Understanding FAA Grant Assurance Obligations Volume 1: Guidebook (2018)

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ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Chapter 1 1 Requirements for airport access and leasing, finance and revenue, and operation and safety are considered the most complex. C H A P T E R 1 , G R A N T A S S U R A N C E S U M M A R I E S , G E N E R A L L Y A P P L I C A B L E G R A N T A S S U R A N C E S This chapter presents the summaries for the generally applicable Grant Assurance requirements governing airport operations, management and finance. Project-Specific Grant Assurance requirements are addressed in Chapter 2. Numerical order will not be followed for the Grant Assurance Summaries, however. First, the Grant Assurances are organized by general subject area, in the following order: 1. Airport Access, Leasing and User Relations 2. Finance and Revenue 3. Operation and Safety 4. Ownership and Control 5. Federal Aircraft and Facilities 6. Grant Assurance 1, General Federal Requirements The order of presentation reflects the results of the research. Specifically, select assurances are more complex than others, generating a significant volume of questions, disputes, or controversies. The complex Grant Assurances fall within the subject areas of access, leasing and user relations; finance and revenue; and operation and safety. These are the first three subject areas covered in this chapter. Within each subject area, the Grant Assurance Summaries are presented in numerical order. For the Grant Assurances, other than Grant Assurance 1 and, in some cases, individual Grant Assurance clauses, the summaries are organized as follows: 1. Assurance Number and Summary Description 2. Summary of Duration, Applicability, Sanctions for Non-Compliance 3. Summary of What the Sponsor Must Do 4. Summary of What the Sponsor May Do 5. Summary of Prohibited Sponsor Actions 6. Summary of Exceptions 7. Recommended Practices 8. List of Related Grant Assurances 9. Common Questions 10. Example of Practice(s) Found in Compliance 11. Example of Practice(s) Found in Non-Compliance The first six items are considered basic information. The remaining items are considered supplemental information. The Grant Assurances and the text boxes include many terms of art that are explained in the Q & As. These terms are highlighted in bold italics.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Chapter 1 2 The summary information is intended to broadly describe the boundaries of permitted, prohibited and mandatory practices. It is written to help Sponsors avoid even gray areas, where compliance status may be uncertain. Many of the Grant Assurance requirements have exceptions, and each will be applied by the FAA to the specific circumstances before it. Thus, in a specific case, the FAA may determine that a particular practice, identified as permitted in the summary, is prohibited; similarly, the FAA may determine that a practice identified as mandatory need not be followed. Examples of practices found in compliance/non-compliance are derived from the review of ACRP LRD 21 or ACRP Report 13, except for administrative decisions issued after publication of LRD 21. Those latter decisions were found in the FAA’s Part 16 database. For decisions found in the LRDs, the LRD reference, in addition to the FAA docket number, are included in the listing of the example. While the determinations indicate how the FAA, DOT or the courts viewed a particular issue, the results in any particular case will depend on the facts and circumstances of that case. Because Grant Assurance 1, General Federal Requirements, covers dozens of statutes, regulations and executive orders, the information is presented in table format. Requirements are grouped by subject area. The tables include the legal reference, a description of the requirements, and resources and references. The latter are included because it would be difficult, and possibly confusing, to replicate the order of the presentation of references for Grant Assurance 1 in Appendix D. Generally applicable Grant Assurances apply to the entire airport, not just to the AIP-funded project.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.1, Grant Assurance 22.a 3 Section 1.1 Airport Access, Leasing and User Relations 1.1.1 Grant Assurance 22.a, Economic Nondiscrimination This clause establishes the basic obligation to provide access to all aeronautical users, commercial and non-commercial alike, on fair and reasonable terms without unjust discrimination. This obligation has been interpreted to include a requirement to charge reasonable, and not unjustly discriminatory, rates, fees and charges. Users who are similarly situated must be treated in the same manner. Users who are not similarly situated can be treated differently. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operations and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used, for violation of this assurance. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Permit all aircraft operators and other aeronautical users (e.g., gliders, skydivers) to use the airport, unless there is a reasonable justification to prohibit certain uses, based on safety or the civil aviation needs of the public. Provide space for commercial operators desiring to establish their business at the airport.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.1, Grant Assurance 22.a 4 What May the Sponsor Do? Charge reasonable and not unjustly discriminatory fees and rents. Establish reasonable rules and regulations for use of the airport. Establish reasonable and not unjustly discriminatory minimum standards for aeronautical businesses. A Sponsor may engage in a reasonable planning/development process to develop rules, regulations, rates and charges, processes and plans etc., before granting a request for access, or for a lease; however, the FAA has held that lengthy delays that result from a perpetual review process deny access in violation of Grant Assurance 22.a. What Sponsor Actions Are Prohibited? Denying use of the airport without reasonable justification. Charging excessive or unjustly discriminatory fees. Denying aeronautical businesses space at the airport without reasonable justification. What Are the Exceptions to the Requirements/Prohibitions? The Sponsor may restrict or deny access if required for safety or civil aviation needs, subject to the determination of the FAA. A Sponsor need not grant an aeronautical business the right to operate if suitable space is not available. A Sponsor exercising proprietary rights to be the exclusive provider of aeronautical services need not grant a competing business the right to operate. A Sponsor need not grant a right of access to taxi aircraft onto the airfield from adjacent property (through the fence, or TTF, access).

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.1, Grant Assurance 22.a 5 Supplementary Information Recommended Practices Recommended Practices are listed under the remaining clauses of Grant Assurance 22, as discussed below. Related Grant Assurances  Remaining clauses of Grant Assurance 22  Grant Assurance 23, Exclusive Rights  Grant Assurance 24, Fee and Rental Structure Common Questions Q. Is a Sponsor always required to lease out available space or facilities to anyone who asks? A. No. There are a variety of exceptions or limitations to the requirement.  The Sponsor may require the prospective aeronautical service provider to prove that it meets the applicable minimum standards, and show that it can be relied on to meet its rental obligations. Similarly, it may require a prospective tenant for aircraft storage facilities to show that it will comply with applicable airport rules and regulations, and it can be relied on to meet its rental obligations.  Even after being approached by a prospective aeronautical service provider, a Sponsor may choose to lease available space or facilities through a competitive bidding, or selection, process. Similarly, a Sponsor may manage accommodation of aircraft in aircraft storage facilities through waiting lists, lotteries or other methods, as long as the method is employed on a consistent basis to all applicants.  If a Sponsor is in the midst of a planning process that could change designations of how a particular parcel is to be used, a Sponsor may decline to lease that parcel until a reasonable planning process is complete, or offer a short-term interim lease; however, a lengthy delay may be considered a denial of access. Q. How long of a delay does the FAA consider reasonable before it considers the Sponsor to be denying access? A. The FAA held a 4-month delay in executing an FBO’s lease, after Sponsor approval to be reasonable. Flightline Aviation, Inc. v. City of Shreveport, La.—No. 16-07-05.—No. FAA-2007-0320. FAA- 2007-0320-0012. 2008 FAA LEXIS 75. 2008 WL 5955355. Director's Determination (March 7, 2008). LRD 21 Determination No. 189. In another case, the FAA determined that denial of a ground lease to support hangar construction, pending completion of a planning process, was unreasonable, where the Sponsor’s real motive was to limit growth, and local jurisdictions were unlikely to accept any result of the planning process that enabled growth of the airport. Martyn v. Port of Anacortes, Wash.—No. 16-02-03.—No. FAA-2002-12988. FAA-2002-12988-0012. 2003

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.1, Grant Assurance 22.a 6 FAA LEXIS 162. 2003 WL 21002099. Director’s Determination (April 14, 2003). LRD Determination No. 113. Q. Is a Sponsor required to accept terms offered by a prospective tenant? A. No. Grant Assurance 22.a does not guarantee a prospective tenant its proposed, or preferred, lease terms. In fact, doing so could result in a violation of the Grant Assurance, if those terms are more favorable than the terms in the leases of other, similarly situated tenants. Q. What are reasonable minimum standards and regulations? A. There is no bright line test, or uniform minimum standards or regulations. They must reflect the circumstances of the airport and the type of services, or use, of the airport contemplated. Please refer to Section 6.1.8, discussing Grant Assurance 22.h, for a more complete discussion. Q. When is a fee excessive or unjustly discriminatory? A. The FAA has established different standards of reasonableness for different facilities; for example, fees for the airfield itself must be based on historic costs, and fees for terminal space or hangars may range from historic cost to fair market value. There is no bright line test for unjust discrimination. Generally, similarly situated users should be charged similar fees, and the fees should reflect an entity’s actual use of the airport facilities and services. Please refer to Section 1.2.1, discussing Grant Assurance 24, Fee and Rental Structure, for a more complete discussion. Examples of Practices Found in Compliance (examples under the remaining clauses of Grant Assurance 22 may be relevant to clause 22.a) 1. The FAA found that changing lease terms that may violate Grant Assurance 22 to be inherently consistent with the Grant Assurances. Platinum Aviation v. Bloomington-Normal Airport Auth.— No. 16-06-09.—No. FAA-2006-25202. FAA-2006-25202-0021. Director’s Determination (June 4, 2007). LRD 21 Determination No. 176. Affirmed by Final Decision and Order of November 28, 2007. LRD 21 Determination No. 185. 2. The FAA held that a Sponsor was not required to offer a ground lease to construct private hangars, when vacant private hangars were available for lease, citing Order 5190.6B, Section 9.7(b). Jim DeVries et al. v. St. Clair, MO—No. 16-12-07 Director’s Determination (May 20, 2014). 3. The FAA held that it was not unjustly discriminatory for an airport commission to discuss, in closed executive session with one potential tenant, proposals for leasing a hangar, when the complainant itself had private discussions with the airport commission. NDC, Inc. v. City of Beverly, Mass.—No. 13-93-04. Record of Decision (January 12, 2001). LRD 21 Determination No. 78. 4. The FAA held that a Sponsor can exclude an incumbent FBO from responding to an RFP for FBO services, if the purpose of the RFP is to increase competition at the airport. 41 N. 73 W., Inc. d/b/a

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.1, Grant Assurance 22.a 7 Avitat Westchester v. Westchester Cnty., N.Y.—No. 16-07-13.—No. FAA-2008-0309. Director’s Determination (June 12, 2008). LRD 21 Determination 195. 5. The FAA determined that a Sponsor did not have to give a lease to a would-be FBO at the FBO’s preferred location, because that location was inconsistent with the Sponsor’s overall plan of separating general aviation, cargo and commercial activities. The FAA considered the practice of separating these activities to be a recognized concept in airport planning, and not unreasonable. Buffalo Jet Ctr., Inc. v. Niagara Frontier Transp. Auth.—No. 16-98-01. 1998 FAA LEXIS 1132. 1998 WL 1083383. Director’s Determination (August 19, 1998). Director’s Determination (August 19, 1998). LRD 21 Determination No. 41. In that decision, the FAA also held that the Sponsor could require a prospective FBO to provide facilities and equipment comparable to the existing FBO offering comparable services, without violating Grant Assurance 22.a. 6. The FAA determined a Sponsor could use an RFP process to obtain additional FBO services, even when it has already received an FBO proposal from a would-be operator. JetAway Aviation, LLC v. Bd. of Cnty. Comm'rs, Montrose Cnty., Colo.—No. 16-06-01.—No. FAA-2006-25185. FAA-2006- 25185-0029. 2006 FAA LEXIS 841. 2006 WL 3914734. Director’s Determination (November 6, 2006). LRD 21 Determination No. 166. 7. The FAA determined that it was reasonable, and not unjustly discriminatory, for a Sponsor to require an applicant for a long-term FBO lease to show that it can finance the development of its business, as long as the requirement was applied to all applicants. Santa Monica Airport Ass'n v. City of Santa Monica, Cal.—No. 16-99-21. 2000 FAA LEXIS 1120. 2000 WL 1824463. Director’s Determination (November 22, 2000). LRD 21 Determination No. 76. Affirmed by Final Decision and Order of February 4, 2003 LRD 21 Determination No. 109. 8. The FAA determined that a requirement for notification of storage of non-airworthy aircraft in designated aeronautical-use areas did not violate Grant Assurance 22.a because the storage of aircraft parts is not an aeronautical activity. The FAA equates the storage of non-airworthy aircraft with the storage of aircraft parts. BMI Salvage Corp. v. Miami-Dade Cnty., FL—No. 16-05-16.—No. FAA- 2005-22380. 2006 FAA LEXIS 561. 2006 WL 2512974. Director’s Determination (July 25, 2006). LRD 21 Determination No. 160. Affirmed by Final Decision and Order of July 3, 2000. LRD 21 Determination No. 170. 9. The FAA found that a Sponsor’s prohibition on a former tenant’s leasing, subleasing or participating in the use of leased airport property was reasonable and, therefore, not a violation of Grant Assurance 22.a, when the former tenant had been in arrears in paying rent, and had not become current, despite repeated requests, and had also failed to meet other lease terms. Cox v. City of Dallas, Tex.—No. 16- 97-02. 1997 FAA LEXIS 1530. 1997 WL 1120744. Record of Determination (October 24, 1997). LRD 21 Determination No. 34. 10. Similarly, the FAA determined that a Sponsor could terminate the lease of a tenant that had not paid rent, and had not submitted financial reports required by the terms of the lease, without violating Grant Assurance 22. Goodrich Pilot Training Ctr., LLC v. Village of Endicott, N.Y.—No. 16-08-03.—No. FAA-2008-1024. Director’s Determination (April 3, 2009). LRD 21 Determination No. 201.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.1, Grant Assurance 22.a 8 Examples of Practices Found in Non-Compliance (examples under the remaining clauses of Grant Assurance 22 may be relevant to clause 22.a) 1. The FAA found the refusal to permit a new aircraft owner/operator lessee to engage in self-fueling, pending adoption of new minimum standards, while allowing other owner/operators with older leases to self-fuel, to be a per se violation of the prohibition on unjust discrimination (Assurance 22.a). Maxim United, LLC v. Bd. of Cnty. Comm'rs of Jefferson Cnty.—No. 16-01-10. 2002 FAA LEXIS 170. 2002 WL 963590. Director’s Determination (April 2, 2002). LRD 21 Determination No. 99. 2. The FAA determined that the denial of access for an on-airport drop-zone violated Grant Assurance 22, when the FAA had previously determined that an on-airport drop-zone could be safely operated at the airport. Once the FAA has determined that an on-airport drop-zone can be operated safely, the Sponsor cannot subsequently deny the drop-zone on safety grounds. Bodin v. City of Santa Clara, Cal.—No. 16-11-06.—No. FAA-2011-0699. FAA-2011-0699-0019. Director’s Determination (December 19, 2011). LRD 21 Determination No. 233. Affirmed in part, reversed in part, by Final Agency Decision and Order of August 12, 2013. 3. The FAA determined that, while the Sponsor is not itself obligated to construct hangars, it cannot deny a proposal to build hangars when there was a documented need for hangars, as demonstrated by a long hangar waiting list. The Sponsor is obligated to make space available, on reasonable terms, to those who are qualified to offer the needed services. Martyn v. Port of Anacortes, Wash.—No. 16- 02-03.—No. FAA-2002-12988. FAA-2002-12988-0012. 2003 FAA LEXIS 162. 2003 WL 21002099. Director's Determination (April 14, 2003). LRD Determination No. 113. In that case, the FAA also held that the Sponsor cannot condition approval of a proposal to build hangars on a commitment to offer the hangars first to those who are on the airport’s hangar waiting list because the proposer would not be acting as an agent of the airport and, therefore, was not obligated to honor the Sponsor’s commitments to those on the wait list. The FAA also did not accept the Sponsor’s justification that it was deferring consideration of the proposal to complete a planning process, when the record evidence showed the Sponsor’s intention was to limit growth of the airport to avoid conflicts with neighboring jurisdictions. 4. The FAA found an unreasonable denial when the Sponsor’s governing body refused to approve a finalized lease, recommended by airport staff, refused again 17 months later, and failed to develop available airport land for a number of years. Grayson v. DeKalb Cnty., Ga.—No. 16-05-13.—No. FAA-2005-22377. FAA-2005-22377-0005. Director’s Determination (February 1, 2006). LRD 21 Determination No. 152.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.2, Grant Assurance 22.b 9 1.1.2 Grant Assurance 22.b, Requirement for Reasonable and not Unjustly Discriminatory Service by Commercial Service Providers Under this clause, a Sponsor must require aeronautical service providers to the public to furnish those services on a reasonable and not unjustly discriminatory basis, and to charge reasonable and not unjustly discriminatory fees for those services; however, the Sponsor may permit reasonable and not unjustly discriminatory discounts or rebates, based on volume purchases. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding ofgrants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used, for violation of this assurance. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Establish a legally enforceable obligation for all aeronautical service providers to treat their customers reasonably and without unjust discrimination, including charging reasonable and not unjustly discriminatory fees. Monitor compliance and enforce the requirement, if needed. What May the Sponsor Do? Select the method of establishing the legally enforceable obligation, including lease terms, permit language, minimum standards, and rules and regulations applicable to aeronautical service providers. Select the method for monitoring and enforcement, as long as it is effective. Permit aeronautical service providers to offer volume discounts.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.2, Grant Assurance 22.b 10 What Sponsor Actions Are Prohibited? Failing to obligate all aeronautical service providers to comply with the requirement. Failing to enforce the obligation. What Are the Exceptions to the Requirements/Prohibitions? None. Supplementary Information Recommended Practices  Include strong subordination clauses in all leases and permits, specifying that the lease is subject to current and future grant agreements, including Grant Assurance 22.b.  Include in all leases a clause giving the Sponsor the continuing right to amend any lease or tenant sublease to comply with the Sponsor’s federal obligations.  Establish a procedure to investigate and resolve complaints from users/subtenants of Sponsor’s aeronautical lessees, or permittees, regarding unreasonable or unjustly discriminatory treatment. Related Grant Assurances  Remaining clauses of Grant Assurance 22  Grant Assurance 5, Preserving Rights and Powers  Grant Assurance 24, Fee and Rental Structure Common Questions Q. Is a Sponsor always required to include subordination clauses in its leases? A. Not necessarily. But if the Sponsor has not done so, and a dispute arises, the Sponsor must be able to show that it has required commercial operators to provide reasonable, and not unjustly discriminatory, services by another means that is equally, or more, effective. Q. Is there a single required or preferred method for monitoring and enforcement of this requirement on aeronautical service providers? A. No. But if a dispute arises, the Sponsor must be able to show that it has followed its procedures, and addressed any non-compliance issues identified. Examples of Practices Found in Compliance No cases finding compliance with this specific clause were identified during the research.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.2, Grant Assurance 22.b 11 Examples of Practices Found in Non-Compliance 1. The FAA determined that a Sponsor’s failure to follow up and resolve a subtenant’s complaint of unreasonable terms required by a tenant (lessee from Sponsor) was a violation of Grant Assurance 22.b. Atl. Helicopters, Inc. v. Monroe Cnty., Fla.—No. 16-07-12.—No. FAA-2008-0250. 2008 FAA LEXIS 387. 2008 WL 5955353. Director's Determination (December 3, 2008). LRD Determination No. 199. The Sponsor’s submission of an acceptable corrective action plan, however, including commitments to require reformation of subleases that violate the lease or Grant Assurances, to provide written responses to complaints about FBO practices within 30 days of receipt, and to review all subleases for compliance with federal obligations and format, resulted in a determination that the Sponsor was in current compliance.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.3, Grant Assurance 22.c 12 1.1.3 Grant Assurance 22.c, FBO Fees and Charges This clause requires the Sponsor to charge each FBO the same rates, fees, rentals and other charges as charged to other similarly situated FBOs. Not only must the charges be consistently applied, but under the terms of Grant Assurance 22.a, the charges must be reasonable; however, if the FBOs are not similarly situated, the Sponsor may charge different fees, as long as they are reasonable. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used, for violation of this assurance. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Charge the same rates, fees and rentals to FBOs who are similarly situated. What May the Sponsor Do? Select the method of establishing rates, fees and charges for FBOs, as long as the result is reasonable and applied consistently to similarly situated FBOs. Establish fees based on current conditions and circumstances when executing new leases, as long as it does so on a consistent basis, even if those fees differ from those in older leases. Charge different rates, fees and charges to FBOs that are not similarly situated. Choose the economic index used as a basis for escalation clauses in long-term FBO leases. What Sponsor Actions Are Prohibited? Failing to charge the same rates, fees and charges to FBOs that are similarly situated.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.3, Grant Assurance 22.c 13 What Are the Exceptions to the Requirements/Prohibitions? FBOs that are not similarly situated may be charged differently. Supplementary Information Recommended Practices  Include escalation clauses in long-term FBO leases, based on a recognized economic index or a modest fixed percentage. Related Grant Assurances  Remaining clauses of Grant Assurance 22  Grant Assurance 24, Fee and Rental Structure Common Questions Q. What makes two FBOs similarly situated? A. The FAA considers the following in determining whether two firms are similarly situated:  The nature of the services or activities being conducted (if two firms are conducting different activities, they would not normally be similarly situated), and the types of customers served (two firms serving different types of customers may not be similarly situated).  Location on the airport (locations considered desirable or advantageous may justify a premium rate).  Age, size and condition of facilities being leased (larger, newer facilities may justify a higher rate).  Length of lease (term) and date of execution of lease (Sponsor executing a lease today may charge rates reflecting current costs and business conditions, even if a 20-year-old lease, for otherwise comparable facilities, specifies lower rates).  The FBO’s investment in facilities.  Type of lease/facilities, i.e., ground lease versus Sponsor-owned facilities. Q. What indexes should a Sponsor use in its escalation clause? A. The FAA does not specify a single economic index. Sponsors often use the Consumer Price Index (CPI), but other indexes, such as the Producer Price Index (PPI) or the GDP deflator, could also be used. A Sponsor may also rely on periodic re-appraisals, or use a modest fixed-percentage annual increase, as long as the methodology is applied consistently. Examples of Practices Found in Compliance 1. The FAA determined that Grant Assurance 22.c did not require the Sponsor to charge the same fees to two FBOs providing the same aeronautical services, because other factors—specifically differences

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.3, Grant Assurance 22.c 14 in the dates the two leases were executed, and in market conditions at the time of execution—meant the two FBOs were not similarly situated. Clarke v. City of Alamogordo, N.M.—No. 16-05-19.—No. FAA-2006-25212. Director’s Determination (September 20, 2006). LRD 21 Determination 164. 2. The FAA has held that, while the use of escalation clauses is a good practice, Grant Assurance 22.c does not require their use for compliance. Desert Wings Jet Ctr., LLC v. City of Redmond—No. 16- 09-07.—No. FAA-2009-1102. FAA-2009-1102-0019. 2010 FAA LEXIS 298. 2010 WL 4723466. Director’s Determination (November 10, 2010). LRD 21 Determination No. 223. Affirmed by Final Agency Decision of May 25, 2012. LRD 21 Determination No. 236. 3. The FAA found no violation of Grant Assurance 22.c, when a Sponsor provided one FBO tenant ramp space and buildings on a rent-free basis, while requiring other tenants to pay rent for the ramp, and construct its own buildings. In this case, the FAA found that the savings to the airport from avoided maintenance costs, among other things, justified the disparate treatment. By including the buildings and ramp space in the FBO’s leasehold, the Sponsor made the FBO responsible for those costs. In addition, the other tenants were not full-service FBOs, and were not, therefore, similarly situated. Hamilton v. City of Yankton, S.D.—No. 13-93-06. Record of Decision (October 23, 1995) LRD 21 Determination No. 18. 4. The FAA determined that a Sponsor could charge less to an FBO that is subject to restrictions on the size of aircraft, or type of services, it provides than it does to another FBO that is not subject to those restrictions, without violating Grant Assurance 22.c. The restrictions on the first FBO meant that it is not similarly situated to the FBO without the restrictions. 41 N. 73 W., Inc. d/b/a Avitat Westchester v. Westchester Cnty., N.Y.—No. 16-07-13.—No. FAA-2008-0309. Director’s Determination (June 12, 2008). LRD 21 Determination 195. Examples of Practices Found in Non-Compliance 1. The FAA determined that a Sponsor, negotiating to renew leases with two similarly situated FBOs at the same time, violated Grant Assurance 22.c, by failing to offer the same rates and terms to both. The fact that the initial leases were executed at different times, with different rates, did not justify offering different rates and terms, when both leases were up for renewal at the same time. Langa Air, Inc. v. St. Louis Reg'l Airport Auth.—No. 16-00-07. Director’s Determination (March 29, 2001). LRD 21 Determination No. 82. Affirmed by Final Decision and Order of December 13, 2001. LRD 21 Determination No. 94. 2. The FAA found that two FBOs were similarly situated when both constructed facilities (even though the constructed facilities were different, and one FBO constructed its facilities on developed land, whereas the other constructed its facilities on raw land), and when both engaged in fuel sales (even though only one of the two was required to sell fuel). The FAA further found that the Sponsor violated Grant Assurance 22.c, by requiring one of the FBOs to pay a fuel flowage fee, but not the other. Aircraft Management Services, Inc. v. Santa Rosa County, FL No. 16-12-02 Director’s Determination (March 27, 2015).

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.4, Grant Assurance 22.d 15 1.1.4 Grant Assurance 22.d, Air Carrier Servicing This clause guarantees that air carriers may service themselves, or use any FBO the Sponsor allows to provide services to air carriers. If the Sponsor has authorized multiple FBOs to provide services to air carriers, the Sponsor must permit the air carrier to choose from among the authorized service providers. Based on interpretations of this clause, and clause 22.f, discussed below, if the air carrier is claiming the right to self-service, the air carrier must use its own employees and equipment. The air carrier cannot employ a third-party contractor who is not authorized by the Sponsor and claim that it is exercising its self-service rights. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used, for violation of this assurance. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Permit air carriers to self-service using their own employees and equipment. Permit an air carrier to use any FBO authorized to provide the specific services the air carrier desires.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.4, Grant Assurance 22.d 16 What May the Sponsor Do? Establish reasonable and not unjustly discriminatory minimum standards for FBOs providing services to air carriers. Establish reasonable and not unjustly discriminatory standards, regulations and conditions for air carriers that self-service. If exercising a “proprietary exclusive” (see Grant Assurance 23, Exclusive Rights), require the air carrier to choose between self-service, or using the Sponsor’s FBO services. Enforce the requirement that an air carrier claiming self-service rights use its own employees and equipment. What Sponsor Actions Are Prohibited? Prohibiting, or otherwise preventing, an air carrier from self-service with its own employees and equipment. If multiple FBOs are authorized to provide a particular service to air carriers, preventing the air carrier from choosing its preferred provider for that service. What Are the Exceptions to the Requirements/Prohibitions? None. Supplementary Information Recommended Practices  Incorporate into airline use and lease agreements, or permits, the right to self-service, or to use authorized FBOs.  Include in airline use and lease agreements, permits, minimum standards or regulations, any requirements, conditions or limitations on the right to self-service. Requirements, conditions or limitations must be reasonable, and not unjustly discriminatory. Related Grant Assurances  Grant Assurance 19, Operation and Maintenance  Grant Assurance 22.f  Grant Assurance 22.h

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.4, Grant Assurance 22.d 17  Grant Assurance 23, Exclusive Rights Common Questions Q. Our airport has itinerant independent airframe and powerplant mechanics who do not have written permits. Does this clause guarantee an air carrier the right to use these mechanics to service its aircraft? A. If the airport management is allowing these itinerant mechanics to operate on the airport, then the air carrier would have the right to use them under this clause; however, the airport’s decision to allow these itinerant mechanics to operate could itself raise questions of compliance with Grant Assurance 22.c. Examples of Practices Found in Compliance 1. The FAA found that a Sponsor’s refusal to permit a Part 135 air taxi operator (which engaged in other aeronautical services) to rely on the air carrier self-fueling right to sell fuel to the customers of its other services did not violate Grant Assurance 22.d. Sterling Aviation, LLC v. Milwaukee Cnty., Wis.—No. 16-09-03.—No. FAA- 2009-0892. Director's Determination (April 13, 2010). LRD 21 Determination No. 217. 2. The FAA also found no violation of Grant Assurance 22.d in Aero Ways, Inc. v. Del. River & Bay Auth.—No. 16-09-12.—No. FAA-2010-0079. FAA-2010-0079-0018. 2010 FAA LEXIS 233. 2010 WL 3826304. Director’s Determination (August 30, 2010). LRD 21 Determination No. 220, where the complainant was not an air carrier and was also claiming a right under Grant Assurance 22.d to fuel its customers’ aircraft. 3. The FAA found that a Sponsor’s requirement that air carriers engaged in self-fueling construct above- ground storage tanks in the existing fuel farm, or meet EPA requirements for secondary containment for fuel trucks, did not violate Grant Assurance 22.d. The FAA also found that the Sponsor’s decision to grant existing self-fuelers more time to comply with the secondary containment requirement was reasonable because that decision reflected the EPA requirement. AmAv, Inc. v. Md. Aviation Admin.—No. 16-05-12.—No. FAA-2005-22376. FAA-2005-22376-0018. 2006 WL 2038717. Directors Determination (March 20, 2006). LRD 21 Determination No. 155. Affirmed by Final Decision and Order of August 8, 2006. LRD 21 Determination No. 161. Examples of Practices Found in Non-Compliance 1. In an informal determination that was later reviewed under Part 16, the FAA advised a Sponsor that it could not deny a part 135 air charter operator the right to self-fuel aircraft used in its part 135 operation, even if the aircraft were not owned by the Part 135 operator. The research identified no decisions that addressed this specific Grant Assurance requirement. AmAv, Inc. v. Md. Aviation Admin.—No. 16-05-12.—No. FAA-2005-22376. FAA-2005-22376-0018. 2006 WL 2038717. Directors Determination (March 20, 2006). LRD 21 Determination No. 155. Affirmed by Final Decision and Order of August 8, 2006. LRD 21 Determination No. 161.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.5, Grant Assurance 22.e 18 1.1.5 Grant Assurance 22.e, Air Carrier Rules, Regulations, Conditions and Rates Under this clause, a Sponsor must provide substantially comparable rules, regulations, conditions, rates, fees, rentals, and other charges to all carriers making similar use of the airport, and using similar facilities. The concept of “similar use … and using similar facilities” is comparable to the concept of “similarly situated” FBOs, discussed under Grant Assurance 22.c. In addition, the clause specifically permits the Sponsor to make reasonable classifications, such as tenants or non-tenants, and signatory carriers and non-signatory carriers. A Sponsor shall not unreasonably withhold preferred status to an air carrier that assumes obligations substantially similar to those already imposed on other carriers with preferred status. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used, for violation of this assurance. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Provide substantially comparable rules, regulations, conditions, rates, fees, rentals, and other charges to all carriers making similar use of the airport, and using similar facilities. Grant signatory or tenant status to any air carrier that is willing to assume the obligations imposed on current signatory or tenant carriers. This requirement applies even if the Sponsor has no available space to lease to a would-be signatory or tenant.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.5, Grant Assurance 22.e 19 What May the Sponsor Do? Establish classifications, such as signatory or tenant, and differentiate between members of these classes and non-members. In particular, a Sponsor may charge a premium to non- members, subject to the other provisions of Grant Assurance 22 and Grant Assurance 24. Establish reasonable and not unjustly discriminatory requirements to qualify for these classifications. What Sponsor Actions Are Prohibited? Charging different rates, or imposing different rules to similarly situated carriers, other than establishing reasonable classifications. Denying preferred status to an air carrier that assumes substantially similar obligations to carriers with preferred status. What Are the Exceptions to the Requirements/Prohibitions? There is no requirement to grant signatory or tenant status to a carrier that is not willing to assume the obligations associated with that status. Supplementary Information Recommended Practices  Establish generally applicable fee schedules for signatory/tenant classifications, and for non- signatory/non-tenant, and update those schedules regularly (at least annually).  Publish the criteria for obtaining signatory or tenant status.  If the criteria for signatory or tenant status is the execution of a lease and use agreement, develop a standard lease agreement applicable to all lessees. Many Sponsors employ a “master lease and use agreement”, which has a fixed term (end date), so that all leases will be subject to renewal at the same time, and can be modified without imposing different sets of obligations on different signatories/tenants. Related Grant Assurances  Remaining clauses of Grant Assurance 22  Grant Assurance 24

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.5, Grant Assurance 22.e 20 Common Questions Q. What criteria may a Sponsor use to define signatory or tenant status? A. The FAA has not defined specific criteria; however, in Order 5190.6B, the FAA observed that “the primary obligation of a signatory is to lease space in airport facilities and commit to long- term financial support of the development and operation of the airport. The debt for airport facilities is typically secured by signatory tenant leases. In return for their financial commitment, signatory carriers may have a rate, fee, and rental structure that differs from non-signatory carriers choosing not to make the same financial commitment. The Sponsor cannot unreasonably deny signatory status to an air carrier willing and able to assume the obligations of a signatory carrier.” Order 5190.6B, §9.2.b. Q. If there is no vacant terminal space available for lease, must a Sponsor still provide signatory status and rates to an air carrier that is ready and willing to execute a lease, if space were available? A. Yes. If the airport has no vacant terminal space and a would-be signatory carrier is willing to sign a lease if there were available space, the Sponsor must provide signatory status and rates to that carrier. Q, How high of a premium can a Sponsor charge to a non-signatory carrier? A. The FAA has not defined a maximum, but any premium is itself subject to the reasonableness requirement of Grant Assurance 22. Sponsors typically charge premiums of 15 percent to 25 percent. In addition, if the airport has a residual fee structure, with signatory carriers sharing in any net non- aeronautical revenues, non-signatory carriers usually do not get the revenue-sharing benefit. Examples of Practices Found in Compliance 1. The DOT found a Sponsor could charge equalized rental rates for two facilities with substantially different amenities without violating Grant Assurance 22.e because the Sponsor had a long- established rate equalization policy that equalized rental rates for all users of the same class of space, “regardless of age, condition, location, or other factor was not unreasonable or unjustly discriminatory.” Miami Int'l Airport Rates Proceeding—No. OST-96-1965. Order No. 97-3-26 (March 19, 1997). DOT-OST-1996-1965-0138. 1997 DOT Av. LEXIS 118. 1997 WL 120400. LRD 21 Determination No. 24. Petitions for review denied sub nom. Air Canada v. Dep't of Transp., 148 F.3d 1142 (D.C. Cir. 1998). 2. The U.S. Court of Appeals determined that a Sponsor’s use of the “rentable space” concept to set terminal rental rates for carriers with short-term leases while using the “usable space” methodology for carriers with long-term leases that had also invested in terminal capital improvements did not violate Grant Assurance 22.e because the differences in the lease terms and capital investment meant that the two groups of carriers were not similarly situated. Alaska Airlines, Inc. v. U.S. Dep't of Transp., 575 F.3d 750 (D.C. Cir. 2009) (Included in LRD 13, which does not assign determination numbers), affirming in part and reversing in part Alaska Airlines, Inc. v. L.A. World Airports—No. OST-2007-27331. Order No. 2007-6-8 (June 15, 2007). DOT-OST-2007- 27331-0198. 2007 DOT Av. LEXIS 437. 2007 2007 WL 1788970. LRD 21 Determination No. 177.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.5, Grant Assurance 22.e 21 3. Where a general aviation airport Sponsor was charging an annual fee to based aircraft, and relying on fuel flowage fees to recover costs for transient users, the FAA found that the two categories were not similarly situated, and that the Sponsor’s approach did not unjustly discriminate against based aircraft. R/T-182, LLC v. Portage Cnty. Reg'l Airport Auth.—No. 16-05-14.—No. FAA-2006- 25076. FAA-2006-25076-0013, FAA-2006-25076-0014. 2006 FAA LEXIS 766. 2006 WL 3264503, 2006 WL 4393153, 2006 WL 4393157. Director’s Determination (November 1, 2006) LRD Determination No. 165. Affirmed by Final Agency Decision of March 29, 2007. LRD Determination No. 172. The FAA reached the same result in Wadsworth Airport Ass'n, Inc. v. City of Wadsworth—No. 16-06-14.—No. FAA-2007-27226. 2007 FAA LEXIS 282. 2007 WL 2373611. Director’s Determination (August 8, 2007). LRD 21 Determination No. 180. Examples of Practices Found in Non-Compliance 1. The FAA found a Sponsor’s refusal to grant a 30-year lease to a helicopter tour operator, and an offer of a 2-year renewable license, similar to that held by other helicopter tour operators, was unjustly discriminatory. The FAA did not consider the two categories to be similarly situated because the operator seeking the 30-year lease was proposing to make a substantial capital investment, while the two-year renewable license holders had not made similar capital investments. Skydance Helicopters, Inc. v. Sedona-Oak Creek Airport Auth.—No. 16-02-02.—No. FAA-2002-13068. FAA-2002- 13068-0010. 2003 FAA LEXIS 92. 2003 WL 1524500. Director’s Determination (March 7, 2003). LRD 21 Determination No. 110. 2. The FAA stated that a rent subsidy to one cargo carrier, under a residual fee agreement, that could lead to an increase in landing fees to unsubsidized passenger carriers could violate Grant Assurance 22. The FAA declined to consider the extent to which the agreement for the subsidy also guaranteed an increase in operations and, hence, landing fee revenues; however, in this particular case, the Sponsor agreed to freeze landing fees at the pre-rent subsidy level. The FAA found no current violation, based on the landing fee freeze. Northwest Airlines, Inc. v. Indianapolis Airport Auth.— No. 16-07-04.—No. FAA-2007-28786. 2008 FAA LEXIS 194. 2008 WL 3976461. Director’s Determination (August 19, 2008). LRD 21 Determination 197. Corrected by Errata of October 7, 2008. LRD 21 Determination No. 197.1. Affirmed by Final Decision and Order of October 27, 2009. See Determination No. 211.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.6, Grant Assurance 22.f 22 1.1.6 Grant Assurance 22.f, Aircraft Owner/Operator Right to Self Service This clause protects the right of an aircraft owner or operator to service its own aircraft (including fueling, repairs and maintenance) with its own employees and equipment. Under this clause, even if a Sponsor is providing commercial services in its own name, as the exclusive provider on the airport (proprietary exclusive), it must permit aircraft owners/operators to service their own aircraft. The services must be provided by the aircraft owner/operators’ own employees. The aircraft owner/operator cannot claim the self-service right, while using third-party contractors. This limitation on using third-party contractors can sometimes raise compliance issues for aircraft management companies that also conduct flights as an air carrier under Part 135. In addition, this right is not absolute. The self-service right is subject to the Sponsor’s right under Grant Assurance 22.h, to impose reasonable regulations and standards. For example, the Sponsor may prohibit the performance of maintenance in T-hangars, or restrict the locations on the airport where aircraft owner/operators can fuel their aircraft. As with other Assurances, in the event of a dispute and complaint, filed with the FAA, the FAA, not the Sponsor, determines whether a particular restriction or regulation is reasonable. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used, for violation of this assurance. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Permit aircraft owners/operators to self-service their aircraft, including self-fueling, with their own employees and equipment. If restrictions on self-service activities in storage hangars are adopted, provide a space on the airport for those activities to take place. If the FAA has reviewed a particular requirement or restriction for safety or civil aviation needs, implement FAA’s determination.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.6, Grant Assurance 22.f 23 What May the Sponsor Do? Establish reasonable rules, requirements or restrictions for self-service, provided that in the event of a dispute, an FAA determination on whether a rule, requirement or restriction is needed for safety or civil aviation needs is controlling. Require self-fuelers to pay the same fuel flowage fee to the airport that patrons of commercial fuel vendors pay. Specify particular areas of the airport for self-service activity. Require self-fuelers to store fuel in the area of the airport designated for fuel farms, rather than on individual leaseholds. Enforce local fire codes, as applicable, to self-service and self-fueling. Prevent an aircraft owner/operator from relying on the self-service right to use third parties who are not authorized to provide commercial aeronautical services on the airport. What Sponsor Actions Are Prohibited? Prohibiting, or otherwise preventing, an aircraft owner or operator from self-service with its own employees and equipment. Applying different rules, regulations or conditions to similarly situated aircraft owners/operators performing the same self-service activities. What Are the Exceptions to the Requirements/Prohibitions? There is no requirement to permit self-service activity that is not consistent with reasonable airport rules, regulations, and the airport’s approved ALP; however, in any dispute over the safety or the civil aviation needs justification for a restriction, the FAA’s determination takes precedence. Supplementary Information Recommended Practices  Establish generally applicable rules, regulations or minimum standards for self-service activity.  Enforce the rules, regulations, requirements on a consistent basis.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.6, Grant Assurance 22.f 24 Related Grant Assurances  Grant Assurance 19, Operation and Maintenance  Grant Assurance 22.d  Grant Assurance 22.h  Grant Assurance 23, Exclusive Rights Common Questions Q. Is a commercial self-service fuel pump covered under the self-service Grant Assurance? A. No. The FAA considers commercial self-service pumps to be another form of commercial aviation fuel sales, which a Sponsor is not required to accommodate as a stand-alone commercial aeronautical activity. Q. Does the right to self-fuel include motor vehicle gasoline (MOGAS)? A. Yes, if the owner/operator’s aircraft is type-certificated to operate on MOGAS. Q. Does the self-fueling right include the purchase of fuel from a fuel cooperative (fuel co-op)? A. No. Order 5190.6B specifically identifies this as outside the classification of self-service. (Order 5190.6B, §11.8.) Q. If a Sponsor has a policy of requiring all fuel farms to be built and operated at a single location, what options must it give to a would-be self-fueler to comply with the self-service Grant Assurance? A. The FAA has determined that, in this situation, permitting the aircraft owner/operator to bring its own fuel truck onto the airport, or granting the aircraft owner/operator a permit to construct a private fuel farm at the centralized location, satisfies the self-service Grant Assurance. Q, If a Sponsor exercises its proprietary exclusive right to sell fuel, can it still collect a fuel flowage fee from tenants that self-fuel. A. Yes. The FAA has determined that this arrangement does not violate Assurance 22.f. Miller v. Bd. of Aviation Comm'rs of the City of Warsaw, Ind.—No. 16-03-03.—No. FAA-2003-15032. FAA-2003- 15032-0006. 2003 FAA LEXIS 427. 2003 WL 22696922. Director’s Determination (October 20, 2003). LRD 21 Determination No. 117. Affirmed by Final Decision and Order of February 27, 2004. LRD 21 Determination No. 122. Examples of Practices Found in Compliance 1. The FAA determined that Grant Assurance 22.f does not guarantee the aircraft owner-operator a right to space that it considers suitable to exercise this right. Assurance 22 is primarily intended to prevent Sponsors from forcing aircraft owners to avail themselves of specific service providers on the airport, in lieu of performing the needed service themselves. Thermco Aviation, Inc. v. L.A.—No. 16-06-07.—No. FAA-2006-25158. Director’s Determination (June 21, 2007). LRD 21 Determination 178.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.6, Grant Assurance 22.f 25 2. The FAA determined that Grant Assurance 22.f was not violated by a Sponsor that adopted more stringent inspection standards for underground tanks than it had for above-ground tanks, as long as they are imposed in a fair, and not unjustly discriminatory, manner. Ervin v. Northumberland Cnty. Airport Auth.—No. 13-82-03 Record of Decision (October 7, 1994). LRD Determination No. 8. 3. The FAA found that the calculation of a fuel flowage fee for self-fuelers, charged by a Sponsor selling fuel under the “proprietary exclusive,” based on total operating costs, less other revenues, was permitted under Grant Assurance 22.f, especially when the resulting per-gallon fee was in the middle of the range of fees charged at airports in the area. Miller v. Bd. of Aviation Comm'rs of the City of Warsaw, Ind.—No. 16-03-03.—No. FAA-2003-15032. FAA-2003-15032-0006. 2003 FAA LEXIS 427. 2003 WL 22696922. Director’s Determination (October 20, 2003). LRD 21 Determination No. 117. Affirmed by Final Decision and Order of February 27, 2004. LRD 21 Determination No. 122. Examples of Practices Found in Non-Compliance 1. The FAA found a Sponsor that prohibited one aircraft owner/operator from self-fueling, pending adoption of new minimum standards, while allowing other aircraft owner/operators to self-fuel under the existing minimum standards, to be in violation of the prohibition on unjust discrimination (Assurance 22.a). Maxim United, LLC v. Bd. of Cnty. Comm'rs of Jefferson Cnty.—No. 16-01-10. 2002 FAA LEXIS 170. 2002 WL 963590. Director’s Determination (April 2, 2002). LRD 21 Determination No. 99. 2. The FAA determined that a 2-year delay in permitting self-fueling, pending adoption of a self-fueling policy, violated Grant Assurance 22.f. Cedarhurst Air Charter, Inc. v. Cnty. of Waukesha, Wis.— No. 16-99-14. 2000 FAA LEXIS 751. 2000 WL 1130495. Director’s Determination (April 1, 2000). LRD 21 Determination No. 61. 3. The FAA found a 1.5-year delay in permitting self-fueling, pending adoption of new minimum standards for self-fueling, violated Grant Assurance 22.f. The FAA stated that the airport was obligated to offer reasonable interim standards. Maxim United, LLC v. Bd. of Cnty. Comm'rs of Jefferson Cnty.—No. 16-01-10. 2002 FAA LEXIS 170. 2002 WL 963590. Director’s Determination (April 2, 2002). LRD 21 Determination No. 99.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.7, Grant Assurance 22.g 26 1.1.7 Grant Assurance 22.g, Sponsor Commercial Services (Proprietary Rights) This clause requires a Sponsor that provides commercial aeronautical services directly to the public to do so under the same conditions that would apply to any other aeronautical service provider. This clause assures that airport users will be treated fairly when the Sponsor provides aeronautical services. It also assures that the Sponsor does not gain an unfair competitive advantage over private operators, providing the same services as the Sponsor. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used, for violation of this assurance. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Apply the same standards and conditions to its own commercial aeronautical services as it does to similarly situated third-parties, providing the same services, except as noted below. If the Sponsor is offering commercial services in competition with third parties, permit aeronautical users to choose the authorized service provider they use. Provide the services on reasonable terms, without unjust discrimination.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.7, Grant Assurance 22.g 27 What May the Sponsor Do? If providing commercial aeronautical services on an exclusive basis, subsidize the commercial aeronautical operations with other aeronautical revenue, if necessary, to assure that services are available. Choose to provide any commercial aeronautical services directly, with its own employees and equipment, on an exclusive basis, or in competition with third parties, as long as the services are provided under the same conditions as would apply to other aeronautical service providers. What Sponsor Actions Are Prohibited? Using other aeronautical revenues to subsidize its commercial aeronautical operations, if it is in competition with third parties. Providing the services in an unreasonable or unjustly discriminatory manner, and charging unreasonable or unjustly discriminatory rates, fees or charges. Contracting out commercial aeronautical services and then relying on the proprietary exclusive to prohibit competition. What Are the Exceptions to the Requirements/Prohibitions? There are no specific exceptions. Supplementary Information Recommended Practices  Exercising a proprietary right, in competition with a third party, can lead to disputes about Grant Assurance compliance. Before adopting this approach, a Sponsor should carefully consider how its actions will be perceived by other commercial aeronautical tenants.  If providing commercial aeronautical services, the Sponsor should establish them as a separate cost center(s), for purposes of accounting, and establishing rates and charges for both the commercial services and for the use of other aeronautical facilities. Related Grant Assurances  Remaining clauses of Grant Assurance 22

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.7, Grant Assurance 22.g 28  Grant Assurance 23, Exclusive Rights Common Questions None for this clause. It is rarely at issue when a dispute over Grant Assurance compliance arises. Examples of Practices Found in Compliance 1. The FAA determined that a Sponsor providing commercial fueling, with fuel trucks that operated only on the airport, could require a tenant using over-the road fuel trucks to use trucks meeting requirements for transporting hazardous materials on public roads, while the Sponsor’s own fuel trucks did not meet those requirements. Scott Aviation, Inc. v. DuPage Airport Auth.—No. 16-00- 19. 2002 FAA LEXIS 398. 2002 WL 31429252. Director’s Determination (July 19, 2002). LRD 21 Determination No. 103. 2. The FAA determined that the decision by a Sponsor selling aviation fuel not to sell MOGAS for use in aircraft was consistent with Grant Assurance 22.g because the decision to offer MOGAS for aircraft use would be a business decision that would be at the discretion of a commercial fuel provider. The decision thus met the requirement to offer commercial aeronautical services under the same conditions that would apply to a commercial aeronautical service provider. Ashton v. City of Concord, N.C. (1999)—No. 16-99-09. 2000 FAA LEXIS 150. 2000 WL 132770. Director’s Determination (January 28, 2000). LRD 21 Determination No. 58. Affirmed by Final Decision and Order of July 3, 2000. LRD 21 Determination No. 67. Examples of Practices Found in Non-Compliance No examples of practices found in non-compliance with Grant Assurance 22.g were found in the research.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.8, Grant Assurance 22.h 29 1.1.8 Grant Assurance 22.h, Reasonable Conditions for Safety and Efficiency This clause permits the Sponsor to establish reasonable, and not unjustly discriminatory, requirements, including rules and regulations, and minimum standards for airport users to assure the safe and efficient operation of the airport. To be reasonable, the requirements must be appropriate to the activity proposed or undertaken by the user. For example, minimum insurance requirements applicable to an air carrier operating large turbojet aircraft might be unreasonable or unjustly discriminatory if applied to the operator of a single-piston-engine four-seat aircraft. In case of a dispute, the FAA, not the Sponsor, makes the final determination on whether the requirement is required for safety or efficiency. The Sponsor must also apply and enforce the requirements without unjust discrimination. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used, for violation of this assurance. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Assure that rules, regulations and minimum standards are appropriate to the activity to which they apply. Apply rules, regulations and minimum standards consistently to similarly situated aeronautical users. In the event of a dispute, follow the FAA’s determination on whether the rule, regulation or minimum standard is required for safety or civil aviation needs.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.8, Grant Assurance 22.h 30 What May the Sponsor Do? Choose the method of establishing standards and requirements, i.e. rules, regulations, minimum standards, or operating conditions, etc. Permit a bona fide flying club to operate without meeting commercial FBO minimum standards, if the club meets FAA specified requirements. The requirements are specified in the Common Questions Section. What Sponsor Actions Are Prohibited? Applying the same set of requirements to full service FBOs and SASOs without accounting for the differences in services or service levels. Enforcing rules, regulations, or minimum standards inconsistently to similarly situated aeronautical users. Establishing a standard or rule that cannot be achieved. What Are the Exceptions to the Requirements/Prohibitions? There is no inherent requirement in Grant Assurance 22.h. to adopt rules, regulations or minimum standards; however, the failure to do so could result in a violation of other assurances, e.g. Grant Assurance 5, Preserving Rights and Powers, or Grant Assurance 19, Operations and Maintenance, and could increase the risk of complaints about violations of other clauses in Grant Assurance 22. Supplementary Information Recommended Practices  Adoption of requirements and standards for operation is recommended to avoid potential non-compliance with other Grant Assurances, and to reduce the risk of complaints from airport users.  It is preferable for the Sponsor to establish standards and requirements as independent rules, regulations and requirements, rather than incorporating them into leases or permits. The recommended approach provides greater flexibility to modify requirements or standards in response to changing circumstances.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.8, Grant Assurance 22.h 31  Sponsors following this approach should include language in leases, use agreements or permits subordinating them to the rules, regulations or minimum standards, as modified from time to time, or incorporating the rules, regulations or minimum standards by reference. Related Grant Assurances  Remaining clauses of Grant Assurance 22  Grant Assurance 19, Operation and Maintenance Common Questions Q. If a Sponsor modifies its minimum standards for new aeronautical tenants going forward, can existing tenants operate under the prior minimum standards? A. While this situation could give rise to conflicts and disputes, the Grant Assurance does not absolutely prohibit the practice because the existing tenants and new tenants could be viewed as not similarly situated. Because of the potential for conflicts and disputes, if a Sponsor does not apply the new minimum standards to existing tenants immediately, it is recommended that the new minimum standards be phased in for existing tenants. Q. What are the requirements for a flying club to be exempted from a Sponsor’s FBO minimum standards without violating Grant Assurance 22? A. If the Sponsor is going to exercise its option to exempt a flying club, the following must apply:  The club must be a non-profit enterprise.  The Sponsor must prohibit the club from selling any goods or services to any person or firm that is not a member of the club, and enforce the prohibition. But the club members may be compensated for services provided to the club or club members.  A club member may be compensated for either flight instruction in club aircraft, or maintenance of club aircraft, through either direct payment or a credit, for dues or flight time, but not both.  A club must either own its aircraft or lease them on a long-term exclusive-use basis. The FAA does not consider the Grant Assurances to permit the club to lease an aircraft from a member at an hourly rate under the flying club exception.  A club may permit non-pilots to be members, if they have the same obligations and responsibilities as pilot members.  A club may not hold itself out, or advertise, as an FBO, SASO, flight training school or aircraft maintenance facility. Q. If a Sponsor has waived a specific minimum standard for one commercial operator, is a second commercial operator entitled to a waiver of a different minimum standard? A. No. The FAA has found that, while the Sponsor might be required to waive the same specific minimum standard, the waiver of a different standard could be grounds for a finding of unjust discrimination. Q. Can a Sponsor adopt minimum standards requiring an operator of commercial self-service fuel pumps to also provide other aeronautical services?

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.8, Grant Assurance 22.h 32 A. Yes. The FAA does not consider commercial self-service fuel pumps to be a SASO entitled to operate on a stand-alone basis under Grant Assurance 22. Examples of Practices Found in Compliance 1. The FAA determined that a Sponsor could include in its minimum standards a building height restriction that is more stringent (i.e., a lower maximum height than the FAA permitted maximum) without violating Grant Assurance 22.h. Desert Wings Jet Ctr., LLC v. City of Redmond—No. 16- 09-07.—No. FAA-2009-1102. FAA-2009-1102-0019. 2010 FAA LEXIS 298. 2010 WL 4723466. Directors Determination (November 10, 2010). LRD 21 Determination No. 223. Affirmed by Final Agency Decision of May 25, 2012. LRD 21 Determination No. 236. 2. The FAA determined that, once a Sponsor had conditionally approved a proposal for commercial aeronautical services, it had no obligations to continue negotiations with the proposed commercial operator, as long as the conditions were reasonable, and the Sponsor did not act to prevent the proposer from meeting them. Rather, it was the responsibility of the proposed operator to meet those conditions. Johnson v. Goldsboro-Wayne Airport Auth.—No. 16-08-11.—No. FAA-2009-0744. Director’s Determination (October 9, 2009). LRD 21 Determination No. 210. 3. The FAA determined that a Sponsor’s failure to adopt minimum standards did not violate Grant Assurance 22.h, but the FAA noted that adoption of minimum standards was encouraged. Goodrich Pilot Training Ctr., LLC v. Village of Endicott, N.Y.—No. 16-08-03.—No. FAA-2008-1024. Director’s Determination (April 3, 2009). LRD 21 Determination No. 201 4. The FAA found no violation of Grant Assurance 22 when a Sponsor had waived minimum standards for one FBO, but not for a second, when the second FBO had not first asked the Sponsor for a waiver, before filing a complaint. Northern Air, Inc. and KEM Aviation LLC v. Kent County, MI Gerald R Ford Int’l Airport Board—No. 16-11-10. Director’s Determination (March 28, 2013). Examples of Practices Found in Non-Compliance 1. The FAA determined that a minimum insurance requirement imposed on a skydiving operator proposing an on-airport drop-zone, when such insurance was not available in the market, was an unreasonable requirement that violated Grant Assurance 22.h. Skydive Sacramento v. City of Lincoln, Cal.—No. 16-09-09.—No. FAA-2009-1122. FAA-2009-1122-0015. Director’s Determination (May 4, 2011). LRD 21 Determination No. 228. 2. The FAA determined that a Sponsor’s requirement for an aircraft rental service, based at another airport and providing only pick-up and drop-off services at the Sponsor’s airport, to meet all minimum standards applicable to a based aircraft rental service was unreasonable, and in violation of Grant Assurance 22.f. Leonard v. Chesapeake Airport Auth.—No. 16-01-06.—No. FAA-2003- 15995. FAA-2003-15995-0002. 2002 FAA LEXIS 590. 2002 WL 31731054. Director’s Determination (October 22, 2002). LRD 21 Determination No. 106. 3. In that same case, the FAA also determined that a Sponsor could not impose minimum standards, based on its belief that the commercial operator would expand its operations in the future. Rather, the

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.8, Grant Assurance 22.h 33 minimum standards must be appropriate to the commercial operator’s current proposal, with additional standards imposed when and if the commercial operator proposed to expand services. 4. The FAA found that a Sponsor’s selective enforcement of a prohibition on non-aeronautical storage in aircraft hangars (enforcing against some tenants, while permitting non-aeronautical storage by others) was unjustly discriminatory and in violation of Grant Assurance 22. Valley Aviation Servs., LLP v. City of Glendale, Ariz.—No. 16-09-06.—No. FAA- 2009-1020. Director’s Determination (May 24, 2011). LRD 21 Determination 229.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.9, Grant Assurance 22.i 34 1.1.9 Grant Assurance 22.i, Access Restrictions for Safe Operation/Civil Aviation Needs This clause permits the Sponsor to prohibit specific aeronautical activities on the airport, if necessary for the safe operation of the airport, or to serve civil aviation needs. On-airport skydiving drop-zones and banner-towing operations are typical of the activities that a Sponsor may seek to prohibit. Prohibitions on these activities also frequently generate complaints to the FAA about unreasonable denial of access. An aircraft weight restriction, based on the load-bearing capacity of airfield pavement, might also be permitted under this clause, if justified. In the case of dispute, the FAA, not the Sponsor, makes the final determination on whether the requirement is required for safety or civil aviation needs. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used, for violation of this assurance. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Follow any FAA determination on whether a particular prohibition or restriction is required for safety or civil aviation needs in the event of a dispute.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.9, Grant Assurance 22.i 35 What May the Sponsor Do? Prohibit a particular aeronautical activity, if justified for safety or civil aviation needs, subject to any determination by the FAA. If the FAA determines that an activity can be accommodated, subject to certain restrictions, the Sponsor must allow the activity, subject to those restrictions. Restrict a particular activity to a particular part of the airport, time of day, or otherwise, if necessary for safety or civil aviation needs, subject to any determination by the FAA. Prohibit through-the-fence (TTF) taxiing of aircraft onto the airfield because the FAA does not consider this TTF activity to be protected by the Grant Assurances. What Sponsor Actions Are Prohibited? Applying an access prohibition on an inconsistent basis, absent a legitimate reason (i.e., permitting a specific operation or activity by some users, but not by others). Prohibiting a particular activity after the FAA has determined that it can be accommodated safely and without compromising civil aviation needs. What Are the Exceptions to the Requirements/Prohibitions? There is no inherent requirement in Grant Assurance 22.i to prohibit or restrict any aeronautical activity; however, failure to do so in the case of an activity that poses a genuine safety risk, or that prevents the airport from meeting civil aviation needs of the public, could result in a violation of other assurances, e.g., Grant Assurance 5, Preserving Rights and Powers, or Grant Assurance 19, Operations and Maintenance. Supplementary Information Recommended Practices  Documentation of safety issues, or other concerns regarding civil aviation needs, raised by the prohibited activity is essential to showing that a prohibition is justified in the event of a dispute.  Obtaining an FAA safety determination before implementing a prohibition may reduce the risk of a protracted dispute or successful challenge to the prohibition.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.9, Grant Assurance 22.i 36 Related Grant Assurances  Remaining clauses of Grant Assurance 22  Grant Assurance 5, Preserving Rights and Powers  Grant Assurance 19, Operations and Maintenance  Grant Assurance 23, Exclusive Rights Common Questions Q. Does a Sponsor need an FAA determination before adopting a prohibition for safety or civil aviation needs? A. No. There is no requirement to get an FAA determination in advance, but doing so may avoid, or at least reduce, the time and effort needed to resolve complaints or disputes. Q. If a proponent’s preferred location for an aeronautical activity is unsafe, can the Sponsor prohibit the activity altogether? A. Not necessarily. If there are other locations at the airport where the activity can be accommodated safely, and the activity would be consistent with the Sponsor’s overall development plans for the airport, the Sponsor must offer to permit the activity at the alternative location; however, the proponent has no right to conduct the activity at the unsafe location. Q. Can a Sponsor adopt weight limitations for aircraft operations? A. Yes. The Sponsor may impose weight-based restrictions, based on the design load-bearing capacity of the airport pavements; however, the restrictions should allow for occasional operations by aircraft above the weight limit that do not result in excessive wear or deterioration. The FAA recommends close coordination with the FAA before adopting any weight-based restriction. Q. What are the requirements for a restriction based on aircraft noise? A. The following restrictions, requirements and limitations apply:  The noise restriction must be reasonable, and not unjustly discriminatory; for example, a restriction based on an aircraft’s status as a Stage 2, instead of a Stage 3, aircraft, rather than a restriction based on a noise-level threshold, was found to be unreasonable and unjustly discriminatory because some Stage 3 aircraft generated more noise.  For a Stage 3 aircraft restriction not in effect on October 1, 1990, the restriction must be agreed to by all aircraft operators, or approved by the FAA, subject to limited exceptions specified in 49 USC §47524 for enforcement of agreements or restrictions in effect before November 5, 1990.  For a Stage 2 aircraft restriction proposed after October 1, 1990, the Sponsor must provide a 180- day public notice and comment procedure, subject to the limited exceptions noted above. FAA approval of a Stage 2 aircraft noise restriction is not required, but the FAA will review the restriction for compliance with the Grant Assurances and any applicable Surplus Property Act requirements.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.9, Grant Assurance 22.i 37 Examples of Practices Found in Compliance 1. The FAA agreed that a Sponsor could prohibit hang-gliding operations on active runways on safety grounds; however, it also found that a complete prohibition of the activity might not be justified and encouraged the parties to find another suitable location on the airport. Jones v. Lawrence Cnty. Comm'n—No. 16-11-07.—No. FAA-2011-0753. Director's Preliminary Determination (July 16, 2012). LRD 21 Determination No. 237. 2. The FAA found that a prohibition on aerial advertising was consistent with Grant Assurance 22.i, where multiple analyses showed that aerial advertising operations would pose safety problems at the airport. Florida Aerial Adver. v. St. Petersburg-Clearwater Int'l Airport—No. 16-03-01.—No. FAA-2003-15041. Director's Determination (December 18, 2003). LRD 21 Determination No. 119. Examples of Practices Found in Non-Compliance 1. The FAA determined that a prohibition on scheduled Part 135 operations, based on safety, while non- scheduled Part 135 were permitted, was unjustly discriminatory because the Sponsor had not demonstrated that the status, as scheduled versus non-scheduled, affected the safety of the operations. Express Airlines v. Arapahoe Cnty. Pub. Airport Auth. / Kehmeier v. Arapahoe Cnty. Pub. Airport Auth. / Centennial Express Airlines v. Arapahoe Cnty. Pub. Airport Auth. / FAA v. Arapahoe Cnty. Pub. Airport Auth.—No. 16-98-05, 13-94-25, 13-95-03. Director’s Determination (August 21, 1998). LRD 21 Determination No. 42. Affirmed by Final Agency Decision of February 18, 1999. LRD 21 Determination No. 46. Affirmed sub nom. Arapahoe County Pub. Airport Auth. v. FAA, 242 F.3d 1213 (10th Cir. 2001), cert. denied, 534 U.S. 1064 (2001). 2. The FAA determined that a Sponsor’s denial of a permit for an on-airport skydiving drop-zone violated Grant Assurance 22.i, when the FAA had determined that an on-airport drop-zone could be operated safely. Bodin v. City of Santa Clara, Cal.—No. 16-11-06.—No. FAA-2011-0699. FAA- 2011-0699-0019. Director’s Determination (December 19, 2011). LRD 21 Determination No. 233. Affirmed in part, reversed in part, Final Agency Decision and Order of August 12, 2013. 3. The FAA determined that a Sponsor was obligated to let a new skydive operator use an existing on- airport drop-zone, previously determined by the FAA to be safe, while the Sponsor was considering relocating the drop-zone. The FAA acknowledged the Sponsor’s right to consider a new location, but held that the Sponsor’s deliberations did not justify a denial of access to the existing drop-zone. Skydive Paris Inc. v. Henry Cnty., Tenn.—No. 16-05-06.—No. FAA-2005-22369. FAA-2005- 22369-0013. 2006 WL 247124. Director’s Determination (January 20, 2006). LRD 21 Determination No. 150. 4. The FAA determined that a Sponsor’s prohibition on a particular Stage 2 aircraft (the retrofitted Q 707), on the basis of noise, was unjustly discriminatory, and not permitted under Grant Assurance 22.i because the Sponsor permitted other, equally noisy or noisier aircraft to operate. City and County of San Francisco v. FAA—942 F. 2d 1391 (1991), affirming FAA decision in FAA Docket 13-86-2 (December 12, 1988) (available in LRD 13, An Index and Digest of Decisions, Compilation of Airport Law Resources).

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.10, Grant Assurance 23 38 1.1.10 Grant Assurance 23, Exclusive Rights This Assurance prohibits the Sponsor from granting an exclusive right to provide aeronautical services to the public. It also prohibits the Sponsor from granting an exclusive right to conduct any aeronautical activity. The prohibition is based not only on the AIP statute, but on a provision of the Federal Aviation Act that prohibits granting an exclusive right at an airport where federal funds have been spent. Because of this statutory prohibition, this Assurance lasts indefinitely, i.e., as long as the airport is operating. A Sponsor may give a prohibited exclusive right directly or explicitly, through a lease or other agreement, or the refusal of access. The Sponsor may also give the exclusive right indirectly or constructively, through provisions in leases granting rights of first refusal, or through actions that violate Grant Assurance 22, Economic Nondiscrimination. In the past, the FAA has found a constructive grant of a prohibited exclusive right whenever a Sponsor violated Grant Assurance 22, without regard to the number of entities conducting the same aeronautical activities, or providing the same services. Under current policy, the FAA will consider the presence of other entities at the airport, engaged in the same activities, before finding that a violation of Grant Assurance 22 is also a constructive violation of Grant Assurance 23. The Grant Assurance includes an exception that permits a single FBO if both of the conditions below are met:  It would be unreasonably costly, burdensome, or impractical for more than one FBO to provide such services; and  If allowing more than one FBO would require the reduction of space currently leased by the incumbent FBO. In other words, even if it would be impractical for two FBOs to operate at the airport, if the Sponsor has vacant space that could accommodate a second FBO, it cannot rely on this exception to deny access to the second FBO. Moreover, the FAA will not necessarily accept the Sponsor’s belief that the airport cannot support a second FBO, but will evaluate the issue independently. In addition, the FAA interprets Grant Assurance 23 to permit a Sponsor to offer commercial aeronautical services, with its own employees and equipment, on an exclusive basis. This right is referred to as the proprietary exclusive right. The use of the Sponsor’s own employees and equipment is critical to this exception. The Sponsor cannot rely on an agency relationship, or contract the services to a third- party, and claim the proprietary exclusive right. Also, a Sponsor cannot rely on the proprietary exclusive right to deny an aircraft owner or operator the right to self-service and self-fuel its aircraft under Grant Assurance 22.d. or 22.f.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.10, Grant Assurance 23 39 Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Indefinite or perpetual1 Withholding of grants2 1 For as long as the airport is operating as an airport. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used, for violation of this assurance. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Permit qualified commercial aeronautical service providers to operate at the airport when space is available, and they meet any applicable Sponsor requirements for operation. Avoid imposing conditions or restrictions that effectively grant an exclusive right to conduct any aeronautical activity. What May the Sponsor Do? Provide commercial aeronautical services directly, with its own employees and equipment, under the proprietary exclusive right, and deny the right to operate to would-be competitors. The exercise of this proprietary exclusive right is subject to the requirement in Grant Assurance 22.d and 22.f to permit air carriers and other aircraft owners/operators to self- service and self-fuel their aircraft. Limit services to a single FBO if it would be impractical, unreasonable or unduly burdensome to permit more than one FBO to operate, and doing so would require a reduction in space currently leased by the single FBO. If the Sponsor’s goal is to promote competition at the airport, it may limit solicitation for new services or new aeronautical leases to new entrants. When presented with an unsolicited proposal to introduce competitive aeronautical services, the Sponsor may choose between negotiating with the proposer, or using a competitive selection process.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.10, Grant Assurance 23 40 What Sponsor Actions Are Prohibited? Providing explicit, contractual, exclusive rights. Granting a right of first refusal, or similar right that would allow an incumbent to protect itself from competition. Using unreasonable rules, minimum standards, actions, processes or procedures to prevent a new entrant from coming onto the airport. Granting third-party exclusive rights to provide aeronautical services as an “agent” of the Sponsor, under the proprietary exclusive rights exception. What Are the Exceptions to the Requirements/Prohibitions? A Sponsor may choose to exercise its proprietary right to offer commercial aeronautical services directly to the public, with its own employees and its own equipment, and exclude competing commercial operators. Supplementary Information Recommended Practices  If a Sponsor wants to use a solicitation to establish competition at its airport, this purpose should be clearly stated in the solicitation document.  Sponsors should avoid granting rights of first refusal, or other rights that would enable an incumbent to hinder competition from a new entrant. Related Grant Assurances Grant Assurance 22, clauses d, f, g, h, i. Common Questions Q. Our airport never accepted an FAA grant, but it does have a federally funded navigational aid. Does the exclusive rights prohibition apply? A. Yes. There is a separate statutory prohibition on exclusive-rights that applies to facilities on which federal funds have been spent. An airport with federally funded navigational aids qualifies as such a facility, but it is subject only to the exclusive-rights prohibition, and not any other requirements of the Grant Assurances. Dart v. City of Corona, Cal.—No. 16-99-20. 2000 FAA LEXIS 703. 2000 WL 1092312. Director’s Determination (June 26, 2000). LRD 21 Determination No. 66. Q. Does a Sponsor grant an exclusive right if the terms in its lease to an FBO grants a right to exclude a competitor offering the same services?

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.10, Grant Assurance 23 41 A. Yes. The FAA held that such a lease term probably resulted in a prohibited exclusive right. Hilton v. City of Arcadia, Fla.—No. 13-93-22. Preliminary Findings and Analysis (November 29, 1995). LRD 21 Determination No. 19. Q. There is a single FBO at our airport. Has the Sponsor granted an exclusive right? A. Not necessarily. In addition to the specific Grant Assurance language defining when a single FBO is not treated as a prohibited exclusive right, the FAA has determined that there was no grant of an exclusive right, due to the presence of a single aeronautical enterprise, where there was no evidence of agreement or intent to exclude other reasonably qualified enterprises. Lytton v. Sheridan Cnty. Bd. of Cnty. Comm'rs—No. 16-01-16.—No. FAA-2003-15835. FAA-2003-15835-0004. 2002 FAA LEXIS 686. 2002 WL 32002471. Director’s Determination (December 20, 2002). LRD 21 Determination No. 107. Q. Our airport granted an exclusive right in a lease. If the lease is amended to eliminate the exclusive right, will the FAA find a violation? A. No. If the Sponsor takes voluntary corrective action, after notification of the violation, the FAA will consider the Sponsor to be in current compliance. Current compliance is the standard FAA applies. Carey v. Afton-Lincoln Cnty. Mun. Airport Joint Powers Bd.—No. 16-06-06.—No. FAA-2006- 25154. FAA-2006-25154-0011. 2007 FAA LEXIS 40. 2007 WL 430630. Director’s Determination (January 19, 2007). LRD 21 Determination No. 168. Affirmed by Order Dismissing Appeal of November 14, 2007. LRD 21 Determination No. 184. Q. Our airport’s passenger terminal is fully leased. Is it a violation of Grant Assurance 23 to deny access, based only on lack of available facilities? A. Yes, as specified in paragraph 9.8(a) of Order 5190.6B. Examples of Practices Found in Compliance 1. The FAA held that a Sponsor can prohibit the tenant of a private hangar from conducting any commercial business from the hangar, without prior permission, without violating Grant Assurance 23 because that prohibition would be consistent with the Sponsor’s obligation under Grant Assurance 5, Preserving Rights and Powers, to enforce adequate rules, regulations, or ordinances as are necessary to ensure safe and efficient operation. Lytton v. Sheridan Cnty. Bd. of Cnty. Comm'rs— No. 16-01-16.—No. FAA-2003-15835. FAA-2003-15835-0004. 2002 FAA LEXIS 686. 2002 WL 32002471. Director’s Determination (December 20, 2002). LRD 21 Determination No. 107. 2. The FAA determined that a Sponsor can restrict the aeronautical services that can be offered by a tenant seeking to operate as a SASO without granting a prohibited exclusive right. Lytton v. Sheridan Cnty. Bd. of Cnty. Comm'rs—No. 16-01-16.—No. FAA-2003-15835. FAA-2003-15835-0004. 2002 FAA LEXIS 686. 2002 WL 32002471. Director’s Determination (December 20, 2002). LRD 21 Determination No. 107. 3. The FAA held that a Sponsor did not grant a prohibited exclusive right to the airport’s only fuel retailer when it required another tenant to remove its fuel storage tanks based on legitimate safety and environmental issues. In this case, the complaining tenant had not regularly engaged in retail fuel sales, and the tenant was not prevented from self-fueling its own aircraft. Ervin v. Northumberland

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.10, Grant Assurance 23 42 Cnty. Airport Auth.—No. 13-82-03. Record of Decision (October 17, 1994). LRD Determination No. 8. 4. The FAA has held that a prohibition on driving a car onto an aircraft parking apron to reach one’s aircraft does not grant a prohibited exclusive right, in violation of Grant Assurance 23, because the ability to drive one’s car onto an aircraft apron is not required for the operation of the aircraft. Lehigh Valley Flying Club v. Lehigh-Northampton Airport Auth.—No. 13-90-09. Record of Decision (February 5, 1992). LRD 21 Determination No. 3. 5. The FAA determined that a Sponsor could deny access to aerial advertising operations, based on safety, without violating Grant Assurance 23, when numerous FAA analyses identified safety problems with aerial advertising operations at the airport. Florida Aerial Adver. v. St. Petersburg- Clearwater Int'l Airport—No. 16-03-01.—No. FAA-2003-15041. FAA-2003-15041-0013. Director’s Determination (December 18, 2003). LRD 21 Determination No. 119. 6. While the FAA considers a right of first refusal to violate grant assurance obligations, the FAA found no violation of Grant Assurance 23 where a Sponsor granted a right of first refusal that covered a single parcel, and other parcels were available for development or redevelopment. Pac. Coast Flyers, Inc. v. Cnty. of S.D., Cal.—No. 16-04-08.—No. FAA-2005-20675. FAA-2005-20675-0021. 2005 FAA LEXIS 514. 2005 WL 1900515. Director’s Determination (July 25, 2005). LRD 21 Determination 143. Corrected by Errata LRD 21 Determination 143.1. 7. The FAA found no violation of the requirement that a Sponsor use its own employees and equipment to claim a proprietary exclusive right, when the use of non-employees had been inadvertent and occasional, and the Sponsor committed that it would use only employees in the future. Nat'l Airlift Support Corp. v. Fremont Cnty. Bd. of Comm'rs—No. 16-98-18. 1999 FAA LEXIS 802. 1999 WL 500029. Director’s Determination (May 3, 2009). LRD 21 Determination No. 49. Affirmed by Final Decision and Order of September 20, 1999. LRD 21 Determination No. 54. Examples of Practices Found in Non-Compliance 1. The FAA found that a Sponsor had granted a prohibited exclusive right to the FBO to conduct aircraft fueling by refusing permission to an aircraft owner to self-fuel, even though the Sponsor had not adopted any express prohibition on self-fueling. Cedarhurst Air Charter, Inc. v. Cnty. of Waukesha, Wis.—No. 16-99-14. 2000 FAA LEXIS 751. 2000 WL 1130495. Director’s Determination (April 1, 2000). LRD 21 Determination No. 61. 2. The FAA found that a ban on scheduled Part 135 operations that was not justified on safety, efficiency or environmental grounds granted an exclusive right to operate to non-scheduled Part 135 operations, in violation of Grant Assurance 23. Centennial Express Airlines v. Arapahoe Cnty. Pub. Airport Auth. / Kehmeier v. Arapahoe Cnty. Pub. Airport Auth. / Centennial Express Airlines v. Arapahoe Cnty. Pub. Airport Auth. / FAA v. Arapahoe Cnty. Pub. Airport Auth.—No. 16-98-05, 13-94-25, 13-95-03. Director’s Determination (August 21, 1998). LRD 21 Determination No. 42. Affirmed by Final Agency Decision of February 18, 1999. LRD 21 Determination No. 46. Affirmed sub nom. Arapahoe County Pub. Airport Auth. v. FAA, 242 F.3d 1213 (10th Cir. 2001), cert. denied, 534 U.S. 1064 (2001).

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.10, Grant Assurance 23 43 3. The FAA found that a Sponsor had granted a prohibited exclusive right to a flying club when the Sponsor allowed the flying club to operate without complying with full FBO minimum standards, and the flying club did not meet the FAA’s criteria for special treatment. In this case, the club leased aircraft from owners on an hourly basis, rather than owning the aircraft outright or relying on exclusive long-term aircraft leases. GFK Flight Support, Inc. v. Grand Forks Reg'l Airport Auth.— No. 16-01-05.—No. FAA-2002-13843. FAA-2002-13843-0002. Director’s Determination (March 22, 2002). LRD 21 Determination No. 98.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.11, Grant Assurance 36 44 1.1.11 Grant Assurance 36, Access by Intercity Buses This Assurance requires the Sponsor to provide airport access for intercity buses, and other modes of transportation. There is no requirement to construct facilities, or to provide access, without charge. In fact, the Sponsor must comply with Grant Assurance 24, Fee and Rental Structure, when providing access under this Grant Assurance. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used, for violation of this assurance. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Provide a location on the airport for intercity buses to pick up and drop off passengers, to the maximum extent practicable. What May the Sponsor Do? Require the intercity bus operator to pay for, or construct, any facilities that it uses, including shelters and signage. Charge an access fee to intercity bus operators to help defray the costs of operating at the airport, and the cost of any facilities built by the Sponsor to serve the intercity bus operators. Designate the location where intercity buses may pick up and drop off, based on considerations of vehicle traffic management, passenger convenience, or other factors typically considered in locating access points for ground transportation service providers.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.11, Grant Assurance 36 45 What Sponsor Actions Are Prohibited? Refusing access to intercity bus operators, when it would be practicable to provide it. What Are the Exceptions to the Requirements/Prohibitions? The obligation applies only to the extent that it is practicable to provide access. The Sponsor is not required to fund any special facilities needed to accommodate intercity buses. Supplementary Information Recommended Practices  Designate a pick-up/drop-off location for intercity buses, using criteria comparable to those used in identifying pick-up/drop-off locations for other ground transportation providers operating multi-passenger vehicles.  Develop and charge an access fee to recover a share of the cost of operating the airport, and recover the cost of any Sponsor-provided facilities. Related Grant Assurances None for this Grant Assurance. Common Questions Q. Does the Sponsor have to construct any special facilities to accommodate intercity buses? A. No. The text of the Grant Assurance specifically says this is not required. Q. Is a Sponsor required to impose an access fee? A. Grant Assurance 36 does not itself require an access fee; however, failure to charge a fee could violate Grant Assurance 24, especially if the Sponsor has constructed facilities to accommodate intercity buses. Examples of Practices Found in Compliance No examples of FAA determinations of compliance with Grant Assurance 36 were identified during the research.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.11, Grant Assurance 36 46 Examples of Practices Found in Non-Compliance No examples of FAA determinations of non-compliance with Grant Assurance 36 were identified during the research.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.12, Grant Assurance 38 47 1.1.12 Grant Assurance 38, Hangar Construction Under this Assurance, if a Sponsor decides to permit an aircraft owner to construct a hangar on airport property, the Sponsor must grant a long-term lease. The lease may be subject to terms and conditions that the Sponsor chooses to impose (provided, of course, that the terms and conditions comply with the remaining Grant Assurances). Grant Assurance 38 does not itself create a requirement to permit hangar construction, but any request by the aircraft owner would be subject to Grant Assurance 22, Economic Nondiscrimination. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used, for violation of this assurance. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Provide a long-term lease, once it decides to permit an aircraft owner/operator to build a hangar on airport property. What May the Sponsor Do? Choose the location and specify reasonable terms and conditions, including construction standards, subject to the requirements of Grant Assurance 22, Economic Nondiscrimination. Charge a reasonable ground rent for the site of the hangar. Under Grant Assurance 38, there is no requirement to permit construction of the hangar, but a refusal could be reviewable by the FAA under Grant Assurance 22.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.12, Grant Assurance 38 48 What Sponsor Actions Are Prohibited? Refusing to offer a long-term lease, once it has decided to permit a hangar to be constructed. What Are the Exceptions to the Requirements/Prohibitions? There are no exceptions. However, Grant Assurance 38 does not itself create an obligation to permit hangar construction. Supplementary Information Recommended Practices  Establish a clear policy on the requirements or standards the Sponsor will apply in considering requests to construct hangars, including criteria for determining appropriate lease length (term). Related Grant Assurances  Grant Assurance 22, Economic Nondiscrimination Common Questions Q. What is the minimum lease term required by Grant Assurance 38? A. There is no strict numerical minimum; however, the lease must be long enough to allow the aircraft owner/operator to amortize the construction costs of the hangar over a reasonable period of time. Q. Our airport has refused permission to construct a hangar. Has the Sponsor violated Grant Assurance 38? A. No. Grant Assurance 38 does not itself require the Sponsor to agree to construction of a hangar. That decision is governed by Grant Assurance 22, Economic Nondiscrimination. The FAA has held that, where suitable hangar space is available for lease on the airport, the Sponsor has no obligation to permit construction of a new hangar. Where hangar space is not available for lease, the Sponsor is required by Grant Assurance 22 to provide a suitable location for construction of the hangar, to the extent that space is available on the airport. Q. Does Grant Assurance 38 require a Sponsor to construct a hangar at its own expense, and lease it to the aircraft owner/operator? A. No. The Assurance specifically applies in a case where the hangar is to be constructed at the aircraft owner’s expense. All that is required is for the Sponsor to give a long-term ground lease.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.1.12, Grant Assurance 38 49 Q. My airport included a lease provision transferring title of the hangar to the airport at the expiration of the lease. Is this permitted under Grant Assurance 38? A. Grant Assurance 38 does not specifically address this issue; however, it is typical for ground leases to provide for reversion of title to facilities to a Sponsor upon expiration of the lease. The FAA considers this arrangement to be reasonable, if the lease is long enough to permit a reasonable amortization of the cost of the facilities. Examples of Practices Found in Compliance 1. The FAA determined that a Sponsor’s refusal to negotiate with a party desiring to construct a hangar at its own expense did not violate Grant Assurance 38 because the Assurance does not establish a right to construct a hangar. Rather, it addresses an individual aircraft owner’s ability to secure a lease that is long enough to allow the amortization of the construction costs. In this case, the FAA also did not find the refusal to negotiate to be a violation of Grant Assurance 22, Economic Nondiscrimination. Jim DeVries et al. v. St. Clair, MO—No. 16-12-07. Director’s Determination (May 24, 2014). 2. The FAA found no denial of a long-term lease in violation of Grant Assurance 38, where a Sponsor declined an FBO complainant’s initial request for a long-term ground lease, but ultimately selected the complainant to provide FBO services, and executed a long-term lease after completion of an RFP process. Platinum Aviation v. Bloomington-Normal Airport Auth.—No. 16-06-09.—No. FAA- 2006-25202. FAA-2006-25202-0021. Director’s Determination (June 4, 2007). LRD 21 Determination No. 176. Affirmed by Final Decision and Order of November 28, 2007. LRD 21 Determination 185. Examples of Practices Found in Non-Compliance No examples of FAA determinations of non-compliance with Grant Assurance 38 were identified during the research.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.1, Grant Assurance 24 50 1.1.13 Grant Assurance 39, Competitive Access Grant Assurance 39 applies only to medium and large hub airports (airports with at least 0.25% of annual passenger boarding or enplanements). If a medium or large hub airport has been unable to grant a request of any air carrier for access to gates or other facilities, Grant Assurance 39 requires the Sponsor to submit a report to the FAA. The report must include the following: 1. A description of the request; 2. An explanation of why the request could not be accommodated; and 3. A projected timeline for accommodating the request. The report must be filed each August 1 and February 1, until the carrier is accommodated. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used, for violation of this assurance. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Submit the report with the required information, after the initial failure to accommodate an air carrier, and continue to file periodic reports (due every February and August) until the air carrier is accommodated. This Grant Assurance itself does not require accommodation. It is a simple reporting requirement. Grant Assurance 22, Economic Nondiscrimination addresses accommodation itself. What May the Sponsor Do? Offer accommodation through a lease of gates, if vacant gates are available, through access to common-use gates, or through facilitating subleasing or gate sharing arrangements. Charge reasonable fees, and apply the same rules, regulations, terms, or conditions as it does to other similarly situated air carriers.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.1, Grant Assurance 24 51 What Sponsor Actions Are Prohibited? Failing to file required reports after an air carrier has not been accommodated. What Are the Exceptions to the Requirements/Prohibitions? The requirement does not apply to airports other than medium and large hub airports. Supplementary Information Recommended Practices  Successful good faith efforts to accommodate an air carrier will avoid the requirement to provide a report.  Document all contacts, exchanges, proposals and negotiations with a carrier requesting accommodation.  Establish, publish and consistently apply clear standards to be met by air carriers seeking to operate at the airport. Related Grant Assurances  Grant Assurance 22.a, Economic Nondiscrimination  Grant Assurance 22.e, Air Carrier Rules, Regulations, Conditions and Rates Common Questions Q. Our airport has gates available for lease and offered the standard use and lease agreement (with standard user fees) to an air carrier seeking to start services. The air carrier said the lease terms and user fees were too onerous and declined to execute the lease. Is a report required under Grant Assurance 39? A. In this case, the Sponsor was ready and willing to accommodate the air carrier under its standard terms and conditions and rates. The air carrier’s refusal to execute the lease and use agreement does not mean that the Sponsor was unable to accommodate the air carrier. Therefore, no report would be filed. Q. Our airport does not have any gates available for lease. An air carrier has proposed to start service with five flights a day. The airport has been able to find a way to accommodate only four of those flights at times acceptable to the air carrier, through common-use gates or gate-sharing. Is a report required under Grant Assurance 39?

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.1, Grant Assurance 24 52 A. Yes. While the air carrier may not be entitled to precise, to-the-minute flight schedules, or the arrangements it desires, if the Sponsor cannot accommodate all of the proposed flights on a schedule reasonably close to the air carrier’s preferences, the situation would likely trigger the reporting requirement. Q. Our airport has terminated a hangar and apron lease with an air carrier, but the carrier still has access to the terminal. Is a report required under Grant Assurance 39? A. No. The FAA has determined that, as long as an air carrier has access to the terminal areas, baggage facilities and gates necessary to provide passenger services, that carrier has been accommodated, and the reporting requirement is not triggered. Tropical Aviation Ground Services, Inc. and Air Sunshine v. Broward County, FL—No. 16-12-15. Director’s Determination (04-27-2015). Examples of Practices Found in Compliance 1. The FAA held that Grant Assurance 39 does not apply if the airport has not denied access to terminal areas or otherwise prevented access to those terminal areas, gate and baggage facilities. The FAA further held that an air carrier does not require a land lease and hangar space to serve the airport, and that Assurance 39 is not triggered every time lease negotiations fail to meet all expectations of a tenant or prospective tenant. Therefore, the FAA found no requirement to submit a report when a Sponsor terminated a ramp and hangar lease for cause. Tropical Aviation Ground Services, Inc. and Air Sunshine v. Broward County, FL—No. 16-12-15. Director’s Determination (04-27-2015). Examples of Practices Found in Non-Compliance No examples of FAA determinations of non-compliance with Grant Assurance 39 were identified during the research. Section 1.2 Finance and Revenue 1.2.1 Grant Assurance 24, Fee and Rental Structure This Assurance obligates a Sponsor to maintain a fee and rental structure that will make the airport as self-sustaining as possible in the circumstances at that airport. The Assurance also prohibits including the federal share of any project funded with AIP grants in the airport’s rate base. This Assurance is additionally subject to the requirement in Grant Assurance 22 that aeronautical fees are reasonable and not unjustly discriminatory. The summary pages for Grant Assurance 22 should also be consulted, especially for issues of unjust discrimination. The Grant Assurance requirements relating to fees are among the most detailed and complex of the Assurances. The FAA and U.S.DOT have issued extensive guidance on reasonable aeronautical fees and the self-sustaining requirement. The basic guidance document is the U.S.DOT and FAA Policy Regarding Airport Rates and Charges, 61 FR 31994 (June 21, 1996) (Rates and Charges Policy). The Rates and Charges Policy has been modified by judicial action and an amendment published in 2008. Individual

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.1, Grant Assurance 24 53 administrative determinations and court decisions have provided further interpretation. Additional guidance documents have been published over the years and are briefly summarized below. The source documents listed in Appendix C, Resources and References for Grant Assurance 24 should be consulted for a complete understanding of the requirements for airport fees. Basic requirements and exceptions are spelled out in the call-out boxes below. The Q & A section of this summary provides more detailed information. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1,2 Withholding of grants3 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2. The requirement to charge FMV for non-aeronautical use, described below, also implicates Grant Assurance 25, Airport Revenues if the non-aeronautical user is the Sponsor or another agency of the Sponsor. In these circumstances, based on the duration of Grant Assurance 25, the obligation is indefinite. 3 Withholding of grants is typically successfully employed to achieve compliance. Civil enforcement action is generally available, but is rarely used for violation of this assurance. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Absent agreement with users, use historic costs to set charges for the use of runways, taxiways and public-use aprons. Set fees for non-aeronautical use based on fair market value (FMV). Charge like fees to similarly situated users. Absent agreement with users, follow the guidance in the Rates and Charges Policy in establishing aeronautical fees, particularly fees for the airfield. In a rates and charges dispute under 49 USC §47129, obtain a letter of credit or other credit facility covering the amount in dispute.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.1, Grant Assurance 24 54 What May the Sponsor Do? Negotiate with users for alternate fee arrangements that adhere to the Rates and Charges Policy. The FAA considers fees reached by agreement to be inherently reasonable unless they unjustly discriminate against users who are not party to the agreement. For aeronautical uses other than the airfield itself, charge up to FMV, so long as the charge recovers the users’ fair share of the costs of the airport facilities and services and does not unjustly discriminate against other users. Select the charging basis (landing fees, terminal rents, ground rents, fuel flowage fees, etc.) for particular users or uses that will achieve economy of collection. For example, fuel flowage fees are often used as the basis for charging transient general aviation users. Set fees by ordinance or regulation, after engaging in meaningful consultation with users. The Rates and Charges Policy includes guidance on FAA criteria for meaningful consultation. What Sponsor Actions Are Prohibited? Including the cost of AIP- or PFC-financed facilities in the rate base used to establish charges. There is an exception for PFC-financed terminal facilities when excluding the PFC- funded costs would give the users of the PFC-financed facilities a competitive advantage over the users of comparable non-PFC financed facilities. Charging less than FMV for non-aeronautical use, subject to the exceptions below. Absent agreement with the users, using FMV accounting to establish charges for the use of the airfield.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.1, Grant Assurance 24 55 What Are the Exceptions to the Requirements/Prohibitions? The Sponsor of a low-activity airport may charge fees that are less than needed to fully recover the costs of the airport, if break-even fees would not be affordable for commercial aeronautical service providers and other tenants given the low level of activity. In this situation, however, the FAA encourages Sponsors to develop a long-term plan to enhance revenue. A Sponsor may charge nominal or reduced rates for certain uses, described more fully in the Common Questions section and the FAA Policy and Procedures Concerning the Use of Airport Revenue, 64 FR 7696 (February 16, 1999) (Airport Revenue Policy). A Sponsor must permit federal government aircraft to use the airfield at no charge unless the operations represent substantial use. This requirement is discussed more fully in the summary for Grant Assurance 27. This obligation only applies to aircraft operations, not the leasing of airport property by government agencies. A Sponsor of a “congested airport,” as defined by the FAA, may impose specified charges during periods of congestion that would otherwise conflict with the Rates and Charges Policy. Additional information is provided in the Common Questions section. A Sponsor may offer fee waivers or discounts on a temporary basis as part of an air service incentive program to encourage new or expanded air service. Requirements and limitations are discussed in Section 1.2.2, Air Service Incentive Programs, below. Supplementary Information Recommended Practices  Use a fully transparent method when establishing rates and charges, either in negotiations for agreement or consultation for fees set unilaterally, and provide users with all data relied on to establish the amounts of the rates and charges.  In long-term lease agreements, include escalation clauses to assure that the lease payments will cover increased costs due to inflation over the life of the lease and to reduce the potential for disputes with users about rates in subsequent new leases.  Establish, publish and consistently apply clear standards to be met by air carriers seeking to operate at the airport.  If it is likely that a unilaterally imposed fee will trigger an expedited review under 49 USC §47129, begin compiling the documentation required for the Sponsor’s submissions and consider retaining outside expertise to assist in presenting the Sponsor’s case before the DOT.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.1, Grant Assurance 24 56 Related Grant Assurances  Grant Assurance 22, Economic Nondiscrimination, clauses a., c., e.  Grant Assurance 25, Airport Revenues  Grant Assurance 27, Use by Government Aircraft Common Questions Q. What is the status of fees set by agreement under Grant Assurance 22 and Grant Assurance 24? A. Fees set by agreement between the Sponsor and users are presumed to meet the standards of the Grant Assurances, unless a user who is not a party to the agreement complains of unreasonable or unjustly discriminatory treatment. While the FAA and U.S. DOT consider a mutual agreement to be the best means by which to establish fees and rental rates, there is no obligation for the Sponsor to reach agreement with aeronautical users. The Sponsor may impose fees unilaterally by ordinance or regulation. However, the FAA encourages timely and meaningful consultation with users before fees are imposed. The questions that follow address the standards the FAA and U.S. DOT apply in the absence of an agreement. Q. What basic charging approaches or models are permitted under the Rates and Charges Policy? A. There are three acceptable charging models available to an airport Sponsor—compensatory, residual and hybrid. In the compensatory model, air carriers are responsible only for the costs of services and facilities that they use. The Sponsor assumes all the risk, hoping that other cost centers in the airport will at least break even or generate positive net revenue. However, the Sponsor retains 100% of any positive net revenue from the other cost centers. In the residual model, the air carriers guarantee that the airport as a whole will break even. The airlines agree to make up for any losses generated in other airport cost centers, but they get the benefit of 100% of any positive net revenue from the other cost centers. A Sponsor cannot require air carriers to cover losses from other cost centers, except by agreement. Therefore, the residual model is not used when a Sponsor sets rates unilaterally, but some Sponsors provide for net revenue sharing through rate ordinances or regulations. The hybrid model refers to a variety of methodologies that allocate the risk and benefits from the performance of non-airline cost centers between the Sponsor and the air carriers. A Sponsor can implement a hybrid model that shares positive net revenues by ordinance, but it cannot impose an obligation on air carriers to subsidize even a portion of the net losses, except by agreement. Q. What cost basis must a Sponsor use in establishing charges for different facilities? A. The cost basis for different facilities varies, as set forth below. Also, certain uses/users may be charged reduced or nominal rates. These exceptions are addressed in a separate question. a. Airfield: The Sponsor must use historic cost accounting (HCA) to establish airfield fees, e.g., landing fees and aircraft parking apron fees. Requirements for the HCA rate base are discussed separately below.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.1, Grant Assurance 24 57 b. Other aeronautical facilities: The Sponsor may use any reasonable method to establish fees and rental rates for other aeronautical facilities. Fees can be set on an HCA cost recovery model or be based on fair market value. The FAA policy states that FMV can be determined by comparing fees negotiated for similar uses of the airport or by appraisal. In practice, however, the FAA requires any mandatory fee to be set at FMV to be supported by an appraisal. In addition, appraisals must be performed by qualified independent appraisers. c. Non-aeronautical facilities: A Sponsor must charge FMV for non-aeronautical facilities. Q. What are the requirements for HCA-based fees? A. The rate-base is the total of all costs that may be recovered when cost-based fees are imposed. Basic requirements for determining the rate-base and allocating costs are set forth below. Additional requirements, conditions or exceptions may apply. The Guidance documents listed in Appendix C, Resources and References for Grant Assurance 24 should be consulted.  Current operation and maintenance costs, including contributions to maintenance reserve funds, may be included. Operations and maintenance costs include environmental mitigation for projects that are themselves includable in the rate base and cost of a comprehensive and publicly disclosed noise compatibility program.  Capital costs are limited to facilities completed and in service at the airport where the charge is imposed, except that a Sponsor may include the costs of another airport if that airport benefits the carriers using the first airport. An FAA-designated reliever airport is presumed to provide the required benefits. Permitted costs can include debt-service and other reserve requirements and debt-service coverage requirements. In addition, a Sponsor may be able to include the costs of land acquired for future airport development if specified conditions are met.  Costs paid for with the federal share of an AIP grant must be excluded from the rate base.  Costs paid for with passenger facility charge (PFC) revenue must be excluded from the rate base, provided, however, that the Sponsor may not charge less for PFC-financed facilities than it does for comparable facilities financed without PFCs. The FAA has not specified a single method for Sponsors to satisfy this “rate equalization” requirement.  Costs must be fairly and equitably allocated among users based on the principle of cost causation. Under this requirement, similarly situated users should be subject to the same fees or rate-base formula. However, in applying this concept to terminal rental rates, the U.S. DOT has accepted charging airlines occupying older, smaller facilities the same rates as airlines occupying newer, larger and more elaborate facilities when the airport has adopted a rate equalization policy for determining terminal rental rates. The FAA and U.S. DOT have expressly stated that a two- element landing fee consisting of a per landing element and a weight-based element can be reasonable and not unjustly discriminatory. Q. Our airport has international air service. Are there any special rules for charges to airlines providing international service? A. Fees charged for international operations must comply with international obligations of the United States in international agreements. Generally speaking, fees that comply with the Rates and Charges Policy will comply with these international obligations.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.1, Grant Assurance 24 58 Q. Our airport generates surplus non-aeronautical revenue. Is there a limit on the size of the surplus? Also, does Grant Assurance 24 require that we spend it in a particular way? A. There is no cap on the amount of surplus revenue that a Sponsor can generate from non-aeronautical fees. There is no specific use required for such surpluses, but the surplus is considered airport revenue subject to Grant Assurance 25, Airport Revenues. Nevertheless, FAA has stated that civil aviation benefits when non-aeronautical surpluses are used to subsidize aeronautical users. Such a subsidy occurs under residual ratemaking or hybrid ratemaking. However, this sharing is not required, as compensatory ratemaking is also permitted and revenue sharing is not an element of compensatory ratemaking. Q. The community next door to our airport has asked for the use of vacant airport land for a public park for $1 per year. Is this permitted under Grant Assurance 24? A. A Sponsor may charge nominal or minimal fees or waive fees for certain users. Each exception is subject to conditions or limitations specified in the Airport Revenue Use Policy, which are not detailed here. The Revenue Use Policy and other guidance documents listed in Appendix C, Resources and References for Grant Assurance 24 should be consulted. The exceptions are listed below:  Community uses, such as parks or recreation facilities.  Not-for-profit aeronautical organizations such as aviation museums, accredited secondary and post-secondary aviation educational institutions and civil air patrol units.  A Sponsor may also offset the value of any services provided by police or firefighting units based at the airport against the reasonable fees those units must otherwise pay. However, the arrangement should be documented in a Memorandum of Understanding or similar document, and the value of services must be based on actual costs established using Generally Accepted Government Accounting Principles and Practices (GAAP).  Public transit stations, rights of way and other facilities for public transit systems owned by the Sponsor. A Sponsor may also charge a private operator less than FMV if the private transit service is limited and it represents the primary source of public transportation to the airport.  Leases of property to military units with an aeronautical mission. Charges for use of the airfield by federal aircraft are subject to Grant Assurance 27, Use by Government Aircraft. Q. What are the special exceptions for congested airports? A. The 2008 amendment to the Rates and Charges Policy gives additional flexibility to congested airports to structure fees to address and alleviate congestion. The amended policy defines a congested airport as one that represents more than 1% of national system delays or one that has been identified as a currently congested airport or future congested airport in specified FAA national airport capacity studies. For congested airports, the 2008 amendment provides for the following:  Confirms the right to establish a reasonable, properly structured peak and off-peak fee system so long as total revenues do not exceed allowable costs;  Permits a congested airport to increase its fees to subsidize FAA-designated secondary airports in the system, thereby encouraging the use of the secondary airports, provided that total revenues do not exceed allowable costs of the airport system;

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.1, Grant Assurance 24 59  Permits a congested airport to include the capital costs of projects under construction in its rate base for fees charged during periods of congestion if doing so would relieve or avoid current congestion. Permitted costs are limited to those actually incurred, and future charges for the project once it is operational must be reduced by the amounts charged during construction. Examples of Practices Found in Compliance 1. In addressing a complaint alleging that a Sponsor was required to charge FMV for exclusively leased airfield property, the FAA held that the Sponsor is permitted to charge FMV, but it is not required to. It may charge less so long as it recovers a reasonable share of its costs and the below-FMV rate does not result in unjust discrimination. Kihlstrom v. Port of Orcas, Wash.—No. 16-02-07.—No. FAA- 2002-13075. Director’s Determination (September 1, 2004). LRD 21 Determination 127. 2. The FAA held that Grant Assurance 24 permits a Sponsor to grant rental credits in exchange for required capital investments by a tenant if the Sponsor determines that the capital investments will benefit the airport and its aeronautical users and that the capital investments have sufficient value. Wilson Air Ctr., LLC v. Memphis & Shelby Cnty. Airport Auth.—No. 16-99-10. Director’s Determination (August 2, 2000). LRD 21 Determination No. 70. Affirmed by Final Agency Decision and Order of August 30, 2001. LRD 21 Determination No. 91. 3. The FAA held that Grant Assurance 24 does not require a Sponsor to establish a fee and rental structure designed to maximize the airport’s profit potential. Valley Aviation Servs., LLP v. City of Glendale, Ariz.—No. 16-09-06.—No. FAA-2009-1020. 2011 FAA LEXIS 136. 2011 WL 2274635. Director's Determination (May 24, 2011). LRD 21 Determination No. 229. 4. The United States Court of Appeals rejected a DOT determination that required a Sponsor using FMV to establish terminal rental rates to base the FMV on aeronautical uses, rather than commercial uses. In other words, the court determined that the Grant Assurances permitted calculation of FMV based on commercial uses for terminal rental rates. Alaska Airlines, Inc. v. U.S. Dep't of Transp., 575 F.3d 750 (D.C. Cir. 2009) (included in LRD 13). Examples of Practices Found in Non-Compliance 1. The FAA found that a three-year failure to collect rent violated Grant Assurance 24. Carey v. Afton- Lincoln Cnty. Mun. Airport Joint Powers Bd.—No. 16-06-06.—No. FAA-2006-25154. FAA-2006- 25154-0011. 2007 FAA LEXIS 40. 2007 WL 430630. Director’s Determination (January 19, 2007). LRD 21 Determination No. 168. Affirmed by Order Dismissing Appeal of November 14, 2007. LRD 21 Determination No. 184. 2. The DOT held that a Sponsor could not use revenue to allocate indirect costs between terminals when the Sponsor is using costs as the basis for rates. Brendan Airways, LLC v. Port Auth. of N.Y. & N.J.—No. OST-2005-20407. Order No. 2005-6-11. DOT-OST-2005-20407-0129. 2005 DOT Av. LEXIS 370. 2005 WL 4739674. Final Decision (June 14, 2005). LRD 21 Determination No. 139. 3. The DOT held that it was unreasonable to include in the cost base one-time nonrecurring cost items that were not shown to be “ordinary and recurring expenses.” Brendan Airways, LLC v. Port Auth. of N.Y. & N.J.—No. OST-2005-20407. Order No. 2005-6-11. DOT-OST-2005-20407-0129. 2005

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.1, Grant Assurance 24 60 DOT Av. LEXIS 370. 2005 WL 4739674. Final Decision (June 14, 2005). LRD 21 Determination No. 139. 4. A district court held that including the cost of facilities under construction in the airline rate base would be unreasonable as a matter of law because they do not relate to the present use of an existing facility. However, the use of surplus concession revenue for the new facility was permissible, since the concession revenue was not an element of the airline rate base. City and County of Denver v. Continental Airlines, Inc., 712 F. Supp. 834 (D CO 1984). Also, the DOT held this practice to be unreasonable in Miami Int'l Airport Rates Proceeding—No. OST-96-1965. Order No. 97-3-26. DOT-OST-1996-1965-0138 (March 19, 1997). DOT-OST-1996-1965-0138. 1997 DOT Av. LEXIS 118. 1997 WL 120400. LRD 21 Determination No. 24. Petitions for review denied sub nom. Air Canada v. Dep't of Transp., 148 F.3d 1142 (D.C. Cir. 1998). However, under the 2008 Amendment to the FAA/DOT Rates and Charges Policy (https://www.gpo.gov/fdsys/pkg/FR-2008- 01-17/pdf/E8-815.pdf), a congested airport, as defined in that policy, could include some costs of facilities under construction in rates charged during periods of congestion. The 2008 amendment is included in Appendix C, Resources and References for Grant Assurance 24. 5. The DOT held that a Sponsor using appraisals to establish FMV rental rates for terminals could not rely on appraisals by its staff and had to use accredited independent appraisers. Alaska Airlines, Inc. v. L.A. World Airports—No. OST-2007-273331. Order No. 2007-6-8 (June 15, 2007). DOT-OST- 2007-27331-0198. 2007 DOT Av. LEXIS 437. 2007 WL 1788970. LRD 21 Determination No. 177. Affirmed in part Alaska Airlines, Inc. v. U.S. Dep't of Transp., 575 F.3d 750 (D.C. Cir. 2009) (included in LRD 13).

ACRP Project 03-38 (FY 2015) Sec. 1.2.2, Grant Assurance 24 Understanding FAA Grant Assurance Obligations (Air Service Incentive Programs) 61 1.2.2 Grant Assurance 24, Air Service Incentive Programs Many communities seek to attract new or expanded air services through the offer of incentives and look to the Sponsor to provide incentives. The FAA interprets Grant Assurance 24 and the prohibition on unjust discrimination in Grant Assurance 22, Economic Nondiscrimination, to limit the types and duration of incentives that an airport Sponsor may provide. In addition, the FAA interprets Grant Assurance 25, Airport Revenues, as prohibiting direct subsidies or revenue guarantees funded by the airport. In general, a Sponsor may offer incentives in the form of fee discounts or waivers or in the form of marketing and advertising support for the incentivized service. While incentive programs may have indefinite duration, there is a limit on how long a particular service may be incentivized—generally one year if the incentive is based on the carrier’s status as a new entrant or two years if the incentive is based on new service by an incumbent. A Sponsor must establish objective criteria for offering the incentive and provide the incentive to all airlines or services that meet the criteria. A Sponsor cannot specify the type of equipment to be used. In addition, a Sponsor cannot increase fees and charges to other carriers in order to finance the incentive. For a fully residual airport that credits signatory airlines with 100% of non-airline revenue, the FAA would consider a reduction in the residual credit to finance an incentive program to violate this prohibition, unless all airlines operating at the airport agree or the reduction in the residual credit is recouped from non-airport sources. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Limit incentives to fee waivers, discounts or sharing of marketing and advertising expenses. Develop objective qualification standards for providing incentives and make the incentive available to all services meeting those standards. Limit incentives for any new entrant to one year. Limit incentives for any new service to two years.

ACRP Project 03-38 (FY 2015) Sec. 1.2.2, Grant Assurance 24 Understanding FAA Grant Assurance Obligations (Air Service Incentive Programs) 62 What May the Sponsor Do? Offer permitted incentives to a new entrant airline. Offer permitted incentives for new service, which can include the following:  Service to a new destination;  Introduction of non-stop service in a market that did not have it;  Increased frequencies in an existing market; and  Adding seats in a market (upgauging) if the incentive program also applies to adding flights and the upgauging does not cause a reduction in frequency. Offer incentives in the form of fee discounts or waivers or marketing support. A Sponsor with a compensatory or hybrid rate structure may use non-aeronautical net revenues to finance its incentives without obtaining airline approval. What Sponsor Actions Are Prohibited? Using airport revenue to pay cash subsidies or revenue guarantees. Increasing the fees charged to airlines not receiving an incentive to cover the costs (including lost revenue) of the incentive program, absent agreement of those airlines. A Sponsor with a 100% residual rate structure may not implement an incentive program unless all airlines serving the airport agree or the cost of the incentive program (including lost revenue) is recouped from non-airport revenue sources. What Are the Exceptions to the Requirements/Prohibitions? The Sponsor of a 100% residual airport may use airport revenue to cover the costs of an incentive program (including lost revenue) if all carriers serving the airport agree.

ACRP Project 03-38 (FY 2015) Sec. 1.2.2, Grant Assurance 24 Understanding FAA Grant Assurance Obligations (Air Service Incentive Programs) 63 Supplementary Information Recommended Practices  When offering incentives, develop a written policy that clearly defines (1) the types of service qualifying for incentives; (2) the duration and nature of incentives and (3) the level of effort or service quality, e.g., number or percentage of completed flights, on-time flights, etc., needed to qualify for the incentives.  If Sponsors are considering including “most favored nation” clauses in lease and use agreements prohibiting the airport from offering more favorable rates to other airlines, they should include an exception for any current or planned incentive program. It is not uncommon for these exceptions to reference programs permitted under federal law or obligations. Related Grant Assurances  Grant Assurance 22, Economic Nondiscrimination, clauses a., c., e.  Grant Assurance 25, Airport Revenues Common Questions Q. Our community desires non-stop service to our state capital. Can the airport offer a fee waiver incentive only for non-stop service to that destination? A. Yes. A Sponsor may designate a specific destination in its incentive program, and it is not obligated to offer incentives for service to other destinations. Q. Our community faces high fares, as well as limited service. Can the Sponsor include a maximum fare requirement as part of an incentive program? A. No. The FAA has stated that an air fare requirement may be unreasonable under the Grant Assurances and Federal Law. Q. Our community currently is served exclusively by turboprop aircraft. Can the Sponsor offer an incentive for service to a new destination conditioned on the flights being operated by regional jets or larger aircraft? A. The Sponsor cannot condition an incentive for service to a new destination based on aircraft size. However, for an existing market, a Sponsor could offer an increased service incentive based on larger aircraft if the incentive is also offered for added frequencies and the use of larger aircraft does not lead to a reduction in frequencies. Q. Our airport is a dues-paying member of the local chamber of commerce. Would it be a violation of the Grant Assurances for the Chamber of Commerce to offer a subsidy or revenue guarantee, even if the airport does not participate in or vote on the decision? A. No. The FAA does not consider refraining from voting on the incentive program in itself sufficient to isolate the Sponsor from the decision-making process; therefore, the FAA would consider the

ACRP Project 03-38 (FY 2015) Sec. 1.2.2, Grant Assurance 24 Understanding FAA Grant Assurance Obligations (Air Service Incentive Programs) 64 Chamber of Commerce’s actions to be subject to the Grant Assurance requirements applicable to incentive programs. Q. Our County imposes a $5 million tax on property located in the county for the specific benefit of the airport. Can this tax revenue be used for a subsidy or revenue guarantee incentive program? A. Yes. The FAA does not consider property taxes imposed on property that is not owned by the airport to be airport revenue. Therefore, the prohibition on using airport revenue for airline subsidies or revenue guarantees would not apply. However, to assure transparency and document compliance, the FAA recommends maintaining the tax revenue in a separate account and not commingling the taxes with other airport revenue. Examples of Practices Found in Compliance No decisions or advisory opinions specifically addressing incentive programs were identified in the research. However, the “Air Carrier Incentive Program Guidebook,” listed in Appendix C, Resources and References for Grant Assurance 24, uses a question and answer format to describe additional practices the FAA has identified as permitted or prohibited. Examples of Practices Found in Non-Compliance No decisions or advisory opinions specifically addressing incentive programs were identified in the research. However, the “Air Carrier Incentive Program Guidebook,” listed in Appendix C, Resources and References for Grant Assurance 24, provides additional practices the FAA has identified as permitted or prohibited, using a question and answer format.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.3, Grant Assurance 25 65 1.2.3 Grant Assurance 25, Airport Revenues Grant Assurance 25 includes three clauses. Grant Assurance 25.a specifies permitted uses of airport revenue and aviation fuel taxes. It requires that all revenues generated by the airport be used for the capital or operating costs of the airport, the local airport system, other local facilities owned or operated by the Sponsor that are directly and substantially related to actual air transportation of passengers or property, or noise mitigation on or off airport property. In addition, local taxes on aviation fuel enacted after December 30, 1987, must be used for the same purposes. The use of state aviation fuel taxes is also restricted to the purposes listed above and subject to exceptions. Most Sponsors are local, rather than state, governments and have no control over state taxation policies, including the use of aviation fuel taxes. In 2014 the FAA published an amendment to the Airport Revenue Policy that clarified its approach to enforcing the requirements for the use of state aviation fuel taxes and local taxes not imposed by a Sponsor. For such taxes, a Sponsor’s obligation is limited to advising the taxing entity of the federal requirements for the use of the tax proceeds and taking reasonable actions within its power to tailor the tax to the FAA requirements. If a non-Sponsor imposes an aviation fuel tax in violation of the federal requirements, the FAA will not take compliance action directly against the Sponsor of the airport where the tax is collected, but would pursue enforcement against the taxing entity directly. There are a number of exceptions to these general requirements, discussed in the call-out boxes and Common Questions section below. The principal exception is for certain financial and legal arrangements in effect when restrictions were first imposed (Grandfathered Exceptions). The use of airport revenue or aviation fuel taxes for purposes other than those specified above is considered revenue diversion. Unless the diversion is covered by an exception, the diversion is considered unlawful diversion. A diversion permitted by one of the exceptions is considered lawful diversion. Also, unlike most Grant Assurance requirements, in 1996 the revenue use requirements were incorporated as direct statutory provisions, similar to the prohibition on exclusive rights. Therefore, for any Sponsor that was subject to Grant Assurance 25 on October 1, 1996, and any airport Sponsor accepting an AIP grant or other federal assistance after that date, Grant Assurance 25 has an indefinite duration. In other words, the requirements of this Grant Assurance apply as long as the airport is an airport. As part of the independent audit under the Single Audit Act of 1984, Grant Assurance 25.b requires Sponsors to obtain an opinion on whether the Sponsor’s use of airport revenue complies with the Grant Assurance. Grant Assurance 25.c specifies that civil penalties imposed to remedy unlawful revenue diversion will be applied as specified in 49 USC §47107, which is the statutory basis for Grant Assurance 25. Policies implementing Grant Assurance 25 are detailed and complex. The basic guidance document is the Airport Revenue Policy. Individual administrative determinations, court decisions, and legal memoranda or opinion letters issued by the FAA, U.S. DOT and the U.S. DOT Office of Inspector General (OIG) have provided additional interpretations. The FAA and OIG do not always agree on

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.3, Grant Assurance 25 66 whether a particular practice constitutes a violation of Grant Assurance 25. If the disagreements cannot be mutually resolved, the U.S. DOT has the final word. Specific requirements, exceptions, policies and interpretations are summarized in the call-out boxes and Common Questions section below. The source documents listed in Appendix C, Resources and References for Grant Assurance 25 section should be consulted for a complete understanding of the Grant Assurance 25 requirements. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management All1 Indefinite, so long as the airport is operating Withholding of grants Civil penalties Civil enforcement Treble damages Withholding of new PFCs Withholding of other DOT grants 1 Under 49 USC §47133, the requirements of Grant Assurance 25 apply to airports receiving federal assistance of any type. Thus, an airport receiving a gift of surplus federal property after the enactment of Section 47133 would be subject to those requirements.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.3, Grant Assurance 25 67 What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Use airport revenue for the capital and operating costs of the airport, the local airport system or other transportation facilities directly and substantially related to air transportation. Use locally imposed taxes on the sale of aviation fuel (whether general sales taxes or target ad valorem taxes) for the same purposes. If state-imposed fuel taxes are collected at the airport, advise the taxing entity of the federal requirements for the use of the tax proceeds and take reasonable actions within its power to tailor the tax to the FAA requirements. Require that the annual audit conducted under the Single Audit Act of 1984 include an opinion concerning the use of airport revenue and taxes, indicating whether transfers of airport funds to the Sponsor were consistent with the requirements of the AIP statute and any applicable regulations. What May the Sponsor Do? The Sponsor of multiple airports may use revenue generated at one of its airports to pay the capital or operating costs of another airport in its system. Under Grant Assurance 25, the Sponsor is free to spend airport revenue on any eligible cost. There is no ranking or priority, so long as the expenditure meets the requirements of the Grant Assurance. A Sponsor may spend airport revenues on ground transportation projects that it owns and controls, if the projects meet the “directly and substantially” test. A Sponsor may reimburse itself for amounts advanced or donated to the airport fund for no more than six years prior to the reimbursement. Interest can be included in the reimbursement only if there is documentation executed at the time of the advance showing that the advance was intended by the Sponsor and the airport to be an interest-bearing loan.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.3, Grant Assurance 25 68 What Sponsor Actions Are Prohibited? (Subject to the Exceptions Noted Below and Additional Actions Identified in the Common Questions Section) Transferring money from the airport fund to the Sponsor’s general fund or non-airport special purpose funds, or using airport revenue for any prohibited purpose identified in Section VI of the Airport Revenue Policy. Charging less than FMV for non-aeronautical use of airport property by other Sponsor departments or agencies. Using airport revenue to pay direct subsidies or revenue guarantees to air carriers as part of an air service incentive program. Requiring the airport to pay more than the value of services provided to the airport by other Sponsor departments or agencies. The FAA considers cost to be a reliable measure of value. Charging other Sponsor agencies or departments less than the value of services provided by the airport. The FAA considers cost to be a reliable measure of value. What Are the Exceptions to the Requirements/Prohibitions? If a Sponsor’s governing documents or financing documents in effect before September 3, 1982, provide for the use of airport revenue to support the Sponsor’s general debt obligations or other non-airport facilities, airport revenues may be used for that purpose. The FAA has identified twelve such “grandfathered” airports, which are listed in Appendix D, Technical Appendices. Taxes on aviation fuel enacted before December 31, 1987, are not subject to the restrictions. If the FAA provides funding to support the sale of an obligated privately owned airport to a public agency, certain portions of the sales proceeds may not be subject to the restrictions, but the private owner must reimburse the FAA for the unamortized portion of any airport improvement grant plus the federal share of the FMV of any land acquired with the grant. A Sponsor of a general aviation airport may use the proceeds from mineral extraction, mineral leases and similar activities for other defined transportation projects, subject to limitations and requirements. This exception is discussed separately in Section 1.2.4. State aviation fuel taxes may also be used to fund state aviation programs or to fund on or off-airport noise mitigation programs.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.3, Grant Assurance 25 69 Supplementary Information Recommended Practices  Execute reimbursable agreements with the basis for fees or charges fully documented for any transactions between the airport and other agencies or departments of the Sponsor. In particular, if a Sponsor department is leasing airport land and providing services to the airport, it is preferable to treat those as separate transactions, rather than simply reducing lease payment by the value (cost) of services provided.  Grandfathered airports should track and account for the amounts of legally diverted revenue each year and document how that revenue is used.  When subsidizing an airport with the expectation of recovering the subsidy under the donation exception, Sponsors should maintain records showing the value of the subsidy based on actual costs incurred, i.e., based on accounting records showing actual revenues and expenditures.  When considering payments of airport revenue or other practices such as leasing of airport land to another department that is not clearly addressed by FAA guidance, i.e., that is in a “gray area”, consult with the FAA before taking any action.  Sponsors that are not single-purpose entities should maintain separate accounts or separate accounting records to document airport revenues and expenditures. Related Grant Assurances  Grant Assurance 24, Fee and Rental Structure  Grant Assurance 26, Reports and Inspections, clauses a. and d.  Grant Assurance 1, General Federal Requirements, Statutes Item x, Single Audit Act of 1984. Common Questions Q. What is airport revenue? A. Airport revenue is defined broadly to include all fees, charges, rents or other payments accruing to the Sponsor. Airport revenue includes, but is not limited to, the following:  All lease revenue.  Proceeds from sale of airport property, including sale of the entire airport.  Proceeds from the sale of mineral rights or mineral extraction, including the sale of water or water rights.  Revenue generated by the use of Sponsor-owned land located off the airport for an airport purpose, e.g., an off-airport duty-free shop.  Revenue generated by the Sponsor’s own commercial aeronautical activities related to the airport.  Revenue generated by the Sponsor’s non-aeronautical activities conducted on airport property, but only to the extent of the fair rental value of the property used, e.g., an on-airport convention center.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.3, Grant Assurance 25 70 Q. What are covered aviation fuel taxes? A. Covered aviation fuel taxes include state and local taxes specifically levied on aviation fuel, whether based on volume sold or value (ad valorem). General sales taxes that are collected on the sale of aviation fuel are also covered. Q. What is the local airport system? A. The local airport system generally includes all airports under common ownership and control. It is theoretically possible for two separately-owned airports serving the same metropolitan area, for example, Los Angeles International Airport and Long Beach International Airport, to qualify as part of the same local airport system. However, the incentives for one Sponsor to contribute financial assistance to another Sponsor’s airport are presumably limited. Q. What kinds of expenditures are considered to be capital and operating costs for which airport revenue may be used? A. The Airport Revenue Policy lists eight types of permitted uses of airport revenue, including standard direct and indirect capital and operating costs. Other permitted uses include, but are not limited to, the following:  Full cost of promoting the airport, including new air service and competition (other than direct air carrier subsidies).  Shared costs of joint promotional or marketing programs, but only to the extent that they promote the airport, including joint promotional activities with air carriers for new air service.  Reimbursement of Sponsor contributions or subsidies to the airport made within six years prior to the reimbursement. Reimbursement may include interest if the contribution is documented as a loan or the FAA determines that the Sponsor is otherwise entitled to interest.  Lobbying and attorney fees to support an activity or project for which airport revenue may be spent.  Costs of government officials for services actually received by the airport and documented.  A portion of the general costs of government if allocated under an acceptable indirect cost allocation plan.  Community support activities or community events that are directly and substantially related to the operation of the airport, e.g., purchase of tickets to a luncheon where the airport director is delivering a speech about the airport. Q. What are the requirements for indirect cost allocations? A. To enable payment for indirect costs of Sponsor services with airport revenue, the Sponsor’s cost allocation plan must meet the following requirements:  The cost allocation plan is consistent with OMB requirements for indirect cost allocation plans for grant-funded projects.  The plan must not place a disproportionate burden on the airport and must be similarly billed to other comparable units of the Sponsor.  Indirectly allocated costs cannot be billed directly to the Sponsor. Q. What uses of airport revenues are prohibited? A. The Airport Revenue Policy lists 12 prohibited uses. The most significant are as follows:

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.3, Grant Assurance 25 71  Payments, including Payments in Lieu of Taxes (PILOTs) exceeding the value of services or facilities provided to the airport, with cost as the reliable indicator of value.  Payments, including PILOTS based on a cost allocation plan that does not comply with the requirements listed in the Q & A above.  General economic development or marketing and promotion unrelated to the airport.  Payments to compensate non-Sponsoring governments for lost tax revenues that exceed stated tax rates.  Land rentals to the Sponsor at less than FMV for non-aeronautical use and at nominal rates for aeronautical use, unless the conditions for nominal rental rates under Section VII of the Airport Revenue Policy are met.  Impact fees exceeding the value of services or facilities provided to the airport, provided that the Sponsor may make certain payments to mitigate environmental or other project impacts if they would otherwise qualify for the use of airport revenue.  General community support activities that are not directly and substantially related to airport operations.  Direct subsidies of air carrier operations, including revenue guarantees, other than joint promotional activities and marketing support listed under the permitted uses of airport revenue, above. Q. Our general fund has subsidized the airport for many years. What are the requirements for recovering those subsidies? A. Reimbursements are limited to expenditures on behalf of the airport made within six years prior to the reimbursement. Reimbursements for both direct and indirect operating expenses must be supported by (1) underlying accounting data such as general and specialized journals, with corroborating data such as invoices or (2) audited financial statements showing the specific expenditures to be reimbursed. The documentary evidence must show that the amounts claimed were actually spent. Budget estimates are not sufficient. Q. What are the specific details of the exceptions to the restrictions on the use of airport revenue in Grant Assurance 25? A. There are five exceptions to the prohibition—two grandfather exceptions and three special purpose exceptions. They are described below: (1) Airport Revenue Grandfather Exception: A Sponsor may use airport revenue for general purposes to the extent that covenants or assurances in debt obligations or governing statutes controlling the Sponsor’s financing that were in effect prior to September 3, 1982, provide for the use of airport revenue to support the Sponsor’s general debt obligations or other facilities. The grandfather exception applies only to arrangements that were in effect on September 3, 1982. For example, if a Sponsor’s governing statute in effect on September 3, 1982, requires the transfer of 5% of the airport’s net revenues to the Sponsor’s general fund, the transfer of only 5% is grandfathered. A change in the statute to increase the required transfer to 6% would not be grandfathered. The FAA has identified only 12 airports grandfathered for airport revenue. These are listed on page 15-12 of Order 5190.6B and reproduced in Appendix D. The airports previously identified by the FAA as grandfathered are not necessarily the only airports that might qualify as grandfathered. Any Sponsor that believes its airport is grandfathered should consult with the FAA before using airport revenue for otherwise prohibited purposes.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.3, Grant Assurance 25 72 (2) Fuel Tax Grandfather Exception: State and local taxes on aviation fuel in effect on September 30, 1987, are not subject to Grant Assurance 25. Only taxes and tax rates in effect on that date are grandfathered. For example, if a Sponsor had a 4% ad valorem tax on sales of aviation fuel on September 30, 1987, only the 4% rate is grandfathered. An increase in the ad valorem rate to 5% would not be grandfathered. (3) State Taxes on Aviation Fuel: Aside from the grandfather exception, state taxes on aviation fuel may be used to support state aviation programs and noise mitigation programs on or off the airport. (4) Sale of Privately Owned Airport to a Public Sponsor: If the FAA provides funding to assist a public Sponsor in acquiring a privately owned airport that received AIP funding, some of the proceeds will not be subject to Grant Assurance 25 if the private owner repays the unamortized Federal share of any AIP grant made to the private owner for projects other than land acquisition. For land acquisition grants, the private Sponsor must repay the federal share of the current fair market value of the land. (5) Mineral Extraction at General Aviation Airports: As a result of statutory amendments in 2012, Sponsors of general aviation airports are now able to use a portion of the proceeds from mineral extraction or the sale or lease of mineral rights (mineral revenue) for non-airport purposes. This exception is addressed in Section 1.2.4 below. Q. What kind of systems can be funded with airport revenue as a facility “directly and substantially related to the movement of passengers and baggage in air transportation?” A. This concept refers to ground transportation facilities and equipment. The ground transportation system can be exclusively on-airport or connect the airport to off-airport locations or other public transportation systems. The system can be for the exclusive use of airport patrons (including passengers, employees, and greeters), or it can be shared with the general public. In the case of shared systems, the FAA will consider the relative usage between airport patrons and the general public in deciding whether the system is directly and substantially related. The FAA has never defined a minimum share of airport patron use, but it has never approved the use of airport revenue for a shared system with less than 50% airport patron use. In addition, if the ground transportation system is an extension of a public transportation system, the allocation of general overhead, maintenance and indirect costs to the Sponsor will be closely scrutinized and may not be permitted. Q. Our light rail line ends a mile from our airport. The transit agency wants to build an extension with a single stop at the airport passenger terminal. What can be funded with airport revenue? A. In this situation, airport revenue could pay for the on-airport station and the full cost of the track for the one-mile extension, so long as the station and track are owned by the Sponsor. The FAA would consider all light rail passengers using that segment of the system to be airport patrons because the system ends at the airport. Q. Our light rail line ends a mile from the airport. The transit agency wants to build an extension through the airport to the suburb on the other side of the airport. There would be two stops at the airport, one at each terminal. What can be funded with airport revenue? A. The two on-airport stations can be paid for entirely with airport revenue, so long as the Sponsor owns them. The FAA would consider all light rail passengers using the on-airport stations to be airport patrons. If a “substantial portion” of the ridership using the segment of track between the stations on

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.3, Grant Assurance 25 73 either side of the airport are airport patrons, a proportional share of that track, if owned by the Sponsor, could also be funded with airport revenue. As noted above, the FAA has never approved the use of airport revenue on a shared system with less than 50% airport ridership. Q. Our airport is grandfathered. The amount of lawfully diverted revenue has been growing every year. Is there any risk to our AIP funding if the amount continues to grow? A. Because the diversion is lawful, the airport is still eligible to receive entitlement and discretionary funds. However, the AIP statute now requires the FAA to consider a growth in the amount of lawfully diverted revenue that exceeds the rate of inflation to be a militating factor in considering requests for AIP discretionary funding. Q. What penalties and remedies are available to the FAA to correct unlawful revenue diversion? A. For violations of Grant Assurances of general applicability, the main penalties available to the FAA are withholding of new AIP grants and withholding of payments under existing grants. The AIP statute includes the following additional penalties and remedies for unlawful revenue diversion: (1) Withholding approval of a passenger facility charge; (2) Withholding approval of other transportation assistance otherwise available to the Sponsor under Title 49 of the U.S. Code; (3) Civil penalties of up to three times the amount of unlawfully diverted revenue, plus interest, although for penalties of more than $50,000, the FAA must start a civil action in U.S. District Court; and (4) Judicial enforcement. For all of the remedies listed above, the FAA is limited to recovering funds unlawfully diverted during the six years prior to the FAA action. Examples of Practices Found in Compliance 1. The FAA held that the use of airport revenue to finance FBO facilities that later become vacant did not violate Grant Assurance 25. Northern Air, Inc. and KEM Aviation LLC v. Kent County, MI Gerald R Ford Int’l Airport Board—No. 16-11-10. Director’s Determination (March 28, 2013). 2. An FAA legal opinion held that using airport revenue to provide disaster aid to another airport is “not inconsistent” with Grant Assurance 25 and is similar to mutual aid agreements. The opinion does not apply to AIP grant funds or PFC revenues. Opinion Letter of September 23, 2005. LRD 21 Opinions and Memos, Record 1 of 51. 3. An FAA legal opinion held that a Sponsor could issue bonds to finance non-airport property, so long as airport revenue will not be used to make the bond payments. The legal opinion advised that bond proceeds are not airport revenue and therefore could be used to acquire an interest in off-airport property. However, the opinion cautioned that the property interest would not qualify as an airport capital cost; therefore, airport revenue could not be used to pay off the bonds. Opinion Letter of December 02, 1993. LRD 21 Opinions and Memos, Record 9 of 51. 4. An FAA legal opinion held that a Sponsor could make a loan of airport revenue to a third party to assist in financing off-airport facilities without violating Grant Assurance 25. The opinion characterized the loan as investment of airport revenue, so long as the loan is repaid and the payments

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.3, Grant Assurance 25 74 are used for airport purposes. Opinion Letter of March 13, 1992. LRD 21 Opinions and Memos, Record 39 of 51. Examples of Practices Found in Non-Compliance 1. The FAA held that a Sponsor could not rely on airport budget documents to establish the value of past subsidies to the airport from its general fund. Accounting records showing actual costs incurred must be used. In re Revenue Diversion by the City of L.A. at L.A. Int'l, Ontario, Van Nuys & Palmdale Airports—No. 16-96-01. 1997 FAA LEXIS 1535. 1997 WL 1120734. Record of Determination (March 17, 1997). LRD 21 Determination No. 23. 2. An FAA advisory opinion held that a Sponsor’s agreement to make annual PILOTs for an indefinite period of time to settle a lawsuit with a neighboring jurisdiction would violate Grant Assurance 25. The opinion stated that because the annual PILOT would be in exchange for a one-time settlement of a lawsuit with the airport receiving no other value, the PILOT would violate the prohibition on use of airport revenues for PILOTs that exceed the value of goods or services provided to the airport. Opinion Letter of March 20, 2007. LRD 21 Opinions and Memos, Record 4 of 51. 3. An FAA advisory opinion held that impact fees imposed before a capital project was completed would violate Grant Assurance 25 since the up-front impact fees represent estimates of the impact of future construction and therefore are not a capital or operating cost of the airport. Only after airport development is completed and the fees for the impacts become fully quantifiable can the FAA determine whether part or all of the fees are capital or operating costs of the airport. Opinion Letter of June 30, 1997. LRD 21 Opinions and Memos, Record 6 of 51. 4. An FAA legal opinion held that Grant Assurance 25 did not permit airport revenue to be used to make lease payments to the Sponsor’s general fund for land that was already dedicated to airport purposes. Because the land was already committed for airport purposes, the airport would not be receiving any other services in exchange for the lease payments. Opinion Letter of June 19, 2008. LRD 21 Opinions and Memos, Record 45 of 51. 5. An FAA advisory opinion held that a state aviation fuel tax in place before 1987 was not grandfathered because its use was limited to state aviation programs in 1987. The conversion to general purposes taking place after 1987 would constitute a new diversion that was not covered by the grandfather provision, which is limited to the arrangements in place in 1987. Opinion Letter of May 24, 2000. LRD 21 Opinions and Memos, Record 5 of 51. 6. An FAA legal opinion held that payments made by a grandfathered airport to the Sponsor’s general fund based on amendments to the statutes governing the airport’s finances made after 1982 were not grandfathered. The opinion concluded that the improper payments made to date were not of sufficient size or frequency to jeopardize the airport’s overall grandfathered status if the airport was repaid. However, the opinion also warned that a continuation of the practice could jeopardize the airport’s overall grandfathered status. Memorandum of April 12, 1994. LRD 21 Opinions and Memos, Record 32 of 51.

ACRP Project 03-38 (FY 2015) Section 1.2.4, Grant Assurance 25, Understanding FAA Grant Assurance Obligations (Mineral Revenue) 75 1.2.4 Grant Assurance 25 Airport Revenues (Mineral Revenue Exception) As a result of statutory amendments in 2012, sponsors of general aviation airports are now able to use a portion of the proceeds from mineral extraction or the sale or lease of mineral rights (mineral revenue) for non-airport purposes. For purposes of this exception, the FAA considers water and water rights to be a mineral. The call-out boxes below describe the major requirements and limitations of this exception. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management All1 Indefinite, so long as the airport is operating2 Withholding of grants Civil penalties Civil enforcement Treble damages Withholding of new PFCs Withholding of other DOT Grants 1 Under 49 USC §47133, the requirements of Grant Assurance 25 apply to airports receiving federal assistance of any type. Thus, an airport receiving a gift of surplus federal property after the enactment of Section 47133 would be subject to the requirements. 2 A Sponsor relying on the mineral revenue exception is also obligated to comply with the remaining Grant Assurances in effect in 2012 for 20 years from FAA’s approval of the exception.

ACRP Project 03-38 (FY 2015) Section 1.2.4, Grant Assurance 25, Understanding FAA Grant Assurance Obligations (Mineral Revenue) 76 What Must the Sponsor Do? (Subject to Exceptions and Permitted Practices, Below) Limit the diverted mineral revenue to federal, state or local transportation infrastructure projects carried out by the Sponsor or within the Sponsor’s jurisdiction. Limit the amount of diverted mineral revenue to the excess above what is required to fund the airport’s five-year capital improvement plan (CIP), including all operations and maintenance, after considering other sources of airport revenue. Continue to operate and maintain the airport. Use all other airport revenue besides the diverted mineral revenue for airport purposes in perpetuity, as long as the airport is an airport. Limit the diversion of mineral revenue to five years. Execute an agreement with the FAA incorporating these requirements and other terms and conditions and identifying the transportation infrastructure projects to be funded with mineral revenue. What May the Sponsor Do? Select the proposed infrastructure projects to be funded with mineral revenue in the first instance, subject to the agreement of the FAA. What Sponsor Actions Are Prohibited? Accepting any AIP entitlement or discretionary grants during the period when the mineral revenue is diverted. Diverting mineral revenue for longer than a five-year period. Closing the airport. Diverting mineral revenue in excess of the amount discussed in the Required Sponsor Actions call-out box. Diverting mineral revenue without an executed agreement with the FAA.

ACRP Project 03-38 (FY 2015) Section 1.2.4, Grant Assurance 25, Understanding FAA Grant Assurance Obligations (Mineral Revenue) 77 What Are the Exceptions/Limitations to the Exemption? The mineral revenue exemption applies only to general aviation airports. Diversion of mineral revenue is limited to five years. Supplementary Information Recommended Practices  Carefully review the guidance material included in the Mineral Revenue Exemption Toolkit webpage listed in Appendix C, Resources and References for Grant Assurance 25.  Consult with the FAA before submitting an application.  Carefully consider the impact of the loss of AIP entitlement and discretionary funding for five years. Note that the loss of this funding will mean that the Sponsor will have to find sufficient revenue to fund 100% of the cost of all projects in the airport’s CIP, without relying on the diverted mineral revenue. Related Grant Assurances  Grant Assurance 19, Operation and Maintenance  The remaining clauses of Grant Assurance 25 Common Questions Q. Our airport is considering granting mineral leases for airport property, but we will need all of the mineral revenue to keep the airport operating. Are there any other FAA requirements or policies for mineral extraction that we should be following? A. Mineral extraction and mineral leases are subject to the requirements of multiple Grant Assurances in addition to Grant Assurance 25, including Grant Assurance 29, Airport Layout Plan; Grant Assurance 5, Preserving Rights and Powers; Grant Assurance 19, Operations and Maintenance; and Grant Assurance 20, Hazard Removal and Mitigation. The FAA’s guidance on this issue appears in AC 150/5100-20, Guidance on the Extraction of Oil and Gas at Federally Obligated Airports, (03-23- 2016); https://www.faa.gov/documentLibrary/media/Advisory_Circular/150-5100-20.pdf. Examples of Practices Found in Compliance No examples of practices found in compliance with the mineral revenue exemption were found in the research.

ACRP Project 03-38 (FY 2015) Section 1.2.4, Grant Assurance 25, Understanding FAA Grant Assurance Obligations (Mineral Revenue) 78 Examples of Practices Found in Non-Compliance No examples of practices found in non-compliance with the mineral revenue exemption were found in the research.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.5, Grant Assurance 26.a, d 79 1.2.5 Grant Assurance 26.a., d., Reports and Inspections Grant Assurance 26 includes four clauses. Clauses a. and d. apply to general airport operations, management and finance and are addressed in this subsection and the next subsection respectively. Clauses b. and c. are project-specific requirements; they are addressed in Chapter 9. Under Clause a., the Sponsor must submit annual and special operations reports to the FAA and make them available to the public. The Sponsor must also make an airport budget report available to the public. Sponsors of commercial service airports must submit FAA Form 5100-127 to comply with this requirement. Under Clause d., the Sponsor must submit annual financial reports to the FAA showing (1) the amounts paid by the airport to any other unit of government and the purposes for which they were paid; and (2) all services and property provided by the airport to other units of government and the compensation the airport received. Sponsors of commercial service airports must submit FAA Form 5100-126 to comply with this requirement. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used for violation of this assurance. What Must the Sponsor Do? (Subject to Exceptions and Permitted Practices, Below) Sponsors of commercial service airports (scheduled service and at least 2,500 annual passenger boardings) must submit FAA Form 5100-127 and FAA Form 126 annually. Reports are normally due within 120 days of the end of the Sponsor’s fiscal year. General financial statements or alternative reporting formats are not accepted. Use the FAA’s electronic reporting system, the Compliance Activity Tracking System (CATS), to submit reports.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.5, Grant Assurance 26.a, d 80 What May the Sponsor Do? The Sponsor of multiple airports may, upon FAA approval, submit consolidated reports for its commercial service airports. Request an extension of up to 60 days from the 120-day deadline in order to file reports based on audited financial information. If the audited information is not available at the end of the extension period, the Sponsor must submit the report based on unaudited information. What Sponsor Actions Are Prohibited? Failing to file the FAA Form 127 or FAA Form 126 each year by the filing deadline. Using a format other than the two FAA Forms to submit the required information. Submitting hard-copy reports. What Are the Exceptions to the Requirements/Prohibitions? General aviation airports (including reliever airports) are not subject to the reporting requirement. A Sponsor may request an extension of up to 60 days from the 120-day deadline to file reports based on audited financial data. If the audited information is not available at the end of the extension period, the Sponsor must submit the report based on unaudited information. Supplementary Information Recommended Practices  To the extent possible, within the deadline for submittal, use audited financial information to complete the FAA Form 127 and FAA Form 126.  If unaudited financial information is used to complete a report and there are differences in the audited and unaudited results, promptly amend the appropriate FAA Form once the audited information is available. Related Assurances  Grant Assurance 26, clause d.  Grant Assurance 25, Airport Revenues

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.2.5, Grant Assurance 26.a, d 81  Grant Assurance 1, General Federal Requirements, Statutes item x., Single Audit Act Common Questions Q. Our airport system includes a large hub airport and a general aviation reliever airport. Do the FAA Form 127 and FAA Form 126 have to include information for the reliever airport? A. No. The reports only need to include information for the large hub airport. Q. Our airport rarely obtains final audited financial data within 120 days of the close of our fiscal year. Should we file unaudited data or ask the FAA for an extension? A. While the FAA has no legal authority to require audited financial data, it prefers that the Form 127 and Form 126 reflect audited results. Therefore, it is better practice to request the 60-day extension, unless you are sure that the audited results still will not be available. In that case you can submit unaudited data and update it once audited data is available. Q. Does Grant Assurance 26.a set a deadline for obtaining audited financial results? A. No. Because the FAA will accept unaudited results, the filing deadline for Form 127 and Form 126 does not act as a deadline for obtaining audited financial results. Examples of Practices Found in Compliance 1. The FAA concluded that a Sponsor of an airport with less than 2,500 annual enplanements could not violate Grant Assurance 26 by failing to file FAA Form 127 and FAA Form 126, because it requires these reports only for airports with more than 2,500 enplanements. Carey v. Afton-Lincoln Cnty. Mun. Airport Joint Powers Bd.—No. 16-06-06.—No. FAA-2006-25154. FAA-2006-25154-0011. 2007 FAA LEXIS 40. 2007 WL 430630. Director’s Determination (January 19, 2007). LRD 21 Determination No. 168. Affirmed by Order Dismissing Appeal of November 14, 2007. LRD 21 Determination No. 184. Examples of Practices Found in Non-Compliance No examples of practices found in non-compliance with these clauses were found in the research.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.1, Grant Assurance 19 82 The operations and maintenance requirement of Grant Assurance 19.a applies to the entire airport, not only the projects funded with AIP grants. Section 1.3 Operation and Safety 1.3.1 Grant Assurance 19, Operations and Maintenance This Assurance includes two clauses, summarized as follows: a. The Sponsor must operate the airport at all times, with due regard to climactic and flood conditions, in a safe and serviceable manner meeting FAA, state and local standards. The Sponsor must not permit activity that would interfere with airport use. The Sponsor is not required to keep the airport open when severe flooding, snow or other weather conditions would prevent safe operations. This requirement includes the operation of any airfield lighting on a 24-hour basis or when needed. At airports with low levels of activity or other circumstances limiting night operations, the Sponsor may satisfy the lighting requirement through remote activation by radio equipment in an aircraft. The Sponsor must notify airmen of any conditions that affect the use of the airport. The FAA maintains a system of notifications to airmen (NOTAM) for this purpose. Grant Assurance 19 also requires the Sponsor to mark and light hazards resulting from airport conditions (see also Grant Assurance 21). The Sponsor must obtain FAA approval before temporarily closing the airport for non-aeronautical purposes. The FAA generally does not support full closure of the airport for non-aeronautical purposes, but may support partial closure for short periods if the activity promotes aviation awareness. The FAA will consider more favorably requests for full closure for short periods and partial closure of the airport to support aeronautical events such as air shows. There are numerous requirements and limitations on temporary closures for air shows, addressed in the Common Questions section. b. The Sponsor must operate and maintain Sponsor-owned noise compatibility program items funded by AIP grants. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.1, Grant Assurance 19 83 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used for violation of this assurance. What Must the Sponsor Do? (Subject to Exceptions and Permitted Practices, Below) Operate the airport at all times in a safe and serviceable manner, meeting FAA, state and local standards. When snow or ice conditions render the airport unsafe: (1) issue a NOTAM regarding the conditions; (2) close all or parts of the airport until the unsafe conditions are remediated and (3) correct the unsafe conditions within a reasonable amount of time. Notify airmen of any conditions that affect the use of the airport. The FAA maintains a system of NOTAMs for this purpose. Operate any airfield lighting on a 24-hour basis or when needed. Obtain FAA approval before temporarily closing the airport for non-aeronautical purposes. The FAA generally does not support full closure of the airport for non-aeronautical purposes, but may support partial closure for short periods if the activity promotes aviation awareness. Mark and light hazards resulting from airport conditions. Operate and maintain Sponsor-owned noise compatibility program items funded by AIP grants. What May the Sponsor Do? Temporarily close the airport when severe flooding, snow or other weather conditions would prevent safe operations. Temporarily close the airport for non-aeronautical events, with the approval of the FAA. The FAA generally does not support full closure of the airport for non-aeronautical purposes, but may support partial closure for short periods if the activity promotes aviation awareness. The FAA will consider more favorably requests for full closure for short periods and partial closure of the airport to support aeronautical events such as air shows. At airports with low levels of activity or other circumstances limiting night operations, the Sponsor may satisfy the lighting requirement through remote activation by radio equipment in an aircraft.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.1, Grant Assurance 19 84 What Sponsor Actions Are Prohibited? Closing the airport without FAA approval, absent a severe weather event that would prevent safe operations. Continuing maintenance failures that result in safety deficiencies. Failures to timely address operations that may impair the safety of other aeronautical users. Permitting non-aeronautical uses of hangars when there is unmet aeronautical demand for hangar space (waiting lists). What Are the Exceptions to the Requirements/Prohibitions? Other than the items listed under “What May the Sponsor Do,” there are no exceptions. Supplementary Information Recommended Practices  Use the NOTAM system to advise pilots of any conditions or circumstances that could affect operations at the airport.  Limit requests for temporary closures to aeronautical events.  Begin coordination with the FAA well in advance of any special event that will require any temporary closure of the airport, whether partial of full.  To the extent feasible, limit special event closures to partial, rather than full closure. This recommendation may not be practical for airports with limited footprints. Related Assurances  Grant Assurance 11, Pavement Preventive Maintenance  Grant Assurance 20, Hazard Removal and Mitigation  Grant Assurance 22.h, Reasonable Conditions for Safety and Efficiency  Grant Assurance 22.i , Access Restrictions for Safe Operations/Civil Aviation Needs Common Questions Q. What does the FAA consider to be the basic requirements to comply with this Assurance? A. A Sponsor is in compliance with its federal maintenance obligation when it “[f]ully understands that airport facilities must be kept in a safe and serviceable condition”; it “[m]akes available the

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.1, Grant Assurance 19 85 equipment, personnel, funds, and other resources, including contract arrangements, to implement an effective maintenance program”; and it “[a]dopts and implements a detailed program of cyclical preventive maintenance to carry out this commitment,” (quoting Order 5190.6B), so long as there is no evidence of actual unsafe conditions at the airport. Ricks v. Greenwood-Leflore Airport—No. 16- 09-04.—No. FAA-2011-0279. FAA-2011-0279-0032. 2011 FAA LEXIS 37. 2011 WL 381953. Director’s Determination (January 24, 2011). LRD 21 Determination No. 225. Q. If the Sponsor also operates a landfill, what are its obligations for management of bird hazards created by the landfill? A. The Sponsor’s Landfill Bird Harassment Program or Bird and Wildlife Management Plan must provide sufficient guidance and direction to be executed by employees without prior experience. Also, adequate training must be provided, and the airport must demonstrate that its plan has been implemented. Town of Fairview, Tex. v. City of McKinney, Tex. (1999)—No. 16-99-04. 2000 FAA LEXIS 738. 2000 WL 1100236. Director's Determination on Remand (July 26, 2000). LRD Determination No. 69—Remand from Order of Remand (March 28, 2000). LRD 21 Determination No. 60. Affirmed by Final Decision and Order of January 23, 2001. LRD 21 Determination No. 79. Q. Does the cancellation of a noise mitigation flight procedure by an airport violate a Sponsor’s obligation to operate and maintain the noise compatibility programs? A. Not necessarily. When the cancellation was based on safety concerns raised by the local FAA TRACON and the airport’s FAA contract air traffic control tower, the FAA found the cancellation to meet the Sponsor’s obligations. Town of Fairview, Tex. v. City of McKinney, Tex. (2004)—No. 16- 04-07.—No. FAA-2005-20888. FAA-2005-20888-0015. Director’s Determination (June 28, 2005). LRD 21 Determination No. 141. Affirmed by Final Decision and Order of November 30, 2005. LRD Determination No. 147. Q. What are the requirements and limitations for a temporary or partial closure of the airport for an airshow? A. The requirements and limitations include the following: (1) Publication of NOTAMs; (2) Special marking of the closed areas of the airport; (3) Extensive coordination with the FAA, including certification inspectors and the local Flight Standards District Office (FSDO); (4) Prior notification of tenants and any air carriers using the airport; (5) For any airshows, a Ground Operations plan approved by the FAA; and (6) For partial closures, the use of areas not needed for normal airport operations or areas that would have limited impact on normal operations for the special event. Additional guidance on the requirements and limitations on airshows can be found at the FAA’s Airshow website: http://www.faa.gov/airports/airport_safety/airshows/.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.1, Grant Assurance 19 86 Examples of Practices Found in Compliance 1. The FAA held that a single picture allegedly showing the airport in non-serviceable condition on a single day was not sufficient evidence to prove a violation of Grant Assurance 19. Ervin v. Northumberland Cnty. Airport Auth.—No. 13-82-03. Record of Decision (October 7, 1994). LRD Determination No. 8. 2. The FAA found no violation in a case where only one aircraft with a wing-span in excess of the design standards for a taxilane used the taxilane and the wing-span exceeded the design width by “less than a few inches.” Roadhouse Aviation v. City of Tulsa—No. 16-05-08.—No. FAA-2005- 22368. FAA-2005-22368-0023. 2006 FAA LEXIS 838. 2006 WL 3914734. Director’s Determination (December 14, 2006). LRD 21 Determination No. 167, Affirmed by Final Decision and Order of June 26, 2007. LRD Determination No. 179. 3. The FAA found no violation of Grant Assurance 19 when a Sponsor failed to correct flooding and drainage problems on an individual leasehold, when the problems had existed and were known to the complainant at the time of the execution of the lease. In these circumstances, the FAA considers the tenant to be responsible for correcting the problems or negotiating with the Sponsor to address the problem under the terms of the lease. Desert Wings Jet Ctr., LLC v. City of Redmond—No. 16-09- 07.—No. FAA-2009-1102. FAA-2009-1102-0019. 2010 FAA LEXIS 298. 2010 WL 4723466. Directors Determination (November 10, 2010). LRD 21 Determination No. 223. Affirmed by Final Agency Decision of May 25, 2012. LRD 21 Determination No. 236. 4. The FAA found no violation of Grant Assurance 19 when the Sponsor had corrected past failures to maintain edge lighting and to issue appropriate NOTAMS. Keyes v. McMinn Cnty., Tenn.—No. 16- 08-12.—No. FAA-2009-1056. FAA-2009-1056-0008. Director’s Determination (December 12, 2009. LRD 21 Determination No. 212. Affirmed by Final Agency Decision and Order of July 26, 2010. LRD Determination No. 219. 5. The FAA found no violation of Grant Assurance 19 based on a single runway incursion incident, where the Sponsor had implemented state DOT safety recommendations and had in place a vehicle driving program addressing the operation of vehicles on the airport. Roemer v. Manitowish Waters Airport Comm'n—No. 13-96-10. Record of Decision (March 20, 1998). LRD Determination No. 39. Examples of Practices Found in Non-Compliance 1. The FAA found that a Sponsor violated Grant Assurance 19 by permitting the operation of non- aeronautical businesses, storage of non-aeronautical items and storage of non-airworthy aircraft because these activities interfered with aeronautical activities. Valley Aviation Servs., LLP v. City of Glendale, Ariz.—No. 16-09-06.—No. FAA-2009-1020. FAA-2009-1020-0015. 2011 FAA LEXIS 136. 2011 WL 2274635. Director's Determination (May 24, 2011). Director’s Determination (May 24, 2011). LRD 21 Determination No. 229.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.2, Grant Assurance 20 87 1.3.2 Grant Assurance 20, Hazard Removal and Mitigation This Assurance requires the Sponsor to keep terminal airspace for visual and instrument approaches cleared and protected by removing, lowering, relocating, marking, or lighting or otherwise mitigating existing airport hazards and by preventing future airport hazards. The requirement includes the protection of minimum flight altitudes. Although zoning is one means of preventing new obstructions or hazards, the FAA considers avigation and clearing easements to be more effective. If a Sponsor has zoning authority and fails to prevent an obstruction or hazard, the Sponsor may be in violation of Grant Assurance 20. FAA guidance documents (listed under References and Resources for Grant Assurance 20 in Appendix C) define obstructions, establish standards for marking and lighting, obstructions, and evaluating proposed construction for potential obstruction impacts. Any person proposing construction that could create an obstruction is subject to 14 CFR Part 77, Objects Affecting Navigable Airspace, and must provide notice of the proposed construction to the FAA. A Sponsor is responsible for compliance with Part 77 for proposed construction on airport property, as well as on any off-airport property it owns. The Sponsor has no responsibility for enforcing Part 77 against third parties. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used for violation of this assurance.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.2, Grant Assurance 20 88 What Must the Sponsor Do? (Subject to Exceptions and Permitted Practices, Below) Prevent construction of any hazards to navigation on property that it owns or controls. Remove, lower, relocate, mark, light or otherwise mitigate existing airport hazards on property that it owns or controls. Exercise any zoning or permitting authority it possesses to prevent construction of any hazards to navigation. Comply with 14 CFR Part 77 for any construction on the airport or on other property that it owns. Advise neighboring jurisdictions with zoning or permitting authority of the requirements of Part 77 when they are considering approval of construction that could create a hazard. Mark and light hazards resulting from airport conditions. What May the Sponsor Do? With the concurrence of the FAA, mark, light, relocate or lower existing airport hazards, when removal is not feasible. What Sponsor Actions Are Prohibited? Constructing or permitting construction of a hazard on the airport or other property it owns or controls. Failing to exercise zoning or permitting authority to prevent construction of a hazard. What Are the Exceptions to the Requirements/Prohibitions? A Sponsor’s obligations with respect to property that it does not own or control, and over which it has no zoning or permitting authority, is limited to informing the interested parties, including the jurisdictions with zoning and permitting authority, of the requirements of Part 77.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.2, Grant Assurance 20 89 Supplementary Information Recommended Practices  Coordinate with the FAA on any proposed construction on the airport itself, on property owned or controlled by the Sponsor in the vicinity of the airport or on property in the vicinity of the airport over which it has zoning or permitting authority.  Promptly notify the FAA when the Sponsor becomes aware of any proposed construction in the vicinity of the airport on property that it does not control and over which it does not have zoning or permitting authority.  Educate neighboring jurisdictions with zoning or permitting authority on the requirements of 14 CFR Part 77.  If the airport is surrounded by trees, develop and implement a tree-clearing plan to protect approach and departure imaginary surfaces. Related Assurances  Grant Assurance 19, Operation and Maintenance  Grant Assurance 21, Compatible Land Use Common Questions Q. Our airport staff just learned that a developer is proposing to construct a building in a neighboring jurisdiction that could be an airport hazard. What should they do to comply with Grant Assurance 20? A. Airport staff should inform the developer and the neighboring jurisdiction of the requirements of Part 77 and should notify the FAA of the proposed construction. Q. As a result of a recent airspace evaluation, a long-standing airport structure has for the first time been identified by the FAA to be a hazard to navigation. What should airport staff do to comply with Grant Assurance 20? A. Airport staff should determine whether it is feasible to remove the hazard. If not, they should coordinate with the FAA on the appropriate measures to light, mark, lower, relocate or otherwise mitigate the hazard. Examples of Practices Found in Compliance 1. The FAA found no violation of Grant Assurance 20 when a proposed project was not located within an airport’s current runway protection zone (RPZ) and when a potential future change in arrival pattern that would have put the project in the RPZ had been rejected by the Sponsor and FAA as infeasible. Paskar v. City of New York—No. 16-11-04.—No. FAA-2011-0612. FAA-2011-0612- 0024. Director’s Determination (September 27, 2012). LRD 21 Determination No. 238. Affirmed by Final Agency Decision of June 17, 2015. Review denied sub nom. Paskar v. FAA, 478 F. App'x 707 (2d Cir. 2012) (unpublished).

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.2, Grant Assurance 20 90 2. The FAA found no violation of Grant Assurance 20 when a Sponsor’s cancellation of a noise mitigation flight procedure was based on safety concerns raised by the local FAA TRACON and the airport’s FAA contract air traffic control tower. Town of Fairview, Tex. v. City of McKinney, Tex. (2004)—No. 16-04-07.—No. FAA-2005-20888. FAA-2005-20888-0015. Director’s Determination (June 28, 2005). LRD 21 Determination No. 141. Affirmed by Final Decision and Order of November 30, 2005. LRD Determination No. 147. Examples of Practices Found in Non-Compliance 1. The FAA found a Sponsor violated Grant Assurance 20 by failing to properly mitigate bird hazards at the Sponsor’s landfill when its Landfill Bird Harassment Program did not provide sufficient guidance and direction to be executed effectively by personnel lacking the requisite experience. Town of Fairview, Tex. v. City of McKinney, Tex. (1999)—No. 16-99-04. 2000 FAA LEXIS 738. 2000 WL 1100236. Director's Determination on Remand (July 26, 2000). LRD Determination No. 69— Remand from Order of Remand (March 28, 2000), LRD 21. Determination No. 60. Affirmed by Final Decision and Order of January 23, 2001. LRD 21 Determination No. 79.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.3, Grant Assurance 21 91 1.3.3 Grant Assurance 21, Compatible Land Use Under this Assurance, the Sponsor must, to the extent reasonable, restrict land uses near the airport to those that are compatible with airport operations. This includes aircraft take-off and landings. Appropriate action varies depending on the Sponsor’s control over the land in question. These actions, as well as typical non-compatible uses, are addressed in the call-out boxes and Common Question section below. In addition, if a Sponsor accepts a grant for a noise compatibility project, it must change the land use of any land within its noise compatibility program and within its jurisdiction to reduce the land’s noise incompatibility. For example, if a Sponsor buys a residential property to assure noise compatibility, it cannot resell that land for residential development. Also, if the Sponsor has zoning authority, it may not rezone industrial or commercial property (which may be generally compatible with airport noise) to permit residential use. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used for violation of this assurance.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.3, Grant Assurance 21 92 What Must the Sponsor Do? (Subject to Exceptions and Permitted Practices, Below) If the Sponsor owns the land: (1) Prohibit incompatible uses through leases, regulations, minimum standards, etc.; (2) Include restrictive covenants to prevent incompatible uses whenever it sells land. If the Sponsor has jurisdiction over the land: (1) Adopt and enforce zoning regulations to prevent incompatible uses; (2) Adopt and enforce building codes to prevent incompatible uses. If another entity has jurisdiction over the land: (1) Encourage the other jurisdiction to adopt zoning regulations and building codes that will prevent incompatible uses; (2) Inform the other jurisdiction when incompatible uses are proposed and encourage it not to grant the permits, waivers or amendments to regulations or codes that would permit the incompatible use. Cooperate with the FAA in conducting an RPZ analysis following the FAA’s Interim Guidance on Land Uses Within a Runway Protection Zone. What May the Sponsor Do? For land that it owns, select lease terms, regulations or minimum standards, etc., as the means to prevent incompatible uses, so long as the method chosen is effective. For land over which it has jurisdiction, select the zoning regulation or building code provisions to assure compatible land uses, so long as they are effective. What Sponsor Actions Are Prohibited? Permitting incompatible land uses on property that it owns or controls. Failing to exercise zoning or permitting authority to prevent incompatible land uses on property over which it has jurisdiction. In a noise compatibility project, causing or permitting any change in land use within its jurisdiction that will reduce its noise compatibility.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.3, Grant Assurance 21 93 What Are the Exceptions to the Requirements/Prohibitions? A Sponsor’s obligations with respect to property that it does not own or control, and over which it has no zoning or permitting authority, is limited to encouraging the jurisdiction with zoning or permitting authority to adopt measures to assure compatible uses; to inform the jurisdiction when incompatible uses are proposed; and to encourage the jurisdiction not to grant the necessary authority or permits. Supplementary Information Recommended Practices  Adopt comprehensive airport overlay zoning ordinances, regulations, etc., that account for current and reasonably foreseeable airport activity.  Encourage neighboring jurisdictions with zoning authority to do likewise, and coordinate with them on any airport overlay zoning initiative. Related Assurances  Grant Assurance 19, Operation and Maintenance  Grant Assurance 20, Hazard Removal and Mitigation Common Questions Q. Aside from noise issues, what types of uses does the FAA consider to be incompatible with an airport? A. Typical incompatible uses, aside from noise, include the following:  Uses that would lead to the assembly of persons under areas defined for aircraft arrivals or departures;  Uses that would create attractants to wildlife that could damage aircraft;  Uses that would encroach on “imaginary surfaces” for aircraft arrivals and departures, as defined by 14 CFR Part 77 (obstructions and hazards). Q. What types of land uses does the FAA consider to be incompatible with an airport on the basis of noise? A. Incompatibility for noise depends not only on the type of use, but the level of noise. The threshold the FAA typically uses to determine noise compatibility is the 65 LDN noise contour. Land uses in the 65 LDN contour or higher that are considered incompatible include the following:  Residential use  Schools  Churches

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.3, Grant Assurance 21 94  Hospitals and nursing homes Q. A vacant parcel within the 65 LDN has come on the market. A developer is interested in purchasing it to develop a mixed single-family, townhome community, if it can obtain a change in zoning to residential use. The neighboring community with zoning authority is not supportive of the airport and is expected to grant a zoning variance. Is our airport required to buy the vacant parcel to prevent a non-compatible use? A. No. The Grant Assurance requires only reasonable actions, and the FAA does not interpret this standard to mandate the acquisition of property to prevent incompatible uses. However, the Sponsor would be obliged to inform the neighboring jurisdiction of the potential incompatible use and request that it either deny the variance or, at a minimum, condition the variance or any building permit on a requirement to incorporate sound attenuation measures in the construction of the dwellings. Examples of Practices Found in Compliance 1. The FAA held that construction near the airport of a recycling center with operations comparable to those described in Advisory Circular 150/5200-33 for recycling centers was not an attractant to hazardous wildlife. Therefore, it was not an incompatible land use, and the FAA found that the Sponsor had fulfilled its obligations under Grant Assurance 21. Keathly v. City of McKinney, Tex.— No. 16-03-14.—No. FAA-2003-15999. 2004 FAA LEXIS 876. 2004 WL 3198207. Director’s Determination (October 13, 2004). LRD 21 Determination No. 128. Examples of Practices Found in Non-Compliance 1. The FAA found that a Sponsor that permitted residential use of hangars violated Grant Assurance 21. The FAA considers residential use to be incompatible with an airport. Therefore, a Sponsor is obligated to prevent residential use of its airport hangars. Carey v. Afton-Lincoln Cnty. Mun. Airport Joint Powers Bd.—No. 16-06-06.—No. FAA-2006-25154. FAA-2006-25154-0011. 2007 FAA LEXIS 40. 2007 WL 430630. Director’s Determination (January 19, 2007). LRD 21 Determination No. 168. Affirmed by Order Dismissing Appeal of November 14, 2007. LRD 21 Determination No. 184.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.4, Grant Assurance 11 95 1.3.4 Grant Assurance 11, Pavement Preventive Maintenance The Sponsor must have in place and follow a pavement maintenance management program for the useful life of all AIP-funded pavements at the airport. Key elements of the program are described in the Common Questions section. The Sponsor must also provide reports on the program and on pavement condition as requested by the FAA. In addition, a Sponsor is responsible for preventing gross overstressing of pavement beyond its load- bearing capacity. While this responsibility may require the Sponsor to restrict access to the runway, the access restriction is itself subject to other Grant Assurance requirements, primarily Grant Assurance 22, Economic Nondiscrimination. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used for violation of this assurance. What Must the Sponsor Do? (Subject to Exceptions and Permitted Practices, Below) Develop and implement a pavement maintenance management program compatible with FAA standards. Conduct periodic and annual pavement inspections. What May the Sponsor Do? To prevent overstressing of pavement, restrict aircraft access based on weights that exceed the airport pavement design standards. Coordination with FAA is recommended before adopting a restriction.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.4, Grant Assurance 11 96 What Sponsor Actions Are Prohibited? Failing to develop or implement an FAA-compliant pavement maintenance management program. What Are the Exceptions to the Requirements/Prohibitions? The requirement for a pavement maintenance management program is limited to pavements funded with AIP Grants. However, the FAA recommends using it for all airport pavement. Supplementary Information Recommended Practices  Conduct daily pavement inspections.  Complete pavement maintenance and repair on a timely basis to prevent accelerated deterioration of pavement.  A systemic program of successive pavement treatments, undertaken when pavement is still in good condition, will improve the quality of the pavement, reduce the life-cycle costs of the pavement and avoid disruptions from major rehabilitation or reconstruction projects. Related Assurances  Grant Assurance 19, Operation and Maintenance  Grant Assurance 22.i, Economic Nondiscrimination Common Questions Q. What elements are required in a pavement maintenance management program in order to comply with Grant Assurance 11? A. The program, at a minimum, must include the following: a. A pavement inventory; b. Annual and periodic inspections in accordance with AC 150/5380-6C, Guidelines and Procedures for Maintenance of Airport Pavements (referenced in Appendix C, Resources and References for Grant Assurance 11); c. A record keeping and information retrieval system; and d. Identification of maintenance program funding.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.4, Grant Assurance 11 97 Q. Our general aviation airport has a low level of activity, and traffic consists entirely of single or twin- engine propeller aircraft. Does our program need to be exactly like the program for Chicago O’Hare to satisfy the Grant Assurance? A. No. While the program must address the same elements, the contents should reflect the differences in airport size, activity level and pavement characteristics. For example, the FAA guidance indicates that a plan should address the budget requirements associated with meeting a Sponsor’s pavement management goals. The available budget for Chicago O’Hare is likely to be substantially greater than for a low-activity general aviation airport with no turbojet operations, and that difference should be reflected in the program. Examples of Practices Found in Compliance No examples of practices found in compliance with this Grant Assurance were found in the research. Examples of Practices Found in Non-Compliance No examples of practices found in non-compliance with this Grant Assurance were found in the research.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.5, Grant Assurance 29 98 1.3.5 Grant Assurance 29, Airport Layout Plan Grant Assurance 29 includes two clauses. Grant Assurance 29.a: This clause requires the Sponsor to maintain an up-to-date airport layout plan (ALP) approved by the FAA. All amendments to the ALP must also be approved by the FAA. The ALP approval is considered a major federal action under NEPA. This clause also prohibits the Sponsor from making or permitting any changes in the airport that are not shown on the approved ALP if those changes would adversely affect the airport’s safety, efficiency or utility. In addition to the ALP, the Sponsor is required to maintain an airport property map, or “Exhibit A,” which shows how each tract of the airport was acquired and the source of funds for the acquisition. The required elements of an ALP are discussed in the Common Questions section. Grant Assurance 29.b: Under this clause, if the Sponsor makes a change in the airport or its facilities that is not reflected in the ALP, and the FAA determines the change will adversely affect the safety, utility, or efficiency of any federally owned, leased or funded property, the FAA may require the Sponsor to eliminate the adverse effect or bear the cost of rectifying the situation. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used for violation of this assurance.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.5, Grant Assurance 29 99 What Must the Sponsor Do? (Subject to Exceptions and Permitted Practices, Below) Obtain FAA approval of its current ALP. Obtain FAA approval of any amendments to the ALP. Develop the airport in a manner that is generally consistent with the approved ALP. Defer any construction until an ALP or amended ALP showing that construction has been approved by the FAA. The requirement applies to both non-aeronautical and aeronautical construction. Maintain an up-to-date airport property map or Exhibit A. If construction that was not shown on an approved ALP adversely affects any federally owned, leased or funded facility (including AIP-funded projects), eliminate the adverse effect or pay the cost of correcting the situation. What May the Sponsor Do? For ALP changes made between major master planning efforts, a Sponsor may submit proposed ALP amendments as pen-and-ink changes. What Sponsor Actions Are Prohibited? Implementing or permitting construction that is not shown on an approved ALP that adversely affects the airport’s safety or utility. The prohibition applies to non-aeronautical as well as aeronautical construction. Failing to update the Exhibit A when parcels are added or deleted. What Are the Exceptions to the Requirements/Prohibitions? Even when unapproved construction adversely affects federally owned leased or financed facilities, the FAA may choose not to require the Sponsor to eliminate the adverse effect or bear the cost of corrective action. A Sponsor may make or permit minor changes to the airport before obtaining FAA approval for an amendment to the ALP, so long as the changes do not adversely affect the safety or utility of the airport and the Sponsor updates the ALP to show the changes.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.5, Grant Assurance 29 100 Supplementary Information Recommended Practices  Consult with the FAA before undertaking or permitting any construction in order to determine whether and how Grant Assurance 29 applies.  As required for any changes in airport parcels that would trigger a revision to Exhibit A, include an updated Exhibit A with the first grant application submitted after the change occurs. Related Grant Assurances None for this Grant Assurance. Common Questions Q. What are the required elements of an ALP? A. The required elements of an ALP include the following: 1. The boundaries of the airport, off-airport areas owned or controlled by the Sponsor and used for airport purposes and proposed additions to the same; 2. The location of all existing and proposed facilities, including any proposed extensions or reductions; 3. The location of all existing and proposed non-aviation areas and all existing facilities located on these areas; and 4. All proposed and existing TTF aircraft access points. Q. A corporate aviation tenant wants to construct a 5’x10’x5’ shed at the back of its aircraft hangar, which is 30’ high. Do airport staff need to submit an amended ALP before permitting this construction? A. Probably not, since the shed is unlikely to impact any aeronautical surfaces, given its size and location. A more substantial structure at a different location, however, might trigger the requirement. Q. How long after an updated ALP is submitted does the FAA have to approve it? A. There is no time limit. Moreover, the ALP review process requires coordination with multiple FAA offices. Examples of Practices Found in Compliance 1. The FAA held that the inadvertent omission of a leasehold from an ALP did not rise to the level of a violation of Assurance 29, where there was no evidence of adverse consequences from the omission. Ricks v. Greenwood-Leflore Airport—No. 16-09-04.—No. FAA-2011-0279. FAA-2011-0279-0032.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.5, Grant Assurance 29 101 2011 FAA LEXIS 37. 2011 WL 381953. Director’s Determination (January 24, 2011). LRD 21 Determination No. 225. 2. The FAA held that there was no violation of Grant Assurance 29 when a Sponsor approved operation of an on-airport sky diving drop zone before receiving FAA approval for an ALP update showing the drop zone. The Sponsor was required to amend the ALP to show the drop zone, but a master plan update was not required to support the ALP change. Bodin v. City of Santa Clara, Cal.—No. 16-11- 06.—No. FAA-2011-0699. FAA-2011-0699-0019. Director’s Determination (December 19, 2011). LRD 21 Determination No. 233. Affirmed in part, reversed in part, by Final Agency Decision and Order of August 12, 2013. 3. The FAA found no violation when a Sponsor temporarily converted aeronautical land to an interim vegetation without amending the ALP at a time when there was no aeronautical demand for that land. Martyn v. Port of Anacortes, Wash.—No. 16-02-03.—No. FAA-2002-12988. Partial Dismissal and Notice of Docketing (April 29, 2002). LRD 21 Determination No. 100. Examples of Practices Found in Non-Compliance 1. The FAA found that the closure of a runway used by glider operations without an amendment to the ALP violated Grant Assurance 29. Orange Cnty. Soaring Ass'n v. Cnty. of Riverside, Cal.—No. 16- 09-13.—No. FAA-2010-0092. FAA-2010-0092-0012. Director’s Determination (February 11, 2011). LRD 21 Determination No. 226. 2. The FAA found that a Sponsor violated Grant Assurance 29 by permitting commercial uses of areas that had been designated on the ALP for aeronautical use. Valley Aviation Servs., LLP v. City of Glendale, Ariz.—No. 16-09-06.—No. FAA-2009-1020. FAA-2009-1020-0015. 2011 FAA LEXIS 136. 2011 WL 2274635. Director's Determination (May 24, 2011). Director’s Determination (May 24, 2011). LRD 21 Determination No. 229. 3. The FAA held that a Sponsor’s actions encouraging non-aeronautical leasing of property for the purpose of reducing the amount of property available to aeronautical users could be a violation of Grant Assurance 29. However, it did not make a definitive determination. Skydance Helicopters, Inc. v. Sedona-Oak Creek Airport Auth.—No. 16-02-02.—No. FAA-2002-13068. FAA-2002-13068- 0010. 2003 FAA LEXIS 92. 2003 WL 1524500. Director’s Determination (March 7, 2003). LRD 21 Determination No. 110.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.6, Grant Assurance 30 102 1.3.6 Grant Assurance 30, Civil Rights Grant Assurance 30 prohibits the Sponsor from discriminating on the grounds of race, creed, color, national origin, sex, age or handicap in providing access to the airport or participation in airport programs, including participation in implementing the projects funded with AIP grants. In many respects, Grant Assurance 30 parallels the requirements of Title VI of the Civil Rights Act and 49 CFR Part 21, which are included in Grant Assurance 1, General Federal Requirements. However, it is based on a specific provision in the AIP statute, 49 USC §47123. Grant Assurance 30 includes seven clauses, summarized below: Grant Assurance 30.a: This clause requires a Sponsor to conduct all programs and operate all facilities in compliance with Grant Assurance 30, with the terms “programs” and “facilities” defined as in 49 CFR Part 21. Grant Assurance 30.b: This clause defines the scope of the non-discrimination obligation. If a Sponsor receives a grant for a program or activity, all of the Sponsor’s programs and activities are subject to Grant Assurance 30. If the grant is issued to fund construction or renovation of any part of a facility, the entire facility and other facilities operated in connection with the grant-funded facility are subject to Grant Assurance 30. If the grant is for land acquisition, Grant Assurance 30 applies to all rights to space on, over or under the property. Grant Assurance 30.c: This clause defines the duration of the Grant Assurance 30 obligations. For Sponsors receiving AIP grants for development, including equipment acquisition, the obligations continue as long as the airport is used as an airport or as long as the Sponsor owns the airport. In other words, the duration of the obligation is indefinite. Grant Assurance 30.d: This clause requires the Sponsor to include certain notice language regarding non-discrimination in any bid solicitation, request for proposals (RFP) for materials or work under the Grant and in all proposals for agreements, regardless of funding sources. Concession agreements are specifically included in this requirement. Grant Assurance 30.e: This clause requires the Sponsor to include non-discrimination language in all contracts that are subject to Title VI and 49 CFR Part 21. The Sponsor must include non-discrimination language as a covenant running with the land for any transfer of land from the Federal government. A non-discrimination covenant running with the land must also be included in any deed, lease or other document transferring property acquired with AIP grants or for construction or use of space on property acquired with AIP grants. All the contracts subject to this clause must also include a list of applicable legal and administrative authorities implementing the prohibition on discrimination in this Grant Assurance and Title VI. Grant Assurance 30.f: This clause requires the Sponsor to guarantee that the Sponsor itself, other recipients, sub-recipients, contractors, sub-contractors, consultants, transferees, successors in interest and other participants comply with all applicable non-discrimination requirements. Grant Assurance 30.g: Under this clause, the Sponsor agrees that the United States has a right to seek judicial enforcement of Grant Assurances 30, including applicable statutes and regulations.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.6, Grant Assurance 30 103 Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Indefinite1 Withholding of grants; Judicial enforcement 1 For so long as the airport is operating or so long as the Sponsor retains ownership or possession of the property subject to the Assurance. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used for violation of this assurance. What Must the Sponsor Do? (Subject to Exceptions and Permitted Practices, Below) Conduct all programs and operate all facilities in compliance with Grant Assurance 30 and 49 CFR Part 21. Include specified notice language regarding non-discrimination in any bid solicitation, RFPs under the Grant and in all proposals for agreements, regardless of funding sources. Concession agreements are specifically included in this requirement. Include non-discrimination language in all contracts that are subject to Title VI and 49 CFR Part 21. Any contract requiring this language must also include a list of applicable legal and administrative authorities implementing the prohibition on discrimination in this Grant Assurance and Title VI. Guarantee that the Sponsor itself, other recipients, sub-recipients, contractors, sub- contractors, consultants, transferees, successors in interest and other participants comply with all applicable non-discrimination requirements. What May the Sponsor Do? There is limited discretion under this Grant Assurance. Required language to implement the requirements is listed in detail and must be followed verbatim.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.6, Grant Assurance 30 104 What Sponsor Actions Are Prohibited? Discriminating on the grounds of race, creed, color, national origin, sex, age or handicap in providing access to the airport or participation in airport programs, including participation in implementing projects funded with AIP grants. Failing to include required nondiscrimination language in solicitations, proposals, contracts or other agreements. What Are the Exceptions to the Requirements/Prohibitions? There are no exceptions. Supplementary Information Recommended Practices  Sponsors should consult 49 CFR Part 21 and Appendix C, Resources and References for Grant Assurance 30 to obtain a full understanding of their obligations under this Grant Assurance. Related Grant Assurances  Grant Assurance 1, General Federal Requirements, Statutes: item #m. Rehabilitation Act of 1973; item #n. Title VI of the Civil Rights Act of 1964; item #o. Americans with Disabilities Act of 1990, as amended; item #p. Age Discrimination Act of 1975.  Grant Assurance 1, General Federal Requirements, Executive Orders: item #f. Executive Order 12898, Environmental Justice.  Grant Assurance 1, General Federal Requirements, Regulations: item #f. 28 CFR Part 35, Discrimination on the Basis of Disability in State and Local Government Services; item #g. 28 CFR §50.3, U.S. Department of Justice Guidelines for Enforcement of Title VI of the Civil Rights Act of 1964; item #n. 49 CFR Part 21, Nondiscrimination in Federally Assisted Programs of the Department of Transportation—effectuation of Title VI of the Civil Rights Act of 1964; item #r. 49 CFR Part 27, Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving or Benefitting from Federal Financial Assistance; item #s 49 CFR Part 28, Enforcement of Nondiscrimination on the Basis of Handicap in Programs or Activities conducted by the Department of Transportation. Common Questions Q. Our airport has accepted only a single grant in the last 20 years for a runway reconstruction project. Is Grant Assurance 30 limited to the operation of the runway?

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.6, Grant Assurance 30 105 A. No. Under the definitions included in the Grant Assurance and Title 21, Grant Assurance 30 applies to all airport activities and facilities regardless of funding source. Q. Does Grant Assurance 30 prohibit discrimination in employment? A. No. Employment discrimination is covered by separate legal requirements under Title II of the Civil Rights Act. Q. What are examples of prohibited discrimination by a Sponsor under this Assurance? A. Appendix C to 49 CFR Part 21 provides examples of prohibited discrimination. Q. Is potential non-compliance with Grant Assurance 30 investigated under 14 CFR Part 13 and Part 16? A. Not necessarily. First, the investigation would be conducted by the FAA’s Office of Civil Rights, not the Office of Airports. Second, a potential violation of Grant Assurance 30 could be treated as a potential violation of 49 CFR Part 21. That regulation includes its own investigation and enforcement procedures, which would be followed to resolve the issue. However, complaints including Grant Assurance 30 regularly include claims under other Grant Assurances, including Grant Assurance 22, Economic Nondiscrimination, and Grant Assurance 37, Disadvantaged Business Enterprises. When other assurances are included in the complaint, the FAA will address the Grant Assurance 30 issues in either the Part 13 investigation or Part 16 proceeding. Examples of Practices Found in Compliance 1. The FAA found no violation when the sole basis for the complaint was the airport proprietor’s use of feminine pronouns to refer to a female complainant. Desert Wings Jet Ctr., LLC v. City of Redmond—No. 16-09-07.—No. FAA-2009-1102. FAA-2009-1102-0019. 2010 FAA LEXIS 298. 2010 WL 4723466. Directors Determination (November 10, 2010). LRD 21 Determination No. 223. Affirmed by Final Agency Decision of May 25, 2012. LRD 21 Determination No. 236. 2. The FAA found no violation of Grant Assurance 30 where the Sponsor showed it had based its award of a valet parking concession on the highest bid. Albuquerque Valet Parking Serv. v. City of Albuquerque, N.M.—No. 16-01-01.—No. FAA-2003-16103. FAA-2003-16103-0015. 2002 FAA LEXIS 84. 2002 WL 321958. Director's Determination (February 11, 2002). LRD 21 Determination No. 96. 3. The FAA found no violation of Grant Assurance 30 where the complainant presented no evidence that the Sponsor had discriminated against the complainant based on race, religious beliefs, creed, color, national origin, sex, age or disability. Cox v. City of Dallas, Tex.—No. 16-97-02. 1997 FAA LEXIS 1530. 1997 WL 1120744. Record of Determination (October 24, 1997). LRD 21 Determination No. 34.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.6, Grant Assurance 30 106 Examples of Practices Found in Non-Compliance No decisions identifying practices as in non-compliance with this Grant Assurance were found in the research. As discussed in the Common Questions section, Appendix C to 49 CFR Part 21 includes examples of practices that would violate Title VI. Two such examples are listed below. 1. Requiring a pilot to park his aircraft at a location that is less desirable or less accessible to the terminal because of his race, color or national origin. 2. Restricting access to airline clubs or first-class lounges based on race, color or national origin.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.7, Grant Assurance 37 107 1.3.7 Grant Assurance 37, Disadvantaged Business Enterprises Under this Assurance, the Sponsor shall not discriminate on the basis of race, color, national origin or sex in the award and performance of any DOT-assisted contract covered by 49 CFR Part 26, or in the award and performance of any concession activity contract covered by 49 CFR Part 23. In addition, the Sponsor shall not discriminate on the basis of race, color, national origin or sex in the administration of its ACDBE and DBE programs or the requirements of 49 CFR Parts 23 and 26. The Sponsor shall take all necessary and reasonable steps under 49 CFR Parts 23 and 26 to ensure nondiscrimination in the award and administration of DOT-assisted contracts, and/or concession contracts. The Sponsor’s DBE and ACDBE programs, as required by 49 CFR Parts 26 and 23, respectively, and as approved by DOT, are incorporated by reference in the Grant Agreement. Implementation of these programs is a legal obligation, and failure to carry out its terms shall be treated as a violation of the Grant Agreement. Grant Assurance 37 also specifies that the FAA can refer a failure to properly implement an approved program for criminal enforcement under 18 USC §1001 or civil enforcement, including debarment, under the Program Fraud and Civil Remedies Act of 1986 (49 USC §3810 et seq.). Although both programs are included in this single Assurance, only the ACDBE program requirements of 49 CFR Part 23 apply to general airport operations and management. Additional information about ACDBE requirements and Part 23 can be found in Section 1.6.2 below. The DBE program requirements of 49 CFR Part 26 are relevant only to projects receiving AIP funds and are discussed in Chapter 2. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants Criminal enforcement Suspension & debarment 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.7, Grant Assurance 37 108 What Must the Sponsor Do? (Subject to Exceptions and Permitted Practices, Below) Avoid discrimination on the basis of race, color, national origin or sex in the award or performance of any concession activity contract covered by 49 CFR Part 23. Prohibit discrimination on the basis of race, color, national origin or sex by any master concessionaire, concession program manager, master lessee, etc., in any concession program covered by Part 23. As required by Part 23, establish ACDBE participation goals for covered concession programs and make good faith efforts to first accomplish those goals through race and gender-neutral measures, but through race or gender-conscious measures if necessary. Follow the ACDBE certification procedures and standards included in Part 23 and 49 CFR Part 26. Maintain all records and documentation required by Part 23. What May the Sponsor Do? Part 23 identifies a variety of methods for Sponsors to attempt to meet their ACDBE participation goals. A Sponsor may select the particular methods, so long they can be reasonably expected to be successful in the Sponsor’s particular circumstances. What Sponsor Actions Are Prohibited? Discriminating on the grounds of race, creed, color, national origin or sex, in implementing concession programs covered by Part 23. Permitting discrimination on the basis of race, color, national origin or sex by any master concessionaire, concession program manager, master lessee, etc., in any concession program covered by Part 23. What Are the Exceptions to the Requirements/Prohibitions? The requirements for ACDBE programs specified in Part 23 apply only to primary airports (airports with scheduled service and at least 10,000 annual passenger boardings). However, the non- discrimination requirements of the Grant Assurance apply to all airports.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.7, Grant Assurance 37 109 Supplementary Information Supplementary Information Recommended Practices  Sponsors should consult 49 CFR Part 23 and Appendix C, Resources and References for Grant Assurance 37 to obtain a full understanding of their obligations under this Grant Assurance. Related Grant Assurances  Grant Assurance 1, General Federal Requirements, Regulations #o., 49 CFR Part 23, Participation by Disadvantaged Business Enterprises in Airport Concessions Common Questions Q. What types of businesses/activities fall under the ACDBE requirements? A. The following types of businesses/activities are considered concessions covered by the requirements:  On-airport food and beverage sales  Other on-airport retail sales  On-airport rental car services  Pay phone services  On-airport hotels  Limousines or taxi services with a physical presence on airport, e.g., a sales booth or dispatcher  Management contracts or subcontracts with activities taking place at the airport  Providers of web services accessible to the public at the airport  Providers of display advertising or other advertising located at the airport  Suppliers of goods or services to airport concessionaires The following types of businesses or activities are not considered concessions:  Businesses whose only contact with the airport is picking up or dropping off passengers, such as hotels, off-airport parking or off-airport rental car shuttles, taxis or limousine services that do not have any other physical presence at the airport  Aeronautical activities  Flight kitchens or catering services  Janitorial or security services  Checked baggage delivery services Q. Is potential non-compliance with Grant Assurance 37 investigated under 14 CFR Part 13 and Part 16? A. Not necessarily. The FAA’s Office of Civil Rights has conducted investigations regarding compliance with Grant Assurance 37 under Part 16. However, Part 23 specifies that the investigation and enforcement procedures in 49 CFR Part 26 also apply to Part 23.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.3.7, Grant Assurance 37 110 Examples of Practices Found in Compliance 1. The FAA found that there was a reasonable and non-discriminatory basis for the termination of a taxi concession when the Sponsor provided evidence of repeated consumer complaints and traffic citations. Rogers v. Metro. Wash. Airport Auth.—No. 13-93-28. Record of Decision (May 31, 2000). LRD 21 Determination No. 64. 2. The FAA held that a Sponsor’s denial of a concession license to one nationally branded ACDBE franchisee (National Brand ACDBE) did not violate Part 23 or Grant Assurance 37, when the Sponsor had not expressed an intent to exclude National Brand ACDBEs and in fact had established another national brand ACDBE concessionaire at the airport. Lolita's Airport Cafe, Inc. v. City of Houston, Tex.—No. 16-99-22. 2000 FAA LEXIS 958. 2000 WL 1387889. Director’s Determination (September 11, 2000). LRD 21 Determination No. 73. 3. The FAA determined that a Sponsor did not violate Part 23 or Grant Assurance 37 by permitting a master concessionaire to charge a 5% management fee where the record showed that the fee was clearly stated throughout the concession agreement and all parties had advice of counsel. Lolita's Airport Cafe, Inc. v. City of Houston, Tex.—No. 16-99-22. 2000 FAA LEXIS 958. 2000 WL 1387889. Director’s Determination (September 11, 2000). LRD 21 Determination No. 73. Examples of Practices Found in Non-Compliance No examples of practices found in non-compliance with this Grant Assurance were identified in the research.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.4.1, Grant Assurance 4 111 Section 1.4 Ownership and Control 1.4.1 Grant Assurance 4, Good Title This Grant Assurance requires that a Sponsor, the federal government or other public agency hold good title, considered adequate by the FAA, in the obligated airport. For a noise compatibility project carried out on the Sponsor’s property, the Sponsor must also hold good title. The FAA may require a Sponsor to provide a Title Search Report as part of an initial Sponsor eligibility determination. Under Grant Assurance 4, good title includes a fee simple interest, an interest transferred by the federal government via quit-claim deed or a lease from the federal government or other public agency. However, the term of the lease must be at least as long as the useful life of the project to be funded by the grant agreement. Thus, the FAA ordinarily would not issue a grant for airfield pavement construction that has a useful life of 20 years to a Sponsor that has 15 years remaining on its lease of the airport from another public agency. The research did not identify any AIP-funded airports where the Sponsor relied on an easement to satisfy Grant Assurance 4. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used for violation of this assurance. What Must the Sponsor Do? (Subject to Exceptions and Permitted Practices, Below) Own the airport or lease it from the federal government or another public agency. If leased, the remaining term of the airport lease must be at least as long as the useful life of the project being funded with the grant. A first-time Sponsor may be required to provide a Title Search Report to the FAA as part of an initial eligibility determination. For noise mitigation projects intended to be carried out on Sponsor property, the Sponsor must own or acquire the property where AIP funds will be spent.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.4.1, Grant Assurance 4 112 What May the Sponsor Do? Satisfy the good title requirement either with ownership or through an appropriate lease. What Sponsor Actions Are Prohibited? Failing to retain good title throughout the useful life of the project being funded. What Are the Exceptions to the Requirements/Prohibitions? An easement theoretically could be used to satisfy the requirement, but the research identified no airports to date that have relied on an easement to satisfy Grant Assurance 4. Supplementary Information Recommended Practices  Sponsors of leased airports should negotiate long-term leases (more than 20 years) and negotiate extensions on a regular schedule to ensure that the remaining lease term never falls below 20 years. Related Grant Assurances  Grant Assurance 5, Preserving Rights and Powers Common Questions Q. Our airport has 10 years left on its lease from the County. We expect that the main runway will need a rehabilitation within the next two years. Does airport staff need to negotiate an extension of the lease before applying for AIP funds to finance the reconstruction? A. Yes. The useful life of the runway reconstruction will be considered to be 20 years. Therefore, the FAA will not issue a grant unless the airport’s lease extends for at least 20 years after the project is completed. Q. Our airport just received approval for a Part 150 noise compatibility program that includes residential soundproofing measures. Does the airport need to purchase the houses to qualify for an AIP grant to soundproof those houses?

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.4.1, Grant Assurance 4 113 A. No. The FAA does not consider residential soundproofing to be the type of noise mitigation project that must be carried out on Sponsor property. However, the FAA encourages, but does not require, Sponsors to obtain voluntary avigation easements from the owners of houses being soundproofed. Examples of Practices Found in Compliance No examples of practices found in compliance with this Grant Assurance were identified during the research. Examples of Practices Found in Non-Compliance No examples of practices found in non-compliance with this Grant Assurance were identified during the research.

ACRP Project 03-38 (FY 2015) Section 1.4.2, Grant Assurance 5.a, b, e, f Understanding FAA Grant Assurance Obligations (General Requirements) 114 1.4.2 Grant Assurance 5.a, b, e, f, Preserving Rights and Powers (General Requirements) This Grant Assurance includes seven separate clauses. Four of the clauses (a., b., e., and f.), representing general requirements, are discussed in this section. Two clauses (c. and d), specifically addressing noise compatibility projects are discussed in Section 1.4.3. Clause g., addressing residential TTF operations, is discussed in Section 1.4.4. That section will also address requirements for non- residential TTF operations. The four generally applicable clauses are summarized below: Grant Assurance 5.a: Under this clause, the Sponsor cannot do anything without the FAA’s approval that would deprive it of the rights and powers to comply with all of the terms and conditions of the grant agreement. It must promptly eliminate any rights or claim of rights that would interfere with its compliance. For example, Sponsor may not enter into a management agreement which would result in exclusive use or unjust economic discrimination at the airport. The FAA encourages Sponsors to use strong subordination clauses to ensure their ability to comply with Grant Assurance 5. Grant Assurance 5.b: This clause prohibits the Sponsor from selling, transferring, encumbering or disposing of any obligated property shown on the Exhibit A Property Map without the FAA’s approval. Obligated airport property includes all of the property identified on the Exhibit A map, not just property acquired with Federal funds. If the FAA approves the transfer of the entire airport to another Sponsor, the old Sponsor will include provisions in the transfer document obligating the new Sponsor to comply with the existing Grant Assurances. The FAA does not treat routine commercial leases as disposals requiring approval. However, the FAA considers a lease that exceeds 50 years to be a disposal, which is subject to Grant Assurance 5.b. Moreover, the FAA guidance directs that FAA offices should not consent to lease terms of this length. Grant Assurance 5.e: This clause requires a private airport Sponsor (non-governmental) to take steps satisfactory to the FAA to ensure that the airport will continue to operate as an airport in compliance with the Grant Assurances for 10 years or the useful life of the project, whichever is greater. If a grant was given for land acquisition, the useful life of the project is indefinite. Grant Assurance 5.f: This clause requires any third-party management agreement for the airport to include a requirement to operate the airport in compliance with Title 49 of the U.S. Code and the Grant Assurances and to ensure the Sponsor has the rights and powers to enforce this requirement.

ACRP Project 03-38 (FY 2015) Section 1.4.2, Grant Assurance 5.a, b, e, f Understanding FAA Grant Assurance Obligations (General Requirements) 115 Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used for violation of this assurance. What Must the Sponsor Do? (Subject to Exceptions and Permitted Practices, Below) Avoid any actions that would deprive it of its rights or powers to fully comply with the terms of the Grant Agreement, without obtaining FAA approval. Promptly extinguish any rights or claim of right that would interfere with its compliance. Obtain FAA approval by submitting a written land release request, using the guidance in the latest iteration of FAA Order 5190.6, before selling, transferring, encumbering or otherwise disposing of airport property. This applies to all airport property, not only property acquired with Federal grants. A lease of more than 50 years is considered a disposal. If selling or otherwise transferring the airport (with FAA approval), include provisions in the transferring document requiring the new Sponsor to comply with existing Grant Assurances. Include requirements in any third-party management agreement for the manager to comply with the AIP statute and the Grant Assurances and include provisions enabling the Sponsor to enforce those requirements. A private airport Sponsor (non-governmental) must ensure that the airport will continue to operate in compliance with the Grant Assurances for at least 10 years or the useful life of the project, whichever is greater.

ACRP Project 03-38 (FY 2015) Section 1.4.2, Grant Assurance 5.a, b, e, f Understanding FAA Grant Assurance Obligations (General Requirements) 116 What May the Sponsor Do? Execute standard aeronautical and non-aeronautical commercial leases without prior FAA approval, so long as they do not exceed 50 years and are consistent with the Sponsor’s other Grant Assurance obligations. Execute a third-party management agreement for the airport without obtaining FAA approval. The agreement must meet the standards of Grant Assurance 5. Sell, transfer, encumber or otherwise dispose of airport property after receiving FAA approval, subject to any terms or conditions included in that approval. What Sponsor Actions Are Prohibited? Selling, transferring, encumbering or otherwise disposing of airport property without FAA approval. Executing third-party management agreements that grant prohibited exclusive rights (Grant Assurance 23), result in unjust economic discrimination (Grant Assurance 22) or that do not enable the Sponsor to enforce requirements that the third-party manager comply with any of the Grant Assurances. Taking any other actions that would deprive the Sponsor of its ability to operate the airport and carry out its obligations under the Grant Assurances. What Are the Exceptions to the Requirements/Prohibitions? Standard aeronautical leases and commercial leases are not considered disposals subject to the requirement for FAA approval, so long as they do not exceed 50 years in length. Supplementary Information Recommended Practices  Include strong subordination language in any third-party management agreement.  Retain the right to review, approve or establish aeronautical rates in third-party management contracts. In some cases, it might be appropriate to also require Sponsor approval of agreements negotiated by the third-party manager.  Sponsors relying on an FBO located on the airport to provide third-party management should execute separate agreements for the airport management services and the FBO services.

ACRP Project 03-38 (FY 2015) Section 1.4.2, Grant Assurance 5.a, b, e, f Understanding FAA Grant Assurance Obligations (General Requirements) 117  While prior FAA approval of third-party management agreements is not required, advance coordination with the FAA may help avoid potential compliance issues by identifying problematic clauses.  Early coordination with the FAA of any proposal to sell, transfer, encumber or otherwise dispose of airport property will facilitate FAA’s timely review of an application.  Sponsors should avoid informal business practices, ad hoc procedures and non-transparent decision making. Related Assurances  Grant Assurance 4, Good Title Common Questions Q. Does our airport need FAA approval before it can sell airport land that was donated to the Sponsor? Y. Yes. If the property is shown on the Exhibit A, it is obligated property and its sale is subject to FAA approval. The source of the property or funds used to acquire it for the airport do not matter. Q. Our airport uses a standard terminal lease and use agreement for airlines. We also have standard contract language that we use in FBO leases. Does airport staff need to get FAA approval before executing airline and FBO leases or changing the standard terms? A. Not under Grant Assurance 5. However, medium and large hub airports that are required to submit competition plans under 49 U.S.C §47106(f) may be required to submit new airline use and lease agreements for FAA review under that section. The FAA prefers to review those leases in draft form. Q. What are the basic elements of compliance with Grant Assurance 5? A. The FAA has identified the ability to maintain financial and legal control of the airport and to operate the airport to be the essential elements of Grant Assurance 5. Asheville Jet, Inc. v. Asheville Reg'l Airport Auth.—No. 16-08-02.—No. FAA-2008-1077. Director’s Determination (October 1, 2009). LRD 21 Determination No. 209. Examples of Practices Found in Compliance 1. The FAA found no violation where the Sponsor had delegated some, but not all, responsibilities for managing and operating the airport to a private entity and included one or more of the following in the contract with the private operator: a subordination clause, a prohibition on the grant of exclusive rights and/or a prohibition on transactions that would deprive the airport of its rights and powers. Johnson v. Goldsboro-Wayne Airport Auth.—No. 16-08-11.—No. FAA-2009-0744. Director’s Determination (October 9, 2009). LRD 21 Determination No. 210. 2. The FAA found no violation of Grant Assurance 5 where an airport tenant had pledged its leasehold interest as security for a loan; the Sponsor agreed to allow the lender to enter the leasehold premises to remove property and to stand in the shoes of the Sponsor to enforce the Sponsor’s rights. Additionally, there was no evidence that the agreement actually interfered with the Airport’s rights and powers. Ricks v. Greenwood-Leflore Airport—No. 16-09-04.—No. FAA-2011-0279. FAA- 2011-0279-0032. 2011 FAA LEXIS 37. 2011 WL 381953. Director’s Determination (January 24, 2011). LRD 21 Determination No. 225.

ACRP Project 03-38 (FY 2015) Section 1.4.2, Grant Assurance 5.a, b, e, f Understanding FAA Grant Assurance Obligations (General Requirements) 118 Examples of Practices Found in Non-Compliance 1. The FAA held that the Sponsor violated Grant Assurance 5 when it signed an 80-year lease that granted the lessee ownership rights if the leased property was no longer needed for airport purposes and that failed to: (1) preserve the Sponsor’s rights to enter a leasehold; (2) grant utility easements and (3) require the lessee to install utilities on leased property. Boston Air Charter v. Norwood Airport Comm'n—No. 16-07-03.—No. FAA-2007-28820. Director’s Determination (April 11, 2008). LRD 21 Determination No. 192, Affirmed by Final Decision and Order of August 14, 2008. LRD 21 Determination No. 196. 2. The FAA found that an agreement granting one tenant the unilateral right to raise rates charged to other tenants could have put the Sponsor in violation of Grant Assurance 5. However, there was no current violation because the agreement that may have granted this right had expired. Goodrich Pilot Training Ctr., LLC v. Village of Endicott, N.Y.—No. 16-08-03.—No. FAA-2008-1024. Director’s Determination (April 3, 2009). LRD 21 Determination No. 201. 3. The FAA found that a Sponsor’s informal business practices, ad hoc procedures and non-transparent decision-making processes represented a casual approach to airport management, which eroded the Sponsor’s overall ability to establish the programs necessary to address its respective grant assurance obligations, thereby resulting in a violation of Grant Assurance 5. Moore v. Sumner Cnty. Reg'l Airport Auth.—No. 16-07-16.—No. FAA-2008-0289. Director's Determination (February 27, 2009). LRD 21 Determination No. 200. Affirmed by Final Decision and Order of July 13, 2010. LRD 21 Determination No. 218.

ACRP Project 03-38 (FY 2015) Section 1.4.3, Grant Assurance 5.c, d Understanding FAA Grant Assurance Obligations (Noise Compatibility) 119 1.4.3 Grant Assurance 5.c, d, Preserving Rights and Powers (Noise Compatibility) Clauses c. and d., which apply to noise compatibility projects, are summarized below: Grant Assurance 5.c: Under this clause, if the FAA provides a grant for a noise compatibility project to be carried out by a local government other than the Sponsor, or if the project will be located on land owned by another local government, the Sponsor must execute an agreement that requires the local government to comply with the terms of the grant agreement. The Sponsor must enforce the agreement if the other local government does not comply. Grant Assurance 5.d: For noise compatibility projects on private property, such as residential noise mitigation projects, the Sponsor must execute an agreement with the property owner including terms specified by the FAA and enforce that agreement. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used for violation of this assurance. What Must the Sponsor Do? (Subject to Exceptions and Permitted Practices, Below) When a noise compatibility project will be carried out by another local government or is located on land owned by another local government, the Sponsor must execute and enforce an agreement with that government requiring compliance with the Grant Assurances. For a noise compatibility project on private property, e.g., a residential sound-proofing project, the Sponsor must execute and enforce an agreement with the property owner including terms specified by the FAA.

ACRP Project 03-38 (FY 2015) Section 1.4.3, Grant Assurance 5.c, d Understanding FAA Grant Assurance Obligations (Noise Compatibility) 120 What May the Sponsor Do? Choose the exact form of the agreement and obligating language, so long as it satisfies the requirements of the Grant Assurance. Choose the method of enforcing the agreement, so long as the method is effective. What Sponsor Actions Are Prohibited? Failing to execute an agreement when one is required under the Grant Assurance. Failing to enforce an agreement whenever there is substantial non-compliance. What Are the Exceptions to the Requirements/Prohibitions? These requirements do not apply to noise compatibility projects carried out by a Sponsor on land owned or controlled by the Sponsor. Supplementary Information Recommended Practices  Develop standard form agreements for use with other local governments and private property owners to be used for noise compatibility projects subject to these clauses. Related Grant Assurances None for these specific clauses. Common Questions Q. What provisions must be included in agreements with private property owners for noise compatibility projects to comply with Grant Assurance 5.d? A. The required provisions are set forth in a special condition that the FAA includes in grant agreements for noise mitigation projects on privately owned property. The text of this special condition is reproduced below: 1. Noise Projects on Privately Owned Property: The Sponsor understands and agrees that no payment will be made under the terms of this Grant Agreement for work accomplished on privately owned land until the Sponsor submits the agreement with the owner of the property required by the Grant Assurance Number 5, Preserving Rights and Powers, and the FAA has

ACRP Project 03-38 (FY 2015) Section 1.4.3, Grant Assurance 5.c, d Understanding FAA Grant Assurance Obligations (Noise Compatibility) 121 determined that the agreement is satisfactory. At minimum, the agreement with the private owner must contain the following provisions: A. The property owner must inspect and approve or disapprove the work on the project during and after completion of the measures as the FAA or Sponsor reasonably requests. B. The property owner is responsible for maintenance and operation of the items installed, purchased or leased. Neither the FAA nor the Sponsor bears any responsibility for the maintenance, operation or replacement of these items. C. If the Sponsor transfers federal funds for the noise compatibility measures to a private property owner or agent, the property owner must agree to keep records and make those records available to the FAA and the Sponsor regarding the amount of funds received and the disposition of the funds. D. The property owner’s right to sue for adverse noise impacts will be abrogated if the property owner deliberately or willfully reduces the effectiveness of the noise compatibility measures during the useful life of such measures. This obligation will remain in effect throughout the useful life of the noise compatibility measures, but not to exceed 20 years from the date of the Sponsor’s acceptance of federal aid for the project. Examples of Practices Found in Compliance No examples of practices found in compliance with this Grant Assurance were identified during the research. Examples of Practices Found in Non-Compliance No examples of practices found in non-compliance with this Grant Assurance were identified during the research.

ACRP Project 03-38 (FY 2015) Section 1.4.4, Grant Assurance 5.g Understanding FAA Grant Assurance Obligations (TTF Operations) 122 1.4.4 Grant Assurance 5.g, Preserving Rights and Powers (TTF Operations) This section discusses (1) the specific requirements of Grant Assurance 5, clause g., which applies specifically to residential TFF operations and (2) requirements for non-residential TTF operations. Most importantly, the Grant Assurances do not require any Sponsor to grant TTF access. Subject to the restrictions and requirements discussed below, a Sponsor may permit TTF operations, although the FAA discourages TTF arrangements. Also, aircraft operators with TTF access are not protected by the Grant Assurances, in particular Grant Assurance 22, Economic Nondiscrimination. The specific requirements of clause g. are summarized below. The Sponsor of a commercial service airport or a privately owned reliever airport cannot permit taxiing of aircraft from an off-airport residential property (including off-airport property zoned for residential use) (residential TTF operations) unless the TTF access is grandfathered and an access agreement has been accepted by the FAA. General aviation airport Sponsors permitting residential TTF operations must comply with Section 136 of Public Law 112-95 and the Sponsor Assurances. Specifically, the Sponsor must have a residential TTF agreement that provides for the following: (1) Requires the residential property owner to pay access charges comparable to those paid by similar on-airport users; (2) Requires the residential property owner to pay the cost of building and maintaining the infrastructure necessary to provide the TTF access; (3) Requires the residential property owner to maintain the property for residential non-commercial use; (4) Prohibits access to the airport from other properties through the residential TTF property; and (5) Prohibits all commercial aircraft refueling on the residential TTF property. There are no Grant Assurance provisions that specifically address non-residential TTF operations. However, a number of Grant Assurances, including, but not limited to, Grant Assurance 19, Operation and Maintenance; Grant Assurance 22, Economic Nondiscrimination; Grant Assurance 24, Fee and Rental Structure and Grant Assurance 29, Airport Layout Plan, are implicated when TTF access, including non-residential TTF access, is granted. In general, for non-residential TTF operations, a Sponsor must recover a fair return from the TTF operator for its use of the airfield. Because TTF access is not protected by Grant Assurance 22, there is no cap on the fees the airport may impose, but the fees cannot be lower than the fee paid by comparable on- airport tenants. Where a TTF operator has hangars or other facilities off-airport, the fee should reflect the ground rental rates paid by on-airport tenants with privately owned hangars. Also, a Sponsor may need to adopt special safety regulations to address unique safety issues presented by TTF operations. This concept applies to residential TTF access as well. Finally, Sponsors should have a written TTF access agreement with the features described in the Common Questions section. Unless directly in conflict with Grant Assurance 5.g, a residential TTF agreement should also include these features.

ACRP Project 03-38 (FY 2015) Section 1.4.4, Grant Assurance 5.g Understanding FAA Grant Assurance Obligations (TTF Operations) 123 Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used for violation of this assurance. What Must the Sponsor Do? (Subject to Exceptions and Permitted Practices, Below) Commercial service and private reliever airport Sponsors must limit TTF access to non- residential off-airport uses. Use written agreements to grant all types of TTF access. Residential TTF access agreements executed for general aviation airports must include the following, per Grant Assurance 5.g:  Requires the residential TTF user to pay fees comparable to those paid by similar on- airport users.  Requires the residential TTF user to pay for the cost of constructing and maintaining the infrastructure needed to provide TTF access.  Requires continued residential-noncommercial use.  Prohibits access to the airport from other properties via the residential TTF property.  Prohibits commercial aviation fueling activities on the residential TTF property. Additional general requirements for all TTF access agreements are listed under the Common Questions section. Per Grant Assurance 29.a.4, Airport Layout Plan, all TTF access points, both residential and non-residential, must be shown on the airport’s ALP. General aviation airports considering new residential TTF access must submit draft residential TTF access agreements to FAA for review.

ACRP Project 03-38 (FY 2015) Section 1.4.4, Grant Assurance 5.g Understanding FAA Grant Assurance Obligations (TTF Operations) 124 What May the Sponsor Do? A Sponsor may refuse any or all requests for TTF access. The Sponsor of a general aviation airport may grant residential TTF access, if it complies with the terms of Grant Assurance 5.g. There is no cap on the fees a Sponsor may charge for TTF access. What Sponsor Actions Are Prohibited? The Sponsor of a commercial service or privately owned reliever airport may not grant new residential TTF access rights. What Are the Exceptions to the Requirements/Prohibitions? Residential TTF access arrangements that predate current FAA requirements are subject to review by the FAA on a case-by-case basis. The FAA may permit these arrangements to remain in place without terminating grant eligibility. Supplementary Information Recommended Practices  Because the FAA does not favor TTF access, a Sponsor should generally avoid granting TTF access.  If a Sponsor decides to proceed with granting new TTF access, it should consult with the FAA before doing so in order to ensure that the arrangements will not result in a violation of the Sponsor’s federal obligations.  A Sponsor granting new TTF access rights should avoid granting perpetual deeded access rights. Related Grant Assurances  Grant Assurance 5(a), (b), Preserving Rights and Powers  Grant Assurance 19, Operation and Maintenance  Grant Assurance 22, Economic Nondiscrimination  Grant Assurance 24, Fee and Rental Structure

ACRP Project 03-38 (FY 2015) Section 1.4.4, Grant Assurance 5.g Understanding FAA Grant Assurance Obligations (TTF Operations) 125  Grant Assurance 29, Airport Layout Plan Common Questions Q. What are the required elements of any TTF access agreement? A. Sponsors should have a written TTF access agreement with the features described below. Unless directly in conflict with Grant Assurance 5.g, a residential TTF agreement should also include these features.  Establishes a firm expiration date—the Sponsor should avoid granting deeded or perpetual access.  Limits the TTF access right to the right to taxi aircraft onto the airport for landing and take off.  Prohibits the TTF operator from granting a right of airfield access to third parties.  Subordinates the TTF access agreement to the Grant Agreement and the Sponsor’s federal obligations. The subordination clause should give the Sponsor the right to unilaterally terminate or amend the agreement to remain in compliance with the Grant Agreement and the Sponsor’s federal obligations.  Requires prior written Sponsor approval for any assignment of the TTF access agreement and provides for an adjustment in the terms of the TTF access agreement for any change in value of the off-airport property at the time of an approved sale.  Requires the payment of fees consistent with the discussion above.  Includes termination and insurance articles to benefit the Sponsor.  Provides a reasonable expiration date for non-residential TTF access from the perspective of the Sponsor, which should not be longer than the appraised useful life of any off-airport facilities. Q. Our airport is classified as a commercial service airport, and it has a residential TTF access agreement that predates the prohibition. Is the airport now ineligible for grants? A. No. The FAA recognizes that elimination of existing residential TTF access rights may be difficult and costly for the Sponsor. As a result, the FAA has developed guidelines for permitting continuation of residential TTF access at commercial service airports, subject to case-by-case review by the FAA. This guidance can be found in the Residential TTF Access Toolkit included in Appendix C, List of Resources and References for Grant Assurance 5.g. Q. Our airport granted deeded TTF access rights with no termination date. Is airport staff required to modify the form of the TTF access to remain eligible for grants? A. Not necessarily. The FAA recognizes that modification of deeded TTF access rights may be difficult and costly for the Sponsor. The FAA will review individual cases to determine the airport’s status. Examples of Practices Found in Compliance 1. The FAA held that a Sponsor could delay consideration of a proposal to establish an FBO by an entity currently conducting TTF commercial operations. Because the FAA generally disfavors TTF operations, it found a delay based on concerns about a TTF FBO to be reasonable. JetAway Aviation, LLC v. Bd. of Cnty. Comm'rs, Montrose Cnty., Colo.—No. 16-06-01.—No. FAA-2006-25185.

ACRP Project 03-38 (FY 2015) Section 1.4.4, Grant Assurance 5.g Understanding FAA Grant Assurance Obligations (TTF Operations) 126 FAA-2006-25185-0029. 2006 FAA LEXIS 841. 2006 WL 3914734. Director’s Determination (November 6, 2006). LRD 21 Determination No. 166. 2. The FAA held that the existence of the TTF operation in competition with a commercial tenant is not sufficient by itself to show unjust economic discrimination. United Aircraft Servs., Inc. v. Hancock Cnty. Port & Harbor Comm'n—No. 16-00-04. 2000 FAA LEXIS 1016. 2000 WL 1642460. Director’s Determination (October 12, 2000). LRD 21 Determination No. 74. 3. The FAA has determined that the grant assurances do not require the Sponsor to permit TTF access by aircraft from adjacent property. Thus, the Sponsor is free to restrict access or charge “any fee it sees fit.” Wadsworth Airport Ass'n, Inc. v. City of Wadsworth—No. 16-06-14.—No. FAA-2007- 27226. 2007 FAA LEXIS 282. 2007 WL 2373611. Director’s Determination (August 8, 2007). LRD 21 Determination No. 180. However, if the Sponsor does permit access, it must recover a fair return for the TTF operator’s use of the landing area. Examples of Practices Found in Non-Compliance No examples of practices found in non-compliance with this clause’s policies were identified during the research.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.4.5, Grant Assurance 31.a 127 1.4.5 Grant Assurance 31.a Disposal of Land (Noise Compatibility) This Assurance governs land acquired with AIP funds. Disposal of other airport properties and the treatment of the proceeds from disposal are governed by other Grant Assurances, including Grant Assurance 5, Preserving Rights and Powers; Grant Assurance 21, Compatible Land Use; Grant Assurance 24, Fee and Rental Structure; Grant Assurance 25, Airport Revenues and Grant Assurance 29, Airport Layout Plan Grant Assurance 31 has been modified over time to reflect changes in statutory authority. As a result, the status of land classified as “noise buffer” land is somewhat ambiguous. Grant Assurance 31 includes four clauses. Clause a. governs disposal of AIP-funded land acquired for noise compatibility purposes and is summarized below: Clause b.: Governs disposal of AIP-funded land acquired for airport purposes and is discussed in Section 1.4.6. Clause c.: Specifies that land is needed for airport purposes if (1) it may be needed for aeronautical purposes (including protection of RPZs) or for noise buffering and (2) if the revenue generated by interim uses of the land contribute to the airport’s financial self-sufficiency. In other words, the Sponsor may retain RPZ and noise buffer land and lease it out to generate revenue for the airport. Under Grant Assurance 24, the lease rates must be based on FMV. Clause d.: Requires the Sponsor to retain the rights or interests in any land disposed of or leased under Grant Assurance 31 to prevent future incompatible uses on the basis of noise. Clauses c. and d.: Addressed further in the call-out boxes for this section and Section 1.4.6. Grant Assurance 31.a: This clause governs disposal of AIP-funded land acquired for noise compatibility purposes. When the land is no longer needed for noise compatibility, the Sponsor must dispose of the land at FMV. The disposal requirement applies to noise land outside the airport boundaries, e.g., off-airport noise-impacted residential property, as well as property within the boundaries. The FMV must be established through at least one independent appraisal. The Federal share of the proceeds received, or of the FMV, whichever is greater, must be applied to one of the following purposes, in descending order of priority: 1. Reinvestment in an approved noise compatibility project at the airport; 2. Reinvestment in a project at the airport eligible for discretionary AIP funding under the special apportionment categories listed in 49 USC §47117(e); 3. Reinvestment in any other AIP-eligible airport development project at the airport; 4. Transfer to another Sponsor for use on a noise compatibility project at another airport; or 5. Repayment to the FAA for deposit in the Airport and Airway Trust Fund. Any project falling under the first four purposes must be approved by the FAA. However, if the Sponsor has leased the land at FMV and the lease is consistent with noise buffering, the FAA will not treat the lease as a disposal, and the lease revenue may be used for an eligible airport development project or any other purpose permitted for the use of airport revenue. Applicability and Duration

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.4.5, Grant Assurance 31.a 128 Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Land Acquisition Indefinite Withholding of grants1 1 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used for violation of this assurance. What Must the Sponsor Do? (Subject to Exceptions and Permitted Practices, Below) Dispose of noise land when it is no longer needed for noise compatibility or noise buffering purposes and apply either the federal share of the proceeds or FMV, whichever is greater, to the following purposes, in descending order of priority: 1. Reinvestment in an approved noise compatibility project at the airport; 2. Reinvestment in a project at the airport eligible for discretionary AIP funding under the special apportionment categories listed in 49 USC §47117(e); 3. Reinvestment in any other AIP-eligible airport development project at the airport; 4. Transfer to another Sponsor for use on a noise compatibility project at another airport; or 5. Repayment to the FAA for deposit in the Airport and Airway Trust Fund. Any project falling under the first four purposes must be approved by the FAA. Retain sufficient rights or interests in any land disposed or leased under this clause to prevent future incompatible uses based on noise. Maintain an up-to-date noise land inventory and disposal plan. Amend the Exhibit A and Airport Layout Plan following disposal.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.4.5, Grant Assurance 31.a 129 What May the Sponsor Do? Continue to lease, rather than sell, noise compatibility land, if it is needed for airport purposes (including protection of RPZs or noise buffering), and if the revenue generated by interim uses of the land contributes to the airport’s financial self-sufficiency. Land used for non-aeronautical purposes must be leased based on FMV. Subject to the priorities listed above, and to FAA approval, select the projects for which the Federal share is to be used. Use the local share of the proceeds from disposal for any purpose permitted under Grant Assurance 25, Airport Revenues. Use the revenue from land retained for aeronautical purposes or noise buffer for any purpose permitted under Grant Assurance 25, Airport Revenues. What Sponsor Actions Are Prohibited? Retaining land no longer needed for noise compatibility purposes. Accepting less than FMV for a disposal, unless the federal share of the FMV is applied as specified in the Grant Assurance. However, based on Grant Assurance 24, Fee and Rental Structure, it is unlikely that the FAA would approve a disposal at less than FMV, even if the Sponsor offered to use the full federal share of the FMV as required. What Are the Exceptions to the Requirements/Prohibitions? Land may be retained for airport purposes (including RPZs or noise buffers), so long as the revenue generated from the interim use contributes to the airport’s financial self-sufficiency. Supplementary Information Recommended Practices  Consult with the FAA about any proposed retention of land for airport purposes, including noise buffering.  Consult with the FAA about the method of retaining rights or interests to prevent future non- compatible uses based on noise.  Consult with the FAA about the proposed use of the federal share of the disposal of proceeds.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.4.5, Grant Assurance 31.a 130 Related Grant Assurances  Grant Assurance 5, Preserving Rights and Powers  Grant Assurance 21, Compatible Land Use  Grant Assurance 24, Fee and Rental Structure  Grant Assurance 25, Airport Revenues  Grant Assurance 29, Airport Layout Plan Common Questions Q. Our airport is preparing to sell land purchased with AIP grants for noise compatibility. How should we protect against future incompatible use? A. In the case of a sale, a restrictive covenant preventing incompatible uses is the typical method. Retention of an avigation easement is also beneficial. If the disposal is via long-term lease, lease restrictions on the use of the property would suffice. Q. Our airport acquired a noise-impacted subdivision with AIP grants and demolished the houses. Airport staff has been approached by a developer who wants to build a new residential subdivision. Can the airport sell the land to this developer if it requires the developer to use state-of-the-art sound attenuation construction measures? A. No. Even with sound attenuation, construction of new residential development would violate both Grant Assurance 31 and Grant Assurance 21, Compatible Land Use. Q. Our airport is planning to sell off-airport AIP-funded land acquired for noise compatibility under Grant Assurance 31. Is prior FAA approval required? A. Grant Assurance 31 does not include a prior approval requirement. However, even though the noise compatibility land is “off airport”, it must be identified as obligated property on the airport’s Exhibit A. Therefore, under Grant Assurance 5, Preserving Rights and Powers, prior approval and release by the FAA is required. Q. Airport staff believe it would be prudent to retain a parcel acquired with AIP funds as a noise buffer, rather than selling it outright. Is prior FAA approval required before airport staff pursue the leasing option? A. Formal FAA approval is not required, but it is advisable to consult with the FAA about the Sponsor’s plans to retain the parcel. Q. Our airport used AIP funds to acquire a parcel for noise compatibility. The neighboring community has approached airport staff about donating land for a community park. Could the airport instead grant a $1.00 per year lease and retain the property as a noise buffer? A. No. The $1.00 per year lease would not meet the requirement of contributing to the airport’s financial self-sustainability.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.4.5, Grant Assurance 31.a 131 Examples of Practices Found in Compliance No examples of practices found in compliance with this clause were identified during the research. Examples of Practices Found in Non-Compliance No examples of practices found in non-compliance with this clause were identified during the research.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.4.6, Grant Assurance 31.b 132 1.4.6 Grant Assurance 31.b (Airport Development) Grant Assurance 31.b governs disposal of AIP-funded land acquired for airport development purposes. Once the land is no longer required for airport purposes, the Sponsor must dispose of the land at FMV. The FMV must be established by at least one independent appraisal. As with Grant Assurance 31.a, airport purposes may include RPZ protection and noise buffering. The Federal share of the proceeds received, or of the FMV, whichever is greater, must be applied to one of the following purposes, in descending order of priority: 1. Reinvestment in an approved noise compatibility project at the airport; 2. Reinvestment in a project at the airport eligible for discretionary AIP funding under the special apportionment categories listed in 49 USC §47117(e); 3. Reinvestment in any other AIP-eligible airport development project at the airport; 4. Transfer to another Sponsor for use on a noise compatibility project at another airport; or 5. Repayment to the FAA for deposit in the Airport and Airway Trust Fund. Any project that falls under the first four purposes must be approved by the FAA. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Land Acquisition Indefinite Withholding of grants1 1 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used for violation of this assurance.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.4.6, Grant Assurance 31.b 133 What Must the Sponsor Do? (Subject to Exceptions and Permitted Practices, Below) Dispose of airport development when it is no longer needed for airport development purposes and apply either the federal share of the proceeds or of the FMV, whichever is greater, to the following purposes, in descending order of priority: 1. Reinvestment in an approved noise compatibility project at the airport; 2. Reinvestment in a project at the airport eligible for discretionary AIP funding under the special apportionment categories listed in 49 USC §47117(e); 3. Reinvestment in any other AIP-eligible airport development project at the airport; 4. Transfer to another Sponsor for use on a noise compatibility project at another airport; or 5. Repayment to the FAA for deposit in the Airport and Airway Trust Fund. Any project under the first four purposes must be approved by the FAA. Retain sufficient rights or interests in any land sold or leased under this clause to prevent future incompatible uses. Amend the Exhibit A and ALP after the disposal. What May the Sponsor Do? Continue to lease, rather than sell airport development land if it is needed for airport purposes (including protection of RPZs or noise buffering), if the revenue generated by interim uses of the land contributes to the airport’s financial self-sufficiency. Land used for non-aeronautical purposes must be leased based on FMV. Subject to the priorities listed above, and to FAA approval, select the projects for which the Federal share is used. Use the local share of the proceeds from disposal for any purpose permitted under Grant Assurance 25, Airport Revenues. Use the revenue from land retained for airport purposes, including noise buffers for any purpose permitted under Grant Assurance 25, Airport Revenues. What Sponsor Actions Are Prohibited? Retaining land no longer needed for airport purposes. Accepting less than FMV for a disposal, unless the federal share of the FMV is applied as specified in the Grant Assurance. However, based on Grant Assurance 24, Fee and Rental Structure, it is unlikely that the FAA would approve a disposal at less than FMV, even if the

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.4.6, Grant Assurance 31.b 134 Sponsor offered to use the full federal share of the FMV as required. What Are the Exceptions to the Requirements/Prohibitions? Land may be retained for airport purposes (including RPZs or noise buffers), so long as the revenue generated from the interim use contributes to the airport’s financial self-sufficiency. Supplementary Information Recommended Practices  Consult with the FAA about any proposed retention of land for aeronautical purposes or noise buffering.  Consult with the FAA about the method of retaining rights or interests to prevent future non- compatible uses based on noise.  Consult with the FAA about the proposed use of the federal share of the disposal of proceeds. Related Grant Assurances  Grant Assurance 5, Preserving Rights and Powers  Grant Assurance 21, Compatible Land Use  Grant Assurance 24, Fee and Rental Structure  Grant Assurance 25, Airport Revenues  Grant Assurance 29, Airport Layout Plan Common Questions Please also refer to the Common Questions for Grant Assurance 31.a. Q. Our airport acquired a parcel for airport development with AIP funds many years ago. Based on current and projected activity levels, it is no longer needed for airport development. The neighboring community has approached airport staff about donating the land for a community park. Could the airport instead grant a $1.00 per year lease and retain the property as a noise buffer under Grant Assurance 31.c? A. No. The $1.00 per year lease would not meet the requirement of contributing to the airport’s financial self-sustainability. Q. Our airport is preparing to sell land acquired for development that is no longer needed, as specified in Grant Assurance 31. Is prior FAA approval required?

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.4.6, Grant Assurance 31.b 135 A. While Grant Assurance 31 does not include a prior approval requirement, Grant Assurance 5, Preserving Rights and Powers, requires prior FAA approval and release. Q. Our airport acquired land using AIP grants in anticipation of building a new runway 20 years ago. Based on changes in current and future activity levels, the new runway will not be needed in the foreseeable future. The airport has been approached by a developer interested in constructing compatible commercial/industrial properties. Must the airport sell the land, or can the airport lease it? A. The FAA considers revenue generation to be an airport purpose; therefore, disposal is not required. However, the FAA would need to grant a partial release to reclassify the land from aeronautical to non-aeronautical. This type of release is subject to a public notice and comment process before the FAA can act. Examples of Practices Found in Compliance No examples of practices found in compliance with this clause were identified during the research. Examples of Practices Found in Non-Compliance 1. The FAA found that a Sponsor had violated Grant Assurance 31.b by selling AIP-funded property without FAA approval, but it considered the issue moot as the Sponsor was working with the FAA to come into compliance. Carey v. Afton-Lincoln Cnty. Mun. Airport Joint Powers Bd.—No. 16-06- 06.—No. FAA-2006-25154. FAA-2006-25154-0011. 2007 FAA LEXIS 40. 2007 WL 430630. Director’s Determination (January 19, 2007). LRD 21 Determination No. 168. Affirmed by Order Dismissing Appeal of November 14, 2007. LRD 21 Determination No. 184.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.5.1, Grant Assurance 27 136 Section 1.5 Federal Aircraft and Facilities 1.5.1 Grant Assurance 27 Use by Government Aircraft Grant Assurance 27 requires a Sponsor to make the airport facilities funded by AIP grants and the aircraft operations area (AOA) available to federal government aircraft at no charge, unless the government aircraft use is substantial. If there is substantial use, the Sponsor may charge a reasonable share, proportional to the government’s use, of the operations and maintenance (O & M) costs of the AOA and other facilities used. Unless otherwise agreed to by the Sponsor and the federal agency or otherwise determined by the FAA, substantial use consists, on a monthly basis, of the following:  five or more based aircraft on or adjacent to the airport;  300 or more landings; or  total landed weight of government aircraft exceeding 300 million pounds. The FAA does not assume the role of negotiator between the Sponsor and the federal government entity using the airport. Also, this assurance does not apply to rates and fees charged for the use of land for facilities such as hangars, operations centers, fuel farms, etc., unless those facilities are financed by AIP grants. Based on well-settled principles of federal appropriation law, it is highly unlikely that facilities like these would be funded with AIP grants. Federal facilities that are not covered by Grant Assurance 27 are governed by Grant Assurance 24, Fee and Rental Structure. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used for violation of this assurance. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Permit federal government aircraft to operate at no charge, unless federal use is substantial, as defined above and below. If charging for substantial use by federal aircraft, limit charges to a prorated share of operations and maintenance costs of the airfield.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.5.1, Grant Assurance 27 137 What May the Sponsor Do? Charge a pro rata share of the operations and maintenance costs of the airfield for substantial use. Unless otherwise agreed to by the Sponsor and federal agency, or otherwise determined by the FAA, substantial use consists, on a monthly basis, of the following:  five or more based aircraft on or adjacent to the airport;  300 or more landings; or  total landed weight of government aircraft exceeding 300 million pounds. In the case of substantial use, negotiate the basis for calculating the fee with the federal department or agency operating the aircraft. Permit the federal agency to use the airport at no charge even if the criteria for substantial use outlined above are satisfied. What Sponsor Actions Are Prohibited? Charging a federal agency for aircraft use when operations are not substantial. Imposing charges that exceed the pro rata share of the operations and maintenance costs of the airfield and other facilities used by the government aircraft. What Are the Exceptions to the Requirements/Prohibitions? The substantial use exception described above. Supplementary Information Recommended Practices  Engage with senior officials of the government agency potentially making substantial use to define what is considered substantial and define the basis for calculating the charges for substantial use.  Document the costs and methodology used to determine the charge for substantial use.  Enter into a MOU/MOA with the government agency to define substantial use, charges, how the airport will be compensated and other rights and obligations of each party.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.5.1, Grant Assurance 27 138 Related Grant Assurances  Grant Assurance 24, Fee and Rental Structure Common Questions Q. Does the FAA get involved in negotiations between the Sponsor and the federal agency over substantial use and the proper charge for substantial use? A. Generally, the FAA avoids becoming involved in the negotiations over charges for the use by government aircraft. The FAA’s role is limited to overseeing compliance with the grant assurance requirement. Q. Is there a standard method for determining what to charge for substantial use? A. The FAA has not specified a single approach, however, Appendix J-1 of Order 5190.6B provides templates and guidance documents used by the Air National Guard (ANG) for joint use agreements with civil airports where substantial ANG use is present. Q. Is Grant Assurance 27 subject to investigation and enforcement under 14 CFR Part 16? A. Yes. Part 16 contains no exceptions for specific assurances. However, the research did not identify any Part 16 complaints or investigations involving Grant Assurance 27. It is likely that if a dispute arose between a Sponsor and a federal agency, the FAA would first try to help the parties achieve an informal resolution before a formal complaint was filed. Examples of Practices Found in Compliance 1. The FAA found no violation of Grant Assurance 27, where it was alleged that military aircraft were limited to servicing on a single apron, when the record contained no evidence that the Sponsor had prohibited operation of government aircraft at no charge. Asheville Jet, Inc. v. Asheville Reg'l Airport Auth—No. 16-08-02.—No. FAA-2008-1077. Director’s Determination (October 12, 2009). LRD 21 Determination No. 209. Examples of Practices Found in Non-compliance No examples of practices found in non-compliance with Grant Assurance 27 were identified during the research.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.5.2, Grant Assurance 28 139 1.5.2 Grant Assurance 28, Land for Federal Facilities Grant Assurance 28 requires the Sponsor to provide without cost to the FAA and other federal agencies areas of land, water or rights in buildings for use in air navigation, air traffic control or weather reporting and communication activities related to air traffic control. This obligation may include utility easements. A Sponsor must accommodate the request within four months. Facilities qualifying for rent-free treatment include very high frequency omni-directional radio range facilities (VORs), air traffic control (ATC) towers or terminal radar approach controls (TRACONs). The Sponsor is not required to furnish land rent-free for parking or roads to serve the facility or to construct a facility at its own expense. In addition, through annual appropriations, Congress has effectively prohibited the FAA from requiring Sponsors to provide space, utilities, maintenance or construction, other than through negotiation for below-market rates. This prohibition does not apply to rent-free land for air traffic control facilities. Applicability and Duration Applicability Projects Subject to Assurance Duration Sanctions General airport operation and management Construction, Equipment, Land Acquisition, Noise Useful life of project1 Withholding of grants2 1 For pavement construction—20 years; for other construction and equipment—may be less than 20 years; for land acquisition (including noise)—indefinite. 2 Withholding of grants is typically employed successfully to achieve compliance. Civil enforcement action is generally available, but rarely used for violation of this assurance. What Must the Sponsor Do? (Subject to exceptions and permitted practices, below) Provide without cost to the FAA and other federal agencies areas of land, water or rights in buildings for use in air navigation, air traffic control or weather reporting and communication activities related to air traffic control. This obligation may include utility easements. Facilities qualifying for rent-free treatment include the following:  very high frequency omni-directional radio range facilities (VORs);  air traffic control (ATC) towers; and  terminal radar approach controls (TRACONs). Accommodate the request within four months.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.5.2, Grant Assurance 28 140 What May the Sponsor Do? Subject to the needs of the FAA, including technical requirements, identify potential areas or building spaces to locate FAA facilities. Charge for land for roads to FAA facilities or for parking facilities for FAA employees. Charge the FAA for any construction, site preparation or other costs incurred by the Sponsor to enable FAA to construct or install the facility or equipment. What Sponsor Actions Are Prohibited? Charging the FAA for land or space in buildings for facilities that qualify for no-cost rent under Grant Assurance 28. What Are the Exceptions to the Requirements/Prohibitions? The Sponsor may charge the FAA for land used for roads to FAA facilities or for FAA employee parking. The Sponsor is not required to construct or pay for construction of any FAA facilities. Based on annual FAA appropriations, a Sponsor is not required to furnish maintenance, utilities or space in buildings, except through negotiations for below-market rates. Supplementary Information Recommended Practices  Respond promptly to any FAA request under this Grant Assurance. Related Grant Assurances  Grant Assurance 24, Fee and Rental Structure Common Questions Q. The FAA has identified a site for construction of a new navigational aid (NAVID). It is in an area identified in our airport’s master plan as a site for future airport development. Must airport staff provide that site, or can it negotiate an alternate location?

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.5.2, Grant Assurance 28 141 A. The FAA’s siting decisions are based on technical requirements. If an alternative location can be identified that meets these requirements and does not add substantially to the cost of installing the NAVAID, the FAA may be willing to consider the Sponsor’s preferred location. Q. Our airport is designing a new runway. The most feasible location for the runway will require construction of a new ATC tower. The only location meeting FAA standards will require relocation of privately owned aircraft storage hangars. Who is responsible for paying the cost of the relocation? A. Because the clearing of the site would be considered a construction cost, the Sponsor has a strong case for saying that the FAA is responsible for the relocation costs. However, the issue is likely to be the subject of negotiations with the FAA. It is also likely that the FAA would identify a location that requires existing tenants and their leaseholds to be disturbed only as a last resort. Examples of Practices Found in Compliance No examples of FAA determinations on compliance with Grant Assurance 27 were identified during the research. Examples of Practices Found in Non-compliance No examples of FAA determinations on non-compliance with Grant Assurance 27 were identified during the research.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.6, Grant Assurance 1 142 Section 1.6 Grant Assurance 1, General Federal Requirements This grant assurance lists legislation, executive orders and regulations applicable to Sponsors receiving AIP grants with the following totals: Some of the general federal requirements apply to general airport operations, management and finance. Others apply only to the planning, design or implementation of projects. Therefore, Grant Assurance 1 is discussed in both Chapter 1 and Chapter 2 of the Guidebook. Of the totals shown above, the count of requirements that apply to general airport operations, management and finance is as follows: Resources and references generally applicable to Grant Assurance 1 include the following.  AC 150/5100-16A, Airport Improvement Program Grant Assurance 1 General Federal Requirements (10/04/1988); http://www.airweb.faa.gov/Regulatory_and_Guidance_Library/rgAdvisoryCircular.nsf/1ab39b4e d563b08985256a35006d56af/58ff1089ac4c691086256c720077b006/$FILE/150-5100-16a.pdf (Cancelled Publication)  Required Contract Provisions for Airport Improvement Program and for Obligated Sponsors (01/29/2016); http://www.faa.gov/airports/aip/procurement/federal_contract_provisions/  ACRP Report 156, Guidebook for Managing Compliance with Federal Regulations: An Integrated Approach (2016); http://www.trb.org/Publications/Blurbs/174389.aspx AC 150/5100-16A is included as a reference because in some cases, it provides more information on particular federal requirements than does other current guidance. In the event of a conflict between AC 150/5100-16A and any later published AC, order or other guidance document, the later published document takes precedent. Due to the number of individual requirements and their interrelationships, the information on Grant Assurance Number 1, General Federal Requirements is presented in a table format, with related 8 pieces of legislation 10 regulations 26 pieces of legislation 6 executive orders 24 regulations

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.6, Grant Assurance 1 143 requirements grouped together. The table includes specific references for individual requirements when applicable. Grant Assurance 1 requirements applicable to airport management, operations and finance fall into two broad categories: 1. requirements for management, operations and finance; and 2. civil rights requirements. Each is addressed in a separate table below. To reduce the length of the report, the tables are formatted for 8½" by 14" paper.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.6.1, Grant Assurance 1 (Generally Applicable) 144 1.6.1 Requirements for Management, Operations and Finance Requirements for management, operations and finance of the airport include four statutes and three regulations. The requirements are summarized (with resource and reference materials) in Table 1, below. Table 1, Requirements for Management, Operations and Finance Item No. Title Digest Resources and References 1. 2. Title 49, USC, subtitle VII, as amended (the AIP Statute) 14 CFR Part 13—Investigative and Enforcement Procedures; 14 CFR Part 16—Rules of Practice for Federally Assisted Airport Enforcement Proceedings. This legislation establishes the AIP program. It defines eligible sponsors, eligible projects, federal share of project costs, and allowable project costs; specifies application requirements for sponsors, sponsor reporting and record-keeping requirements; project implementation requirements and required Sponsor assurances; and specifies grant administration requirements for the FAA. Many of the requirements imposed on Sponsors are included in specific grant assurance requirements, and they are addressed in the discussion of the applicable grant assurances. Part 13 applies to investigations of any alleged violation of FAA requirements by any person (except investigations covered by Part 16). As applicable to Sponsors and grant assurance compliance, section 13.1 of Part 13 governs informal complaints (reports of violations) and investigations of possible violations of the grant assurance obligations. These sections provide for the filing of reports of violations by any person and provide for a wide range of procedures for the FAA to investigate reports, including hearings, subpoenas, document production requests and depositions. The provisions do not specify the procedures to be used in investigating any report of a violation, nor do they provide detailed requirements for Sponsors responding to a report of a violation or investigation initiated by the FAA in response to such a report. The FAA has established requirements for Sponsors on a case-by-case basis, as needed for each report of a violation. For 49 USC, the following: FAA Order 5100.38D, AIP Handbook (September 30, 2014); http://www.faa.gov/airports/aip/aip_handbook/media/ AIP-Handbook-Order-5100-38D.pdf FAA Order 5190.6B, FAA Airport Compliance Manual (September 30, 2009); http://www.faa.gov/airports/resources/publications/or ders/compliance_5190_6/media/5190_6b.pdf FAA Order 5100.38C, AIP Handbook (June 28, 2005) (Cancelled publication); http://www.faa.gov/airports/airport_development/omp /funding/PFC_06-19-C--00- ORD_ADMIN_REC/MEDIA/DOC-053.pdf The resources and references listed above apply generally to the provisions and requirements included in 49 USC subtitle VII. Order 5100.38C is included as

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.6.1, Grant Assurance 1 (Generally Applicable) 145 2. 14 CFR Part 13—Investigative and Enforcement Procedures; 14 CFR Part 16—Rules of Practice for Federally Assisted Airport Enforcement Proceedings (con’t.). Part 16 governs formal complaints and investigations by the FAA of possible violations of grant assurance obligations. It establishes the kinds of responsive documents that may be filed following a complaint and the deadline for those filings; it establishes standards for dismissing complaints and for standing to bring complaints. It establishes deadlines for FAA determinations and provides administrative procedures to appeal initial FAA determinations. It also establishes procedures for oral evidentiary hearings and when a Sponsor can request one. Key provisions and requirements include the following, (1) Complainants must be directly and substantially affected by the alleged violation. For alleged violations of Grant Assurance 25, Airport Revenues, all airport tenants are presumed to be directly and substantially affected. (2) Complainants must document that they attempted to resolve the issues in the complaint through negotiation with the Sponsor. (3) All parties are required to submit all supporting documentation and evidence with their original pleadings. (4) The FAA Director of the Office of Airport Compliance and Management Analysis issues the FAA’s initial determination (Director’s Determination (DD)) within 120 days of the last pleading, but the director can extend the time for issuing a decision. (5) Any party may appeal an adverse Director’s Determination to the Associate Administrator for Airports (Associate Administrator), who issues a final agency decision (FAD). The FAD is due 60 days after the reply to the appeal is filed, but the Associate Administrator for Airports can extend the time for issuing a decision. For cases involving violations of assurances relating to civil rights, the Associate Administrator may refer the appeal to the Assistant Administrator for Civil Rights. (6) If the Director’s Determination finds a violation of the grant assurances and proposes the withholding of new AIP entitlement grants or payments under existing grants; withholding of approval of a new passenger facility charge (PFC) application for a violation of Grant Assurance 25; a cease and desist order; or the refund of fees unlawfully collected, the Sponsor may request an oral evidentiary hearing instead of a direct appeal to the Associate a reference because in some cases, it may explain the requirements included in subtitle VII more extensively than Order 5100.38D. If there is a conflict between the two versions of the order, the latter (5100.38D) takes precedence. For 14 CFR §13.1, FAA Order 5190.6B, Chapter 5, sections 5.1 through sections 5.15. For 14 CFR §13.1, Compliance Guidance Letter (CGL) 2014-01, Procedures for Accepting and Investigating 14 CFR Part 13 Informal Complaints Alleging Violations of Grant Assurance Obligations and Surplus Property Deed Restrictions (July 1, 2014) For 14 CFR Part 16, FAA Order 5190.6B, Chapter 5, section 5.16

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.6.1, Grant Assurance 1 (Generally Applicable) 146 2. 14 CFR Part 13—Investigative and Enforcement Procedures; 14 CFR Part 16—Rules of Practice for Federally Assisted Airport Enforcement Proceedings (con’t.). Administrator. When an oral evidentiary hearing is requested, the complainant will have the status of a party. The Hearing Officer’s Initial Decision is due 110 days after the Director’s Determination. A party may appeal an adverse decision to the Associate Administrator. The FAD is due within 60 days of the filing of any reply to an appeal. FADs can be appealed directly to the United States Court of Appeals. 3. Hatch Act—5 USC §§1501- 1508 As applicable to Sponsors, the Hatch Act limits the political activities of Sponsor employees whose primary employment is connected to an activity financed in whole or in part by AIP grants. Elected officials are exempt if the elective office is their principal employment. Specifically, a Sponsor and its covered employees must not: (1) use official authority or influence to interfere with or affect elections or nominations; · (2) coerce, command or advise a Sponsor employee to make a political contribution or loan. Prohibited activities include threatening to deny a promotion to an employee who does not vote for certain candidates, requiring employees to contribute a percentage of their pay to a political fund, influencing subordinate employees to buy tickets to political fund-raising events, and advising employees to take part in political activity; and/or (3) be a candidate for public office in partisan elections, including primary and run- off elections to nominate candidates of partisan political parties. However, candidacy for political party office and candidacy for nonpartisan elections are not prohibited by this provision. AC 150/5100-16A, Airport Improvement Program Grant Assurance 1 General Federal Requirements (October 14, 1988); http://www.airweb.faa.gov/Regulatory_and_Guidance _Library/rgAdvisoryCircular.nsf/1ab39b4ed563b0898 5256a35006d56af/58ff1089ac4c691086256c720077b 006/$FILE/150-5100-16a.pdf (Cancelled Publication)

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.6.1, Grant Assurance 1 (Generally Applicable) 147 4. Power Plant and Industrial Fuel Use Act of 1978—Section 403 —2 USC §8373 This act requires federal agencies to carry out programs and to take such actions to maximize the efficient use of energy and conserve natural gas and petroleum in programs funded or carried out in federal grant programs. The FAA complies with this act by requiring Sponsors to take the following actions: (1) incorporate, to the extent consistent with good engineering practice, in the building design, construction, and operation, the most cost-effective energy conservation features; (2) require fuel and energy conservation practices in the operation and maintenance of the airport; and (3) encourage airport tenants to use fuel and energy conservation practices. AC 150/5100-16A, Airport Improvement Program Grant Assurance 1 General Federal Requirements (October 4, 1988); http://www.airweb.faa.gov/Regulatory_and_Guidance _Library/rgAdvisoryCircular.nsf/1ab39b4ed563b0898 5256a35006d56af/58ff1089ac4c691086256c720077b 006/$FILE/150-5100-16a.pdf (Cancelled Publication) 5. Drug-Free Workplace Act of 1988—41 USC §§702-706 49 CFR Part 32—Government- wide Requirements for Drug- Free Workplace (Financial Assistance) This statute requires recipients of federal grants to establish drug-free workplace programs. The requirements for the program are discussed in more detail in section 2.2.3.i. In addition to the program, a Sponsor must notify the FAA within 10 days after an employee is convicted of a criminal drug statute violation and must either sanction the employee who is convicted or require the employee to participate in a drug abuse assistance or rehabilitation program. A Sponsor that violates the statute may have payments on existing grants suspended and may be debarred from receiving any new grants for up to five years. This regulation implements the Drug-Free Workplace Act, above. Under the regulation, a Sponsor must: (1) make good faith efforts to maintain a drug-free workplace on a continuing basis; (2) publish a drug-free workplace statement that: (a) tells employees that possession, use, manufacture or distribution of a controlled substance in the workplace is prohibited; (b) specifies the actions the Sponsor will take against employees who violate the prohibition; (c) notifies employees that compliance with the statement is a condition of employment; and (d) notifies employees that they must notify the Sponsor within five calendar days of a conviction of a criminal drug statute occurring in the workplace; (3) establish a drug-free awareness program that informs employees about: AIP Sponsor Guide, Section 740, FAA Central Region (April 30, 2014); http://www.faa.gov/airports/central/aip/sponsor_guide /media/0700.pdf

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.6.1, Grant Assurance 1 (Generally Applicable) 148 5. 49 CFR Part 32—Government- wide Requirements for Drug- Free Workplace (Financial Assistance) (con’t.) (a) the dangers of drug abuse; (b) the Sponsor’s policy of maintaining a drug-free workplace; (c) any available drug counseling, rehabilitation and employee assistance programs; and (d) the penalties that the Sponsor may impose for drug abuse violations occurring in the workplace; (4) take actions specified in Part 32 concerning employees convicted of violating drug statutes in the workplace; and (5) identify all known workplaces under AIP grants as specified in Part 32. Many of the requirements listed above have exceptions, waiver provisions, or supplemental requirements. The regulation should be consulted to determine the exact nature of a Sponsor’s obligations.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.6.2, Grant Assurance 1 (Generally Applicable) 149 1.6.2 Civil Rights Requirements Civil rights requirements include four statutes and seven regulations. Two of the statutes and four of the regulations specifically address discrimination against or accommodation of individuals with disabilities. Two of the statutes and three of the regulations address civil rights or non-discrimination generally. The requirements are summarized (with resource and reference materials) in Table 2, below. Table 2, Civil Rights Requirements Item No. Title Digest References 1. Rehabilitation Act of 1973—29 USC §794, as amended Americans with Disabilities Act of 1990, as amended (ADA)— 42 USC §12101 et seq. Section 504 of the Rehabilitation Act (29 USC § 794) specifically prohibits discrimination against persons with disabilities in any program or activity receiving federal financial assistance. The FAA and U.S. DOT interpret the prohibition to apply to all aspects of an obligated airport’s operation. To implement the statutory requirement, the U.S. DOT Department of Transportation adopted 49 CFR Part 27, Nondiscrimination on the Basis of D i s a b i l i t y in Programs and Activities Receiving or Benefiting from Federal Financial Assistance and 49 CFR Part 28, Enforcement of Nondiscrimination on the Basis of Handicap in Programs or Activities Conducted by the Department of Transportation. Specifically, a Sponsor must: (1) notify participants, applicants, and employees that it does not discriminate on the basis of handicap; and (2) comply with 49 CFR Parts 27 and 28. The requirements of these regulations are described below. This act prohibits discrimination against individuals with disabilities and requires reasonable accommodation of otherwise qualified individual disabilities in the economy and public life. The act includes requirements for private entities and public entities. Specific Sponsor responsibilities FAA Advisory circular (AC) 150/5360-14, Access to Airports by Individuals with Disabilities (June 30, 1999); http://www.faa.gov/documentLibrary/media/advisory _circular/150-5360-14/150_5360_14.PDF. AC 150/5100-16A, Airport Improvement Program Grant Assurance 1 General Federal Requirements (October 4, 1988); http://www.airweb.faa.gov/Regulatory_and_Guidance _Library/rgAdvisoryCircular.nsf/1ab39b4ed563b0898 5256a35006d56af/58ff1089ac4c691086256c720077b 006/$FILE/150-5100-16a.pdf (Cancelled Publication) FAA AC 150/5220-21C, Aircraft Boarding Equipment (June 29, 2012); http://www.faa.gov/documentLibrary/media/Advisory _Circular/150_5220_21c.pdf

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.6.2, Grant Assurance 1 (Generally Applicable) 150 1. Americans with Disabilities Act of 1990, as amended—42 USC §12101 et seq. (con’t.) include the following: (1) the Sponsor must comply with 49 CFR Part 27; (2) the Sponsor may not discriminate against individuals with disabilities and must make reasonable accommodation for such individuals in its employment practices; (3) the Sponsor’s programs, services and activities must be readily accessible to and usable by individuals with disabilities; (4) the Sponsor must include appropriate language in its lease agreements, permits, etc., to assure that lessees, concessionaires, etc., operate consistently with the Sponsor’s obligations under Item 3; (5) the Sponsor must design and construct new facilities or alterations in existing facilities in compliance with the Americans with Disability Act Accessibility Guidelines (ADAAG); (6) the Sponsor must maintain accessibility features in working order and make repairs promptly; and (7) the Sponsor must comply with the accessibility requirements of 49 CFR Parts 37 and 38 in providing transportation services (either directly or by contract with third parties), including inter-terminal connectors, parking shuttles and inter-airport connectors. Transportation by aircraft is not covered by this act. Private entities operating courtesy shuttles, e.g., hotels, car rental agencies and off-airport parking lots, are also subject to accessibility requirements for transportation services and vehicles. Although it is not listed in Grant Assurance 1, The Air Carrier Access Act, 49 USC §47105 and U.S. DOT’s implementing regulation, 14 CFR Part 382, impose obligations on airport operators jointly with air carriers to provide accessible air transportation. Specifically, airport operators and air carriers are jointly responsible for providing accessible paths through airports; providing accessible facilities in compliance with the AADAG; providing boarding assistance through level boarding (passenger-loading bridges), accessible boarding lounges (mobile lounges), ramps or mechanical lifts (other than lifts for freight); and for maintaining boarding assistance devices. Part 35 implements Title II of the ADA, which prohibits discrimination on the basis of disability

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.6.2, Grant Assurance 1 (Generally Applicable) 151 1. 28 CFR Part 35—Discrimination on the Basis of Disability in State and Local Government Services by public entities and applies to all publicly owned airports. Specific obligations of the Sponsor include, but are not limited to, the following: (1) all Sponsors must conduct a self-evaluation within one year after adoption of Part 35; Sponsors with at least 50 employees must maintain records of the self-evaluation process for three years; (2) Sponsors with at least 50 employees must designate an employee to coordinate compliance with Title II and Part 35 and establish a grievance procedure for resolving complaints; (3) Sponsors may not discriminate against individuals on the basis of disability directly, or indirectly through, among other actions: (a) providing aid or assistance to another organization or individual that discriminates on the basis of disability; (b) perpetuating discrimination on the basis of disability by another public entity if the Sponsor and the public entity are under common control or are agencies of the same state; (c) selecting locations of facilities that exclude persons with disabilities from participating in the Sponsor’s programs or benefits; or (d) administering a licensing or certification program or establish requirements for licensees or certified entities that subject persons with disabilities to discrimination on the basis of their disability; (4) Sponsors may not impose a surcharge for giving non-discriminatory treatment; (5) Sponsors may impose reasonable safety requirements based on actual risks, and not on mere speculation, stereotypes or generalizations about persons with disabilities; (6) Sponsors are not required to provide individuals with personal devices, such as wheelchairs, eyeglasses or personal readers; or with personal services, such as assistance in eating or using the toilet; (7) Sponsors must maintain in operable working condition the features of facilities and equipment required to be readily accessible and usable by persons with disabilities, other than isolated interruptions for maintenance and repairs; (8) Sponsors may not retaliate against individuals for questioning compliance with Title II or

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.6.2, Grant Assurance 1 (Generally Applicable) 152 1. 28 CFR Part 35—Discrimination on the Basis of Disability in State and Local Government Services (con’t.) Part 35, through objections, participation in investigations or aiding or encouraging another person from exercising their rights; (9) Sponsors must permit the use of a house-broken service animal under control of a handler (including properly trained miniature horses), but are not responsible for the care or supervision of the service animal; (10) Sponsors must permit the use of wheelchairs and other manual mobility aids and make reasonable accommodations for power mobility aids; (11) Sponsors must design and construct new public facilities or alterations to make existing facilities public accessible and usable by persons with disabilities, unless it is structurally impracticable; (12) Sponsors must ensure that communications with persons with disabilities are as effective as communications with others, including providing auxiliary aids and services. Sponsors may not require the person with disabilities to bring another person to interpret or rely on another person to interpret except in emergency situations. This requirement includes requirements to use text telephones (TTYs) for telecommunications; and (13) Sponsors must ensure that persons with impaired vision can obtain information about the location of accessible services and facilities; provide signage at inaccessible entrances directing users to an accessible entrance; and use the international symbol for accessibility at each accessible entrance. Many of the requirements listed above have exceptions, waiver provisions or supplemental requirements. The regulation should be consulted to determine the exact nature of a Sponsor’s obligations. The regulation also specifies compliance procedures, including procedures for processing complaints. Part 27 implements section 504 of the Rehabilitation Act of 1973, discussed above.

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.6.2, Grant Assurance 1 (Generally Applicable) 153 1. 49 CFR Part 27— Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving or Benefiting from Federal Financial Assistance 49 CFR Part 28—Enforcement of Nondiscrimination on the Basis of Handicap in Programs or Activities conducted by the Department of Transportation 49 CFR Part 37—Transportation Services for Individuals with Disabilities (ADA) Under the regulation, a Sponsor must: (1) not limit, segregate, or classify applicants for employment or employees in any way that adversely affects their opportunities or status on the basis of handicap; (2) not discriminate on the basis of handicap in hiring, upgrading, promotion, demotion, transfer, layoff, termination, right of return from layoff and rehiring; (3) make reasonable accommodations, such as job restructuring, modified work schedules, acquisition or modification of equipment, to the handicap of qualified applicants or employees; and (4) make existing and future facilities and programs accessible to handicapped persons by providing specific equipment to accommodate the handicapped as outlined in 49 CFR Part 27. Part 28 implements section 504 of the Rehabilitation Act as it applies to programs and activities carried out directly by the U.S. DOT and its modal administrations, including the FAA, as opposed to financial assistance programs, which are subject to Part 27. Because Part 28 applies to programs and activities carried out directly by the U.S. DOT and the FAA, Part 28 imposes no direct requirements on Sponsors, even though it is included in Grant Assurance 1. The general prohibition on discrimination on the basis of handicap in programs, activities or benefits of the U.S. DOT could be interpreted to apply to Sponsors, but this prohibition is included in Part 27, as well. Part 37 implements the ADA. As applied to Sponsors, the regulation includes provisions that, among other things: (1) specify standards for accessible transportation facilities and vehicles; (2) prohibit discrimination based on disability in providing transportation services; (3) require Sponsors to designate an individual to coordinate compliance efforts and establish complaint procedures; (4) specify the accessibility standards applicable to ground transportation systems operated by Sponsors;

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.6.2, Grant Assurance 1 (Generally Applicable) 154 1. 49 CFR Part 37—Transportation Services for Individuals with Disabilities (ADA) (con’t.) (5) require that new facilities be constructed to meet applicable accessibility standards, unless compliance with the standards is structurally impracticable; (6) require that certain alterations to existing facilities be made in ways that assure they are accessible and can be used by individuals with disabilities, with exceptions for excessive costs; (7) establish requirements for the purchase of used, remanufactured and new vehicles meeting vehicle accessibility standards; and (8) require Sponsors to maintain the features of facilities and vehicles required to make them readily accessible to and useable by individuals with disabilities. The regulation includes additional requirements, exceptions and waiver provisions that may apply to Sponsors. The regulation should be consulted to determine the exact nature of a Sponsor’s obligations. 2. Title VI of the Civil Rights Act of 1964—42 USC §2000d et seq. Title VI prohibits discrimination on the grounds of race, color or national origin under any program or activity receiving federal financial assistance and prohibits the denial of benefits of or participation in the program on those grounds. These requirements are primarily concerned with discrimination in service to the public rather than employment, which is covered under Title VII of the Act. The U.S. DOT has adopted 49 CFR Part 21 to implement Title VI. Title VI applies to the AIP program and airport Sponsors accepting AIP grants, with 49 CFR Part 21 outlining the specific areas and services covered Specifically, a Sponsor must: (1) comply with the requirements of 49 CFR Part 21, that are discussed below; and (2) incorporate in all contract specifications and contracts of any kind, including leases and other property transfers, clauses specified by the FAA in Required Contract Provisions for Airport Improvement Program and for Obligated Sponsors (01/29/2016). This regulation describes the procedures that federal agencies issuing grants to state and local governments should follow if there is a possible violation of Title VI. Agencies are to first U.S. DOT Order1050.2A, DOT Standard Civil Rights Assurances and Non-Discrimination Provisions (undated); https://www.faa.gov/about/office_org/headquarters_of fices/acr/com_civ_support/non_disc_pr/media/dot_or der_1050_2A_standard_dot_title_vi_assurances.pdf FAA Order 1400.11, Non-Discrimination in Federally Assisted Programs at the FAA (August 27, 2013); http://www.faa.gov/documentlibrary/media/order/faa_ 1400_11.pdf Required Contract Provisions for Airport Improvement Program and for Obligated Sponsors (January 29, 2016), Appendix A, section A6 ACRP Report 47, Guidebook for Developing and Leasing Airport Property (2011);

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.6.2, Grant Assurance 1 (Generally Applicable) 155 2. 28 CFR §50.3—U.S. Department of Justice Guidelines for Enforcement of Title VI of the Civil Rights Act of 1964 49 CFR Part 21— Nondiscrimination in federally assisted programs of the Department of Transportation— effectuation of Title VI of the Civil Rights Act of 1964 attempt to achieve voluntary compliance from the grantee. If voluntary compliance cannot be achieved, alternatives include administrative actions, termination of eligibility and judicial enforcement. No specific requirements are imposed on Sponsors by this regulation. This regulation implements Title VI, described above. These requirements are primarily concerned with discrimination in service to the public, rather than employment, which is covered under Title VII of the Act. As applied to Sponsors, Part 21 provides the following: (1) a Sponsor may not deny benefits or discriminate against any person on the basis of race, color or national origin, including seven specific practices listed in 49 CFR §21.5(b)(1); (2) a Sponsor may not select the location of facilities with the purpose or effect of discriminating against any person on the basis of race, color or national origin; (3) a Sponsor may consider race, color or national origin to cure past discrimination and must take affirmative action if necessary to overcome the effects of past discrimination; (4) a Sponsor is expected to take affirmative action, even without prior discrimination, if necessary to assure that individuals are not denied the benefits of or participation in a program on the basis of race, color or national origin; (5) a Sponsor must include in each AIP grant application an assurance that it will comply with Part 21; (6) a Sponsor must maintain records, supply compliance reports and provide access to records to enable the FAA to determine compliance with Part 21; and (7) a Sponsor must make information on compliance with Part 21 to participants, beneficiaries and other interested persons. The regulation includes compliance procedures. Also, Appendix C, section (a)(1), provides examples of prohibited and required practices under Part 21. In addition to the regulatory provisions summarized above, Sponsors must include in their solicitation documents, all contract specifications and contracts of any kind, including leases and http://onlinepubs.trb.org/onlinepubs/acrp/acrp_rpt_04 7.pdf

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.6.2, Grant Assurance 1 (Generally Applicable) 156 2. 49 CFR Part 21— Nondiscrimination in federally assisted programs of the Department of Transportation— effectuation of Title VI of the Civil Rights Act of 1964 (con’t.) other property transfers, clauses specified by the FAA in Required Contract Provisions for Airport Improvement Program and for Obligated Sponsors (January 29, 2016). 3. Age Discrimination Act of 1975—42 USC §6101 et seq. This act prohibits discrimination on the basis of age in federally assisted programs or activities. Specifically, a Sponsor must ensure that no one shall, on the basis of age, be excluded from participation, or be denied the benefits of or be subjected to discrimination in any of the Sponsor's programs or activities. This act does not apply to employment practices, which are governed by the Age Discrimination in Employment Act of 1967. AC 150/5100-16A, Airport Improvement Program Grant Assurance 1 General Federal Requirements (October 4, 1988); http://www.airweb.faa.gov/Regulatory_and_Guidance _Library/rgAdvisoryCircular.nsf/1ab39b4ed563b0898 5256a35006d56af/58ff1089ac4c691086256c720077b 006/$FILE/150-5100-16a.pdf (Cancelled Publication) 4. 49 CFR Part 23—Participation by Disadvantaged Business Enterprise in Airport Concessions This regulation implements 49 USC §47107(e), which requires Sponsors to ensure, to the maximum extent practicable, that at least 10% of all businesses selling consumer goods or supplying consumer services are disadvantaged business enterprises (DBEs). The regulation defines the requirements for establishing and implementing an airport concession DBE (ACDBE) program. As applied to Sponsors, Part 23 provides, among other things, the following: (1) a Sponsor may not discriminate in the award of any concession agreement or contract, including management contracts or leases, on the basis of race, color, national origin or sex; (2) a Sponsor must include specified clauses in all concession contracts and management agreements prohibiting discrimination and acknowledging the applicability of Part 23; (3) a Sponsor of a primary airport (scheduled service and 10,000 or more passengers) must submit a new or revised ACDBE program for FAA approval. Other Sponsors must make appropriate outreach efforts to encourage ACDBEs to participate in concession opportunities. The ACDBE program must include the following: (a) a policy statement; FAA ACDBE Joint Venture Guidance (July 17, 2008) https://www.transportation.gov/sites/dot.gov/files/ docs/AirportConcessionDBEJointVentureGuidanc e_0.pdf Car Rental Company Good Faith Efforts Guidance (undated) https://www.transportation.gov/sites/dot.gov/files/ docs/Car_Rental_Companies_Good_Faith_Efforts _Guidance.pdf FAA, Principles for Evaluating Long-Term Exclusive Agreements in the ACDBE Program (June 10, 2013)

ACRP Project 03-38 (FY 2015) Understanding FAA Grant Assurance Obligations Section 1.6.2, Grant Assurance 1 (Generally Applicable) 157 4. 49 CFR Part 23—Participation by Disadvantage Business Enterprise in Airport Concessions (con’t.) (b) a liaison officer; (c) a directory; (d) ACDBE certification procedures; (e) an affirmative commitment to operate the ACDBE program in a non-discriminatory manner; and (f) a program narrative; (4) in addition, the program must provide for the following: (a) setting goals consistent with Part 23, including the requirement for stakeholder outreach; (b) seeking ACDBE participation in all types of concession activities; (c) race-neutral measures to obtain ACDBE participation; (d) race-conscious measures to be employed when race-neutral measures are not effective; and (e) businesses subject to the ACDBE goals to make good faith efforts to explore practicable options to achieve ACDBE participation through direct ownership. Many of the requirements listed above have exceptions, waiver provisions or supplemental requirements. The regulation should be consulted to determine the exact nature of a Sponsor’s obligations. https://www.transportation.gov/sites/dot.gov/files/ docs/LTE_Guidance_Final_508.pdf Sample “No Change Declaration” for ACDBE Concessionaires (undated) https://www.transportation.gov/sites/dot.gov/files/ docs/SampleNoChangeDeclarationForConcession aires_0.pdf