WHAT HAPPENS WHEN AN FBO CANNOT SELECT ITS OWN FUEL PROVIDER? Continued from page 55 facilitates interpretation of the as- surances by FAA personnel.” Order 5190.6B, Introduction. The next two sections of this article will look at two particular grant assurances that are relevant to the determina- tion of whether an airport owner can force a fuel provider on an FBO. Prohibition Against Exclusive Rights In exchange for receiving fed- eral grant funds, an airport sponsor agrees to Grant Assurance 23, which prohibits a sponsor from granting an exclusive right for the use of an airport. Specifically, Grant Assurance 23 provides that an airport sponsor “will permit no exclusive right for the use of the airport by any person providing, or intending to provide, aeronautical services to the public.” An exclusive right is defined as fol- lows: “[A] power, privilege, or other right excluding or debarring another from enjoying or exercising a like power, privilege or right. An exclu- sive right may be conferred either by express agreement, by imposi- tion of unreasonable standards or requirements or by another means. Such a right conferred on one or more parties, but excluding others from enjoying or exercising a similar right or right, would be an exclusive right.” Order 5190.6B, Section 8.4 g. The prohibition against the grant- ing of exclusive rights is limited to aeronautical activities. The FAA has interpreted aeronautical activi- ties to be: (1) activities for which the airfield is utilized, such as air carrier, flight schools, and charter opera- tions; and (2) activities that involve, make possible, or are required for the operation of aircraft; or that contribute to, or are required for the safety of such operations. Aircraft fueling services are an activity that is required for the operation of aircraft and fall within the defini- tion of aeronautical activities. It is important to note that al- though an airport sponsor cannot grant exclusive rights to others, the sponsor is entitled to exercise an exclusive right for itself. As such, it would be permissible for an FBO itself to provide aircraft fueling ser- vices. If, however, an airport spon- sor decides to exercise an exclusive right to provide aeronautical services, it must utilize its own employees and resources to do so. As such, an airport sponsor cannot attempt to exercise an exclusive right through the use of a services agreement. Prohibition Against Economic Discrimination In exchange for receiving federal grant money, airport sponsors also agree to be bound by Grant Assurance 22, which prohibits airport sponsors from engaging in economic discrimi- nation. Specifically, Grant Assurance 22 requires, among other things, that airport sponsors “will make the airport available as an airport for public use on reasonable terms and without unjust discrimination to all types, kinds and classes of aeronau- tical activities, including commer- cial aeronautical activities offering services to the public at the airport.” The prohibition of unjust discrimi- nation applies not only to all types, kinds, and classes of aeronautical activity, it also applies to individual members of a class of operators. Does an Airport Sponsor Violate its Obligations under the Federal Grant Assurances if it Forces a Fuel Provider on an FBO? As established above, airport sponsors who accept federal grant money under the AIP are prohibited pursuant to the federal grant as- surances from granting exclusive rights and from engaging in eco- nomic discrimination. The ques- tion remains whether an airport sponsor forcing a fuel provider of its choice on an FBO would violate these grant assurance prohibitions. Order 5190-6B acknowledges this issue, stating: “If the sponsor requires an FBO to procure fuel, services, or supplies from a source that the sponsor provides, the FAA may determine that the requirement is an unreasonable restraint on the FBO’s use of the airport and not consistent with Grant Assurance 22, Economic Nondiscrimination or Grant Assurance 23, Exclusive Rights.” Based upon this language, it appears likely that an airport spon- sor would be in violation of Grant Assurance 22 and Grant Assurance 23 if it forced a fuel provider on a FBO. That being said, Order 5190-6B states only that the FAA may find it a violation. The FAA is not required to determine that it is a violation. As such, whether forcing a fuel provider on an FBO constitutes a violation of the federal grant assurances depends upon the particular facts and circum- stances at issue. The case law does Continued on page 58 Aviation Business Journal | 4th Quarter 2015 57
