May/June 2023 - 41

LEGAL MATTERS
exclusive right to conduct any aeronautical
activity at an airport limits the
usefulness of the airport and deprives
the public of the benefits of competitive
enterprise. The FAA considers it
inappropriate to provide federal funds
for improvements to airports where
the benefits of such improvements
will not be fully realized by all users
due to the inherent restrictions of an
exclusive monopoly on aeronautical
activities. " Chapter 8.4.c.
Grant Assurance 22
Only Prohibits Exclusive
Rights Involving
Aeronautical Activity
An airport sponsor's prohibition
against providing an exclusive right
at a federally funded airport is not
absolute. To the contrary, law and
applicable FAA guidance clarify that
a federally obligated airport sponsor's
prohibition against providing exclusive
rights does not apply to nonaeronautical
activity.
First and foremost, the plain language
of Grant Assurance 22 makes
this clear. Specifically, it limits the
prohibition to an " exclusive right for
the use of the airport by any person
providing, or intending to provide,
aeronautical services to the public. "
Case law also clarifies that the
prohibition against providing exclusive
rights only applies to aeronautical
activity. In Ashton v. City of Concord,
NC, Docket No. 16-00-01, April 17,
2001, the FAA held that " the prohibition
against the granting of an exclusive
right only applies to aeronautical
activity. It does not protect a user's
ability to conduct nonaeronautical
activity. " (Emphasis added.)
Likewise, in In the Matter of
Compliance with Federal Obligations
by the City of Santa Monica,
California; Docket No. 16-02-08, May
14, 2009, the FAA, relying in part on a
1941 legal opinion by the United States
Attorney General, held that the prohibition
against exclusive rights applies
solely to aeronautical activity.
The Airport Compliance Manual
also confirms that the prohibition
against exclusive rights does not
apply to nonaeronautical activity.
Specifically, Section 8.4.b(1) states
that " [a]ll nonaeronautical activities
... are excluded from the prohibition "
against providing exclusive rights. The
Airport Compliance Manual further
provides that " nonaeronautical activities
... are not covered under the grant
assurances or covenants in conveyances
of federal property. " Section
10.2. Additionally, Section 8.1 of the
Airport Compliance Manual provides
that a federally obligated airport
sponsor " may not grant a special privilege
or a monopoly to anyone providing
aeronautical services on the airport
or engaging in an aeronautical use. "
In sum, the Grant Assurances,
case law, and the Airport Compliance
Manual make clear that a
federally funded airport sponsor's
prohibition against exclusive rights
only applies to aeronautical activity.
A federally funded airport sponsor
may permissibly provide exclusive
rights to airport tenants concerning
nonaeronautical activities.
Aeronautical Activity
and Nonaeronautical
Activity Defined
Given that a federally obligated
airport sponsor can confer exclusive
rights to an airport tenant concerning
nonaeronautical activity, this begs
the question: what is aeronautical
activity and what is nonaeronautical
activity? Initially, the FAA interpreted
aeronautical activity as related
to exclusive rights prohibitions as
activity involving the airfield, such
as air carrier and flight schools, for
example. The FAA later extended the
interpretation of aeronautical activity
to " all aeronautical 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. " Airport
Compliance Manual, Section 8.4.b.
" Activities within this definition,
commonly conducted on airports
include, but are not limited to, the
following: general and corporate
aviation, air taxi and charter operations,
scheduled and nonscheduled
air carrier operations, pilot training,
aircraft rental and sightseeing, aerial
photography, crop dusting, aerial
advertising and surveying, aircraft
sales and services, aircraft storage, sale
of aviation petroleum products, repair
and maintenance of aircraft, sale of
aircraft parts, parachute or ultra light
activities, and any other activities that,
because of their direct relationship to
the operation of aircraft, can appropriately
be regarded as aeronautical
activities. " BMI Salvage Corp. v. FAA,
488 Fed. Appx. 341, 345-346 (July
19, 2012).
Nonaeronautical activity includes
the following: " public parking, rental
cars, ground transportation, as well
as terminal concessions such as food
and beverage and news and gift shops. "
Airport Compliance Manual, Section
18.3.c; see also FAA Order 5190.1A,
Section 6.b.(2) ( " ground transportation
(taxis, car rentals, and limousines);
restaurants; barber shops; and auto
parking lots " are not considered aeronautical
activities). Additionally, the
Airport Compliance Manual specifies
that " [a]viation-related uses that do not
need to be located on an airport, such
as flight kitchens and airline reservation
centers, are considered nonaeronautical
uses. " Section 18.3.c.
Although the distinctions discussed
above between aeronautical activity
and nonaeronautical activity may
seem straightforward and easily discernible,
that is not always the case.
For example, in BMI Salvage Corp.
v. FAA, the FAA ruled that aircraft
salvage and demotion operations are
not aeronautical activities. Supra, at
347. The FAA reasoned that: (1) the
official FAA definition of aeronautical
activities did not include salvage and
demolition; (2) the list of activities
that would qualify as aeronautical,
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