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¹⁰ Available at https://onlinepubs.trb.org/onlinepubs/acrp/acrp_rpt_016.pdf.

¹¹ Available at https://ppp.worldbank.org/public-private-partnership/sites/ppp.worldbank.org/files/documents/Guidebook%20for%20Developing%20and%20Leasing%20Airport%20Property.pdf.

¹² Available at https://onlinepubs.trb.org/Onlinepubs/trr/1989/1218/1218-002.pdf.

¹³ Available at https://crp.trb.org/acrpwebresource6/home/chapter-resources/chapter-3-business-financial-and-administrative-management/3-6-leases/.

¹⁴ Available at https://crp.trb.org/acrpwebresource6/home/chapter-resources/chapter-3-business-financial-and-administrative-management/3-7-airport-operations-documents/.

¹⁵ See generally FAA Compliance Manual, Order 5190.6B (discussing federal requirements for aeronautical leases, including GA and FBO leases).

¹⁶ Airport Policy Documents may include minimum standards, leasing policies or guidelines, airport rules and regulations, and a schedule of rates and charges (sometimes contained in a legislative provision, but often contained in leasing policies). See ACRP Synthesis 86: Airport Operator Options for Delivery of FBO Services (2018) at 17 [hereinafter ACRP Synthesis 86]. GA leases may include provisions from these Airport Policy Documents or, more often, simply incorporate them by reference.

¹⁷ Federal grants to airports are made under the Airport Improvement Program (AIP). See https://www.faa.gov/airports/aip.

¹⁸ FAA Airport Compliance Manual, Order 5190.6B (2009) discusses and provides supporting materials about the federal Grant Assurances. The manual and recent updates are available at https://www.faa.gov/documentlibrary/media/order/5190_6b.pdf.

Barry, et al. (2017).¹⁹ The following explanation of the Grant Assurances relevant to developing and drafting of GA leases at airports provides helpful background material for the issues discussed in this digest.

• Grant Assurance 5 (Preserving Rights and Powers) prohibits an airport sponsor from taking actions that may deprive it of its rights and powers to direct and control the development of the airport and to comply with its federal obligations.²⁰ Grant Assurance 5 prohibits an airport from granting a Lessee of airport premises a property interest that may restrict the sponsor’s ability to preserve its rights and powers to operate the airport in compliance with its federal obligations by not ceding or providing to the Lessee the contractual control of the airport. An airport, therefore, may not transfer a fee interest in airport property or enter into a lease for a term that effectively transfers a controlling interest in property to a Lessee. Compliance with Grant Assurance 5 is most often achieved by using lease terms less than 50 years in length, consulting with the Federal Aviation Administration (FAA) Airport District Office (ADO) regarding any lease terms of 50 years or longer and including a subordination clause in all lease agreements that subordinates the terms of the lease or agreement to the federal grant assurances. A subordination clause will allow the airport to pursue an amendment to a lease if the FAA finds that any of its provisions violate Grant Assurance 5 by depriving the airport of its rights and powers. A subordination clause typically states that in the event of a conflict between the lease terms and the federal grant assurances, the grant assurances (or any other regulatory requirements) will take precedence.
• Grant Assurances 6 (Consistency with Local Plans), 7 (Consideration of Local Interests), and 8 (Consultation with Users) apply to project supported by federal funds and collectively require an airport to consider any existing plans, interests, and concerns of the surrounding community and current airport users prior to entering into an airport development. These Grant Assurances may have little or no effect on an airport lease that follows an existing use of the premises or is not federally funded, but may play a role when a new ground lease contemplates a development with a larger effect or if the development will include federally funded infrastructure (such as a taxiway leading to a new hangar or other facility).
• Grant Assurance 19 (Operation and Maintenance). The relevant portion of Grant Assurance 19 provides as follows:

19. Operation and Maintenance.

1. The airport and all facilities which are necessary to serve the aeronautical users of the airport, other than facilities owned or controlled by the United States, shall be operated at all times in a safe and serviceable condition and in accordance with the minimum standards as may be required or prescribed by applicable Federal, state, and local agencies for maintenance and operation. It will not cause or permit any activity or action thereon which would interfere with its use for airport purposes.²¹

• Grant Assurance 22 (Economic Nondiscrimination) requires an airport to treat all similarly situated tenants equitably when assessing rates, charges, and lease terms. Grant Assurance 22 provides as follows:

22. Economic Nondiscrimination.

1. It 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 aeronautical activities, including commercial aeronautical activities offering services to the public at the airport.
2. In any agreement, contract, lease, or other arrangement under which a right or privilege at the airport is granted to any person, firm, or corporation to conduct or to engage in any aeronautical activity for furnishing services to the public at the airport, the sponsor will insert and enforce provisions requiring the contractor to:
   1. Furnish said services on a reasonable, and not unjustly discriminatory, basis to all users thereof, and
   2. Charge reasonable, and not unjustly discriminatory, prices for each unit or service, provided that the contractor may be allowed to make reasonable and nondiscriminatory discounts, rebates, or other similar types of price reductions to volume purchasers.
3. Each fixed-based operator at the airport shall be subject to the same rates, fees, rentals, and other charges as are uniformly applicable to all other fixed-based operators making the same or similar uses of such airport and utilizing the same or similar facilities.
4. Each air carrier using such airport shall have the right to service itself or to use any fixed-based operator that is authorized or permitted by the airport to serve any air carrier at such airport.
5. Each air carrier using such airport (whether as a tenant, non-tenant, or subtenant of another air carrier tenant) shall be subject to such nondiscriminatory and substantially comparable rules, regulations, conditions, rates, fees, rentals, and other charges with respect to facilities directly and substantially related to providing air transportation as are applicable to all such air carriers which make similar use of such airport and utilize similar facilities, subject to reclassifications such as tenants or non-tenants and signatory carriers and non-signatory carriers. Classification or status as tenant or signatory shall not be unreasonably withheld by any airport provided an air carrier assumes obligations substantially similar to those already imposed on air carriers in such classification or status.
6. It will not exercise or grant any right or privilege which operates to prevent any person, firm, or corporation operating aircraft on the airport from performing any services on its own aircraft with its own employees (including, but not limited to maintenance, repair, and fueling) that it may choose to perform.
7. In the event the sponsor itself exercises any of the rights and privileges referred to in this assurance, the services involved will be provided on the same conditions as would apply to the furnishing of such services by commercial aeronautical service providers authorized by the sponsor under these provisions.

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¹⁹ Available at https://nap.nationalacademies.org/catalog/25126/understanding-faa-grant-assurance-obligations-volume-1-guidebook.

²⁰ Grant Assurance 4 requires an airport sponsor to hold good title to the airport.

²¹ Airport Compliance Manual, 5190.6B Change 3 (Sept. 2023) at 19-2.

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²² Available at https://www.faa.gov/sites/faa.gov/files/airports/new_england/airport_compliance/assurances-airport-sponsors-2022-05.pdf.

²³ Available at https://www.faa.gov/sites/faa.gov/files/airports/new_england/airport_compliance/assurances-airport-sponsors-2022-05.pdf.

²⁴ Airport Sponsor Assurances 5/2022 Page 14 of 19.

²⁵ Available at https://www.faa.gov/sites/faa.gov/files/airports/new_england/airport_compliance/assurances-airport-sponsors-2022-05.pdf.

certain differences among an airport’s leases may arise over time as circumstances and conditions change. As the FAA observed in a recent Part 16 decision:

Minimum standards may change over time. Lease terms may change over time. The FAA recognizes that leases are legal documents that exist in time and are rarely identical between users because of differing circumstances of the leases, sites, users, negotiations, business plans, economic circumstances, and market conditions, etc. The FAA does not enforce lease provisions through the compliance program. When a sponsor amends its minimum standards, it may attempt to apply such standards to all users. If such application of new minimum standards appears to be in conflict with lease agreements, such a dispute is a legal dispute over lease terms. This is outside of FAA jurisdiction. However, the FAA recognizes that sponsors may not always be able to enforce new minimum standards against leaseholders of prior legal contracts. In such circumstances, the FAA often recommends that when the sponsor has the ability to re-open lease agreements, it should pursue amending the leases to be consistent with the new minimum standards. The FAA does not require airport sponsors to refrain from applying newer minimum standards to prior tenants.²⁶

And while an airport may not violate the federal Grant Assurances simply because it leases land to a single FBO, it may well violate them if it also fails to make a reasonable effort to provide sufficient area for GA self-service.²⁷

Finally, the FAA and the U.S. Department of Transportation have published guidelines and advisory documents related to airport leases and contracts. The FAA’s Contract Provisions and Guidelines for Obligated Sponsors and Airport Improvement Program Projects²⁸ provides the text of mandatory lease provisions for airport GA leases. And airports that have received grants of real property from the United States under the Surplus Property Act,²⁹ or who have received deeds for nonsurplus property, should be aware of the restrictions and conditions attached to such property. The Surplus Property Act authorizes the transfer of surplus real property that the Secretary of the Department of Transportation has determined is suitable or desirable for the development, improvement, operation, or maintenance of a public airport, including property used as a source of revenue from non-aviation businesses. The act, however, contains specific terms, conditions, reservations, and restrictions for the use of the transferred property and subjects an airport to agency compliance reviews—in particular the deed of transfer for the property may contain restrictions its use, the length of those restrictions, and conditions for its transfer.³⁰ Similarly, nonsurplus property transferred to airports by the federal government will often include deed restrictions.

B. An Airport’s Right and Authority to Enter into GA Leases Are Grounded in State Law

The source of an airport’s authority to enter into contracts and leases has been addressed in two previous ACRP publications.³¹ LRDs 10 and 41 explain that an airport’s authority to enter into leases is grounded in state law, subject to the limitations of federal regulatory law and other contractual obligations. State law grants of authority (such as airport enabling statutes) typically grant airports the power to acquire, operate, maintain, and improve an airport; to expend funds and to incur indebtedness for airport purposes; to impose reasonable charges for use of airport facilities; and to engage in such “private” or “proprietary” commercial activities as negotiating and entering into contracts and leases, much like any private entity. Such authority, however, is limited by three principles: the exercise of the airport’s authority (1) must be carried out for a public purpose, (2) may be superseded by federal regulation, and (3) may be modified by contractual obligations made between the airport sponsor and the federal government.³²

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²⁶ Rick Aviation, Inc. v. Peninsula Airport Comm’n, FAA Docket No. 16-05-18 (2017).

²⁷ In Aircraft Owners & Pilots Ass’n (AOPA) v. Key W. Int’l Airport (EYW) (Aug. 28, 2017), for example, AOPA filed a Part 13 Complaint against EYW alleging, among other things, that the airport violated Grant Assurances 22 and 23 by leasing airport land to only a single FBO and by not providing an area that would allow GA operators to perform self-service maintenance operations (https://download.aopa.org/advocacy/2018/180629_EYW.pdf?_gl=1*14tvi2n*_gcl_au*MjExMTA2MDE3Mi4xNzI3MjE4MTc4). Relying on Monaco Coach Corp. v. Eugene Airport & City of Eugene, Ore., FAA Docket No. 16-03-17 (Mar. 4, 2005) (Final Agency Decision), the FAA’s Southern Region Airports Division determined while EYW violated Grant Assurance 22 because it failed to offer a reasonable level of self-service at the airport, the airport, without more, did not grant an exclusive right simply because it leased the airport’s only available commercial space to a single FBO. Had EYW denied access to a new entrant FBO, or allowed the existing FBO to retain an unused leasehold in order to block a new FBO entrant, there may have been a violation of Grant Assurance 23. Rather than develop a self-service area itself, an airport may consider an amendment to an FBO lease requiring the development of such an area that meets the applicable FAA standards. An airport may also consider referencing the mandatory self-service disclaimer required by the FAA Guidelines discussed in Section V, 16 later. The sample provision reprinted here is used by MSP for GA leases at its reliever airports.

21.7. Performance of Services on Aircraft

It is clearly understood by Tenant that no right or privilege has been granted which would operate to prevent any person, firm, or corporation operating aircraft on the Airport from performing any services on its own aircraft with its own regular employees (including, but not limited to, maintenance and repair) that it may choose to perform, in accordance with the Policies.

MSP Reliever Airport Lease Template (2022).

²⁸ Available at https://www.faa.gov/sites/faa.gov/files/2022-11/combined-federal-contract-provisions-2022-11-17_0.pdf.

²⁹ Section 13(g) of the Surplus Property Act of 1944 (49 U.S.C. § 47151) is continued in effect by section 602(a) of the Federal Property and Administrative Services Act of 1949 and amended by Public Law 311, 81st Congress (50 U.S.C. App. 1622(a)-(c)).

³⁰ See, for example, the FAQs at https://disposal.gsa.gov/s/faq describing restrictions on the application process and procedures used under the act, the restrictions on the use of the property, and the duration of those restrictions.

³¹ See generally ACRP LRD 10: Analysis of Federal Laws, Regulations, and Case Law Regarding Airport Proprietary Rights (2010) (explaining the source of airport authority in the context of the federal law of airport proprietary rights); ACRP LRD 41: Legal Issues Related to Airport Commercial Contracts (2021) at 2-3 (same and explaining context of relevant issues) [hereinafter ACRP LRD 41].

³² ACRP LRD 41, supra, at 3-5, 17-18, 29.