Jesse Rigby, who represents Varona Enterprises of Florida, has pointed out to the City Attorney Jim Messer and the Pensacola City Council a potential violation by the city of 49 CRE 23.75 – which requires FAA approval of exclusive long-term contracts. Rigby wrote that he assumed that the Airport had submitted the required request to the FAA Office of Civil Rights, and had received approval to enter into the 10 year contract. However, the city can not provide any documentation to prove it.
In fact, it appears the city delayed its reply to his public record request until the day after the council’s agenda review meeting. Rigby doesn’t blame Jane Ballard, public records coordinator, but suggests it was her superiors and those who had to provide her the records.
From: Jesse Rigby [jrigby@cphlaw.com]
Sent: Tuesday, March 25, 2014 6:34 PM
To: Legal
Cc: Jewel Cannada-Wynn; Megan Pratt; P.C. Wu; Sherri Myers; Andy Terhaar; Larry B. Johnson; Gerald Wingate; Brian Spencer; Charles Bare; Ashton Hayward; Colleen Castille; Greg Donovan
Subject: Potential Violation by City of 49 CFR 23.75Jim:
Earlier this afternoon, I left a voice message requesting a return call, as I believe that discussion between us of the issues addressed in this email could be worthwhile. Having not received a return call, I concluded that this written communication would be appropriate. I have copied all elected officials and key city staff members who should have an interest in the affairs of the Airport.
I believe that the City, acting on behalf of the Airport, has placed federal grant money at risk. I don’t know the sum involved, but my guess is that the amount of federal grant money that has been used by the Airport is substantial. The risk arises if the City has allowed the Airport to violate terms and conditions that accompany federal grants. I don’t purport to be an expert on this subject, so I downloaded from the FAA website the attached document that is represented by the FAA to be the Grant Assurances that all airport sponsors must agree to abide by as a contractual term of accepting federal money. Conspicuous on the list of federal regulations is 49 CFR Part 23. The Grant Assurances was somewhat eye-opening for me. I now understand why the City Council has a clear role in the affairs of the Airport (see par. 2.a on page 4 of the document).
As you know, on March 13 in an email to you, I raised the question of whether the Mayor’s intent to award a 10 year exclusive contract to OHM would violate 49 CFR 23.75. I watched the City Council meeting on March 13, so I am aware of what was said at that meeting. Then on March 18 the Mayor issued a press release that he intended to award a contract to OHM, and subsequently it was reported that the Mayor signed a 10 year contract with OHM.
49 CFR 23.75 clearly states that FAA must approve, in advance, any exclusive concession of more than 5-year duration.. Therefore, after the Mayor’s announcement of contract award, I had to assume that the Airport had submitted the required request to the FAA Office of Civil Rights, and had received approval to enter into the 10 year contract. However, to confirm this fact, I submitted a simple public records request on March 19, requesting documents that would support FAA’s approval to enter into a 10 year contract. I sent the request to the Mayor, as well as the public records coordinator, because I did not want this request to get lost in the bureaucracy. I assume you saw the request, but if not, I have attached a copy. The request was simple, and as I later explained to Ms. Ballard, I would consider it to be impossible that Greg Donovan would not know whether the prior approval request was sent to the FAA.
I received the public records response earlier today. In addition to my letter of request, it included 5 copies of the Mayor’s press releases, and two substantive documents that I have attached to this email. One is a copy of the Airport ACDBE Program statement that was signed by the Airport Director in August 2012. The other is a memo from Ms. Kvech to Mr. Donovan that is dated the same day as my public records request. Interestingly, there was no request to the FAA Office of Civil Rights, and therefore no approval authorizing the long-term exclusive agreement with OHM. More interesting is the fact that my simple public records request could have been answered on March 20 or 21, rather than on the 25th. However, I cannot fault the City’s public records coordinator because I am confident that she distributed my request immediately after receipt and did not have any documents to send to me before the 25th.
With the new information that has now been produced by the City, I can draw the following conclusions:
1. The statement found on page 12 of the Airport’s ACDBE Program description, under the heading “Section 23.75 Long-Term Exclusive Agreements†is legally incorrect. The second sentence of this section states: “We understand that a ‘long-term’ agreement is one having a term of longer than 10 years.†Someone representing the Airport simply misread 49 CFR 23.75. A long-term agreement is one having a term greater than 5 years. The City does not have the luxury of re-writing federal regulations.
2. I then read Ms. Kvech’s memo of last Wednesday to Greg Donovan. The memo raised a couple of legal questions. First, had 49 CFR 23.75 been revised at some point that would support Ms. Kvech’s statement? The answer is no. Attached is a copy of the Westlaw download of 49 CFR 23.75. The regulation has not changed since it was published in the Federal Register in March 2005. Therefore, Ms. Kvech’s statement that “On June 10, 2013, the FAA issued guidance on Airport Concession Requirements reducing an exclusive agreement to 5 years†is simply incorrect. The Guidance issued in June 2013 clarified what the Airport had to do to seek approval for a long-term contract, to whom to send the request, and what information needs to be provided to the FAA. It did not change 49 CFR 23.75 in any manner, and as we know, the FAA Office of Civil Rights would not have the authority to revise the regulation.
3. Can the City rely on the Airport policy statement that a long-term concession agreement is one exceeding 10 years? I think you will agree that the City cannot modify the terms of the federal regulation.
4. Ms. Kvech is probably correct that the June 2013 FAA guidance did not require the Airport to update its ACDBE plan, but then again, the portion of the plan that violates federal law cannot be relied on to support the Mayor’s decision to sign a 10 year concession contract. The federal regulation makes the incorrect statement in the Airport’s ACDBE Program plan invalid. The City’s plan should probably be revised to state the federal low accurately, if for no other reason than to provide accurate information to the public, as well as potential concessionaires.
5. We also know that the Airport’s RFP was fundamentally flawed in its inception, in that it requested proposals for a 10 year agreement.
What are the potential risks and consequences if the City presses forward with the 10 year agreement? The risks appear to be described in 49 CFR §§ 26.101, 26.103 and 26.105 (copies attached for convenience). In addition to the formal enforcement procedures referenced in 49 CFR §26.105 (namely, 14 CFR Part 16), it would appear that 14 CFR Part 13 might also be applicable. I have not tried to determine which enforcement procedure is appropriate, because I have not been asked to do so, and more importantly, the City Council and the Mayor can still correct this problem.
I assume that you will have a pivotal role in advising the City Council as to whether or not the future receipt, or repayment, of federal Airport Improvement Program grant funds has been put in jeopardy. I do not contend that I fully understand all of the details of the regulations that appear to apply to these issues. I do know enough to pose questions that need to be addressed. I am willing to discuss these issues with you. All you need do is to give me a call.
As you know, our firm represents Varona Enterprises of Florida, Inc. An appropriate resolution of the issues raised in this communication may, or may not, assist our client. Even if our client does not benefit, these issues need to be addressed, for the benefit of our entire community.
Jesse W. Rigby
Clark Partington Hart Larry Bond & Stackhouse
Here are the attachments:
49 CFR 23.75 (A1606989xA3759)
49 CFR 26.101 [2013]_S
49 CFR 26.105_031214_S49 CFR 26.103_031214_S
Airport ACDBE Program_081312 (A1606780xA3759)
Grant Assurances Airport Sponsors_032514
PRR_A – Mayor Hayword_031914_S
MF Kvech – Donovan 031914 (A1606814xA3759)
