Legal Aspects of Airport Programs

Review and Corrective Action for Long-Term, Exclusive Agreements in the ACDBE Program

The Airport Concession Disadvantaged Business Enterprise (ACDBE) program rules set for th in 49 CFR Part 23 prohibits airport sponsors from entering into long-term, exclusive (LTE) agreements for concessions, except under very limited conditions and only with pre-review and approval from the FAA Office of Civil Rights. The DOT published the final rule in the Federal Register on June 20, 2012, but according to one compliance specialist, LTEs continue to exist, uncorrected, or entered into unknowingly by airport operators. This Legal Research Digest topic will provide direction for airport managers and attorneys in concessions agreement compliance.

Background--State the problem and why research is necessary. Highlight the legal and regulatory issues as they specifically pertain to airports.

If scrutinized, many airports operators may find they have airport concession agreements that are in conflict with 47 CFR Part 23, prohibiting long-term, exclusive agreements in ACDBE Program. A LTE is any concession agreement of more than five years, including any combination of base term and options. Concessions categories for the agreements subject to this Federal regulation include, but are not limited to: Food Service, Retail Stores, Parking Management, Lodging, Advertising, Advertising, Duty Free, and Transportation (shuttle service). The FAA states in its guidance, "the reason for this general prohibition is to limit the situation where an entire category of business activity is not subject to competition for an extended period of time through the use of an LTE agreement." The guidance additionally states, "the FAA is aware that there may be existing LTE agreements that have not been approved by FAA. These agreements raise serious compliance concerns and should be immediately submitted to FAA for review." This regulation is especially important for small airport operators to be aware of as many small airports can only support one concessionaire in each category. FAA Guidance further states "an airport's use of the word "exclusive" in describing the rights of a concessionaire is not controlling as to whether the enterprise has a LTE agreement under the ACDBE program rule." Airports with concession agreements in violation of this program rule jeopardize Federal grant assurance compliance.

Objective--State the objective, including a brief description of the intended deliverable, which airport stakeholders are the intended audience, and how their needs will be met by the deliverable.

The objective of this Legal Research Digest is to provide airport managers and attorneys with the tools needed to gain approval for LTEs, if that is the desired outcome, and to provide a road map for remedying existing concessions contracts not in compliance with 47 CFR Part 23.

Relevance to Airport Legal Issues--ACRP's Legal Research Program focuses on legal and regulatory challenges and issues as they specifically pertain to airports. Please describe how this topic is relevant and unique to airports such that it should be researched.

49 CFR Part 23 applies only to the Airport Concessions Disadvantaged Enterprise Program. Non-compliance can result in corrective action by the FAA Office of Civil Rights and/or determination of Federal grant assurance non-compliance.

Information Sources--Organizations, individuals, or related literature.

FAA Office of Civil Rights, National Airport Civil Rights Policy and Compliance, Principles for Evaluating Long-Term, Exclusive Agreements in the ACDBE Program

https://www.transportation.gov/civil-rights/principles-evaluating-long-term-exclusive-agreements-acdbe-program

 

Federal Register, DOT, 49 CFR Part 23

https://www.govinfo.gov/content/pkg/FR-2005-03-22/pdf/05-5530.pdf#page=14

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Idea No. 544