Huffman finds CPA in violation of grant requirement

A Federal Aviation Administration official has determined that the Commonwealth Ports Authority is requiring insurance amounts that are unreasonable and unjustly discriminatory of airplanes that operate at the Francisco C. Ada/Saipan International Airport.

Byron Huffman, the FAA acting director of Office of Airport Compliance and Management Analysis, directed CPA to reevaluate its rules pertaining to aircraft liability insurance requirements to differentiate between general aviation and commercial air transportation operators.

CPA was also directed to develop and apply an aircraft liability insurance requirement for general aviation aircraft operating in the CNMI.

CPA was directed to submit a corrective action plan within 45 days of the decision.

CPA has yet to respond to Saipan Tribune’s request for comments.

Flight instructor Hiroaki Nishio had complained to FAA in April that he is being required by CPA to post a $10-million general liability insurance.

He said this requirement is unreasonable because it does not differentiate between general aviation operators and commercial operators. Nishio also complained that the $10 million liability insurance requirement is unreasonable as to it not widely available on the market and is unfeasible.

Nishio is part owner of the Saipan Flight Academy. He has been performing flight instruction on Saipan since 1992. Saipan Flight Academy also used to do charter air services and sightseeing tours but these two services have since been halted.

Nishio provided a certificate of insurance and an airworthiness certificate on his Cessna 172M on Sept. 1, 1993.

CPA then amended its rules, including the liability insurance requirement of $10 million for air carriers providing scheduled service to or from any airport in CNMI. CPA also required scheduled and charter operators to enter a written Airline Use Agreement, which Nishio signed in March 1994. Since the signing of the AUA, Nishio has no longer been providing charter air services or sightseeing tours, and has been limited to providing only flight instruction services at the Saipan airport.

In 2010, CPA found no updated insurance papers for Nishio on its files during a compliance review of insurance records for aircraft operators. Since then, CPA has been asking Nishio to provide proof of the required $10 million liability insurance. CPA has also prohibited Nishio from using the airport until he provides documents proving that the liability insurance has been obtained.

Upon Huffman’s review, it was found that CPA was in violation of its grant obligations. Specifically, Grant Assurance 22 requires the owner of any airport that is developed using federal grant funds to operate for the use and benefit of the public. It also requires the airport to be available to all types, kinds, and classes of aeronautical activity on fair and reasonable terms and without unjust discrimination. Grant Assurance 22 prohibits adopting unjustly discriminatory conditions that limits airport access.

Huffman concluded that $1 million to $10 million of liability insurance is available from various insurers. Huffman also pointed out that Nishio obtained aircraft liability insurance of varying amounts, including $10 million, over the course of his operation at the Saipan airport.

Huffman said he was able to find aircraft liability insurance that complies with the $10 million minimum being required by CPA. “To that end, the record does not demonstrate that the complainant has performed a sufficiently comprehensive search of insurance providers to corroborate his claims of insurance unavailability.”

Despite these, Huffman said that CPA’s interpretation and application of aircraft liability insurance requirements is unreasonable and unjustly discriminatory to Nishio’s flight training-only operation.

In his final remarks, Huffman deems that Nishio has yet to commit due diligence in searching for available aircraft liability insurance in the CNMI.

Also, Huffman said that CPA’s $10 million aircraft liability insurance requirement is unreasonable and discriminatory, in violation of Grant Assurance 22, and directed CPA to revise its rules regarding aircraft liability insurance requirements.