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Pofolk Aviation Haw., Inc. v. Department of Transportation for the State

Supreme Court of Hawai'i

June 29, 2015

POFOLK AVIATION HAWAII, INC., and HALE O'LELE CORP., Petitioners/Plaintiffs-Appellants,

Eric A. Seitz for petitioners.

Jack A. Rosenzweig for respondents.



Page 437

[136 Hawai'i 2] RECKTENWALD, C.J.

This case involves the validity of airport landing fees imposed by the Department of Transportation Airport Division (DOT-A). DOT-A leases Dillingham Airfield on the island of O'ahu (Dillingham Airfield) from the United States Army. Since DOT-A began leasing the airfield from the Army, DOT-A has imposed landing fees on commercial users, including Petitioners/ Plaintiffs-Appellants Pofolk Aviation Hawai'i, Inc., and Hale O'lele Corp. (collectively " Pofolk" ).

In late 2012, DOT-A claimed that Pofolk owed DOT-A a total of $264,994.99 in unpaid landing fees. Pofolk paid a portion of this amount under protest. Pofolk also filed a lawsuit and sought temporary and permanent injunctions preventing DOT-A from imposing additional fees against Pofolk, and a declaration that an administrative rule of DOT-A was invalid to the extent it established the rate of landing fees at the airfield. Specifically, Pofolk claimed that DOT-A had violated Hawai'i Revised Statutes (HRS) § 261-12(a), which provided that " [n]o rule of the director [of transportation] shall apply to airports . . . owned or operated by the United States." The circuit court denied Pofolk's request for injunctive relief and entered a final judgment on the merits in favor of DOT-A, and the Intermediate Court of Appeals (ICA) affirmed. For the reasons set forth below, the judgment of the ICA is affirmed, as clarified herein.

I. Background [1]

A. Dillingham Airfield

Dillingham Airfield is used primarily for commercial glider, sky diving, and flight training operations. DOT-A has operated Dillingham Airfield under a lease from the United States Army (Army Lease) continually since 1983. Clause 32 of the Army Lease, titled " Additional Site Conditions," provides, in relevant parts:

b. That the lessee's use of Dillingham Airfield shall be limited to the construction, operation, repair, and maintenance of a public airport facility . . . .
c. That the use of Dillingham Airfield is subject to the following operational provisions:
(I) That the primary purpose of the land and improvements within the leased area is for the operation of a joint-use-airport.
. . . .

DOT-A imposes fees on users of Dillingham Airfield, including Pofolk.

Two statutes at the heart of this dispute, HRS § § 261-12(a) and 261-7(e), set forth the scope of DOT-A's authority to impose such fees.

At all times pertinent to the instant dispute, HRS § 261-12(a) (2007) provided:

Powers to adopt. The director of transportation may perform such acts, issue and amend such orders, adopt such reasonable general or special rules and procedures, . . . as the director deems necessary to carry out this chapter and to perform the duties assigned thereunder, all commensurate with and for the purpose of protecting and insuring the general public interest and safety, the safety of persons operating, using, or traveling in aircraft, and the safety of persons and property on land or water, and developing and promoting aeronautics in the State. No rule of the director shall apply to airports or air navigation

Page 438

[136 Hawai'i 3] facilities owned or operated by the United States.

( Emphasis added).[2]

HRS § 261-7(e) (Supp. 2013) provides, in relevant parts:

The department may fix and regulate, from time to time, reasonable landing fees for aircraft, including the imposition of landing surcharges or differential landing fees, and other reasonable charges for the use and enjoyment of the airports and the services and facilities furnished by the department in connection therewith, including the establishment of a statewide system of airports landing fees . . . for the purpose of meeting the expenditures of the statewide system of airports
. . . .
If the director has not entered into contracts, leases, licenses, and other agreements with any or fewer than all of the aeronautical users of the statewide system of airports prior to the expiration of an existing contract, lease, license, or agreement, the director shall set and impose rates, rentals, fees, and charges pursuant to this subsection without regard to the requirements of chapter 91; provided that a public informational hearing shall be held on the rates, rentals, fees, and charges. . . .
The director shall develop rates, rentals, fees, and charges in accordance with a residual methodology so that the statewide system of airports shall be, and always remain, self sustaining. . . .

( Emphasis added).

DOT-A imposes fees on users of Dillingham Airfield through DOT-A Procedure 4.5.04 § E, which provides, in relevant part:

Any aircraft operator who is not a party to an Airport-Airline Lease, landing at a state airport shall pay airports system fees and charges as established by Hawai'i ...

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