Background
Airports need to provide a ready source of fuel for their users -- including commercial airlines, general aviation, corporate aircraft operators, and other commercial operators. Fuel farms are an efficient way to provide storage and dispensing of aviation fuels to multiple users at an airport. Various models are used to provide this necessary resource -- some airports serve as the single source of fuel while others retain commercial providers. At larger airports, airlines and other users enter into a fuel consortium to operate a fuel farm and, at still other airports, individual airlines or commercial suppliers are responsible for bringing fuel into an airport. As a result of these various models, airports may face multiple legal issues regarding fuel farms and consortia, e.g., who can have access to fuel, safety and operational standards, risk assignment, environmental liability and other risk management issues, and insurance limits and structure. In addition, there exist various state, federal, and local rules and regulations and industry best practices that guide and regulate the use and availability of fuel on airports -- such as the fuel farm location, security, insurance, above and below ground tanks, piping and hydrants, and truck fueling.
LRD 8 addresses the right to self fuel and LRD 11 was a survey on minimum standards and includes a discussion on fueling.
Objective
The objective of this research was to produce a practical compendium that describes and explains the various models and legal issues that airport counsel will likely encounter during the consideration, negotiation, and administration of fuel related issues. The digest should also identify the breadth of issues associated with airport fuel farms and the risks and liabilities associated with fuel related activities on an airport, including answering the following:
- What are the various models for supplying fuel on airports and what legal issues arise from each model? Provide a discussion of the advantages and disadvantages of each model.
- Who should or must be allowed to store and/or access fuel at an airport and fuel farm and why?
- What are the federal and state regulations, including the applicable grant assurances, the right to self-fuel, and NEPA, that may apply to fuel operations on airports and how should those issues be addressed?
- Are there potential federal or state regulatory, antitrust or anti- competitive issues that may apply to fuel operations on airports, including a consortium’s ability to frustrate non-signatory and new entrant airlines?
- What minimum standards typically apply to fuel operations on airports and what are the justifications for these standards?
- What are the risk management issues that arise from fuel operations on airports and how and in what amounts are Insurance Requirements used to address these risks? Can airports use any other risk shifting methods to address these issues?
- What are the environmental issues and concerns that arise as a result of fuel operations at airports and how are these issues addressed by the various entities that use fuel on airports? What potential insurance or and other methods are available for allocating environmental risks?
Status: The report has been published as LRD 28: Operational and Legal Issues with Fuel Farms.
