BEFORE THE 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

MARK SMITH ET AL., 

Complainants, 

v. DocketNo. 16-16-02 

CITY OF SANTA MONICA, CALIFORNIA, 

Respondent. 

MEMORANDUM IN SUPPORT OF SANTA MONICA'S MOTION TO DISMISS 

MarshaJones Moutrie 

City Attorney 

Joseph Lawrence 

Assistant City Attorney 

CITY OF SANTA MONICA 

1685 Main Street, Room 310 

Santa Monica, CA 90401 

310.458.8233 

Marsha.moutrie@smgov.net 

Scott P. Lewis 

David S. Mackey 

Jessica A. Wall 

ANDERSON & KREIGER LLP 

One Canal Park, Suite 200 

Cambridge, MA 02141 

617.621.6560 

slewis@andersonkreiger.com 

Counsel for Respondent, 

City of Santa Monica, California 
TABLE OF CONTENTS 

Introduction ...................................................................................................................................... 1 

Background ..................................................................................................................................... .2 

1984 Settlement Agreement. ...................................................................................................... 2 

The Pending Quiet Title Action ................................................................................................ .3 

The Pending Part 16 Proceeding Concerning The Dmation of the City's Grant 

Assmances ................................................................................................................................ .4 

The Instant Part 16 Complaint. .................................................................................................. 6 

Argun1ent ......................................................................................................................................... 8 

I. THE CITY'S PROMULGATION OF ITS NEW LEASING POLICY MOOTS 

THE LEASING PROCESS CLAIMS ................................................................................ 8 

II. THE COMPLAINANTS CANNOT SHOW THAT THE NEW LEASING 

POLICY IS INVALID "IN ALL ITS APPLICATIONS" AND THEREFORE 

ANY FACIAL CHALLENGE TO THE NEW LEASING POLICY MUST FAIL ......... 10 

A. The City's New Leasing Policy is Reasonable Given The Present 

Circumstances at SMO ......................................................................................... 12 

B. The City's New Leasing Policy Provides Reasonable Access to the Airport 

While The City's Appeals Are Pending ................................................................ 13 

Conclusion ..................................................................................................................................... 17 

1 
Introduction 

The respondent, the City of Santa Monica, California (the "City"), is the sponsor of the 

Santa Monica Airport ("SMO" or "Airport"). Pursuant to 14 C.P.R. § 16.26(b), the City has 

moved for two reasons to dismiss Part IV of the Complaint, which alleges that "[t]he City's 

Proposed Airport Leases and its Leasing Process Blatantly Disregard Federal Requirements." 

Complaint~~ 137-153 (the "Leasing Process Claims"). 

First, the Leasing Process Claims have been mooted by the City's promulgation, on · 

March 22, 2016, of a new "Santa Monica City Council Airport Leasing and Licensing Policy" 

("New Leasing Policy") (a true and correct copy of which is attached as Exhibit A). On that 

basis alone, the Federal Aviation Administration ("FAA") should dismiss the Leasing Process 

Claims (see below, pp. 8-10). 

Second, even if it were appropriate for the FAA to consider the pending Complaint as a 

challenge to. the City's New Leasing Policy, it would have to be taken as a facial attack on the 

Policy because City has not yet begun to apply the new Policy to any proposed leases. Such a 

challenge would necessarily fail because the Complainants could not possibly show, or the FAA 

find, that "no set of circumstances exists" under which the policy would be valid (see below, pp. 

10-16). 

The New Leasing Policy strikes an appropriate balance between the City's good faith 

pursuit of its ownership and proprietary rights to take immediate control of the real estate 

underlying SMO, and the City's obligation to provide reasonable access to aeronautical tenants 

in the meantime. As the FAA itself has determined with respect to SMO, "it would likely be 

unreasonable for the Airport to be required to enter into a lease agreement with an FBO or any 

1 
aeronautical user that would provide for the Airport to be operated as an airport beyond July 1, 

2015" (see below, p. 3). 

Accordingly, for these two independent reasons, the FAA should dismiss the Leasing 

Process Claims in their entirety. 

Background 

1984 Settlement Agreement. Several decades ago, the City's efforts to address the 

impact of the Airport on its neighbors in the surrounding community generated significant 

litigation that culminated, in 1984, in a Settlement Agreement between the FAA and the City. 

See Complaint, Ex. 9. Under the 1984 Settlement Agreement, the City was required to "operate 

and maintain the Airport as a viable functioning facility ... until July 1, 2015." !d. at 9. The 

Settlement Agreement provided the City with a reasonable basis to believe that its obligation to 

operate and maintain SMO as an airport would expire on that date. In fact, the 1984 Agreement 

specifically provided that "any future grant agreements between the City and the FAA which are 

designed to implement the program covered by this Agreement ... executed prior to July 1, 

1995, shall be consistent with this agreement and shall not extend or alter the obligation of the 

City to operate [the] Airport under this Agreement, except as may be required by federal 

statute." !d. at 8-9 (emphasis added). 

Accordingly, since 1984 the City has carefully calibrated its leasing practices to ensure 

that its aeronautical tenants were never vested with leasehold interests which extended beyond 

the date when the City was entitled to cease operating SMO as an airport. As the Complaint 

recites, "[v]irtually all airport leases terminated by their terms on July 1, 2015." Complaint 

~ 142. Prior to 2008, the FAA acknowledged, on the basis ofthe Settlement Agreement, that the 

2 
City could stop operating SMO as an airport in 2015, and that it would be unreasonable to 

require the City to lease land to an FBO beyond 2015. As the FAA itself determined: 

[T]he Settlement Agreement makes clear that the City is obligated to operate the 

Airport only for the duration of the Agreement (through July 1, 20 15). Providing 

at this time a lease for more than approximately 15 years would require the City 

to operate the Airport beyond the time agreed upon in the Settlement Agreement. 

For example, it would likely be unreasonable for the Airport to be required to 

enter into a lease agreement with an FBO or any aeronautical user that would 

provide for the Airport to be operated as an airport beyond July I, 2015 ... 

To the extent that the Complainants ... seek to prevent the future closure of the 

Airport or require the City to operate the Airport beyond July 1, 2015, that is a 

local land use matter. 

Santa Monica Airport Ass'n v. City of Santa Monica, FAA Docket No. 16-99-21,2000 WL 

1824463, *19 (November 22, 2000) (Director's Determination) ("SMAA") (emphasis added), 

aff'd, 2003 WL 1963858 (February 4, 2003) (Final Agency Action). 

The Pending Quiet Title Action. The City owns the real estate underlying SMO in fee 

simple, but leased it to the United States in 1941 to aid in the war effort. In 1948, five years 

before the lease would have expired under its own terms in 1953, the United States and the City 

executed an Instrument of Transfer ("lOT") (a true and correct copy of which is attached as 

Exhibit B), whereby the United States assigned its temporary leasehold interest in the Airport 

back to the City. The IOT provided that if the City breached its obligations under the lOT to 

operate SMO as an airport, then the "rights transferred by [the lOT]"- i.e., the temporary 

leasehold that expired in 1953 and certain improvements that by now have long exceeded their 

useful lives- would "revert" to the United States. !d. at 6. But because the leasehold would 

have expired in 1953 in any case, there has been nothing left of the leasehold to revert to the 

United States for more than 60 years. 

In 2008, the FAA took the surprising position, at complete odds with its own 

determination in SMAA that the City was only obligated to operate SMO as an airport until July 

3 
1, 2015, that the IOT from the United States to the City trumped the 1984 Settlement Agreement 

and obligated the City to operate SMO as an airport forever- or else the airport would "revert" 

to the United States. The City thereupon filed a Quiet Title Action, City of Santa Monica v. 

United States, C.A. 2:03-cv-08046-JFW-VBK (C.D. Cal. 2013) (the "Quiet Title Action"), 

seeking a declaration that the United States had.no interest in the Airport that could somehow 

"revert" to the United States if the City discontinued use of SMO as an airport. Without reaching 

the merits of the City's claim, the District Court dismissed the complaint as barred by a twelveyear statute oflimitations. 28 U.S. C.§ 2409(a). City of Santa Monica, 2014 WL 1348499, 

*8-13 (C.D. Cal. 2014). The District Court reasoned that the City knew or should have known in 

1948 that the United States claimed ownership rights in the land underlying SMO, even though 

such ownership rights were never held by the United States, could not therefore have been 

transferred by the United States to the City, and could not therefore "revert" to the United States 

if the City breached the IOT. Id at * 8-11. 

The City appealed from the District Court's dismissal of the Quiet Title Action, arguing 

that the City could not possibly have been on notice that the FAA would claim, 60 years later, 

that the IOT provided for a "reversion" to the United States of title to airport property the United 

States never held. 1 The Ninth Circuit heard oral argument on March 19, 2016 and took the 

City's appeal under advisement. 

The Pending Part 16 Proceeding Concerning The Duration of the City's Grant 

Assurances. The City last accepted a grant agreement with the FAA on June 29, 1994. That 

grant specifically provided that: 

1 For a more complete description of the City's arguments in the Quiet Title Action, please refer to the Principal 

Brief for Plaintiff-Appellant City of Santa Monica in City of Santa Monica v. United States, Appeal No. 14-55583 

(9th Cir.) (a true and correct copy of which is attached as Exhibit C). 

4 
[t]he terms, conditions and assurances of the grant agreement shall remain in full 

force and effect throughout the useful life of the facilities developed or the 

equipment acquired, ... but in any event not to exceed twenty (20) years from the 

date pfthe acceptance of a grant offer of Federal funds for the property. 

National Business Aircraft Association v. City of Santa Monica, California, FAA Docket No. 16-

14-04 ("NBAA"), at 13. Accordingly, the City's grant assurance that the City continue to operate 

SMO as an airport expired no later than June 29,2014, twenty years after June 29, 1994. The 

FAA has previously acknowledged as much. "When the City's last grant agreement expires in 

approximately 2014, the AIP grant sponsor assurances will no longer require the City to operate 

the Airport as an airport." SMAA, 2000 WL 1824463, at* 19. And once the obligation imposed 

by the grant assurances expired in 2014, the City's only obligation to continue to operate SMO 

as an airport derived from its 1984 Settlement Agreement with the FAA, which required the City 

to operate SMO as an airport only until July 1, 2015. 

However, inNBAA, FAA Docket No. 16-14-04, the complainants filed a Part 16 

complaint against the City seeking a declaration that the grant assurances provided by the City, 

including the assurance that the City maintain SMO as an airport, did not expire in June 2014, 

but rather extend until August 2023. The complainants asserted that when the City and FAA 

amended the 1994 grant on August 27, 2003 to increase federal funding by $240,600, they 

effectively "reset the clock" so that the grant assurances would not expire until August 27, 2023. 

!d. at 11-12. 

The City reasonably contends that NBAA's Part 16 Complaint is contrary to the plain 

terms of the 2003 grant amendment and the underlying 1994 grant agreement. By its own terms, 

the 2003 amendment rests entirely on a grant which the City accepted in 1994. The 2003 

amendment was not a new grant requiring a new grant acceptance by the City. The 2003 

amendment specifically provides that, other than the grant amount, "[a ]II other terms and 

5 
conditions of the Grant Agreement remain in full force and effect." Jd at 15. These "terms and 

conditions" include the original20 year duration of the grant assurances and thus expressly 

preserve the outside date of June 29, 2014 for the expiration of the City's grant obligations. 

Nevertheless, on December 4, 2015, the Director issued his determination that the City's 

grant assurances will remain in effect until August 27, 2023, on the theory that even though the 

2003 amendment was not a new grant, it was "akin to a new grant." NBAA at 16, 19. The City 

reasonably contends that this finding is unsupported by and inconsistent with the applicable 

statutes, regulations and grant assurances. The City promptly filed an appeal with the Associate 

Administrator and the matter is pending before the FAA, which currently has until June 15, 

2016, to issue its Final Decision.2 In the event that the FAA's Final Decision is adverse to the 

City, given the City Council's publicly declared commitment to establishing local control at the 

earliest opportunity, the City will almost certainly exercise its right of appeal to the United States 

Court of Appeals under 49 U.S.C. § 46110. 

The Instant Part 16 Complaint. After reciting in~~ 19-37 a litany of purported 

background facts which the Complainants concede are not the subject of their Complaint, they 

assert four distinct claims: Part I,~~ 43-68, alleges that the City is improperly diverting airport 

revenue to repay loans to the airport; Part II, ~~ 69-126, alleges that the City has imposed 

excessive and unreasonable landing fees; Part III,~~ 127-136, alleges that the City is charging 

2 For a more complete description of the City's arguments on appeal to the Associate Administrator, please refer to 

the Brief for Respondent City of Santa Monica on Appeal from the Director's Determination in National Business 

Aircraft Association v. City of Santa Monica, FAA Docket No. 16-14-04 (a true and correct copy of which is 

attached as Exhibit D). 

6 
below market rents to a non-aeronautical tenant; and Part IV,~~ 137-153, sets forth the Leasing 

Process Claims that are the subject of the City's motion to dismiss? 

The Complaint alleges in general terms that "virtually all airport leases terminated by 

their terms on July I, 2015" and that "the City undertook little effort before, or even after, that 

date to develop leasing criteria, negotiate leases or finalize lease negotiations and terms." 

Complaint~ 142. As a result, the Complaint alleges, Bill's Air Center and Kim Davidson 

Aviation "have for months been forced to operate their established businesses solely on a 

holdover, month to month basis since July 1, 2015."4 !d.~ 143. Most of the Complaint's 

specific factual allegations describe the City's efforts, beginning on March 24,2014, to develop 

a new leasing policy for airport tenants. !d. ~~ 144-146. During this period, the Complaint 

alleges, "the City has now taken the de facto position that no leases beyond month-to-month will 

be offered to aeronautical tenants (even though non-aeronautical tenants have been granted 

multi-year terms)." !d. ~ 150. 

Pursuant to 14 C.F.R. § 16.26(b)(ii), the City has moved to dismiss the Leasing Process 

Claims because they fail ''to state a claim that warrants an investigation or further action by the 

3 Because the City is moving to dismiss Part IV of the Complaint, the City is not presently required to file its answer 

to Parts I-III of the Complaint. See 14 C.F.R. § 16.26(b)(5). The City believes that the loaos it has made to SMOthe subject of Part I of the Complaint- can lawfully be repaid with airport revenue, but acknowledges that the 

applicable rates of interest, if any, to be paid on outstanding loao balances may need to be adjusted to conform to 

federal requirements. The City will attempt in good faith to resolve this issue while its motion to dismiss is pending 

before the FAA. The City believes that its new laoding fees- the subject of Part II- completely conform with all 

applicable federal requirements. The City acknowledges its obligation to charge fair market rental rates to its nonaeronautical tenants at SMO aod will take corrective action, if aoy is warraoted, with respect to the rental rates the 

City charges Santa Monica College- the subject of Part III of the Complaint. 

4 Efforts are currently underway to resolve the claims by a third Complainant, Justice Aviation. 

5 The City has filed a motion to dismiss under 14 C.F.R. § 16.26(b) , as opposed to a motion for summary judgment 

under 14 C.F.R. § 16.26(c), because the City's motion is based solely on the allegations of the Complaint aod other 

materials that are all appropriate for 'Judicial" notice by the FAA on a motion to dismiss, including exhibits to the 

(continued .. .) 

7 
Argument 

I. THE CITY'S PROMULGATION OF ITS NEW LEASING POLICY MOOTS THE 

LEASING PROCESS CLAIMS. 

On March 22, 2016, several weeks after the Complaint was filed, the Santa Monica City 

Council adopted its New Leasing Policy. This development moots the Leasing Process Claims 

by establishing aNew Leasing Policy which specifically recognizes that "all existing airport 

tenants will be given the opportunity to submit a lease application to the City," New Leasing 

Policy '1f B.5 (emphasis added); that "[!]ease terms may .be month-to-month or longer," id. 

'1['1[ B. I, E.l (emphasis added); and that authorized uses include "uses required by law." Id 

'1f A. I. b. The preamble to the New Leasing Policy emphasizes that "the City Council seeks to 

have an airport tenant mix that ... [c]omports with any applicable legal requirements." Id at 1 

(emphasis added). 

The City Manager (and the City Council, for leases that extend beyond June 3 0, 20 18) 

have not yet applied the New Leasing Policy. Nonetheless, the New Leasing Policy moots the 

Complaint's allegations about the City Council's delay in promulgating leasing criteria and 

moots the Complaint's allegation about a "de facto" policy requiring month-to-month leases. 

Any further challenge to the City's leasing program will have to await the City's application of 

the New Leasing Policy to specific Airport tenants. 

As the FAA emphasizes in virtually every one of its Part 16 determinations: 

(continued ... ) 

Complaint itself, Jones v. Lieber, 579 F. Supp. 2d 175, 179 (D.D.C. 2008); pleadings in other related judicial or 

administrative proceedings, id.; and the City's own New Leasing Policy, a municipal procedure, rule or regulation. 

Gambrel v. Fulwood, 950 F. Supp. 2d 109, 116 (D.D.C. 2013) (municipal statute and guidelines regarding parole 

violations); D.C. Professional Taxicab Drivers Association v. District of Columbia, 880 F. Supp. 2d 67, 72 (D.D.C. 

2013) (municipal taxicab regulations). Consideration of such material does not convert a motion to dismiss into a 

motion for summary judgment. Long v. Safeway, Inc., 842 F. Supp. 2d 141, 144 (D.D.C. 2012), quoting Baker v. 

Henderson, !50 F. Supp. 2d 13, 15 (D.D.C. 2001). 

8 
[t]he FAA Compliance Program is designed to achieve voluntary compliance with 

federal obligations . . .. Therefore, in addressing allegations of noncompliance, 

the FAA will make a determination as to whether an airport sponsor is currently 

in compliance with the applicable federal obligations. Consequently, the FAA 

will consider the successful action by the airport to cure any alleged orpotential 

past violation of applicable federal obligation[ s] to be grounds for dismissal of 

such allegations. 

Thermco Aviation, Inc. v. City of Los Angeles, FAA Docket No. 16-06-07, at 25-26 

(December 17, 2007) (Final Agency Decision), aff'g, 2007 WL 189382 (Director's 

Determination) (June 21, 2007). Accordingly, the FAA has consistently dismissed Part 16 

complaints when the respondent has taken action that resolves a claim of a continuing violation 

of its grant obligations. See, e.g., Thermco Aviation, Inc., at 26 (FAA rejects claim where 

"corrective action is under way or, perhaps, completed"); Sanford Air, Inc. v. Town of Sanford, 

Maine, FAA Docket No. 16-05-04, 2007 WL 926175, * 18 (March 5, 2007)(Final Agency 

Decision) (FAA determines that FBO's claim regarding improper audit of its operations is moot 

after Town withdraws request for audit); Keathly v. City of McKinney, Texas, FAA Docket No. 

16-03-14,2004 WL 3198207, *26 (October 13, 2004) (Director's Determination) (Director 

determines that citizen complaint regarding noise abatement procedure is moot after airport had 

"made steps" to eliminate procedure); Roger Leonard Cardinals' Pilot Shop, Inc. v. Chesapeake 

Airport Authority, FAA Docket No. 16-0l-06, 2002 WL 31731054, * 17 (October 22, 2002) 

(Director's Determination) (Director determines exclusive rights claim moot after airport sponsor 

terminates airport management agreement with FBO); Vortex Aviation Services, LLC v. Jackson 

Hole Airport Board, FAA Docket No. 16-00-18, 2001 WL 865710, *12 (June 21, 2001) 

(Director's Determination) (Director determines discrimination claim moot after sponsor lifts 

moratorium on scenic air tour operations). 

The Part 16 process is focused on "current compliance," and now that the City has 

adopted its New Leasing Policy, the Leasing Process Claims should be dismissed. Although the 

9 
City has not yet applied its New Leasing Policy, it would be improper for the FAA to assume 

that the City will do so in a manner that violates the law. As the FAA reasoned in a similar 

circumstance: 

The Director correctly observes that the circumstances under which [the 

Complainant] may be denied access to the Airport, or unjustly discriminated 

against, in the future, is conjecture ... Even if the Director were to suspect that 

the [Respondent] would deny access in the future, ... the Director would be 

unable to make such a finding of noncompliance because there is no 

preponderance of evidence upon which to base such a finding. 

Thermco Aviation, Inc., at 21-22. Here, any insinuations by the Complainants about how the 

City will apply the New Leasing Policy in the future would, by necessity, be mere speculation, 

and the Director cannot base a finding of non-compliance on guesswork or suspicion. Thermco 

Aviation, Inc., 2007 WL 1893821, *19 (Director's Determination) (June 21, 2007) ("Conjectures 

or statements about things that may or may not happen contingent on some future event are not 

germane to this investigation"). 

II. THE COMPLAINANTS CANNOT SHOW THAT THE NEW LEASING POLICY 

IS INVALID "IN ALL ITS APPLICATIONS" AND THEREFORE ANY FACIAL 

CHALLENGE TO THE NEW LEASING POLICY MUST FAIL. 

Even if the FAA were to review the legality of the New Leasing Policy on its face, before 

the City has ever applied it in connection with specific proposed leases, the FAA should 

determine that, under the specific and unique circumstances at SMO, the New Leasing Policy is 

a reasonable and permitted exercise of the City's proprietary powers. In fact, the FAA has 

already determined that, given the expiration of the Settlement Agreement between the City and 

the FAA, "it would likely be unreasonable for the Airport to be required to enter into a lease 

agreement with an FBO or any aeronautical user that would provide for the Airport to be 

operated as an airport beyond July 1, 2015." SMAA, 2000 WL 1824463, * 19 (emphasis added). 

10 
It is well established that "[a] facial challenge to a legislative Act is, of course, the most 

difficult challenge to mount successfully, since the challenger must establish that no set of 

circumstances exists under which the Act would be valid." US. v. Salerno, 481 U.S. 739, 745 

(1987); Hodge v. Talkin, 799 F.3d 1145, 1156 (D.C. Cir. 2015); see Lewis v. Government of 

District of Columbia, 2015 WL 8082293 *6 (D.D.C. 2015) (facial challenge to mayoral order 

regarding drug testing). Stated otherwise, to invalidate the City's New Leasing Policy at this 

stage, the Complainants must show- and the FAA would have to fmd- that the New Leasing 

Policy could not possibly be applied in a lawful way and is invalid "in all of its applications." 

Hodge v. Talkin, 799 F.3d at 1156 (quotations omitted). The Complainants cannot possibly 

make that showing. 

The City has reasonably taken the position that it was entitled to take control of the real 

estate underlying SMO as early as July 1, 2015. This argument is currently being advanced by 

the City in two distinct legal proceedings: in the Quiet Title Action against the United States 

currently pending in the Ninth Circuit Court of Appeals; and in the Part 16 proceeding on 

NBAA's complaint currently before the FAA's Associate Administrator for Airports. As these 

pending legal proceedings underscore, the context in which the City presently claims and 

exercises its rights as an airport proprietor is nothing if not unique. Until the City's claims to be 

free of any continuing federal obligation to operate SMO as an airport have been resolved, the 

FAA cannot properly compel the City to give up the proprietary rights it is advancing in those 

two proceedings by forcing the City to enter into aeronautical leases with terms that may extend 

beyond the time the City is otherwise obligated to operate SMO as an airport. Pending the 

conclusion of these legal proceedings, the City's New Leasing Policy strikes a reasonable 

balance between the City's lawful assertion of its rights in the Quiet Title Action and NBAA Part 

11 
16 Proceeding, and the City's obligation under the grant assurances to provide Complainants 

with "reasonable" access to the Airport. 

A. The City's New Leasing, Policy is Reasonable Given The Present 

Circumstances at SMO. 

"[T]he grant assurances obligate the sponsor to provide access to aeronautical users on 

reasonable, not unjustly discriminatory terms." De Vries v. City of St. Clair, Missouri, FAA 

Docket No. 16-12-07, at 24 (May 20, 2014) (Director's Determination), quoting Jimsair Aviation 

Services, Inc. v. San Diego County Regional Airport Authority, FAA Docket No. 16-6-08,2007 

WL 2405821, *15 (April12, 2007) (Director's Determination). The requirement o;f"reasonable" 

access does not, however, entitle a "lessee or potential lessee ... to any specific .lease terms," De 

Vries, at 25, and does "not require that an airport sponsor recognize past occupancy as a 

preference for future occupancy." Id. 

Moreover, the FAA has specifically rejected the suggestion that the City, as an airport 

sponsor, is necessarily obligated to enter into long term leases with its tenants: 

no entity is 'entitled' to a long term lease at the location of its choosing and upon 

its preferred terms and conditions ... A sponsor is not required to develop any 

and all parcels of land in a manner consistent with the wishes of any one party, 

but rather may exercise its proprietary rights and powers to develop and 

administer the Airport's land in a manner consistent with the public's interest. 

SMAA, 2003 WL 1963858, *17. Instead, the FAA has recognized that "reasonable" access 

claims involve an intensely fact-bound inquiry. Whether the sponsor is acting reasonably 

"depends on the exact circumstances." Thermco Aviation, Inc., at 21. For example, the FAA has 

concluded that, depending on the "exact circumstances," a delay in negotiation of lease terms, a 

refusal to enter a long-term lease, or the termination of a lease may be reasonable. Jimsair 

Aviation Services, Inc. v. San Diego County Regional Airport Authority, 2007 WL 2405821 

(Director's Determination) (April12, 2007) (delay in negotiation not unreasonable when caused 

12 
by airport's consideration of a competitive solicitation for the award of the next FBO contracts); 

ALCA v. Miami-Dade County, Florida, 2010 WL 3826299 (Director's Determination) 

(August 31, 201 0) (denial oflong term lease not unreasonable where tenant failed to propose 

attractive development plans with financing requirements); Skydive Monroe, Inc., v. City of 

Monroe, Georgia, FAA Docket No. 16-06-02, 2007 WL 1058450, * 13 (March 30, 2007) 

(Director's Determination) (termination of tenancy at will not unreasonable when based on 

litigation related to ownership of complainant). Given the City's pending legal challenges, the 

FAA could not properly find in this case that there is no possible set of circumstances that would 

make the New Leasing Policy reasonable. The FAA must, therefore, reject any facial challenge 

to the New Leasing Policy. 

B. The City's New Leasing Policy Provides Reasonable Access to the Airport 

While The City's Appeals Are Pending. 

The Complainants assert that "reasonable" access means a blanket right to renegotiate 

long term leases long before the expiration of their original leases. Complaint~~ 138-144. 

Given the concurrent administrative and judicial appeals by the City's concerning its right to take 

immediate control of the Airport's real estate, it was reasonable for the City to develop a New 

Leasing Policy before offering any of its tenants the opportunity to apply for new leases, and for 

the City to reserve the right, in the New Leasing Policy, to limit future use and occupancy of the 

airport to month-to-month terms. The FAA cannot compel the City to give up the rights the City 

is currently asserting in the Quiet Title Action and in the NBAA Part 16 Proceeding, by forcing 

the City to enter into long term leases now with aeronautical tenants that may, depending upon 

the resolution of these two proceedings, extend years after the City has the legal right to take 

local control of SMO's real estate. 

13 
The FAA has already addressed, and rejected, similar challenges to its leasing practices at 

SMO. In SMAA, two aeronautical tenants alleged that the City was engaging in unjust economic 

discrimination by applying a leasing policy that denied them long term leases. 2000 WL 

1824463. The Director rejected that claim based in large measure on the July 1, 2015 expiration 

date in the Settlement Agreement. The Directed concluded that it would be "unreasonable" for 

the FAA to require the City to enter into leases with an FBO that extended beyond July 1, 2015, 

id * 19, and noted that other aeronautical leases were "timed to expire in 2015 when the City 

would no longer be obligated to operate the Airport." Id 

The Complainants acknowledge this authority and the force of the 1984 Settlement 

. Agreement, Complaint ~ 151, but contend, nonetheless, that the City's asserted right to close the 

Airport is subordinate to its federal obligation to enter into long term leases. Id. ~ 152. The 

authority relied upon, De Vries, FAA Docket 16-12-07, cannot be stretched that far. In De Vries, 

the respondent was legally obligated, by a grant agreement for land acquisition, to operate the 

airport as an airport in perpetuity. Id at 2. The respondent submitted a request to the FAA for 

permission to close the airport for lack of traffic and revenue, and then allegedly used its pending 

request as an improper excuse to deter future tenants. Id at 3-6. The FAA rejected the Part 16 

complaint, finding that the complainants there were not currently being denied access to the 

airport. ld at 26. The FAA also cautioned the respondent, however, that it could not use "its 

intent and desire to close the airport" to evade its grant responsibilities. Id at 26. Here, the City 

has more than mere "intent and desire"; it has asserted a legal right to close the Airport (which 

the respondent in De Vries never claimed). See also United States Construction Corp. v. City of 

Pompano Beach, Florida, FAA Docket No. 16-00-14, 2002 WL 1821882 (Final Agency Action) 

(July 10, 2002) (sponsor, which did not assert legal right to close airport, could not force tenants 

14 
to agree to two year cancellation provision in lease to make it less expensive to close airport). 

The City is entitled to reconcile its federal obligation to provide reasonable access to aeronautical 

users with its duly claimed right to take local control of the Airport. SMAA, 2000 WL 1824463, 

*19. 

The Complainants allege that the City's delay in promulgating its New Leasing Policy 

itself reflects a denial of reasonable access. Complaint n 144-145. This claim, in the 

circumstances here, is meritless. The Complaint itself reflects that City staff, including the City 

Attorney, and the City Council deliberated extensively on alternatives to address the uniquely 

challenging leasing issues at SMO. These issues are legally complex: the City is asserting rights 

to take control of SMO's real estate immediately, yet acknowledges its obligations to provide 

reasonable access to its aeronautical tenants in the meantime. 

Since early 2014 when the City began work on the New Leasing Policy, Complaint 

~ 144(a), the NBAA filed its Part 16 proceeding to determine the duration of the City's grant 

assurances, the Director issued his Determination, and the City lodged its appeal with the 

Associate Administrator. Similarly, in the Quiet Title Action, the District Court issued its 

decision, and the matter was briefed and argued in the Ninth Circuit. In light of these legal 

developments, it is hardly surprising that the City took considerable time and effort to develop its 

New Leasing Policy- or that dev€Iopment of the policy involved considerable back and forth 

between staff and the City Council. Far from foot-dragging, the delays involved in the New 

Leasing Policy are the inevitable result of an airport sponsor's efforts to harmonize its grant 

assurance obligations with its asserted rights to take immediate control of the real estate 

underlying the airport. 

15 
The New Leasing Policy reflects a facially reasonable approach to these circumstances. 

The Complainants could never show that the policy is invalid "in all its applications." Its 

preamble expresses the goal that the airport's tenant mix "[c]omport[] with any applicable legal 

requirements." New Leasing Policy at 1. It provides that "all existing airport tenants will be 

given the opportunity to submit a lease application." ld. at~ B.S. It specifically authorizes "uses 

required by law," id. at~ A.l.b, and leases longer than month-to-month. ld. ~ B.1. In fact, leases 

may extend beyond June 30,2018 with the approval of the City Council. ld. ~ E.1 There is no 

basis on which the FAA could simply assume, or guess, that the City will apply these directives 

in a manner incompatible with federal law. See Thermco Aviation, Inc., 2007 WL 1893821, *19. 

16 
Conclusion 

For all of these reasons, the FAA should dismiss Part IV of the Complaint, the Leasing 

Process Claims set forth in 'lf'lf 137-154. 

Aprilll, 2016 

Jessica . W 

ANDERS KREIGER LLP 

I Canal Park, Suite 200 

Cambridge, MA 02141 

617.621.6560 

slewis@andersonkreiger.com 

Marsha Moutrie 

City Attorney 

Joseph Lawrence 

Assistant City Attorney 

CITY OF SANTA MONICA 

1685 Main Street, Room 310 

Santa Monica, CA 90401 

Marsha.moutrie@smgov.net 

17 
CERTIFICATE OF SERVICE 

I hereby certify in accordance with 14 CFR § 16.15(a) that I have on this day served the 

foregoing Memorandum In Support of Motion of Respondent, City of Santa Monica, to Dismiss 

Part IV of the Complaint, The Leasing Process Claims, on the following persons at the following 

addresses by email and first -class mail: 

FAA Part 16 Docket Clerk 

AGC-600 

Federal Aviation Administration 

800 Independence Avenue, SW 

Washington, D.C. 20591 

9-A WA-AGC-Part-16@faa.gov 

April!!, 2016 

18 

Richard K. Simon 

1700 Decker School Lane 

Malibu, CA 90265 

31 0-503c7286 

rsimon3 @verizon.net 
EXHIBIT A 
State of Califomia 

County ofLos Angeles 

City of Santa Monica 

I, Vernice Hankins, Staff Assistant to the City Clerk of the City of Santa 

Monica, do hereby certify that to the best of my knowledge and belief the foregoing 

is a full, true and corre.ct copy of the March 22. 2016 City Council Meeting 

Complete Agenda noting the approval ofltem 8-A, which is on file in The City 

Clerk's Department, and that I have carefully compared the same with the original(s). 

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal 

of the City of Santa Monica, this gth day of April, 2016. 

Vernice 

1L~L~ Hankins 

. Staff Assistant III, City Clerk's Office 

City of Santa Monica 
COMPLETED AGENDA 

CITY OF SANTA MONICA 

REGULAR MEETING 

City of 

Santa 31oniea'" 

CITY HALL COUNCIL CHAMBERS 

1685 MAIN STREET, ROOM 213 

TUESDAY MARCH 22, 2016 

MEETING BEGINS AT 5:30 PM 

CALL TO ORDER 

PLEDGE OF ALLEGIANCE 

ROLL CALL 

(Please note that Agenda Items may be reordered during the Council meeting at 

the discretion of the City Council.) 

1. CLOSED SESSIONS 

1.A. Conference with Legal Counsel • Existing Litigation • Litigation has been 

initiated formally pursuant to Government Code Section 54956.9 (d)(1): 

McGroutheriBruni v. City of Santa Monica, Los Angeles Superior Court Case 

Number BC 555 106 

ACTION: Approved Settlement No. 10277 (CCS) in the amount of $30,000. 

1.8. Conference with Labor Negotiator. 

City Labor Negotiator: Donna Peter, Director of Human Resources 

Bargaining Units: Administrative Team Associates (ATA) 

Municipal Employees Association (MEA) 

Public Attorney's Union (PAU) 

ACTION: Heard. No reportable action taken. 

1.C. Conference with Real Property Negotiator: 

Property: 1241 Fifth Street 

City Negotiators: Andy Agle, Director of Housing and Economic Development 

Under Negotiation: Terms of Affordability. Covenant 

Owner of Record: Alon Roma, LLC 

ACTION: Heard. No reportable action taken. 

1.0. Conference with Legal Counsel • Existing Litigation • Litigation has· been 

initiated formally pursuant to Government Code Section 54956.9 (d)(1): 

National Business Aircraft Association, et al. v. City of Santa Monica, Part 16 

Proceeding FAA Docket No. 16-14-04 · 
ACTION: Approved. 

101-003-04-16- new#- Risk Management Software 

3.R. Authorization of Professional Services Agreements to Community Arts 

Resources (CARS) to produce June 5, 2016 Open Streets Event 

Staff recommends that the City Council: 

1. Authorize the City Manager to negotiate and execute professional services 

Agreement No. 10276 (CCS) with Community Arts Resources (CARS), a 

California based company, to produce the June 5, 2016 open streets event in 

an amount not to exceed $150,000. 

2. Authorize the City Manager to negotiate and execute a first modification to 

professional services agreement No. 9870 (CCS) in the amount of $57,000 

with Community Arts Resources (CARS), a California based company, to 

provide additional production services for the June 5, 2016 open streets 

event. This will result in a two-year amended agreement in an amount not to 

exceed $257,000, with three additional one year renewal options in the 

amount of $300,000, on the same terms and conditions for a total amount not 

to exceed $557,000 with future year funding contingent on· Council budget 

approval. 

ACTION: Approved. 

(304-003-1 0) 

7. ORDINANCES 

(Public comment is permitted on ordinances for introduction and first reading. No public 

discussion is permitted on ordinances for second reading and adoption.) · 

7.A. Second Reading and Adoption of Ordinance No, 2511 (CCS) Regulating 

Lobbying 

Recommended Action 

Staff recommends that City Council adopt the attached Ordinance. 

ACTION: Adopted. 

( 1 00-002-02) 

8. STAFF ADMINISTRATIVE ITEMS 

B.A. Leasing Policy for Santa Monica Airport 

Recommended Action 

Staff recommends that the City Council: . 

1. Approve the attached Santa Monica Airport Leasing and Licensing Policy for 

the leasehold and license management of properties at the Santa Monica 

Airport (Airport or SMO). 

2. Authorize the City Manager to negotiate and execute leases at the Santa 

Monica Airport in accordance with this Policy. 

City of Santa Monica March 22, 2016 City Council Meeting Page 8 
ACTION: Approved. 

(800-005) 

8.8. Selection of Priority Park Projects for Inclusion in the Los Angeles 

Countywide Comprehensive Parks & Recreation Needs Assessment Report 

Recommended Action 

Staff recommends that the Council review and consider the recommendations from 

the Recreation and Parks Commission, staff, and community input and formally 

select the City's highest priority park projects to be included in the Los Angeles 

Countywide Parks Needs Assessment Report. 

ACTION: Approved. 

303-001-01 -this may refer only to a local plan 

Or new # - 303-001-01-01 - Countywide Comprehensive 

13. . COUNCILMEMBER DISCUSSION ITEMS 

13.A. Request of Councilmember Winterer that the Council allocate $7000 to the 

Ocean Park Association, a 501 (c)3, to hire a professional coordinator to assist 

with organizing and staging of the annual Fourth of July Parade on Main 

Street. 

ACTION: Approved. 

(1 00-003-02) 

14. PUBLIC INPUT 

(Public comment is permitted only on items not on the agenda that are within the subject 

matter jurisdiction of the City. State law prohibits the City Council from taking any action on 

items not listed on the agenda, including issues raised under this agenda item.) 

ACTION: Held. 

ADJOURNMENT at 10:22 p.m. in memor1 of Keith Emerson, and the victims of bombings 

in Brussels, and around the world. 

Any documents produced by the City and distributed to a majority of the City Council 

regarding any item on this agenda will be made available at the City Clerk's Counter 

located at City Hall, 1685 Main Street, Santa Monica, and at Main Library, 601 Santa 

Monica Boulevard, Santa Monica during normal business hours. Documents are also 

available at www.smgov.neUcouncillagendas. 

For a free subscription to City Council Agendas sign up at 

http://www.santamonicacityca.iqm2.com or contact the City Clerk's Office at (31 0) 458-

8211 or clerk@smgov.net. This agenda is available in alternate format upon request. 

City of Santa Monica March 22, 2016 City Council Meeting Page 9 
SANTA MONICA CITY COUNCIL AIRPORT LEASING AND LICENSING POLICY 

The purpose ofthis Airport Leasing and Licensing policy is to establish and declare 

City policy on matters related to airport leasing. This Leasing Policy shall be used 

by the City Manager to analyze leasing and licensing issues, to present leasing and 

licensing recommendations to the City Council, and to render leasing and 

licensing decisions under the authority granted by the City Council. 

By adopting the Airport Lease Policy, the City Council seeks to have an airport 

tenant mix that: 

• Is harmonious with the nearby built environment by protecting the health 

and safety of Airport neighbors. 

• Maintains a sustainable Airport Fund that is independent from the General 

Fund and other subsidies. 

• Comports with any applicable legal requirements and protects the City's 

rights that relate to leases at the Airport. 

• Continues to provide opportunities for arts, education, and culture, 

including, but not limited to, the Artist Space Program administered in 

conjunction with Cultural Affairs Division. 

• Establishes practices and procedures for evaluating potential leasehold 

interests, and for lease management and administration. 

• Fosters uses and practices that are sensitive to the environment and 

protect the health of Airport neighbors and users and protect the City from 

future environmental damage exposure. 

General Provisions. The majority of the Airport revenue is derived from leases. 

To help support the Airport's fiscal self-sufficiency, all rents, fees, and charges 

must reflect fair market value. To achieve the goals of the Leasing Policy, the 

policy shall be managed in a manner consistent with the following standards: 

SECTION A: USES 

1. Authorized Uses: Authorized uses include: (a) low intensity uses that are 

compatible with surrounding uses, serve the adjacent community, and are 

consistent with the City's environmental goals and policies. Examples of 

1 
uses in category (a) include, but are not limited to: parks and open space, 

arts/cultural, creative space, professional theaters, museums, artist studios, 

art galleries, photograph studios, uses customary or incidental to the 

production or distribution of motion pictures, educational facilities, 

professional and general offices, public or private schools existing prior to 

September of 1984, warehouses, self-storage/public mini-warehouses, and 

restaurants with 500 square feet of floor area or less; and b) uses required 

bylaw. 

2. Conditionally permitted uses: Parking and automobile storage lots and 

structures. Restaurants with over 500 square feet of floor area.Theaters. 

New public or private schools or educational institutions. 

3. Prohibited Uses: Prohibited uses include: any use involving the 

manufacture, processing, storage, or treatment of products, which by 

nature of the operation is likely to be obnoxious or offensive to the 

surrounding environment; construction of new general office buildings; any 

use not specifically authorized as a permitted or conditionally permitted 

use; and high intensity uses that are incompatible with the surrounding 

residential uses. 

SECTION 8: TERMS AND CONDITIONS 

1. Term. Lease terms may be month-to-month or longer. However, no lease 

shall have a term that goes beyond June 30, 2018. 

2. Environmental Responsibility. New requests to lease and existing leases 

shall be reviewed to assess potential negative effects on the environment. 

The City may require environmental studies or testing as appropriate and 

necessary, and any needed remediation shall be performed prior to 

establishment of new uses. All lessees shall be responsible for any 

environmental contamination, resulting from their prior use, as a condition 

to a renewed or extended lease. Environmental clean-up will be required 

as a condition of any renewal or extension. At the time of the application, 

an assessment of the proposed use will be conducted, and appropriate 

2 
insurance and/or remediation requirements will be incorporated into the 

lease based on proposed usage. 

3. Rates. All new and renewed leases will be leased at prevailing market rates 

and rates will be adjusted to stay current with market conditions and as 

new/renewed leases arise. 

4. Percentage Rent Provision. In addition to a base rent, the City may elect to 

require that certain leases include a percentage rent provision, which can 

be differentiated by categories of sales. The City shall have the right to 

audit tenant's financial records to ascertain that the gross sales figures 

reported by the tenant are accurate. 

5. Existing Tenants. All existing airport tenants will be given the opportunity 

to submit a lease application to the City. The City is under no obligation to 

offer lease agreements. Submitting an application to the City does not 

obligate the City to enter into lease negotiations, offer a lease agreement, 

or execute a lease agreement. The decision to execute a lease agreement 

will be made solely within the City's discretion as landlord and property 

owner. 

6. Whole Building Leases. Whole building leases may, at the City's discretion, 

be subject to public Requests for Proposals intended to optimize leasehold 

occupancy and the self-sustainability of the airport. Tenants under a whole 

building lease shall be responsible for maintenance and repair of said 

buildings. 

7. Transfer of Interest. Space sharing is prohibited without the written 

consent of the City, and granting or withholding consent will be conditioned 

on express standards and conditions set forth in the lease. 

8. Lease and License Areas. Operation and improvements to lease and license 

areas are subject to the City's standard regulatory rules, review and 

approval process. 

9. Triple lliet Leases. The City may require tenants to pay all property taxes 

and assessments (including Possessory Interest Tax), insurance, and 

utilities. 

3 
10. Commercial Operations Permit (COP). Prospective tenants proposing to 

use the Santa Monica Airport to engage in an activity that requires a 

business license from the City, are required to acquire a commercial 

operations permit issued by the City Manager. All COPs will be presented 

to the Airport Commission for their recommendation and comment prior to 

City Manager's approval. 

11. Master Tenants. Master tenant agreements are to be phased out in an 

orderly transition. 

12. Sub-Leasing. New sub-leasing shall be prohibited. Existing sub-tenancies 

shall be subject to an orderly phase-out at the sole discretion of the City. 

13. Insurance. Airport lease agreements shall minimize the City's financial and 

economic risk, by incorporating reasonable indemnification and insurance 

provisions. 

14.Daily and Transient Users. Daily and transient uses shall be permitted. 

SECTION C: PERFORMANCE STANDARDS 

1. Compatible and Harmonious. All lessees shall use the airport and any 

airport property in a manner that is compatible with City policies and with 

the adjacent residential uses; to encourage activities that complement 

adjacent residential and commercial uses; and to establish practices that 

are sensitive to the environment and protect the City from future 

environmental exposure. 

2. Alternative Fuels. Maintenance facilities will be required to minimize their 

· environmental impact by ensuring that all vehicles used inside the Airport 

Operations Area (AOA) are powered by alternative fuels. 

3. All City-owned buildings appropriate and suitable for leasing may be subject 

to a public procurement and solicitation process to identify prospective 

tenants and licensees whose financial and professional experience, and 

products and/or services are consistent with the Leasing Standards set 

forth herein. 

4 
4. All prospective tenants must submit a Lease or License Application to the 

City. Information contained in the Lease Application shall describe the 

proposed use for the available space; provide information about the 

respondent; provide references; describe in detail the financial capability of 

the respondent to perform; and set forth preliminary terms and conditions. 

5. Hangars 

a. Hangars that have a land lease agreement with the City will be on a 

month to month tenancy under a City approved lease agreement which 

will be updated as deemed necessary by the City. 

b. The City will request hangar owners to avoid from performing pattern 

operations at Santa Monica Airport during weekends, holidays, and 

evening hours. 

6. Recruitment for artist day studios will adhere to the criteria set forth by the 

Cultural Affairs Division of Community and Cultural Services Department. 

Candidate tenants for available Artist Day Studio space are required to file 

Program applications for screening purposes, and qualifying artists are 

selected only from the screened waiting list. 

SECTION D: MAINTENANCE AND TENANT IMPROVEMENTS 

1. All leaseholders shall be responsible for maintaining their facilities in 

attractive and safe condition, in compliance with applicable building and 

life safety codes and all applicable environmental laws, ordinances, 

regulations and other city standards. 

2. Facilities will be inspected prior to new or extended leasehold occupancy 

and refurbished, by the City or tenant (at the City's election), to a decent, 

safe and sanitary condition appropriate for use. If tenant makes 

improvements to the facility as a mutually agreed upon condition of a 

lease, the City must first review and approve the proposed design and 

scope of work. All necessary building permits must be obtained and the 

work must be inspected for compliance with applicable code(s). 

Appropriate rental credits for the approved work performed may be 

5 
negotiated as part of the lease. Any Tenant Improvement Credit that 

exceeds two months' worth oftenant monthly rent must be approved by 

the Airport Director. 

3. Each tenant or licensee will be responsible for interior maintenance and 

repair at its sole expense, and the City generally will retain responsibility for 

maintenance and repair of roofs, building exteriors, landscaping and 

common use parking for all Airport-managed leaseholds unless otherwise 

specified in the lease or license. Tenants who lease whole buildings from 

·the City will be responsible for any and all maintenance, repair and 

improvements including roofs, building equipment and exteriors ofthe 

facilities as well as interior maintenance and repairs. 

4. Tenants shall respond to the City's written inquiries regarding any 

complaints or issues. Tenant will provide an action plan for improvement if 

so requested by the City. 

5. As applicable, the above requirements may be incorporated in leases, 

licenses and other agreements. In addition, the City may add to any Lease 

or License further or different or additional operational and performance 

standards as the City concludes are appropriate to the particular Tenant's 

operation. 

6. Upon confirmation that the proposed tenancy is consistent with this 

Leasing Policy, a lease agreement will be prepared for review by the City 

Attorney and execution by the prospective tenant before being referred to 

the City Manager for approval. Leases for terms greater than terms 

specified in these guidelines require City Council approval. 

SECTION E: LEASE APPROVALS AND & DELEGATION OF AUTHORITY 

1. The City Manager has the authority to negotiate and execute month-tomonth leases and leases that expire prior to June 30, 2018 provided the 

City Manager finds the proposed use is consistent with this Leasing Policy. 

To be valid, such leases must be on the basis of written agreements 

prepared and approved as to form by the City Attorney. Leases for terms of 

6 
occupancy beyond June 30, 2018, or otherwise outside the parameters 

established by this Policy, will require City Council approval. 

2. The City may cooperate with commercial real estate brokers who are 

authorized to negotiate leases on behalf of prospective tenants. 

SECTION F: GENERAL PROVISIONS 

This Leasing Policy may be altered by the City at any time, in its sole discretion, 

and shall not create any right or reliance interest for any person. 

7 
EXHIBITB 
\ 

. 1)81)"\5 Book {:. 't '- PageA!l 

INS'I!lUIIEN'! OF TIWISFER 

I!JIOJI ALL liEN BY fi!ESB PRiSBIITS I ~· -:¥- ·l C<.S 

tlut.t, tho UIIITED STATES OP &llli\ICA, oot1JJC by 111111 tbrOII&h 

tho WAR L'SBTS ~ISTRATIOR undor and purou&nt to Roor~oni&ation 

Plon Ono or 19.7 (12 p,R. 4&~•), and tho powor1 and authority oon• 

tain•G in tho prawi1ione of the Surplua Property Act ot 1~~4, ae ~nded, and applica'bb rule•, recul&tiou, aD4 orclere, PAlt'IY OF 

fUE FIRST PARt, !n OoDeidoration of the &aeumption by th. CITJ OP 

WTA IICIIIOA, a body oorporAto and politi.G undor tho lowo or tho 

Stat• ot Col.iromia, PART!' OF fi!B SBCDIID PARI:', of all tho obli~ationl and it• tak1ng aubjeot to certain re1ervat1oDe, re1tr1ctione, 

•nd aonditian• and it1 covenant to abide by and •Er••ment to certain 

ather re1ervatlon1 1 reetriotlope, and ooad1t1ona, all &e eet out bere1~tter, hal remile4, releaaed and tore~er quitolaimad, and by tbeaa 

pres$nte daoe re~••, releaee, and rorover quitola~ to eaid Cit7 or 

Santa. llonloa, it• aua~:~ .. l!lar• and &lligD.I, under md tubjeot to the 

ro•ervation,, re•triotionl, and oonditione, IXDeptiona, .nd reaarwation 

or right• hereinafter Jet out, all 1t• right, title, intare1t, and olaia 

in .nd to the tollowins de•cribe4 real, perlonal, or Mixed propert,r 

eltuated 1D ~bo Couut,v or Loa Angele11 State or Oaliforni~, to •lts 

(1) Tract *1- ~ te~porary eaaement granted by~&JDO»d 

1. 11r11ht Uld Lub. II &Day Marter Wri,ht, huaband md 'llif'e to the 

'D'n1 t.Q State a of .lmerloa, 'by ea&eraent dee4 At. ted. 21 October 194:2, 

tor rip.t--or-way to looa.t•• nlooa.te, aon1truot, reaouatr\1ot, aain• 

t.in? rep.tr, operate, renew, enlarte, remove aa4 replaoe, 1nareaae 

andtor chan~ tba n\&ll.'ber and/or 1he or ooa.4u1~1 1 p1pee, pipe llnu, 

aooe•aorle• and appurtenance• ror the oo~voyauoe .nd diepoeal ot 

•en.ge and/or ettluoni.l Wider, onr, alone; and upo.a. that oerte.tA lmd 

aituatea in the County at Lo1 kn&elel. State ot California, deBaribed ae tollowu 

A otrip of land 10 foot in Width, oi tu&to in tho C1 t;y ot 

Lo• .Angel .. , Couuty ot Lo• Ane;el••• State ot · Cal:U'o:rnla, belua: under 

aud aor·oo• a portioll at Lot 84, 'l'r&ot JJo. 12'-60, •• p.r up reoorde4 

in Boot 2S6, Pae;e1 20 and 21 of U.p1, Recor4• at Loa Angele1 County, 

lying 6 teet on eaoh aide of the rollGWing detorlbed center 11ue. 

Bog1DD1•g at tho i•toroootion of tho Southoootorly liDO of 

oaid Lot 94 with ~ho oontor liDO or Waoatoh Avonuo, (60 foot in width), 

1&14 paint beiA& R0 rth 32° 3'• 'on We1t, a di1tanc• liB.Bl teet trom 

the interaection ot tho aenter lin• otW•a•tch AYenue ~d the oenter 

line of Wood,roon Stroot (60 foot in width)! tho••• Korth 82° 34' ~· 

lre1t alan£ the lortbweeteriy prolon~tion of t~ oent8t line ot 

Waoatoh ATonuo o diotonoo of 66.00 toot to a point i• tho K0rthwoatorly 

line at laia Lot 9•, oontainint 4'0 Jquare teet, more or lela. 

(Z) Treat #Z • A temporary ooooment srootod by tho Southorn 

Cel1torn1a Water CompaQ¥, a oorporatloa or~&ed .m4 ~ietiD£ under 

ond by 'lirtuo of tho lowo of tho Stato of California, to tho ll'Ditod 

&tate• or J.er1oa, by e&eamant deed d&ted 22 Ootob•r 1142, tor rlsht• 

of ... &)' to looate. reloae.te, GOD.i!iti'Uot, reoonetruot, MiJLtaiD., repair, 

operate, renww, oDlerc•i romova ana repl•o•, iDDreaee an4/ar ohan1e 

the number •nd/or li&e of oonduitl, pipe1, pipe lines, acoeaeorie• 

and appurteuanoe• fQr the oonYayanoe and 41epolal ot ••••c• AD4/or 

etf'lun.t und.•r, crt~r, alca.g and upon that certain lud dW•ted in 

the County ot Loa Jn,oleJ, Btato of Califo~ia, d81orlbed &I tollOW.l 

A otrip ot land 10 foot in width, oltuoto in tha City of 

Loo .Ao~alu, COunt)' of Lol I.D£tlu, Stato or Colitonia boiu£ uno!or 

&Dd aoro•• a portion at ta. Su'bdiYiaio.a. ot the tanG• ot Sam~el Cripe 

in tho ianoho La BolloO& ao por o.p rooordod in Book 1, Pogo 6i, 

- .. '• 
IH~ NU, ~U~ 4~b I!IU 

~Jw;s , 1" OooiL-:...:.~?.~!.:<.~':·".: .2 ~-·--"·-~' 

L1oenaed. Bllr'YIIyor• )l.apt, Rooorda ot add Cou.niiy lying 6 t'oet on eaoh 

1ide ot th• tollowiu& detoribed o•nttr ltne• Beginning at the inter- eoatio~ ot the Jortnw.,terly 11at at Lot 9t, fraot lo, lZ,50, &I per ~P reoorded in Book 236, P•~• 20 and Zl ot Kape, Recardt ot Loa 

Mngele• County, ~th th' Eor~hfta1terly prolongation ot the oentar 

line or Waootoh A .. nuo, (60 toot in width) ooid point being H 32° , •• lOR Weat, • diatano• or le2.Bl teet from the 1ntereeot10D ot th• 

oent•r line of Waaatoh Avenu• •nd the oent1r llne otWoodgreen 

Street, (60 teet in width)J thence lorth S2° !11 'O" Welt ala~ 

the Northwe1terly prolon~atlon ot the oenter line ot Wa1atohATenue, a di•t•noe of lG teet to the Northwe1terly lin• ot aaid Subdivision or the Lllnd1 ot Samuel Cripe 1n the Ranoho La Ballona., oonta1n1nc. 

160 1quare reut, more or 1•••• 

(3) Traot 13 - A tomporary ouoJIIIIII~ ,r~ntod by tho B&l>k: 

ot Aaerioa Ha~1onal Tr~•t & S&?lnt• A-eooiatiou, a natloAal bankin& 

&asooiatlan, ownere, and Gore Bra•• lno., • corporation orcanile4 

and •slating under &Gd b7 YirtQe or the l••• of the State ot Cali• ~oru1a, V•ndee, under a land puraha1e oaatraot, to the Uaited Statll or Amorioo, by eooomont dood dated 2l.Ootobor 19~2, for ri~t-of-way 

to locate, relocate, oon•tr~ct, reaon1~ruot, maintain, repair, 

operate, rene•, enlarge, remove and replace, inoreaae an~or ohange 

the number and/or d&• at ooncSuit1, pipu, pipe linn, acaeuoriea . .nd appurten~cts for th• oonvty&AGe an4 di1poeal or , ... ge ~d/or 

ertluent uuder, oYer, along and ~pon"that oertaiu land 1i~•~•d in 

the County of Lo1 An~eles, State or dalilornia, delcribed ae follaw11 

A otrip or land lO foot in width oituoto 1n tho Cit¥ of 

LoiS AD.geln, County ot Loa .&nr;elet, State vr California, beinr; under 

•n4 aero•• • portion ot the 10.?0 jpre• ot Fraotlooal Joee n. La Lui 

U&ohedo 61.9753' Aor•• in tb. ftanobo La Ballana, (Diltriot Cour~ 

Caeo Hwobor Z722) •• por map rooordod in Book 8, P•&•• 204 to Z09 

1ualu•1n, Jlilodle.n.eoul Reoard.a or Loe httlel County, lyinl!: 6 leat on each lide ar the following de1aribed oe~ter linea Btginn~g •t 

the inteneotion of the 80\ltheuterly lin• or e:e14 Fr•otiall&l Jo•• 

Do t.a lloohodo 61,97834 Aoroo with tho Nortlar .. torly prolmgotion of 

the center lin. ot W&l&toh Avenue (WaaatohAvwnue lhawn on Traot No. 

12450, aa per =ap reaorded in Book 235, Pagel 21 and 20 at Mapa, 

Recorda ot aaid Coqnt7) l&id point being lort~ 32° S~1 to• Weet along 

tbe Jort~eJttrly proloncatlon ot tho oenttr 11De ot Watatoh Avenue, a 41•t~o• at 198,81 tett t.rom tha lnter1eotion at tha oenter liu. 

ot ll'alatoh .lTeDUII (60 teet iu width) aul the O•Dttr lint or Woodgre•n 

Stroot (60 toot inwidth)J tb8noo Hortb SZ0 84' ~o• Woot 11,19 foot1 

thonoo Nortb G6° 08' 4~" Woot ~42.16 toot to a point in tho Horthweeterly liae gf l&id Fractional Ja1e D•·LUI Maobado dl,97134 Acre•, 

QontllnLms 46!3 1quare teet. more or le••• 

(l) Traot 14 • A tomporary oaeo~ont 1rontod b7 Goro Broo, 

Ina, 1 a corporation or~:uhad and exhti~g lDI.der md by rlrtut ot 

the 1•••. or the B11ate ot California, to the trnited Statu ot l.m.arioa, 

by oaeeaent 4se4 dated 20 OOtober 1942, tor r~~t·ot-.ay to locate, 

r•loa:ata, .ao:n.truo't. raaouatNot, aaintain1 repair, Gper&'te. ren...-• .nlarc•. r•NO~• and replaoe, !Dar•••• andtoT ohantG the n~mber an4for 

ai&e or oondu1tl, pip••· pipe lia.e, aaae••ori•• &Dd app~rtenanoe1 

tor tha aonv•yano• and diapo••l ot .... ,. and/or atrluaut under. 

oftr, alons IUld ~poa that aart&i.n land e1tv.•t•d 1D. the County or Los 

Ansolea, Stat• ot C•litorn1a, de1oribed •• rollaww, 

~•trip ot land 10 ~••t in_width, eitQate lu the Cit1·ot 

Lo1 .AIIg_al••, County ot Lo1 .AD~ele•, State o.r C&litornia, be!Dr; under 

lUll! aoron a portioo. of Frootioo.&l Joeo Jlo La Lus llaohodo 61,97834 

.loroo in tho Ranoho La Bolloll& (Dhtriot Court Caoo 11o, 2722) ao por -.l map r•oor4e4 1ill Bodl: a, f'•e; .. 204: to 209 illol\llin. Kl•o•llJntOUI 

looorde or to1 JDgel11 Couutr, lytns 6 teet ~D eaoh 1id• of the 

fallawinE de•orib•4 aen~or lin•• Commenoiag at the intareeotion ot 

r. u;tJ; 
\ 

tho oontor lino or Waoatoh !vonuo (60 toot in wldth) and Woodcroon 

Stroot (60 foot in width), ohown on Traot No, l2t50, •• por mop 

rooorded in »ook 236• P•t•• 20 and 21 at U&p1, Reoord1 ot Lo• 

MJ.gele1 Coum.-ty 1 thence !forth 120 341 t-011 l1'e1'f; along tht aenttr 

lime and prolon,a~ioo ot the oenter li~ at laid Waaatoh A~mue, 

1. diatano• ot 210,00 teeta thenae Borth: 66° 08 1 451 We1t '42,16 

toot to tho illUB POl!l~ OF BBOINNIBC. Tlwl>oo llorth 66° OQ 1 u• 

Weet 425.10 reetJ thenae larth IS0 S$1 i&W·Weet 26,69 teet to 

the poi.Dt or torJJdnation iD. tbe aoutbar.eterly line or lf'ooilb1u 

.A.vtnue {2'1 rut ride) ehown on !r.aafo No, 12367 •• per lli.P reoor• 

de4 ih Book z*g• Page 13 ot Kape, Reoord. at Loa jngelel Countya 

oaid point ot tormia&tion bolD£ Worth 67°111 &O''Baot 25.50 toot 

t'rom the most SoutbrJrly oorner at ••ld 'l:ra.ct llo. 12!67. 

(5) Troot #5 - A. tomporarr rir;ht-ot...,..r for oollotruoUoa., operation. ma.inten.ne•~ renewal. and re..o'Yal of' 1. &~r lint 

•lonr;, A.Qf'oaa, beneath and aYer tho following deaor1bed property, 

to w1 to 

the Boutmoootor1y ton (10) foot ot Lot 62 ot Traot 12867, 

ln tho City of Loa Ango1to, County of Loo Amgoleo, Stato ot Oa1iforn1a, •• per ••P reoordod_iu Book Z49, P•,•• 12 and 1a ot Japa, re• 

oordo in th6 Ot£1ao of tho County Rooordor of o&id County and Stoto, 

'rmnto4 Dy a 1•••• ontered 1~to by and bet..on the B~ of America 

National ~ruat and Sa~t !aeooletion, a Batiom.l Banking A•aool&• 

tioD, and th. United State• o£ Jaeriaa ou 1 81ptember 18'2• •• aodifiod by 8upplomo11ta1 .lp"eo~~e~~tu fl, doted 10 January 19U, fa, dated Bl Jul)' 1S44, *'• datod 4 AYguot 1946, ondf&, dated SO 

Dtoember 19,6, whiohwae duly traneterrod and a.aei~ed to the 

Capital Comp.ny, • Cellrornia Corporation, on 1 September• 194&, 

(6) That oortain oowor pipo line oonotruoted purouont 

to and all rlCht• acquired by, that oertain Beaalutlon or 9 Outober 

19.2, in the lliDQtea of the Board of Publlo Work•, Cit:r at Lo• 

~gelea, Pace 205, !ook No' 326, grantiPg perm11aion to tb. Federal 

Government to in•t~ll a •enit-ry 1ewer in Stewart !,.nue b1twwen - Ro11 Avenue and Woodbiu Sfe•ta. 

(1) Thoee oertal.n chattell enlllllra.ted. in Sohedule 11A" 

attoohod horoto and made a pars horoot •• tho~&b tully oot forth 

horoat. 

EXCBP'l'ING~ HOWEVER, troll thll oonveyan~t ell right, title, 

and intere•t in and. to all property in the JJature ot 1quipment, 

turDiahing, and othtr peraonal property located on the land leaeod 

£tom th. City of S111t• Jl,.niaa. •• bereinatter 1et out, whiGb can bo 

removed r~om tho land wit out IIIAtoriol ii!Ju•·y to tho land or otruoturea laoatt4 thereon, other than thoae ohattele •numerated in 

Sohodulo ·~· attaohod horoto and modo a port ht~eaf •• thoUgh tully 

oot torth horoat, and roaorvins to tho rjRTY, OF THE FIRST PARr tor 

it1elt ~d it• leaaeea, lio•n•eel. permit•••• •t•nta, and •••ignl 

the ri&ht to u1a the prop1rt,y oxcepted hereby 1u auoh a aanntr aa 

will nat ma.t.ridly and. &d'VIIrltlJ a.t.teot the development, ilapro..., .. ment, operation or uainteDanoe of the airport an4 the rl,ht ot re-

&oval tram eaid promieel ot 1uob property, all within a reasonable 

ptriod or time atter the d~t• hereot, which ehall not be conatrued 

to mean •JJY pt"riod 111o:re than one (1) Jl'lll" •f'ter the date of tbi1 in• 

.truaent. together with .. rir.ht or ingreu ta and ecre•• trDJD. add 

premiael tor euoh purpoaea. 

hrthor, t.b.o PMU OF TilE FIRn pjRf, tor tho oonoidorati011 

n.reiuabgye expr••••d, doe• h1r1b7 aurrender, 1ubj•ot to the te~ 

and aonditiolll ot thio 1notr.....,t, to tluo PARrY Ol' :rm;: SI!:COIID PM~, 

the torm8r 1 1 l•••ehald intereet in and to the pram!••• known a• 

"Clover Field, S•h llollio• llulll.o1pal !irport•, 10t torth &n4 doo• 

oribod in Loa1o Vo, W-ot-1VS-&n,-l89l, dato4 8 Dooomber, 1841, •• 

-s-

...-
nAK-V~-ij~ IHU u~: I~ rn ~U ~L~-Kt~ AU111N r. Ub/ 1.; 

mod1fiod by Supplemental .Agree1n0ntu f-l, dated July Z~, lB~S, lhld fZ, 

d•t•d July 16, 19461 and inLea11 No, W·8~SO•Iag•S49, dated D•c•mh•r l, 

19U, •• madithd by Supple11.enta.l Agraemenh& fl., date.d Dec.m'ber 20, 

1944, and. fZ, datod. Ju.ly 15, 196-6, 'both. trom tho City oi' Smte. Jloa1oa 

to the United Statee ot ~rioa, and iaoludin, 188.8? aore•, mor• or 

le•a ot land 1ituattd iD the County of Lo1 jngel••• $tatt oi' Calitorn1a, 

THE PAlt!lY OF ~~ smooND PART doei h•reby relea10 ilhe PARTY 

OF mE FIRST PARf !'rom ey and all olo1ma wbioh exiot or may arioo 

under the proYialon. or the atoreaald le•••, exotpt ala~a whioh may 

be 1ubmitt•d under Seotion 17 or the Federal Airport Aot. 

Sa1d. property tranetGrred berebywal dul7 deolared aur• pl\u and. ..-aa &ldpied to the Will" .U1ota ..t.dminlltrat1o'Q tor dilponl, 

&oting pureuant to the pro~aion• ot the above-mentioned Act, a1 · amsnded, Reor,ani:•tio~ Fl•n One or 1947 and applioable rulea, 

regulatlone and ordart. 

'lliAT Till! P.IIRTY OF tam FIRBT PART b&o rolouod and quit" 

olai~ed, and by thil instrument daea releaee and ~uitolatm to tho 

P.AB.t'Y OF mB SECOND PART all or the etruotl.lr .. and improYemtnts on the leaaed land, inoludin£ undercraund and ov•rhaa4 ~tility 

•yeteru, whioh were a.d4ed ther•to by PARTY OF m& FIRST P.AR1'~ 

That br the aooept~ao ot thil instrument or any r1&ht• 

hereunder, the 1aid PAR1'Y OF 'l'UE SECOND PAR'l, tor it .. l.r, ita 

•uooeseor•, and •••i~a, agr••• that the aroreea14 aurrender or ll<hold interest, transfer or ltruoturel, improvement• and 

ohattel•, an4 aaaigonent, ahall be eubjaot to the following r•· otriotiono, uot forth lD oobporog;opho (l) and (Z) or thll pora- ~;rapb, whiah 1haH run with the land, 1lnpo1ed pur1uant to the 

authority ot Artiale 4. Sootlon 3, Clause 2 ot tho Coneti~tion 

ot the United State8 of America, tho Surplue Propertt ~ct ot 1944, 

&I amended, Reor1aoization Plan One or 1941 &ad appllo•Ole rule1, 

regulation• ~d order•• 

(l} That, oxoopt aa provided in aubporograph (6) or tho next 

1uaoeeding unnumbered paragraph, the land, )uildtng•, 1truoturae, 

im.pro'1'011ionts and equipment in whhh thia in1truaent tran•i"•r• any 

lnteroot aholl bo uaod for publio airport purpoaoo tor tho uoo and 

benofit ot tho pu~lio, on roaaonablo tormo and without unJuat d1a· 

orillliDatlon an4 without ,rant or oxoro1oo o£ 1.117 u:Uodvo r1th1i 

tor uee ot the airport within the meaning ot the tara. "exolusi,_ 

rl,ht" ae uaad in au~paragraph (•) ot the ne~t IUQOitdin~ paragraph • .AI 811ci in thb iustrunumt, the tarm "airport• ehall ba cleemacl to 

inolude at lea1t all auob land, buildince, atruot~r••, improv~nta 

and equipment. 

(2) ~hat, exoopt •• pro•ided in 1ubporograph (G)' of the noxt 

auoaeeding paragraph, the entir• landing arta, aa det1ned in WAA lt~latlon 16, dated Juna 26, 19,6, and all 1truoturea, ~roye• 

.. nt1, taoilitiee and equipment in ~hioh tbi• instrument tran•ter• 

.ny intereet •h•ll be maintained tor the uee and benefit of tbJ 

publlo at all ti-e• in good and eer~oeabl• condition, provided, 

b.c:rnv•r, that •uob uint~a• Jh&ll' bt reCJ,aail'•d •• to •truottll"el, 

hlpron111entJ, faa111tiel and •quipm.ent only durinc the r~t~~&indtr ot 

their o1timatod 11••, aa deterudnod by tho C1Yil Aero~·~~1oe Admin~ 

istrator or bia euooea&or, In the eyent material• ar• required t~ 

reb.bilitate or repair oertain or the aforem.at1one4 etruaturea, tbproYe~Atll taoil1titl or e~uipm1nt, they m&f bf p~oaured by d~olltion ot 

othtr •traoturee, !Dproyementa, taoilitlee or e~uipment tran•f•rr•d. 

herebr aad loaated on tbe aboYe doacribed premi••• whioh have outll~ed 

thalr u~• •• airport property in the opinion or ~ UiTil Aeronaut1o1 

£dm1Ai1trator or hil IUOOIIIOr, 

,./.~ ...... I "' 9' 
r, UO/!j 

Book 28055 Fago .. 2J§ 

that by the aooep~anae or thi• inetrument, or ~ ri&hta 

hereunder, the PARTY OP TOE SECOND PJRT, for itaeltt ite l~oOeiiOrs 

and u1t-p1, &11o anumt~a the oblic:atiollS ot, co'ftnanh to abide b)" 

and a~rea1 to, and thia aurrender, tran•t•r, ana •••ltnment la m~4• 

aubjeot to, the tollawint reeervationa and re1triotion1 aet torth in 

oubpara,ropho (1) to 47) ot thio porograph, which ohall run with tho l~a, impoaed purauant to th• authority or Artlale 't Seotlon 3, 

Clanae Z ot tbe Co~titution ot the United States or America, the 

Surplu1 Proporty Aot ot 1g44, au ~ende4, ieor&~i~ation Pl~ One 

ot 19'7 ~d applicable rule•, regulatio~ and ordere. 

(1) That" iD11o:far •• 1t b 1ri.i:hi..n 1·\:e powers, t}w PARTY OF TllB S~COND PJRT 1~11 &dequatelr ol•ar ~d proteot the aerial approaobe1 

to the airport by removing, la-eriD~, relooating. ~king or li~ting 

or othe~iae attigat1~E ex11ting airport h&Jard• and by preventtn~ 

, the eatabli•hment or creation or tu~re airport b&'arde, 

(~) That tho United St•tea or Amoric• (boro1oattor ocmotimol 

referred to a8 the."Gov.rnment") through any of 1tl employ••• or 

agents ahAll at •ll tiMe• have the right to mate nouexolua1~ u•e 

ot the landin~ are• or the airport at whlah any ot ~he property 

tran•terre4 by th1• iDst~nt 11 laoate4 or uaed, with~t ch.rco; 

Provided, howev.r, tb~t 1uoh Ule may be lt.!ted aa ~·Y be determined ~t .ny time by the Civil Aero~utio• Admlni•tr&tor or hie auoo•••or to be neoeua.ry tG prennt undue S.nt.rr.reue~e 1li th use by otJ\or 

&uthoriled aircratta Provided1 turt~r, .that tb. Government eh&ll 

bo obligated to pay tor dama~e• oauaed by 1uah uae, or 1t lt• use . or the landing e.r•• b IUbatantial, to oontribut. a reaeouable ah&re 

g~ th• ooat of maintainiu5 and operating the landing area, o~en• 

aurate with the uae mede by 1 t, 

(3) That during any nat1~nal emergency deolared by t~ Praaiu.nt o£ the United State• ot Jmerioa or the Congre•e thereat, th• 

GonrtUDent 1hall have the richt to make exoluain or nollexaluein usa and have excluaiv• or uone1clu11~• oontrol and p011esa1on1 with• 

out ohar,e, or the aLrfort at whioh a~ of the property tran•f•rte4 

by thle lnstrumGnt 1• looated or uaed, o~ or euob portiou thereat 

&e it m&7 de•ire, provide~, hawe~or, that tht Ggva~ent shall be 

re1ponaible tor the entire ouat or mainta1n1ns auon p•rt ot tho 

airport 11 it may uee e~olue1Tely, or ovar whiob it may hLve exoluai~e po1B111ion or oontrol1 duriag tl~ period ot 1uoh u'•• 

poaaeetlon, or oontrol, and aha1l be obligated to oontribRte a 

roaaonable 1hare, oommen1urate with the uae ~ade by it, of the ooet 

or maintenance of auch property aa it may uae nonexolucLvely or 

ovar whiah it m.y h•~• none~oluaive oontrol aDd poaee1eion1 Provided, 

further, that the Govtram8Dt ahall pay a fair rental for ita nae, 

ooDtrol, or po•••a•1on, exolu1iv.ly or non.zoluaively of ~ ~­

provomonto to tho •irport made without United Statoo aid. 

(4) Tn&t no O~clualYo r1&ftt for tho UIO or tho airport at 

wbiah the ~roperty trenaferre4 by thit inttrument 1a looated •hall 

be·veated {direot1y or ia41reotly) in any peraou or per1on1 to the ez~lulion ar othere in the ·~ ol&ea, the term •axolueive ri~tn 

being detilled to mean 

(l) any exolueive right to uae the airport ror oon- du."oting_ a:o.y particular aeroaautiaal activity requiring oper&tion ot airor&t\J 

(2) any exoluaive r1£ht to engage in tbe ••l• or •~pplying or aLroratt, aircratt aocee•ari••• equipment or 1Uppl1ea (e~oluding the l&le ot gaeoline and oil}, or airarllf-t aerrloee ne.ceaeary for tho operat10D or aircratt (looluding tn• m&int•••••• and rop•ir of 

airoratt, &irorart onglne11 propellera, and appli- anaee), 

-5-

dr-r ,,1 rl.' 
riHK.-VO-tlt) lt1U UOOC::U rn l.iU l.iLr..-Kr.Li HIJrlll't rN~ nu. ~u~ ~~o tltU 

Book 2t~.~55page2.!f 

(5) That, o~oopt aa proTide~ in subparagraph (6) of tbio paratraph, tho property tranaferr•d hereby may b•.•uaceal1~ely tr&n•ferred 

only with th• provi•o that any 1uch aubse~uent tranaferee aasum.1 all 

tho obl1gotiO>ll impoud upon tho PARTY OF m SSCOIID PART b1 tho proTiaione Of tbil inttr~ent. 

(6) Tbot no property transferred by th1• inatrumont ohall bo 

uaed leased, aold• eal••£ed• or diepoaed or by the PARTY 01 tHE 

SECoND PAR1' for oth•r than air'port purpo11e1 wlthollil the writttn oon• .. nt ot i:h• Cirll Aetona.utioe Jdminittrator. 11h:loh shall be gr&nted 

only :lf ••1d Adm!Di1trator determiDal that the property aan be ~led, 

l•ased, 1old, ••lva,ed or dilpo••d ot tor other than airport purpo•ea 

without materially and adver1ely att.otinc the development, tmprov.-

a.nt, operation or ._1ntonanae of tha airport at whioh •uoh ~roper~ 

11 loaateda1 Provided, that no etruoturee diepo•ed ot hereunder shall 

be u•ad •• an iD.duitrial planii, faotory, or 1i.nailar fa.oil1ty within 

the aoaning ot Seotion 23 of the Surplua Propnty Aot ot 19«, u kmended, unleas the.PJRTY OF tHE SECOND PART thall pay to the Unitod 

Statu auoh 1~1'1\ •• the liar Aneta Admlnlltrator or hie IUcce .. or !xt. 

runot1on ahall determine ta be·~ tair oons1deration tor the removal 

ot the ~eatriation imposed by thil proViao. 

(7) Tho PARTY OF THE S~CCND PART dooo hereby roloaao tho 

Oo'YII'IlbUJ.t, and 11'111 t<t 'What.ver aa'tion ma.y be required 'by tlw 

War Aaeet• Jdmin1atretor to •••ure the oamplete relaaae of the 

Gonr-nt rr ... any and all l1«bil1 ty tho GoTOr..,ont .,ay bo uDdor 

tor restoration or other d._a~e1 under any leaae or other a,reement 

coyering the uae by the GoYernment ot tbe ~~~t, or part thereat. 

owned, controlled or oporatod by tho PARTY CF 7BR SECOND PART, upon whioh~ &dja.oent to whioh, or in oonneotionwith Which, an, property 

traneterred by thit iD1trum.nt wae loc~ted or ~•edJ Pro1ided, that no 1uoh r•leaa• 1b&ll be conlltrued. u deprivin£ the PARrY OF mE 

SB:COND PARi' ot •zv right it ma.y otbanri'u have to reaeive l'eimbQrlf!-

~nt uuder Seotion.l7 of tbt Federal Airpor~ Aot tor the u.oeea&rJ 

rehabilitation or repair or publio airport• heretofore or hereafter 

•ub•tantially dama;ed by any Fe~eral agonoy. 

By aooeptance ~r thil inatru~ent. or any ~lght hereunder, 

tho l'AI\TY OF M SECOIID PAR~ C.rthor &II"••• with tho PARTY OF T!l!: 

FIRS7 PART •• follawlla 

(l) That in tho ···~t t~t any or tho atorooaid terms, 

conditions. reservations or restrictions ia not mot, obaerved, or oompliod with by tho PARrY OF 7HZ SEOOHD PART or any aubeoquont 

tronotereo, whothor oauaed by the legal inability of said PARrY OF 

M SBCOID PAR7 or oubooquont tranatoroo to porfono any or tho 

vbl1cat1on• b.rein 1et out, or otberwi••• tAe title, ri;Bt of po1~ 

••••ion and all otbor r1,hto tranotorrod by tbio inatru.ont to tho 

PAirf OP !BE SECOND PARt, or ~ portion thereat. •hall at th~ 

option of tho PAnTY 01 I'IIE FIRS! PARi rnort to tho P~:rY OF M 

FIRST PART oi.:ty (80) dayo !olloO'ing tloe dato upon which domand to 

thh efi'eo-t ie u.U S.n'WS.tiac by the Ci"ri.l .UroD&\lUol Admils.htrator or hi1 •~ooe11or in IUDGtion, uul••• within eaid sixty (GO) 

daya 1uoh default or ~olation •hall hav. 'be•n ourt4 aa4 all auoh 

ttr.ml 1 oonditiana, r•••rvat1ona and re1triotiona 1hall have bwen ~t, ob1erved or oompliQd with, in whioh •vent taid reveraion •hall 

n.t oqour and tiblt 1 ri&ht of po111111on, and all other rlght1 

tranef•rre4 hereby. e;xcept auoh, if any. 1.1 •hall ban prtvlou.aly 

reverted, 1hall remain voated in the PARTY OF T.ijE S~COWD FARr, ita ~ranaf•r•ee, ~OOIIIOrl &D4 &111~, 

( 2) 1'ha11 if -bha constNotion •• oovenanta ot M-Y o£ iih• 

£oregoins r•••rY&tion• and reatriotione reolted bereln •• covenant• 

or tho applioation or tho oam• •• oovtnanto in ~ partioulor in-

•tanae i1 held invalid, iiha partioul•r r•••r.ation• or re1triotion1 

in ~~·•tion •hall b~ conatruad inatead merely aa oonditions upoD 

-6-

r. uu1" 

... 
rHA NU, t1U::I '!tiD II JU r. Utl/J.j 

the breaon or which the Government may •~oroiae 1tl option to oauae 

tho titl~, right of pou&ellioD and all Gtber ri1hts tranaterred to 

the PARfT 01 THE SECOND PART. or anJ portion thereof, to revert to 

it, and tbe application or such reservation• or reatriotions •• oo .. ~t• in any other 1nstanoe ~d the oonatruotion of the remaia~ 

der ot •~oh reeerv&tion• and roatriotloa. •• ooven~t• ahall not 

be affected thereby. 

TO I!AVE !liD TO !!OLD tho property tr011o1'errod hereby, under 

~d •ubjeot to the aforeaaid reaervationa, reatr1ot1onl and conditions, 

unto the eaid rARtY OF 7BE SZCOHD PART~ itt •uooea&ors .nd aesigna . f'orever. 

INWl~BSS WUERBOF, tho UNITED STA~S OF AMERICA, aotinc 

by and ~ough tha War.Aaaet• Adm1n1Btrati~, haa oau1ed theae pro• 

aen'ta to be B.X.tUU.I'tod. ill itl DUIO and On itl b.half b)' W •.A,, Rover 1 

ttlatriot Direotor, Ylar A11tu1-h Adminhtra.tiou, ud. the CITY OF SANT4 

•ORICA1 autiD£ ~f &a4 ~~c~gb 1ta City Couaail, hal oauaed theee preaenta 

to be oxoouto4 in ito llllll\e aDd on ito behal1' b)' 11. M, ll9l!l'ON, City Mapager 

and attested by ~ 0. GRURR Ita CitY clerk, BAd 

1t1 seal iiQ be bereUD 0 attii:ed1 &U u o.r the 1Oth day of 

Auouot · , 19•8. 

l!IillESSESa 

UBIUD SUTES OF AIIEI\lCA 

Aotinc by and through 

WAR ASSETS TIOH 

CITY OF SANTA IIOHICJ. 

SUTE OF C.ILIFORJIU 

By~ 

.'• 

. "'t 
l'lHt\-,Uo-;:,t1 IMU uooa rn VU VLII.-t'i.t\i HUI"IIN rH~ NU. ~U~ q~~ IIIU 

... 

. . ' 

Book ~P~age2l.i 

'· 

SIIP.I. NO.P·L 

2661568-1·1 • 1-2 

• 1-S 

2661565·1-1 

" 1·2 • l•Z 

" 1-" • 1-5 

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On thisLl!!:..~oy or' U, ·~ .,.J , 1948, be!oro 

#,(/, H e &411;.> , ll Notnry F~blio ~n ond 

for tho County of Los .~1ngol.es, Stntc of Calif'ornin1 personalJ..Y 

appeflrod VI alter j,, Rover, known to mo to be the Distriot 

Director, Los l.nr,clos District Office, Wl\r J,ssets f.d.mini5trotior•, <\nd known to rna to bo the person who excauted the within 

instrument on behol! of the l1or i.seets l.dminiet.rt'l.tion which 

executed snid inst~ument on behalf or the Unitod Stotss of 

;.merica cmd ncknovlledged to Jite that he SU;b:Jeribed to the 5tdd 

instrument the nnme or tha1 United States of /.rncl'ioe and the 

namo o.£ thG \lar I.ssets /.dminiatration on behnl! oi' tho Unitod 

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Stntes ot .,·dllerion, and further that the United 'sbtes oi' /.m.o.~ica 

·- ·-· .... excouted ~aid instrument. 

'1ITNESS my h•nd and otficiol seol. 

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My Comnissioz;t oxpi~e5j~ · ... , , 

My Commission Expir" Apr. 2a, m)· 

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UNITIID STA~ OF AMERICA 

WlW Ao~et~ A<lml.nj.st.ra~ion 

CER~IFICATB 

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I, the uncloroi!l'od _ _..:1::;"~8.:,· _:'l;.:.ffi;:I.::.GI;;;IT~,~S,.•o_:r_•_t_,•r,;y;,..,.,.,...,_ __ .,_ ....... -.. .......... ... .. . . .. . ~ . . The Generttl Boar(\ 

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official. c:~apa.oi ty a.1 suCJh __ s;..•;.;•.:•:.•t;.•;..r.:.r __ ,..,.....,.,_~.,.;.----T'"~ 

and doly aothorized in tho DELEGATION OF AUTHORITY INC!DttlT TO TliE" CARE'. 

1~\IIDLIMG AND CONVEYAHCH!G dated ,Apr, 91 1948. f. to m&ke the follO\d.nG 

oertifio~tlon~ do hereby certifY I 

l'! That Halter-A. Rover 

District Director 1 J,o!J ~\ngel(!S ~t.ric.:~.t_o;::~:,:, f::i::.;•,;.• ___ .,....,.. __ ,__,.,.,'" 

-----------------~------------------~--..,..~~--~~~ . \'lar ~88eto Mminhtration, duly appointed, authotiud and ootinG ill ouoh 

oRp~oity at the time of tho e~aution of the atbaabed instrument~ 

.., 

2 • Th•t tho attoohod DELEGATION OF AUTIIl!llTl I!IC~DEIIT •o THE 

0~! HANDLIJIG AND CONm.:\:NOING 1s A true o.nd aorr,o'ii oap.y ~1' the ~r.ig1no.~ 1 

of ••id llELEGJ\'llOtl OF .1\iJTIDgiTY, d•ted . .::~·. 9, l~I,S~, 

~hen under ley' hoJ>d thh le - dny of . 19~ • ••- ,•: ... ,; .,,• ,,; • ··' "' , I 

... '• 

it e· " •·· 

Ib• GenerAl Board 

(or.nce } .. • .. · ·· .. , Wur Alrooto ..\dinillhtrntl.on · 

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JlELilliU'IOR OF AIJTIIlBln' 110, 11,5 

DZLBQA.TIDN OP AIJ!IIORlft l!ICIDI!II': fO ~1111 CI.U, IWllliDG, AID CO!IVIT.IJICIIG OP 

IIU!U'WS 11B4L PROPEII!.'l' AID PIIIIBOHJ,L lROl'IR'I"'' ASSIGIIBD l!llR DISPOSAL TlllllnlTII 

r. Wl~ 

T~ lleJI1ltJ' lod!WI:t.ot .... tor, Otfioo of lloa1 :Property Dl.opooal, ODd. l&ob Aooool• 

ate Deputy Adalnl.otrotor, Otrl.oo or Ro&1 :Property Diopooa1, """ Aoooto .ldoliDlo• 

tra'tion1 t~ ll•si~ll&1 Dirootor, t~ DoJI1ltr lltci-1 Dirootor tar Rtal :Property 

Dilpo•al, the .UIOoS.&te »-putt llep.ou.l Dlreotor tor l.e&l PropertJ' DS.1po••l 11 u4 

tlla .bo1net Deputy Ropoll&1 Dirootor tor l!oal l'roporty Diopooal, 1A ... b 111d 

norr '11'..- £.oooto .Amoinl.otratian R•P.Dilll Ortlot1 tho Dioliriot Dirootor 111111 Doplltr 

Diotriot Dlrootor for aoal :Proporty Diopooa1, in oaob ud '"''7 'll'v .t.ooota Ad• 

:a!lliri:ration Diltriot Otii.oe, u.a &r:ll per1on or por1ou du:l.pl:b4 to aot:, aad 

uti!lc, 1n "''F or ~ toro&oin& oapaol.tlu, art btroby avtborllod, llldbidu&Ur 

(1) i:a IROU.t.e, aob.GWleclce azul del1nr u;r 4••411 leaee, perwit, oODtraot, 

rooolpt, bill of oalo, or otbor b.oli..-..to ill 'lll'itb.s ill oouootioll 'rith tho 

o&ro, ~411D£ .n4 d1apot&l ot 1urplu. real properif1 or p1r1oD&l propert,r ... oiptd tor dlopotltl.Oil '!11th roa1 ~roporty, 1ooato4 witbl.ll tho UD1to4 -too, 

it• tenltoriel aa.4 po11ud.oa.e 1 (2) to aoaep\J 1J11 notee, 'boiiAe, •rtca"'• 

d.eede at tNet. or othtir ••ouri ty 1utr111118Dtl \&tell a1 oonllbratioA in ftole 

Or in part tor tb. di1po•itlon ot auoh 1urpl~• rtal or ptrlaaal prop•~, &D4 

to do all •ot1 noo••••~ or prop•r to rel•••• au4 dilobars• ~ IUQh iD1tr~nt 

or U11' lieD. or••t•d 'b7 · 1uoh 1Ditr\1118:ato or t.therdll are&tta., Mid (~) to dD or · 

pertor.m ~ ota.r &at a•atll&r,J to ett•ot t~ traa1ter ot ti,l• to ~ 1uoh 

•urplu• real or per•onal propo~ loo&ted &I abo_. prov1di4J all pur1U&Dt to 

the prmol.ono of tho Surplut Property .lot ot 18", ao -lldod, (68 stat. Tt61 

50 u,s,c, .App, Suppo 1811)1 Pllbllo lA• 181, 79th Co~~~~:. (69 Stat, 6331 60 Uoi.O, 

jpp, 8upp. lBll&, l6l4b)J Roorsanioatio~ P1&1l 1 of 1947 (1Z F.X,45S&)I PUblio 

Low 289, Both Cong,_ (61 Stat. 878 h &ll4 ar !uoto Adld.lliotratloll Rop1at1on 

lloo 1 (12 F. R, BBel ), ao -dodo 

'lhl RtC,11D11a.l Dlreotor ·s.n e&ab &D4 nwey 11'11.1' .latRI .Adlli.D11tn.t1au lllclonal. 

Ottiae '1.1 berebJ &llthorl&e4 to r•d•bgat• to •uoh psr1an or pe't'IODI u bll ...,. 

dosignato tho a\Ztborlty 4o1optod to Ida bJ' thl.o l.llttr-nt, 

Lo e, 'll'rigbt, tho Soorotary ot Tila Gonoral Joar4 aa4 Robert 'll'bl.ttot, .t.lto• 

oiato Deputy £dmia1otrato~, Ort1o• ot Ro&l Proport, Dlopooa1, 'll'ar Alooto Adaillll• 

tr&tion, aro horol>J' o.utborho4, l.ndl.ndually, to oortitr tr .. oopl.to ot Wo 

Del•s•iloll llld prondo ouoh rwrthor oort1r1o&tl01l •• a1J bo n•••••arr to 

otreotuato tho latollt of th1• Do1•s•tion b. fora tor rooordllls 1n "''F ;luril• 

d1ot1on, •• ""'! be ro'luiro4, 

ihi1 Deles.atiou 1~11 b• ettootin &I ot tM opllWlr:: ot buliu••• OD 

Aprll 9 a 1948. 

Thl.o authority l.o in addltloll to dolo&ationo ot authority pronouol;r p--4 

UDda~ d&too ot llror l1 1 19461 llay U, l9&BJ Julr $0, lBlG1 Stptori>o~ 16, 1948J 

Ootobor Jl, 191BJ No,. .. or 221 l9,6J J&n"""J 13, 19171 Juno 81 l917J &lld 

Dooombor 1, 19171 but ohall not in o.oy ....,.,.r oupo pronol.ont tf uU 

dol•tation• •• do not aontliot with the proTili 1 ot ~hi• ~l•~tion. 

Dato4o __ 4.;:.P~R..:g:.__J ue. 
~HX NU, ~U~ q~~ fllU .. 

Boo/< :t.f0 S""::[)>age.21_ :l_ RESDLIITION NO, ...!!!... 

(CITY COUNCIL D~RitS) 

A n-:SOLUTION OF TilE Ol'lY OOUNOIL OF THB: 

CITY OF SANTA MONICA ACCEPTING AN INSTRUMENT OF TRANSFER FROM THB: UNITED BTATES 

OF AMICI\IOA, 

TKI: OI'l'X COUNCIL OF TilE CITY OF BANTA IIONIOA llOii:S HI!:BOLVE AS 

FOL,LOWSI 

OEO'l'ION 1, That that oortaln instrument at transfer rroa 

ll 

I ~ 

I 

the United At&tBI of Amerloa, aatlng by lllld through the l'lar A•oeh ·/i 

Adalnl1trntlon, •horoby Bald Unltod Btateo of .~merloa dooa IUI'I'onder " 

to the Olty or Santa Non!oa the former'• lo.ae•-hold 1ntereat in ·; 

and to the premloea ~own a1 Olovertllld S&nt' Manloa UUnlolpal Airport end oerte1n saoomonta and temporary rlgbta ot way appurtenant 

thereto, bo and the oame hereby 11 aoaepto4, 

8EOTION 2, That the City N&negor hereby 1s nutborlzad 

to exaoute aald lnotrumBnt ot tranater on bohalt ot the olty and 

the ISlty Clerk ohall atteot hh signature thereto, I I SIJ:OTIOM 3, That tho Clt:y Clerk ahall oertlty to th• adop- • 

tlon~·· th1B reoolut1on and thenoetorth and thereAfter the aa~~~e .. , . · . ..... ,,,,_.,,._ in full toroe n)'d· ett'eot, 

~li:;.,;·~~~'il~l.~!'-'l1:"':1l and APPROVED th1a ·...12!!!. day ot Ausuat , loo&a, 

y,~::~~~J~~;~~;::;~~~ oortlty that the toregolng reaolut1on wa1 dUly '' 

·'"' Olty Oounoiill at the Olty ot Santa l.!onioe. ,.t a 

·"''>'"·"'.n" thereat hold on the lOth da:y ot Ausuot 

Counollmon: Bernard, Dutrclo, Markworth, Ne11aon, Talmaso, B~h1mmer 

Oounollmon1 Nona 

O~nollmen: Oateo 

. ·, .. :, .. , . ilf.AL H. SQRl!N§ljl! 

. -.:".·; ·. ;·:~-iii)' ~~T l!orennn, OU:y Attorn e)' 

... 

I 
EXHIBIT C 
Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 1 of 68 

No. 14-55583 

UNITED STATES COURT OF APPEALS 

FOR THE NINTH CIRCUIT 

CITY OF SANTA MONICA, 

Plaintiff-Appellant, 

v. 

UNITED STATES OF AMERICA, FEDERAL AVIATION ADMINISTRATION, and 

MICHAEL P. HUERTA, in his official capacity as 

Administrator of the Federal Aviation Administration, 

Defendants-Appellees. 

Appeal from the United States District Court for the Central District of California, 

Hon. John F. Walter (Case No. CV 13-8046-JFW (VBKx)) 

PRINCIPAL BRIEF FOR PLAINTIFF-APPELLANT 

CITY OF SANTA MONICA 

MARSHAJONESMOUTRIE 

City Attorney 

JOSEPH LAWRENCE 

Assistant City Attorney 

LANCE S. GAMS 

IVAN CAMPBELL 

Deputy City Attorneys 

1685 Main Street, Room 310 

Santa Monica, California 90401-3295 

Telephone: 310.458.8336 

DEANNE E. MAYNARD 

MARC A. HEARRON 

JESSICA E. PALMER 

MORRISON & FOERSTER LLP 

2000 Pennsylvania Avenue, Suite 6000 

Washington, D.C. 20006-1888 

Telephone: 202.887.8740 

DON G. RUSHING 

JAMES W. HUSTON 

WILLIAM V. O'CONNOR, JR. 

JOANNA L. SIMON 

MORRISON & FOERSTER LLP 

12531 High Bluff Drive, Suite 100 

San Diego, California 92130-2040 

Telephone: 858.720.5100 

Counsel for Plaintiff-Appellant City of Santa Monica 
Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 2 of 68 

TABLE OF CONTENTS 

TABLE OF AUTHORITIES ................................................................................... iii 

JURISDICTIONAL STATEMENT .......................................................................... 1 

STATEMENT OF THE ISSUE ................................................................................. 1 

INTRODUCTION ..................................................................................................... 1 

STATEMENT OF THE CASE .................................................................................. 3 

A. Factual Background ............................................................................... 3 

1. The City's acquisition of the City's Land ................................... 3 

2. The United States' World War II leases of the Airport .............. 4 

3. The Instrument of Transfer ......................................................... 8 

4. City's operation of the Airport subject to grant 

agreements ................................................................................ 16 

5. The 1952 and 1956releases ...................................................... 17 

6. The FAA's recognition in the 1960s and 1970s of the 

City's authority to close the Airport ......................................... 17 

7. The 1984 Settlement Agreement .............................................. 19 

8. The FAA's 2008 change ofposition ......................................... 22 

9. The City's evaluation of the Airport's future ........................... 24 

B. Proceedings Below .............................................................................. 25 

SUMMARY OF ARGUMENT .............................................................................. .27 

STANDARD OF REVIEW ..................................................................................... 29 

ARGUMENT ........................................................................................................... 31 
Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 3 of 68 

A. The Instrument Of Transfer Did Not Provide Notice In 1948 

That The United States Claimed An Interest In Title To (Or 

Perpetual Possession Of) The City's Land .......................................... 31 

1. The Instrument of Transfer's reverter clause could not 

have put the City on notice because the clause did not 

extend to rights never held by the United States ...................... 31 

2. Any ambiguity in the reverter clause precludes it from 

triggering the statute of limitations .......................................... .40 

3. Recordation of the Instrument of Transfer did not provide 

notice of the United States' claim to title of the City's 

Land ........................................................................................... 41 

4. The reverter clause is consistent with the City's title to 

the Land and does not create a cloud on the title ..................... .43 

5. The City's conduct after entering into the Instrument of 

Transfer does not support the district court's conclusion ........ .46 

B. Even If The 1948 Instrument Of Transfer Notified The City Of 

The United States' Claim, The United States Later Disclaimed 

Its Interest, And The Limitations Period Began Anew In 2008 ........ .49 

C. The City's Quiet Title Act Claim Should Not Have Been 

Dismissed Because Whether That Claim Is Time Barred 

Depends On Resolution Of Factual Issues Going To The Merits ...... 56 

CONCLUSION ........................................................................................... , ............ 58 

11 
Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 4 of 68 

TABLE OF AUTHORITIES 

Page(s) 

CASES 

Amoco Prod. Co. v. United States, 

619 F.2d 1383 (lOth Cir. 1980) ......................................................................... .42 

Augustine v. United States, 

704 F.2d 1074 (9th Cir. 1983) ................................................................ 56, 57, 58 

California v. Yuba Goldfields, Inc., 

752 F.2d 393 (9th Cir. 1985) ............................................................................. .42 

Comedy Club, Inc. v. Improv W Assocs., 

553 F.3d 1277 (9th Cir. 2009) ........................................................................... .41 

Fadem v. United States, 

52 F.3d 202 (9th Cir. 1995) ............................................................................... .45 

Glenbrook Homeowners Ass 'n v. Tahoe Reg'! Planning Agency, 

425 F.3d 611 (9th Cir. 2005) .............................................................................. 30 

Hagan v. Gardner, 

283 F.2d 643 (9th Cir. 1960) ............................................................................. .42 

Harden v. Roadway Package Sys., Inc., 

249 F.3d 1137 (9th Cir. 2001) ............................................................................ 29 

Kingman Reef Atoll Invs., LLC v. United States, 

541 F.3d 1189 (9th Cir. 2008) ......................................................... .49, 53, 54, 58 

Kinscherffv. United States, 

586 F.2d 159 (lOth Cir. 1978) (per curiam) ....................................................... 44 

Leisnoi, Inc. v. United States ("Leisnoi f'), 

170 F.3d 1188 (9th Cir. 1999) ................................................................ 32, 44, 53 

Leisnoi, Inc. v. United States ("Leisnoi IF'), 

267 F.3d 1019 (9th Cir. 2001) ................................................................ 31, 43,46 

1l1 
Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 5 of 68 

McFarland v. Norton, 

425 F.3d 724 (9th Cir. 2005) ....................................................................... .43, 44 

Michel v. United States, 

65 F.3d 130 (9th Cir. 1995) (per curiam) ................................................... .passim 

Narramore v. United States, 

852 F.2d 485 (9th Cir. 1988) ............................................................................. .44 

Nestle v. City of Santa Monica, 

6 Cal. 3d 920 (1972) ........................................................................................... 18 

Oceanside 84, Ltd. v. Fidelity Fed. Bank, 

56 Cal. App. 4th 1441 (1997) ............................................................................ .41 

Patterson v. Buffalo Nat 'l River, 

76 F.3d 221 (8th Cir. 1996) .......................................................................... 31, 41 

Poverty Flats Land & Cattle Co. v. United States, 

706 F.2d 1078 (lOth Cir. 1983) ......................................................................... .41 

Safe Air for Everyone v. Meyer, 

373 F.3d 1035 (9th Cir. 2004) ............................................................................ 30 

Shultz v. Department of Army, 

886 F.2d 1157 (9th Cir. 1989) .................................................................... .passim 

Shultz v. Hinojosa, 

432 F.2d 259 (5th Cir. 1970) .............................................................................. 35 

Sun Valley Gasoline, Inc. v. Ernst Enters., Inc., 

711 F.2d 138 (9th Cir. 1983) .............................................. ., .............................. 56 

Werner v. United States, 

9F.3d 1514(11thCir.1993) ........................................................................ 31,44 

STATUTES 

28 U.S.C. § 2409a(a) ................................................................................................ 32 

28 U.S.C. § 2409a(g) ............................................................................................... 31 

IV 
Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 6 of 68 

49 u.s.c. §§ 47151--47153 ........................................................................................ 9 

Amendment to Surplus Property Act of 1944, Pub. L. No. 80-289, 61 Stat. 

678 (1947) ................................................................................................. 9, 36, 39 

Quiet Title Act, 28 U.S.C. § 2409a ...................................................................... 1, 25 

Surplus Property Act of 1944, Pub. L. No. 78-457, 58 Stat. 765 (1944) ............ 9, 37 

REGULATIONS 

14 C.F.R. § 555.11(3) (1947) ................................................................................... 38 

32 C.F.R. § 644.428(k) ........................................................................................... .42 

OTHER AUTHORITIES 

1 Melvin B. Ogden, Ogden's California Real Property Law § 8.2 (1956) ............. .42 

Airport Compliance Requirements, FAA Order No. 5190.6A § 8-2 (Oct. 2, 

1989) ................................................................................................................... 38 

American Heritage Dictionary of the English Language, https://www. 

ahdictionary.com/word/search.html ?q=revert .................................................... 34 

5B Charles Alan Wright et al., Federal Practice & Procedure§ 1350 (3d ed. 

2012) .......................... , ........................................................................................ 56 

Merriam-Webster Dictionary, http://www.merriam-webster.com/dictionary/ 

revert ................................................................................................................... 35 

Oxford English Dictionary, http://www.oed.com .................................................... 35 

v 
Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 7 of 68 

JURISDICTIONAL STATEMENT 

The district court had jurisdiction under 28 U.S.C. § 1331. The final order 

dismissing the claims of plaintiff-appellant City of Santa Monica ("City") was 

entered on February 13, 2014. The City appealed on April 11, 2014. This Court 

has jurisdiction under 28 U.S.C. § 1291. 

STATEMENT OF THE ISSUE 

Whether the City's claim under the Quiet Title Act, 28 U.S.C. § 2409a, is 

timely because the City brought suit within the 12-year statute of limitations. 

INTRODUCTION 

The City owns and operates the Santa Monica Municipal Airport ("Airport" 

or "SMO"). The City owns in fee simple all the land on which the Airport is 

located. At issue here are two parcels of land totaling 168 acres, known as the 

"Runway Lease" and the "Golf Course Lease" (together, "the City's Land"). The 

City has owned these parcels in fee simple since the City purchased them between 

1926 and 1941. 

In 2008, for the first time, the Federal Aviation Administration ("FAA") 

claimed that a 1948 "Instrument of Transfer" obligated the City to operate the 

Airport as an airport forever or else title to the City's Land would "revert" to the 

United States. The United States continues to press that remarkable contention 

here. ER29. But title to the City's Land could not "revert" to the United States 
Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 8 of 68 

under that 1948 Instrument of Transfer because the United States has never owned 

the real property underlying the Airport, i.e., the City's Land. 

Rather, that 1948 Instrument of Transfer effected merely a surrender by the 

United States of its wartime temporary lease of the City's Land back to the City, as 

well as conveying certain easements, improvements, and chattel. Although the 

Instrument of Transfer contains certain restrictions and obligations, only the "rights 

transferred by this instrument" could revert to the United States if the City's 

obligations were not met. The "rights transferred" by the United States did not 

include title to the City's Land. And any right of the United States to reenter the 

City's Land under the temporary leasehold interest that the United States did 

transfer expired with the leases in 1953, leaving nothing to revert. 

In 2013, the City filed this suit under the Quiet Title Act, seeking a 

declaration of the City's rights to the City's Land in light of the FAA's 2008 

contention. The City seeks to protect the real property rights of its citizens from 

encroachment by the federal government and to establish the City's right to 

determine the best use of the City's Land for the benefit of its citizens. 

The district court held the City's Quiet Title Act claim was time barred by 

the 12-year statute of limitations. The district court erred by not focusing on the 

precise interests at stake-title to and possession of the City's Land~and when a 

reasonable landowner would have been on notice that the United States made an 

2 
Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 9 of 68 

adverse claim to those ownership interests. Nothing in the Instrument of Transfer 

gave the City notice that 60 years later the United States would invent an 

extraordinary new reading of the reverter clause to contend that ownership rights 

never held by the United States, and thus not transferred to the City by the United 

States, could somehow "revert" to the United States. Nor did the Instrument of 

Transfer put the City on notice that the United States could somehow repossess the 

City's Land based on an expired leasehold interest. The City brought suit within 

five years of the United States' first assertion of its adverse claim in 2008. The 

City's suit is therefore timely. To hold otherwise would mean that the City should 

have filed a premature suit seeking an essentially advisory opinion to protect 

against the remote possibility that the United States might someday claim 

ownership (or the right to perpetual possession) of the City's Land, when (as far as 

the City could have known) no dispute existed as to those interests. 

STATEMENT OF THE CASE 

A. Factual Background 

1. The City's acquisition of the City's Land 

Beginning in 1917, the land on which the Airport sits was used as an 

informal landing strip. ER284. In 1922, Douglas Aircraft Company ("Douglas") 

began using the Airport as a site for production and testing of its early military and 

civilian aircraft. ER284. In 1926, the City purchased most of the land at issue 

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here, obtaining title by grant deed. ER284. The City paid more than $755,000, 

which in inflation-adjusted terms is approximately $10 million. ER284. Between 

1926 and 1941, the City acquired through grant deeds additional smaller parcels of 

land that now make up the rest of the land at issue. ER284. Thus, by December 

1941, the City held title in fee simple to all of the City's Land. ER284. 1 

2. The United States' World War II leases of the Airport 

On May 27, 1941, President Franklin D. Roosevelt issued Presidential 

Proclamation 2487, declaring an "unlimited national emergency." ER284. The 

Proclamation required "military, naval, air and civilian defenses be put on the basis 

of readiness to repel any and all acts or threats of aggression directed toward any 

part of the Western Hemisphere." ER284-ER285. By that time, Douglas had 

become a major defense contractor, supplying hundreds of aircraft in support of the 

war effort. ER284. In December 1941, the City leased the City's Land to the 

United States to aid in the war effort. ER285. 

1 In April 1945, the United States condemned a number of residential 

properties on approximately 20 acres of the west side of the Airport to assist the 

City with expanding the City's Land. ER287. The properties were purchased by 

the United States using the City's funds, and the land was deeded to the City in 

1949. ER287; ER263. In November 1945, the City's Land was further expanded 

when Douglas conveyed to the City by grant deed an approximately 15-acre parcel 

on the Airport's south side. ER287. The United States does not appear to dispute 

the City's title to these parcels, and they are not part of this suit. 

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The United States leased the land in two parcels. The "Runway Lease" 

covered approximately 86 acres on the northern portion of the City's Land, 

consisting mostly of two runways. ER285; ER314-ER319. The term of the 

Runway Lease began on December 8, 1941, and was to end 12 months after 

Proclamation 2487 terminated. ER285. The City charged the United States only 

$1 for the entire term of the Runway Lease. ER285. The Runway Lease allowed 

the United States to construct or install improvements and structures on the land 

covered by the Runway Lease, "which structures or improvements shall be and 

remain the property of the [United States] and may be removed by the [United 

States] at or prior to the termination ofthis lease." ER318. Before termination of 

the Runway Lease, the United States was required to remove "all camouflage 

structures and all revetments" but was permitted to "leave other improvements or 

any portion thereof it desires." ER318. 

The "Golf Course Lease" leased to the United States approximately 83 acres 

on the southern portion of the City's Land, consisting mostly of a golf course and 

certain structures, including a clubhouse. ER286; ER329-ER331. The lease 

provided that the land was "to be used exclusively for ... Military purposes." 

ER329. The Golf Course Lease required the United States to pay only $150 per 

month. ER286. The lease term was from December 1, 1941 to June 30, 1943, 

with an annual-renewal option until 1947. ER286; ER329-ER330. The United 

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States was permitted to "attach fixtures, and erect additions, structures, or signs, in 

or upon the premises hereby leased." ER330. The lease provided that any 

"fixtures, additions, or structures so placed in or upon or attached to the said 

premises shall be and remain the property of the [United States] and may be 

removed therefrom by the [United States] prior to the termination of this lease." 

ER330. The United States was required, at the City's option upon the lease's 

expiration, to "restore the premises to the same condition as that existing at the 

time of entering upon the same under this lease." ER330. 

The 168 acres of land described in the Runway Lease and Golf Course Lease 

together make up the City's Land. The picture below depicts the current Airport, 

with the land covered by the Runway Lease shaded in yellow and the land covered 

by the Golf Course Lease shaded in red: 

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ER116. 

In 1944, the City Council passed a resolution agreeing to allow the United 

States to build a project on the City's Land. ER286. The Civil Aeronautics 

Administration (the FAA's predecessor) required, as a condition of this agreement, 

"that the City have certain property interests in the landing area of the Airport and 

the lands to be improved." ER286. Thus, "[i]n order to satisfy the [United 

States]" that the City was "qualified to sponsor the Project," the City Council 

warranted in the resolution that the City had "fee simple title to all the lands 

comprising the present airport" and that the only encumbrances were the City's 

leases to the United States, Douglas, and a gas utility company. ER286. 

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In 1944 and 1945, respectively, the City and the United States agreed to 

modifications of the Runway Lease and Golf Course Lease. ER286; ER321-

ER324; ER333-ER342. The Golf Course Lease was amended to allow 

construction of a new runway to accommodate larger aircraft. ER286; ER334. 

The amendments also relieved the United States of its obligation to restore the 

City's Land to its original condition. ER286; ER323; ER334. 

In exchange for the release of that obligation under the Runway Lease, the 

United States agreed to pay the City $3,000, "representing the cost of restoration." 

ER323. In exchange for release of that obligation under the Golf Course Lease, 

the United States conveyed to the City certain improvements it made on the land 

and agreed to pay the City $150,000, representing "the difference between the 

value of said improvements and the estimated cost of the restoration required by 

said lease." ER334; see ER336. 

The term of the Golf Course Lease also was brought into alignment with the 

Runway Lease, so that both were in effect until 12 months after the termination of 

Proclamation 2487. ER287. The City also reduced the rent for the Golf Course 

Lease to $1 for the lease's duration. ER287; ER334. 

3. The Instrument of Transfer 

At the end of World War II, the United States decided it no longer needed a 

presence at the Airport. ER288. On July 15, 1946, the United States and the City 

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therefore modified the Runway Lease and Golf Course Lease, allowing the United 

States to stop maintaining and operating the Airport and paying rent. ER288; 

ER326-ER327; ER344-ER345. Although the United States' temporary leases 

remained in effect, the City resumed maintaining and operating the Airport. 

ER289. The City continued (as it always had) to retain fee simple ownership of 

title to the City's Land. ER289. 

On July 29, 1946, the United States War Assets Administration declared its 

leasehold interest in the Airport to be "surplus" under the Surplus Property Act of 

1944, Pub. L. No. 78-457, 58 Stat. 765 (1944) (codified as amended at 49 U.S.C. 

§§ 47151-47153). ER289; ER195-ER196. The Act was intended "to facilitate 

and regulate the orderly disposal of surplus property" in which the federal 

government had an interest. Surplus Property Act, § 2, 58 Stat. at 766. The Act 

was amended in 1947 specifically to facilitate and expedite the disposal of surplus 

airport property. Pub. L. No. 80-289, 61 Stat. 678 (1947). 

In the document declaring the Airport surplus property, the United States 

expressly acknowledged that the City owned the real property underlying the 

Airport, including the 168 acres at issue here: 

Subject Facility is a Municipal Airport which 

expanded considerably from its original size during the 

Wartime occupancy of the Government. The Airport 

comprises a total of approximately 241.637 acres ofland, 

of which approximately 226.4 acres are owned in Fee or 

being acquired by the City of Santa Monica. 

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Government Leases cover approximately 168.87 

acres of City-owned Lands together with approximately 

15.236 acres of Privately-owned Lands and Closed 

Streets within the boundary of the Airport. The balance 

of approximately 57.531 acres of land, occupied by the 

Government, is not covered by Formal Agreement, but is 

included in this Report to present a complete description 

of the Facility. 

ER195 (emphasis added). 

On September 19, 1946, the City Council wrote a letter to the Chief of the 

War Assets Administration's Airports Division. ER204-ER206. The letter noted 

that the War Assets Administration had declared as surplus property the United 

States' leasehold interest in the City's Land, and it requested that the City also "be 

given an opportunity to acquire, without reimbursement, all [United States] owned 

airport facilities located upon land owned by the City of Santa Monica for the 

purpose of encouraging and fostering the development of civil aviation." ER204-

ER205. Specifically, the letter noted that the United States had made 

improvements "consisting primarily of the construction of a concrete runway, 

taxiway, two hangars, class room building, control tower, fencing, service road, 

and utilities." ER204. 

On January 9, 1947, in an internal letter, the Deputy Administrator of the 

War Assets Administration's Office of Real Property Disposal outlined the plans 

for the improvements on the City's Land. ER208-ER210. The letter provided that 

certain improvements that the United States had built on the City's Land would be 

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transferred to the City. ER208-ER209. The City was to "accept[] title to the 

improvements and facilities." ER209 (emphasis added). Notably, and 

understandably, the letter did not suggest the City would be accepting title to the 

City's Land, as the United States did not own that title and could not transfer it. 

Rather, "[t]he Government's interest" in the "leased land" was to be transferred. 

ER208. As to any other "property of whatever nature" that was "owned by the 

[United States] on the premises" but that was not being conveyed to the City, the 

United States was to reserve "the right of removal thereoffrom the premises within 

a reasonable period of time." ER209. 

On August 10, 1948, the United States officially surrendered to the City the 

United States' leasehold interest, as well as certain easements, all remaining 

improvements, and certain specific chattel, in an "Instrument of Transfer." ER289; 

ER347-ER363. The Instrument of Transfer provides that the United States "does 

hereby surrender, subject to the terms and conditions of this instrument," the 

United States' "leasehold interest in and to" the Airport. ER349. In addition to 

the leasehold interest, the Instrument of Transfer also conveyed to the City: 

(1) "all of the structures and improvements on the leased land, including 

underground and overhead utility systems, which were added thereto by" the 

United States (ER350); (2) four temporary easements and a temporary right-ofway (ER347-ER349); (3) a sewer pipeline (ER349); and (4) certain chattel, 

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including an ice chest, an oak barrel, fire extinguishers, a fire truck, tractors, wire 

camouflage, and a Ping-Pong table (ER349, ER354). 

The conveyance of the leasehold interest and the specific easements, 

improvements, and chattel identified in the Instrument of Transfer was made 

subject to certain restrictions. ER350. Among them, ''the land, buildings, 

structures, improvements and equipment in which this instrument transfers any 

interest shall be used for public airport purposes for the use and benefit of the 

public": 

That by the acceptance of this instrument or any 

rights hereunder, the said PARTY OF THE SECOND 

PART, for itself, its successors, and assigns, agrees that 

the aforesaid surrender of leasehold interest, transfer of 

structures, improvements and chattels, and assignment, 

shall be subject to the following restrictions, set forth in 

subparagraphs (1) and (2) of this paragraph, which shall 

run with the land, imposed pursuant to the authority of 

Article 4, Section 3, Clause 2 of the Constitution of the 

United States of America, the Surplus Property Act of 

1944, as amended, Reorganization Plan One of 1947 and 

applicable rules, regulations and orders: 

(1) That, except as provided in subparagraph (6) of 

the next succeeding unnumbered paragraph, the land, 

buildings, structures, improvements and equipment in 

which this instrument transfers any interest shall be used 

for public airport purposes for the use and benefit of the 

public, on reasonable terms and without unjust 

discrimination and without grant or exercise of any 

exclusive right for use of the airport within the meaning 

of the terms "exclusive right" as used in subparagraph (4) 

of the next succeeding paragraph. As used in this 

instrument, the term "airport" shall be deemed to include 

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ER350. 

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at least all such land, buildings, structures, improvements 

and equipment. 

The document also provided that "no property transferred by this instrument 

shall be used, leased, sold, salvaged, or disposed of . . . for other than airport 

purposes without the written consent of the Civil Aeronautics Administrator": 

( 6) That no property transferred by this instrument 

shall be used, leased, sold, salvaged, or disposed of by 

the PARTY OF THE SECOND PART for other than 

airport purposes without the written consent of the Civil 

Aeronautics Administrator, which shall be granted only if 

said Administrator determines that the property can be 

used, leased, sold, salvaged or disposed of for other than 

airport purposes without materially and adversely 

affecting the development, improvement, operation or 

maintenance of the airport at which such property is 

located .... 

ER352 (emphasis added). 

The Instrument of Transfer included a reverter clause, which provided that, 

in the event any restriction or condition in the Instrument of Transfer is not met, 

"the title, right of possession and all other rights transferred by this instrument" to 

the City shall, at the United States' option, "revert" to the United States: 

By acceptance of this instrument, or any right 

hereunder, the PARTY OF THE SECOND PART further 

agrees with the PARTY OF THE FIRST PART as 

follows: 

(1) That in the event that any of the aforesaid 

terms, conditions, reservations or restrictions is not met, 

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observed, or complied with by the PARTY OF THE 

SECOND PART or any subsequent transferee, whether 

caused by the legal inability of said PARTY OF THE 

SECOND PART or subsequent transferee to perform any 

of the obligations herein set out, or otherwise, the title, 

right of possession and all other rights transferred by this 

instrument to the PARTY OF THE SECOND PART, or 

any portion thereof, shall at the option of the PARTY OF 

THE FIRST PART revert to the PARTY OF THE FIRST 

PART sixty (60) days following the date upon which 

demand to this effect is made in writing by the Civil 

Aeronautics Administrator or his successor in function, 

unless within said sixty (60) days such default or 

violation shall have been cured and all such terms, 

conditions, reservations and restrictions shall have been 

met, observed or complied with, in which event said 

reversion shall not occur and title, right of possession, 

and all other rights transferred hereby, except such, if 

any, as shall have previously reverted, shall remain 

vested in the PARTY OF THE SECOND PART, its 

transferees, successors and assigns. 

ER352 (emphasis added). 

By its express terms, the reversion clause applies only to "rights transferred 

by this instrument," ER3 52, i.e., the leasehold interest and the certain easements, 

improvements, and chattel. Fee simple title to the City's Land had been held 

continuously by the City; the City's Land merely had been leased to the United 

States. The United States had no fee simple title to return to the City, and thus the 

fee simple title to the City's Land was not subject to the Instrument of Transfer's 

reverter clause, nor would any reasonable property owner have believed it to be. 

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In 1948, the Santa Monica City Council ("City Council") passed Resolution 

No. 183, accepting the transfer from the United States and authorizing the City 

Manager to execute the instrument. ER290; ER358. The resolution confirmed that 

the Instrument of Transfer effected only a transfer of the United States' "lease-hold 

interest in and to the premises known as Cloverfield Santa Monica Municipal 

Airport and certain easements and temporary rights of way appurtenant thereto." 

ER358. The executed Instrument of Transfer was filed as a quitclaim deed with 

the County Recorder for the County of Los Angeles, California. ER4; ER228, 

ER235-ER247. 

On April 28, 1952, President Harry S. Truman terminated 

Proclamation 2487, proclaiming that the national emergency declared in 1941 no 

longer existed. ER291. Accordingly, 12 months thereafter, on April28, 1953, the 

Runway and Golf Course Leases expired by their own terms. ER291. That was 

the end of the leasehold interest the United States had transferred under the 

Instrument of Transfer. ER349-ER350. 

Thus, because the leases expired long ago, there now is no transferred 

leasehold interest that could revert to the United States. ER302. And the current 

improvements on the City's Land either (1) were paid for with City funds, (2) were 

conveyed to the City before the execution of the Instrument of Transfer in 

exchange for the City's release of the United States from the leasehold obligations 

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to return the City's Land to its original condition, or (3) have exceeded their useful 

life. ER302-ER303. 

4. City's operation of the Airport subject to grant agreements 

Since the United States relinquished its leasehold interest in the Airport, the 

City has continuously maintained and operated the Airport. ER288. Over that 

time, the City accepted several grants from the United States for airfield 

improvements. Numerous agreements were signed, including at least in 1948, 

1968, and 1969, and the last such agreement was signed in 1994. ER294; ER271; 

ER71. 

In exchange for each grant, the City contractually promised to maintain the 

Airport for the use and benefit of the public for the useful life of improvements 

made with federal funds, but no more than 20 years from the date of execution of 

each grant agreement. ER294; ER4. For example, the City agreed that it "will 

operate the Airport as such for the use and benefit of the public." ER181. Further, 

the City "will suitably operate and maintain the Airport and all facilities thereon or 

connected therewith which are necessary for airport purposes other than facilities 

owned or controlled by the United States, and will not permit any activity thereon 

which would interfere with its use for aeronautical purposes." ER181. The City's 

obligations under the grant agreements are distinct from the obligations under the 

Instrument of Transfer. 

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5. The 1952 and 1956 releases 

In 1952, before the Runway and Golf Course Leases had expired, the City 

obtained from the United States a release from the City's obligations to use for 

airport purposes an approximately 1 0-acre parcel of land within the Golf Course 

Lease, known as "Lot A" of the "George Tract." ER265; ER329. That parcel was 

situated within the City of Los Angeles and could not be used for airport expansion 

because of Los Angeles' zoning restrictions. ER265. In 1956, the City obtained a 

similar release for a tract ofland known as "Runway No. 1," which was part of the 

Runway Lease. ER271. Both the George Tract and Runway No. 1 are depicted in 

the picture supra p. 7. 

By obtaining permission to use these parcels for non-airport purposes, the 

City ensured that it could not be held in breach of the Instrument of Transfer or the 

1948 grant agreement. Nothing in the 1952 or 1956 releases suggests that the City 

believed the releases were necessary to preclude title to the City's Land from 

reverting to the United States. 

6. The FAA's recognition in the 1960s and 1970s of the City's 

authority to close the Airport 

In the 1960s, the first civilian jets began using the Airport, and their use 

grew steadily throughout that decade. ER291. At that time, civilian jets were ten 

times louder and more polluting than present-day jets and exposed the surrounding 

neighborhoods to severe noise. ER291. Residents complained and brought legal 

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action against the City. ER291. The California Supreme Court held that the City 

could be sued by residents for airport impacts under theories including nuisance. 

ER291; Nestle v. City of Santa Monica, 6 Cal. 3d 920 (1972). The City thus 

explored a wide range of options, including Airport closure. ER291-ER292. 

In 1962, the City Council asked the City Attorney: "Can the City, 

unilaterally, on motion of the City Council, abandon the use of the Santa Monica 

Municipal Airport as an airport?" ER1 73. The City Attorney issued an Opinion in 

response, concluding that both the Instrument of Transfer and a grant agreement 

"compel the conclusion that the City must operate the airport as an airport, and that 

the City cannot legally unilaterally, on its own motion, abandon the use of the 

Santa Monica Municipal Airport as an airport." ER181-ER182. The City 

Attorney was not asked and did not opine on whether title and right of possession 

to the City's Land would "revert" to the United States if the Airport were closed. 

ER173-ER182. Indeed, inconsistent with any reverter of title to the City's Land, 

the Opinion noted that, in the Instrument of Transfer, the United States 

"surrendered its leasehold interest in the Airport and assigned to the City certain 

easements, structures, improvements, and chattels." ER176. 

In an April 23, 1971 letter responding to the Aircraft Owners and Pilots 

Association, the FAA recognized concerns that, in response to growing 

apprehension from City residents, the City might shut down Airport operations. 

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ER47-ER48; ER291-ER292. The FAA stated that upon expiration of the City's 

obligations under the then-in-force grant agreement, the "Santa Monica Airport is 

vulnerable to being discontinued and used for non-airport purposes." ER47. 

According to the FAA, ifthe City closed the Airport, the FAA's recourse would be 

to "declare the City in default of its obligation of its Grant Agreements" and to 

"seek[] recovery of the funds expended." ER47. The FAA did not take the 

position that title and right of possession to the City's Land would "revert" to the 

United States if the City ceased Airport operations. 

7. The 1984 Settlement Agreement 

In 1975, the City Council adopted ordinances seeking to alleviate the 

Airport's impact on City residents, including a total jet ban, a ban on helicopter 

flights, a noise limit, and a night curfew. ER292. These ordinances led to 

litigation against the City by the Santa Monica Airport Association. ER292. The 

FAA intervened on the side of the plaintiff and against the City. ER292. The 

ordinances were upheld with the exception of the jet-ban ordinance. ER292. 

In 1979, the City Council adopted an ordinance imposing a lower Airport 

decibel limit. ER292. This ordinance prompted litigation by the National 

Business Aircraft Association. ER292-ER293. The FAA again intervened on 

behalf of the plaintiff and against the City. ER293. In 1981, while that litigation 

was pending, the City Council adopted a resolution declaring its intention to close 

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the Airport when legally possible. ER293. Thereafter, in 1983, the National 

Business Aircraft Association's lawsuit was dismissed after the City adopted a new 

Airport Master Plan and Noise Mitigation Project. ER293. 

In response, multiple Airport users filed administrative complaints with the 

FAA. ER293. The City negotiated with the FAA, culminating in the signing of a 

1984 Settlement Agreement. ER293-ER294; ER365-ER392. 

The Agreement allowed the City to make substantial changes in the 

operation of the Airport. The Agreement "recogni[zed] that the Airport is poorly 

designed and organized" and that the Airport needed to be "redesigned." ER369. 

In particular, the "Airport is bounded on three sides by densely populated 

residential areas" severely impacted by aircraft noise. ER368. The Agreement 

thus approved a new "Airport Layout Plan" that "shifts a substantial portion of 

aeronautical services from their present location on the south side of the Airport to 

the north side." ER370. The reconfiguration made available a substantial amount 

of land, which the new Airport Layout Plan designated as "parkland and residual 

land." ER370-ER371. The Agreement expressly permitted that land to be used 

"for other than airport and aviation purposes." ER3 71. 

In addition to approving the "redesign of the Airport," the Agreement 

provided overarching "principles and plans for the operation of the Airport" going 

forward. ER369, ER371. The Agreement "resolve[d] all existing legal disputes 

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among the parties" and "release[ d] the City and this parkland and residual land 

from any and all conditions, covenants, and restrictions imposed by the Instrument 

of Transfer." ER369, ER371. The City agreed to a new 30-year commitment "to 

improve the Airport physical layout as shown in the Airport Layout Plan and 

maintain the Airport and the facilities located on the Airport." ER373. The City 

agreed to "operate and maintain the Airport as a viable functioning facility ... 

until July 1, 2015." ER373. The Agreement also provided that "[a]ll prior 

agreements between the parties concerning the Airport, and all actions of the 

parties during the duration of this Agreement, shall be interpreted consistently with 

this Agreement." ER369. 

In 1998, the FAA expressly acknowledged that the 1984 "Settlement 

Agreement makes clear that the City is obligated to operate the Airport only for the 

duration of the [1984] Agreement (through July 1, 2015)." ER294. The FAA did 

so in a Director's Determination in an administrative proceeding regarding the 

City's refusal to offer leases beyond 2015 to two Airport tenants. ER294. The 

Director explained that to the extent that parties "seek to prevent the future closure 

of the Airport or require the City to operate the Airport beyond July 1, 2015, that is 

a local land use matter . ... When the City's last grant agreement expires in 

approximately 2014, the [Airport Improvement Program] grant sponsor assurances 

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will no longer require the City to operate the Airport as an airport." ER294-ER295 

(emphasis added). 

In a 2003 Final Agency Decision, the FAA Administrator affirmed the 

Director's Determination. ER295. The FAA Administrator concluded the 1984 

Settlement Agreement only required the City to maintain the Airport's "role in the 

National Airport System as a general aviation reliever airport until July 1, 2015." 

ER295. 

8. The FAA's 2008 change of position 

In 2001, the City Council commissioned a study to address the safety and 

liability risks inherent in the increase of Category C and D aircraft traffic at the 

Airport, which are large jets requiring longer runways to land. ER295-ER296 & 

n. 7. The study recommended adoption of an "Aircraft Conformance Program" that 

would promote safety by expanding the distance from the runway ends to the 

Airport perimeter. ER295. The City Council approved the Airport Conformance 

Program and directed staff to seek a voluntary agreement with the FAA to 

implement it. ER296. The FAA refused a voluntary agreement. ER296. Then in 

2008, the City Council passed an ordinance banning Category C and D aircraft. 

ER296. 

Subsequently, on March 26, 2008, the FAA issued an Order to Show Cause, 

seeking to prohibit the City from enforcing the ordinance. ER296. 

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Notwithstanding the 1984 Settlement Agreement's release of the City from the 

Instrument of Transfer's obligations, the FAA asserted that the Instrument of 

Transfer obligates the City to maintain the Airport "in perpetuity" and that the 

City's Land would revert to the United States if the City tried to close the Airport: 

Under the Surplus Property Act of 1944 (SPA), 

surplus property instruments of transfer are one of the 

means by which the Federal government provides airport 

development assistance to public airport sponsors .... 

Upon acceptance of surplus property conveyance by the 

City, the obligations in the instrument of disposal became 

a binding obligation of the City. 

The SPA deed contains Federal obligations similar 

to [Airport Improvement Program] grant obligations to 

offer access on fair and reasonable terms, that run in 

perpetuity until the FAA releases the SPA obligations or 

reverts the airport under the right to revert clause for 

violations of the SPA deed covenants. One of the surplus 

property conveyance covenants contained in the 1948 

Surplus Property Instrument of Transfer stipulates that 

the Airport "shall be used for public airport purposes for 

the use and benefit of the public, on reasonable terms and 

without unjust discrimination and without grant or 

exercise of any exclusive right for use of the 

mrpo . rt " .... 

ER99 (second omission in original) (emphasis added and omitted). 

The 2008 Order to Show Cause was the first time the FAA claimed that title 

to the City's Land could revert to the United States if the City ever ceased 

operating the Airport. According to the Order to Show Cause, the Instrument of 

Transfer allows the United States to cause the "airport" to revert to the United 

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States if the City does not operate the Airport as an airport "in perpetuity." ER99. 

That was the first time that the FAA claimed that the reverter clause allowed the 

United States to take parts of the "airport" to which the United States had never 

owned title, including the City's Land itself. 

The FAA continues to maintain that position. In the district court here, the 

defendants asserted that, under the reverter clause, "the United States may exercise 

an option to take title or possession of the land." ER29. 

9. The City's evaluation of the Airport's future 

In December 2010, in anticipation of the 1984 Settlement Agreement's 

expiration, the City Council directed staff to conduct a comprehensive public 

process concerning the Airport's future. ER298. The result was a March 2013 

report concluding that the Airport's status quo is unacceptable to City residents. 

ER298. 

Thereafter, City staff members met with FAA representatives several times 

to convey community concerns and the City's position about the Airport's future. 

ER298. The FAA would not negotiate any compromise regarding the Airport's 

future operation. ER298. FAA representatives maintained that the City is 

obligated to continue operating the Airport in perpetuity under the Instrument of 

Transfer, that the operational status quo must be maintained, and that no 

agreements to the contrary could be made outside oflitigation. ER298. 

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B. Proceedings Below 

In October 2013, the City filed this suit against the United States, the FAA, 

and the FAA Administrator in his official capacity. The complaint includes a 

claim under the Quiet Title Act, 28 U.S.C. § 2409a, seeking to quiet title to the 168 

acres described in the Runway and Golf Course Leases. ER300-ER303. The 

complaint alleges that the City first learned that the United States claimed a 

reversionary interest to the title to the City's Land on or after March 26, 2008, 

through the FAA's Order to Show Cause. ER302. 

On the United States' motion, the district court dismissed the City's Quiet 

Title Act claim with prejudice under Rule 12(b)(1), holding that there is no 

subject-matter jurisdiction because the claim is barred by the 12-year statute of 

limitations. ER9-ER14. The district court concluded that, "by executing and 

accepting the terms of the Instrument of Transfer, the City had actual notice of the 

reversion clause in 1948, and thus had actual notice that the United States claimed 

an interest in the title to the Airport Property in 1948." ER10. 

The district court reasoned that, irrespective of its context, "the use of the 

term 'title' in the Instrument of Transfer would have, or at least should have, 

alerted a reasonable landowner that the government claimed an interest in the title 

to the land." ER11. Alternatively, the district court held that the Instrument of 

Transfer "create[ d] a cloud on title," thus triggering the limitations period. ER11. 

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The district court brushed aside the City's contention that, by its terms, the reverter 

clause could not apply to property interests, such as ownership of the City's Land, 

that the United States never held. The district court rejected that contention as 

going to the merits rather than to whether the City was on notice. ERll, ER13-

ER14. 

The district court further reasoned that because the City had requested 

releases from the Instrument of Transfer's obligations for certain parcels of land, 

and because the City Attorney had issued an opinion that the City could not 

unilaterally stop maintaining the Airport, the City knew "that the United States had 

a continuing and substantial interest in the Airport Property." ER11-ER12. But 

the district court did not explain how these actions purportedly demonstrated the 

City's knowledge of a claim that the United States could retake its onetime 

leasehold interest long after the leases had expired, much less take title to the 

City's Land that the United States never held. 

The district court also concluded that the FAA's repeated, official 

acknowledgements that the City is obligated to operate the Airport only until the 

1984 Settlement Agreement expires in 2015 did not constitute abandonment of the 

United States' claim to the City's Land. ER12-ER13. The district court 

acknowledged that abandonment and later reassertion of a claim begins a new 

limitations period under the Quiet Title Act. ER12. Nevertheless, the court held 

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that the FAA's statements were not sufficiently "clear and unequivocal" to 

constitute abandonment. ER12. 

Finally, the district court concluded that the City had notice of the United 

States' claim, even while acknowledging that the court must not resolve factual 

issues in the context of a Rule 12(b )(1) motion if "the jurisdictional issue and the 

substantive issues are so intermeshed that the question of jurisdiction is dependent 

on decision of the merits." ER13 (internal quotation marks omitted). The district 

court reasoned only that "the crucial issue in the statute of limitations inquiry is 

whether the plaintiff had notice of the federal claim, not whether the claim itself is 

valid." ER13-ER14 (alteration and internal quotation marks omitted). 2 

SUMMARY OF ARGUMENT 

A. The Instrument of Transfer's reverter clause could not have started the 

running of the statute oflimitations in 1948. The reverter clause provides only that 

"the title, right of possession and all other rights transferred by this instrument" 

may revert to the United States. ER352 (emphasis added). Only the (longexpired) leasehold interest, easements, and (now-valueless) improvements and 

chattel were transferred in the Instrument of Transfer; thus, only those interests 

2 The complaint also includes certain constitutional claims, which the district 

court dismissed without prejudice as unripe. Those claims are not part of this 

appeal, as the City can bring them, if necessary, when they ripen. Wolfson v. 

Brammer, 616 F.3d 1045, 1064 (9th Cir. 2010). 

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potentially could have reverted. Title to the City's Land always remained with the 

City; such title was not transferred in the Instrument of Transfer and therefore 

cannot legally revert to the United States. Any right of the United States to possess 

the City's Land terminated when the leases expired in 1953. 

The Instrument of Transfer thus gave no notice that the United States might 

decades later claim it could take title to (or have a perpetual right of possession of) 

the City's Land. Nor did the Instrument of Transfer create any "cloud" on the title 

to the City's Land, as nothing in the reverter clause is inconsistent with the City's 

continuing to maintain full title to the City's Land. Even if another reading were 

plausible (and it is not), it would at best make the reverter clause ambiguous; but 

an ambiguous provision cannot provide the requisite notice. 

That the Instrument of Transfer was recorded as a quitclaim deed did not 

provide notice that title to the City's Land could somehow revert. The recordation 

gave no more notice than the Instrument of Transfer itself. Nor does the City's 

conduct after entering into the Instrument of Transfer suggest that the City had 

such notice. Neither the releases from the Instrument of Transfer's obligations nor 

the City Attorney's 1962 Opinion indicated that the City knew that, if it closed the 

Airport, the United States could claim title to (or a right of perpetual possession of) 

the City's Land solely on the basis of the Instrument of Transfer. 

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B. Even if the Instrument of Transfer somehow gave notice that the 

United States claimed an interest in the title to (or perpetual possession of) the 

City's Land, the United States later abandoned that claim. For example, in 1984, 

in an agreement broadly resolving plans for the Airport going forward, the FAA 

released the City from the Instrument of Transfer, and the City agreed to operate 

the Airport only until July 1, 2015. Notwithstanding that agreement, the FAA 

asserted in 2008 that the obligations under the Instrument of Transfer are still in 

effect and will remain so in perpetuity. That gave rise to a new Quiet Title Act 

cause of action, and the City timely filed thereafter. 

C. In any event, the district court should not have dismissed the City's 

Quiet Title Act claim because the question of subject-matter jurisdiction is 

integrally intertwined with the merits of that claim. Both questions depend on the 

correct reading of the Instrument of Transfer and the 1984 agreement. It is well 

established that when the jurisdictional question and the merits are so inextricably 

intertwined, the district court must not dismiss on jurisdictional grounds without 

first reaching the merits. The district court did so here, and that was reversible 

error. 

STANDARD OF REVIEW 

"The existence of subject matter jurisdiction is a question of law reviewed 

de novo." Harden v. Roadway Package Sys., Inc., 249 F.3d 1137, 1140 (9th Cir. 

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2001). The jurisdictional question here depends on whether the City brought suit 

within the statute of limitations. When the timeliness of an action turns on what a 

reasonable person should know, it is a mixed question of law and fact. Shultz v. 

Department of Army, 886 F.2d 1157, 1159 (9th Cir. 1989). Here, however, 

whether the City had notice turns on the interpretation of legal instruments, which 

this Court reviews de novo. Glenbrook Homeowners Ass 'n v. Tahoe Reg '1 

Planning Agency, 425 F.3d 611, 616 (9th Cir. 2005). 

To the extent the district court may have resolved factual questions in 

deciding the Rule 12(b)(1) motion, those factual questions were intertwined with 

the merits. Where the question of jurisdiction is intertwined with the merits but the 

district court dismisses under Rule 12(b )( 1) before trial, this Court reviews the 

dismissal "not as a dismissal for lack of subject matter jurisdiction but rather as a 

grant of summary judgment on the merits." Safe Air for Everyone v. Meyer, 373 

F.3d 1035, 1040 (9th Cir. 2004). The district court's decision is thus reviewed de 

novo. Id. at 1040 n.4. The Court views the evidence in the light most favorable to 

the nonmoving party, determining whether there are any genuine issues of material 

fact and whether the moving party is entitled to judgment as a matter of law. I d. 

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ARGUMENT 

A. The Instrument Of Transfer Did Not Provide Notice In 1948 That The 

United States Claimed An Interest In Title To (Or Perpetual Possession 

Of) The City's Land 

Nothing in the Instrument of Transfer gave notice in 1948 that the United 

States claimed an interest in the title to the City's Land or the right to possess the 

City's Land in perpetuity. 

1. The Instrument of Transfer's reverter clause could not have put the 

City on notice because the clause did not extend to rights never held 

by the United States 

A claim under the Quiet Title Act must be brought within 12 years of "the 

date the plaintiff . , . knew or should have known of the claim of the United 

States." 28 U.S.C. § 2409a(g). "To start the limitations period, the government's 

claim must be adverse to the claim asserted by the [plaintiff]." Michel v. United 

States, 65 F.3d 130, 131-32 (9th Cir. 1995) (per curiam); see Leisnoi, Inc. v. United 

States ("Leisnoi IF'), 267 F.3d 1019, 1025 (9th Cir. 2001) (limitations period 

triggered when United States claims an "adverse interest"); Patterson v. Buffalo 

Nat'! River, 76 F.3d 221, 224 (8th Cir. 1996) (plaintiffs must have ''reasonable 

awareness that the Government claims some interest adverse to the plaintiffs" 

(alteration and internal quotation marks omitted)). 

It is not enough "that the government claims some interest-any interest-in 

the property." Werner v. United States, 9 F.3d 1514, 1518-19 (11th Cir. 1993). 

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This is clear from the text of the Quiet Title Act itself. The Quiet Title Act 

provides that "[t]he United States may be named as a party defendant in a civil 

action under this section to adjudicate a disputed title to real property in which the 

United States claims an interest." 28 U.S.C. § 2409a(a) (emphasis added). Thus, 

for a claim to accrue under the Quiet Title Act, not only must the United States 

"claim an interest in the property at issue," there also "must be a disputed title to 

real property." Leisnoi, Inc. v. United States ("LeisnoiF'), 170 F.3d 1188, 1191 

(9th Cir. 1999). 

Before 2008, there was no dispute over title to the City's Land. The City has 

owned all 168 acres of the City's Land continuously since its purchase for what 

would now be $10 million. ER284. The parties were in full agreement in 1948 as 

to who had what interests. The City owned the City's Land in fee simple title. 

ER289; ER195. The United States had only a temporary leasehold interest in the 

City's Land. ER285-ER289; ER195. The United States owned the structures and 

improvements it had erected on the City's Land (ER318; ER330), except for 

certain improvements it already had transferred to the City (ER334, ER336). 

Although the United States previously had been obligated to restore the City's 

Land to its original condition upon the leases' expiration (ER330), the United 

States had paid the City for the option to leave the remaining structures and 

improvements on the City's Land (ER323; ER334). In the Instrument of Transfer, 

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the United States surrendered back to the City its (now-expired) leasehold interest. 

ER349-ER350; ER195. The United States also conveyed certain easements and 

transferred title to the remaining (and now-valueless) improvements and certain 

chattel. ER347-ER350, ER354; ER208-ER209. As to any other United Statesowned chattel on the City's Land, the United States claimed only the right to 

remove it within a reasonable time. ER209. 

Although the reverter clause in the Instrument of Transfer provided that that 

leasehold interest, and those easements, improvements, and chattel could revert to 

the United States if the City stopped using them for airport purposes, nothing in the 

reverter clause created a dispute over title to the City's Land. By its very terms 

(and as its name suggests), the reverter clause applied only to the interests that the 

United States had transferred to the City under the Instrument of Transfer. 

Specifically, the reverter clause provides that "the title, right of possession and all 

other rights transferred by this instrument ... , or any portion thereof, shall ... 

revert" to the United States. ER352 (emphasis added). As the United States never 

owned the title to the City's Land, the reverter cause did not implicate title to the 

City's Land, and thus the reverter clause could not plausibly have put the City on 

notice of any claim that title to the City's Land could somehow "revert" to the 

United States. Moreover, any right of the United States to possess the City's Land 

under the leasehold interest has long since expired by the leases' terms, and the 

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easements, improvements, and chattel either had been conveyed to the City before 

1948 or have no remaining useful value. 

To conclude that the City was required to sue within 12 years of 1948 would 

mean that the. City was required to file a premature, potentially pointless claim to 

quiet title at a time when there was no dispute over that title. The City would have 

been "compelled to sue to protect against the possibility, however remote, that the 

government might someday" claim that it had a right to the title to the City's Land. 

Michel, 65 F.3d at 132. As this Court has long recognized, such speculative suits 

are not required. Id. 

Nevertheless, that is what the United States argues and the district court 

held. ER1 0. The district court latched onto the word "title" in the reverter clause, 

concluding "that the use of the term 'title' in the Instrument of Transfer would 

have, or at least should have, alerted a reasonable landowner that the government 

claimed an interest in the title to the land." ER11. That conclusion cannot be 

squared with either the plain language of the reverter clause or the Instrument of 

Transfer as a whole. 

The plain and ordinary meaning of "revert" involves previously held 

property interests being returned to its former owner. American Heritage 

Dictionary of the English Language, https://www.ahdictionary.com/word/search. 

html?q=revert ("To be returned to the former owner or to the former owner's 

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heirs."); Oxford English Dictionary, http://www.oed.com ("to return to the original 

owner, or to his or her heirs, after the expiry of a grant, or a grantee's death; to 

return by reversion"); Merriam-Webster Dictionary, http://www.merriam-webster. 

com/dictionary/revert ("to return to the proprietor or his or her heirs at the end of a 

reversion"). The only interest in the City's Land that the United States previously 

held was a limited-term leasehold interest. That is the only interest in the City's 

Land that potentially could have reverted to the United States under the Instrument 

of Transfer, and any such reversion could have occurred only if the City had 

defaulted on the Instrument's obligations before the leases expired in 1953. 

Because the United States never held title to the City's Land, such title could never 

"revert" to the United States. 

Indeed, the reverter clause explicitly states that the only rights that could 

revert are rights that were "transferred by this instrument." ER352. The reverter 

clause applies to "the title, right of possession and all other rights transferred by 

this instrument." ER352 (emphasis added). The word "other" makes clear that 

"title" and "right of possession" are specific examples of the category of "rights 

transferred by this instrument." Shultz v. Hinojosa, 432 F.2d 259, 267 (5th Cir. 

1970) ("the words 'other facilities' are to be considered as being in pari materia 

with the preceding words 'board and lodging"'). Thus, the reverter clause applies 

only to any "title ... transferred by this instrument," any "right of possession ... 

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transferred by this instrument," and any "other rights transferred by this 

instrument." ER352. Because title to the City's Land was not transferred by the 

Instrument of Transfer, the reverter clause did not give the City notice that the 

United States would claim, decades later, that title to the City's Land could 

somehow "revert" to the United States. Michel, 65 F.3d at 132. 

This reading of the reverter clause is confirmed by the Surplus Property Act. 

The Instrument of Transfer was entered into "under and pursuant to" the Surplus 

Property Act, and therefore the Surplus Property Act informs the meaning of 

language in the Instrument of Transfer. ER347. The Surplus Property Act 

required that every instrument of transfer for airport property contain a clause 

requiring the transferred property to be used for airport purposes. Pub. L. No. 80-

289, sec. 2, § 13(g)(2), 61 Stat. at 678-80. The Surplus Property Act also required 

that all instruments of transfer contain reverter clauses providing that if the 

conditions in the agreement are not met, "all of the property so disposed of or any 

portion thereof, shall, at the option of the United States, revert to the United States 

in its then existing condition." Id. sec. 2, § 13(g)(2)(H), 61 Stat. at 680 (emphasis 

added). By the statute's terms, the only property that could revert to the United 

States in a Surplus Property Act instrument of transfer is "property so disposed of' 

in the instrument. Id. Indeed, the Surplus Property Act defines "property" as "any 

interest, owned by the United States or any Government agency, in real or personal 

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property, of any kind, wherever located." Surplus Property Act§ 3(d), 58 Stat. at 

767 (emphasis added). The Surplus Property Act therefore makes clear that 

reverter clauses in instruments of transfer apply only to interests of the United 

States that were being disposed of in the instrument. Here, that does not include 

title to the City's Land, which was never owned by the United States nor disposed 

of in the Instrument of Transfer. 

This also is confirmed by the FAA's Airport Compliance Manual. 

Chapter 23 of that manual, titled "Reversions of Airport Property," discusses 

reverter clauses in instruments of transfer under various federal laws, including the 

Surplus Property Act. ER107-ER108. According to the manual, when the United 

States disposes of airport property under such laws, "[t]he instrument of 

conveyance from the federal government must specifY the right to have property 

interest revert to a federal agency and title revest in the United States." ER107. 

But "[t]his right extends only to the title, right of possession, or other rights vested 

in the United States at the time the federal government transferred the property 

described in the instrument to the grantee." ER107. Under that guidance, the right 

of reverter does not extend to title to the City's Land because such title was not 

"vested in the United States" at the time of the Instrument of Transfer. 

Accordingly, the reverter clause could not have put the City on notice that the 

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United States would, decades later, claim that such title would "revert" to the 

United States should Airport operations cease. 

The district court discounted the FAA Airport Compliance Manual's 

guidance because the version of the manual included in Santa Monica's opposition 

to the motion to dismiss was published in 2009. ER11 n.5. But the FAA's Airport 

Compliance Manual has included this guidance for at least 20 years. See Airport 

Compliance Requirements, FAA Order No. 5190.6A § 8-2 (Oct. 2, 1989). In 

1947, a regulation promulgated by the FAA's predecessor similarly interpreted 

reverter clauses, requiring that instruments of conveyance "include a provision that 

the conveyance is made on the condition that the property interest conveyed shall 

automatically revert to the United States" if certain conditions in the instrument are 

not met. 14 C.F.R. § 555.11(3) (1947) (emphasis added). That the FAA 

consistently has interpreted reverter clauses as extending only to rights transferred 

in the instrument of conveyance confirms that no reasonable landowner would 

have understood the Instrument of Transfer's reverter clause to extend to the title 

to the City's Land. 

Indeed, because the reverter clause was not drafted specifically for this 

transaction, there was no reason for the City to have believed that inclusion of the 

word "title" extended the clause to the title to the City's Land. The Instrument of 

Transfer used boilerplate language that also was used for numerous other post-war 

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transfers, including transfers of property to which the United States did have title. 

ER171. Indeed, a War Assets Administration regulation provided that"[ d]eeds or 

instruments of transfer shall be in the form approved by the Attorney General." 

ER171 (War Assets Administration Regulation 16, § 8316.20). Much of the 

language of the Instrument of Transfer was dictated by the Surplus Property Act 

and the War Assets Administration Regulation. Pub. L. No. 80-289, sec. 2, 

§ 13(g)(2), 61 Stat. at 678-80; ER170-ER171 (§§ 8316.13, 8316.21). 

Moreover, the word "title" in the Instrument of Transfer was appropriate 

here, but was limited to a specific purpose. The United States transferred title of 

other property to the City, including title to certain improvements and chattel that 

no longer have useful value. ER302-ER303; ER349, ER354; see ER209 (1947 

War Assets Administration letter observing that "title to the improvements and 

facilities" would be transferred to the City). But again, the word "[t]itle" could not 

have referred to title to the City's Land which was never owned by the United 

States and thus could not have been transferred back to the City. 

In short, given the way the United States structured the Instrument of 

Transfer, the United States' reversionary interest in the City's Land was limited to 

the United States' right to take possession during the remaining period of its 

transferred leasehold interest. That protected the United States against a default by 

the City only during that limited period. That makes sense: as long as the City 

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was enjoying the remainder of the United States' leasehold term, the City was 

subject to the United States reclaiming possession if the City breached its 

obligations. But once the limited term of that transferred leasehold interest 

expired, so did the United States' reversionary interest in possession of the City's 

land. Vastly different language would have been required for the Instrument of 

Transfer to put a reasonable property owner on notice of the remarkable claim the 

United States asserts here: that it has a greater interest in the City's Land than it 

ever held-i.e., title to the City's Land or a right to possess the City's Land in 

perpetuity. It is too late for the United States to re-write the Instrument of 

Transfer. No reasonable property owner in the 1940s and 1950s would have 

understood "revert" to have the effect the United States claims here. 

2. Any ambiguity in the reverter clause precludes it from triggering the 

statute of limitations 

Even if the district court were correct that ''title" in the reverter clause could 

be read to extend to title to the City's Land, that is not the only plausible reading. 

An ambiguous contractual provision cannot provide notice sufficient to begin the 

limitations period under the Quiet Title Act. "The statute of limitations is not 

triggered ... when the United States' claim is ambiguous or vague." Shultz, 886 

F.2d at 1160. The provision on which the United States relies as purportedly 

providing notice "must be so clear that it would have been unreasonable for the 

plaintiff to believe" that the United States did not claim the interest at issue. 

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Poverty Flats Land & Cattle Co. v. United States, 706 F.2d 1078, 1079 (lOth Cir. 

1983); see Patterson, 16 F.3d at 224 ("we think that the restrictions contained in 

the 1976 deed were at best too ambiguous to place the Halls on notice of the 

government's claims" because although the United States' reading was plausible, 

the plaintiffs' reading "is more plausibl[ e ]"). To require plaintiffs to file suit to 

quiet title over claims of the United States that are at best vague or ambiguous 

would have the perverse effect of compelling plaintiffs to bring suits that would 

often tum out to be unnecessary. Michel, 65 F.3d at 132. 

Here, the reverter clause was at best ambiguous. The City's reading of the 

reverter clause as permitting reversion only of the (now-expired) leasehold interest 

and specific easements, improvements, and chattel transferred in the Instrument of 

Transfer is at least as reasonable as the district court's reading. Comedy Club, Inc. 

v. Improv W Assocs., 553 F.3d 1277, 1285 (9th Cir. 2009) ('"[i]f a contract is 

capable of two different reasonable interpretations, the contract is ambiguous"' 

(alteration in original) (quoting Oceanside 84, Ltd. v. Fidelity Fed. Bank, 56 Cal. 

App. 4th 1441, 1448 (1997))). The reverter clause therefore could not have given 

the City the requisite notice. 

3. Recordation of the Instrument of Transfer did not provide notice of 

the United States' claim to title of the City's Land 

The district court likewise erred in concluding that "the City had 

constructive notice of the United States' reversionary interest in the title to the land 

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because the Instrument of Transfer was recorded as a quitclaim deed with the 

County Recorder for the County of Los Angeles in 1948." ERlO. Recording an 

instrument as a quitclaim deed does not suggest that the instrument is concerned 

with title. Quitclaim deeds can be used to transfer interests in land less than fee 

simple, including leasehold interests. E.g., 32 C.F.R. § 644.428(k) ("quitclaim 

deed can be used to surrender leased land and convey the improvements and 

related personal property"). A quitclaim deed "transfers only such interest as the 

grantor may have at the time the conveyance is executed." 1 Melvin B. Ogden, 

Ogden's California Real Property Law§ 8.2 (1956); Hagan v. Gardner, 283 F.2d 

643, 646 (9th Cir. 1960) ("By the sale and the execution and delivery of the 

quitclaim deed to Lenz, the trustee did not and could not effect appellant's title. 

He merely transferred such interest as he had and such deed created no right, estate 

or interest in appellant."). 

To be sure, recordation of a deed can, in some circumstances, provide 

constructive notice of a claim, on the theory that "a party who neglects a duty to 

~earch a title record should be imputed with notice of anything that would have 

been discovered upon a proper search." Amoco Prod. Co. v. United States, 619 

F.2d 1383, 1388 n.3 (lOth Cir. 1980); see California v. Yuba Goldfields, Inc., 752 

F.2d 393, 396 (9th Cir. 1985). But that theory is based on the notion that what is 

recorded, if reviewed by the landowner, would provide sufficient notice. Here, as 

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explained, the Instrument of Transfer provided no notice that the United States 

claimed an interest in the title to the City's Land. Recording that insufficient 

Instrument of Transfer could not fix that problem. 

4. The reverter clause is consistent with the City's title to the Land and 

does not create a cloud on the title 

The district court additionally concluded that "even if the Instrument of 

Transfer did not provide notice that the United States claimed an interest in the title 

to the land, it certainly put the City on notice that the United States claimed a 

substantial property interest in the land sufficient to create a cloud on title." ERll. 

But the reverter clause is not inconsistent with the City's title to its Land and did 

not legally or factually create any adverse cloud on the title. 

A "clouded" title is created only when the United States claims an "adverse 

interest" to the plaintiffs claim. Leisnoi II, 267 F.3d at 1025. The mere fact that 

both the United States and the plaintiff claim some interest to the same land does 

not alone make the claims adverse because the two claims may be consistent with 

each other. For example, "when the plaintiff claims a non-possessory interest such 

as an easement, knowledge of a government claim of ownership may be entirely 

consistent with a plaintiffs claim." Michel, 65 F.3d at 132; see McFarland v. 

Norton, 425 F.3d 724, 726-27 (9th Cir. 2005). When the United States and a 

plaintiff claim potentially consistent interests in the same property, a Quiet Title 

Act cause of action accrues only "when the government, 'adversely to the interests 

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of plaintiff[], denie[s] or limit[s]"' the plaintiffs claimed interest. Michel, 65 F.3d 

at 132 (quoting Werner, 9 F.3d at 1516). 

Thus, in Shultz, where the plaintiff claimed a right of access to a public road, 

the govermnent's erection of a gate, fence, and guardhouse along the road did not 

provide notice of an adverse claim because the government had not actually 

precluded access to the roadway. 886 F.2d at 1160-61; see McFarland, 425 F.3d 

at 727-28 (same). Similarly, in Michel, where the plaintiffs claimed a right of 

access to roads and trails across a govermnent-owned refuge, the Quiet Title Act 

claim "did not accrue until the Michels knew or should have known the 

government claimed the exclusive right to deny their historic access to the trails 

and roads across the refuge." 65 F.3d at 132; see Narramore v. United States, 852 

F.2d 485, 492 (9th Cir. 1988); Kinscherffv. United States, 586 F.2d 159, 161 (lOth 

Cir. 1978) (per curiam). 

Likewise, where the United States has conveyed land to the plaintiff subject 

to easements retained by the United States, the mere fact that the United States 

claims some interest in the plaintiffs land does not necessarily accrue a claim to 

quiet title. Leisnoi!, 170 F.3d at 1191-92. The United States' retention of a 

property interest in the plaintiffs land may be entirely consistent with the 

plaintiffs title to the land. Without a "conflict in title between the United States 

and the plaintiff," there is no cause of action under the Quiet Title Act. !d. at 1192. 

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Nor does a conflict over title to one portion of land necessarily cloud the title 

to the land as a whole. For example, in Fadem v. United States, this Court held 

that the plaintiffs' dispute with the United States over the eastern section of an area 

of land demonstrated that the plaintiffs had notice of the United States' claim as to 

the eastern area. 52 F.3d 202, 204, 206 (9th Cir. 1995). But that dispute did not 

cloud the plaintiffs' title to the land as a whole. Until the United States had a 

survey conducted, "[t]here was no evidence ... to give the Fadems notice the 

Government would assert a claim to the western section." !d. at 207. 

Under these principles, the reverter clause did not cloud the title to the City's 

Land. The possibility that the leasehold interest (until it expired in 1953) and 

certain easements, improvements, and chattel (which are now no longer valuable) 

could revert to the United States was entirely consistent with the City's title. 

Under the reverter clause, if the City had ceased operating the Airport as an airport 

during the life of the United States' now-expired leases, the United States could 

have retaken possession for the then-remaining duration of the leases' terms. But 

nothing about those facts called into question the City's title to the City's Land or 

suggested the United States could take possession after expiration of its leasehold 

interest. The United States first made that claim in 2008 when the FAA asserted 

that if the City did not operate the Airport "in perpetuity" the City's Land could 

somehow "revert" to the United States. ER99. 

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Indeed, as this Court has recognized, if the statute of limitations were 

deemed to trigger before then, that would create "an undesirable result." Michel, 

65 F.3d at 132. Such a holding would mean that the City needed to sue by 1960, 

even though there was no indication that title to (or possession of) its Land was in 

jeopardy. But it "makes no sense to start limitations running because of an event 

that creates no dispute." Leisnoi II, 267 F.3d at 1025. The City should not have 

had to predict (and no reasonable landowner would have) that the United States 

would decades later make this extraordinary claim about the reverter clause. 

Michel, 65 F.3d at 132. 

5. The City's conduct after entering into the Instrument of Transfer 

does not support the district court's conclusion 

The district court also reasoned that the City must have had notice of the 

United States' claim because "the City's statements and conduct since agreeing to 

the terms of the Instrument of Transfer demonstrate the City's awareness that the 

United States had a continuing and substantial interest in the Airport Property." 

ER11. In particular, the district court pointed to the City's purported requests for 

release from the Instrument of Transfer's restrictions on the use of the City's Land 

in 1952, 1956, and 1984, as well as the City Attorney's 1962 legal opinion. ER11-

ER12 & n.6. At most, however, these documents showed that the City knew it had 

agreed to certain restrictions on the use of the Airport. Nothing in these documents 

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demonstrated that the United States claimed any reversionary interest in the title to 

the City's Land. 

Obtaining the 1952 and 1956 releases was consistent with the City's view 

that the United States had no claim to the title to the City's Land. In 1952 the 

Runway Lease and Golf Course Lease had not yet terminated by their terms-that 

occurred in 1953. ER300. Thus, if any of the conditions imposed by the 

Instrument of Transfer were breached in 1952, the United States could have 

demanded that its leasehold interest revert to the United States for their remaining 

term. Although the leases had expired by 1956, there were other property interests 

that could have reverted to the United States had the Instrument of Transfer's 

conditions been breached, including the easements, improvements, and chattel. 

The releases allowed the City to use parcels known as the George Tract and 

Runway 1 for non-airport purposes without risking reverter of those specific items 

of property enumerated in the Instrument of Transfer. There is no indication that 

the City thought the release was necessary to preclude reverter of title to the City's 

Land. Moreover, the 1956 release itself states that it was obtained not only 

because of the Instrument of Transfer but also because of similar restrictions 

contained in a separate (since-expired) grant agreement. A271. 

Nor does the 1962 Opinion of the City Attorney suggest that the City had 

notice of the United States' claim to title to the City's Land. The Opinion 

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answered the question: "Can the City, unilaterally, on motion of the City Council, 

abandon the use of the Santa Monica Municipal Airport as an airport?" ER173. 

The Opinion quoted extensively both from the Instrument of Transfer and from 

then-in-force grant agreements. ER176-ER182. The City Attorney concluded that 

under those agreements, the City could not unilaterally close the Airport. ER176-

ER182. The Opinion did not, however, consider whether, under the Instrument of 

Transfer alone, title to the City's Land could "revert" to the United States if the 

City ceased operating the Airport as an airport. At most, the Opinion shows that 

the City knew it had obligations under multiple agreements; it does not show that 

the City had notice of a claimed interest in title to the City's Land. 

The 1984 Settlement Agreement's "Consent to Use of Land" also was 

consistent with the view that the United States had no claim to the title to the 

City's Land. The 1984 Settlement Agreement "release[d] the City and this 

parkland and residual land from any and all conditions, covenants, and restrictions 

imposed by the Instrument of Transfer" and approved "the use of land designated 

as parkland and residual land" in the Airport Layout Plan "for other than airport 

and aviation purposes." ER371. Nothing in the 1984 Settlement Agreement 

indicates that the City believed title to the City's Land could revert. 

Accordingly, for all these reasons, the district court legally erred in 

interpreting the Instrument of Transfer as providing notice of the United States' 

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claim to the title to the City's Land. To the extent the district court's decision 

rested on factual findings, those findings were clearly erroneous for all the same 

reasons and should be set aside. 

B. Even If The 1948 Instrument Of Transfer Notified The City Of The 

United States' Claim, The United States Later Disclaimed Its Interest, 

And The Limitations Period Began Anew In 2008 

Even if the district court were correct (and it is not) that the Instrument of 

Transfer gave the City notice of the United States' claim and triggered the statute 

of limitations in 1948, the United States later abandoned that claim. The statute of 

limitations started anew when the United States in 2008 reasserted an interest in 

the title to the City's Land. 

"The statute of limitations provision in the Quiet Title Act cannot reasonably 

be read to imply that if the government has once asserted a claim to property, 

twelve years later any quiet title action is forever barred." Shultz, 886 F.2d at 

1161. "If the government has apparently abandoned any claim it once asserted, 

and then it reasserts a claim, the later assertion is a new claim and the statute of 

limitations for an action based on that claim accrues when it is asserted." Id.; see 

Michel, 65 F.3d at 133. As the district court recognized, the '"key inquiry' is 

whether the United States' actions would give the City 'reason to believe the 

government did not continue to claim an interest."' ER12 (quoting Kingman Reef 

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Atoll Invs., LLC v. United States, 541 F.3d 1189, 1200 (9th Cir. 2008)); see Shultz, 

886 F.2d at 1161 (same). 

For example, in Michel, the plaintiffs claimed a right to access roads and 

trails in a national wildlife refuge to access their property. 65 F.3d at 131. Over 

several decades, the government disputed the plaintiffs' right of access, and the 

plaintiffs negotiated with the government, reaching several agreements. Id. The 

plaintiffs finally sued to quiet title in 1992. Id. The district court concluded that 

the plaintiffs had notice of the government's claim of an exclusive right to control 

access to the roads as early as 1960, and thus dismissed the action as time barred. 

Id. at 132. 

This Court reversed. The government had recognized in a 1970 letter that 

the plaintiffs had a "historic right of access." Id. at 133. This Court observed that 

the "government's acknowledgement of the Michels' 'historic right of access' 

appears to abandon any previously asserted claim of exclusive control of that 

right." Id. Although there were renewed disputes after 1970, the parties reached 

another agreement in 1984 that "expressly incorporat[ed] the 1970 letter 

recognizing the Michels' 'historic right of access."' Id. This Court held that "the 

1984 agreement could be construed as an abandonment of the government's claim 

that it had the exclusive right to control access." I d. 

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Here, as in Shultz and Michel, the United States' actions after the 1948 

Instrument of Transfer gave the City ample "reason to believe the government did 

not continue to claim an interest." Shultz, 886 F.2d at 1161. In the 1984 

Settlement Agreement, the United States abandoned any claim to the City's Land 

that the Instrument of Transfer may have given it. ER303. The Settlement 

Agreement provided a new, comprehensive framework for the operation of the 

Airport going forward. ER369. The Agreement expressly "resolve[ d) all existing 

legal disputes among the parties." ER369. It further "release[ d) the City and this 

parkland and residual land from any and all conditions, covenants, and restrictions 

imposed by the Instrument of Transfer." ER371 (emphasis added). The 1984 

Settlement Agreement also provided that "[a]ll prior agreements between the 

parties concerning the Airport, and all actions of the parties during the duration of 

this Agreement, shall be interpreted consistently with this Agreement." ER369. 

The Agreement paired the release of the City from its obligations under the 

Instrument of Transfer with a new 30-year obligation to operate the redesigned 

Airport, but only until July 1, 2015. ER371-ER373. After entering into the 1984 

Settlement Agreement, the City reasonably believed that it could close the Airport 

when the Settlement Agreement expires in 2015. 

The FAA confirmed the City's understanding in the 1998 Director's 

Determination. The Director explicitly stated that the 1984 "Settlement Agreement 

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makes clear that the City is obligated to operate the Airport only for the duration of 

the [1984] Agreement (through July 1, 2015)." ER294. To the extent others "seek 

to prevent the future closure of the Airport or require the City to operate the 

Airport beyond July 1, 2015, that is a local land use matter." ER294-ER295 

(emphasis added). 

Even before the 1984 Settlement Agreement, the FAA acknowledged in 

1971 that the City could use the City's Land for non-airport purposes. ER47. The 

only recourse that the FAA identified if the City "should move to close the airport" 

would be to "declare the City in default of its obligation of its Grant Agreements" 

and to bring "suits for damages" to force "repayment for airport improvement 

funds expended." ER47-ER48. The City could reasonably believe based on this 

language that the United States in 1971 no longer claimed (to the extent it ever 

had) any reversionary interest in the City's Land. 

Under Shultz and Michel, these documents stopped the running of the 12-

year limitations period. Each of these documents led the City "reasonably to 

believe that the government did not continue to claim an interest" in the City's 

Land. Shultz, 886 F.2d at 1161. After the United States explicitly released the 

City from the Instrument of Transfer and expressly represented that the City could 

close the Airport, there was no reason for the City to try to quiet title to the City's 

Land. Indeed, there would not have been any basis for the City to bring a Quiet 

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Title Act claim, as there was no "dispute" over the City's Land that needed to be 

settled. Leisnoi I, 170 F .3d at 1193 (no Quiet Title Act jurisdiction where ''there 

was no colorable conflict between an interest of the United States and an interest 

of' the plaintiff). The United States' assertion in 2008 thus was a "new claim," 

and the statute of limitations for an action based on that claim began running in 

2008. Shultz, 886 F.2d at 1161. The City brought suit well within the 12-year 

statute of limitations. 

Citing Kingman Reef, the district court concluded that the United States did 

not "'clearly and unequivocally abandon[] its interest, as evidenced by 

documentation from a government official with authority to make such decisions 

on behalf of the United States."' ER12 (quoting Kingman Reef, 541 F.3d at 1201) 

(internal quotation marks omitted). That was incorrect, and Kingman Reef is 

nothing like this case. 

In Kingman Reef, this Court held that informal statements by low-level 

employees could not abandon a claim made in a Presidential Executive Order. 541 

F.3d at 1200. There, the President had issued an Executive Order declaring certain 

property under the control of the Navy. Id at 1192-93. But due to "confusion and 

mistake," certain government employees informally acknowledged that the 

plaintiffs owned the property. Id at 1201. The plaintiffs argued that this 

constituted abandonment of the United States' claim. This Court disagreed, 

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concluding that "where the United States's claim of interest in property stems from 

formal actions of the legislative or executive branch, a person could not reasonably 

conclude that informal remarks of agency personnel or internal agency memoranda 

could eliminate the cloud upon the property's title." Id. at 1200. 

That is a far cry from the facts here, which involve senior agency officials 

taking agency actions in clear and unequivocal terms. The 1984 Settlement 

Agreement was an official agreement between the FAA and the City, providing a 

comprehensive framework for the operation of the Airport, resolving all prior 

disputes, and unequivocally releasing the City from its obligations under the 

Instrument of Transfer and imposing new obligations that last only until July 2015. 

ER371-ER373. The 1998 Director's Determination was an official decision 

resolving administrative proceedings within the FAA involving a dispute over the 

City's refusal to offer leases to Airport tenants beyond 2015. ER294. Similarly, 

the 1971 letter recognizing the City's ownership of the City's Land was an FAA 

Director's written response to users of the Airport (ER47-ER48), not an informal 

act by relatively low-level employees lacking authority to bind the agency as in 

Kingman Reef 

The district court also concluded that the 1984 Settlement Agreement did not 

constitute "clear and unequivocal abandonment" because it purportedly did not 

address ''whether the City is obligated to operate SMO as an airport after July 1, 

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2015 or whether title would revert to the United States if the City ceases to operate 

SMO as an airport after July 1, 2015." ER13. But that is not so. The 1984 

Settlement Agreement expressly "resolve[d] all existing legal disputes among the 

parties" and "release[d] the City ... from any and all conditions, covenants, and 

restrictions imposed by the Instrument of Transfer." ER369, ER371. There are 

now no obligations under the Instrument of Transfer that can be breached, and 

therefore the reverter clause can have no effect. 

The district court additionally believed that the 1998 Director's 

Determination did not "constitute a clear and unequivocal abandonment" because 

the FAA "did not consider the 1948 Instrument of Transfer in the Director's 

Determination or the Final Decision and Order, as the Instrument of Transfer was 

not part of the administrative record." ER13. But the Director's Determination 

was interpreting the 1984 Settlement Agreement (ER13), and the Settlement 

Agreement released the City from its obligations under the Instrument of Transfer. 

ER371. That is enough to constitute abandonment. Michel, 65 F.3d at 133 ("By 

expressly incorporating the 1970 letter recognizing the Michels' 'historic right of 

access,' the 1984 agreement could be construed as an abandonment of the 

government's claim that it had the exclusive right to control access."). 

In short, the FAA's actions after the Instrument of Transfer disclaimed any 

interest in the title to (or possession of) the City's Land. The United States 

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reasserted its claim in 2008, giving rise to a new Quiet Title Act cause of action. 

Because the City sued five years later, its suit is not time barred. 

C. The City's Quiet Title Act Claim Should Not Have Been Dismissed 

Because Whether That Claim Is Time Barred Depends On Resolution 

Of Factual Issues Going To The Merits 

At the very least, it was reversible error for the district court to dismiss the 

City's Quiet Title Act claim because the statute-of-limitations issue is inextricably 

intertwined with the merits. 

To the extent factual determinations were required to decide the motion to 

dismiss under Rule 12(b )(1 ), the district court was required to defer deciding the 

factual questions until it considered the merits of the City's claim. Augustine v. 

United States, 704 F.2d 1074, 1077 (9th Cir. 1983). "[W]here the jurisdictional 

issue and substantive issues are so intertwined that the question of jurisdiction is 

dependent on the resolution of factual issues going to the merits, the jurisdictional 

determination should await a determination of the relevant facts on either a motion 

going to the merits or at trial." Id.; see Sun Valley Gasoline, Inc. v. Ernst Enters., 

Inc., 711 F.2d 138, 139 (9th Cir. 1983); SB Charles Alan Wright et al., Federal 

Practice & Procedure § 1350 (3d ed. 2012). "In such cases it is both proper and 

necessary for the trial court first to resolve the merits of the claim to the extent 

necessary to allow the court tc properly determine its own jurisdiction." 

Augustine, 704 F.2d at 1079. The grant of a Rule 12(b)(1) motion before trial on 

56 
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the merits is permissible only if the moving party is also entitled to "a grant of 

summary judgment on the merits." Id. 

The jurisdictional statute-of-limitations question here is closely intertwined 

with the merits of the City's Quiet Title Act cause of action. Among the 

contentions that the City will make on the merits is that the Instrument of Transfer 

cannot cause title to the City's Land to revert to the United States because the 

United States never transferred such title to the City. That is the same contention 

that the City makes to show that the reverter clause did not give the City notice of 

the United States' claim to title to the City's Land. See supra Argument Part A.l. 

Both the merits question and the statute-of-limitations question involve interpreting 

the reverter clause. 

Another merits contention is that the Instrument of Transfer cannot cause 

title to the City's Land to revert because the 1984 Settlement Agreement resolved 

all prior disputes and released the City from any remaining obligations under the 

Instrument of Transfer to operate the Airport after July 1, 2015. ER303. Because 

of that release, no property can revert as the result of any breach of the Instrument 

of Transfer's now-terminated obligations. The City makes that same contention 

for statute-of-limitations purposes to show that the United States abandoned any 

interest it may have had in the title to the City's Land. See 'Supra Argument Part B . 

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Both the merits question and the statute-of-limitations question involve interpreting 

the 1984 Settlement Agreement. 

The district court nevertheless concluded that "the statute of limitations issue 

is not inextricably intertwined with the ultimate merits of the Quiet Title Act claim 

because ' [ t ]he crucial issue in the statute of limitations inquiry is whether the 

plaintiff had notice of the federal claim, not whether the claim itself is valid."' 

ER13-ER14 (quoting Kingman Reef, 541 F.3d at 1196-97). But that is true of 

every statute-of-limitations issue. Yet this Court has instructed that when the 

notice and merits questions are intertwined, dismissal without resolving the merits 

question is reversible error. Augustine, 704 F.2d at 1079. Here, the factual 

disputes concerning whether the City had notice of the United States' claim "go to 

the heart of' the merits of the City's Quiet Title Act claim. Id. at 1078. It was 

therefore erroneous for the district court to dismiss on jurisdictional grounds 

without first "resolv[ing] the merits of' the City's Quiet Title Act claim "to the 

extent necessary to allow the court to properly determine its own jurisdiction." !d. 

at 1079. The district court should have waited to resolve the jurisdictional issues 

after considering the merits either at trial or at summary judgment. Id. 

CONCLUSION 

The order dismissing the City's Quiet Title Act claim should be reversed, 

and the case remanded for consideration of the merits of that claim. 

58 
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MARSHA JONES MOUTRIE 

City Attorney 

JOSEPH LAWRENCE 

Assistant City Attorney 

LANCE 8. GAMS 

IVAN CAMPBELL 

Deputy City Attorneys 

1685 Main Street, Room 310 

Santa Monica, California 9040 1 

Telephone: 310.458.8336 

OCTOBER 14,2014 

Respectfully submitted, 

s/ Deanne E. Maynard 

DEANNE E. MAYNARD 

MARc A. HEARRON 

JESSICA E. PALMER 

MORRISON & FOERSTER LLP 

2000 Pennsylvania Ave., N.W. 

Washington, D.C. 20006-1888 

Telephone: 202.778.1663 

DON G. RUSHING 

JAMES W. HUSTON 

WILLIAMV. O'CONNOR, JR. 

JOANNAL. SIMON 

MORRISON & FOERSTER LLP 

12531 High Bluff Drive, Suite 100 

San Diego, California 92130 

Telephone: 858.720.5100 

Counsel for Plaintiff-Appellant 

City of Santa Monica 

59 
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STATEMENT OF RELATED CASES PURSUANT TO 

CIRCUIT RULE 28-2.6 

Counsel for plaintiff-appellant is unaware of any related cases pending in 

this Court. 
Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 67 of 68 

CERTIFICATE OF SERVICE 

I hereby certify that I electronically filed the foregoing with the Clerk of the 

Court for the United States Court of Appeals for the Ninth Circuit by using the 

appellate CMIECF system on October 14, 2014. 

I certify that all participants in the case are registered CMIECF users and 

that service will be accomplished by the appellate CMIECF system. 

Dated: October 14, 2014 s/ Deanne E. Maynard 
Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 68 of 68 

CERTIFICATE OF COMPLIANCE WITH RULE 32(a) 

This brief complies with the type-volume limitation of Rule 32(a)(7)(B) of 

the Federal Rules of Appellate Procedure because it is 13,980 words, excluding the 

parts of the brief exempted by Rule 32(a)(7)(B)(iii). 

This brief complies with the typeface requirements of Rule 32(a)(5) of the 

Federal Rules of Appellate Procedure and the type-style requirements of Rule 

32(a)(6) of the Federal Rules of Appellate Procedure because this brief has been 

prepared in a proportionally spaced typeface using Microsoft® Office Word 2010 

in 14-point Times New Roman font. 

Dated: October 14, 2014 sf Deanne E. Maynard 

dc-769685 
EXHIBITD 
) 

FAA Docket No.16-14-04 

UNITED STATES DEPARTMENT OF TRANSPORTATION 

FEDERAL AVIATION ADMINISTRATION 

ASSOCIATE ADMINSTRATOR FOR AIRPORTS 

NATIONAL BUSINESS AIRCRAFT ASSOCIATION, KRUEGER AVIATION, INC., HARRISON FORD, JUSTICE 

AVIATION, KIM DAVIDSON AVIATION, INC., AERO FILM, YOUR! BUJKO, JAMES ROSS, PARAMOUNT 

CITRUS LLC, AND AIRCRAFT OWNERS AND PILOTS ASSOCIATION, 

Complainants, 

v. 

CITY OF SANTA MONICA, 

Respondent. 

Appeal from the Director's Determination 

Issued by Director Byron K. Huffman, Dated December 4, 2015 

~ 

BRIEF FOR RESPONDENT CITY OF SANTA MONICA ON APPEAL FROM THE 

DIRECTOR'S DETERMINATION 

MARSHA JONES MOUTRIE 

JOSEPH LAWRENCE 

LANCE S. GAMS 

IV AN CAMPBELL 

SANTA MONICA CITY ATTORNEY'S 

OFFICE 

1685 Main Street, Room 310 

Santa Monica, CA 90401 

Telephone: (310) 458-8336 

G. BRIAN BUSEY 

PAUL VARNADO* 

JAMES SIGEL* 

MORRISON & FOERSTER LLP 

2000 Pennsylvania Avenue, NW 

Washington, DC 20006 

Telephone: (202) 887-1500 

ZANE 0. GRESHAM 

MORRISON & FOERSTER LLP 

4 25 Market Street 

San Francisco, CA 94105 

Telephone: (415) 268-7000 

Counsel for Respondent City of Santa Monica 

\ 
TABLE OF CONTENTS 

INTRODUCTORY STATEMENT ................................................................................................ I 

JURISDICTIONAL STATEMENT ............................................................................................... 3 

PARTIES ........................................................................................................................................ 3 

ISSUES RAISED ON APPEAL ..................................................................................................... 4 

FACTUAL AND PROCEDURAL BACKGROUND .................................................................... 4 

A. Factual Background ................................................................................................ 4 

B. Procedural Background ........................................................................................... 8 

ARGUMENT ................................................................................................................................ 10 

I. The Director's Determination that the 2003 Grant Amendment Extended the 

City's Grant Obligations to 2023 is Contrary to Law, Precedent, and Policy and is 

Arbitrary and Capricious and an Abuse of Discretion ...................................................... 10 

A. The Plain Language Of The Agreements Makes Clear That The City's 

Grant Obligations Expired In 2014 ..................................................................... 100 

B. In Rejecting The Plain Meaning Of This Contractual Language, The 

Director's Determination Relied On An Erroneous Understanding Of The 

Consideration Requirement .................................................................................. 14 

C. The Director's Determination Further Relied On The Erroneous 

Conclusion That Contractual Ambiguity Need Not Be Resolved Against 

The Agency, But That The Agency Is Instead Free To Resolve Any 

Ambiguity In Its Favor. ......................................................................................... 17 

1. The contractual language must be construed against the FAA, 

which drafted the agreements ................................................................. 177 

2. The Director erred in concluding that this maxim was inapplicable, 

and that the FAA should instead receive deference in interpreting 

these agreements ....................................................................................... 19 

3. The City's understanding that Amendment No.2 did not extend its 

grant assurance obligations was reasonable ............................................ 211 

ii 
D. The Director's Determination Was Premised On Its View That A Grant 

Modification May Be "Akin To A New Grant," An Arbitrary 

Classification Wholly Unsupported By The Relevant Statutes And 

Regulatory Guidance ............................................................................................ 23 

E. The Director's Newfound Rule That Certain Amendments To Grant 

Offers Will Again Trigger The Grant Assurances Is Ambiguous And 

Procedurally Improper .......................................................................................... 26 

II. The Director's Determination That Any Claim Regarding The City's Grant 

Obligations Was Properly Before It Was Contrary to Law, Precedent and Policy .......... 29 

A. Complainants Have Not Been "Directly And Substantially Affected By 

Any Alleged Noncompliance" And Thus Lack Standing ..................................... 29 

B. Complainants Failed To State A Claim Under Part 16, And Thus Have 

Failed To Establish Any Basis For The Director's Jurisdiction ........................... 31 

C. Complainants Failed To Satisfy The Pre-Complaint Resolution 

Requirement .......................................................................................................... 32 

CONCLUSION ............................................................................................................................. 33 

111 
INTRODUCTORY STATEMENT 

In 1994, the City of Santa Monica ("City") entered into a Grant Agreement with the 

Federal Aviation Administration ("FAA"), accepting funds to improve the Santa Monica Airport. 

At that time, the City agreed to satisfy certain grant assurances. By the plain terms of the Grant 

Agreement, these assurances would expire no later than June 2014, twenty years after the City's 

acceptance of the FAA's grant offer. 

Subsequently, in 2003, the City and the FAA executed an amendment to the 1994 Grant 

Agreement, reimbursing the City for certain unanticipated costs incurred in completing the 

project funded by the grant. This 2003 amendment expressly provided that, aside from the grant 

amount, "[a]ll other terms and conditions of the Grant Agreement remain in full force and 

effect." The City therefore understood that the 2014 expiration of the grant obligations remained 

unchanged. 

But in the underlying Director's Determination, the Director rejected this straightforward 

interpretation of these plain and unambiguous contractual terms and agreements. The Director 

instead declared that, whatever its terms might suggest, the 2003 amendment was no mere 

modification of the 1994 Grant Agreement, but was "akin to a new grant." The Director held 

that the Amendment silently (and, indeed, contrary to its express disclaimer) extended the date 

on which the City's grant assurance obligations would expire from 2014 to 2023. This 

conclusion is contrary to law, and it produces absurd and arbitrary results. 

Indeed, the Director's interpretation of the 2003 amendment is premised on a number of 

legal errors. The Director incorrectly presumed that the City was required to provide some sort 

of additional and previously undisclosed consideration in exchange for the FAA's increase in its 

grant obligation. The Director then failed to recognize that even if consideration were required, 

it was provided, and did not take the form of the City extending its grant assurances for an 

1 
additional mne years. The Director also rejected the standard principle that ambiguous 

contractual provisions must be construed against the drafter, here the FAA, and instead 

erroneously declared that the agency's own interpretation even of ordinary contractual terms is 

entitled to deference. In so doing, the Director ignored precedent establishing that a municipality 

or state must be clearly advised of the conditions imposed on federal funding so that it can give 

"informed consent" to such conditions-something that did not occur in this case. Furthermore, 

the Director contorted what was plainly an amendment to an existing grant into what it deemed 

something "akin to a new grant"-a concept that has no basis in law, let alone the FAA's own 

regulations or written guidance as to what constitutes a new grant. And the Director announced 

an arbitrary new rule that certain modifications to grant agreements will trigger the application of 

grant assurances even though no such abrupt change in policy had been adopted through the 

notice-and-comment procedure mandated by statute. Any one of these errors is alone sufficient 

to justify reversal; all together, they compel it. 

And that is not all. The Director also erred in concluding that question of the scope of the 

City's grant assurance obligations was properly before it in the first place. Even assuming that 

these grant assurances are still in effect, the City has taken no action that might violate them. 

The Complainants here seek an advisory opinion regarding what the City's obligations might be. 

They have failed to identifY any imminent harm they will suffer that might give them standing to 

request relief. Nor have they identified any violation of statute or grant assurance as required by 

the applicable Part 16 regulations-thus causing the Director to issue a purely advisory opinion. 

Moreover, the Complainants failed even to fulfill their obligation to seek informal resolution 

before bringing this complaint. For all of these reasons as well, the Director's Determination 

must be reversed. 

2 
JURISDICTIONAL STATEMENT 

This appeal arises from the Director's Determination resolving the Part 16 complaint 

filed by the Complainants. Authority to entertain this appeal vests with the Associate 

Administrator for Airports pursuant to 14 C.F.R. §16.33(b). Pursuant to 14 C.F.R. § 16.31, 

16.109(a), (b), and 16.201(a), on December 23, 2015, the City filed a request for a hearing to 

address factual and legal issues raised by the Director's Determination. The FAA has not yet 

acted on that request. 

PARTIES 

Respondent City of Santa Monica owns and operates the Santa Monica Airport, a general 

aviation public use airport located in a residential neighborhood within the City. 

The Complainants consist of various airport tenants, individuals who use the airport, and 

organizations of such users. The National Business Aviation Association, Inc. is a District of 

Columbia corporation that represents companies operating aircraft. Krueger Aviation, Inc., is a 

California corporation and a tenant of the airport. Harrison Ford is an actor, businessman, and a 

tenant of the airport. Justice Aviation is a California corporation and a tenant of the airport. Kim 

Davidson Aviation is a California corporation and a tenant of the airport. Aero Film is a 

California limited liability company and a tenant of the airport. Y ouro Bujko is the owner and 

pilot of two aircraft and a tenant of the airport. James Ross is a recreational flyer and a tenant of 

the airport. Paramount Citrus LLC is a California limited liability corporation and uses the 

airport in its business operations. The Aircraft Owners and Pilots Association, Inc., is a New 

Jersey non-profit corporation that represents its pilot members. 

3 
ISSUES RAISED ON APPEAL 

1. Whether, by entering into a 2003 Amendment that increased the funds provided 

pursuant to a 1994 grant agreement, the City agreed to extend the expiration date of its grant 

assurance obligations from 2014 to 2023. 

2. Whether the Complainants have demonstrated that they were "directly and 

substantially affected," 14 C.F.R § 16.23(a), by the speculative possibility that the City might in 

the future violate its grant assurances. 

3. Whether, given the Complaints' failure to allege the violation of any specific 

statute or grant assurance as required by 14 C.P.R.§ 16.23(b)(l), the Director issued an advisory 

opinion outside the jurisdiction conferred by Part 16. 

4. Whether the Complainants satisfied their duty to engage in good faith efforts to 

resolve their complaint. 

FACTUAL AND PROCEDURAL BACKGROUND 

A. Factual Background 

The City purchased the land on which the airport sits between 1926 and 1941. At that 

time, land surrounding the airport was largely rural. The airport went on to become the home 

and manufacturing center for Douglas Aircraft. During the ensuing decades, the adjacent land in 

the cities of Santa Monica and Los Angeles was transformed. What was once farm land became 

home to thousands of Douglas workers who lived in the nearby residential neighborhoods that 

developed during this period, which lie adjacent to the airport's runway. 

In 1941, the City leased the airport to the United States in order to aid in the war effort. 

Together with the City, the federal government expanded and reconfigured the airport. In 1948, 

with the war over, the federal government officially surrendered its leasehold interest to the City. 

4 
The City has continued to operate the airport since that date. It has, however, been 

unable to do so without serious adverse consequences for residents of the densely populated 

surrounding neighborhood, who are subject to the airport's noise, pollution and safety hazards. 

The City has undertaken a number of efforts to alleviate these effects, including imposing noise 

limits, curfews, and banning certain types of aircraft. 

The City's attempts to ameliorate the effects of airport operations on local residents have 

generated substantial litigation. In 1984, the FAA and the City entered into a Settlement 

Agreement that resolved "all existing legal disputes among the parties." [Part 16 Complaint 

Ex. 5 at 5-6]. Pursuant to the Agreement, the City was required to "operate and maintain the 

Airport as a viable functioning facility ... until July 1, 2015." [Part 16 Complaint Ex. 5 at 9]. 

The Agreement further provided that "any future grant agreements between the City and the 

FAA which are designed to implement the programs covered by this Agreement, defined as 

those agreements for the federal funding of programs or improvements intended to further this 

agreement executed prior to July 1, 1995, shall be consistent with this agreement and shall not 

extend or alter the obligation of the City to operate Airport under this Agreement, except as may 

be required by federal statute." [Part 16 Complaint Ex. 5 at 8-9]. 

On June 29, 1994, the City accepted an FAA Airport Improvement Program grant to fund 

certain airport enhancements including construction of certain blast walls. This grant was for 

Project Number 3-06-0239-06, conferred by Contract Number DTFA08-94-C-20857. The Grant 

Agreement described the work to be conducted with the grant funds, and calculated the federal 

goverrnnent's maximum obligation to be $1,604,700. [Santa Monica Answer Ex. A at 2]. The 

Agreement provided, however, that the "[flinal determination of the United States share [of the 

project] will be based upon the final audit of the total amount of the allowable project costs and 

5 
settlement will be made for any upward or downward adjustments to the Federal share of costs." 

[Santa Monica Answer Ex. A at 2]. The Agreement further "incorporated" the "Assurances" 

attached to the contract, making them "a part" of the agreement. [Santa Monica Answer Ex. A at 

15]. One such provision, Assurance (B)(1), set forth a 20-year limit on any City obligations. It 

provided: 

The terms, conditions and assurances of the grant agreement shall 

remain in full force and effect throughout the useful life of the 

facilities developed or equipment acquired for an airport 

development or noise compatibility program project, or throughout 

the useful life of the project items installed within a facility under a 

noise compatibility program project, but in any event not to exceed 

(20) years from the date of the acceptance of a grant offer of 

Federal funds for the project. 

[Santa Monica Answer Ex. A at 15 (emphasis added)]. 

When the City accepted this grant offer, it thus understood that any obligations entailed 

with its acceptance would expire in twenty years at most. This 2014 expiration date was critical 

to the City. So long as the grant obligations did not extend beyond that time, the City would not 

find itself forced to operate the airport beyond the July I, 2015 date set forth in the 1984 

Settlement Agreement. 

The City and the FAA amended the 1994 Grant Agreement on two separate occasions. 

First, in 1999, the City and the FAA executed "Amendment No.1," which modified the 

description of the "airport development" instituted under the 1994 Grant Agreement. [Santa 

Monica Answer Ex. B at 1]. This amendment used the same contract and project numbers (3-06-

0239-06 and DTFA08-94-C-20857, respectively) as the original grant. [Santa Monica Answer 

Ex. Bat 1]. 

Subsequently, in 2003, the City and the FAA executed "Amendment No.2" to the 1994 

Grant Agreement. This amendment increased the grant amount by $240,600. [Santa Monica 

6 
Answer Ex. B at 3]. That sum reflected the FAA's reimbursement to the City of certain cost 

overruns it had experienced in completing the project covered by the Grant Agreement. It was 

also just below 15% of the original grant amount-the cap that Congress has prescribed for 

amendments to existing grants. See 49 U.S.C. § 47108(b)(3)(A). No substantive changes were 

made to the grant or the projects it covered. Like Amendment No. 1, Amendment No.2 used the 

same contract and project numbers as the original grant. Amendment No. 2 also recognized that 

the City had "accepted" the "Grant Agreement" on June 29, 1994. And Amendment No. 2 

specifically provided that "[a]ll other terms and conditions of the Grant Agreement remain in full 

force and effect." [Santa Monica Answer Ex. Bat 3]. As one of the "terms and conditions" of 

the 1994 Grant Agreement had been the 2014 expiration of any grant assurance obligations, the 

2003 Amendment thus expressly preserved this 2014 sunset provision. 

The City signed Amendment No. 2 with exactly that understanding, as the declaration of 

Susan McCarthy, the former Santa Monica City Manager, confirms. McCarthy, who executed 

Amendment No. 2, explains that it was the City's policy "to take all precautions to preserve the 

City Council's flexibility to make operational changes at the Airport once the 1984 Agreement 

expired." [McCarthy Declaration 'l/6]. She further states that she has no recollection "that the 

FAA ever communicated to City Staff its current position on the implications of the 2003 

Amendment," and that she "did not understand that the grant assurances accepted in the 1994 

grant agreement were being extended nine years." [McCarthy Declaration 'l!'l/6, 8]. 

In the years since, the airport has remained controversial. The City has not, however, 

made any definitive plans to close the airport. The City has conducted a "Visioning Process," 

pursuant to which it issued a report identifying ways in which the airport's impacts might be 

mitigated. It has also initiated a federal lawsuit against the FAA seeking to clarify its rights to 

7 
control portions of the land on which the airport sits. In addition, the City Council directed staff 

to explore the possible closure of the airport, but it has publicly and expressly confirmed that it 

was not yet making any final decisions regarding closure. At this time, the City continues to 

evaluate its options for the future of the airport. 

B. Procedural Background 

The Complainants initiated the instant proceeding by filing a Part 16 formal complaint 

alleging that, were the City to close the airport prior to 2023, it would violate its grant assurances 

and 49 U.S.C. § 47107(a). The City filed a motion to dismiss, observing that the complaint 

suffered from a number of procedural deficiencies: the Complainants could not possibly have 

been "directly and substantially affected by any alleged noncompliance" that had not, and might 

not ever, occur, and therefore they did not possess the standing required by 14 C.F.R. § 16.23(a); 

the Complainants had failed to identify a violation of any statute or grant assurance, as required 

by 14 C.F.R. § 16.23(b)(l); the complaint sought an advisory opinion as to possible future 

conduct, and was therefore outside the FAA's Part 16 jurisdiction; and the complaint was filed 

without the good-faith efforts toward informal resolution required by 14 C.F.R. § 16.21. In its 

answer, the City reiterated these jurisdictional and procedural defects. It also noted that 

Complainants' contentions failed on the merits, as the plain language of both the Grant 

Agreement and Amendment No. 2 precluded any argument that the City's grant obligations 

extended beyond 2014. 

The Director brushed aside all of these barriers to Complainants' requested relief, 

declaring that the City "remains obligated by the grant assurances until August 27, 2023." 

[Director's Determination at 19]. Beginning with the jurisdictional and procedural issues, the 

Director first asserted that, although the "Complaint is not clear in terms of the specific Act 

violated," and although the City continued to operate the airport in compliance with whatever 

8 
obligations it might have, certain statements made by City officials might be understood as a 

repudiation of those obligations. [Director's Determination at 8]. As for how the Complainants 

were "directly and substantially affected by any alleged noncompliance" resulting from the 

City's so-called repudiation, the Director declared that they were harmed by the mere 

"uncertainty involving the grants." [Director's Determination at 10 (emphasis added)]. 

Defending its jurisdiction to issue such a wholly advisory opinion, the Director stated that "[a]ll 

potential grant assurance violations are within the scope of FAA Ourisdiction] to review and 

address"-even though, again, the City continues to operate the airport in accordance with 

whatever grant assurances might be applicable. [Director's Determination at 10]. And, the 

Director concluded, because the City's "position on the expiration date" of its grant obligations 

was "longstanding and fixed," the Complainants' obligation to engage in good faith efforts to 

resolve the dispute was satisfied notwithstanding their failure to send anything more than a 

perfunctory letter to the City prior to filing their complaint. [Director's Determination at 11]. 

Turning to the merits of the complaint, the Director concluded that the City had extended 

its grant obligations by an additional 9 years simply by receiving a modest increase of $240,600 

in funding provided by Amendment No.2 to the 1994 Grant Agreement. Apparently believing 

that principles of contract law required the City to provide separate and additional consideration 

to support this modification to the prior agreement, the Director reasoned that, absent the 

extension of the grant assurances, the City would have provided "no new consideration to 

support the additional funds provided." [Director's Determination at 16]. Rejecting the City's 

asseJtion that there was "nothing to indicate that [Amendment No. 2] would have the effect of 

extending the expiration date ofthese assurances," the Director declared that the amendment was 

"in essence the award of a new grant" that itself triggered application of the grant assurances. 

9 
[Director's Determination at 16-17]. Significantly, the Director did not determine that the 

amendment was actually a new grant--<mly that it was "akin to a new grant." [Director's 

Determination at 16]. The Director cited nothing in the statutes governing federal airport grants, 

FAA regulations, or in the grant assurances themselves to support this "akin to a new grant" 

assertion. Nevertheless, the Director concluded that the City "knew or should have known that 

acceptance of these new funds would restart the date that these assurances would apply." 

[Director's Determination at 18]. The Director also rejected the City's invocation of the ordinary 

rule of contractual interpretation that any ambiguity should be construed against the drafterhere, the FAA. The Director reasoned that federal grants may be "partly a creature of statute," 

and that therefore the FAA is "entitled to deference in interpreting the grant assurance 

obligations." [Director's Determination at 18]. The Director failed to acknowledge that none of 

the contractual language at issue here is, in fact, embodied in any statute. 

ARGUMENT 

Neither the Director's conclusion that Amendment No.2 imposed new grant assurances 

on the City, nor its conclusion that this question was properly before it in the first place, was 

supported or supportable. The Determination is contrary to law, precedent, and policy, and will 

produce arbitrary results. It must be reversed. 

I. THE DIRECTOR'S DETERMINATION THAT THE 2003 GRANT 

AMENDMENT EXTENDED THE CITY'S GRANT OBLIGATIONS TO 2023 IS 

CONTRARY TO LAW, PRECEDENT, AND POLICY AND IS ARBITRARY AND 

CAPRICIOUS AND AN ABUSE OF DISCRETION 

A. The Plain Language Of The Agreements Makes Clear That The City's Grant 

Obligations Expired In 2014 

This proceeding should begin and end with the plain language of the agreements the City 

signed with the FAA. Under "ordinary principles of contract law, ... '[w]here the words of a 

contract in writing are clear and unambiguous, its meaning is to be ascertained in accordance 

10 
with its plainly expressed intent."' M&G Polymers USA, LLC v. Tackett, 135 S. Ct. 926, 933 

(2015) (quoting II R. Lord, Williston on Contracts § 30:6, p. 108 (4th ed. 2012)); see also 

United States v. Seckinger, 397 U.S. 203, 209 (1970) (federal law governs interpretation of 

contract made by the United States pursuant to federal law). Here, the contractual language 

provides in no uncertain terms that any obligations the City incurred by executing the relevant 

grant agreements expired in 2014. 

The 1994 Grant Agreement itself unambiguously sets forth a 2014 expiration date. The 

City accepted the FAA's offer of funding for the project in question in June 1994. At that time, 

Assurance B(l), which was expressly incorporated into the agreement, provided that the City's 

obligations under the grant would not "exceed (20) years from the date of the acceptance of a 

grant offer of Federal funds for the project." [Santa Monica Answer Ex. A at 15]. Because the 

City accepted this grant offer in June 1994, its obligations under that agreement were therefore 

limited to the period prior to June 20 14--as the Director's Determination itself acknowledged. 

[Director's Determination at 15]. 

In this respect, the 1994 Grant Agreement was consistent with the 1984 Settlement 

Agreement the FAA and the City had entered a decade previously. That Agreement specifically 

provided that "[t]he City will operate and maintain the Airport as a viable functioning facility ... 

until July 1, 2015." [Part 16 Complaint Ex. 5 at 9]. It further specified that "any future grant 

agreements between the City and the FAA which are designed to implement programs covered 

by this Agreement, defined as those agreements for the federal funding of program 

improvements intended to further this Agreement, executed prior to July 1, 1995, shall be 

consistent with this Agreement and shall not extend or alter the obligation of the City to operate 

11 
the Airport under this Agreement, except as may be required by federal law." [Part 16 

Complaint Ex. 5 at 8-9] (emphasis added). 

In accordance with this Settlement Agreement, the 1994 Grant Agreement did not 

"extend or alter the obligation of the City to operate the Airport." Rather, by providing that any 

grant obligations incurred would expire in twenty years at most (i.e., in 2014), it continued to 

permit the City to discontinue or otherwise modify operation of the airport as of July 1, 2015 to 

serve the best interests of its residents. 

Amendment No. 2, executed in 2003, did not change matters. To the contrary, it 

expressly left the expiration date in place. Amendment No.2 modified the 1994 Grant 

Agreement in only one respect, providing that the "maximum obligation stated on page 2, 

condition 1 [of the 1994 Grant Agreement] is hereby increased by $240,600.00, from 

$1,604,700.00 to $1,845,300.00." [Santa Monica Answer Ex. Bat 3]. Such a modification had 

been contemplated in the 1994 Grant Agreement itself, which, in recognition of the possibility of 

cost overruns of the sort that in fact occurred, provided that "[f]inal determination of the United 

States share [of the project] will be based upon the final audit of the total amount of the 

allowable project costs and settlement will be made for any upward or downward adjustments to 

the Federal share of costs." [Santa Monica Answer Ex. A at 2]. 

Otherwise, Amendment No. 2 did not make, and actually disclaimed making, any 

substantive change to the 1994 Grant Agreement. In particular, Amendment No.2 did not again 

invoke and incorporate the FAA's general grant assurances. Unlike the original Grant 

Agreement, it did not provide that the grant assurances were "incorporated hereto," and "made a 

part hereof." Instead, Amendment No.2 stated: "All other terms and conditions of the Grant 

Agreement remain in full force and effect." [Santa Monica Answer Ex. B at 3 (emphasis 

12 
added)]. Given the June 30, 2015 termination date of the 1984 Agreement, the City considered 

one of the 1994 Grant Agreement's most important "terms and conditions" to be that any 

obligation imposed by the Agreement would expire in 2014. Amendment No.2 made clear that 

this 2014 expiration date remained "in full force and effect." 

These limitations on the scope of Amendment No. 2 reflected its status as an amendment 

to a preexisting grant agreement, and not a new grant agreement. It was, after all, entitled 

"Amendment No. 2 to Grant Agreement for Project No. No. [sic] 3-06-0239-06"-a name given 

to it by the FAA. [Santa Monica Answer Ex. B at 3 (emphasis added)]. It reiterated that the 

"Grant Agreement" was "accepted" on June 29, 1994, and it did not set forth any new or 

different date of "acceptance" of a grant offer. And not only did it employ the same project 

number as the 1994 Grant Agreement, it also used the same contract number (DTFA08-94-C20857). [Santa Monica Answer Ex. Bat 3]. As this title, grant acceptance date, and numbering 

all confmn, Amendment No. 2 was intended to modify only the limited portion of the 1994 

Grant Agreement it claimed to modify: the provision "on page 2, condition I" setting the 

amount the United States might pay to complete the project. [Santa Monica Answer Ex. B at 3]. 

Even the amount of this modification made clear that Amendment No. 2 would in fact be an 

amendment, and not a new grant: the $240,600 figure was 14.99% of the original grant amount, 

just below the 15% threshold that Congress has established for amendments to existing grants. 

See 49 U.S.C. § 47108(b)(3)(A). By accepting this amendment to the existing agreement, the 

City did not also thereby agree-sub silentio, and indeed contrary to the plain terms of 

Amendment No. 2's express disclaimer of additional substantive changes-to modify any other 

key terms of the agreement. 

13 
B. In Rejecting The Plain Meaning Of This Contractual Language, The 

Director's Determination Relied On An Erroneous Understanding Of The 

Consideration Requirement 

The Director's contrary interpretation of Amendment No. 2 was based on the entirely 

unbriefed premise that the City was required to provide something extra in exchange for the 

additional funds the FAA provided, and that "[t]he only consideration for the amendment 

provided by the City ... would be the continued applicability of the grant assurances using the 

date of the signed second amendment as the starting date." [Director's Determination at 16]. 

But the Director's understanding and application of the consideration requirement involved at 

least two fundamental errors. 

First, and most important, the Director erred in presuming that in 2003 consideration was 

necessary or even relevant. Even assuming that the general requirement of consideration applies 

to this type of modification to an existing contract, I the absence of consideration would mean 

only that the FAA's promise was not enforceable, not that its promise could never be made or 

carried out. That is, an exchange of promises might be necessary to make the FAA's 

contemplated payment enforceable in a court. If, for example, the FAA promised to grant the 

City a million dollars as a gift, the City could not (absent reliance or some other substitute for 

consideration) sue to force the FAA to fulfill that promise. See, e.g., Dougherty v. Salt, 227 N.Y. 

200, 202 (1919) (a simple donative promise is "unenforceable"). But not all grants need be 

I This is a questionable assumption in its own right. "The modem trend appears to recognize the 

necessity that courts should enforce agreements modifying contracts when unexpected or 

unanticipated difficulties arise during the course of the performance of a contract, even though 

there is no consideration for the modification, as long as the parties agree voluntarily." Angel v. 

Murray, 113 R.I. 482, 492 (1974). Thus, the Uniform Commercial Code, for example, provides 

that "[a]n agreement modifying a contract within this Article needs no consideration to be 

binding." U.C.C. § 2-209(1). In essence, the consideration promised in the initial exchange can 

be said to support future modifications in performance-especially where, as here, the original 

agreement contemplates future amendments. The Director failed to consider the possibility that, 

under general principles of contract law, a modification to a preexisting contract of this sort may 

be affected without consideration. 

14 
enforceable in this fashion, and nothing precludes the FAA from making such an unenforceable 

grant. 

The question here is what conditions, if any, the FAA attached to Amendment No. 2. 

That question must be answered by examining the terms of that agreement-which, again, 

actually refute the possibility that the 1994 agreement's grant assurances would be extended until 

2023. The question cannot be answered simply by presuming, as the Director did, that any 

increase in grant funding necessarily exacts a corresponding promise for additional performance. 

There is no reason to assume that the City need have been able to sue to enforce Amendment 

No. 2 against the FAA. Indeed, the City is not seeking to compel the FAA to pay out the funds 

that it said it would pay; the FAA has already made the relevant payments. See Angel v. Murray, 

113 R.I. 482, 489 (1974) ("Since consideration is only a test of the enforceability of executory 

promises, the presence or absence of consideration for the first payment is unimportant because 

the city council's agreement to make the first payment was fully executed at the time of the 

commencement of this action."). 

In reaching a contrary conclusion, the Director cited two Supreme Court decisions: 

Jackson v. Birmingham Board of Education, 544 U.S. 167 (2005), and Pennhurst State School 

and Hospital v. Halderman, 451 U.S. I (1981). [Director's Determination at 16]. These 

decisions do not, however, stand for the proposition that each and every payment of federal 

funds must be supported by consideration. Far from it. They instead describe the limits of the 

federal government's power to impose conditions on the recipients of federal funds. They hold 

that the federal government may utilize the power derived from the Spending Clause to 

effectively legislate or dictate the actions of fund recipients only if the government makes the 

conditions of its funding exceedingly clear. See Pennhurst, 451 U.S. at 17 (while "Congress 

15 
may fix the terms on which it shall disburse" funds, "if Congress intends to impose a condition 

on the grant of federal moneys, it must do so unambiguously") (emphasis added); accord 

Jackson, 544 U.S. at 183; cf also National Federation of Independent Businesses v. Sebelius, 

132 S. Ct. 2566, 2604 (2012) (controlling opinion of Roberts, C.J.) (while the federal 

government can use "financial inducement" to offer "relatively mild encouragement," it cannot 

wield this power as a "gun to the head"). Nothing in Jackson, Pennhurst, or any other similar 

decision would compel the FAA, when amending grant funds within the limits set by Congress, 

to extract new return promises from the recipient. Certainly, none of these decisions would 

preclude the FAA, or any other agency, from providing additional funding to cover cost overruns 

incurred in a previously contracted-for project. That, as its plain terms reveal, is all that 

Amendment No. 2 accomplished. 

Second, and in any event, even if the City were required to provide consideration in 

exchange for the FAA's increase in funding, the Director erred in concluding that this 

consideration must have been the City's acceptance of an additional nine years of grant 

assurance obligations. In fact, the parties' course of dealing suggests a far more plausible 

candidate: the City's commitment to use the granted funds (or the local funds thereby freed up) 

for airport maintenance. The City's request for additional funds to cover the 1994 Grant 

Agreement's cost overruns (which the Director introduced and cited as Exhibit 11) made this 

benefit plain. The City expressly noted that the "requested reimbursement funds represent a 

substantial amount of revenue that could be utilized for much-needed and differed airfield 

maintenance projects." The City's promise to, as the same letter put it, use the reimbursement 

funds to "enhance and maintain the Santa Monica Airport" was itself beneficial to the FAA. 

After all, the agency is charged with ensuring that "the airport and facilities on or connected with 

16 
the airport will be operated and maintained suitably." 49 U.S.C. § 47107(a)(7). The benefits 

associated with airport improvements were what Amendment No. 2 referred to in mentioning the 

"benefits to accrue to the parties." [Santa Monica Answer Ex. Bat 3]. Given the FAA's receipt 

of these benefits, the Director's conclusion that Amendment No. 2 did not mean what it said in 

providing that "all other terms and conditions of the [1994] Grant Agreement remain in full force 

and effect" cannot be supported even under the erroneous assumption that some sort of 

consideration was required. 

C. The Director's Determination Further Relied On The Erroneous Conclusion 

That Contractual Ambiguity Need Not Be Resolved Against The Agency, But 

That The Agency Is Instead Free To Resolve Any Ambiguity In Its Favor 

The Director's Determination was also premised on a separate misapplication of basic 

contractual principles. As noted above, the relevant contractual language is not ambiguous; 

instead, the 1994 Grant Agreement and Amendment No.2 to that agreement together make plain 

that City's grant obligations expired in 2014. But even if the terms of these documents left some 

room for doubt, general principles of contract law and the law governing federal grants require 

that this doubt be resolved in the City's favor. The Director, however, applied the opposite 

presumption, and instead twisted the contractual language to favor the FAA's interpretation. But 

contrary to the Director's assertion, the City did not agree to the terms fashioned by the Director. 

The City certainly was not put on fair and reasonable notice that such reinterpretations of the 

Grant Agreement and Amendment No. 2 were possible. 

I. The contractual language must be construed against the FAA, which 

drafted the agreements 

Pursuant to what is sometimes known as the rule of contra proferentem, when there are 

multiple "reasonable meanings of a promise or agreement or a term thereof, that meaning is 

generally preferred which operates against the party who supplies the words or from whom a 

17 
writing otherwise proceeds." Restatement (Second) of Contracts § 206 (1981). The federal 

govemment, like any other contracting party, is subject to this "general maxim" of contract law. 

Seckinger, 397 U.S. at 210; see id. ("a contract should be construed most strongly against the 

drafter, which in this case was the United States"). Here, the FAA drafted both the 1994 Grant 

Agreement and Amendment No. 2. Thus, to the extent that these agreements create ambiguity as 

to the duration of the City's grant obligations, the City's reasonable interpretation must prevail 

over that of the FAA. 

Indeed, this principle of contract construction carries particular force where, as here, the 

agreement in question imposes conditions on a governmental recipient of federal grant money 

and compels the performance of duties. That is because such grant conditions reflect the 

exercise of federal power under the Spending Clause. And, as the Supreme Court has held, 

"OJust as a valid contract requires offer and acceptance of its terms, the legitimacy of Congress' 

power to legislate under the spending power ... rests on whether the [recipient] voluntarily and 

knowingly accepts the terms of the 'contract."' Barnes v. Gorman, 536 U.S. 181, 186 (2002) 

(some internal quotation marks omitted, alterations in original). Accordingly, when the federal 

government "intends to impose a condition on the grant of federal moneys, it must do so 

unambiguously." !d. This clear-statement requirement "enable[ s] [recipients] to exercise their 

choice knowingly, cognizant of the consequences of their participation." Pennhurst, 451 U.S. at 

17; see also id. at 25 ("The crucial inquiry, however, is not whether a [recipient] would 

knowingly undertake that obligation, but whether Congress spoke so clearly that we can fairly 

say that the [recipient] could make an informed choice."). It also ensures that the federal 

government is not simply directing state and local officials to do as it commands, in violation of 

18 
the Constitution's anti-commandeering mandate. See National Federation of Independent 

Businesses, 132 S. Ct. at 2602; Printz v. United States, 521 U.S. 898, 933 (1997). 

Airport Improvement Program grants are no exception to this rule. In fact, the principle 

that grant recipients must be given clear notice of any grant conditions is embodied in 49 U.S.C. 

§ 4 71 07(h), which requires the FAA to provide notice and an opportunity for comment on any 

proposed modification of grant assurances-particularly, an abrupt and substantial change in 

their duration. As the agency has previously concluded, this provision confirms that obligations 

not previously made clear to grant recipients cannot be retroactively imposed. Air Trans. Ass'n. 

of America v. City of Los Angeles, FAA Final Decision and Order, Docket No.13-95-05, at *91 

(2009) ("In light of FAA's obligations under section 47107(h), the Director properly concluded 

that the agency itself was 'bound' by the terms of its orders, in the sense that the agency could 

not compel the City to comply with new policy expanding its grant obligations adopted after it 

requested advice."). 

2. The Director erred in concluding that this maxim was inapplicable, and 

that the FAA should instead receive deference in interpreting these 

agreements 

In rejecting the application of contra proferentem and refusing to construe the relevant 

agreements in the City's favor, the Director relied upon inapposite precedent governing the 

interpretation of statutory, rather than contractual, provisions. Citing Bennett v. Kentucky 

Department of Education, 470 U.S. 656 (1985), the Director declared that because "grants 

originate in and are governed by Federal statutes, the rules governing statutory interpretation 

apply," and thus the "FAA is entitled to deference in interpreting the grant assurance 

obligations." [Director's Determination at 18]. 

Bennett, however, addresses a different issue. It reflects the general principle that grant 

agreements incorporating statutory directives may be subject to the ordinary rules of statutory 

19 
interpretation, and that the implementing agency may therefore receive some measure of 

deference. See id at 669-70; see also City and County of San Francisco v. FAA, 942 F.2d 1391, 

1396 (9th Cir. 1991) (according deference to FAA in its interpretation of the "statutory condition 

imposed by [49 U.S.C. §]2110(a)(l) and incorporated in the grant contract"). In Bennett, the 

Court confronted a grant agreement dispute involving the implementation of a statutory mandate: 

Congress itself had provided that the federal funds received could not "supplant such funds from 

non-Federal sources." Bennett, 470 U.S. at 660 (quoting 20 U.S.C. § 241e(a)(3)(B) (1970 ed.)). 

Enforcing this provision required the agency, as in other cases of statutory interpretation, to 

resolve certain ambiguities contained in the statute. Id at 669. The Court therefore concluded 

that the agency's implementation of that directive "cannot be viewed in the same manner as a 

bilateral contract governing a discrete transaction." Id at 657.2 

The circumstances are entirely different where, as here, no statutory grant condition is at 

1ssue. None of the relevant terms in either the 1994 Grant Agreement or Amendment No. 2 

directly incorporate or implement any statutory provision. Assurance (B)(l), invoked by the 

1994 agreement, imposes a 20-year limit on grant assurances that is found nowhere in the 

governing statute. Likewise, and even more important, Amendment No.2's provision that "[a]ll 

other terms and conditions of the Grant Agreement remain in full force and effect" is a 

straightforward, commonly used and understood contractual term that derives from no statute. 

This dispute thus centers on the interpretation of the terms of what is, in essence, "a bilateral 

contract governing a discrete transaction." Bennett, 470 U.S. at 669. The FAA has no particular 

2 Even in such a case of statutory interpretation, the Court was unwilling to go so far as to holdas the Director apparently would-that the grant recipients in that case "guaranteed that their 

performance under the grant agreements would satisfY whatever interpretation of the terms might 

later be adopted by the Secretary, so long as that interpretation is not 'arbitrary, capricious, or 

manifestly contrary to [the statute]."' Bennett, 470 U.S. at 670 (quoting Chevron USA. Inc. v. 

Natural Resources Defense Council, 467 U.S. 837, 844 (1984)). 

20 
expertise in interpreting contractual langnage of this sort, or any specially delegated authority to 

do so. In such a case, no deference to the agency is warranted. See Clay Tower Apartments v. 

Kemp, 978 F.2d 478, 480 (9th Cir. 1992) ("[T]he parties executed a contract, and our inquiry 

focuses on the contractual requirements. This focus does not demand deference to HOD's 

statutory interpretation."). 

In any event, even assuming that the FAA were entitled to deference, that would not 

render the principle of contra proferentem inapplicable. Instead, that rule continues to govern 

the FAA's interpretation of the relevant agreements even if the agency's reading might warrant 

some deference. Cf INS v. St. Cyr, 533 U.S. 289, 320 n.45 (2001) ("Because a statute that is 

ambignous with respect to a retroactive application is construed under our precedent to be 

unambiguously prospective, there is, for Chevron purposes, no ambignity in such a statute for an 

agency to resolve.") (internal citation omitted). That the FAA may be entitled to deference does 

not mean, as the Director apparently believed, that it is free to adopt whatever interpretation of a 

contract it believes to be most favorable to it. Consistent with general principles of contract law 

and the law governing federal grants, the terms of the City's agreements with the FAA, even 

when construed by the FAA, must still be construed against the FAA. See Barnes, 536 U.S. at 

186; Seckinger, 397 U.S. at 210. 

3. The City's understanding that Amendment No. 2 did not extend its grant 

assurance obligations was reasonable and therefore must prevail 

Under a proper application of the principle that contractual ambiguity is construed in the 

City's favor, the City's understanding of Amendment No.2 must prevail. That interpretation, as 

discussed above, reflects a straightforward reading of Amendment No.2's terms: by preserving 

"[ a]ll other terms and conditions of the Grant Agreement" in "full force and effect," the 

amendment necessarily retained the 2014 expiration date set forth in the 1994 Grant Agreement. 

21 
That interpretation is "reasonable," and thus should be accepted here. Restatement (Second) of 

Contracts§ 206 (1981). 

The Director pointed to nothing that would render this interpretation unreasonable. The 

Director observed only that under Assurance B(l) "the not-to-exceed date is linked to 'a offer' 

and not limited to the original offer." [Director's Determination at 18]. But the Director's 

ungrammatical paraphrasing of Assurance B(l) omits its key language: the not-to-exceed date 

begins "the date of the acceptance of a grant offer of Federal funds." [Santa Monica Answer 

Ex. A at 15 (emphasis added)]. Amendment No.2 may have increased the original grant 

amount, but it was not itself a new "grant offer." It was, instead, an amendment to a prior grant 

offer. That was why it was styled an "Amendment," why it used the same contract and project 

number as the 1994 Grant Agreement, why it stated that the grant was accepted on June 29, 

1994, why it did not attempt to specify a new grant acceptance date, and why it failed to 

specifically incorporate the grant assurances as the Grant Agreement itself had. That is also why 

Amendment No. 2 expressly retained all other "terms and conditions" of the 1994 grant offer 

itself-language that the Director's Determination did not even attempt to reconcile with its 

strained reading of Assurance B(l ). For all these reasons, Amendment No. 2 did not trigger 

application of Assurance B(l ). 

At the very least, nothing in Assurance B(l) or Amendment No. 2 provided the City with 

the requisite clear notice that acceptance of these additional funds would subject it to the grant 

assurances for an additional nine years. See Pennhurst, 451 U.S. at 17 ("There can, of course, be 

no knowing acceptance if a [recipient] is unaware of the conditions or is unable to ascertain what 

is expected of it."). Consistent with the terms of the 1984 Settlement Agreement and the City's 

long-expressed policy to seek closure of the airport, the City had taken care to ensure that all 

22 
grant obligations would expire prior to the July I, 2015 date on which the Settlement Agreement 

would no longer compel the City to operate the airport. The City did not, and never would have, 

accepted the small amount of additional funds the FAA offered in 2003 had it understood that it 

thereby committed itself to operating the airport into 2023. 

Indeed, as the declaration of former City Manager Susan McCarthy makes clear, the City 

was never put on notice of the FAA's newly advanced interpretation of Amendment No.2. 

McCarthy, who in fact signed Amendment No.2 as the City's designated official representative, 

has no memory of the FAA ever communicating "to City Staff its current position on the 

implications of the 2003 Amendment." [McCarthy Declaration 'If 8]. She thus had no 

understanding that "the grant assurances accepted in the 1994 grant agreement were being 

extended nine years." [McCarthy Declaration 'If 6]. 

D. The Director's Determination Was Premised On Its View That A Grant 

Modification May Be "Akin To A New Grant," An Arbitrary Classification 

Wholly Unsupported By The Relevant Statutes And Regulatory Guidance 

The Director's conclusion that Amendment No.2 reset the grant assurances' expiration 

date was also premised on his determination that Amendment No.2 was "akin to a new grant," 

rather than a mere modification of the existing grant agreement. [Director's Determination at 

16]. But an examination of the panoply of laws, policies, practices, precedent, and guidance 

regarding FAA grant assurances reveals no category of modification "akin to a new grant." 

Nothing in the grant assurances themselves, or in any agency guidance materials, refer to such a 

concept. See, e.g., FAA, Airport Compliance Manual, Order 5190.68 (2009) at Sec. 4.3 

(advising airport operators on the duration of federal grant obligations and releases from federal 

obligations, but making no mention of their duration being extended by grant amendments that 

are "akin to a new grant"). 

23 
Instead, the relevant guidance materials demonstrate that the agency has recognized a 

sharp distinction between new grants and modifications to existing grants. They also make clear 

that Amendment No.2 falls on the "modification" side of this line. 

Had Amendment No. 2 in fact been a "new grant," it would have been subjected to a very 

different process than the simple grant amendment the FAA and the City entered into in 2003. 

The FAA's AlP Handbook effective in 2003 detailed the specific procedures for the offer and 

acceptance of a new airport grant. See FAA, Airport Improvement Handbook, Order 5100.38B 

(2002) at§§ 11:1 & 11:4. Similarly, the current version of the Handbook continues to provide 

detailed requirements for such new grants. See FAA, Airport Improvement Handbook, Order 

5100.38D (2014) at § 5:4 ("Grant Application, Offer and Acceptance"). The FAA did not 

require the City to submit a new grant application or anything "akin to" a new application before 

approving Amendment No.2 in 2003. 

Instead, the FAA followed its routine procedure for increasing the funding under an 

existing grant. That process was described in a separate section of the FAA's AlP Handbook. 

See FAA, Airport Improvement Handbook, Order 5100.38B (2002) at § 11:5 ("Grant 

Amendments"). This section of the Handbook specifically recognizes that a grant agreement 

may be modified by increasing the grant amount. Id Nowhere does it indicate that, by simply 

increasing funding for an existing grant, such an amendment may in fact be "akin to a new 

grant." 

That even the FAA understood Amendment No.2 to be an amendment, and not a new 

grant, is demonstrated by its report to Congress submitted that year. In this report, the FAA 

stated that it had disbursed $123 million for "increases in existing grant agreements," a category 

it reported separately from "new grant agreements." FAA, Report to Congress: Twentieth 

24 
Annual Report of Accomplislunents (May 2004) at II, available at: 

http:/ /www.faa. gov /airports/ aip/ grant_ histories/media/annual-report-200 1-03. pdf (emphasis 

added) ("2003 Report to Congress"). Notably, the FAA did not report the City in its separate list 

of recipients of new "AlP Grants Awarded in FY 2003." Id at Figure C-9. Likewise, the FAA 

failed to include the City in its Grant Histories database for 2003. See FAA, Fiscal Year 2003 

Approved Grants, available at: http:/ /www.faa.gov/airports/aip/grant_ histories/media/grants2003 .pdf. These omissions confirm that the agency did not consider the City to have been 

awarded a new grant or anything "akin to" a new grant in 2003, when the parties executed 

Amendment No.2. 

The FAA's distinction between new grants and amendments to existing grants reflects the 

line that Congress itself has drawn. Congress has expressly recognized that an existing grant for 

an airport project may be augmented to provide for additional funding, specifying that the 

maximum federal grant obligation "for an airport development project" may be increased by "not 

more than 15 percent." 49 U.S.C. § 47108(b)(3)(A). Moreover, in the context of authorizing the 

FAA to take corrective action for violations of grant assurances, Congress has separately listed 

"new grant application[s]" and "proposed modification[s] to an existing grant that would 

increase the amount of funds made available." 49 U.S.C. § 47111(e). These provisions 

demonstrate that Congress views new grants to be distinct from modifications to existing grants. 

Never has Congress suggested that, notwithstanding this distinction, grant amendments may be 

deemed "akin to new grants" for the purposes of extending grant assurances. 

In seeking to find support for its novel interpretation that a modification of an existing 

grant agreement may be "akin to a new grant," the Director's Determination cited only to a pair 

of decades-old Comptroller General opinions. [Director's Determination at 17]. Tellingly, the 

25 
FAA has never before cited these Comptroller General opinions. And they provide no support 

for the Director's conclusion here. These decisions stand for a far more limited proposition: 

under appropriations law, an increased grant award is chargeable to appropriations in the current 

fiscal year when the change is made. See 41 Comp. Gen. 134 (1961 ); 39 Comp. Gen. 296, 298 

(1959); U.S. Gen. Accounting Office, Principles of Federal Appropriations Law, 2d ed., at 10-

71. No one disputes that the Amendment No.2's increase in the grant amounts should be 

charged to the fiscal year in which it was made. Indeed, the FAA does just that whenever it 

increases a grant award. See 2003 Report to Congress at 11. That such modifications might, for 

accounting purposes, be charged to the year in which they were made has nothing to do with 

whether they represent a "new grant" that triggers renewed application of the grant assurances 

and extension oftheir duration. 

Accordingly, there is no support for the Director's view that a subsequent increase and 

funding may be "akin to a new grant." Absent any basis in the extensive legal and agency policy 

framework for the FAA's grant assurance program, it was arbitrary and capricious for the 

Director to declare as much. 

E. The Director's Newfound Rule That Certain Amendments To Grant Offers 

Will Again Trigger The Grant Assurances Is Ambiguous And Procedurally 

Improper 

The Director's conclusion that the City remains bound by the 1994 grant assurances 

through 2023 is all the more problematic given the uncertain scope of the rule adopted. The 

Director's Determination states that Amendment No. 2, at least, is "akin to a new grant," and 

purports to restart the running of the 20-year clock for grant assurances. Otherwise, the 

Determination fails to clearly delineate why, exactly, Amendment No. 2 is such a "new grant," 

or how this conclusion will be confined in future cases. But any understanding of the Director's 

interpretation of grant modifications would have a broad possible scope. This newly declared 

26 
rule thus represents a far-reaching change in the FAA's policy guidance regarding grant 

assurances---{)ne that may be adopted only pursuant to the notice-and-comment procedure 

mandated by 49 U.S.C. § 47107(h), allowing grant recipients to be put on fair and clear notice of 

the ramifications of any grant assurance. 

The ambiguity inherent in the Director Determination's attempt to shoehorn Amendment 

No. 2 into the category of "new grants" is illustrated by its differing treatment of Amendment 

No. 1. Pursuant to that amendment, the City and the FAA in 1999 modified the description of 

the project covered by the 1994 Grant Agreement. In the Determination, the Director suggested 

that Amendment No. 1, unlike Amendment No.2, would not have restarted the Assurance B(1)'s 

20-year clock. [Director's Determination 16]; see also SMAA v. City of Santa Monica, Docket 

No. 16-99-21, Director's Determination at 23 (Nov. 22, 2000) (concluding, after the execution of 

Amendment No. 1, that the City's grant assurances expire in 2014). But it cited two separate and 

not necessarily congruent rationales for this distinction: (1) Amendment No. 1 continued to 

provide that there would be "additional work performed"; and (2) Amendment No. 1 "add[ ed] no 

funds." [Director's Determination at 16]. 

The first rationale appears to be a reference to the "consideration" requirement that the 

Director deemed to be lacking under the City's interpretation of Amendment No.2. See supra, 

at pp. 14-17. But such a ground of distinction raises a host of questions. Would Amendment 

No. 1 have triggered Assurance B(1) if it, like Amendment No.2, had been adopted after the 

work was completed, or at least after the FAA had paid its designated share? What if 

Amendment No. 1 had narrowed the description of the work the City had performed without 

correspondingly reducing the FAA's grant obligation? What if Amendment No.2 had been 

executed in 1999? In this respect, unless it is reversed, the Director's Determination will sow 

27 
substantial uncertainty regarding grantees' obligations that may take years of litigation to 

resolve. 

The Director's second proffered rationale suggests a more categorical rule: modifications 

that increase the FAA's grant obligation in any amount will restart Assurance B(l)'s 20-year 

clock; modifications that do not, will not. That the Determination adopted such a categorical 

rule is suggested by its later reasoning that Assurance B(l)'s "not-to-exceed date is linked to 'a 

offer' and not limited to the original offer." [Director's Determination at 18]. But as discussed 

above, the Director is actually mischaracterizing the terms of Assurance B(l ), which applies to 

"the acceptance of a grant offer" and not just to "a offer." See supra, at p. 22. And the Director 

identified no other support for the proposition that Assurance B(l) is triggered any time 

additional funds are extended under a preexisting grant agreement. Such a conclusion, which 

would apply to all of innumerable grants subject to the language of Assurance B(l), would be 

arbitrary and unsupported. 

Amounts in original grants are normally estimates, regularly subject to potential 

adjustment for cost overruns and variations. In fact, the additional $240,600 paid out pursuant to 

Amendment No.2 was only a very small fraction of the $123 million in grant disbursement 

increases that the FAA approved in 2003. 2003 Report to Congress at II. But nonetheless, the 

FAA has never before held that the grant of such additional funds will result in a new set of grant 

obligations or extension of the duration of existing grant assurances. And for good reason: such 

a conclusion would make superfluous 49 U.S.C. § 47108(b)(3)(A)'s provision allowing for 

amendments to grant amounts, as it would render all amendments that increase funds 

substantively equivalent to "new grants." 

28 
Whatever the precise limits of the holding of the Director's Determination, one thing is 

clear: the Determination announced an abrupt and arbitrary change in the FAA's treatment of 

grant obligations. The FAA had never previously suggested that mere modifications to grant 

agreements-amendments permitted by the terms of the grant and by federal law-may 

themselves later be deemed to be "new" grants triggering extension of the duration of the grant 

assurances previously accepted with the original grant. In order to give grantees proper notice of 

this sort of new and far-reaching requirement, 49 U.S.C. § 47107(h) prohibits such a change in 

policy from being accomplished in a Part 16 proceeding. As the FAA has previously recognized, 

§ 47107(h) instead requires the "agency to provide notice and comment before making an abrupt 

change in grant assurance obligations and grant compliance policy." Air Trans. Ass 'n of 

America, FAA Final Decision and Order, Docket No.l3-95-05, at *112 (2009). The agency's 

failure previously to adopt the Director's newly declared rule via the statutorily-mandated 

procedure is yet another, independent reason that the Determination must be reversed. 

II. THE DIRECTOR'S DETERMINATION THAT ANY CLAIM REGARDING THE 

CITY'S GRANT OBLIGATIONS WAS PROPERLY BEFORE IT WAS 

CONTRARY TO LAW, PRECEDENT AND POLICY 

A. Complainants Have Not Been "Directly And Substantially Affected By Any 

Alleged Noncompliance" And Thus Lack Standing 

In order for the complaint to be properly before the Director, the Complainants were 

required to establish that they are "directly and substantially affected by any alleged 

noncompliance" on the part of the City. 14 C.F.R § 16.23(a). But because the City has not 

engaged in any "noncompliance" at all-alleged or otherwise-the Complainants cannot satisfy 

this standing requirement. 

Indeed, the Complainants have failed to allege any concrete harm whatsoever. Instead, 

they have offered vague and conclusory allegations that their "business and operations already 

29 
have been, currently are, and will continue to be adversely affected by the City's repeated public 

announcements" concerning the airport's future. The closest Complainants came to identifying 

any concrete harm was to complain of the City's planned decision to offer three-year extensions 

on leases that were set to expire in 2015. But the FAA has already rejected any argument that 

the City is required to extend long-term leases to airport tenants. See SMAA v. City of Santa 

Monica, Docket No. 16-99-21, Director's Determination at 22-23 (Nov. 22, 2000) ("It would 

likely be unreasonable for the Airport to be required to enter into a lease agreement with an FBO 

or any aeronautical user that would provide for the Airport to be operated as an airport beyond 

July 1, 2015."), affirmed by SMAA v. City of Santa Monica, Docket No. 16-99-21, Final 

Decision and Order at 19 (Feb. 4, 2003) (holding that no tenant at Santa Monica Airport is 

'"entitled' to a long term lease at the location of its choosing."). 

In nevertheless concluding that the Complainants had adequately established their 

standing, the Director reasoned that the City had "repudiated" the Grant Agreement, thus causing 

"uncertainty" that harmed the Complainants. [Director's Determination 8, I 0]. But whatever the 

City might have previously said regarding the expiration of its airport obligations, it cannot have 

repudiated those obligations unless it also specifically indicated its intent to commit an act 

breaching them. See Restatement (Second) of Contracts § 250 (1981) ("[A] repudiation a) is a 

statement by the obligor to the obligee indicating that the obligor will commit a breach that 

would be a material breach or b) a voluntary affirmative act rendering the obligor unable or 

apparently unable to perform without such a breach."). That the City has not done. 

In any event, even if the City had somehow repudiated the Grant Agreement, the 

Complainants are not themselves parties to that contract, and may complain of such a breach 

only if it somehow injures them. Declaring, as the Director did, that they had satisfied this 

30 
requirement by pointing to mere "uncertainty" vitiates 14 C.F .R § 16.23(a)' s standing 

requirement. Uncertainty is nearly always present; any airport might at any time violate its grant 

obligations. Unless and until the City indicates that it plans to breach these obligations in a 

manner that would cause Complainants imminent harm, they cannot establish that they are 

"directly and substantially affected by any alleged noncompliance." 14 C.F.R § !6.23(a). 

B. Complainants Failed To State A Claim Under Part 16, And Thus Have 

Failed To Establish Any Basis For The Director's Jurisdiction 

For similar reasons, the Complainants have failed to fulfill their obligation to identify 

"the specific provisions of each Act that the[y] believe[] were violated," as required by 14 C.P.R. 

§ 16.23(b)(1). As the FAA has held, this requirement ensures that the agency can "make a 

determination as to whether an airport sponsor is currently in compliance with the applicable 

federal regulations." Larry L. Davis v. Jackson Municipal Airport Authority, Docket No. 16-10-

01, Director's Determination at 16-17 (Jan. 18, 2011) (emphasis in original). 

Here, however, it is undisputed that the City is currently in compliance with all federal 

regulations. It has taken no actions that would violate its grant assurances, nor has it indicated 

any immediate intent to do as much. Thus, as even the Director acknowledged, the "[ c ]omplaint 

is not clear in terms of the specific Act violated." [Director's Determination at 8]. 

In nevertheless disregarding the Complainants' failure to state a claim, the Director again 

(incorrectly) relied on the theory that, even if the City had not violated its grant assurance 

obligations or indicated any intent to do so, it had somehow "repudiated" these obligations. 

[Director's Determination 8; see supra, at p. 30]. The Director further reasoned that issuing a 

determination in this proceeding would "assure[] both current and future compliance." 

[Director's Determination at 9]. 

31 
But the defects in the complaint cannot be so easily overlooked. Because the 

Complainants identified no current violation, they were, in effect, asking the Director to render 

an advisory opinion. The Complainants were not seeking to have the Director resolve a live 

dispute; rather, they were requesting the Director to opine on the legal consequences of the 

purely hypothetical situation in which the City departed from its grant assurances at some point 

prior to 2023. Indeed, the wholly advisory nature of the Director's Determination is revealed by 

the fact that, even in ruling for the Complainants, it failed to order the City to take any particular 

corrective action to comply with any specific Acts or grant assurances. 

That the Director entertained this request, and in fact resolved that hypothetical 

controversy, was directly contrary to FAA precedent. As prior agency determinations have made 

clear, "Part 16 is not the proper venue to adjudicate contract disputes when no action has yet to 

be taken to implement the contract terms that are in a manner contrary to the grant assurances," 

because the "Director will not speculate regarding the future" actions parties may take. 

Northwest Airlines Inc., et al. v. Indianapolis Airport Authority, et al., Docket No. 16-07-04, 

Director's Determination at 29, 44 (Aug. 19, 2008); see also SMAA v. City of Santa Monica, 

Docket No. 16-99-21, Final Decision and Order at 22 (Feb. 4, 2003) (reminding complainants 

that "the purpose of a Part 16 investigation process is to determine whether or not an airport 

sponsor is in compliance with its Federal obligations in the current factual situation."). By 

disregarding this precedent, the Director issued an advisory opinion, one that was outside the 

jurisdiction conferred in Part 16. 

C. Complainants Failed To Satisfy The Pre-Complaint Resolution Requirement 

The Director also erroneously overlooked a third procedural defect: the Complainants' 

failure to satisfy their obligation to "engage in good faith efforts to resolve the disputed matter" 

prior to filing their complaint. 14 C.F.R. § 16.2l(a). As the Director acknowledged, the 

32 
Complainants filed their complaint following only one exchange of letters with the City, and 

never responded to the City's invitation that they contact the City Attorney's office should they 

wish to engage in further discussions. [Director's Determination at 11]. But the Director 

deemed these minimal efforts sufficient, declaring that the "Complainants are not required to 

conduct continued informal resolution efforts when it appears clear that the City's position on the 

expiration date is longstanding and fixed." [Director's Determination at II]. 

The cursory letters the Complainants sent the City cannot have constituted the requisite 

"substantial and reasonable effort" to achieve resolution. 14 C.F.R. §16.21(b)(l). The 

Complainants gave the City no opportunity to provide Complainants with assurances that might 

have obviated the need for these proceedings. This is true however "fixed" the City's "position 

on the expiration date" might have been. Again, that position does not, on its own, harm 

Complainants. What the Complainants are actually concerned about are future actions the City 

might take, not its current views regarding obligations it has not violated even if they remain 

applicable. The Complainants engaged in no real efforts to negotiate with the City regarding its 

plans for the airport. Their complaint therefore should have been dismissed. 

CONCLUSION 

For the foregoing reasons, the Director's determination must be reversed. 

Dated: January 8, 2016 Respectfully submitted, 

33 
MARSHA JONES MOUTRIE 

JOSEPH LAWRENCE 

LANCES. GAMS 

IVAN CAMPBELL 

SANTA MONICA CITY ATTORNEY'S 

OFFICE 

1685 Main Street, Room 310 

Santa Monica, CA 90401 

Telephone: (310) 458-8336 

ZANE 0. GRESHAM 

MORRISON & FOERSTERLLP 

425 Market Street 

San Francisco, CA 94105 

Telephone: ( 415) 268-7000 

Is! G. Brian Busey 

G. BRIAN BUSEY 

PAUL VARNADO* 

JAMES SIGEL* 

MORRISON & FOERSTER LLP 

2000 Pennsylvania Avenue, NW 

Washington, DC 20006 

Telephone: (202) 887-1500 

*Application to the District of Columbia Bar 

pending. Practice supervised by principals of 

firm admitted to District of Columbia Bar. 

Counsel for Respondent City of Santa Monica 

34 
CERTIFICATE OF SERVICE 

I, G. Brian Busey, counsel for the City of Santa Monica, herby certify that pursuant to 14 

C.F.R. § 16.33 I have this day served the foregoing Brief on Appeal from the Director's 

Determination on the following persons by first class mail, postage prepaid: 

Richard K. Simon, Esq. 

1700 Decker School Lane 

Malibu, CA 90265 

rsimon3 @verizon.net 

Office of the Chief Counsel 

Attention: FAA Part 16 Docket Clerk 

AGC-600 

Federal Aviation Administration 

800 Independence Avenue SW 

Washington, DC 20591 

9-A WA-AGC-Part-16@faa.gov 

Byron K. Huffman, Acting Director 

Office of Airport Compliance and Management Analysis 

Federal Aviation Administration 

800 Independence Avenue SW 

Washington, DC 20591 

Dated: January 8, 2016 

35 

Is! G. Brian Busey