BEFORE THE FEDERALAVIATIONADMINISTRATION WASHINGTON, D.C.

MARKSMITHETAL., Complainants,
v. DocketNo. 16-16-02 CITYOF SANTAMONICA, CALIFORNIA, Respondent.

MEMORANDUMINSUPPORT OF SANTA MONICA'S MOTION TO DISMISS

MarshaJones Moutrie CityAttorney Joseph Lawrence Assistant CityAttorney CITY OF SANTAMONICA 1685 Main Street, Room 310 SantaMonica, CA 90401 310.458.8233 Marsha.moutrie@smgov.net ScottP. Lewis David S. Mackey Jessica

### A. Wall ANDERSON & KREIGERLLP One CanalPark, Suite 200 Cambridge, MA 02141 617.621.6560 slewis@andersonkreiger.com

Counsel for Respondent, City ofSantaMonica, CaliforniaTABLE OF CONTENTS 

### Introduction
......................................................................................................................................1 Background
......................................................................................................................................2 

### 1984 SettlementAgreement.
......................................................................................................2 The Pending Quiet Title Action
.................................................................................................3 

### The Pending Part 16 Proceeding Concerning The Dmation ofthe City's Grant Assmances
.................................................................................................................................4 

### The Instant Part 16 Complaint.
..................................................................................................6 Argun1ent
.........................................................................................................................................8 I. THE CITY'S PROMULGATION OF ITS NEWLEASINGPOLICYMOOTS THE LEASINGPROCESS CLAIMS
................................................................................ 8 II. THE COMPLAINANTS CANNOT SHOWTHAT THENEWLEASING POLICY IS INVALID "INALL ITS APPLICATIONS" AND THEREFORE ANYFACIAL CHALLENGE TO THE NEWLEASINGPOLICYMUST FAIL
......... 10 A. The City's NewLeasing Policy is Reasonable Given The Present Circumstances at SMO
......................................................................................... 12 B. The City'sNewLeasing PolicyProvides Reasonable Access to the Airport While The City'sAppeals Are Pending
................................................................ 13 Conclusion
.....................................................................................................................................17

1Introduction The respondent, the City ofSantaMonica, California (the "City"), is the sponsor ofthe SantaMonicaAirport ("SMO" or "Airport"). Pursuantto 14 C.P.R. § 16.26(b), the Cityhas moved for two reasons to dismiss PartIV ofthe Complaint, which alleges that "[t]he City's Proposed AirportLeases and its Leasing Process BlatantlyDisregardFederal Requirements."**Complaint~~** 137-153 (the "LeasingProcess Claims"). First, the Leasing Process Claims have beenmootedbythe City'spromulgation, on · March22, 2016, ofa new "SantaMonica City CouncilAirportLeasing and Licensing Policy" ("NewLeasing Policy") (atrue and correct copy ofwhich is attached as ExhibitA). Onthat basis alone, the Federal AviationAdministration ("FAA") should dismiss the Leasing Process Claims (see below, pp. 8-10). Second, evenifitwereappropriate for the FAAto considerthe pending Complaint as a challenge to. the City's NewLeasingPolicy, itwouldhave to be taken as a facial attack onthe Policy because Cityhas notyet begunto apply thenewPolicyto anyproposed leases. Such a challenge wouldnecessarily fail because the Complainants couldnotpossibly show, orthe FAA find, that"no set ofcircumstances exists" under whichthepolicywouldbe valid (see below, pp. 10-16).TheNewLeasing Policy strikes an appropriate balance betweenthe City's good faith pursuit ofits ownership andproprietaryrights to take immediate control ofthe real estate underlying SMO, and the City's obligationtoprovide reasonable access to aeronautical tenants inthe meantime. Asthe FAAitselfhas determined withrespectto SMO, "itwould likelybe unreasonable for the Airport to be requiredto enter into a lease agreement with an FBO or any

1aeronautical user that wouldprovide for the Airportto be operated as an airportbeyond July 1, 2015" (see below, p. 3). Accordingly, for these two independent reasons, the FAA should dismiss the Leasing Process Claims intheir entirety. Background 1984 Settlement Agreement. Several decades ago, the City's efforts to address the impact oftheAirport on its neighbors inthe surrounding community generated significant litigationthat culminated, in 1984, in a SettlementAgreementbetweenthe FAA and the City. See Complaint, Ex. 9. Underthe 1984 Settlement Agreement, the City was requiredto "operate andmaintainthe Airport as a viable functioning facility
...until July 1, 2015." 

### !d. at 9. The SettlementAgreementprovidedthe City with a reasonable basis to believe that its obligationto operate andmaintain SMO as an airport would expire onthat date. Infact, the 1984 Agreement specificallyprovidedthat "anyfuture grant agreements betweenthe City andthe FAAwhich are designedto implement theprogram coveredbythis Agreement
... executedpriorto July 1, 1995, shall be consistentwiththis agreement andshallnot extendoralter the obligation of the City to operate [the]Airportunderthis Agreement, except as mayberequired by federal statute." 

### !d. at 8-9 (emphasis added). Accordingly, since 1984 the Cityhas carefully calibrated its leasingpractices to ensure that its aeronautical tenants were never vestedwith leasehold interests which extendedbeyond the date whenthe City was entitledto cease operating SMO as anairport. As the Complaint recites, "[v]irtually all airport leases terminated bytheirterms on July 1, 2015." Complaint**~** 142. Priorto 2008, the FAA acknowledged, onthe basis ofthe SettlementAgreement, thatthe

2City could stop operating SMO as an airport in2015, andthatit wouldbeunreasonable to require the Cityto lease landto anFBO beyond2015. As theFAA itselfdetermined: [T]he SettlementAgreementmakes clearthatthe Cityis obligatedto operate the Airportonlyfor the durationofthe Agreement (through July 1, 2015). Providing at this time a lease for more thanapproximately 15 years wouldrequire the City to operate the Airportbeyondthe time agreedupon inthe SettlementAgreement. For example, itwouldlikely be unreasonablefor theAirportto be requiredto enter into a lease agreementwith an FBO or anyaeronauticaluser thatwould provide for theAirportto be operated as an airportbeyondJuly I, 2015
... To the extentthatthe Complainants
... seekto preventthe future closure ofthe Airport orrequire the Cityto operate the Airportbeyond July 1, 2015, that is a local land use matter. SantaMonicaAirportAss'nv. City of SantaMonica, FAADocketNo. 16-99-21,2000WL 1824463, *19 (November 22, 2000) (Director's Determination) 

### ("SMAA") (emphasis added), aff'd, 2003 WL 1963858 (February 4, 2003) (FinalAgencyAction). The Pending Quiet Title Action. The City ownsthe real estate underlying SMO infee simple, butleaseditto the United States in 1941 to aid inthe war effort. In 1948, five years before the lease wouldhave expired under its ownterms in 1953, the United States andthe City executed anInstrument ofTransfer ("lOT") (atrue and correct copy ofwhichis attached as ExhibitB), wherebythe United States assignedits temporaryleaseholdinterest inthe Airport backto the City. TheIOTprovidedthatifthe Citybreachedits obligations underthe lOTto operate SMO as an airport, thenthe "rightstransferred by [the lOT]"- i.e., thetemporary leaseholdthat expired in 1953 and certainimprovements thatbynowhave long exceededtheir useful lives- would "revert"to the United States. 

### !d. at 6. Butbecause the leasehold would have expired in 1953 in any case, there has beennothingleft ofthe leaseholdto revertto the United States for more than 60 years. In 2008, the FAAtookthe surprisingposition, at complete odds with its own determination in

### SMAA thatthe Citywas only obligatedto operate SMO as anairport until July
31, 2015, thatthe IOT from the United Statesto the Citytrumpedthe 1984 SettlementAgreement and obligatedthe Cityto operate SMO as anairportforever- or else the airport would "revert" to the United States. The Citythereupon filed a QuietTitleAction, City of SantaMonica v. UnitedStates, C.A. 2:03-cv-08046-JFW-VBK (C.D. Cal. 2013) (the "QuietTitle Action"), seeking a declarationthatthe United Stateshad.no interest inthe Airportthat could somehow "revert"to the United States ifthe Citydiscontinueduse ofSMO as an airport. Withoutreaching the merits ofthe City's claim, the District Court dismissedthe complaint as barred byatwelveyear statute oflimitations. 28 U.S.C.§ 2409(a). City of SantaMonica, 2014 WL 1348499, *8-13 (C.D. Cal. 2014). The District Courtreasonedthatthe City knew or shouldhave known in 1948 thatthe United States claimed ownership rights inthe landunderlying SMO, eventhough such ownership rights were neverheldbytheUnited States, couldnottherefore have been transferred bythe United States to the City, and could nottherefore "revert"to the United States ifthe City breachedthe IOT. 

### Id at *8-11. The City appealed from the District Court's dismissal ofthe Quiet Title Action, arguing thatthe City couldnotpossiblyhavebeenonnotice thatthe FAAwould claim, 60 years later, thatthe IOTprovided for a "reversion"to the United States oftitle to airportpropertytheUnited States neverheld. 1 TheNinth Circuitheard oral argument onMarch 19, 2016 and tookthe City's appealunder advisement. ThePendingPart 16 Proceeding Concerning The Duration ofthe City's Grant Assurances. The Citylast accepted a grant agreement withthe FAA onJune 29, 1994. That grant specificallyprovidedthat:

1Fora more complete description ofthe City's arguments inthe Quiet Title Action, pleasereferto the Principal Brieffor Plaintiff-AppellantCity ofSantaMonicain City of SantaMonica v. UnitedStates, AppealNo. 14-55583 (9th Cir.) (atrue and correct copy ofwhichis attached as Exhibit C).



### 4[t]he terms, conditions and assurances ofthe grant agreement shall remain infull force and effectthroughout the useful life ofthe facilities developed orthe equipment acquired,
... but in any eventnotto exceedtwenty (20) years from the datepfthe acceptance of a grantoffer of Federal fundsfor theproperty. NationalBusinessAircraftAssociation v. City of SantaMonica, California, FAADocketNo. 16- 14-04 ("NBAA"), at 13. Accordingly, the City's grant assurance thatthe City continueto operate SMO as anairport expiredno laterthanJune 29,2014,twenty years after June 29, 1994. The FAAhaspreviously acknowledged as much. "Whenthe City'slast grant agreement expires in approximately 2014, the AIP grant sponsor assurances will no longerrequire the Cityto operate theAirport as an airport." SMAA, 2000 WL 1824463, at* 19. And oncethe obligationimposed bythe grant assurances expired in2014, the City's only obligationto continue to operate SMO
as anairport derived from its 1984 SettlementAgreement withthe FAA, whichrequired the City to operate SMO as an airport onlyuntil July 1, 2015. However, inNBAA,FAADocketNo. 16-14-04,the complainants filed a Part 16 complaint against the City seeking a declarationthat the grant assurances providedby the City, includingthe assurance thatthe Citymaintain SMO as an airport, didnot expire inJune 2014, butrather extenduntil August 2023. The complainants assertedthatwhenthe City andFAA amendedthe 1994 grant onAugust 27, 2003 to increasefederal funding by $240,600, they effectively "resetthe clock" so thatthe grant assurances wouldnot expire untilAugust27, 2023. 

### !d. at 11-12. The City reasonably contends that NBAA'sPart 16 Complaint is contraryto theplain terms ofthe 2003 grant amendment andtheunderlying 1994 grant agreement. Byits ownterms, the 2003 amendment rests entirely on a grant which the City accepted in 1994. The 2003 amendment was not a new grantrequiring a new grant acceptance bythe City. The 2003 amendment specificallyprovides that, otherthanthe grant amount, "[a ]II otherterms and

5conditions ofthe GrantAgreement remain in full force and effect." Jd at 15. These "terms and conditions" include the original20 year duration ofthe grant assurances andthus expressly preserve the outside date ofJune 29, 2014 for the expirationofthe City's grant obligations. Nevertheless, onDecember4, 2015, theDirectorissued his determinationthatthe City's grant assurances willremain ineffectuntilAugust 27, 2023, onthe theorythat eventhoughthe 2003 amendmentwas not a new grant, itwas "akinto a new grant." NBAA at 16, 19. The City reasonably contends thatthis finding isunsupportedby and inconsistent withthe applicable statutes, regulations and grant assurances. The Citypromptlyfiled anappeal withtheAssociate Administrator and thematteris pendingbefore the FAA, whichcurrentlyhas until June 15, 2016, to issue its Final Decision.2 Inthe eventthatthe FAA'sFinal Decisionis adverse to the City, giventhe City Council'spublicly declared commitmentto establishing local control atthe earliest opportunity, the Citywill almostcertainly exercise its right ofappeal to the United States Court ofAppeals under 49 U.S.C. § 46110. TheInstantPart 16 Complaint. After reciting**in~~** 19-37 a litany ofpurported backgroundfacts whichthe Complainants concede are notthe subject oftheir Complaint, they assert four distinct claims: Part**I,~~** 43-68, alleges thatthe City is improperly diverting airport
revenue to repayloans to the airport; PartII,**~~** 69-126, alleges that the Cityhas imposed excessive andunreasonable landing fees; Part**III,~~** 127-136, alleges thatthe Cityis charging

2 For a more complete description ofthe City's arguments on appeal to the Associate Administrator, pleasereferto the Brieffor Respondent City ofSantaMonica on Appealfrom the Director's Determination inNationalBusiness AircraftAssociationv. City of SantaMonica, FAA DocketNo. 16-14-04 (a true and correctcopyofwhichis attached as ExhibitD).

6belowmarketrents to a non-aeronautical tenant; and Part**IV,~~** 137-153, sets forth the Leasing Process Claims that are the subject ofthe City'smotionto dismiss? The Complaint alleges ingeneral terms that "virtually all airportleases terminated by their terms onJuly I, 2015" andthat "the City undertooklittle effortbefore, or even after, that date to develop leasing criteria, negotiate leases or finalize leasenegotiations andterms."**Complaint~** 142. As a result, the Complaint alleges, Bill'sAirCenter and KimDavidson Aviation "havefor months beenforced to operate their established businesses solely on a holdover, monthto month basis since July 1, 2015."4**!d.~** 143. Most ofthe Complaint's specific factual allegations describe the City's efforts, beginning onMarch 24,2014,to develop
a newleasingpolicy for airporttenants. 

### !d.**~~** 144-146. Duringthisperiod, the Complaint alleges, "the Cityhas nowtakenthe de facto position that no leases beyondmonth-to-monthwill be offered to aeronautical tenants (eventhoughnon-aeronauticaltenants have been granted multi-year terms)." 

### !d.**~** 150. Pursuantto 14 C.F.R. § 16.26(b)(ii),the Cityhas movedtodismisstheLeasingProcess Claims because they fail ''to state a claimthatwarrants an investigation or further actionbythe

3 Because the City is moving to dismiss PartIV ofthe Complaint, the City is notpresentlyrequiredto file its answer to PartsI-III ofthe Complaint. See 14 C.F.R. § 16.26(b)(5). The Citybelieves thatthe loaos ithas made to SMOthe subject ofPartI ofthe Complaint- can lawfullybe repaid with airport revenue, but acknowledges that the applicable rates ofinterest, ifany, to bepaid on outstandingloaobalances mayneedto be adjustedto conformto federalrequirements. The City will attempt in good faith toresolvethis issue while its motion to dismiss is pending beforethe FAA. The Citybelievesthatits new laoding fees- the subject ofPartII- completely conform with all applicable federal requirements. The City acknowledges its obligationtocharge fair marketrentalrates to its nonaeronautical tenants at SMO aod will take corrective action, ifaoyis warraoted, withrespect to the rentalrates the City charges SantaMonica College- the subject ofPartIII ofthe Complaint. 4 Efforts are currentlyunderwayto 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 opposedto a motion for summaryjudgment under 14 C.F.R. § 16.26(c), because the City's motion is based solely on the allegations ofthe Complaint aod other materials that are all appropriate for 'Judicial"noticebytheFAA on a motion to dismiss, including exhibits to the (continued
...)



### 7Argument I. THE CITY'SPROMULGATION OF ITS NEWLEASING POLICYMOOTS THE LEASING PROCESS CLAIMS. OnMarch22, 2016, severalweeks afterthe Complaintwas filed, the SantaMonica City Council adopted itsNewLeasing Policy. This developmentmootsthe Leasing Process Claims byestablishing aNewLeasing Policywhich specifically recognizes that 

### "all existing airport tenants will begiventhe opportunity to submit a lease applicationtothe City," NewLeasing Policy '1f B.5 (emphasis added); that "[!]easeterms may.be month-to-month or longer," id. '1['1[ B.I, E.l (emphasis added); and that authorizeduses include "uses requiredbylaw." 

### Id '1f 

### A. I.b. The preamble to the NewLeasing Policy emphasizes that "the City Council seeks to have an airporttenant mixthat
... [c]omportswith

### any applicable legal requirements." 

### Id at 1 (emphasis added). The CityManager (andthe City Council, for leases that extend beyond June 30, 2018) have not yet appliedthe NewLeasingPolicy. Nonetheless, the NewLeasing Policymoots the Complaint's allegations about the City Council's delay inpromulgating leasing criteria and moots the Complaint's allegation about a "de facto" policy requiring month-to-month leases. Anyfurther challengetothe City'sleasing programwillhave to awaitthe City's application of the NewLeasing Policyto specific Airporttenants. As the FAAemphasizes invirtually every one ofits Part 16 determinations:
(continued
...) Complaintitself, Jones v. Lieber, 579 F. Supp. 2d 175, 179 (D.D.C. 2008);pleadings in otherrelatedjudicial or administrative proceedings, id.; and the City's ownNewLeasing Policy, a municipal procedure, rule orregulation. Gambrelv. Fulwood, 950 F. Supp. 2d 109, 116 (D.D.C. 2013) (municipal statute and guidelinesregardingparole violations); D.C. Professional Taxicab DriversAssociationv. District of Columbia, 880 F. Supp. 2d67, 72 (D.D.C. 2013) (municipal taxicabregulations). Consideration ofsuchmaterial does notconvert a motion to dismiss into a motionfor summaryjudgment. Longv. Safeway, Inc., 842 F. Supp. 2d 141, 144 (D.D.C. 2012), quotingBakerv. Henderson, !50 F. Supp. 2d 13, 15 (D.D.C. 2001).



### 8[t]he FAA Compliance Programis designedto achieve voluntary compliance with federal obligations
. . .. Therefore, in addressing allegations ofnoncompliance, the FAAwill make a determination as to whether an airport sponsoris currently in compliance withthe applicable federal obligations. Consequently, the FAA will considerthe successful actionbythe airport to cure anyalleged orpotential past violation ofapplicable federal obligation[s] to be grounds for dismissal of such allegations. ThermcoAviation, Inc. v. City of LosAngeles, FAADocketNo. 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 dismissedPart 16 complaints whentherespondenthas taken actionthatresolves a claim ofa continuingviolation ofits grant obligations. See, e.g., ThermcoAviation, Inc., at26 (FAA rejects claim where "corrective actionis under way or, perhaps, completed"); SanfordAir, Inc. v. Town of Sanford, Maine, FAADocketNo. 16-05-04, 2007 WL 926175, * 18 (March 5, 2007)(Final Agency Decision) (FAAdetermines thatFBO's claim regarding improper audit ofits operations is moot after Townwithdraws request for audit); Keathly v. City of McKinney, Texas, FAADocketNo. 16-03-14,2004WL 3198207, *26 (October 13, 2004) (Director's Determination) (Director determines that citizen complaintregardingnoise abatementprocedure is moot after airporthad "made steps"to eliminateprocedure); RogerLeonard Cardinals'PilotShop, Inc. v. Chesapeake AirportAuthority, FAADocketNo. 16-0l-06,2002 WL 31731054, *17 (October 22, 2002) (Director's Determination) (Director determines exclusiverights claim moot after airport sponsor terminates airport management agreementwithFBO); VortexAviation Services, LLCv. Jackson HoleAirportBoard, FAADocketNo. 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 nowthatthe Cityhas adopted its NewLeasing Policy, the LeasingProcess Claims should be dismissed. Although the
9Cityhas not yet applied its NewLeasingPolicy, itwould be improper for the FAAto assume thatthe City will do so ina mannerthatviolates the law. As the FAAreasoned in a similar circumstance: The Director correctly observes that the circumstances under which [the Complainant] maybe denied access to the Airport, or unjustly discriminated against, inthe future, is conjecture
...Evenifthe Director were to suspectthat the [Respondent] woulddeny access inthe future,
... the Directorwouldbe unableto make such a finding ofnoncompliance because there is no preponderance ofevidenceuponwhichtobase such a finding. ThermcoAviation, Inc., at 21-22. Here, any insinuations bythe Complainants abouthowthe Citywill applythe NewLeasingPolicy inthe future would, bynecessity, be mere speculation, andthe Director cannotbase a finding ofnon-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 ormay nothappen contingent on some future eventare not germane to this investigation"). 

### II. THE COMPLAINANTS CANNOT SHOW THAT THE NEW LEASING POLICY IS INVALID "INALL ITS APPLICATIONS" AND THEREFORE ANY FACIAL CHALLENGE TO THE NEWLEASING POLICYMUST FAIL. Evenifthe FAAwere to reviewthe legalityoftheNewLeasing Policy onits face, before the Cityhas ever applied itinconnectionwith specific proposed leases, the FAA should determine that, underthe specific andunique circumstances at SMO, the NewLeasing Policy is
a reasonable andpermitted exercise ofthe City'sproprietarypowers. Infact, the FAA has already determinedthat, giventhe expiration ofthe SettlementAgreementbetweenthe City and the FAA, "itwould likely be unreasonable for theAirportto be requiredto enterinto a lease agreementwith an FBO or any aeronautical userthatwouldprovide for the Airportto be operated as anairport beyond July 1, 2015." SMAA, 2000 WL 1824463, 

## *19 (emphasis added).

10Itis well establishedthat "[a] facial challengeto a legislativeActis, ofcourse, the most difficult challenge to mount successfully, sincethe challengermust establishthat no set of circumstances exists under whichthe 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); seeLewis v. Government of Districtof Columbia, 2015 WL 8082293 *6 (D.D.C. 2015) (facial challengeto mayoral order regarding drugtesting). Stated otherwise, to invalidate the City'sNewLeasingPolicy atthis stage, the Complainants must show- andthe FAAwouldhave to fmd- thatthe NewLeasing Policy couldnotpossibly be appliedin a lawful way and is invalid "inall ofits applications." Hodge v. Talkin, 799 F.3d at 1156 (quotations omitted). The Complainants cannotpossibly make that showing. The Cityhas reasonablytakenthe positionthat itwas entitledto take control ofthe real estate underlying SMO as early as July 1, 2015. This argument is currently being advanced by the Cityintwo distinctlegalproceedings: inthe Quiet Title Action againstthe United States currentlypending inthe Ninth Circuit Court ofAppeals; andinthe Part 16 proceeding on NBAA'scomplaint currentlybefore the FAA'sAssociate Administratorfor Airports. As these pendinglegal proceedings underscore, the contextinwhichthe Citypresently claims and exercises its rights as an airportproprietor is nothing ifnotunique. Until the City's claims to be free ofany continuing federal obligationto operate SMO as an airporthave beenresolved,the FAAcannotproperly compelthe Cityto give up theproprietaryrights it is advancing inthose two proceedings byforcing the Cityto enterinto aeronautical leases withterms thatmay extend beyond thetime the City is otherwise obligatedto operate SMO as an airport. Pendingthe conclusion ofthese legal proceedings, the City'sNewLeasing Policy strikes areasonable balance betweenthe City's lawful assertion ofits rights inthe Quiet Title Action and NBAA Part

1116 Proceeding, and the City's obligationunderthe 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 sponsorto provide access to aeronautical users on reasonable, notunjustly discriminatoryterms." De Vries v. City of St. Clair, Missouri, FAA DocketNo. 16-12-07, at 24 (May 20, 2014) (Director's Determination), quotingJimsairAviation Services, Inc. v. SanDiego CountyRegionalAirportAuthority, FAADocketNo. 16-6-08,2007 WL 2405821, *15 (April12, 2007) (Director's Determination). The requiremento;f"reasonable"
access does not, however, entitle a "lessee orpotential lessee
...to any specific.lease terms," De Vries, at 25, and does "notrequirethatan airport sponsorrecognizepast occupancy as a preference for future occupancy." Id. Moreover, the FAAhas specificallyrejectedthe suggestion thatthe City, as an airport sponsor, is necessarily obligatedto enterinto longterm leases withits tenants:
no entity is 'entitled' to a long termlease at the location ofits choosing and upon its preferredterms and conditions
... A sponsor is notrequiredto develop any andall parcels oflandin amanner consistent with the wishes ofany one party, but rather may exercise its proprietaryrights and powers to develop and administerthe Airport's land in a manner consistent withthepublic's interest. SMAA, 2003 WL 1963858, *17. Instead, the FAAhas recognizedthat "reasonable" access claims involve anintensely fact-bound inquiry. Whetherthe sponsoris actingreasonably "depends onthe exactcircumstances." ThermcoAviation, Inc., at21. Forexample, theFAAhas concludedthat, depending onthe "exact circumstances," a delay innegotiation ofleaseterms, a refusal to enter a long-term lease, or the termination ofa lease may be reasonable. Jimsair AviationServices, Inc. v. SanDiego CountyRegionalAirportAuthority, 2007 WL 2405821 (Director's Determination) (April12, 2007) (delay innegotiation not unreasonable when caused

12by airport's consideration ofa competitive solicitationfor the award ofthe nextFBO contracts); ALCA v. Miami-Dade County, Florida, 2010 WL 3826299 (Director's Determination) (August 31, 2010) (denial oflongterm lease notunreasonable wheretenant failed to propose attractive developmentplans withfinancing requirements); Skydive Monroe, Inc., v. City of Monroe, Georgia, FAADocketNo. 16-06-02, 2007WL 1058450, 

## *13 (March 30, 2007) (Director's Determination) (termination oftenancy at willnotunreasonable when based on litigationrelatedto ownership ofcomplainant). Giventhe City'spending legal challenges, the FAA couldnotproperly find inthis case thatthere is no possible set ofcircumstances that would make the NewLeasingPolicyreasonable. The FAAmust, therefore, reject any facial challenge to the NewLeasing Policy. 

### B. The City's New Leasing Policy Provides Reasonable Access to the Airport While The City'sAppeals Are Pending. The Complainants assert that "reasonable" access means a blanket right to renegotiate longterm leases longbefore the expiration oftheir original leases.**Complaint~~** 138-144. Giventhe concurrent administrative andjudicial appeals bythe City's concerning its right to take immediate control ofthe Airport's real estate, itwas reasonable for the Cityto develop aNew LeasingPolicybefore offering any ofits tenants the opportunityto apply for newleases, and for the Cityto reserve the right, inthe NewLeasing Policy, to limitfuture use and occupancy ofthe airport to month-to-monthterms. The FAA cannot compel the Cityto give up the rights the City is currently asserting inthe QuietTitle Action and inthe NBAAPart 16 Proceeding, by forcing the Cityto enter into longtermleases nowwith aeronautical tenantsthatmay, depending upon the resolution ofthesetwo proceedings, extend years after the City has the legal rightto take local control ofSMO'sreal estate.

13The FAAhas already addressed, and rejected, similar challenges to its leasingpractices at SMO. InSMAA, two aeronautical tenants allegedthatthe City was engaging inunjust economic discriminationbyapplying a leasingpolicythatdenied them longterm leases. 2000 WL 1824463. TheDirectorrejectedthat claim based inlarge measure onthe July 1, 2015 expiration date inthe SettlementAgreement. The Directed concludedthatitwouldbe 

### "unreasonable" for the FAAto requirethe Cityto enter into leases with an FBOthat extended beyond July 1, 2015, 

### id 

## *19, andnotedthat other aeronautical leases were "timedto expire in2015 whenthe City wouldno longerbe obligatedto operate the Airport." 

### Id The Complainants acknowledge this authority and the force ofthe 1984 Settlement

. Agreement, Complaint**~** 151, but contend, nonetheless, thatthe City's assertedrightto closethe

Airport is subordinate to its federal obligationto enterinto longterm leases. 

### Id.**~** 152. The authorityreliedupon, 

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

### De Vries, therespondent was legally obligated, by a grant agreementfor land acquisition, to operatethe airport as an airport inperpetuity. 

### Id at 2. The respondent submitted a requestto the FAAfor permissionto closethe airport for lack oftraffic andrevenue, and then allegedly used its pending request as an improper excuse to deter future tenants. 

### Id at 3-6. The FAArejectedthe Part 16 complaint, finding thatthe complainants there were notcurrentlybeing denied access to the airport. 

### ld at 26. The FAAalso cautionedthe respondent, however,that it couldnotuse "its intent and desire to close the airport" to evade its grantresponsibilities. 

### Id at 26. Here, the City has morethanmere "intent and desire"; ithas asserted a 

### legal rightto close the Airport (which the respondentin

### De Vries never claimed). 

### See also UnitedStates Construction Corp. v. 

### City of Pompano Beach, Florida, FAADocketNo. 16-00-14, 2002 WL 1821882 (Final Agency Action) (July 10, 2002) (sponsor, which did notassert legal rightto close airport, could notforce tenants

14to agree to two year cancellationprovision inlease to make it less expensiveto close airport). The City is entitledto reconcile its federal obligation to provide reasonable access to aeronautical
users withits duly claimedrightto take local control ofthe Airport. SMAA, 2000 WL 1824463, *19. The Complainants allege thatthe City's delay inpromulgating its NewLeasing Policy itselfreflects a denial ofreasonable access. Complaint

# n 144-145. This claim, 

### inthe circumstances here, is meritless. The Complaint itselfreflects that City staff, includingthe City Attorney, andthe City Council deliberated extensively on alternatives to address the uniquely challenging leasing issues at SMO. These issues are legally complex: the Cityis asserting rights to take control ofSMO's real estate immediately, yet acknowledges its obligations to provide reasonable access to its aeronauticaltenants in the meantime. Since early 2014 whenthe City beganwork ontheNewLeasing Policy, Complaint**~** 144(a), theNBAAfiled its Part 16 proceedingto determinethe duration ofthe City's grant assurances, the Director issued his Determination, andthe City lodged its appeal withthe Associate Administrator. Similarly, inthe Quiet Title Action, the District Courtissued its decision, andthe matter was briefed and argued inthe Ninth Circuit. 

### Inlight ofthese legal developments, it is hardly surprisingthatthe Citytook considerable time and effortto develop its NewLeasing Policy- or that dev€Iopmentofthe policyinvolved considerableback and forth between staffand the City Council. Far from foot-dragging, the delays involved 

### inthe New LeasingPolicy are the inevitable result ofan airport sponsor's efforts to harmonize its grant
assurance obligations withits assertedrights to take immediate control ofthe real estate underlying the airport.

15TheNewLeasingPolicyreflects a facially reasonable approachto these circumstances. The Complainants couldnever showthatthepolicy is invalid "inall its applications." Its preamble expresses the goal thatthe airport's tenantmix "[c]omport[] with any applicable legal requirements." NewLeasingPolicy at 1. Itprovides that "all existing airporttenants will be giventhe opportunityto submit a lease application." 

### ld.**at~** B.S. Itspecifically authorizes "uses required by law," 

### id.**at~** A.l.b, and leases longerthanmonth-to-month. 

### ld.**~** B.1. In fact, leases may extendbeyond June 30,2018 withthe approval ofthe City Council. 

### ld.**~** E.1 There is no basis onwhichthe FAAcould simply assume, or guess, thatthe Citywill applythese directives in a manner incompatible withfederal law. See ThermcoAviation, Inc., 2007 WL 1893821, *19.

16Conclusion For all ofthese reasons, the FAA should dismiss PartIV ofthe Complaint, the Leasing Process Claims set forth 

### in

## 'lf'lf 137-154.

Aprilll, 2016 Jessica
.

### W ANDERS KREIGERLLP I CanalPark, Suite 200 Cambridge, MA 02141 617.621.6560 slewis@andersonkreiger.com MarshaMoutrie CityAttorney JosephLawrence Assistant CityAttorney CITYOF SANTAMONICA 1685 Main Street, Room 310 SantaMonica, CA 90401 Marsha.moutrie@smgov.net

17CERTIFICATE OF SERVICE I hereby certify in accordancewith 14 CFR § 16.15(a) that Ihave onthis day servedthe foregoing Memorandum In Support ofMotion ofRespondent, CityofSantaMonica, to Dismiss Part IV ofthe Complaint, The LeasingProcess Claims, onthe following persons at the following addresses by email and first-class mail: FAAPart 16 Docket Clerk AGC-600 Federal AviationAdministration 800 Independence Avenue, SW Washington, D.C. 20591 9-AWA-AGC-Part-16@faa.gov
April!!, 2016

18 Richard K. Simon 1700 Decker School Lane Malibu, CA 90265 310-503c7286 rsimon3 @verizon.net

# EXHIBIT A

### State ofCalifomia County ofLosAngeles City ofSantaMonica
I, Vernice Hankins, StaffAssistant to the City Clerk ofthe City ofSanta Monica, doherebycertifythatto thebestofmyknowledge and belief theforegoing is a full, true and corre.ct copy ofthe March 22. 2016 City Council Meeting Complete Agenda 

### noting the approval ofltem 8-A, which is on file in The City Clerk'sDepartment, andthatIhavecarefullycomparedthe samewiththeoriginal(s). INWITNESS WHEREOF,Ihavehereunto setmyhandandaffixedthe seal ofthe City ofSantaMonica, this gth

### day ofApril, 2016.

# 1L~L~ VerniceHankins

.StaffAssistantIII, City Clerk's Office City ofSantaMonica

### 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 thatAgenda Items may be reordered during the Council meeting at the discretion ofthe City Council.) 

### 1. CLOSED SESSIONS 1.A. Conferencewith Legal Counsel • Existing Litigation • Litigation has been initiated formally pursuantto Government Code Section 54956.9 (d)(1): McGroutheriBruni v. City ofSanta Monica, Los Angeles Superior CourtCase Number BC 555 106 

### ACTION: Approved Settlement No. 10277 (CCS) in the amount of $30,000. 1.8. Conferencewith Labor Negotiator. City Labor Negotiator: Donna Peter, Directorof 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. Conferencewith Real Property Negotiator: Property: 1241 Fifth Street City Negotiators: Andy Agle, Director of Housing and Economic Development Under Negotiation: Terms ofAffordability. Covenant Owner ofRecord: Alon Roma, LLC 

### ACTION: Heard. No reportable action taken. 1.0. Conferencewith Legal Counsel • Existing Litigation • Litigation has·been initiated formally pursuantto Government Code Section 54956.9 (d)(1): National Business AircraftAssociation, et al. v. City ofSanta 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 Managerto 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 notto exceed $150,000. 

### 2. Authorize the City Managerto negotiate and execute afirst 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 forthe June 5, 2016 

### open streets event. This will result in atwo-year amended agreement in an amount notto exceed $257,000, 

### with three additional one year renewal options in the amount of $300,000, 

### on the same terms and conditions for atotal amount not toexceed $557,000 

### with future yearfunding 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 ofOrdinance 

### 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 Policyfor Santa Monica Airport Recommended Action 

### Staff recommends that the City Council:

. 1. Approve the attached Santa Monica Airport Leasing and Licensing Policyfor the leasehold and license management ofproperties at the Santa Monica Airport (Airport or SMO). 2. Authorize the City Managerto negotiate and execute leases at the Santa Monica Airport in accordance with this Policy. CityofSanta 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 considerthe 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 ofCouncilmemberWintererthatthe Council allocate $7000 to the Ocean ParkAssociation, a 501 (c)3, to hire a professional coordinator to assist with organizing and staging ofthe annual Fourth ofJuly Parade on Main Street. ACTION: Approved. (100-003-02) 

### 14. PUBLIC INPUT (Public comment is permitted only on items not on the agenda that are within the subject matterjurisdiction ofthe City. State law prohibits the City Council from taking any action on items not listed on the agenda, including issues raised underthis 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 bythe City and distributed to amajority ofthe 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

## ofSanta 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 bythe City Managerto analyze leasing and licensing issues, to present leasing and licensing recommendations to the City Council, and to render leasing and licensing decisions underthe authoritygranted bythe City Council. By adoptingthe Airport Lease Policy, the City Council seeks to have an airport tenant mixthat:
• Is harmonious with the nearby built environment by protectingthe health and safety ofAirport neighbors.
• Maintains a sustainable Airport Fund that is independent from the General Fund and othersubsidies.
• Comports with any applicable legal requirements and protects the City's rights that relate to leases atthe 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 protectthe health ofAirport neighbors and users and protect the City from future environmental damage exposure. General Provisions. The majority ofthe Airport revenue is derived from leases. To help supportthe Airport's fiscal self-sufficiency, all rents, fees, and charges must reflect fair marketvalue. To achieve the goals ofthe 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 limitedto: parks and open space, arts/cultural, creative space, professional theaters, museums, artiststudios, art galleries, photograph studios, uses customary or incidental to the production or distribution of motion pictures, educationalfacilities, professional and general offices, public or private schools existing priorto September of 1984, warehouses, self-storage/public mini-warehouses, and restaurants with 500 square feet offloor 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 offloor area.Theaters. New public or private schools or educational institutions. 3. 

### Prohibited Uses: Prohibited uses include: any use involvingthe manufacture, processing, storage, ortreatment of products, which by nature ofthe operation is likelyto 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 aterm 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 ortesting as appropriate and necessary, and any needed remediation shall be performed priorto establishment of new uses. All lessees shall be responsible for any environmental contamination, resulting from their prior use, as acondition to a renewed orextended lease. Environmental clean-up will be required as a condition ofany renewal or extension. Atthe time ofthe application, an assessment ofthe 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 ofsales. The City shall have the right to audittenant'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 tosubmit 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 ofthe airport. Tenants undera whole building lease shall be responsible for maintenance and repair ofsaid buildings. 7. 

### Transfer of Interest. Space sharing is prohibited withoutthe written consent ofthe 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 propertytaxes and assessments (including Possessory InterestTax), insurance, and utilities.

3

### 10. 

### Commercial Operations Permit (COP). Prospective tenants proposing to use the Santa Monica Airportto 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 theAirport Commission fortheir recommendation and comment priorto City Manager's approval. 

### 11. Master Tenants. Mastertenantagreements are to be phased out in an orderlytransition. 12. 

### Sub-Leasing. New sub-leasing shall be prohibited. Existing sub-tenancies shall be subject to an orderly phase-out atthe sole discretion ofthe City. 13. 

### Insurance. Airport lease agreements shall minimize the City's financial and economic risk, by incorporating reasonable indemnification and insurance provisions. 

### 14.Dailyand 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 mannerthat 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 protectthe 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/orservices 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 forthe available space; provide information aboutthe 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 Airportduringweekends, holidays, and evening hours. 6. Recruitmentfor artist day studios will adhere to the criteria set forth by the Cultural Affairs Division ofCommunity and Cultural Services Department. Candidate tenants for available Artist Day Studio space are required to file Program applications forscreening 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 maintainingtheirfacilities 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 priorto new orextended leasehold occupancy and refurbished, by the City ortenant (at the City's election), to adecent, safe and sanitary condition appropriate for use. Iftenant makes improvements to the facility as a mutually agreed upon condition ofa lease, the City mustfirst review and approve the proposed design and scope ofwork. All necessary building permits must be obtained and the work must be inspected for compliance with applicable code(s). Appropriate rental credits forthe approved work performed may be
5

### negotiated as part ofthe lease. AnyTenant 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 responsibilityfor maintenance and repair ofroofs, 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 tothe 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 otheragreements. In addition, the City may add to any Lease or License further ordifferent or additional operational and performance standards as the City concludes are appropriate to the particularTenant's operation. 6. Upon confirmation thatthe 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 forterms greaterthan terms specified in these guidelines require City Council approval.


### SECTION E: LEASE APPROVALS AND & 

### DELEGATION OF AUTHORITY 1. The City Manager has the authorityto negotiate and execute month-tomonth leases and leases that expire priorto June 30, 2018 provided the City Managerfinds the proposed use is consistent with this Leasing Policy. To be valid, such leases must be on the basis ofwritten agreements prepared and approved as to form by the CityAttorney. Leases forterms 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 ofprospective 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 interestfor 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~a** tionl 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 Angele1 1 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'n1t.Q Statea 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, oitu&to in tho C1t;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& R 0rth 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 K 0rthwoatorly line at laia Lot 9•, oontainint 4'0 Jquare teet, more or lela. (Z) Treat 

### #Z • Atemporary 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 Aotrip 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° !1 1 '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 - Atomporary**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 • Atomporary**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, aaintain 1 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 34 1 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°11 1 &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 w1to 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 1t, (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 p011esa1on 1 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 ex**oluai~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**•~p** plying 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 onglne1 1 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«bil1ty 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 IIJU 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:ed 1 &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~

.'•

. "'tl'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 • 1·& " l-1 111 1-B 2661567-1-1 " 1·2 • 1•3 • 1-4 2661569·1-1' 2861670·1-1 • 1-2 "**1-~** 2861586-1·1 2661511·1-1 &009-5711 WAA•Zl 

### fa 2667337·3-4 WAA·Zl 

### f6 266733?
...·4 WU·2l 

### f3 2667U2·8·B IIAA•Zl 

### il'l Z66HU·2·1 11AA·21 flO 8009·lll2S·l·l BP·1 

### .!!!!! !!!!ill. Ice Choot oa.



### • 

## • 

## ••• Ice Box 

## ••• Steel Druu 

## •••

• 

## • 

## ••• • 

## • 

## ••• • • 

## ••• • • 

## ••• " 

## " 

## ••• " • 

## ••• " 

### • 

## ••• F.1re btiugu.ilher 

## •••

• " 

## ••• " 

### • 

## ••• • • 

## ••• lUre Camollt"h&e 

## ••• Hooo Fibre Firo w/••••1• 

## ••• 

## • • 

## • ••• 

## • • • 

## ••• Oak Barrel oa, Plag Poag 7ablo .a, Truak tire, pu.por Traotor, tmternational, Mad.TDR 18 Bulldaser**~raotor,** Pordeon Grader, Motor1sed, J.D. Adam• Kod. 201 Crane, traotor,**Hu~s-Keenan,** Model MC2R**Tr~ck,** Fire**~** Re1oue, International r.**u~/Jj ~UAN,ITY**  

# ' 1 1 2' 2 1 1' 

### s· 7 B 1 

# • 10 4 12
. 10 2' 

# ' 2
. 1. 1**.~.**:**nAK-~b-~~** IHU uo:<; rn W**~L~-KI:\i** AUniN**'~** ' I ' '.,' \ r. IU/Ij '•



### Book 

# 2S055 Page 2 I'), 

# l

.'·. ' 

# . ST;.'fll Or' Ci.LIFORNif, COUIIr:t' OF LOS /,tlGKLES

me 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 VIalter 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 tha1United States of /.rncl'ioe and the
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## ·- ·-· .... excouted**~aid** instrument. '1ITNESS my h•nd and otficiol seol.

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UNITIID**STA~** OF AMERICA WlW**Ao~et~ A<lml.nj.st.ra~ion** **CER~IFICATB** 

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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
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.... 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••l11 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 

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### 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
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### :t.f0S""::[)>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

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# 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

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# I

# EXHIBIT CCase: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 1 of 68


### No. 14-55583 UNITED STATES COURT OFAPPEALS FORTHE NINTH CIRCUIT 

### CITYOF SANTAMONICA, Plaintiff-Appellant, v. 

### UNITED STATES OFAMERICA, FEDERALAVIATIONADMINISTRATION, and MICHAELP. HUERTA, inhis official capacity as AdministratoroftheFederalAviation Administration, Defendants-Appellees. 

### Appeal from the United States District Court for the CentralDistrict ofCalifornia, Hon. JohnF. Walter (Case No. CV 13-8046-JFW(VBKx)) PRINCIPAL BRIEF FOR PLAINTIFF-APPELLANT CITY OF SANTA MONICA 

### MARSHAJONESMOUTRIE CityAttorney 

### JOSEPHLAWRENCE

Assistant CityAttorney 

### LANCE S. GAMS IVANCAMPBELL

Deputy CityAttorneys 

### 1685 Main Street, Room 310 SantaMonica, California 90401-3295 Telephone: 310.458.8336 DEANNEE. 

### MAYNARD MARC A. 

### HEARRON JESSICAE. 

### PALMER MORRISON&

### FOERSTERLLP 2000 PennsylvaniaAvenue, Suite 6000 Washington, D.C. 20006-1888 Telephone: 202.887.8740 DON G. RUSHING JAMES W. HUSTON WILLIAMV. O'CONNOR, JR. JOANNA L. 

### SIMON MORRISON & 

### FOERSTERLLP 12531 High BluffDrive, Suite 100 San Diego, California 92130-2040 Telephone: 858.720.5100 Counsel forPlaintiff-Appellant City of SantaMonicaCase: 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 THEISSUE
................................................................................. 1 INTRODUCTION .....................................................................................................1 

### STATEMENT OF THE CASE
..................................................................................3 A. Factual Background
...............................................................................3 

### 1. The City's acquisition ofthe City'sLand
...................................3 2. TheUnited States' World War II

### leases ofthe Airport
..............4 3. 

### The Instrument ofTransfer
.........................................................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 authorityto closethe Airport
.........................................17 7. The 1984 SettlementAgreement
..............................................19 8. The FAA's 2008 change ofposition
.........................................22 9. The City's evaluation oftheAirport's future
...........................24 B. Proceedings Below
..............................................................................25 SUMMARY OF ARGUMENT
...............................................................................27 STANDARD OF REVIEW
.....................................................................................

### 29 ARGUMENT
...........................................................................................................31Case: 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 PerpetualPossession Of) The City'sLand
..........................................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 bythe United States
......................31 2. Any ambiguity in the reverter clause precludes it from triggering the statute oflimitations
...........................................40 3. Recordation ofthe Instrument ofTransfer did not provide notice ofthe United States' claim to title ofthe 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 supportthe district court's conclusion
.........46 B. Even IfThe 1948 Instrument OfTransfer Notified The City Of The United States' Claim, The United States Later Disclaimed Its Interest, And TheLimitations PeriodBeganAnewIn 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 OfFactual Issues Going To The Merits
......56 CONCLUSION
...........................................................................................,............58

11Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 4 of 68



### TABLE OFAUTHORITIES Page(s) CASES 

### AmocoProd. Co. v. UnitedStates, 619 F.2d 1383 (lOth Cir. 1980)
..........................................................................42 Augustinev. UnitedStates, 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. UnitedStates, 52 F.3d202 (9th Cir. 1995)
................................................................................45 GlenbrookHomeownersAss'n v. Tahoe Reg'!PlanningAgency, 425 F.3d 611 (9th Cir. 2005)
..............................................................................30 Hagan v. Gardner, 283 F.2d 643 (9th Cir. 1960)
..............................................................................42 Harden v. RoadwayPackageSys., Inc., 249 F.3d 1137 (9th Cir. 2001)
............................................................................29 Kingman Reef AtollInvs., LLCv. UnitedStates, 541 F.3d 1189 (9th Cir. 2008)
..........................................................49, 53, 54, 58 Kinscherffv. UnitedStates, 586 F.2d 159 (lOth Cir. 1978) (per curiam) .......................................................44 Leisnoi, Inc. v. UnitedStates ("Leisnoif'), 

### 170 F.3d 1188 (9th Cir. 1999)
................................................................32, 44, 53 Leisnoi, Inc. v. UnitedStates ("LeisnoiIF'), 267 F.3d 1019 (9th Cir. 2001)
................................................................31, 43,46

1l1Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 5 of 68



### McFarlandv. Norton, 425 F.3d 724 (9th Cir. 2005)
........................................................................43, 44 

### Michel v. UnitedStates, 65 F.3d 130 (9th Cir. 1995) (per curiam)
...................................................

### .passim Narramore v. UnitedStates, 852 F.2d485 (9th Cir. 1988)
..............................................................................44 

### Nestle v. City of SantaMonica, 6 Cal. 3d920 (1972)
...........................................................................................18 

### Oceanside 84, Ltd. v. FidelityFed. Bank, 56 Cal. App. 4th 1441 (1997)
.............................................................................41 

### Patterson v. BuffaloNat 'lRiver, 76F.3d 221 (8th Cir. 1996)
..........................................................................31, 41 

### PovertyFlats Land & 

### Cattle Co. v. UnitedStates, 706 F.2d 1078 (lOth Cir. 1983)
..........................................................................41 

### SafeAir forEveryone v. Meyer, 373 F.3d 1035 (9th Cir. 2004)
............................................................................30 

### Shultz v. Departmentof 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. ErnstEnters., Inc., 711 F.2d 138 (9th Cir. 1983)
...............................................,..............................56 

### Werner v. UnitedStates, 9F.3d 1514(11thCir.1993)
........................................................................31,44 STATUTES 

### 28 U.S.C. § 2409a(a)
................................................................................................32 28 U.S.C. §2409a(g)
...............................................................................................31

IVCase: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 6 of 68



### 49

# u.s.c. §§ 47151--47153
........................................................................................9 Amendmentto Surplus PropertyAct 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 PropertyActof 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 OTHERAUTHORITIES 

### 1Melvin B. Ogden, Ogden's CaliforniaReal PropertyLaw § 8.2 (1956)
..............42 Airport Compliance Requirements, FAAOrderNo. 5190.6A § 8-2 (Oct. 2, 1989)
...................................................................................................................38 AmericanHeritage Dictionary ofthe EnglishLanguage, https://www. ahdictionary.com/word/search.html?q=revert
....................................................34 5B Charles Alan Wright et al., FederalPractice & 

### Procedure§ 1350 (3d ed. 2012)
..........................,........................................................................................56 Merriam-WebsterDictionary, http://www.merriam-webster.com/dictionary/ revert ...................................................................................................................35 OxfordEnglishDictionary, http://www.oed.com
....................................................35

vCase: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 7 of 68



### JURISDICTIONAL STATEMENT 

### The district court hadjurisdiction 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 hasjurisdictionunder 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 timelybecause the Citybrought suitwithinthe 12-year statute oflimitations. INTRODUCTION 

### The City owns and operates the SantaMonica 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 ofland totaling 168 acres, known as the "Runway Lease" and the "GolfCourse 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 airportforever 

### 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 StatesCase: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 8 of 68



### underthat 1948 Instrument ofTransfer because the United States has 

### never owned the real propertyunderlying the Airport, i.e., the City'sLand. Rather, that 1948 Instrument ofTransfer effected merely a surrender by the United States ofits wartime temporary 

### lease ofthe City's Land backto the City, as well as conveying certain easements, improvements, and chattel. Although the Instrument ofTransfer contains certainrestrictions and obligations, onlythe "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 ofthe United States to reenter the City's Land under the temporary leasehold interest that the United States did transfer expired withthe leases in 1953, leaving nothingto 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 ofits citizens from encroachment by the federal government and to establish the City's right to determine the bestuse ofthe City'sLandfor the benefit ofits citizens. The district court held the City's Quiet Title Act claim was time barred by the 12-year statute oflimitations. The district court erred by not focusing on the precise interests at stake-title to and possession ofthe City's**Land~and** 

### when a reasonable landowner would have been on notice that the United States made an

2Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 9 of 68



### adverse claim to those 

### ownership interests. Nothing in the Instrument ofTransfer gave the City notice that 60 years later the United States would invent an extraordinary new reading ofthe reverter clause to contend that ownership rights

never 

### held by the United States, and thus not transferred to the City bythe United States, could somehow "revert" to the United States. Nor did the Instrument of Transferputthe City onnotice thatthe United States could somehowrepossess the City's Land based on an expired leasehold interest. The City brought suit within five years ofthe 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 rightto perpetual possession) ofthe City's Land, when (as far as the City couldhave known) no dispute existed as to those interests. STATEMENT OFTHE CASE 

### A. FactualBackground 1. 

### The City'sacquisition of the City'sLand 

### 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 ofits early military and civilian aircraft. ER284. In 1926, the City purchased most ofthe land at issue

3Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 10 of 68


### here, obtaining title by grant deed. ER284. The City paid more than $755,000, which in inflation-adjustedterms 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 ofthe land at issue. ER284. Thus, by December 1941, the Cityheldtitle in fee simple to all ofthe City'sLand. ER284. 1 

### 2. The UnitedStates' World WarIIleases of theAirport On May 27, 1941, President Franklin D. Roosevelt issued Presidential Proclamation 2487, declaring an "unlimited national emergency." ER284. The Proclamationrequired "military, naval, air and civilian defenses be put onthe basis ofreadiness to repel any and all acts or threats ofaggression directed toward any part of the Western Hemisphere." ER284-ER285. By that time, Douglas had become a major defense contractor, supplying hundreds ofaircraft in support ofthe
war effort. ER284. In December 1941, the City leased the City's Land to the United States to aid inthe war effort. ER285.

1 

### In 

### April 1945, the United States condemned a number of residential properties on approximately 20 acres ofthe west side ofthe 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-acreparcel on the Airport's south side. ER287. The United States does not appear to dispute the City's titleto these parcels, and they are notpart ofthis suit.
4

### Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, 

### Page 11

### of 68



### 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 ofthe 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 ofthe [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 portionthereofit desires." ER318. The "GolfCourse Lease" leased to the United States approximately 83 acres
on the southern portion ofthe City's Land, consisting mostly ofa golfcourse 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 GolfCourse 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 ofthis 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 ofentering upon the same underthis lease." ER330. The 168 acres ofland described in the Runway Lease and GolfCourseLease together make up the City's Land. The picture below depicts the current Airport, withthe land covered bythe Runway Lease shaded in yellow and the land covered bythe GolfCourse Lease shaded inred:

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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 ofthis agreement, "that the City have certain property interests in the landing area ofthe 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 Landto its original condition. ER286; ER323; ER334. In exchange for the release ofthat obligation under the Runway Lease, the United States agreed to paythe City $3,000, "representing the cost ofrestoration." ER323. In exchange for release ofthat 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 ofsaid improvements and the estimated cost ofthe restoration required by said lease." ER334; 

### see ER336. The term ofthe GolfCourse 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 GolfCourse Lease to $1 for the lease's duration. ER287; ER334. 3. The InstrumentofTransfer 

### At the end ofWorld 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 GolfCourse 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 specificallyto facilitate and expedite the disposal ofsurplus airportproperty. 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, includingthe 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 atotal ofapproximately 241.637 acres ofland, ofwhich approximately 226.4 acres are owned in Fee or beingacquiredby the City of Santa Monica.
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### Government Leases cover approximately 168.87 acres ofCity-owned Lands 

### together with approximately 15.236 acres of Privately-owned Lands and Closed Streets within the boundary ofthe Airport. The balance of approximately 57.531 acres of land, occupied by the Government, is not covered byFormal Agreement, but is included in this Report to present a complete description ofthe Facility. ER195 (emphasis added). On September 19, 1946, the City Council wrote a letter to the Chiefofthe 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 ofencouraging and fostering the development ofcivil 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 ofthe War Assets Administration's Office ofReal Property Disposal outlined the plans for the improvements on the City's Land. ER208-ER210. The letterprovided that certain improvements that the United States had built on the City's Landwould be 10Case: 14-55583,10/14/2014, ID: 9275845, DktEntry: 22-1, Page 17 of68



### 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 ofwhatever 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 ofremoval thereoffromthe premises within
a reasonable period oftime." 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 ofTransfer." ER289; ER347-ER363. The Instrument ofTransfer 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 aPing-Pongtable (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) ofthis paragraph, which shall run with the land, imposed pursuant to the authority of Article 4, Section 3, Clause 2 ofthe Constitution ofthe 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 ofthe public, on reasonable terms and without unjust discrimination and without grant or exercise of any exclusive right for use ofthe airport within the meaning ofthe terms "exclusive right" as used in subparagraph (4) of the next succeeding paragraph. As used in this instrument, the term "airport" shall be deemedto include 12

### ER350.Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 19 of 68



### at least all such land, buildings, structures, improvements and equipment.

The document also provided that "no propertytransferred bythis instrument shall be used, leased, sold, salvaged, or disposed of
. . . for other than airport purposes withoutthe written consent ofthe 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 ofthe Civil Aeronautics Administrator, which shall be granted only if said Administrator determines that the property can be used, leased, sold, salvaged or disposed offor 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 ofTransfer included a reverter clause, which provided that, in the event any restriction or condition in the Instrument ofTransfer is not met, "the title, right ofpossession and all other rights transferred by this instrument" 

### to the City shall, atthe United States' option, "revert"to theUnited States: By acceptance of this instrument, or any right hereunder, the PARTY OF THE SECOND PARTfurther 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 subsequenttransferee to perform any ofthe obligations herein set out, or otherwise, the title, right of possession andallotherrights transferredby this instrument to the PARTY OF THE SECOND PART, or anyportion thereof, shall at the option of the PARTYOF THE FIRSTPARTrevert to the PARTYOF 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," ER352, 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 ofTransfer's reverter clause, nor would any reasonableproperty ownerhave believed itto 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 Managerto execute the instrument. ER290; ER358. The resolution confirmedthat the Instrument ofTransfer effected only atransfer ofthe United States' "lease-hold interest in and to the premises known as Cloverfield Santa Monica Municipal Airport and certain easements and temporary rights ofway appurtenant thereto." ER358. The executed Instrument ofTransfer was filed as a quitclaim deed with the County Recorder for the County ofLos 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 GolfCourse Leases expired by their own terms. ER291. That was the end of the leasehold interest the United States had transferred under the Instrument ofTransfer. 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 ofthe 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 Airportsubjectto grantagreements 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 ofthe public for the useful life ofimprovements made with federal funds, but no more than 20 years from the date ofexecution of each grant agreement. ER294; ER4. For example, the City agreed that it "will operate the Airport as such for the use and benefit ofthe 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 bythe 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 ofTransfer.

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### 5. 

### The 1952 and1956releases In 1952, before the Runway and GolfCourse 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 ofland within the Golf Course Lease, known as "LotA" ofthe "GeorgeTract." ER265; ER329. That parcel was situatedwithinthe City ofLos Angeles and could notbe used for airport expansion because ofLos Angeles' zoning restrictions. ER265. In 1956, the City obtained a similar release for a tract oflandknown as "RunwayNo. 1," which was part ofthe RunwayLease. ER271. Boththe 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 notbeheld in breach ofthe Instrument ofTransfer orthe 1948 grant agreement. Nothing inthe 1952 or 1956 releases suggests thatthe City believed the releases were necessary to preclude title to the City's Land from revertingto the United States. 

### 6. The FAA's recognition in the 1960s and 1970s of the City's authority to close theAirport In the 1960s, the first civilian jets began using the Airport, and their use grew steadily throughout that decade. ER291. At that time, civilianjets were ten times louder and more polluting than present-dayjets 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 ofSanta Monica, 6 Cal. 3d 920 (1972). The City thus explored awide range ofoptions, including Airport closure. ER291-ER292. In 1962, the City Council asked the City Attorney: "Can the City, unilaterally, on motion ofthe City Council, abandon the use ofthe Santa Monica Municipal Airport as an airport?" ER173. The CityAttorney issued an Opinion in response, concluding that both the Instrument ofTransfer and a grant agreement "compel the conclusionthatthe Citymust operate the airport as an airport, and that the City cannot legally unilaterally, on its own motion, abandon the use ofthe Santa Monica Municipal Airport as an airport." ER181-ER182. The City Attorney was not asked and did not opine on whether title and right ofpossession to the City's Land would "revert" to the United States ifthe Airport were closed. ER173-ER182. Indeed, inconsistent with any reverter oftitle 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 ofthe City's obligations under the then-in-force grant agreement, the "SantaMonica Airport is vulnerable to being discontinued and used for non-airport purposes." ER47. Accordingto the FAA, ifthe City closedthe Airport, the FAA's recourse would be to "declare the City in default of its obligation ofits Grant Agreements" and to "seek[] recovery of the funds expended." ER47. The FAA did not take the position that title and right ofpossession to the City's Land would "revert" to the United States ifthe City ceasedAirport operations. 7. 

### The 1984SettlementAgreement 

### 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 ofthe plaintiff and against the City. ER292. The ordinances were upheld with the exception ofthejet-banordinance. 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 behalfofthe plaintiffand 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 AircraftAssociation's lawsuit was dismissed after the City adopted a new AirportMasterPlan andNoise 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 ofa 1984 SettlementAgreement. ER293-ER294; ER365-ER392. The Agreement allowed the City to make substantial changes in the operation ofthe 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 ofthe Airportto the north side." ER370. The reconfiguration made available a substantial amount ofland, which the new Airport Layout Plan designated as "parkland and residual land." ER370-ER371. The Agreement expressly permitted that land to be used "for otherthan airport and aviation purposes." ER371. In 

### addition to approving the "redesign of the Airport," the Agreement provided overarching "principles and plans for the operation ofthe 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 bythe Instrument ofTransfer." 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 ofthis Agreement, shall be interpreted consistentlywith this Agreement." ER369. In 1998, the FAA expressly acknowledged that the 1984 "Settlement Agreementmakes clearthatthe City is obligatedto operate theAirport only for the duration ofthe [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 "seekto prevent the future closure ofthe Airport or require the Cityto operate the Airportbeyond 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 Cityto 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 Cityto maintain the Airport's "role in the National Airport System as a general aviation reliever airport until July 1, 2015." ER295. 8. 

### The FAA's2008 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 largejets requiring longer runways to land. ER295-ER296 &
n.7. The study recommended adoption ofan "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, onMarch 26, 2008, the FAA issued an Orderto 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 theUnited States ifthe Citytriedto close theAirport: 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 ofsurplus property conveyance by the City, the obligations in the instrument ofdisposal became a binding obligation ofthe 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 clausefor violations of the SPA deed covenants. One ofthe 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 ofthe public, on reasonable terms and without unjust discrimination and without grant or exercise of any exclusive right for use of the

. rt " mrpo .... ER99 (second omission in original) (emphasis added and omitted). The 2008 Orderto 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 ifthe 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 ofthe "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 assertedthat, under the reverter clause, "the United States may exercise
an option to take title or possession ofthe land." ER29. 

### 9. The City's evaluation of theAirport'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 staffmembers 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 claimunder the QuietTitle 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 Orderto 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 ofthe Instrument ofTransfer, the City had actual notice ofthe reversion clause in 1948, and thus had actual notice that the United States claimed
an interest inthetitletotheAirportProperty in 1948." ER10. The district court reasoned that, irrespective of its context, "the use ofthe 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 courtbrushed aside the City's contention that, by its terms, thereverter clause could not apply to property interests, such as ownership ofthe 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 ofTransfer's obligations for certain parcels ofland, and because the City Attorney had issued an opinion that the City could not unilaterally stop maintaining the Airport, the Cityknew "thatthe 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 Landthatthe United States neverheld. 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 ofthe 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 ofthe United States' claim, even while acknowledging that the court must not resolve factual issues in the context ofa Rule 12(b)(1) motion if"thejurisdictional issue and the substantive issues are so intermeshed that the question of jurisdiction is dependent
on decision ofthe merits." ER13 (internal quotation marks omitted). The district court reasoned only that "the crucial issue in the statute of limitations inquiry is whether the plaintiffhad notice ofthe federal claim, not whether the claim itselfis valid." ER13-ER14 (alteration and internal quotation marks omitted). 2 

### SUMMARY OFARGUMENT 

### A. The Instrument ofTransfer's reverter clause could nothave startedthe running ofthe statute oflimitations in 1948. The reverter clause provides onlythat "the title, right ofpossession 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, whichthe 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 revertto the United States. Any right oftheUnited States to possess the City'sLandterminated when the leases expired in 1953. The Instrument ofTransfer thus gave no notice that the United States might decades later claim it could take title to (or have aperpetual right ofpossession of) the City's Land. Nor did the Instrument ofTransfer create any "cloud" onthe 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 ifanother reading were plausible (and it is not), it would at best make the reverter clause ambiguous; but
an ambiguous provision cannotprovide 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 ofTransfer itself. Nor does the City's conduct after entering into the Instrument of Transfer suggest that the City had such notice. Neitherthe releases from the Instrument ofTransfer's obligations nor the CityAttorney's 1962 Opinion indicated that the City knew that, ifit closed the Airport, the United States could claimtitleto (or aright ofperpetualpossession of) the City's Land solely onthe basis ofthe Instrument ofTransfer.



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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 ofTransfer, 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 ofTransfer are still in effect and will remain so in perpetuity. That gave rise to a new Quiet Title Act
cause ofaction, and the Citytimely 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 ofthat claim. Both questions depend on the correct reading ofthe Instrument ofTransfer and the 1984 agreement. It 

### is well establishedthat when thejurisdictional question and the merits are so inextricably intertwined, the district court must not dismiss onjurisdictional grounds without first reaching the merits. The district court did so here, and that was reversible
error. STANDARD OF REVIEW 

### "The existence of subject matterjurisdiction is a question oflaw reviewed de novo." Harden 

### v. Roadway Package Sys., Inc., 

### 249 F.3d 1137, 1140 (9th Cir.

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### 2001). Thejurisdictional question here depends on whether the City brought suit within the statute oflimitations. When the timeliness ofan action turns on what a reasonable person should know, it is a mixed question oflaw and fact. 

### Shultz 

### v. Department ofArmy, 886 F.2d 1157, 1159 (9th Cir. 1989). Here, however, whether the City had notice turns onthe interpretation oflegal instruments, which this Court reviews de novo. 

### Glenbrook Homeowners Ass 'n 

### v. Tahoe Reg'1 PlanningAgency, 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 intertwinedwith the merits butthe district court dismisses under Rule 12(b)(1) before trial, this Court reviews the dismissal "not as a dismissal for lack of subject matterjurisdiction but rather as a grant ofsummaryjudgment on the merits." 

### Safe AirforEveryone 

### 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 inthe light most favorable to the nonmoving party, determining whetherthere are any genuine issues ofmaterial fact andwhetherthe movingpartyis entitledtojudgment as a matter oflaw. 

### I d.

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### ARGUMENT A. The Instrument OfTransfer Did Not Provide Notice In 1948 That The United States Claimed An Interest In Title To (Or PerpetualPossession Of) The City'sLand 

### Nothing in the Instrument ofTransfer 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'sLand in perpetuity. 1. 

### TheInstrument ofTransfer's reverter clause couldnot haveputthe City on notice because the clause didnotextendto rights neverheld bythe UnitedStates 

### 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); seeLeisnoi, Inc. v. United States ("LeisnoiIF'), 

### 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 "thatthe government claims some interest-anyinterest-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 disputedtitle 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 overtitle to the City'sLand. The Cityhas owned all 168 acres ofthe 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 ofTransfer,

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### the United States surrendered backto 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 areasonable time. ER209. Although the reverter clause in the Instrument ofTransfer provided that that leasehold interest, and those easements, improvements, and chattel could revert to the United States ifthe City stopped using them for airportpurposes, 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 ofpossession 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 ofthe 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 orhave no remaining useful value. To conclude thatthe Citywas 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 thattitle. The Citywould have been "compelled to sue to protect against the possibility, however remote, that the government might someday" claim that it had a rightto the title to the City's Land. Michel, 

### 65 F.3d at 132. As this Court has long recognized, such speculative suits
are notrequired. Id. 

### Nevertheless, that is what the United States argues and the district court held. ER10. The district court latched onto the word "title" in the reverter clause, concluding "that the use ofthe 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 ofthe 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

34

### Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, 

### Page 41 

### of 68


### heirs."); Oxford EnglishDictionary, http://www.oed.com ("to return to the original owner, or to his or her heirs, after the expiry ofa 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 ofa 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, suchtitle could never "revert"tothe 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 ofpossession and all other 

### rights transferred by this instrument." ER352 (emphasis added). The word "other" makes clear that "title" and "right ofpossession" are specific examples ofthe 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 ofpossession
...
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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 ofthe reverter clause is confirmed by the Surplus PropertyAct. The Instrument ofTransfer 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 oftheproperty so disposed of 

### or any portion thereof, shall, at the option ofthe 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 PropertyAct instrument oftransfer is "property so disposed of' in the instrument. Id. 

### Indeed, the Surplus Property Act defines "property" as "any interest, ownedby the UnitedStates 

### or any Government agency, in real or personal

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### property, ofany 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 ofin the instrument. Here, that does not include title to the City's Land, which was never owned by the United States nor disposed ofin the Instrument ofTransfer. 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 oftransfer 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 onlyto the title, right ofpossession, 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. Underthat guidance, the right ofreverter 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 shouldAirport operations cease. The district court discounted the FAA Airport Compliance Manual's guidance because the version ofthe manual included in SantaMonica's opposition to the motionto 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 ofconveyance "include a provision that the conveyance is made on the condition that theproperty interest conveyed 

### shall automatically revert to the United States" ifcertain 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 ofTransfer's reverter clause to extend to the title to the City'sLand. Indeed, because the reverter clause was not drafted specifically for this transaction, there was no reason for the City to have believed that inclusion ofthe 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 ofproperty 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 ofthe Instrument ofTransfer 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 transferredto 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 beentransferred backto 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 ofthe City's land. Vastly different language would have been required for the Instrument of Transfer to put a reasonable property owner on notice ofthe 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 effecttheUnited States claims here. 

### 2. Anyambiguity in the reverter clauseprecludes it 

### from triggering the statuteof limitations Even ifthe district courtwere correctthat ''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. 40Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 47 of 68


### PovertyFlats 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 ofthe United States that are at best vague or ambiguous would have the perverse effect ofcompelling plaintiffs to bring suits that would oftentum outto be unnecessary. Michel, 65 F.3d at 132. Here, the reverter clause was at best ambiguous. The City's reading ofthe reverter clause as permitting reversion only ofthe (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 oftwo 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 ofTransfer did notprovide notice of the UnitedStates'claim to title of the City'sLand The district court likewise erred in concluding that "the City had constructive notice ofthe United States' reversionary interest in the title to the land 41Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 48 of 68



### because the Instrument of Transfer was recorded as a quitclaim deed with the County Recorder for the County ofLos 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." 1Melvin 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 merelytransferred such interest as he had and such deed created no right, estate
orinterest in appellant."). To be sure, recordation of a deed can, in some circumstances, provide constructive notice ofa 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, ifreviewed 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 ofTransfer could not fix thatproblem. 

### 4. The reverter clause is consistent with the City's title to theLandand does notcreate acloudon the title The district court additionally concluded that "even if the Instrument of Transferdidnotprovide notice thatthe 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 sufficientto 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 thetitle. A "clouded" title is created only when the United States claims an "adverse interest" to the plaintiffs claim. 

### LeisnoiII, 267 F.3d at 1025. The mere fact that both the United States and the plaintiffclaim 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, "whenthe plaintiffclaims a non-possessory interest such
as an easement, knowledge ofa government claim ofownership 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 ofaction accrues only "whenthe government, 'adversely to the interests
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### ofplaintiff[], denie[s] or limit[s]"' the plaintiffs claimed interest. Michel, 

### 65 F.3d at 132 (quoting Werner, 

### 9F.3d at 1516). Thus, in Shultz, 

### where the plaintiffclaimed a right ofaccess to a public road, the govermnent's erection ofa 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.2d485, 492 (9th Cir. 1988); Kinscherffv. UnitedStates, 

### 586 F.2d 159, 161 (lOth Cir. 1978) (per curiam). Likewise, where the United States has conveyed land to the plaintiffsubject 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 andthe plaintiff," there is no cause ofaction underthe QuietTitle Act. !d. 

### at 1192.

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### Nor does a conflict overtitle to one portion ofland necessarily cloud the title to the land as a whole. For example, in Fadem v. United States, 

### this Court held thatthe plaintiffs' dispute with the United States over the eastern section ofan area ofland demonstrated thatthe plaintiffs had notice ofthe 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 claimto the western section." !d. 

### at 207. Underthese principles, the reverter clause did not cloudthetitle tothe 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. Underthe reverter clause, ifthe City had ceased operating the Airport as an airport during the life ofthe United States' now-expired leases, the United States could have retaken possession for the then-remaining duration ofthe 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 ofits leasehold interest. The United States first made that claim in 2008 when the FAA asserted that ifthe 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 thattitle to (orpossession of) its Land was in jeopardy. But it "makes no sense to start limitations running because ofan event that creates no dispute." 

### LeisnoiII, 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 ofTransfer does notsupportthe district court's conclusion The district court also reasoned that the City must have had notice ofthe United States' claim because "the City's statements and conduct since agreeing to the terms ofthe Instrument ofTransfer demonstrate the City's awareness that the United States had a continuing and substantial interest in the Airport Property." ER11. Inparticular, the district court pointed to the City's purported requests for release from the Instrument ofTransfer's restrictions on the use ofthe City's Land in 1952, 1956, and 1984, as well as the CityAttorney's 1962 legal opinion. ER11- ER12 & n.6. Atmost, however, these documents showedthat the Cityknew it had agreed to certain restrictions on the use ofthe 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 GolfCourse 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 ofthose specific items ofproperty enumerated in the Instrument ofTransfer. There is no indication that the City thoughtthe release was necessary to preclude reverter oftitle 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 ofthe 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: "Canthe City, unilaterally, on motion ofthe City Council, abandon the use ofthe Santa Monica Municipal Airport as an airport?" ER173. The Opinion quoted extensively both from the Instrument ofTransfer and from then-in-force grant agreements. ER176-ER182. The CityAttorney concludedthat 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 ifthe 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 Cityhad notice ofa claimed interest in

### titleto 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 ofTransfer" and approved "the use ofland 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 thatthe City believed title to the City's Land could revert. Accordingly, for all these reasons, the district court legally erred in interpreting the Instrument ofTransfer as providing notice ofthe United States'

48

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### Page 55 

### of 68



### 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 shouldbe 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 TheLimitations Period Began AnewIn 2008 

### Even ifthe district court were correct (and it is not) that the Instrument of Transfer gave the City notice ofthe United States' claim and triggered the statute oflimitations in 1948, the United States later abandonedthat claim. The statute of limitations started anew when the United States in 2008 reasserted an interest in the titleto the City'sLand. "The statute oflimitations provision in the Quiet Title Act cannotreasonably 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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### AtollInvs., LLCv. UnitedStates, 

### 541 F.3d 1189, 1200 (9th Cir. 2008)); see Shultz, 

### 886 F.2dat 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 ofthe government's claim ofan 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 ofaccess." 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 ofaccess."' Id. 

### This Court held that "the 1984 agreement could be construed as an abandonment ofthe government's claim that it

### hadthe 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 ofTransfer 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 ofTransfer." ER371 (emphasis added). The 1984 Settlement Agreement also provided that "[a]ll prior agreements between the parties concerning the Airport, and all actions ofthe 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 ofTransfer 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 whenthe SettlementAgreement expires in

### 2015. The FAA confirmed the City's understanding in the 1998 Director's Determination. The Director explicitly statedthatthe 1984 "SettlementAgreement

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### makes clearthatthe 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 thatthe City could use the City's Land for non-airportpurposes. ER47. The only recourse thatthe FAAidentified ifthe City "should move to close the airport" would be to "declare the City in default ofits obligation ofits 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) anyreversionary interest inthe City'sLand. Under 

### Shultz and 

### Michel, these documents stopped the running ofthe 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 ofTransfer 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. LeisnoiI, 

### 170 F.3d at 1193 (no Quiet Title Actjurisdiction where ''there
was no colorable conflict between an interest ofthe 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 oflimitations. 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 behalfofthe 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 ofthe 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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### concludingthat "where the United States's claim ofinterest inproperty stems from formal actions ofthe legislative or executive branch, aperson could not reasonably conclude that informal remarks ofagency personnel or internal agency memoranda could eliminatethe 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 ofTransfer 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 ofthe City's Land was an FAA Director's written response to users ofthe Airport (ER47-ER48), not an informal act by relatively low-level employees lacking authority to bind the agency as in KingmanReef 

### The district court also concludedthatthe 1984 SettlementAgreement 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 whethertitle would revertto the United States ifthe 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 ofTransfer." 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 ofTransfer was not part ofthe 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 ofTransfer. 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 claimthatithadthe exclusive rightto control access."). In short, the FAA's actions after the Instrument ofTransfer disclaimed any interest in the title to (or possession of) the City's Land. The United States

55

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### 22-1, Page 62 of 68



### reasserted its claim in 2008, giving rise to a new Quiet Title Act cause ofaction. Becausethe City sued five years later, its suit is nottime barred. 

### C. The City's Quiet Title Act Claim Should Not Have Been Dismissed Because Whether That Claim Is Time Barred Depends On Resolution OfFactualIssues Going ToTheMerits 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 withthe 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 ofthe City's claim. 

### Augustine v. United States, 704 F.2d 1074, 1077 (9th Cir. 1983). "[W]here thejurisdictional issue and substantive issues are so intertwined that the question ofjurisdiction is dependent on the resolution offactual issues going to the merits, thejurisdictional determination should await a determination ofthe relevant facts on either a motion going to the merits or at trial." 

### Id.; see Sun Valley Gasoline, Inc. v. ErnstEnters., 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 ofthe claim to the extent necessary to allow the court 

### tc properly determine its own jurisdiction." 

### Augustine, 704 F.2d at 1079. The grant ofa Rule 12(b)(1) motion before trial on

56

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### the merits is permissible only ifthe moving party is also entitled to "a grant of summaryjudgmenton the merits." Id. 

### Thejurisdictional 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 onthe merits is that the Instrument ofTransfer 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 showthat 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. Boththe 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 ofTransfer to operate the Airport after July 1, 2015. ER303. Because ofthat release, no property can revert as the result ofany breach ofthe 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 interestitmay have had inthe title to the City's Land. See'Supra 

### ArgumentPartB .

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### Boththe merits question and the statute-of-limitations question involve interpreting the 1984 SettlementAgreement. The district court nevertheless concluded that "the statute oflimitations issue is not inextricably intertwined with the ultimate merits ofthe Quiet Title Act claim because ' [ t]he crucial issue in the statute of limitations inquiry is whether the plaintiffhad 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 ofthe United States' claim "go to the heart of' the merits ofthe 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 allowthe court to properly determine its ownjurisdiction." !d. 

### at 1079. The district court should have waited to resolve thejurisdictional issues after consideringthe merits either attrial or at summaryjudgment. Id. CONCLUSION 

### The order dismissing the City's Quiet Title Act claim should be reversed, and the case remanded for consideration ofthe merits ofthat claim.

58Case: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 65 of 68

MARSHAJONES MOUTRIE 

### CityAttorney JOSEPHLAWRENCE



### Assistant CityAttorney LANCE

### 8. GAMS IVAN CAMPBELL



### Deputy CityAttorneys 

### 1685 Main Street, Room 310 SantaMonica, California 90401 Telephone: 310.458.8336

OCTOBER 

### 14,2014 Respectfully submitted,
s/DeanneE. Maynard DEANNE

### E. MAYNARD 

### MARcA. HEARRON JESSICA

### E. PALMER MORRISON

### & FOERSTERLLP 

### 2000 PennsylvaniaAve., N.W. Washington, D.C. 20006-1888 Telephone: 202.778.1663 DONG. RUSHING JAMES W. HUSTON WILLIAMV. O'CONNOR, JR. JOANNAL. SIMON MORRISON

### & FOERSTERLLP 

### 12531 HighBluffDrive, Suite 100 SanDiego, California 92130 Telephone: 858.720.5100 Counsel forPlaintiff-Appellant City of SantaMonica



### 59Case: 14-55583, 10/14/2014, JD: 9275845, DktEntry: 22-1, Page 66 of 68



### STATEMENT OF RELATED CASES PURSUANT TO CIRCUIT RULE 28-2.6 Counsel for plaintiff-appellantis unaware ofany 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 ofthe Court for the United States Court ofAppeals 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 accomplishedbythe appellate CMIECF system.

Dated: October 14, 2014 s/ Deanne E. 

### MaynardCase: 14-55583, 10/14/2014, ID: 9275845, DktEntry: 22-1, Page 68 of 68



### CERTIFICATE OF COMPLIANCE WITH RULE 32(a) 

### This briefcomplies withthe type-volume limitation ofRule 32(a)(7)(B) of the FederalRules ofAppellateProcedure because it is 13,980 words, excludingthe parts ofthe briefexemptedbyRule 32(a)(7)(B)(iii). This briefcomplies with the typeface requirements ofRule 32(a)(5) ofthe Federal Rules of Appellate Procedure and the type-style requirements of Rule 32(a)(6) ofthe Federal Rules ofAppellate Procedure because this briefhas been prepared in a proportionally spaced typeface using Microsoft® Office Word 2010 in 14-pointTimes NewRoman font.

Dated: October 14, 2014 sf

### Deanne E. Maynard

dc-769685

# EXHIBITD)

FAADocketNo.16-14-04
UNITED STATES DEPARTMENT OFTRANSPORTATION FEDERAL AVIATIONADMINISTRATION ASSOCIATE ADMINSTRATORFORAIRPORTS

NATIONAL BUSINESSAIRCRAFTASSOCIATION, KRUEGERAVIATION, INC.,HARRISONFORD, JUSTICE

AVIATION, KIMDAVIDSONAVIATION, INC.,AERO FILM, YOUR! BUJKO, JAMES ROSS, PARAMOUNT CITRUS LLC, AND AIRCRAFT OWNERS AND PILOTS ASSOCIATION, Complainants, v. CITY OF SANTAMONICA, Respondent.

Appeal from the Director's Determination Issued byDirectorByron K. Huffman, DatedDecember4, 2015**~** BRIEF FORRESPONDENT CITY OF SANTAMONICA ONAPPEAL FROM THE DIRECTOR'SDETERMINATION

MARSHA JONES MOUTRIE JOSEPH LAWRENCE LANCE S. GAMS IV AN CAMPBELL SANTAMONICACITYATTORNEY'S OFFICE 1685 Main Street, Room 310 SantaMonica, CA 90401 Telephone: (310) 458-8336 G. BRIANBUSEY PAULVARNADO* JAMES SIGEL* MORRISON& FOERSTERLLP 2000 PennsylvaniaAvenue, NW Washington, DC 20006 Telephone: (202) 887-1500 ZANE

### 0. GRESHAM MORRISON & FOERSTERLLP 425 Market Street SanFrancisco, CA 94105 Telephone: (415) 268-7000 Counsel for Respondent City of SantaMonica 

# \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. ProceduralBackground
........................................................................................... 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 ofDiscretion
...................................................... 10 A. The Plain Language Of The Agreements Makes Clear That The City's Grant ObligationsExpired In2014
..................................................................... 100 B. In Rejecting The Plain Meaning Of This Contractual Language, The Director's Determination Relied On An Erroneous Understanding OfThe ConsiderationRequirement
.................................................................................. 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. TheDirector erred in concludingthatthis maxim was inapplicable, and that the FAA should instead receive deference in interpreting these agreements ....................................................................................... 19 3. The City's understanding that AmendmentNo.2 did not extend its grant assurance obligations was reasonable
............................................ 211

iiD. 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 ItWas Contraryto Law, Precedent and Policy
.......... 29 A. Complainants Have Not Been "Directly And Substantially Affected By AnyAlleged Noncompliance" AndThus Lack Standing
..................................... 29 B. Complainants Failed To State A Claim Under Part 16, And Thus Have Failed To Establish Any Basis ForThe 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 SantaMonica Airport. At that time, the City agreed to satisfy certain grant assurances. By the plain terms ofthe Grant Agreement, these assurances would expire no later than June 2014, twenty years after the City's acceptance ofthe 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 projectfunded bythe 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 thatthe 2014 expiration ofthe grant obligations remained unchanged. But in the underlying Director's Determination, the Director rejected this straightforward interpretation ofthese plain and unambiguous contractual terms and agreements. The Director instead declared that, whatever its terms might suggest, the 2003 amendment was no mere modification ofthe 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 itproduces absurd and arbitrary results. Indeed, the Director's interpretation ofthe 2003 amendment is premised on a number of legal errors. The Director incorrectly presumed thatthe City was required to provide some sort ofadditional and previously undisclosed consideration in exchange for the FAA's increase in its grant obligation. The Director then failed to recognize that even ifconsideration were required, it was provided, and did not take the form of the City extending its grant assurances for an 1additional 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 ofordinary contractual terms is entitled to deference. In so doing, the Director ignoredprecedent establishingthat a municipality
or state must be clearly advised ofthe conditions imposed on federal funding so that it can give "informed consent" to such conditions-somethingthat 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 triggerthe 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 ofthese errors is alone sufficient tojustifyreversal; all together, they compel it. And that is not all. The Director also erred in concludingthatquestion ofthe scope ofthe 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 whatthe City's obligations mightbe. They have failed to identifY any imminentharm theywill suffer thatmight give them standingto request relief. Nor have they identified any violation ofstatute 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 ofthese reasons as well, the Director's Determination mustbe reversed.
2JURISDICTIONAL 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 onthat request. PARTIES Respondent City ofSanta Monica owns and operates the Santa MonicaAirport, a general aviationpublicuse airportlocated in a residential neighborhood withinthe City. The Complainants consist ofvarious 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 ofthe airport. Harrison Ford is an actor, businessman, and a tenant ofthe airport. Justice Aviation is a California corporation and a tenantofthe 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 ofthe airport. Youro Bujko is the owner and pilot oftwo aircraft and a tenant ofthe 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 corporationthatrepresents its pilot members.

3ISSUES RAISED ONAPPEAL 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), bythe 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 thejurisdiction conferred by Part 16. 4. Whether the Complainants satisfied their duty to engage in good faith efforts to resolve their complaint. FACTUALAND PROCEDURAL BACKGROUND A. FactualBackground 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. Duringthe ensuing decades, the adjacent land in the cities ofSanta Monica and Los Angeles was transformed. What was once farm land became home to thousands ofDouglas workers who lived in the nearby residential neighborhoods that developed during this period, which lie adjacentto 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, withthe warover, the federal government officially surrendered its leasehold interestto the City.

4The City has continued to operate the airport since that date. It has, however, been unable to do so without serious adverse consequences for residents ofthe densely populated surrounding neighborhood, who are subject to the airport's noise, pollution and safety hazards. The City has undertaken a number ofefforts to alleviate these effects, including imposing noise limits, curfews, and banning certaintypes ofaircraft. The City's attempts to ameliorate the effects ofairport 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 ofprograms 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 ofthe City to operate Airport under this Agreement, except as may berequired byfederal statute." [Part 16 ComplaintEx. 5 at 8-9]. On June 29, 1994, the City accepted an FAAAirport Improvement Program grant to fund certain airport enhancements including construction of certain blast walls. This grant was for ProjectNumber 3-06-0239-06, conferred by ContractNumber 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 ofthe United States share [ofthe project] will be based upon the final audit ofthe total amount ofthe allowable project costs and
5settlementwill be made for any upward or downward adjustments to the Federal share ofcosts." [Santa Monica Answer Ex. A at 2]. The Agreement further "incorporated" the "Assurances" attached tothe contract, makingthem "apart" ofthe agreement. [SantaMonicaAnswerEx. 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 ofthe 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, orthroughout the useful life oftheproject items installed within a facility under a noise compatibilityprogram project, but in any eventnot to exceed (20) yearsfrom the date ofthe acceptance ofa grant offer of Federal funds for theproject. [SantaMonicaAnswerEx. A at 15 (emphasis added)]. When the City accepted this grant offer, it thus understood that any obligations entailed with its acceptance would expire intwenty 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 SettlementAgreement. 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 ofthe "airport development" instituted under the 1994 Grant Agreement. [Santa MonicaAnswerEx. B at 1]. This amendmentusedthe same contract and projectnumbers (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 6Answer 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 AmendmentNo. 1, AmendmentNo.2used the
same contract and projectnumbers 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 specificallyprovided that "[a]ll otherterms and conditions ofthe Grant Agreementremain in full force and effect." [Santa Monica Answer Ex. Bat 3]. As one ofthe "terms and conditions" of the 1994 Grant Agreement had been the 2014 expiration ofany grant assurance obligations, the 2003 Amendmentthus expressly preservedthis 2014 sunsetprovision. The City signed AmendmentNo. 2 with exactly that understanding, as the declaration of Susan McCarthy, the former Santa Monica City Manager, confirms. McCarthy, who executed AmendmentNo. 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 extendednine years." [McCarthyDeclaration '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
7control portions ofthe land on which the airport sits. In addition, the City Council directed staff to explore thepossible closure ofthe 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 forthe future ofthe airport. B. ProceduralBackground The Complainants initiated the instant proceeding by filing a Part 16 formal complaint allegingthat, were the Cityto closethe airportpriorto 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 ofprocedural 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 notpossess the standingrequired by 14 C.F.R. § 16.23(a); the Complainants had failed to identify a violation ofany 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 extendedbeyond 2014. The Director brushed aside all of these barriers to Complainants' requested relief, declaring that the City "remains obligated by the grant assurances until August27, 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 8obligations it might have, certain statements made by City officials might be understood as a repudiation ofthose 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 itsjurisdiction 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" ofits 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 Citypriorto filing their complaint. [Director'sDetermination at 11]. Turning to the merits ofthe complaint, the Director concludedthatthe 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 ofcontract 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 extendingthe expiration date ofthese assurances," the Director declared thatthe amendment was "in essence the award of a new grant" that itselftriggered application ofthe 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 rejectedthe City's invocation ofthe 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 ofstatute," 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 arbitraryresults. 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 ANABUSE OF DISCRETION A. The Plain Language OfTheAgreements Makes Clear That The City's Grant Obligations Expired In 2014 This proceeding should begin and end with the plain language ofthe agreements the City signed with the FAA. Under "ordinary principles ofcontract law,
... '[w]here the words ofa contract in writing are clear and unambiguous, its meaning is to be ascertained in accordance 10with 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 itselfunambiguously sets forth a 2014 expiration date. The City accepted the FAA's offer offunding 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 ofthe acceptance ofa grant offer ofFederal 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 2014--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 Agreementthe FAA and the City had entered a decade previously. ThatAgreement specifically provided that "[t]he Citywill 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 shallnotextendor alter the obligation of the City to operate

11the Airport under this Agreement, except as may be required by federal law." [Part 16 ComplaintEx. 5 at 8-9] (emphasis added). In accordance with this Settlement Agreement, the 1994 Grant Agreement did not "extend or alter the obligation ofthe City to operate the Airport." Rather, by providingthat 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 ofthe airport as ofJuly 1, 2015 to
serve the bestinterests ofits 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." [SantaMonica Answer Ex. Bat 3]. Such a modification had been contemplated in the 1994 Grant Agreement itself, which, in recognition ofthe possibility of cost overruns ofthe sort that in fact occurred, provided that "[f]inal determination ofthe 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 ofcosts." [SantaMonicaAnswerEx. A at 2]. Otherwise, Amendment No. 2 did not make, and actually disclaimed making, any substantive change to the 1994 Grant Agreement. In particular, AmendmentNo.2 did not again invoke and incorporate the FAA's general grant assurances. Unlike the original Grant Agreement, it did notprovide that the grant assurances were "incorporated hereto," and "made a part hereof." Instead, Amendment No.2 stated: "All other terms and conditions ofthe Grant Agreement remain in full force and effect." [Santa Monica Answer Ex. B at 3 (emphasis
12added)]. Given the June 30, 2015 termination date ofthe 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. AmendmentNo.2 made clear that this 2014 expiration date remained "infull force and effect." These limitations on the scope ofAmendment No. 2 reflected its status as an amendment to a preexisting grant agreement, and not a new grant agreement. It was, after all, entitled "AmendmentNo. 2 to Grant Agreement for Project No. No. [sic] 3-06-0239-06"-aname 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 amountthe United States mightpayto complete the project. [SantaMonicaAnswer Ex. B at 3]. Even the amount ofthis 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% ofthe 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 ofadditional substantive changes-to modify any other keyterms ofthe agreement.

13B. 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 bythe City
... would be the continued applicability ofthe grant assurances using the date ofthe signed second amendment as the starting date." [Director's Determination at 16]. But the Director's understanding and application ofthe consideration requirement involved at leasttwo fundamental errors. First, and most important, the Director erred in presumingthat in 2003 consideration was necessary or even relevant. Even assuming that the general requirement ofconsideration applies to this type ofmodification 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 FAAto fulfill thatpromise. See, e.g., Doughertyv. 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 ofthe performance of a contract, even though there is no consideration for the modification, as long as the parties agree voluntarily." Angelv. 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 considerationpromised 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 possibilitythat, under general principles ofcontract law, a modification to apreexisting contract ofthis sort may be affected without consideration. 14enforceable 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, actuallyrefute the possibilitythat 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 correspondingpromise 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 itwould pay; the FAA has already made the relevant payments. SeeAngelv. Murray, 113 R.I. 482, 489 (1974) ("Since consideration is only a test ofthe enforceability ofexecutory promises, the presence or absence ofconsideration 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 ofthis 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 ofthe federal government's power to impose conditions on the recipients offederal funds. They hold that the federal government may utilize the power derived from the Spending Clause to effectively legislate or dictate the actions offund recipients only ifthe government makes the conditions of its funding exceedingly clear. See Pennhurst, 451 U.S. at 17 (while "Congress
15may fix the terms on which it shall disburse" funds, "ifCongress 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 costoverruns incurred in a previously contracted-for project. That, as its plain terms reveal, is all that AmendmentNo. 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 commitmentto 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
16the airport will be operated and maintained suitably." 49 U.S.C. §47107(a)(7). The benefits associated with airport improvements were what AmendmentNo. 2 referred to in mentioningthe "benefits to accrue to the parties." [Santa Monica Answer Ex. Bat3]. Given the FAA's receipt ofthese benefits, the Director's conclusion that Amendment No. 2 did not mean what it said in providing that "all otherterms and conditions ofthe [1994] GrantAgreementremain in full force and effect" cannot be supported even under the erroneous assumption that some sort of considerationwas required. C. TheDirector's Determination Further Relied On TheErroneous Conclusion ThatContractualAmbiguity Need NotBeResolved AgainstTheAgency, But ThatThe Agency Is Instead FreeTo Resolve AnyAmbiguity In

### Its Favor The Director's Determination was also premised on a separate misapplication ofbasic contractual principles. As noted above, the relevant contractual language is not ambiguous; instead, the 1994 Grant Agreement and AmendmentNo.2to that agreement together make plain that City's grant obligations expired in 2014. Buteven ifthe terms ofthese documents left some
room for doubt, general principles ofcontract 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 bythe Director. The City certainly was not put on fair and reasonable notice that such reinterpretations ofthe GrantAgreement and AmendmentNo. 2 were possible. I. The contractual language must be construed against the FAA, which draftedtheagreements Pursuant to what is sometimes known as the rule ofcontraproferentem, 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 17writing otherwise proceeds." Restatement (Second) of Contracts § 206 (1981). The federal govemment, like any other contractingparty, is subjectto this "general maxim" ofcontract 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 extentthatthese agreements create ambiguity as to the duration ofthe City's grant obligations, the City's reasonable interpretation must prevail
overthat ofthe FAA. Indeed, this principle ofcontract construction carries particular force where, as here, the agreement in question imposes conditions on a governmental recipient offederal 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 ofits terms, the legitimacy ofCongress' power to legislate under the spending power ... rests on whether the [recipient] voluntarily and knowingly accepts the terms ofthe '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 ofthe consequences oftheir 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

18the Constitution's anti-commandeering mandate. See National Federation ofIndependent Businesses, 132 S. Ct. at 2602; Printz v. UnitedStates, 521 U.S. 898, 933 (1997). Airport Improvement Program grants are no exception to this rule. In fact, the principle that grantrecipients mustbe given clear notice ofany grant conditions is embodied in 49 U.S.C. §47107(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 notpreviously made clear to grant recipients cannot be retroactively imposed. Air Trans. Ass'n. of America v. City of LosAngeles, FAA Final Decision and Order, Docket No.13-95-05, at *91 (2009) ("In light ofFAA's obligations under section 47107(h), the Director properly concluded that the agency itselfwas 'bound' by the terms ofits 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 ofcontraproferentem 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 ofEducation, 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 19interpretation, 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 ofthe "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 ofa statutory mandate: Congress itselfhad 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 ofthe 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'sprovision 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 ofwhat 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 ofstatutory interpretation, the Court was unwillingto go so far as to holdas the Director apparently would-that the grant recipients in that case "guaranteed that their performance underthe grant agreements would satisfY whatever interpretation ofthe 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. NaturalResourcesDefense Council, 467 U.S. 837, 844 (1984)). 20expertise in interpreting contractual langnage ofthis sort, or any specially delegated authority to do so. In such a case, no deference to the agency is warranted. See Clay TowerApartments 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 statutoryinterpretation."). In any event, even assuming that the FAA were entitled to deference, that would not render the principle ofcontraproferentem inapplicable. Instead, that rule continues to govern the FAA's interpretation ofthe relevant agreements even ifthe agency's reading might warrant
some deference. CfINS 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). Thatthe FAAmay be entitled to deference does not mean, as the Director apparently believed, that it is free to adopt whatever interpretation ofa contract itbelieves to be most favorable to it. Consistent with general principles ofcontract law and the law governing federal grants, the terms ofthe City's agreements with the FAA, even when construed by the FAA, must still be construed againstthe FAA. See Barnes, 536 U.S. at 186; Seckinger, 397 U.S. at 210. 3. The City's understanding thatAmendmentNo. 2 didnot extend itsgrant assurance obligations was reasonable andtherefore mustprevail Under a proper application ofthe principle that contractual ambiguity is construed in the City's favor, the City's understanding ofAmendment No.2 mustprevail. That interpretation, as discussed above, reflects a straightforward reading ofAmendment 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. 21That 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 ofAssurance B(l) omits its key language: the not-to-exceed date begins "the date ofthe acceptance of a grant offer ofFederal funds." [Santa Monica Answer Ex. A at 15 (emphasis added)]. Amendment No.2 may have increased the original grant amount, but itwas not itselfa new "grant offer." It was, instead, an amendmentto 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 itselfhad. That is also why Amendment No. 2 expressly retained all other "terms and conditions" ofthe 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 ofAssurance B(l). At the very least, nothing in Assurance B(l) or AmendmentNo. 2 providedthe City with the requisite clear notice that acceptance ofthese additional funds would subject it to the grant
assurances for an additional nine years. See Pennhurst, 451 U.S. at 17 ("There can, ofcourse, be
no knowing acceptance ifa [recipient] is unaware ofthe conditions oris unable to ascertain what is expected ofit."). Consistent with the terms ofthe 1984 Settlement Agreement and the City's long-expressed policy to seek closure ofthe airport, the City had taken care to ensure that all
22grant obligations would expire prior to the July I, 2015 date onwhichthe Settlement Agreement would no longer compel the Cityto operatethe airport. The City did not, and never would have, accepted the small amount ofadditional funds the FAA offered in 2003 had it understood that it thereby committed itselfto operatingthe airport into 2023. Indeed, as the declaration offormer City Manager SusanMcCarthy 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 AmendmentNo.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 extendednine 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 WhollyUnsupported 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 AmendmentNo.2 was "akin to a new grant," rather than a mere modification ofthe existing grant agreement. [Director's Determination at 16]. But an examination ofthe panoply of laws, policies, practices, precedent, and guidance regarding FAA grant assurances reveals no category of modification "akin to a new grant." Nothing inthe 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 offederal grant obligations and releases from federal obligations, but making no mention oftheir duration being extended by grant amendments that
are "akinto a new grant").
23Instead, 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 AmendmentNo.2 falls on the "modification" side ofthis line. Had AmendmentNo. 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 ofa new airport grant. See FAA, Airport Improvement Handbook, Order 5100.38B (2002) at§§ 11:1 & 11:4. Similarly, the current version ofthe 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 Cityto submit a new grant application or anything "akin to" a new application before approving AmendmentNo.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 ofthe 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
24Annual Report of Accomplislunents (May 2004) at II, available at: http:/ /www.faa.gov/airports/aip/grant_ histories/media/annual-report-2001-03.pdf (emphasis added) ("2003 Reportto Congress"). Notably, the FAA did not report the City in its separate list ofrecipients ofnew "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 AmendmentNo.2. The FAA's distinction between new grants and amendments to existing grants reflects the line that Congress itselfhas 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 developmentproject" may be increased by "not
more than 15 percent." 49 U.S.C. § 47108(b)(3)(A). Moreover, in the context ofauthorizingthe FAA to take corrective action for violations ofgrant 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 "akinto new grants" for the purposes ofextending grant assurances. In seeking to find support for its novel interpretation that a modification ofan existing grant agreement may be "akin to a new grant," the Director's Determination cited only to a pair ofdecades-old Comptroller General opinions. [Director's Determination at 17]. Tellingly, the
25FAA 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 ofFederal 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 ofthe grant assurances and extension oftheirduration. Accordingly, there is no support for the Director's view that a subsequent increase and funding may be "akinto a new grant." Absent any basis in the extensive legal and agencypolicy framework for the FAA's grant assurance program, it was arbitrary and capricious for the Directorto 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 ofthe 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 ofthe Director's interpretation of grant modifications would have a broad possible scope. This newly declared 26rule 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 grantrecipients to be put on fair and clear notice of the ramifications ofany 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 ofAmendment 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. Inthe Determination, the Director suggested that AmendmentNo. 1, unlike AmendmentNo.2, would nothave 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 AmendmentNo. 1, thatthe City's grant assurances expire in2014). Butit citedtwo separate and not necessarily congruent rationales for this distinction: (1) Amendment No. 1 continued to provide thatthere would be "additional workperformed"; and (2) AmendmentNo. 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 ofAmendment No.2. See supra, at pp. 14-17. But such a ground of distinction raises a host ofquestions. 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 ofthe 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
27substantial 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 ofAssurance B(l), which applies to "the acceptance ofa grant offer" and notjustto "aoffer." 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 ofAssurance 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 outpursuantto 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. Butnonetheless, the FAA has neverbefore held thatthe grant ofsuch additional funds willresultina new set ofgrant obligations or extension ofthe duration ofexisting 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 equivalentto "new grants."

28Whatever the precise limits ofthe holding ofthe 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 ofthe duration ofthe grant
assurances previously accepted with the original grant. Inorder to give grantees propernotice of this sort ofnew and far-reaching requirement, 49 U.S.C. §47107(h) prohibits such a change in policy from being accomplished in aPart 16 proceeding. As the FAAhas 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, independentreason thatthe Determinationmust 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 standingrequirement. 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 29have been, currently are, and will continue to be adversely affected bythe City's repeated public announcements" concerning the airport's future. The closest Complainants came to identifying any concrete harm was to complain ofthe 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 ofSanta Monica, Docket No. 16-99-21, Director's Determination at 22-23 (Nov. 22, 2000) ("It would likelybe unreasonable for the Airportto be required to enter into a lease agreementwith 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 ofSanta 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 longterm lease atthe location ofits choosing."). In nevertheless concluding that the Complainants had adequately established their standing, the Director reasoned that the Cityhad "repudiated" the Grant Agreement, thus causing "uncertainty" that harmedthe Complainants. [Director's Determination 8, I0]. Butwhateverthe City mighthave previously said regarding the expiration ofits airport obligations, it cannot have repudiated those obligations unless it also specifically indicated its intent to commit an act breaching them. See Restatement (Second) ofContracts § 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."). Thatthe Cityhas notdone. 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
30requirement 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 "directlyand 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 TheDirector's Jurisdiction For similar reasons, the Complainants have failed to fulfill their obligation to identify "the specific provisions ofeachAct 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 MunicipalAirportAuthority, DocketNo. 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 ofthe specific Actviolated." [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].

31But 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 priorto 2023. Indeed, the wholly advisory nature ofthe Director's Determination is revealed by the fact that, even in ruling for the Complainants, it failed to orderthe City to take any particular corrective action to complywith any specific Acts or grant assurances. That the Director entertained this request, and in fact resolved that hypothetical controversy, was directly contrary to FAAprecedent. 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 contractterms 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 AirportAuthority, et al., Docket No. 16-07-04, Director's Determination at 29, 44 (Aug. 19, 2008); see also SMAA v. City ofSanta 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 jurisdictionconferred in Part 16. C. Complainants Failed To Satisfy ThePre-ComplaintResolution 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 32Complainants 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 continuedinformal resolution efforts when it appears clear that the City'sposition on the expiration date is longstanding and fixed." [Director'sDetermination 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 ifthey remain applicable. The Complainants engaged in no real efforts to negotiate with the City regarding its plans for the airport. Their complainttherefore shouldhave been dismissed. CONCLUSION Forthe foregoing reasons, the Director's determination mustbe reversed.

Dated: January 8, 2016 Respectfully submitted,

33MARSHAJONES MOUTRIE JOSEPH LAWRENCE LANCES. GAMS IVAN CAMPBELL SANTAMONICACITYATTORNEY'S OFFICE 1685 Main Street, Room 310 SantaMonica, CA 90401 Telephone: (310) 458-8336
ZANE

### 0. GRESHAM MORRISON & FOERSTERLLP 425 Market Street SanFrancisco, CA 94105 Telephone: (415) 268-7000 Is!G. Brian Busey G. BRIANBUSEY PAULVARNADO* JAMES SIGEL* MORRISON & FOERSTER LLP 2000 PennsylvaniaAvenue, NW Washington, DC 20006 Telephone: (202) 887-1500 *Application to the Districtof Columbia Bar pending. Practice supervisedbyprincipals of firm admittedto Districtof ColumbiaBar.

Counsel for Respondent City of SantaMonica

34CERTIFICATE OFSERVICE I, G. Brian Busey, counsel for the City ofSanta Monica, herby certifythatpursuant to 14 C.F.R. § 16.33 I have this day served the foregoing Brief on Appeal from the Director's Determination on the followingpersons byfirst class mail, postageprepaid:
Richard K. Simon, Esq. 1700 Decker School Lane Malibu, CA 90265 rsimon3 @verizon.net Office ofthe ChiefCounsel Attention: FAA Part 16 Docket Clerk AGC-600 Federal AviationAdministration 800 Independence Avenue SW Washington, DC 20591 9-A WA-AGC-Part-16@faa.gov Byron 

### K. Huffman, ActingDirector Office ofAirport Compliance andManagementAnalysis FederalAviationAdministration 800 Independence Avenue SW Washington, DC 20591

Dated: January 8, 2016

35 Is!G. Brian Busey