EXHIBIT

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UNITED STATES DEPARTMENT OF TRANSPORTATION

FEDERAL AVIATION ADMINISTRATION

WASHINGTON, DC

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IN THE MATTER OF COMPLIANCE )

WITH FEDERAL OBLIGATIONS )

BY THE CITY OF SANTA MONICA, )

CALIFORNIA )

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FAA Docket No. 16-02-08

ORDER TO SHOW CAUSE

This matter is before the Federal Aviation Administration (FAA) based on a Notice of

Investigation initiated by the Director of the Office of Airport Safety and Standards on October 8,

2002, into the legality of the City of Santa Monica, California's ("the City") proposed Ordinance,

an Aircraft Conformance Program (ACP), banning certain jet aircraft from the Santa Monica

Municipal Airport (SMO). The Notice ofInvestigation (NOI) was issued in accordance with the

FAA Rules of Practice for Federally Assisted Airport Enforcement Proceedings, 14 C.F.R. Part 16,

Subpart D. This investigation has remained pending because the City had not adopted the proposed

ordinance and had engaged in discussions with the FAA to resolve the matter until its recent action

adopting the Ordinance.

On March 25, 2008, the City adopted a new Ordinance banning Category C and D jet aircraft from

SMO effective within 30 days, on or about April 24, 2008. These circumstances require expedited

handling of this matter. The City is hereby provided the opportunity to show cause why the FAA

should not supplement the existing Part 16 investigation with the facts pertaining to the adopted

Ordinance and expedite said investigation and issuance of the initial determination, pursuant to

14 C.F.R. § 16.11.

SUMMARY OF FACTS UNDER REVIEW

The Santa Monica Municipal Airport is a public-use airport owned and operated by the City of

Santa Monica, California. The facility, classified as a reliever airport.' is the base of operations

for over 400 aircraft and accounts for approximately 130,000 operations each year.' FAA records

indicate that the planning and development of the airport has been financed, in part, with funds

I FAA Form 5010 "Airport Master Record" for APF. Date: 10/11/2001.

2 National Plan of Integrated Airport Systems (NPIAS), 1998-2002. SMO serves as an important reliever airport to

Los Angeles International Airport (LAX).

3 FAA From 50 I0 "Airport Master Record" for 2005 reported 165,000 annual operations but the number of operations

today is believed to be about 135,000. The executive summary to the 2008 Ordinance estimates 130,000 operations.
provided by the FAA under the Airport Improvement Program (AlP), authorized by the Airport

and Airway Improvement Act of 1982,(AAIA), as amended, 49 USC § 47101, et seq. Between

1985 and 1994, the Airport has received a total of$9.7 million in Federal airport development

assistance." In addition, the Airport was transferred to the City from the Federal government under

the provisions of the Surplus Property Act (SPA) of 1944.

On July 22, 2002, the Santa Monica Airport Commission voted to recommend that the Santa

Monica City Council implement, by ordinance, an Aircraft Conformance Program (ACP) at SMa.

The ACP would restrict aircraft operations at SMa to aircraft that meet the standards for an airport

with an Airport Reference Code (ARC)5 designation ofB-II. Essentially, the ACP would prohibit

Category C and D aircraft from operating at the Airport.

On October 1, 2002, FAA representatives from the Air Traffic, Flight Standards, Airports

Divisions and the Regional Counsel met with Santa Monica to address the proposed ACP. FAA

cautioned the Santa Monica representatives that the proposal was not consistent with the City's

Federal obligations and Federal law. FAA commented that safety determinations involving flight

of aircraft are the responsibility of the FAA and the agency does not consider it inherently unsafe

for an aircraft of a larger design category to use an airport designed to accommodate a lesser

category aircraft.

Additionally, Air Traffic and Flight Standards representatives reiterated that design standards

limitations do not translate into operational limitations and that FAA develops instrument

approaches to permit safe aircraft operations. Finally, the FAA told Santa Monica that the agency

holds the expectation that the City must comply with Section 9 of the 1984 Agreement to maintain

the existing runway length and width," and that any action taken by the City that conflicts with its

federal obligations would be of concern to the FAA.

4 Airport Sponsor AlP Grant History dated July 22,2002.

5 The ARC is an FAA coding system used to relate airport design criteria to the operational and physical

characteristics of the aircraft types for which the airport was designed. FAA Advisory Circular No. 150/5300-13,

"Airport Design" (September 29,1989), chapter 1, p.4. The ARC code has two components, both relating to the

"critical design aircraft" for the airport. The critical design aircraft is defined as the category of aircraft which

conducts 500 itinerant or more operations per year at the airport. National Plan ofIntegrated Airport Systems

(NPIAS), 1998-2002, p. 38. The first component, depicted by the letters A-E, is the aircraft approach category and

relates to aircraft approach speed. For example, a Category A aircraft has an approach speed of less than 91 knots

while a Category B aircraft has an approach speed of 121 knots or more, but less than 141 knots. The second

component, depicted by Roman numerals I-VI, is the airplane design group and relates to airplane wingspan. For

example, a Group I aircraft have a wingspan of up to but not including 49 feet, while a Group 11aircraft has a

wingspan of 49 feet up to but not including 79 feet. Id., p. 1.

6 In 1981, the Santa Monica City Council enacted a resolution to close SMO. That action resulted in extensive

litigation against the City by airport associations, the FAA, and the Department of Justice (DOJ). The litigation

resulted in a negotiated settlement memorialized on January 31, 1984, referred to as the 1984 Santa Monica Airport

Agreement (" 1984 Agreement"), which resolved a series of disputes involving SMO. The 1984 Agreement

recognized that SMO serves a "vital and critical role in its functions as a general aviation reliever for the primary

airports in the area ... by diverting aircraft away from the air carrier airports and other heavily used airports located in

the Greater Los Angeles Area." The 1984 Agreement, p. 3-4. In addition, the 1984 Agreement outlined conditions by

which the City would operate and maintain the Airport as a viable functioning facility without derogation of its role as

a general aviation reliever airport. As the basis for the 1984 Agreement, the parties recognized several legal principals

including ... the "Airport is to be open and available to and for public use as an airport on fair and reasonable terms,

without unjust discrimination, and without granting any exclusive rights prohibited by law .." and "pursuant to the

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On October 8, 2002, the FAA issued the NOI under Part 16 initiating the investigation concerning

the legality of the ACP. The City responded to the NOI on November 2,2002.

On December 10,2002, the City Council received the Airport Commission's recommendation to

approve the ACP and a report on the pending administrative proceeding. Following a public

hearing, the City Council approved the ACP concept of implementing 300 foot runway safety

areas at either end of the runway, a 300 foot relocated threshold from the departure end of the

runway, and a ban on C and D aircraft. The City Council did not adopt the ACP as an ordinance

but directed City staff to continue to meet with the FAA in an attempt to promptly resolve the

matter. Attempts at resolution between the FAA and the City continued until the adoption of the

Ordinance in March 2008

Between 2002 and 2008, there were several meetings and discussions between SMa officials and

the FAA that included new proposals and counterproposals as alternatives to the ACP. The City's

proposals included displaced thresholds 7of several hundred feet, declared distances'' and large

engineered material arresting system (EMAS) installations9 which would have a significant impact

on the utility of the Airport.

On July 31, 2007, the FAA proposed the installation of one EMAS installation at each end of the

runway. On August 28,2007, the FAA participated at a public hearing on SMO in Santa Monica.

At the meeting the FAA reiterated that its proposal provides an actual, physical stopping effect on

overrunning aircraft that directly benefits both persons on the aircraft and the areas off the ends of

the runway.

The FAA believes that the proposal would significantly enhance safety at SMa while maintaining

the utility of the Airport. The City rejected the FAA's proposal. On November 27,2007, the new

Ordinance was read (first reading) at the City Council meeting. By letter dated March 7, 2008, the

FAA proposed modifications to its EMAS proposal, as well as to holdline and departure

procedures, and to the information pilots receive on SMO upon filing a flight plan.

On March 25,2008, the City adopted the new Ordinance banning Category C and D jet aircraft

from SMa effective within 30 days, on or about April 24, 2008. The effect of the new Ordinance

is the same as the Aircraft Conformance Program (ACP) proposed by the City in 2002. Both

would prohibit Category C and D aircraft from operating at the Airport.

Federal Aviation Act of 1958, as amended, exclusive authority is vested in the FAA for the regulation of all aspects of

air safety, the management and control of the safe and efficient use of the navigable airspace, and movement of aircraft

through that airspace." 1984 Agreement pgs 3 & 9.

7 A displaced threshold is a threshold located at a point on the runway other than the designated beginning of the

runway. Displacement of a threshold reduces the length of runway available for landings. The portion of runway

behind a displaced threshold is available for takeoffs in either direction and landings from the opposite direction.

8 Declared Distances are the distances the airport owner (with FAA concurrence) declares available for the airplane's

takeoff run, takeoff distance, accelerate-stop distance, and landing distance requirements.

9 EMAS is a bed of highly crushable concrete blocks that are installed at the ends of the runway. When an aircraft

leaves the runway traveling at speed, the landing gear will crush the EMAS bed and the aircraft will come to a quick

and safe stop.

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The Ordinance adds section 10.04.06.220 to the Municipal Code prohibiting Category CorD

aircraft from landing or departing SMO except in a "bonafide" emergency. Violations of the

Ordinance are punished as misdemeanors by a $1,000 fine or six months imprisonment, or both.

The stated purpose of the new Ordinance is to protect the safety of persons living adjacent to the

airport and flying in aircraft using the airport. The City claims that the Ordinance comports with

agreements between the City and the FAA "recognizing the City's obligation to serve category A

and B aircraft at the Airport." It further claims to be consistent with the 1984 Settlement

Agreement and 1991 Airport Layout Plan (ALP) assigning an Airport Reference Code (ARC)

designation ofB-II to the Airport and, obligating the City to operate it accordingly.

The Ordinance prohibits all aircraft of a category higher than B ARC from operating at the Airport.

As explained in the original 2002 NOI, the ARC design category of an airport is not intended, and

cannot be used, to limit operations of an airport. The same is true of the related runway safety

areas (RSA) design standard. While the design category and geometry of an airport are useful in

airport planning, the FAA does not consider it inherently unsafe for an aircraft of a larger design

category to utilize an airport that has been designed to accommodate a lesser design category of

aircraft. It is incorrect to assume that Category C and D aircraft operating at SMO are not

compatible with the airport's Airport Reference Code and lack of standard RSAs.

Instrument approach charts published by the FAA for SMO provide instrument approach

procedures for the airport up to Category D aircraft. Under 14 C.F.R. § 91.3, the pilot in command

of an aircraft is directly responsible for, and is the final authority as to, the safe operation of the

aircraft he or she commands.

The applicable FAA operational limitations, such as the FAA approved Airplane Flight Manual

performance data and the regulatory frame work, such as 14 CFR Part 91 and Part 135, permit safe

operations of Category C and D aircraft on 5,OOO-footrunways. The safety of an aircraft' s

operation is a function of the requirements for that operation in the aircraft certification manual.

SMO's runway is 4987 feet. IfSMO's runway meets the FAA's requirements, there is no safety

basis for prohibition of that operation.

On several occasions since 2002, the City was advised that RSAs, [which are clear areas at the end

of runway varying in size depending upon the ARC code] are designed for the protection of

aircrews and passengers, not to guarantee that an aircraft will never get beyond the safety area.

RSAs are problematic at SMO because they need to be level, and the land drops off at the end of

the runways at SMO. However, the RSA standard is part of FAA's airport design standards, and is

not an operating requirement of condition. No FAA aircraft operating rule requires a standard

RSA, and there is no basis in FAA regulations for prohibition of any operation based on the status

of the RSA.

For protection of persons and property near the end of the runway, FAA design standards provide

for a runway protection zone (RPZ) that limits land uses in that area, and when necessary,

promotes the acquisition and clearing of RPZs by the airport. The RPZ is recommended but not

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required at general aviation airports like SMO. It appears that the City has not acted to acquire

land to create RPZs at SMO.

The practical effect of the new Ordinance (like that of the ACP) would be to ban several thousand

jet operations per year from SMO. Based on the City's own data, the new Ordinance would ban

approximately 9,000 operations at the Airport.

APPLICABLE LAW AND POLICY

Title 49 of the United States Code assigns the FAA Administrator broad responsibilities for the

regulation of air commerce in the interests of safety and, among other things, the promotion,

encouragement, and development of civil aeronautics. 49 U.S.C. §§ 40101(c), (d), 4010410•

Under these broad powers, the FAA seeks to achieve safety and efficiency of the total airspace

system through direct regulation of airman, aircraft, and airspace. 49 U.S.C. §§ 40103, 44702-

44705.

The Federal role in promoting civil aviation has been augmented by various legislative actions

which authorize programs for providing funds and other assistance to local communities for the

development of airport facilities. In each such program, the airport sponsor assumes certain

obligations, either by contract or by restrictive covenants in property deeds and conveyance

instruments, to maintain and operate its airport facilities safely and efficiently and in accordance

with specified conditions. Commitments assumed by airport sponsors in property conveyance or

grant agreements are important factors in maintaining a high degree of safety and efficiency in

airport design, construction, operation and maintenance as well as ensuring the public fair and

reasonable access to the airport.

SMO has been financed, in part, with funds provided by the FAA and the U.S. Department of

Transportation under the Airport Improvement Program (AlP). The program provides financial

assistance to an airport sponsor for airport development in exchange for binding commitments

designed to assure that the public interest will be served. These commitments are set forth in the

sponsor's applications for Federal assistance and in the grant agreement as sponsor assurances, i.e.

a list of applicable Federal laws, regulations, executive orders, statute-based assurances, and other

requirements, binding the sponsor upon acceptance of the Federal assistance.

The FAA has a statutory mandate to ensure that airport owners comply with these sponsor

assurances. See 49 U.S.C. §§ 40103(e), 40113, 40114, 46104, 47122, 46101, 46105, 47107(a),

(b), (g), 47106(e), 47111(d), and 47122.

10 In addition and with limited exceptionsfor military concerns, the FAA shall make long-range plans and policy for

the orderly development and use of the navigable airspace and air navigation facilitiesthat will best meet the needs and

serve the interests of civil aeronautics and national defense. 49 U.S.c. § 44501(a).

The U.S. Government has exclusive sovereignty of air space of the United States. 49 U.S. C. § 40103. Moreover, the

FAA Administrator prescribes air traffic regulations on the flight of aircraft for navigating, protecting, and identifying

aircraft; protecting individuals and property on the ground; using the navigable airspace efficiently; and preventing

collision between aircraft, between aircraft and land or water vehicles, and between aircraft and airborne objects. 49

U.S. C. § 40103(b) (2)

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Because the City of Santa Monica assumed Federal obligations in the form of grant assurances,

surplus property obligations and those incorporated into the 1984 Settlement Agreement, the City

is required to operate its airport facilities in accordance with specified conditions, including

making SMO available for public use on reasonable terms, and without unjust discrimination, and

without granting an exclusive right, to all types, kinds, and classes of aeronautical activities,

including commercial aeronautical activities offering services to the public at the airport. Thus, any

actions taken by the airport sponsor that conflict with these obligations could be found to be in

violation of its Federal obligations.

GRANT ASSURANCES

As a condition of providing airport development assistance under the AAIA, the Secretary of

Transportation must receive certain assurances from the airport sponsor. Title 49 U.S.C. § 47101

et seq. sets forth assurances to which an airport sponsor receiving Federal financial assistance must

agree as a condition precedent to receipt of such assistance.

49 U.S.c. § 471 07(g» authorizes the Secretary to prescribe project sponsorship requirements to

insure compliance.

Grant Assurance No 22, Economic Nondiscrimination, and Grant Assurance No. 23, Exclusive

Rights are applicable to the specific circumstances of this proceeding. II

Surplus Property Obligations

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. The conveyance of surplus Federal land to public agencies for airport purposes is

administered by the FAA, in conjunction with the U.S. Department of Defense (DOD) and the

General Services Administration (GSA) pursuant to 49 USC §§ 47151, 47152, and, 47153. Upon

acceptance of surplus property conveyance by the City, the obligations in the instrument of

disposal became a binding obligation of the City.

The SPA deed contains Federal obligations similar to AlP grant obligations to offer access on fair

and reasonable terms, that run in perpetuity until the FAA releases the SPA obligations or reverts

the airport under the right to revert clause for violations of the SPA deed covenants. One of the

surplus property conveyance covenants contained in the 1948 Surplus Property Instrument of

Transfer stipulates that the Airport "shall be used for public airport purposes for the use and

benefit of the public, on reasonable terms and without unjust discrimination and without grant or

exercise of any exclusive right for use of the airport ... "

The FAA has the sole responsibility for determining and enforcing compliance with the terms and

conditions of all instruments of transfer by which surplus airport property is or has been conveyed

to non-federal public agencies pursuant to the Surplus Property Act of 1944 (SPA). Accordingly,

II 14 Code of Federal Regulations Part 16 implements regulatory guidance for enforcement proceedings

related to the grant assurances.

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such covenants continue in full force and effect until released under 50 App. U.S.C.A. § 1622(g)

(1949) (originally enacted as Surplus Property Act of 1944, ch. 479, § 13,58 Stat. 765, 770, or

other applicable Federal law.

Other Applicable Law - Airport Noise and Capacity Act of 1990

As stated in the 2002 NOI, the City of Santa Monica should also be aware of the FAA's concerns

regarding compliance with other applicable Federal law. Under the Airport Noise and Capacity

Act of 1990 (ANCA), 49 U.S.c. § 47524 (c) an airport noise or access restriction that affects Stage

3 aircraft, like the C and D category aircraft affected by the City's proposed ordinance, may

become effective only if agreed to by the airport proprietor and all aircraft operators or has been

submitted and approved by the Secretary. Restrictions covered by this paragraph include any

restriction on Stage 3 aircraft. The ANCA statute also provides in part that unless the Secretary is

satisfied that an airport is not imposing an airport or access restriction not in compliance with this

subchapter, the airport may not receive grants or impose Passenger Facility Charges (PFCs). 49

U.S.C. §47526.

ISSUES UNDER INVESTIGATION

In addition to the issues presented in the October 8, 2002 NOI, the issues under investigation

include, but are not limited to, the following issues:

• Whether Santa Monica's implementation of the adopted Ordinance prohibiting Category C

and D aircraft is consistent with the federal obligation to make its airport available as an airport for

public use on reasonable terms and without unjust discrimination to all types, kinds, and classes of

aeronautical activities.

• Whether Santa Monica's implementation ofthe adopted Ordinance prohibiting Category C

and D aircraft is consistent with the federal obligation prohibiting the granting of an exclusive right

at the airport to conduct any aeronautical activities.

• Whether Santa Monica's implementation of the adopted Ordinance prohibiting Category C

and D aircraft is preempted under Federal Law.

• Whether Santa Monica's implementation of the adopted Ordinance prohibiting Category C

and D aircraft is consistent with the terms of the 1984 Agreement.

• Whether Santa Monica's implementation of the adopted Ordinance prohibiting Category C

and D aircraft is consistent with the Surplus Property Act deed covenants.

ORDER TO SHOW CAUSE

Given the public interest for fair review and decision of this matter; the right of the City to be

heard, and finding that the adoption of the ordinance requires expedited handling of this matter,

the Director concludes that the City should be provided with the opportunity to show cause as

described below pursuant to 14 C.F.R.§ 16.11.(a);(b).

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Accordingly:

1. The FAA hereby directs the City of Santa Monica to show cause why the FAA should

not supplement the existing Part 16 investigation with the facts pertaining to the adopted

Ordinance and expedite said investigation and issuance of the initial determination pursuant to 14

C.F.R. § 16.11.

2. Because of the April 24th effective date of the Ordinance this matter needs to be

expedited pursuant to 14 C.F.R. §16.11(b). The City may file a response to this Order to Show

Cause within 10 days from the date of this Order pursuant to 14 C.F.R. 16.11(b). Service of

documents is limited as follows pursuant to 14 C.F.R. §16.11(b). The City's response directed to

the Director of the Office of Airport Safety and Standards must be served by personal delivery, or

by electronic-mail to kelvin.l.solco@faa.gov.

3. Failure of the City to respond to this Order within the 10 day period provided will result

in the FAA supplementing and expediting the investigation, and expediting issuance of the initial

determination.

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CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on March 26, 2008, I caused to be served by electronic mail (email) and by overnight express delivery service (Federal Express), a true copy of the

foregoing document addressed to:

Marsha Jones Moutrie

City Attorney

City of Santa Monica

1685 Main Street

Santa Monica, CA 90401

marsha. moutrie@smgov.net

P. Lamont Ewell

City Manager

City of Santa Monica

1685 Main Street, Room 209

Santa Monica, CA 90401

lamont. ewell@smgov. net

Mr. Robert Trimborn

Airport Manager

Santa Monica Municipal Airport

3223 Donald Douglas Loop S.

Santa Monica, CA 90405

bob.trimborn@smgov.net

Sharon Long

Airports and Environmental La

Office of the Chief Counsel

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