UNITED STATES DEPARTMENT OF TRANSPORTATION

FEDERAL AVIATION ADMINISTRATION EXHIBIT

WASHINGTON, DC j ::]:lEJ1 I

IN THE MATTER OF

COMPLIANCE

WITH FEDERAL OBLIGATIONS

BY THE CITY OF SANTA

MONICA. CALIFORNIA

FAA Docket No. 16-02-08

NOTICE OF INVESTIGATION

Notice is hereby given to the City of Santa Monica (Santa Monica), the owner and

operator of the Santa Monica Municipal Airport (SMO), Santa Monica, California, that

the Federal Aviation Administration (FAA) is initiating an investigation into the legality

of Santa Monica Airport Commission's apparent decision to recommend that the Santa

Monica City Council adopt and implement the Aircraft Conformance Program (ACP).

The FAA issues this Notice ofInvestigation (NOI) in accordance with FAA Rules of

Practice for Federally Assisted Airport Proceedings, 14 C.F.R. Part 16, Subpart D.

In accordance with 14 C.F.R. § 16.103, Santa Monica has 30 days from the date of

service of this Notice to respond. The FAA strongly recommends that Santa Monica

defer any further action regarding the ACP until this matter can be resolved.

However, if this matter is not resolved on or before the date the reply is due, and the

FAA's investigation establishes violations of Santa Monica's sponsor obligations and

related Federal law, the FAA may issue a determination that Santa Monica is in

noncompliance with its Federal grant obligations in its operation of SMO and the terms

of the 1984 Settlement Agreement approved by the U.S. District Court. As a result,

Santa Monica could be found to be ineligible to receive new FAA grants and payments

under existing grants until this matter is resolved. Further sanctions, including a judicial

order of enforcement, are also possible.

I. BACRGROUND

A. The Airport and Its Obligations

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 447 aircraft and accounts for approximately 217,600 operations

each year, more than 156,000 of which are itinerant.'

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

2 National Plan ofIntegrated Airport Systems (NPIAS), 1998-2002. SMO serves as an important reliever

airport to Los Angeles International Airport (LAX).

3 FAA From 5010 "Airport Master Record" for APF. Date: 09/11/2001.
FAA records indicate that the planning and development of the airport has been financed,

in part, with funds provided by the FAA under the Airport Improvement Program (AlP),

authorized by the Airport and Airway Improvement Act of 1982, 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.'

B. The 1984 Settlement Agreement

In 1981, the Santa Monica City Council enacted a resolution to close SMa. 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 SMa.

The City agreed to operate and maintain the Airport as a viable functioning facility

without derogation of its role as a general aviation reliever airport until July 1,2015.

As a basis for the 1984 Agreement approved by the U.S. District Court, 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." [1984 Agreement, pages 2-3].

• "pursuant to the 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." [!d. at 3].

In Section 8, the City committed to "operate and maintain the Airport as a viable

functioning facility without derogation of its role as a general aviation reliever as

described in Section 2(b)(i) of this Agreement or its capacity in terms of runway length

and width, taxiway system, and runway weight bearing strength until July 1,2015."

[1984 Agreement, page 9]. The 1984 Agreement also states that the "Airport will be

capable of accommodating most kinds of general aviation aircraft, generally consistent

with Group II Design Standards .... "5[Id].

Section 9 requires the City to maintain "continuously" the one designated runway (3/21)

"which is 5,000 feet long and 150 feet wide." [1984 Agreement, page 9]. The Airport

Layout Plan (ALP) depicting the airport's existing runway and taxiway configuration was

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

5 The Airport Reference Code (ARC) designations, including the B-II designation at issue, are a coding

system used to relate airport design criteria to the operational and physical characteristics of the categories

of aircraft for which the airport was designed. We note, however, that this provision in the 1984

Agreement would not permit the City of Santa Monica to prohibit the use of the airport by other aircraft

that can safely operate at SMO. As discussed more fully below, Design Standards may not be used to limit

operations of an airport.

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incorporated by reference into the 1984 Agreement "and shall guide the development of

the Airport for the duration of this Agreement." [Id. at 6].

Finally, the 1984 Agreement highlights SMO's important role in the regional and

national system of air transportation and air commerce. 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." [Id. at 3-4].

In short, because the City of Santa Monica assumed various Federal obligations including

the grant assurances and those incorporated into the 1984 Settlement Agreement, the City

is required to maintain and operate its airport facilities safely, efficiently, and in

accordance with specified conditions. Thus, any actions taken by the airport sponsor that

conflict with these obligations are of concern to the FAA.

II. APPLICABLE LAW AND POLICY

The FAA Airport Compliance Program

The FAA discharges its responsibilities for ensuring airport owners' compliance with

their Federal obligations through its Airport Compliance Program. The FAA's airport

compliance efforts are based on the contractual obligations, which an airport owner

accepts when receiving Federal grant funds or the transfer of Federal property for airport

purposes. These obligations are incorporated in grant agreements and instruments of

conveyance in order to protect the public's interest in civil aviation and to ensure

compliance with Federal laws.

The FAA Airport Compliance Program is designed to ensure the availability of a national

system of safe and properly maintained public-use airports operated in a manner

consistent with the airport owners' Federal obligations and the public's investment in

civil aviation. The Airport Compliance Program does not control or direct the operation

of airports; rather it monitors the administration of the valuable rights pledged by airport

sponsors to the people of the United States in exchange for monetary grants and

donations of Federal property to ensure that the public interest is being served.

As a general rule, we note that the FAA Compliance Program is designed to achieve

voluntary compliance with Federal obligations. In addressing allegations of

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

currently in compliance with the applicable Federal obligations. FAA has to make a

judgment of whether the sponsor is reasonably meeting the Federal obligations."

FAA may also take into consideration any action or program the sponsor has taken or

implemented or proposed action or program the sponsor intends to take which, in FAA's

judgment, is inadequate to reasonably carry out the obligations under the grant

assurances.

6 See FAA Order 5190.6A, Sec. 5-6.

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The Airport Improvement Program and the Airport Sponsor Assurances

Title 49 of the United States Code, § 47101, et seq., provides for Federal financial

assistance for the development of public-use airports under the Airport Improvement

Program (AlP) established by the Airport and Airway Improvement Act of 1982, as

amended. Section 47107, et seq., and the grant contract, set forth assurances to which an

airport sponsor agrees as a condition of receiving Federal financial assistance. Upon

acceptance of an AlP grant, the assurances become a binding contractual obligation

between the airport sponsor and the Federal government.

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

sponsor assurances. 7 FAA Order 5190.6A, "Airport Compliance Requirements," issued

on October 2, 1989, provides the policies and procedures to be followed by the FAA in

carrying out its legislatively mandated functions related to federally obligated airport

owners' compliance with their sponsor assurances. The Congress mandated conditions

such as these on grants to local airport proprietors in part to ensure the maintenance of

conditions essential to an efficient national air transportation system.

Grant agreements under the AAIA are not ordinary contracts, but part of a procedure

mandated by Congress to assure federal funds are disbursed in accordance with

Congress' will." The FAA considers it inappropriate to provide Federal assistance for

improvements to airports where the benefits of such improvements will not be fully

realized due to inherent restrictions on aeronautical activities.

Economic Non-Discrimination

The owner of any airport developed with Federal grant assistance is required to operate

the airport for the use and benefit of the public and to make it available to all types, kinds,

and classes of aeronautical activity on fair and reasonable terms, and without unjust

discrimination. Assurance 22, Economic Nondiscrimination, of the prescribed sponsor

assurances implements the provisions of 49 U.S.c. § 47107(a)(1) through (6), and

requires, in pertinent part, that the sponsor of a federally obligated airport

"... will 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, including commercial aeronautical activities offering services to the

public at the airport." Assurance 22(a)

"... may establish such fair, equal, and not unjustly discriminatory

conditions to be met by all users of the airport as may be necessary for the

safe and efficient operation of the airport." Assurance 22(h)

FAA Order 5190.6A, Chapter 4, describes the responsibilities under Assurance 22

assumed by the owners of public use airports developed with Federal assistance. For

7 See, e.g., the Federal Aviation Act of 1958, as amended and re-codified, 49 U.S.c. § 40101, 40113,

40114,46101,46104,46105,46106,46110, and the Airport and Airway Improvement Act of 1982, as

amended and re-codified, 49 U.S.C. § 47105(d), 47106(d), 47107(k), 47107(1), 47111(d), 47122.

8 City and County of San Francisco v. FAA, 942 F.2d at 1396 (9th Cir. 1991).

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example, the Order provides, in relevant part, that "[i]n all cases [where an airport

sponsor restricts access for safety reasons] the FAA will make the final determination of

the reasonableness of the ... restrictions."

Exclusive Rights

Title 49 of the United States Code, § 40103(e), provides, in relevant part, that "there shall

be no exclusive right for the use of any landing area or air navigation facility upon which

Federal funds have been expended." 49 U.S.C. § 47107(a)(4) similarly provides, in

pertinent part, that "there will be no exclusive right for the use of the airport by any

person providing, or intending to provide, aeronautical services to the public."

Assurance 23, "Exclusive Rights", of the prescribed sponsor assurances requires, in

pertinent part, that the sponsor ofa federally obligated airport "...will permit no exclusive

right for the use of the airport by any persons providing, or intending to provide,

aeronautical services to the public ... and that it will terminate any exclusive right to

conduct an aeronautical activity now existing at such an airport before the grant of any

assistance under the Airport and Airway Improvement Act of 1982."

In FAA Order 5l90.1A, Exclusive Rights, the FAA published its exclusive rights policy

and broadly identified aeronautical activities as subject to the statutory prohibition

against exclusive rights. While public-use airports may impose qualifications and

minimum standards upon those who engage in aeronautical activities, FAA has taken the

position that the application of any unreasonable requirement or standard that is applied

in an unjustly discriminatory manner may constitute a constructive grant of an exclusive

right.

Courts have found the grant of an exclusive right where a significant burden

has been placed on one competitor that is not placed on another. See ~ City

of Pompano Beach v. Federal Aviation Administration, 774 F.2d 1529 (l1th

Cir. 1985). FAA Order 5190.6A provides additional guidance on the

application of the statutory prohibition concerning exclusive rights and FAA

policy regarding exclusive rights at public-use airports."

Federal Preemption and the Proprietor Exception

The principal aviation responsibilities assigned to the FAA under the Federal Aviation

Act of 1958, as amended, 49 U.S.c. 40101 et seq., concern promoting the safety and

security of air commerce. The basic national policies intended to guide FAA actions

under the Federal Aviation Act are set forth at 49 U.S.C. 401Ol(d) which provides public

interest standards."

9 See FAA Order 5190.6A, Chapter 3.

10 These include: (I) Assigning, maintaining, and enhancing safety and security as the highest priorities in

air commerce; (2) Regulating air commerce in a way that best promotes safety and fulfills national defense

requirements; (3) Encouraging and developing civil aeronautics, including new aviation technology; (4)

Controlling the use of the navigable airspace and regulating civil and military operations in that airspace in

the interest of the safety and efficiency of both of those operations; (5) Consolidating research and

development for air navigation facilities and the installation and operation of those facilities; and (6)

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To achieve these statutory purposes, 49 U.S.C. 40103(b), 44502, and 44721 provide

extensive and plenary authority to the FAA concerning use and management of the

navigable airspace, air traffic control, and air navigation facilities. The FAA has

exercised this authority by promulgating wide-ranging and comprehensive Federal

regulations on the use of navigable airspace and air traffic control." Similarly the FAA

has exercised its aviation safety authority, including the certification of airmen, aircraft,

air carriers, air agencies, and airports under Title VI of the Federal Aviation Act, section

601 et seq., 49 U.S.C. 44701, et seq. by extensive Federal regulatory action."

The Federal government, through this exercise of its constitutional and statutory powers,

has preempted the areas of airspace use and management, air traffic control, and aviation

safety. Under the legal doctrine of preemption, which flows from the Supremacy Clause

of the Constitution, state and local authorities do not have legal power to act in an area

that already is subject to comprehensive Federal regulation.

Under Federal law, state and local aircraft noise restrictions are generally preempted. See

City of Burbank v. Lockheed Air Terminal, 411 U.S. 624 (1973). However, a limited

exception to this preemption applies to municipal airport proprietors, which are "vested

only with the power to promulgate reasonable, nonarbitrary and nondiscriminatory

regulations that establish acceptable noise levels for the airport and its immediate

environs." British Airways Board v. Port Authority of New York and New Jersey, 558

F.2d 75,84 (2d Cir. 1977); see also American Airlines, Inc. v. City of Dallas, 202 F.3d

788, 806 (5th Cir. 2000). Congress had made it clear that the power delegated to airport

proprietors to adopt noise control regulations" ... is limited to regulations that are not

unjustly discriminatory." City and County of San Francisco v. FAA, 942 F.2d 1391,

1394 (9th Cir. 1991). This "proprietor exception," codified by the Congress as part of the

Airline Deregulation Act of 1978 (49 U.S.C. 41713), is based on an airport proprietor's

legitimate interest in protecting itself from liability for damages resulting from excessive

noise generated by aircraft using the airport. See Griggs v. Allegheny County, 369 U.S.

84 (1962). "Since airport proprietors bear monetary liability for excessive aircraft noise

under [Griggs], fairness dictates that they must also have power to insulate themselves

from that liability." San Diego Unified Port Dist. v. Gianturco, 651 F.2d 1306, 1316-17

(9th Cir. 1981), cert. denied, Dept. of Transportation v. San Diego Unified Port Dist., 455

U.S. 1000 (1982) (citations omitted).

III. FACTS AND ANALYSIS

On July 22, 2002, the Santa Monica Airport Commission passed a motion indicating that

it will 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) designation ofB-II.

Developing and operating a common system of air traffic control and navigation for military and civil

aircraft.

II See 14 CFR Parts 71, 73, 75, 91, 93, 95, and 97.

12 See 14 CFR Parts 21-43,61-67,91, 121 through 149.

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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.':' 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." 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 has a wingspan of up to

but not including 49 feet, while a Group II aircraft has a wingspan of 49 feet up to but not

including 79 feet.15 Thus, under Santa Monica's proposal, any aircraft faster or larger

than a B-II aircraft (approach speed 121-140 knots, wingspan 49-78 feet) would be

banned regardless of whether that aircraft would be safe to operate at the airport in

accordance with FAA safety standards.

The practical effect of the ACP would be to ban approximately 7,000 jet aircraft

operations per year from SMO, an airport that has 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." [Settlement Agreement, pp. 3-4].

On the same date the Airport Commission passed this motion, the FAA notified Santa

Monica of its concerns regarding the above-mentioned proposal. In its letter, the FAA

stated that "restricting aircraft operations based on the design category of SMO would not

be consistent with the City's Federal obligations to provide airport access to the public on

reasonable terms and without unjust discrimination, or with the City's 1984 settlement

agreement with the FAA and other parties." FAA also recommended that "the airport

defer any further action regarding the ACP pending further review and comment by the

FAA."

On October 1, 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 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, 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.

13 FAA Advisory Circular No. 150/5300-13, "Airport Design" (September 29, 1989), chapter 1, pA.

14 National Plan ofIntegrated Airport Systems (NPIAS), 1998-2002, p. 38.

15 Id., p. 1.

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The Airport Reference Code design category of an airport is not intended, and cannot be

used, to limit operations of an airport. 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 aircraft

operating at SMa that are larger or faster than B-II aircraft are not compatible with the

airport's Airport Reference Code. For example, instrument approach charts published by

the FAA for SMa provide instrument approach procedures for the airport up to Category

D aircraft. Thus, FAA has already determined that at least some operations by Category

C and D aircraft, which are larger and faster than B-II, can be safely operated at SMa.

Such aircraft, however, would be banned under Santa Monica's ordinance.

The critical design aircraft is not defined as the only aircraft or largest aircraft that can

safely conduct operations at the airport. Additionally, 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. Ultimately, it is the responsibility of the

FAA to determine the safety of a category of flight operations or an individual flight.

The City of Santa Monica has not provided adequate documentation to the FAA to

support its recommendation to the City Council to adopt and implement the ACP.

Restricting SMa to B-II aircraft will have a serious impact since it would prevent other

categories such as C-I, C-II, D-I and D-II from operating at the airport. In fact, the City

of Santa Monica reports that 50 percent of jet operations at the airport are other than B-II

type. As a result of the above, the FAA finds sufficient cause to initiate a formal

investigation in this matter.

The issues involved in this investigation include whether Santa Monica's implementation

ofthe ACP would be consistent with its Federal grant obligations relating to economic

discrimination and exclusive rights, Federal preemption law, and the terms of the 1984

Settlement Agreement. Under Federal law, use of noise control regulations by airport

proprietors to bar aircraft on a basis other than noise, or without a factual basis, has been

found to be inconsistent with a fair and efficient national air transportation system and

unlawful. City of San Francisco v. FAA, 942 F.2d 1391 (9th Cir. 1991).

IV. ISSUES UNDER INVESTIGATION

The issues under investigation include, but are not limited to, the following:

• Whether Santa Monica's implementation of the ACP would be consistent with its

statutory and grant 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 of the ACP would be consistent with its

statutory and grant assurance prohibition from granting or permitting any person,

firm, or corporation, either directly or indirectly, the exclusive right at the airport to

conduct any aeronautical activities.

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• Whether Santa Monica's implementation of the ACP would be preempted under

Federal Law.

• Whether Santa Monica's implementation of the ACP would be consistent with the

terms of the 1984 Settlement Agreement.

V. OTHER FEDERAL LAW

The City of Santa Monica should also be aware of the FAA's concerns regarding

compliance with other applicable Federal law. Specifically, should the City decide to

implement the ACP without (i) an FAA determination that the ACP is a reasonable

response to unsafe aircraft operations at SMa, or (ii) meeting the requirements set forth

in the Airport Noise and Capacity Act of 1990, 49 U.S.C. 49 USC § 47521, et seq., as

implemented by 14 CFR Part 161, the FAA will undertake informal resolution in

accordance with 14 CFR 161.503. If informal resolution is unsuccessful, then the FAA

will initiate formal action to terminate grants and authority to impose or collect passenger

facility charge under 14 CFR Part 161, Subpart F, for failure to comply with ANCA. The

procedures that apply to termination of eligibility will then depend upon whether the City

agrees to defer implementation or enforcement of the ACP until FAA completes the

process under Subpart F to determine compliance.

VI. OPPORTUNITY TO RESPOND

Pursuant to 14 C.F .R. §16.103 and 16.17, the City of Santa Monica may reply to this

Notice no later than 30 days from the Notice's date of service. In accordance with

14 C.F.R. §§16.l03 and 16.105, during that timeframe, the FAA invites good faith efforts

by the City of Santa Monica to resolve informally the matters that are addressed in the

Notice. Information provided by the City after the 30-day timeframe may not be

considered by the FAA. Possible noncompliance with Federal requirements is a serious

matter. If the issues addressed in this Notice are not resolved within the 30-day time

period, and the FAA's investigation establishes violations of Federal law and related

sponsor obligations, the FAA may issue a Director's Determination in accordance with

14 C.F .R. § 16.31 making findings on the above-identified issues.

David L. Bennett

Director, Office of Airport Safety

and Standards

OCT 8 2002

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