National Business Aircraft Association, Krueger Aviation, Inc., Harrison Ford, Justice Aviation, Kim Davidson Aviation, Inc., Aero Film, Youri Bujko, James Ross, Paramount Citrus LLC, and Aircraft Owners and Pilots Association v. City of Santa Monica, California – No. 16-14-04

FAA Docket No:

FAA Docket No. 16-14-04

Author:

Eduardo A. Angeles, Associate Administrator for Airports

Complainant(s):

Respondent(s):

Airport(s):

Santa Monica Airport (SMO)

History:

See also Director's Determination dated 12/4/15.

Holding:

Abstract:

Complainants—existing tenants of the airport or organizations with members who were aviation users of the airport (an important reliever airport for Los Angeles International Airport)—sought clarification concerning the expiration date of the airport’s Airport Improvement Program (“AIP”) grant assurance obligations as determined by the FAA. More specifically, they alleged that the City of Santa Monica, California, violated its grant assurance obligations based on its repeated and continued assertions that its obligations would no longer be in effect after June 29, 2014, not August 2023 as the Complainants argued. They sought a determination of the date that the grant assurances expired.

The Director determined that the City remained obligated by the AIP grant assurances until August 27, 2023. The Director based this finding on the acceptance of AIP Grant Amendment No. 2 on August 27, 2003, which resulted in additional AIP funds being provided to the City. The Director found that this acceptance of the FAA’s offer of additional grants [beyond an initial 1995 grant agreement and subsequent 2003 Amendment], after the project had been completed, triggered grant assurances to remain in force 20 years thereafter. (Director’s Decision, p. 19.) “Assurance (B)(1) [of the FAA Airport Compliance Manual] reflects the FAA’s expectation that the benefit to the public extends, in general, for approximately 20 years.” (Final Agency Decision, p. 17.)

On appeal, the City asserted that the Director erred in his analysis and that the Director’s Determination must be reversed because the AIP grant assurance obligations expired in 2014.

The Associate Administrator affirmed the Director’s decision. However, he also noted: “The FAA’s concurrence to increase the federal investment into SMO was done through a grant amendment to a re-opened AIP grant. This amendment did not have its own expiration date, but rather made direct reference to the required AIP language for such grants, which specifically refers to the useful life of the improvements not to exceed 20 years. The issue then is to discuss the impact of the new 2003 AIP grant amendment upon the expiration date to which the City would be obligated. As noted in the grant agreement itself, the date is determined by the (1) useful life of the project and (2) the not-to-exceed date of no more than 20 years from acceptance of the grant offer. The AIP grant and funds offer referenced here is the 2003 offering. The Associate Administrator finds that the Director properly concluded that the grant assurance obligation maximum duration is 20 year from the date of acceptance of the grant—August 27, 2023, rather than the longer useful life date of March 27, 2027.” (Final Agency Decision, p. 11.)

The City appealed the decision to the Ninth Circuit Court of Appeals, City of Santa Monica v. United States of America et al., Case No. 13-CV-8046-JFW (vBKx) (C.D. Cal.), with a stipulation and order/consent decree filed on January 30, 2017, see https://www.smgov.net/uploadedFiles/Departments/Airport/News_and_Litigation/Consent%20Decree.pdf.

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