Santa Monica Airport (File photo)

The City of Santa Monica is required to operate the Santa Monica Airport until 2023 according to a ruling by the Federal Aviation Administration.

The FAA issued a ruling on Dec. 4 regarding the so called “Part 16” hearing that states Santa Monica is obligated to keep SMO open until 2023 based assurances connected to a federal money the city accepted in 2003.

The case centered on a claim by national aviation associations and individuals that the City of Santa Monica was in violation of its agreement with the FAA by stating its obligations to the Federal Government expired in 2014.

City officials had filed a motion to dismiss the case claiming the complaints lacked standing to file a case, failed to state a claim, failed to engage in good faith efforts to resolve the matter informally and that the FAA lacked jurisdiction.

In denying the City’s motion, the Director outlined several reasons for the validity of the case.

Failure to state a claim:

“If the date proffered by the complainants were correct, the City’s declaration would constitute an express repudiation of the contract. The FAA finds that in the unusual case in which the sponsor expressly and unequivocally declared that the grant agreement expired, and where a reasonable counterargument exists, it is well within the FAA’s authority to rule upon this limited but threshold issue by clarifying the expiration date. We decline to dismiss this Complaint on the grounds that it fails to state a claim.”

Standing

“Assuming the assurances are in fact in effect, the stability and fundamental ground rules the assurances create are undermined by the City’s repudiation, particularly given the current position of the City Commission, which, regardless of whether the Council has taken action yet, appears to lean towards a full or partial closure. We find the Complainants are directly and substantially affected by the uncertainty of the grant expiration date and have standing to bring this Complaint seeking clarification of that date”

Jurisdiction

“Section 16.1 is very broad and conveys jurisdiction where a complaint is filed under any of the listed authorities. Here, the Complaint has been filed under the authority of ‘the assurances and other Federal obligations contained in a grant-in-aid agreement issued under the Airport and Airway Improvement Act of 1982 (AAIA).’ Therefore, we find jurisdiction exists.”

Good Faith efforts

“The City’s position on the expiration date is clear and unlikely to be voluntarily reversed. The Complainants are not required to conduce continued informal resolution efforts when it appears clear that the City’s position on the expiration date is longstanding and fixed.”

In addition to disputing the Complainants right to bring the case, City Hall had argued that the timeline for grant assurances began in 1994, not 2003.

According to the FAA, Santa Monica received $1,604,700 for planning, airport development or noise program implementation in 1994. Projects funded by the grant were completed in 1996 however the city applied for, and received, an additional $240,600 in 2003.

In their letter, the FAA states that acceptance of grant money includes rules that must be followed by grant recipients and that the FAA would not issue grants without assurances the money would be spent in a way that provides benefits to the community.

Those rules state “The terms, conditions and assurances of the grant agreement shall remain in full force and effect throughout the useful life of the facilities developed or equipment acquired for an airport development or noise compatibility program project, or throughout the useful life of the project items installed within a facility under a noise compatibility program project but in any event not to exceed twenty (20) years from the date of the acceptance of a grant offer of Federal funds for the project.”

The extra money was used to pay for a new blast wall. Both sides agree the wall went into service in 2002 and the city’s argument was that accepting the additional money did not restart the 20-year clock first started in 1994. City Hall’s arguments include a contention that the original document included authorization for additional money that nothing in the amendment indicated it would be considered a new agreement, that a prior settlement with the FAA governed the extension of grant assurances, that the terms were unclear and when there is ambiguity, the law should favor the city

The ruling acknowledges the city first accepted money in 1994.

“Had nothing else happened, the not-to-exceed date for the grant assurances would have been June 29, 2014, the date that the city argues is, in fact, the actual expiration date,” reads the document. “Complainants, however, observe that this is not the last date on which grant funds were accepted by the city.”

The ruling states the FAA is required by congress to adhere to its grant assurance rules when issuing money and those rules begin when money is accepted. By reopening the previously closed grant to take the new cash, the FAA said the clock was reset, as the amendment became functionally a new agreement above and beyond the original terms.

“Upon acceptance of an offer of Federal funds for an (Airport Improvement Project), the assurances become a binding contractual obligation between the airport sponsor and the Federal Government,” said the ruling.

The Director rejected the city’s contention that it did not understand the terms of the agreement citing multiple previous interactions between the FAA, state regulators and the City as evidence the city should have had the experience by this point to understand the agreement.

In addressing the claim that a 1984 settlement overrode the grant assurance, the FAA stated the settlement’s authority was specifically limited to grant agreements prior to 1995 and that the settlement also states compliance with a 20 year timeline is mandatory from the date a grant was accepted.

Claims that when language is unclear and it should favor the city were also rejected. The FAA cited precedent for favoring its own interpretation of the language and said the grant assurances are specific in their language that the not-to-exceed date is tied to “a offer” not the “original offer.”

Airport supporters said the ruling would limit any efforts to alter operations at SMO.

“It’s not a surprise to us,” said Bill Worden. “Some people go to court to find out what the law says, others go to see it enforced. We had every reason to believe the FAA would rule 2023.”

He said the grant assurances would likely override efforts to limit fuel sales on site, remove airport tenants from their leases or alter the runway.

“What becomes one of the questions is how long will the city piss all their money away on this frivolous lawsuits and wasting all their time,” he said.

Santa Monica officials criticized the FAA for delaying the ruling and continued to dispute their findings.

“The FAA’s decision is inconsistent with best grant management practices,” said Nelson Hernandez, Senior Advisor for Airport Affairs. “In the meantime, we will continue to take every action necessary to promote the health and safety of our residents.”

Mayor Kevin McKeown said the ruling fails to address public concerns over the airport. “It is highly unfortunate, though hardly surprising given its past actions, that yet again the FAA favors aviation interests to the detriment of the health and safety of the families that live near the Airport,” he said.

City Attorney Marsha Moutrie said appeal options would be considered.

“The decision from the FAA is no surprise, particularly since the FAA gets to be essentially its own judge and jury,” she said. “Once we have had time to carefully review the Director’s Determination, we will make recommendations to the City Council. This decision is not yet final. There are two more levels of appeal within the FAA, followed by judicial review in the federal court of appeals.”