CASE NOT YET SCHEDULED FOR ORAL ARGUMENT CASE NO UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

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1 CASE NOT YET SCHEDULED FOR ORAL ARGUMENT CASE NO UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT THE CITY OF SANTA MONICA, Petitioner, v. FEDERAL AVIATION ADMINISTRATION, Respondent BRIEF OF PETITIONER CITY OF SANTA MONICA Review of the Final Agency Decision and Order No issued by Respondent Federal Aviation Administration, entered on July 8, 2009, modified by Order No (Sept. 3, 2009), and issued by FAA in the Matter of Compliance with Federal Obligations by the City of Santa Monica, California, FAA Docket No MARSHA JONES MOUTRIE W. ERIC PILSK City Attorney THOMAS R. DEVINE LANCE S. GAMS Kaplan Kirsch & Rockwell LLP IVAN O. CAMPBELL 1001 Connecticut Avenue, NW, #800 Deputy City Attorneys Washington, DC Santa Monica City Attorney s Office Telephone: (202) Main Street, Suite 310 Attorneys for Petitioner Santa Monica, CA City of Santa Monica Telephone: (310) Attorneys for Petitioner City of Santa Monica

2 as follows: CERTIFICATE OF PARTIES, RULINGS UNDER REVIEW, AND RELATED CASES Pursuant to Circuit Rule 28(a)(1), Petitioner City of Santa Monica certifies Parties and Amici Parties and Amici In This Court. Petitioner is the City of Santa Monica ( City ). The Respondent is the Federal Aviation Administration ( FAA ). The Aircraft Owners and Pilots Association ( AOPA ) and the National Business Aviation Association ( NBAA ) have each filed Motions for Leave to Participate as Amicus Curiae in support of Respondent. The Court granted AOPA s Motion on November 23, 2009, and it granted NBAA s Motion on December 7, Parties and Amici Before the Agency. In the proceedings before FAA, the following parties were admitted to participate by order of the Hearing Officer: a) California Department of Transportation b) Airports Council International-North America c) Mr. Martin Rubin, Director, Concerned Residents Against Airport Pollution d) Mr. Rob Kadota, Director, Mar Vista Community Council e) Ms. Jacqueline A. Magnum, Esq, Mangum Law Offices f) Ms. Zina Josephs, President, Friends of Sunset Park g) Ms. Susan J. Hartley, Esq., Law Offices i

3 Participants Concerned Residents against Airport Pollution, Friends of Sunset Park, and the Mar Vista Community Council each filed a post-hearing brief pursuant to 14 C.F.R (c) in support of the City. Rulings Under Review The City challenges FAA s decision to issue a final cease and desist order and find that the City is not in compliance with its federal obligations under 49 U.S.C FAA s decision is based on its determination that the Ordinance adopted by the City unreasonably discriminates between categories of aircraft and is preempted by federal law. In the Matter of the City of Santa Monica, Final Agency Decision and Order, FAA Order No (FAA Docket No ; FDMS No. FAA , July 8, 2009) ( Final Decision ), modified by Order Granting Motion for Clarification of Final Agency Decision, FAA Order No (FAA Docket No ; FDMS No. FAA , September 3, 2009) ( Clarification ), Certified Index of the Administrative Record ( R ) Nos. 130 and 133, copies of which are reproduced in the Statutory and Regulatory Addendum to this Brief. The Final Decision and its Clarification affirmed in part and reversed in part the decision of an FAA Hearing Officer. In the Matter of Compliance with Federal Obligations by the City of Santa Monica, California, Initial Decision of the Hearing Officer, FAA Docket No (May 14, 2009), R. 125, a copy of ii

4 which is included in the Joint Appendix ( J.A. ) at. The Initial Decision affirmed in part and reversed in part the decision of FAA s Director of the Office of Airport Safety and Standards. In the Matter of Compliance with Federal Obligations by the City of Santa Monica, California, Director s Determination, FAA Docket No (May 27, 2008), R. 5 (J.A. ). Related Cases This case has not previously been before this Court or any other court, and counsel for Petitioner is not aware of any related cases within the meaning of D.C. Circuit Rule 28(a)(1). Petitioner notes that there was prior litigation between the parties regarding the enforceability of an Interim Cease and Desist Order FAA issued prior to the final agency decision on review in this case. United States v. City of Santa Monica, No (9th Cir. May 8, 2009). That litigation involved issues not currently before this Court. /s/ W. Eric Pilsk Attorney for Petitioner City of Santa Monica iii

5 STATEMENT REGARDING ADDENDUM OF STATUTES AND REGULATIONS Pursuant to Circuit Rule 28(a)(5), copies of the following pertinent statutes and regulations, and a copy of FAA s decisions under review, are set forth in the separately bound Addendum: Page Tab 1 Final Agency Decision and Order No (July 8, 2009)... 1 Tab 2 Decision and Order No (September 3, 2009) Tab 3 49 U.S.C Tab 4 49 U.S.C Tab 5 49 U.S.C Tab 6 49 U.S.C Tab 7 49 U.S.C Tab 8 49 U.S.C Tab 9 14 C.F.R. Part 16 (Excerpts) Tab C.F.R. Part 135 (Excerpts) Tab C.F.R. Part 139 (Excerpts) Tab C.F.R Tab 13 Millard Refrigerated Services Inc., v. Omaha Airport Authority, FAA Docket No Tab 14 FAA Order ; Appendix R (Excerpts) Tab 15 Grant Assurances i

6 TABLE OF CONTENTS STATEMENT REGARDING ADDENDUM OF STATUTES AND REGULATIONS...i TABLE OF AUTHORITIES...iv GLOSSARY OF ABBREVIATIONS... viii JURISDICTIONAL STATEMENT...1 STATEMENT OF ISSUES...2 STATEMENT OF THE CASE...3 STATEMENT OF FACTS...4 I. THE AIRPORT IS LOCATED IN THE MIDDLE OF RESIDENTIAL NEIGHBORHOODS BUT HAS NO RUNWAY SAFETY AREAS OFF THE ENDS OF THE RUNWAYS...4 II. III. IV. THE 1984 AGREEMENT ESTABLISHING THE CITY S OBLIGATIONS TO MAINTAIN SMO FOR CATEGORY A AND B AIRCRAFT...6 THE FLEET CONTINUES TO CHANGE AND SAFETY CONCERNS MOUNT...8 THE CITY RESPONDS TO GROWING SAFETY AND LIABILITY CONCERNS BY FORMULATING THE AIRCRAFT CONFORMANCE PROGRAM...9 V. FAA OPPOSITION TO THE CONFORMANCE PROGRAM...10 VI. ADMINISTRATIVE PROCEEDINGS BELOW...12 SUMMARY OF ARGUMENT...13 STANDING...15 ARGUMENT...15 i

7 I. FAA LACKS THE AUTHORITY TO ADJUDICATE PREEMPTION IN A PART 16 PROCEEDING...15 II. CONGRESS DID NOT PREEMPT THE CITY FROM EXERCISING ITS PROPRIETARY AND POLICE POWERS TO REASONABLY RESTRICT AIRPORT ACCESS TO PROMOTE COMMUNITY SAFETY AND WELFARE...19 A. Congress Regulation of Airports Demonstrates an Intent Not To Preempt Proprietary Powers Regarding Local Safety Issues, Particularly at General Aviation Airports Like SMO...21 B. Even If Federal Law Generally Occupies The Field of Airport Safety, The Proprietor s Exception Includes The Power To Address Local Safety Risks and Liability Exposure...26 III. FAA S DECISION ON GRANT ASSURANCE 22 MUST BE VACATED BECAUSE FAA S DECISION FAILS TO APPLY THE PROPER STANDARD, CONTRADICTS ITS OWN POLICIES AND FINDINGS AND IGNORES CONTRARY EVIDENCE IN THE RECORD...33 A. Standard of Review and the Assistant Administrator s Decision B. The Assistant Administrator Erred In Failing To Consider Whether The Ban Is Not Unjustly Discriminatory Under Grant Assurance 22(a)...37 C. FAA s Decision That FAA Met Its Burden Of Proving A Violation Of Grant Assurance 22 Is Arbitrary and Capricious And Is Not Supported By Substantial Evidence In The Record Just Because Category C & D Aircraft Are Capable of Operating Safely at SMO Does Not Mean that Measures to Address Safety Concerns Are Not Necessary or Reasonable...42 ii

8 2. Safety Records of Category C & D Aircraft Compared to Category A & B Aircraft Have Never Formed The Basis of FAA Safety Determinations FAA s Conclusion that Most Category C & D Overruns Would Not Reach Nearby Homes Is Not Supported By Substantial Evidence The Availability of Potential, Partial Alternatives Does Not Make Ban Unreasonable D. FAA s Decision Is Also Arbitrary And Capricious Because It Failed To Consider All Of The Evidence Before It And Applied The Wrong Standard...55 CONCLUSION AND RELIEF SOUGHT...59 CERTIFICATE OF COMPLIANCE...60 CERTIFICATE OF SERVICE...61 iii

9 TABLE OF AUTHORITIES Cases Alaska Airlines v. City of Long Beach, 951 F.2d 977 (9th Cir. 1991)...29 Arapahoe County Pub. Airport Auth. v. FAA, 242 F.3d 1213 (10th Cir. 2001)...31 Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281 (1974)...36 British Airways Board v. Port Authority of New York & New Jersey, 558 F.2d 75 (2nd Cir. 1977)...30 Cablevision Systems Corp v. F.C.C., F.3d, 2010 WL (D.C. Cir. 2010)... 36, 38, 55 City of Burbank v. Lockheed Air Terminal, Inc., 411 U.S. 624 (1973)... 26, 27 City of Naples Airport Auth. v. FAA, 409 F.3d 431 (D.C. Cir. 2005)...36 Gade v. National Solid Wastes Management Association, 505 U.S. 88 (1992)...21 Griggs v. Allegheny County, 369 U.S. 84 (1962)...26 Gustafson v. City of Lake Angelus, 76 F.3d 778 (6th Cir. 1996)...30 Hillsborough County v. Automated Medial Laboratories, Inc., 471 U.S. 707 (1985)...22 Lakeland Bus Lines, Inc. v. NLRB, 347 F.3d 955 (D.C. Cir. 2003)...50 Louisville Gas & Electric Co v. Coleman, 277 U.S. 32 (1928)...49 iv

10 Massachusetts v. Dep t of Transp., 93 F.3d 890 (D.C. Cir. 1996)...19 Midway Airlines v. County of Westchester, 584 F.Supp. 436 (S.D.N.Y. 1984)...29 *Mine Reclamation Corp. v. FERC, 30 F.3d 1519 (D.C. Cir. 1994)...15 Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983)...36 Mount Royal Joint Venture v. Kempthorne, 477 F.3d 745 (D.C. Cir. 2007)...36 National Ass n of Home Builders v. Defenders of Wildlife, 551 U.S. 644 (2007)... 36, 38, 55 National Aviation v. City of Hayward, 418 F.Supp. 417 (N.D. Cal. 1976)...29 National Business Aviation Ass n v. City of Naples Airport Authority, 162 F.Supp.2d 1343 (M.D. Fl. 2001)...29 Plaquemines Port, Harbor and Terminal Dist. v. Federal Maritime Comm n, 838 F.2d 536 (D.C. Cir. 1988)...17 R.J. Reynolds Tobacco v. Durham County, N.C., 479 U.S. 130 (1986)...22 Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947)...21 *Santa Monica Airport Ass n v. City of Santa Monica, 481 F.Supp. 927 (C.D. Cal. 1979), aff d 659 F.2d 100 (9th Cir. 1981)... 7, 30, 31, 55 Tutor-Saliba Corp. v. City of Hailey, 452 F.3d 1055 (9th Cir. 2006)...58 Universal Camera Corp. v. NLRB, 340 U.S. 474 (1951)... 35, 50 v

11 Warshawky & Co. v. NLRB, 182 F.3d 948 (D.C. Cir. 1999)...50 *Western Air Lines, Inc. v. Port Authority of New York and New Jersey, 658 F.Supp. 952 (S.D.N.Y. 1986), aff d, 817 F.2d 222 (2d Cir. 1987)... 28, 29, 31 Wyeth v. Levine, 129 S.Ct (2009)...23 Statutes 5 U.S.C. 706 (a)(2) U.S.C et seq U.S.C U.S.C (b)... 21, U.S.C (b)(3) U.S.C (a) U.S.C (a)(2) U.S.C U.S.C (b) U.S.C (a)... 1, 39, U.S.C (a)(4)... 12, U.S.C (c)... 2, U.S.C (a)... 1, U.S.C , U.S.C (d)(3) U.S.C , 37, 38 vi

12 Regulations 14 C.F.R (a)(1) C.F.R C.F.R (a) C.F.R (b) and (f) C.F.R , C.F.R (a) C.F.R. Part , 13, 15, 18 Legislative and Regulatory Materials 124 Cong. Rec (1978)...32 FAA Order B, FAA Airport Compliance Manual (Sept. 30, 2009)... passim Federal Aviation Reauthorization Act of 1996, Pub.L , 110 Stat (HR 3539)...40 Millard Refrigerated Services Inc., v. Omaha Airport Authority, FAA Docket No (August 4, 1995), remanded on other grounds 98 F.3d 1361 (D.C. Cir. 1996)... 16, 17, 45 Pub.L , 404(a)...24 Roadhouse Aviations, LLC v. City of Tulsa, 2007 WL at *6, F.A.A. Docket No (Final Decision and Order, June 26, 2007)...37 * Authorities on which we chiefly rely are marked with asterisks. vii

13 GLOSSARY OF ABBREVIATIONS AAS ALP EMAS FAA J.A. NPIHS RPZ RSA SMO Federal Aviation Administration, Office of Airport Safety and Standards Airport Layout Plan Engineered Material Arresting System Federal Aviation Administration Joint Appendix National Plan for Integrated Airport Systems Runway Protection Zone Runway Safety Area Santa Monica Airport viii

14 CASE NO UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT THE CITY OF SANTA MONICA, Petitioner, v. FEDERAL AVIATION ADMINISTRATION, Respondent BRIEF OF PETITIONER CITY OF SANTA MONICA Review of the Final Agency Decision and Order No issued by Respondent Federal Aviation Administration, entered on July 8, 2009, modified by Order No (Sept. 3, 2009), and issued by FAA in the Matter of Compliance with Federal Obligations by the City of Santa Monica, California, FAA Docket No JURISDICTIONAL STATEMENT On July 8, 2009, FAA issued its Final Decision pursuant to 49 U.S.C (a). The City timely filed its Petition for review on September 1, 2009 pursuant to 49 U.S.C (a). FAA modified its July 8, 2009 Order on September 3, 2009, and the City timely filed an Amended Petition for Review on 1

15 October 14, This court has jurisdiction pursuant to 49 U.S.C (c) and 47106(d)(3). STATEMENT OF ISSUES 1. Whether FAA exceeded its authority by adjudicating whether the Ordinance is preempted by federal law in a 14 C.F.R. Part 16 proceeding when Part 16 does not authorize FAA to adjudicate preemption issues. 2. Whether, assuming FAA had the authority to adjudicate preemption, it erred as a matter of law in determining that federal law impliedly preempts the City, as Airport proprietor, from protecting community safety and welfare by banning Category C & D aircraft from using SMO. 3. Whether FAA erred in resting its grant compliance decision on whether the Ordinance complied with the safety exception found in Grant Assurance 22(i) without first determining whether the Ordinance complied with the general rule that airport regulations be reasonable and not unjustly discriminatory set forth in Grant Assurance 22(a) and 49 U.S.C Whether FAA s decision that the Ordinance violates Grant Assurance 22 is unreasonable, arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law since there is not substantial evidence in the record to support FAA s conclusion that the Ordinance violates the City s grant obligations. 2

16 STATEMENT OF THE CASE This dispute is about the extent of the City of Santa Monica s authority, under its police powers and as proprietor and operator of a small, older airport, to adopt an airport operating rule that controls airport access in order to protect the safety of airport neighbors and users and to protect itself against legal claims and liability. The City owns and operates the Santa Monica Airport ( SMO ), a single-runway airport that serves general aviation aircraft. The Airport sits on a plateau approximately feet above the surrounding land. The Airport is located in the middle of a residential area, and homes are feet from the runway ends. Over the years, SMO, originally developed in the 1920s through 1940s for propeller aircraft, has come to host increasing numbers of high performance, fast approach speed aircraft, classified by FAA as Approach Category C and D aircraft. Unlike modern airports, the Santa Monica Airport does not have any Runway Safety Areas ( RSAs ) off the ends of its runways. RSAs are paved areas providing a safe area to allow airplanes to stop in the event of an overrun. Overruns are a serious safety issue and FAA has devoted billions of dollars nationwide to upgrade RSAs to address this problem. Due to SMO s topography, it is not practicable to build the 1,000-foot RSAs off the runway ends that FAA prescribes for Category C and D operations. 3

17 Concerned about dangers to the community and liability as Airport proprietor, the City acted to protect against overruns. Applying FAA runway design criteria, the City approved a program to conform Airport usage to FAA s design standards by making improvements to facilitate the continued accommodation of slower propeller and jet aircraft and banning the faster aircraft SMO was not designed to accommodate. In 2002, before the City adopted program, FAA instituted a Part 16 proceeding claiming that the City s action to ban Category C and D aircraft (approximately 7% of total operations at SMO) violated several of the City s obligations under federal law. The City subsequently enacted the Category C & D restriction. After years of negotiation and litigation, FAA has ruled that the City s Ordinance banning Category C and D aircraft is (1) preempted by federal law and (2) violates the City s obligations under federal aviation grants. For the reasons set forth below, FAA s rulings on both issues should be vacated. STATEMENT OF FACTS I. THE AIRPORT IS LOCATED IN THE MIDDLE OF RESIDENTIAL NEIGHBORHOODS BUT HAS NO RUNWAY SAFETY AREAS OFF THE ENDS OF THE RUNWAYS The Airport is small, old and adjacent to two dense residential neighborhoods. R. 71 at 6-9 (J.A. ); R. 86 at 3-6 (J.A. ). First built in the early 1900 s, SMO serves small jet and propeller-driven, general aviation 4

18 aircraft, with no scheduled passenger service. Id. at 8, 10 (J.A. ). The City has owned and operated SMO since 1926, and its basic layout and configuration have remained largely unchanged for over 50 years. Id. at 8 (J.A. ). The single runway is 4,973 feet long and is used in both directions, depending upon the prevailing wind. R. 78 at 35 (J.A. ). The vast majority of takeoffs are to the west and travel over Santa Monica s Sunset Park residential neighborhood, toward the ocean. R. 118, Vol. 2, at 378:5 379:7 (J.A. ). Takeoffs to the east travel over a residential neighborhood in West Los Angeles. Id. Like SMO, both of these neighborhoods date back to the middle of the last century, before the jet age. Id. at 6-9 (J.A. ). The ends of SMO s single runway are just 300 feet from the homes to the west and 200 feet from the homes to the east. R. 71 at 6 (J.A. ). Further, the homes are beneath the runway s ends, because SMO perches atop a plateau with a foot drop-off at the runway s ends. R. 71 at 6 (J.A. ); R (J.A. ). Bundy Ave. and 23 rd Street, busy arterial streets that provide access to freeways afford the only separation between SMO and these residences. Id.; R. 71 at 29 (J.A. ). Homes line 23rd Street, to the west, and Bundy Avenue to the east. Id. A gasoline station is also near the eastern end of the runway. Id. There are no safety buffers separating the runway from these two residential neighborhoods. Id. There are no Runway Safety Areas ( RSA ) off the ends of 5

19 the runway to protect against an overrun or undershoot on takeoff or landing. 1 R. 71 at 7 (J.A. ). Likewise, there are no Runway Protection Zones ( RPZ ) or cleared areas to separate the adjacent neighborhoods from Airport operations. 2 R. 86 at 1, 6 (J.A. ). II. THE 1984 AGREEMENT ESTABLISHING THE CITY S OBLIGATIONS TO MAINTAIN SMO FOR CATEGORY A AND B AIRCRAFT As jet traffic increased in the 1970s, noise and safety concerns, and the attendant liability risks, the City passed a series of measures restricting Airport usage. R. 5 at 3-4 (J.A. ). The ordinances were challenged and the District Court for the Central District of California upheld four of the five ordinances, invalidating only the jet ban on equal protection grounds. Santa Monica Airport Ass n v. City of Santa Monica, 481 F.Supp. 927 (C.D. Cal. 1979). The Ninth Circuit affirmed, rejecting appellant s claim that the ordinances were preempted 1 An RSA is a defined surface surrounding the runway prepared or suitable for reducing the risk of damage to airplanes in the event of an undershoot, overshoot or excursion from the runway. R. 56, AAS-3, Chptr. 1, pg. 3 (J.A. ). The dimensions of a given RSA are based upon design requirements for a critical design aircraft, the aircraft that imposes greatest demand upon the airport s facilities and has at least 500 annual airport operations. R. 56, AAS-2 at 8(c) (J.A. ). Airport planners design airports and their facilities to FAA-established design standards based upon the critical design aircraft to ensure a safe operating environment. R. 56, AAS-3, Chptr. 2, pg. 9 (J.A. ). 2 An RPZ is defined as a trapezoidal area centered about the extended runway centerline that is controlled by the airport owner and cleared of incompatible 6

20 by the comprehensive nature of federal control of civil aviation. 659 F.2d 100 (9th Cir. 1981). Following that litigation, to resolve FAA concerns over compliance with federal grant obligations, the City and FAA negotiated and executed the landmark 1984 Settlement Agreement. R. 71 at 10 (J.A. ). Together with the conditions on grants received by the City from the federal government, the 1984 Agreement establishes the rights and obligations of both FAA and the City with regard to SMO. Id.; R. 5, Item 4, Exh. 3; R. 5, Item 6 at 11 (J.A. ). Among other provisions, FAA and the City agreed that the City would operate SMO through the year 2015 as a B-II facility for Category A & B aircraft. R. 71 at 11; R. 5, Item 4, Exh. 3 at 8 (J.A. ). In making the agreement, the City did not forego its right to limit access to ensure safety. Id. The 1984 Settlement Agreement recognizes that the City has no federal obligation to provide facilities for Category C and D aircraft. Id. It also provides that future FAA interpretations of grant assurances for grants accepted through 1995 would be consistent with the terms of the 1984 Agreement. Id. At 3 (J.A. ). The City accepted its last objects and activities. R. 56, AAS-3, Chptr. 2, pg. 13 (J.A. ). Airport control of the RPZ is achieved through the acquisition of sufficient property interests. Id. 7

21 FAA grant in 1994 and its current federal grant obligations will expire in R. 125 at (J.A. ). III. THE FLEET CONTINUES TO CHANGE AND SAFETY CONCERNS MOUNT In the years following the adoption of the 1984 Agreement, the fleet using SMO continued to evolve. R. 71 at 12 (J.A. ). The majority of planes using the facility were slower, Category A & B aircraft. Id. However, increasing numbers of faster, Category C & D aircraft began using SMO. Id. In 1997 and 1999, the California Department of Transportation Division of Aeronautics inspected SMO and sent letters to the City, warning that the absence of RSAs at the runway ends created a risk of liability for the City. R. 64 at 3, 4; R. 63, Exs. 43, 44 (J.A. ). The City s options for addressing this potential liability were limited by the physical circumstances. R. 71 at 6-7 (J.A. ); R. 67 at 38 (J.A. ). Federal design standards for RSAs call for RSAs to extend 1,000 feet beyond the runway ends for Category C & D aircraft and 300 feet for Category A & B aircraft. R. 71 at 12 (J.A. ). However, a 1,000-foot RSA would extend across the arterial roads at SMO s boundaries and 700 feet into the 3 FAA claims that the City accepted a later grant in R. 125 at (J.A. ). It did not. The 2003 transaction was just an accounting on a previous grant and included no new grant assurances. Id. The Hearing Officer's language to the contrary, as stated in his findings of facts, is incorrect, and the City reserves all of its rights. Id. 8

22 adjacent neighborhoods. Id. Leveling the surrounding neighborhoods to build Runway Protection Zones was not viable, because of the large number of residents that would be displaced and the exorbitant costs, estimated to be $560 million for land acquisition alone. R. 86 at 3-6 (J.A. ). In 2001, safety concerns became paramount when a fatal overrun occurred. A Category B aircraft overran the runway s west end on take-off, exploding into flames on the hillside just west of and below the runway end, towards 23rd Street. R. 71 at 32; R. 63, Exh. 2 (J.A. ). The pilot and passenger perished in the fire. Id. Residents and officials feared that, had a faster Category C or D aircraft been involved in a similar overrun, it would have penetrated into the Sunset Park neighborhood before crashing and exploding into flames. R. 71 at 37 (J.A. ). This fear was magnified by the increase in the number of Category C & D operations. R. 71 at 13, 30 (J.A. ); R. 5 at 42 (J.A. ). IV. THE CITY RESPONDS TO GROWING SAFETY AND LIABILITY CONCERNS BY FORMULATING THE AIRCRAFT CONFORMANCE PROGRAM The City responded to growing safety concerns by hiring an aviation consulting firm, Coffman Associates, to propose appropriate safety measures. R. 71 at 13; R. 2, Exh. A at (J.A. ). Ultimately, the consultant recommended an Aircraft Conformance Program that would conform Airport usage to SMO s Category B-II designation, consistent with the FAA-approved 9

23 Airport Layout Plan ( ALP ) and the 1984 Agreement, according to federal airport design standards. Id. Among other things, the Program called for creating standard RSAs for Category A & B aircraft. Id. However, because of the short distance between the runway ends and SMO s boundaries, it is not possible to install RSAs that meet FAA standards for Category C & D operations. R. 71 at 12 (J.A. ). Thus, the Program proposed banning Category C & D aircraft but allowing all Category A & B aircraft, including jets, to continue to use SMO. The Conformance Program would meet safety standards for Category A & B aircraft through the use of displaced thresholds, which would effectively create RSAs by prohibiting use of the ends of runways for takeoffs and landings. R. 2, Exh. A at (J.A. ). V. FAA OPPOSITION TO THE CONFORMANCE PROGRAM Before the City Council could consider those measures, FAA challenged them by issuing a Notice of Investigation on October 8, R. 71 at 13 (J.A. ). The Notice alleged the City had violated the statutory and grant obligations prohibiting unjust discrimination between types of aircraft and the creation of exclusive rights to use SMO. R. 1 at 8-9 (J.A. ), and the 1984 Settlement Agreement, and that federal law preempted the City from banning Category C & D aircraft. Id. The City timely filed a lengthy Memorandum in Reply, dated November 7, 2002, with supporting evidence. R. 2 (J.A. ). 10

24 FAA and the City engaged in negotiations over the following six years in an effort to resolve the dispute. Without reciting all of the numerous proposals and counter-proposals, the parties positions can be summarized as the City refusing to accept FAA proposals that afforded safety protection less than that afforded by full-sized RSAs, and FAA refusing to accept any proposal for the construction of safety facilities that would encroach on runway length beyond a certain point. R. 71 at (J.A. ). After a final round of negotiations in March, 2008 failed to resolve the dispute, the Santa Monica City Council adopted the Ordinance banning Category C and D aircraft from SMO. R. 71 at 26-29; R. 5, Item 8 (J.A. ). The Council s decision to exercise its police and proprietary powers through adoption of the Ordinance is supported by extensive legislative findings, R. 5, Item 8 (J.A. ), including increased evidence of the dangers of overruns across the country, R. 71 at 31, 34, 35 (J.A. ). Despite the fact that its prior 2002 case had expired by regulation because FAA had not issued a determination within 120 days, 14 C.F.R , (Addendum 101), FAA purported to issue a Show Cause Order in that proceeding requiring the City to respond within 10 days, as well as an Interim Cease and 11

25 Desist Order. 4 R. 5, Item 91 (J.A. ). The Secretary of Transportation then filed suit in federal court seeking a temporary restraining order and preliminary injunction to block the City from enforcing the Ordinance pending completion of FAA s Part 16 investigation. The court granted the relief, and the Ninth Circuit affirmed on appeal. R. 5, Item 95; R. 5, Item 119 (J.A. ). VI. ADMINISTRATIVE PROCEEDINGS BELOW On May 27, 2008, FAA, through its Office of Airport Safety and Standards ( AAS ), issued its initial Director s Determination, purportedly based on the 2002 Notice of Investigation. R. 5 (J.A. ). The Director s Determination found that the Ordinance violated: (1) the prohibition against unjust discrimination in Grant Assurance 22; (2) the prohibition against granting exclusive rights in Grant Assurance 23; (3) the Surplus Property Act of 1944 and Instrument of Transfer; (4) the 1984 Settlement Agreement; and (5) federal preemption. Id. at The City requested a hearing. R. 5, Item 120 (J.A. ). Following a week-long evidentiary, the Hearing Officer affirmed the Director s Determination on three of five issues, holding that that the Ordinance violated Grant Assurance 22 (prohibiting unjust discrimination), the 1984 Settlement Agreement and the Instrument of Transfer. R. 125 at (J.A. 4 Federal law requires a hearing before issuance of an order. 49 U.S.C (a)(4); 14 C.F.R (a). Prior to a hearing, the agency s authority is limited to issuance of a proposed order. Id. 12

26 ). The Hearing Officer reversed on the issue of Grant Assurance 23 ( exclusive rights ) and declined to decide the preemption issue because FAA is not authorized to adjudicate preemption in a Part 16 proceeding. Id. Both parties appealed, and the Acting Assistant Administrator found in favor of FAA on two issues, concluding that: (1) federal law preempts the City s Ordinance; and (2) the Ordinance violates Grant Assurance 22. R. 130 at 3-5 (Addendum 3-5). Subsequently, the Assistant Administrator issued a supplemental order requiring the City to cease and desist from prohibiting operations of Category C & D aircraft at SMO. R. 133 (Addendum 58). The City timely filed its Petition for Review initiating this proceeding. SUMMARY OF ARGUMENT 1. FAA prosecuted this action pursuant to 14 C.F.R. Part 16. Section 16.1 specifies the statutory issues that may be adjudicated in a Part 16 proceeding and claims of preemption and Supremacy Clause violations are not among them. Accordingly, FAA was without jurisdiction or authority to adjudicate its claim that the City s Ordinance is preempted by federal law. 2. Even if FAA had the authority to adjudicate its preemption argument, it incorrectly found that the Ordinance is preempted. FAA relies on a novel implied field preemption theory to argue that the web of statutes governing the management of airspace, air carriers, airmen, and aircraft preempts an airport 13

27 proprietor from adopting rules to address local safety concerns. A careful examination of Congressional intent shows that Congress did not intend to preempt proprietary powers, and indeed demonstrates that Congress limited regulation of airports like Santa Monica to the voluntary grant program, not to any mandatory, preemptive regulatory regime. Even if FAA s preemption theory is valid in general, the Ordinance is still not preempted because it falls within the well recognized proprietor s exception to FAA control over airspace. 3. FAA s Grant Assurance 22 determination is incorrect because it failed to consider whether the Ordinance was not unreasonable or unjustly discriminatory under Assurance 22(a), focusing instead on Assurance 22(i), an exception to Assurance 22(a) for necessary safety rules. FAA failed to properly balance the safety benefits of the Ordinance against the modest impacts on airport users, rendering its decision arbitrary and capricious. 4. Even under Assurance 22(i) the record shows that FAA s decision is arbitrary and capricious, because it ignores evidence in the record, is inconsistent with FAA s own policies and prior decisions, and fails to state a rational connection between the evidence and the decision. Therefore, the City respectfully requests that FAA s decision be vacated. 14

28 STANDING Pursuant to Circuit Rule 28(a)(7), the City states that it has standing to pursue this Petition for Review because FAA Orders and effectively deny the City the ability to implement Ordinance No. 2251(CCS), which prohibits a relatively small number of faster jet aircraft from using SMO. Accordingly, the City is [a] person adversely affected by an order of the secretary. See also 49 U.S.C (a) (conferring standing on a person disclosing a substantial interest in an order issued by the Administrator of the Federal Aviation Administration. ). Further, the City would be subject to an FAA cease and desist order preventing the City from enforcing its Ordinance. ARGUMENT I. FAA LACKS THE AUTHORITY TO ADJUDICATE PREEMPTION IN A PART 16 PROCEEDING Although agency decisions are generally reviewed under the traditional substantial evidence standard of review, it is axiomatic that in reaching its decision, an agency must follow its own regulations, and its failure to do so is fatal to the deviant action. Mine Reclamation Corp. v. FERC, 30 F.3d 1519, 1524 (D.C. Cir. 1994) (internal quotations omitted). This proceeding is governed by FAA s regulations at 14 C.F.R. Part 16. Section 16.1(a) defines the scope of FAA s jurisdiction under Part 16 by specifying the statutory issues that may be adjudicated: the prohibition against the 15

29 grant of exclusive rights to use an airport: requirements of the Anti-Head Tax Act, 49 U.S.C ; assurances contained in grants made pursuant to the Federal Airport Act of 1946, the Airport and Airway Development Act of 1970 and the Airport and Airway Improvement Act of 1982; and federal obligations contained in deeds for property transferred pursuant to the Federal Airport Act and the Surplus Property Act. Notably absent from this list is the Supremacy Clause or the question of preemption. Under the statutory construction principle of expressio unius est exclusio alterius, the inclusion of specific issues that can be adjudicated under Part 16 means that issues not listed may not be adjudicated in a Part 16 proceeding. Thus, under FAA s own regulations defining the scope of its adjudicatory power in this case, FAA lacks the authority to address preemption in a Part 16 proceeding. FAA has previously understood that its adjudicatory jurisdiction does not include preemption claims. In Millard Refrigerated Services Inc., v. Omaha Airport Auth., FAA Docket No at 23 (Aug. 4, 1995), remanded on other grounds, 98 F.3d 1361 (D.C. Cir. 1996), decided under the predecessor to Part 16, FAA stated: [T]he alleged violation of the Supremacy Clause of the United States Constitution does not fall within the scope of the FAA jurisdiction with regard to a federallyassisted airport owner s grant assurance obligations. 16

30 The FAA does not ordinarily resolve constitutional questions in the context of grant compliance proceedings Addendum 134 Like this case, Millard involved a local access restriction: a ban on larger aircraft weighing more than 12,500 pounds. Following the reasoning in Millard, the Hearing Officer in this case found that Part 16 does not confer authority on FAA to adjudicate a preemption claim. R. 125 at (J.A. ). Unable to provide a reasoned explanation for its change in position since Millard, FAA simply ignores that decision. Instead, FAA offers two rationales for its determination. Both fail to withstand scrutiny. First, FAA relies on the general notion that while administrative agencies are not required to consider constitutional claims, they are entitled to do so. R. 130 at 29 (Addendum 29) (emphasis in original). But the case FAA relies upon, Plaquemines Port, Harbor and Terminal Dist. v. Federal Maritime Comm n, 838 F.2d 536, 544 (D.C. Cir. 1988), does not authorize FAA to adjudicate issues beyond the limits of its regulatory authority. At most, Plaquemines recognized that an administrative agency may consider a constitutional defense to an enforcement action, but it is not required to do so. Id. Indeed, in Plaquemines, the Federal Maritime Commission declined to adjudicate a constitutional defense because the issue was better left to this Court to resolve. The general discretion to consider a 17

31 constitutional defense does not allow FAA to ignore a limitation contained in its own regulations precluding it from enforcing the Supremacy Clause in a Part 16 case. Second, FAA argues that this case involves a dispute concerning whether there is a conflict between the City s Ordinance and the statutes that are listed in Section 16.1(a). R. 130 at 29 (Addendum 29) (footnote omitted). This notion is both incorrect and inadequate. FAA s justification for allowing itself to make a preemption determination in this case alleged conflict between the City s Ordinance and certain specified federal statutes is not the basis for the FAA s substantive determination that the City s action is actually preempted. FAA s preemption claim is an implied field preemption theory based on the FAA Act and other general aviation laws. Those general laws are not the specific statutory provisions set forth in Section Thus, FAA s asserted conflict preemption theory is meritless merely a ploy to bootstrap the preemption issue into a Part 16 case, where it does not belong. Moreover, the statutory conflict asserted by FAA to confer jurisdiction relates solely to the issue of City compliance with its statutorily-mandated grant obligations. This is simply not a question of whether Congress has denied the City authority to exercise its power in this area i.e., whether the City s action is preempted. FAA s theory would convert every routine administrative 18

32 enforcement action against a state or local entity for violation of a federal statute, regulation, or grant assurance into a constitutional claim under the Supremacy Clause. That clearly paints with too broad a brush, and certainly does not provide a basis for FAA to use its limited jurisdiction under Part 16 to enforce an alleged violation of the Supremacy Clause. FAA s attempt to adjudicate its preemption claim in the Part 16 proceeding is improper, and its preemption decision should be vacated. II. CONGRESS DID NOT PREEMPT THE CITY FROM EXERCISING ITS PROPRIETARY AND POLICE POWERS TO REASONABLY RESTRICT AIRPORT ACCESS TO PROMOTE COMMUNITY SAFETY AND WELFARE This Court generally reviews an agency s preemption determination under the Chevron standard of review. Albany Engineering Corp. v. FERC, 548 F.3d 1071, (D.C. Cir. 2008). In Albany Engineering, however, the Court acknowledged a growing recognition that an agency s decision on the scope of preemption calls for a less deferential standard of review. Id. Regardless of whether Chevron or some other standard of review is applied, however, this Court has considered closely preemption determinations by federal agencies. Id. (noting that agency preemption decision would be vacated under either standard of review). See also Massachusetts v. Dep t of Transp., 93 F.3d 890, 893 (D.C. Cir. 1996) (same). 19

33 FAA rests its preemption decision on an implied field preemption theory that has never been adopted or acknowledged by any Court. The theory is fatally flawed for two reasons. First, despite the federal regulation of standards for aircraft design, flight operations and pilot qualifications on which FAA relies, Congress has not regulated the area of airport safety to the same extent, and has quite deliberately refrained from mandatory federal regulation of general aviation airports like SMO. Whatever the reach of federal preemption in aviation generally, it does not extend to an airport proprietor s safety regulation of small, general aviation airports. Second, even if federal law generally preempts airport safety regulation, Congress and the courts have acknowledged a proprietor s exception to federal preemption of local aviation regulation. FAA also acknowledges the proprietor s exception, but argues that its scope is limited to proprietary actions to regulate noise, terminal and groundside congestion and environmental concerns. R. 130 at 33 (Addendum 33). FAA does not explain why Congress would allow proprietors to restrict access in order to address noise, terminal congestion, traffic and environmental concerns, but not the safety of people on the ground. Nor is such a distinction supportable. A review of the relevant statutory provisions, FAA s own regulations and grant assurances, and the cases, demonstrates that Congress did not intend to preempt airport proprietors powers with respect to safety. Thus, 20

34 even if FAA had the authority to adjudicate a preemption claim in a Part 16 proceeding, it decided the issue incorrectly. A. Congress Regulation of Airports Demonstrates an Intent Not To Preempt Proprietary Powers Regarding Local Safety Issues, Particularly at General Aviation Airports Like SMO The touchstone of any preemption analysis is the intent of Congress. Gade v. National Solid Wastes Management Association, 505 U.S. 88, 96 (1992). When considering that intent, courts start with the assumption that the historic police powers of the State were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress. Rice v. Santa Fe Elevator Corp. 331 U.S. 218, 230 (1947). Review of the relevant statutes demonstrates that Congress did not intend to preempt an airport proprietor s authority to enact reasonable safety rules. FAA relies on two statutes to support its preemption theory: the Federal Aviation Act, 49 U.S.C et seq. and the Airport and Airway Improvement Act, 49 U.S.C et seq. The Airport and Airway Improvement Act contains no express preemption provisions whatsoever. The Federal Aviation Act contains only limited express preemption provisions, unrelated to this case U.S.C (b) preempts state laws and regulations related to pricing, routing and service provided by air carriers covered by the Act. 49 U.S.C (b). This provision does not apply to the City since covered air carries do not utilize the Airport; nor does the Agency claim otherwise. R. 130 at 16 (Addendum 16). Nonetheless, it is important to note that, in adopting this express 21

35 Because there is no express preemption, FAA relies on the federal government s legislatively mandated regulation of aviation safety to assert implied field preemption of the City s ordinance. R. 130 at (Addendum 30-33). In making this claim, FAA bears the burden of demonstrating a manifest Congressional intent to preempt the powers of a proprietor to adopt reasonable rules regarding the use of its airport. Preemption may not be inferred simply because regulations are comprehensive. R.J. Reynolds Tobacco v. Durham County, N.C., 479 U.S. 130, 149 (1986), citing Hillsborough County v. Automated Medial Laboratories, Inc., 471 U.S. 707, (1985). Here, it is clear that FAA has failed to meet its burden. FAA invokes general statutes concerning control over flight safety, use of the navigable airspace, and the safety certification of aircraft, air carriers, and airmen. R. 130 at (Addendum 30-32). But it does not cite any such law relating to safety regulation of airports or the safety of people near airports. In fact, review of the limited statutory provisions regarding the regulation of airports demonstrates that that Congress did not intend to totally occupy the field of airport safety. In general, there are no statutes mandating that any airport preemption provision, Congress explicitly acknowledged and protected the rights of airport proprietors. 49 U.S.C (b)(3) (statute does not limit a political subdivision of a state that owns or operates an airport served by an air carrier holding a certificate issued by the Secretary of Transportation from carrying out its proprietary powers and rights. ). 22

36 be of a particular size, capacity or capability or that limit the available measures to protect the safety of people near airports. Mandatory federal regulation of airports is limited to a certification process for airports serving an air carrier operating aircraft designed for at least 31 passenger seats or scheduled passenger-carrying operations of an air carrier operating aircraft designed for more than 9 passenger seats 49 U.S.C (a). (Addendum 73). See also 14 C.F.R (a)(1). (Addendum 105). Certification of such airports is intended to ensure safety in air transportation. 49 U.S.C (b). But providing minimum standards for certification of some airports does not imply a Congressional intent to preempt local actions that may impose additional safety measures at any airport. See Wyeth v. Levine, 129 S.Ct. 1187, (2009) (Congressional establishment of a regulatory floor does not imply an intent also to enact a regulatory ceiling, preempting additional local measures). If Congress had intended to preempt a proprietor s power to regulate its airport, it would have so provided. See id. Whatever preemptive power the Part 139 certification process may have, however, it clearly does not extend to airports not subject to those requirements. Congress clearly expressed its intent to provide federal minimum standards at Part 139 airports only, and deliberately chose not to provide a similar certification 23

37 process for airports that do not serve the specified commercial service operations. 6 SMO is not subject to this airport safety certification process, as it does not serve such commercial service operations. R. 130 at 16 (Addendum 16). Federal regulation of airports like Santa Monica is limited to enforcement of the Airport Improvement Program grant assurances, the underlying basis for FAA s enforcement action in this case. 49 U.S.C But participation in that program is voluntary. That limited form of regulation demonstrates that that Congress did not intend to preempt proprietary control over airports the very notion of voluntary preemption is oxymoronic. Similarly, FAA recognizes that airports not subject to grant obligations and Part 139 may take a wide range of measures that affect capacity and access, including closing completely, without any FAA approval; FAA determinations on the effects of such actions are only advisory. 14 C.F.R (a). The principal that airport owners retain the inherent power to adopt safety rules limiting access to their airports is acknowledged in FAA s own grant assurances, which represent the agency s interpretation of 49 U.S.C Moreover, the scope of the federal regulation of airports has been considered quite deliberatively by Congress, which has refined it very specifically. For instance, in 1996, Congress added 49 U.S.C (a)(2), which extended the scope of the provision to cover airports receiving scheduled commercial service by aircraft with 9-30 seats. Pub.L , 404(a). 24

38 Embedded in the very grant assurance prohibiting unjust discrimination that FAA asserts the City has violated is the following provision: The [airport] sponsor may prohibit or limit any given type, kind, or class of aeronautical use of the airport if such action is necessary for the safe operation of the airport or to serve the civil aviation needs of the public. Assurance 22(i) (Addendum 169). Assurance 22(i) explicitly recognizes the inherent authority of an airport proprietor to limit aircraft operations to address local safety issues. 7 As a matter of contractual obligation under the grant program, FAA has retained the right to review such local restrictions to ensure compliance, but Assurance 22(i) embraces the point that the proprietor has the power to adopt such safety measures. The plain meaning of this provision undercuts FAA s position on preemption in this case; if airports may ban categories of aircraft for safety reasons, FAA cannot seriously argue that airport proprietors are federally preempted from doing so. 8 7 Although the FAA decision acknowledges the existence of Assurance 22(i) (R. 130 at 6, 34 (Addendum 6, 34), it does not discuss it at all in the section concerning preemption (id. at 30-33), despite its obvious relevance. 8 The issue of whether the City s ordinance meets the substantive standards of Assurance 22(a), or if it otherwise would not, whether it meets the exception contained in Assurance 22(i), is discussed fully in Sections III. C and D, below. Whether the City has complied with its grant assurances is a completely different issue than whether the City is preempted from enacting any such provision. 25

39 Thus, although there is pervasive federal control over the navigable airspace, there is not corresponding federal control over the management and operations of airports. This clearly reflects a deliberate decision by Congress to strike an appropriate balance between the powers of local airport proprietors and the federal interest in aviation. This careful and deliberate balancing of interests preserves the power of airport proprietors to adopt reasonable rules to address safety issues their airports. B. Even If Federal Law Generally Occupies The Field of Airport Safety, The Proprietor s Exception Includes The Power To Address Local Safety Risks and Liability Exposure. As FAA recognizes, even when state or local government action affecting aviation is generally preempted, the courts and Congress have long recognized an exception to preemption for actions taken by airport proprietors. R. 130 at (Addendum 32-33). The history of the airport proprietors exception begins with the Supreme Court s decision in Griggs v. Allegheny County, 369 U.S. 84 (1962), in which the Court held that municipal airport owners could be liable for Fifth Amendment takings of private property resulting from the impact of airport operations causing excessive noise that adversely impacted neighboring lands. Eleven years later, in City of Burbank v. Lockheed Air Terminal, Inc., 411 U.S. 624 (1973), the Court held that a non-proprietor municipality could not impose access restrictions on an airport within its boundaries, but recognized that federal 26