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SR-0 (34) . . -.-~~ ~....----... ---- CITY OF SANTA CALIFORi\IA ::7 ;:;:~ c-: T:<:; C-T~ A~~K;..,E) ~T:-'" J--iA~L EX~r;Jok 3-99'?5 Januarv 20, 1981 To: ~GO~ It May Concerr 7eur trrJ ~ ~~ i/ 1vlOl~ICA~ /S/~ rFL<- :;-:- The attached memoranduili dated December 5, 1980 from Josepn M. Berl ln regard to toe Santa Monlca Munlclpal Alrport and noted "Prlvl1eged and Confldentlal Materla1", ~ias been released for publlC reVle\o' per an announcement of the Clty At':.orney at a recent Councll meetlng. i ~;,..-~ .' . --:-~ ~/ BARBARll. LEVI'J:'T Clty Attorney's Offlce f I -----f hI Att. ;~~",~~~--,-. -~.~ -...-- -- -~-.,..-~--- --~~--=---,----.- --~----.q-~~--~...~~--;.--~-.-".-~~~-----....",.-~--~ . . . PRI\1LI:::';::LJ AKD CO:\FlDE:\TiAL -,jA TERIAL c:::l r" <'"> -~ r...n D€C~ernbe~ 5.195(; c !\lDIORAKDU!\; FOR THE FILES ~-' :---- FRO";: , - -< Josep~ i\l. Ber! RE: Santa \lomca \iumc1pal Airport IntrocuctlOn The C1ty of Santa :\iomca. Cal1forma (the "C1ty") owns and operates the Santa i\Iomca :\iumclpal AJrport ("S\lA" or the "AJrport"). Over a perIOd of years. the City has entered mto a number of arrangements WJth the federal government WJtto regard to the AJrport. 1. \'arJous 1mprovements to S:\IA were partJally fmanced by AJr- port Development Grants rece1ved from the Federal AV1atlOn AdmimstratlOn or 11 1ts predecessor a.gencles)-' 2. The FAA leased a portlOn of the A1rport on Wh1Ch it has constructed an air traff1c control tower and has operated that tower SInce 1965. The questIOn presented 1S whether the above-descrlbed arrangements presently obltgate the City to contmue operatmg SI\IA as an aIrport or whether the C1ty may legally cease inrport operatIons and utilIze the land on which S:\!A 15 located for other purposes. y The Federal AVIatlOn AdmInIstratlOn and lts predecessors, the C1VIl Aero- nautICs Board and the Federal AVIatIOn Agency. are herem referred to as the "F AA". . . . - 2 - Arra:1~E''Tlent~ Bet,\-eer tl>e CIty ane tJ>e l'mted States Governme'1t A. ;_l!'r~-:'~ DE\-(..}02fT,€r: Gf'E...~t3 Pu:-suant to the Federal AIrport Act of 1946,49 v.S.C. ~51101. et ~. the City received a nUffiner of AIrport Develooment Grants which prOVIded feceral funclTIg- to asSIst IT' speCifIC developrpent and Irnproverr,ent projects. In each Instance the statutory procedure for obtammg such grants was followed. This procedure reqUIred the CIty, as sponsor of eacl', project, to subrmt aT] aptlllcatJOn descrlbJl1g the proposed project to the FAA. 49 U .S.C. ~tl108. When a project was approvec, the FAA offered to pay a portIOn of the project costs to the CIty. 49 LS.C. ~llll. In each Instance the FAA also reqUired the CIty to prOVide certam Written "assurances". 49 V.S.C. ~lllO}./ The reqUIred assurances were: a. That the CIty would operate S\1A "for the use and benefit of the pubhc"; b. That the CIty would operate and mamtam S:vrA m a "safe and serviceable condItIOn"; c. That the CIty would not permIt any actlvity whIch would Interfere WIth the use of 5:\1.'1. for aIrport purposes; and. d. That the CIty would honor these assurances durmg the useful hfe of the facIlIty or Im- provement constructed WIth the proceeds of each grant, or for a perlOd of 20 years, WhICh- ever IS less. 2! The Federal AIrport Act of 1946 was repealed and replaced by the Airport and Airway Development Act of 1970, 49 V.S.C. SS1701, et seq. Pursuant to SectIOn 1718 of the 1970 Act, Sponsors. as a "conditIOn precedent" to receI vmg a grant, are now reqUIred to give assurances sunstantlally Similar to those reqUIred under the 1946 Act. . . . - 3- The~e asS:V~B"Iee5 v.-ere InC'o:-~'JrEt9c l~ the G~[:l1t A~neerrerts bet\l,Tee'l the CIty a'iC tr," F A~. T~'c IT-cst rC'~~~:.-t Alr;~2:-t [.i€\Elop-...,,(:.~t Gr~:.:s rE-C'(l\'ec b:- the CIty are dated June 22.1952 and July 24.1968. 0" June 22.1962. the FAA authorIzed S90,302 for addItIOnal apron constructIOn at 5JlA. On July 24. 1968, the FAA authorlzed $11.925 for removal of an abandoned control tower and for general 111='l"1t1'"1;. Assu'11m; the useful ll\'eo: of these I'nprove'11e'1ts to be 20 years, the CIty has tpus statec that It woule honor the assurances It gave In connectlOn wltf, the 19&8 grants through July 23. 1985}./ B. Leases On ;~larch 31. 1965. the CIty leasec part of the land on whICh 5:\IA IS located to the FAA for the ope:-atlon of an aIr traffIC control tower. The term of the lease cOIT'1l'Jencec on AP:-ll 1. 1965. The lease IS renewable by the FAA for succeSSIve one-year perIOds begmnmg July 1, 1965, and term matIng on June 30, 2G15.!-' Thus far the lease has been renewed annually. The FAA has constructed an 8lr traffIC control tower on the leased land and has operated the tower at federal expense since the date of construc- tlOn. The cost of constructmg the tower was $386,931. We do not know what 3/ Between 1948 and 1959, the City receIVed four other AIrport Development Grants. These grants authOrIzed a total of $165,648 for various proJects. More than 20 years have elapsed smce the date of these grants. Thus the period durmg which the CIty has stated that It would honor the assurances relatmg to those earlier grants has elapsed. if We understand that there may eXIst other leases between the CIty and the FAA. We do not know the terms of such leases and, accordmgly, hmlt our dISCUSSIOn herem to the one lease the terms of whICh have been made kno",n to us. . . . -4- 9rn("'.J.~ts h-?\2 bee1^ ex~encec boy the F_-\~-\ It: operatl11g ane iT'&lntalnln6" the al~pC:-:-L Th: le~"f a~-ecY,c:-t bet;'.eu, thE C:ty ar>c' th~ FAA doe" not s~,eciflCally provide that the City wIll o;Jerate 5\1.'\ as &.'1 airport durmg the entire terr" of the lease as extended. The agreement does, however, provIde tt.&t Jr, conS1Cerb.tJoIi for the F AA's operatIon of an air tra.fflc control tower, the City '0',',11 lease la'lo or. v, hiC~ tpe to" er 15 to be constructec'. will provide access Boie riGhts-of-way necessar::- for operatIOn of the tower, and will prOVIde o~er8tlOna1 co",trol of lIghtmg deemed by the FAA to be essential for aircraft o;:>ers.tlOns. The CIty IS also "to be responsible for the proper and continued functlOmne,: of all eqUlp:nent and apparatus v;hlch the FAA determmes IS necessary for air traffIC control": to tal{e measures to aVOid llnpalrmg- the FAA's a:llllty to control ground and aIr traffiC: and to hold the federal government harrrless from losses and claims arIsmg from the operatIOn of the tower. which clmf'1s or losses do not resul t fro'Tl negligence or wrongful acts by the FAA. DISCUSSIon A. Almort DeveloDment Grants. > , As stated above. the Airport Develo;>ment Grants WhICh the City recen'ed were maGe pursuant to the Federal Airport Act of 1945. 49 D.S.C. smo of that Act prOVided In pertment part: "The Admmistrator shllll recelVe assurances In wr1t- ing satisfactory to him that - "(1) the airport to which the project relates will be available for public use on fair and reasonable terms and Without unjust discriminatIOn." '....hen the Federal Airport Act was replaced by the A1rport and Airway Development Act of 1970, thiS provlslOn was strengthened to prOVide that: . . . - 5 - "As 8 COndltlO" precedent to hlO' a;JrI'o\'al of an 8.1roort develo;Jmept proJect under thIs subcheDter, tilE. Sec~etaI'Y Lof TrE.~,s;Jo~tE.tIOT"]J shall receIve as~ SJ~cr-c-es Pi ,.,rltl~;- .s2.t15f~ctory to hire th2~t- "(1\ the a "';:J:);,t to \', ]-.;('') the p"cJect foI' 8.1I'~ort developm ent relates \\ III be avallable for publIc use or; fal!' and reasonable terms and WIthout unJust dISCrlITllnatlon." 49 L".S.C. SI7lS. Both the 1946 Act and the 1970 Act take tile form of reqUlrmg the federal goveI'nment to exact certam contractual cond:tlOns as a cond:tlOn precedent to approvmg an AIrport Development Grant. In the termmology of the statutes. these COndJtlOns are called "assurances". Some of the assurances req,ared under the Acts have been held to constItute commItments bmdmg upon an aIrport authority and enforceable by persons who, although not parties to the grant agreements, are mtended benefIcIarIes of the assurances. c:::1 ty___of Ip.[;'lewooc! v. Clt;.-- of Los Angeles. 451 F.2d 948,954-956 (C.A. 9,1972), cf., Port Authont;.-- of Nel'. York v. Eastern Air Lmes, Inc., 259 F.Supp. 745, 750 (E.D.N.Y., 1965). An airport proprletor's obligatIOn to make Its airport avaIlable for public use Without unjust dlscrlmmatiOn does not, however, arise solely from the contractual nature of the assurances gIven In connectIon with grants. Rather, it has been held that "the actual covenant IS ummportant; it IS the statute that enacts the nght and obligation". AIrcraft Owners and Pilots AssocIatIOn v. Port Autho!"lt~. of New York, supra. It IS the duty of the federal courts to momtor observance by an aIrport proprietor of "the strict statutory oblIgation to make hIS faCIlIty aVailable for public use on faIr and reasonable terms and WIthout unjust diSCI' I'TlI na t IOn", as reqUIred by the 1970 Act and ItS predecessor, the 1946 Act. Entish Airways v. Port Authorlt~. of New York, 564 F.2d 1002,1011 (C.A. 2, . . . - 6 - 1977): Clt:,~ of Dallas \'. Southv. est Airlines Co.. 494 F .2d 773 (C.A. 5), cert. dE:.D.l€L. 4~~ l..,.S. IG7St 95 5.C-t. 668 nft'-ft. The decided c/:'ses c]~('lo~ed b~ our re~e&rc!' gere"ally address the questIOn of \\ hether rules or regulations enacted by an aIrport authority for the purpose of reg-ulatmg ongomg- mrport Oper&tlOns art unjustly discrimInatory ;o.ithm the rnea'1Jns of the statutes. For exallple, federal courts have: requued an airport proprIetor to revise Its formula for computmg rent payable by all' earners utilIzIng terrr:mal facIlIties In order to elI'Tunate diSCriminatIOn between carriers. Southern AIrwa~'s v. City of A tlant&, 428 F.Supp. 1010 (N.D. Ga., 1977): reqUIred an airport proprietor to prOVide faCIlIties to an mtrastate carner which was provldmg serVIce comparable to services prOVided by other users of the airport. CIty of Dallas v. Southwest AirlInes, 371 F .Supp. 1015 (N.D. Tex., 1973), afhrwed. 494 F .2d 773 (C.A. 5), cert. demed. 419 u.s. 1079, 95 S.Ct. 668 (1974); and prohlbltec an airport propnetor from banmng landmgs by the Concorde, British Alnva~'s Board v. Port Authority of Kew York, 564 F.2d 1002 (C.A. 2, 1977). Thus It IS clear that the reCipient of an AIrport Development Grant IS legally reqUired to operate its Blrport on fall' and reasonable terms. Without unjust dIscrimination. and that persons injured by an airport proprIetor's de- parture from this standard can brmg an action for appropl'late relIef In the federal courts. There may eXIst a difference In views as to whether such actIOns are based upon contractual oblIgatIOns undertaken by grant recipients or &rectly upon the statutory prohibitIon agaInst unjust dlscrlmmatIon WhIch applies to all aIrports receiving federal funds. Whatever the theory, It IS well establIshed that such actIOns can be maIntamed. . . . - 7 - The s[:~,e st&tut" \\;llcr- prohibits unjust dlSCrlfYiIrletJOn alsa requires the pro;metor of a:1 alr;:>ort whlcP receIves an Alr;lOrt Development Grant ta rr.a~€ t)l€ a;~;J;)rt t'8v811a:,le for pujliC use'". The statute require=- that befare the federal government can approve a development project far fundmg, it must receive satisfactory Written assurance that the aIrport will be "available for public use'". This reqUirement IS alsa set forth In regulations adopted by the F A.A. See 14 c.r .R. Part l52.~! We are not aware of any decided cases In which an airport proprietor, after giVing the reqUired assurances and receivIng a grant, attempted to discontinue alr;:>ort operatIOns. thereby making the airport unavailable for public use. If a proprietor does attempt to cease airport operations during the useful life of a facIlity funded by an Airport Development Grant or Within 20 years frair, receipt of a grant, whIchever is saoner, It undertakes a risk that persons allegedly Injured by the cessatIOn of operations Will attempt to bring suit to enJom that cessatIOn or to recover damages. Since the statute which requires a proprIetor to make its airport available for public use IS the same statute which prohibIts unjust dlscrlmmation, and It IS clear that the unjust dISCrimInatIOn prOVISIon IS enforceable by a court, there eXiSts a substantial pOSSibility that a court would hold that the proprietor's obligatIOn to make the airport available for public use IS also enforceable. ~/ Pursuant to the Act, the FAA has broad authOrIty to prescribe project sporsorship reqUIrements so long as the reqUIrements are not beyond the reasonable lImItS of the FAA's dlscretlOn. Walker Field, Colorado, Public Authorlt\' v. Adams. 606 F .2d 290 (C.A. 10. 1979). It would be dIfficult to argue that It IS beyond reasonable limIts of the FAA's discretlOn to reqUire that mrports receiving Airport Development Grants Will be available to the public durmg the useful life of airport faCIlities funded m substantial part by such grants. ThiS IS particularly true smce Airport Development Grants may only be made by the FAA in connection WIth public airports. . . . - 8- A" It applIec to S'\:A.. 1f ar atte<.'[Jt 1" Trade to clo"e tire A1rport. the possc:.;;;t,- EXISt~ tt;Cit a plaintiff l'1JurEc by tl1at closm; could obtaIn eCjU1table rehe: f~o:-" &. court. ep]DUiJjJ; th~ CIty fr0~ elOSln;- thE Alr~ort &'JC er'Jolnlng aDY actlVIty Wf>ich Interferes Witt. the utilizatIOn of S'.rA as a safe /IDe serviceable alr;>ort available for publIc use. It IS also possIble that persons Injured by a C10S1[;6 of 51;/\' rllgtlt reco\'er rr:oney damages for such Injury. B. Lease. ThE lease dated \larch 31. 1965, between the City and the Umted States of A;nenca, rec1tes that a parcel of land (on Wh1Ch the SMA all' traffH~ control tower IS now sItuated) will be leased to the federal government In COnSifJeratlon for a payment of $1.00 for the fIrst term of the lease and an addItional $1.00 for each year In which the lease is renewed at the federal goverTlment's optIOn. A rIder, Incorporated In the lease by reference, recites that "[f] or and m consIderatIOn of the foregomg and of the operatIOn of an All' TraffIC Cor-trol Tower at the Santa :'viomca !\1umclpal AIrport b~' tt>e Umted States Government. actIng b~' and through the Federal A vlation Agency", the CIty agrees that the all' traffIc control tower wIll be operated In accordance wIth certaIn speCIfIed condItIOns. We understand that the FAA dId construct a control tOl'.'er at a cost of $386,931, anc has contmuously operated and mam- tamed that tower at federal government expense. The lease thus sets forth a contractual arrangement pursuant to whIch the CIty prOVIdes a sIte and the federal government constructed, main- tamed, operated and contmues to operate an air traffIc control tower. The towel' IS, and has been, used for the benefIt of S:\IA, a facIlIty owned and operated by the City, and from whIch the CIty derlves certaIn revenues. By . . . - 9 - reaso:-~ of the cot[traetu~ a:'re.r-'sc~eilt e:-rbodl€C In thE l€as€:~ the Cit~ has been relie'TO of tfoe ex~'ensE' of C{)r5tru('tm~. 1To&.I'1tammg ape operatmr Its OWl' to",er, ar. ex;)sr,~c It \\OLlc:' ctr,crvd".e han: hac to Incur. The City hiiS thus recelvec valuable conslderatlOn In return for provldmg the federal government with the land on which the tower IS sItuated. There IS no questIOn that both the FAA and the City are and were authorlzed to enter mto the lease agreement. 49 U ,S.C. 31344 authollzes the L'L-\ to lease property. 4~ LS.C. 51348 authorizes the FAA to acqUIre, e",tabl1sh. Imp"ove and operate fur navIgatIOn faCilities such as the air traffic control to\\ er at S\'IA. Pursuant to California law. tDe City IS also authOrized to lease space to the feder&! government In connectIOn With the erectIOn or mamtenance of aI' airport. 58 Attorney General's OpinIOns 345. 346 (Opinion No. C\" 74-317, ~lay 30,1975). As set forth above. the lease reqUIres the City to take measures to avoid Impalrlng the FAA's ablltty to control ground and aIr traffiC at S:\IA, to prOVide essential equipment ane apparatus, to be responsible for the functIOning of lIghtmg deemed essential by the FAA for aIrcraft operatIOns, and, to do varIOus other things to asSISt the FAA m the control of air traffic. These obhg-atlOns contmue for the life of the lease WhiCh, at the FAA's option. can exte'1d until June 30, 2015. A cessatlOn of airport operatlOns and utilization of the land under- lymg Sl\IA for other purposes would, in all likelihood, be a breach of the CIty's agreement With the FAA. For example. puttmg up a structure which would Impede air traffic or failure to prOVide reqUlred eqUIpment and apparatus would contravene som e of ,the speCifiC lease prOVISIOns deSCribed above. . . . - 10 - As les'CeE of the la'1c underlYIr!f" the tower, the FAA woulc heve a callie of actIOn, a;cur..st Its lessor. the City. Sucr. an actIOn could see\": eqUItable rellef prohlbltmg the en) from vlolatmg the lease andlor money damages for ar-y vlolatlor;. Cor.clUSlOn BEcause the Clt; received AIrport DevelopMent Grants In 1962 and 1968. art atte:"pt to close S:I,..1. prIOr to July 23,1988, would create the risk that a court woule enJOln such a closlni; or ";oule award money damages to a party Injured by that closmb' Closmg S\1A before June 30. 2015, and utlllzmg the land underlymg the AIrport for other purposes woulc!. m all likelihood, Violate the 1965 Lease bet\\een the City and the United States government. If SUit were brought by the FAA. It could result In a grant of eqUItable relief or an award of money damages against the City.