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SR-10-27-2015-8D City Council Report City Council Regular Meeting: October 27, 2015 Agenda Item: 8.D 1 of 22 To: Mayor and City Council From: Marsha Moutrie, City Attorney, City Attorney's Office Subject: Potential Options for Reducing Emissions Recommended Action Staff recommends that the City Council direct staff to: 1. Include provisions in Santa Monica Airport ("the Airport" or "SMO") leases that limit the sale of aircraft fuels for piston-engine aircraft to low-lead or unleaded fuels and fuels for turbine-engine aircraft to biofuels or other sustainable fuels by a date or dates certain; 2. Include provisions in flight schools leases prohibiting lessees from using leaded fuels for flight training; 3. Require lessees who currently sell aircraft fuel at the Airport to begin remediation of any contamination of the premises they occupy; 4. Assess and report back to Council on the possible termination of third party fuel sales at the Airport and on the feasibility of the City taking over that function to assure that, so long as aircraft fuel is sold at the Airport, it is the most environmentally sound fuel available; and 5. Begin developing and report back on a cap on total emissions generated by the Airport. Executive Summary A growing body of scientific evidence establishes that lead emissions from piston aircraft engines and black carbon and other emissions from turbine aircraft engines are detrimental to human health and to the environment. This is a world-wide challenge and a significant local problem. Studies performed at and around the Airport in recent years document the extent of the harmful emissions generated by its operations. In light of these scientific and technical studies and of Airport neighbors' first -hand reports about the impact of emissions on their lives, the City Council directed staff to return with a report providing alternatives for reducing aircraft emissions. This report responds to that direction. 2 of 22 It provides information about aircraft emissions and efforts to reduce them; and it discusses alternatives for reducing emissions locally, including alternatives suggested by members of the community. The report discusses and recommends using lease provisions to limit fuel sales at the Airport to cleaner fuels and to require flight schools to switch to unleaded or low-lead fuels. Staff's recommendations also include requiring the businesses that sell fuel at the Airport to begin remediation of any contamination on their premises now and assessing the possible termination of third-party fuel sales and the assumption of such sales by the City, for whatever time period fuel continues to be sold, to ensure that sales are limited to the cleanest fuels available. Finally, staff recommends that Council direct staff to begin work on developing a cap on Airport emissions. These actions are recommended as options for protecting the communi ty's health and welfare, aligning Airport operations with the City's environmental values, and better shielding the City from liability. The report also discusses other proposals, including banning aircraft based on engine ratings, terminating FBO leases, and closing the Western Parcel; and the report notes other possible alternatives. Background The adverse impacts of Airport operations have been a major source of concern to the community for half a century. And, the City's efforts to regulate those impacts have spawned legal disputes and litigation throughout that time. Detailed information about the history of the Airport and the legal battles relating to its operations is included in staff's report of March 24, 2015, among several others. The first efforts by the City to curtail adverse Airport impacts focused on the noise impacts of early jets. The City Council adopted a package of six ordinances, including a jet ban. Litigation erupted, setting the tone for the fractious decades that foll owed. The 1984 Settlement Agreement brought a brief hiatus to the City's disputes with the federal 3 of 22 government; however, Airport neighbors, Airport businesses, and other aviation interests continued to make claims against the City. In the last fifteen years, disputes and litigation between the City and the federal government, Airport neighbors and Airport businesses have been virtually constant. During this time, aircraft emissions from both jets and piston aircraft have been a growing source of concern and conflict. Most piston aircraft are fueled by aviation gasoline (avgas), which commonly contains the additive tetraethyl lead and therefore generates lead emissions that may be inhaled or ingested. At certain concentrations, such emissions may be toxic to the human nervous system, especially for children. Jet fuels do not contain lead. However, turbine engines on jet aircraft emit carbon dioxide and ultrafine particles, which threaten both the environment and human health. The debates here in Santa Monica about how to address the adverse impacts of aircraft emissions reflect national and world-wide debate on the subject of emissions from commercial aircraft. The Center for American Progress reports that aviation accounts for 13 percent of global transportation carbon dioxide emissions, and emissions from aviation are expected to quadruple by 2050 if left unchecked. Moreover, aviation's impact on air quality is not limited to carbon dioxide. Other greenhouse gases emitted by aircraft include water vapor, black carbon, nitrogen oxides and sulfur oxides; and their impacts are particularly detrimental because these gases are emitted by commercial aircraft directly into the upper atmosphere. Governments around the world have taken varied approache s. The European Union (EU) introduced aviation into its emissions trading system in 2008. The EU estimates that including aviation in its trading system will reduce aviation emissions by more than 70 million tons annually. The United States has moved much more slowly. The Environmental Protection Agency (EPA) sets emissions standards for aircraft engines, and the Federal Aviation Administration (FAA) certifies engines and enforces federal emissions standards. However these agencies have not yet established regulations governing aircraft 4 of 22 emissions. In June of this year, the EPA announced the first steps towards proposing regulations. However, the agency also said that it would wait for current international negotiations limiting emissions before publishing final rules. Thus, the process will take years. Meanwhile, the federal government continues to support development work on biofuels . And, the FAA touts development of its satellite-based air traffic management system (NextGen), which will reduce fuel consumption and attendant emissions because it will facilitate more direct routing and reduce circling while awaiting landing clearance to land. However, net environmental gains from this project appear highly unlikely given the projected increase in air travel. While the federal government plods forward on efforts to reduce harmful aircraft emissions, efforts in California have yielded some success. For instance, last December, the Center for Environmental Health announced that litigation in Northern California had yielded a settlement whereby 30 companies that sell and/or distribute lead-containing avgas at 23 California Airports (including Santa Monica Airport) will offer for sale the lowest-lead fuel that is commercially available. They will also, upon request, make ethanol-free premium gasoline available. It is an FAA-approved fuel; and it is, or can be made compatible with more than 70 percent of piston aircraft. The City's efforts to address aircraft emissions have been ongoing for at least fifteen years. An ad hoc study group composed of members of the Environmental Task Force and the Airport Commission studied the issues and, in 2002, requested that the South Coast Air Quality Management District (AQMD) take various actions, including studying the impacts of General Aviation on air quality, characterizing levels of toxicity in communities around GA airports, and determining the impact of aircraft emissions on measured pollutant levels. AQMD conducted a study in 2006 -7. It measured lead, carbon, ultrafine particulars and volatile organic compounds, among other things. The agency's conclusions included that lead levels in communities near the runway did not exceed federal standards and that the concentration of ultrafine pa rticles was significantly elevated near runways during aircraft operations; but, in general, the 5 of 22 Airport's impact on air pollution was difficult to distinguish from pollution caused by automobiles and other motor vehicles. In 2009, the City Council adopted an Airport Sustainability Plan as an addendum to the Sustainable City Plan. The Airport plan was reviewed and recommended by both the Task Force on the Environment and the Airport Commission. As to air quality, the plan requires: advocacy with federal and state agencies for reductions in emissions and alternative fuels, support for studies and monitoring of emissions to serve as the basis for advances in emission controls, and or reduced taxiing and hold times (which generate high concentrations of emissions). That plan has been implemented. In 2010, the AQMD study was augmented when the suspension of all Airport operations for runway repaving presented an unusual opportunity to assess SMO's impacts. The AQMD concluded that the suspension of Airport operations resulted in a "substantial decrease" in measured ultra- fine particles and black carbon pollution. Measurements taken on the eastern tarmac showed that concentrations of ultra-fine particles were 12 to 17 times higher when the Airport was operating. Measurements taken at the closest home showed that levels were four to seven times higher when the Airport was operating. Additionally, the AQMD reported that aircraft idling near the runway before and during departure generated very high concentrations of ultra-fine particles over short time periods. These concentrations were as high as 600 times background levels. Also in 2010, the EPA conducted a study of lead emissions. The agency's primary purpose was to develop a modeling approach to quantify the effect of emissions from piston-engine aircraft on local ambient lead levels. A secondary purpose was to monitor air, soil and dust lead concentrations, including the possibility of lead-emission intrusions into indoor spaces. The EPA explained that SMO was selected because: the monitoring study conducted by AQMD laid a good foundation; SMO has excellent data collection regarding piston-engine aircraft operations; and Santa Monica is a busy general aviation airport within a densely populated location. In particular, the EPA noted that 6500 people live within 0.5 km of the Airport. 6 of 22 The EPA reported that its air quality monitoring showed modeled concentrations at two sites with three-month averages above federal air quality standards. The agency identified four factors as most significantly impacting concentrations of lead in the air: engine "run-up check" duration, taxi-out time, the percentage of twin-engine aircraft operations, and the lead concentration in the fuel. As to lead concen tration in fuel, the agency noted that two samples of avgas had lead concentrations 20% higher than specifications established by the American Society of Testing and Matter, which develops fuel specifications. Soil and dust samples showed no elevated lead levels above area averages on the Airport or in local parks. However, sampling taken inside two homes showed elevated levels (though the EPA speculated that sources other than the Airport might be involved). Reports and presentations on both these studi es are available to the public at the Airport website. In addition to the AQMD and EPA studies, scientists at UCLA also conducted studies. Those scientists concluded, among other things, that aircraft operations at SMO caused elevated concentrations of ultrafine particles and other pollutants downwind as far as 660 meters from the source. They surmised that the long downwind impact distance was primarily due to the large volumes of air craft emissions, which contain higher initial concentrations of particles than on-road vehicle exhaust. The UCLA studies were presented to the Airport Commission in 2014 and were the basis of recommendations that the Council consider adopting an ordinance that would restrict aircraft usage of the Airport based on engine ratings. The Airport Commission also conducted a workshop on the development and marketing of alternative aviation fuels. Representatives described their companies' formulation of "drop in" jet biofuels, which they anticipated would be widely availabl e within a few years. Because they blend directly with petroleum jet fuel, such fuels would eliminate or reduce the need to modify aircraft, aircraft engines or fueling infrastructure. A representative of another company described the Piston Alternative Fuels Initiative, which will facilitate FAA evaluation of unleaded fuels for propeller aircraft. He estimated that such fuels will be readily available by 2018. 7 of 22 In recent years, community members' complaints about emissions have increased. During the comprehensive Airport Visioning Process, the health impacts of aircraft emissions and the inconsistency of the Airport's adverse environmental impacts with the City's core values ranked high among community concerns. More recently, demands for City action to curtail adverse impacts have continued to mount, with emissions and their impacts on human health and the environment becoming a primary community focus. This year, in response to those demands, the City Council has considered adverse Airport impacts on multiple occasions. On March 24, 2015, after considering a staff report on future options for Airport operations and land use, Council provided direction on Airport leasing policy, approving the general direction that action should be taken to reduce adverse impacts of Airport operations, through lease conditions and other lawful means. On May 12, 2015, Council gave direction on the specific subject of emissions. The motion was to direct staff to return to Council, as soon as possible, with strate gies to reduce air pollution, such strategies to be practical, include lease provisions curtailing pollution, and minimize risks of preemption. Likewise, on July 14th, Council directed staff to, among other things, return with information about options for fuel sales, about regulating emissions through lease terms, and about environmental remediation. This report responds to those directions. Discussion There is certainly no dispute as to the paramount importance of addressing adverse Airport impacts in order to protect community health and our environment. Nor is there any dispute that harmful aircraft emissions pose risks to both. Moreover, they also pose liability risks to the City. Neighbors have previously sued the City over aircraft emissions and have threatened to do so again. Notably, in the larger, ongoing global effort to address harmful effects of aircraft emissions, even aviation interests acknowledge that emissions must be reduced and aircraft fuels must be improved. However, local governments face significant challenges in this area because the federal 8 of 22 and state governments exercise substantial control. Given this practical and legal context, the question for Santa Monica is how best to act locally to reduce aircraft emissions from the City's airport. Staff is recommending Council consideration of five possibilities for City action, each of which is discussed in this section: 1. Requiring fuel providers to convert to sales of cleaner fuels 2. Requiring fuel providers to begin the cleanup of any contamination on their leaseholds 3. Assessing the possible termination of third-party fuel sales and the feasibility of the City taking over that function to ensure that, so long as fuel is sold, it is the cleanest available 4. Requiring flight schools to convert to cleaner fuels 5. Assessing the development of a cap for Airport emissions Additionally, this section discusses, but does not recommend, adoption of an ordinance regulating access to the Airport based on aircraft engine emissions. Also discussed, but not recommended, is the proposal from some community members to ameliorate adverse impacts, including emissions, by eliminating Fixed Base Operator (FBO) services or closing the Western Parcel. Limiting Fuel Sales by FBO’s Through Lease Provisions Staff proposed prompt action to reduce emissions (and other adverse impacts) contractually through leasing policy. The Airport leases all expired this year. This event is very important because it affords the opportunity for the City, as proprietor and landlord, to both increase rents to market value (so that residents are not at risk of subsidizing the Airport’s operations) and to impose new requirements upon lessees. Such requirements could relate to fuel sales. The type of fuels sold at the Airport will directly impact the composition of emissions. And, regulating types of fuels sold is a reasonable means to achieve the ends of protecting public health, safeguarding the environment and shielding the City from liability. 9 of 22 Currently utilized aircraft fuels yield emissions that endanger both public health and the environment. A wealth of evidence establishes this fact. The federal government acknowledges it and has joined the world-wide effort to develop cleaner fuels and limit aircraft emissions. Even the aviation community acknowledges the need for change. For example, the Aircraft Owners and Pilots Association (AOPA) has told the Environmental Protection Agency that AOPA is committed to “an unleaded future.” However, progress on the development and distribution of cleaner fuels is frustratingly slow. The ponderous pace is difficult to justify or even explain. Resources are available. As to jet aircraft, federal agencies, the military, and airline corporations are working jointly to develop and distribute biofuels. They are already widely available for commercial aircraft and are used as a “drop in” (meaning they are simply added to standard fuels and used in existing engines); but using biofuels as a drop in for general aviation aircraft is problematic. So efforts to formulate and market cleaner fuels for private jets are lagging behind. As to piston-driven aircraft engines, unleaded and low-lead fuel are available. Some newer aircraft engines are designed to utilize them. Moreover, most older piston - powered aircraft can use them, once appropriate certification is obtained. Staff estimates that such certification costs between $500 and $1,000 per aircraft. Indeed, many aircraft owners would prefer to use cleaner fuels because they reduce engine “gunk”. The problem is making such fuels available sooner, rather than later. The future is, indeed, “unleaded”, Santa Monica simply needs to hasten its coming for the community’s health and welfare. Airport neighbors and persons living in surrounding communities complain that their yards are covered with soot, and they are afraid to let their children play outside. The situation is apparently most dire for neighbors living just west of the Airport. Their homes are within 300 feet of the runway end. One neighbor, who traveled to Washington to testify to FAA officials in July, stated that she cannot even open her windows for fear that the emissions will permeate her indoor living space. 10 of 22 These circumstances pose liability risks for the City, and the risks have increased in recent years. About 15 years ago, when neighbors last sued the City claiming damages for noise and emissions, significantly less information was available about aircraft emissions and their impact on health. Most important, the studies on Airport emissions, which are described in the Background section of this report, had not yet been done. The next such lawsuit may well be more difficult to defend. While the risks posted by emissions to residents and to the City are clear and substantial, any potential harm to aviation interest in regulating fuel sales through reasonable lease terms is not. Establishing leasing requirements related to cleaner fuels need to be significantly detrimental to aviation interests. Such requirements would not deprive Airport users of access to the Airport. Nor would they preclude FBO’s from doing business at the Airport. Cleaner fuels exist, and fuel providers know that they must make them available in Southern California. As noted above, a litigation settlement reached in Northern California requires 30 companies that sell and/or distribute lead-containing aviation gas (avgas) to sell cleaner fuel. Both of the companies that sell fuel at the Airport are bound by that settlement agreement. Presumably, they have made progress on that mandate since executing the settlement agreement. Lease provisions requiring them to sell cleaner fuels would not impose new burdens. Instead, they would simply spur faster progress. Nor would aircraft owners be unduly burdened. Most piston -aircraft do not need avgas to operate. Ethanol-free premium automotive gas and unleaded aviation gasoline are compatible with 70% of piston aircraft. And, the FAA has approved their use with a Supplemental Type Certificate, which may be obtained by aircraft owners for a cost that staff estimates between $500 and $1000. As to jets, biofuels exist. Commercial carriers have been using biofuels for some time. Perhaps their distribution into the world of general aviation interests would be hastened by demands from those interests. 11 of 22 Moreover, aircraft owners and operators have choices about where to buy their fuel. Lease restriction on what fuels are sold at SMO would, of course, not prevent any owner or pilot from purchasing fuel elsewhere. Based upon all these considerations, staff recommends that Council provide direction to staff to develop lease terms that limit the sale of aviation fuels. Specifically, staff proposes that lease terms prohibit the sale of leaded fuels and highly polluting jet fuels after a date or dates certain. Council could consider different dates for the two classes of fuel depending upon the most current information on availability of cleaner fuels. After that date or dates, piston aircraft fuel sales would be limited to low lead or unleaded. Je t fuel sales would be limited to biofuels or other environmentally preferable fuel. Requiring Lessees That Sell Aircraft Fuel to Begin Cleaning Up Any Contamination on Their Leaseholds Current lease provisions make lessees responsible for environmental cl eanup of the property. However, that responsibility is linked to termination of the leases. At present, the lessees that sell fuel are on hold-over status with short-term leases, while the Council awaits a staff report on subleasing and the possibility of its elimination. So, the lessees are not obligated to being cleaned up at present. Council could advance the cleanup obligations as part of its ongoing effort to facilitate and protect City options for the land’s future use. This approach may be prudent, given the fact that contamination levels would need to be thoroughly assessed before a remediation program could be devised and approved, the fuel providers do not have long-term leases at present, and the cleanup work could take years. Assessing the Possibility of Eliminating Third-Party Fuel Sales and the City Taking over Fuel Sales, for However Long as Fuel is Sold at the Airport At present fuel sales at the Airport are conducted by two lessees. As noted above, both of them are bound by a litigation settlement to sell cleaner fuels for piston aircraft when those fuels become available. However, how rigorously that settlement will be enforced 12 of 22 is unknown. And, in any event, the settlement does not cover jet fuel sales. Therefore, Council may want an assessment of the costs and benefits of the City taking over all fuel sales at the Airport. Staff notes that historic precedent exists; the City sold aircraft fuel at the Airport in the past. Moreover, aircraft fuel can be sold from trucks – an approach that could facilitate any required cleanup of the underground tank facilities and avoid additional ground contamination. Eliminating the Use of Leaded Fuels by Flight Schools In addition to limiting fuel sales through lease provisions, staff also recommends lease terms that require flight schools to use unleaded or low-lead fuels. This recommendation is based on several considerations including the physical circumstances of the Airport, the unusually large number of flight schools at the Airport, and the particularly adverse impacts of patterned flying on air quality. SMO’s physical circumstances make it a particularly poor location for flight training. Homes are in very close proximity to runway ends, and there are no runway safety facilities, partly because the runway ends are so unusually close to the Airport perimeter. Moreover, the runway is on a plateau above surrounding residential neighborhoods. This has led to the observation that taking off and landing there is a little like landing on the deck of an air craft carrier. Yet, in recent years, there have been as many as seven flight schools operating at once at the Airport; and there have been several accidents including flight-school students. Complaints about the flight schools’ impacts have been constant because patterned flying over a relatively small area in the vicinity of the Airport creates extremely detrimental impacts upon Airport neighbors. The factual basis of those complaints is confirmed by the results of studies describe in the Background section of this report. Thus, the dangers know to be associated with lead emissions, the particularly intense adverse impacts of patterned flying, the harm to adjacent communities, and the potential for City liability all justify prohibiting the use of leaded fuel by flight schools 13 of 22 through lease terms. Moreover, the harm to flight school operations would not outweigh harm to the community and potential harm to the City of incorporating such terms into flight school leases. Most, if not all, of the aircraft presently used by the flight schools at the Airport can operate on unleaded or low lead fuel. One of the schools already utilizes an aircraft designed to operate on unleaded fuels. And certification is available for most, if not all, of the other aircraft used for flight training. Additionally, the unusually large number f flight schools at the Airport means that flight training would likely remain available at the Airport even if certain flight school operators made a business decision to leave the Airport rather than agreeing to lease terms prohibiting the use of leaded fuels. Finally, to ensure fairness to flight school operators, staff suggests that current lessees be afforded a reasonable, but not extended, amount of time to obtain certification, convert their fleets or otherwise implement the proposed new requirement. Developing the Possibility of a Greenhouse Gas Emissions Cap for the Airport Staff also recommends that Council give direction to begin work on developing greenhouse gas emissions cap for the Airport. Such a cap could afford another means of controlling adverse impacts on neighbors and reducing the City’s liability risks as owner and operator of the Airport. This undertaking would be completely consistent with the City’s commitment to serving as a leader on environmental issues. It would advance the goals of the City’s Sustainability Plan. It would also effectuate the City’s Sustainability Rights Ordinance, whereby Council recognized that the peoples’ rights include the right to clean indoor and outdoor air and that, to the full extent legally possible, short-term, private interest must be subordinated to the common, long-term interest of achieving environmental and economic sustainability for the community as a whole. Moreover, development of an emissions cap would also harmonize with President Obama’s and Governor Brown’s declared intent to reduce greenhouse gas emissions. This effort would likely include, among other things: gathering information about and 14 of 22 measuring Airport emissions; formulating proposals and models for the cap’s operation; and crafting remedies for exceeding the cap. Presumably, potential remedies could include reducing or eliminating certain activities particularly likely to exacerbate or contribute to emissions. Flight training, fuel sales and other FBO operations might be among those activities. At this point, an emissions cap is, of necessity, merely a very general concept. Doubtless such an effort would generate legal opposition, including challenges to the City legal authority to impose a cap. However, staff believes that the approach holds significant promise and that there is legal authority for the proposition that federal law does not preempt local plans for reducing emissions from sites or facilities (as o pposed to moving sources such as vehicles or engines). See National Association of Home Builders v. San Joaquin Valley Unified Air Pollution Control District., 627 F.3d 730 (9th Cir. 2010). Obviously, developing this approach to reducing emissions would take time and resources. However, staff anticipates s that assistance would be available from he local environmental community and perhaps other sources. This approach obviously involves many unknowns. Nonetheless, given the existing and mounting scientific evidence of the health and environmental risks posed by greenhouse gases, including those generated by Airport operations, the federal and state governments’ efforts and calls to action, the community’s demands for action, the unaccountably slow pace of the federal effort on regulating emissions, and the City’s core commitment to sustainability, staff recommends evaluating this alternative. Imposing Regulatory Limits on Aircraft Engines Community members prepare and presented to the Airport Commission a carefully considered and documented proposal for regulating emissions by ordinance. It has been discussed previously but is also discussed here because the regulation of emission by ordinance is an appealing approach. Under the proposed ordinance, aircraft with emissions ratings for hydrocarbons and nitrogen oxides above specified levels would be excluded from the Airport. The 15 of 22 proposed exclusion would be phased in, with the emissions limits being lowered over the phase-in period. Specifically the proposal was that no aircraft with engines rate 40 or more pounds per hour in hydrocarbons in idle mode or 200 pounds or more per hour in oxides of nitrogen in take-off mode should be prohibited from operating at the Airport. The ordinance would step these limits down every six months until the limits would be ten pounds per hour in hydrocarbons in idle mode or 80 pounds or more in oxide of nitrogen per hour in take-off mode. Thereafter, the proposed ordinance would require a 5% reduction each year, unless the Airport Commission decided to forbear on further reductions. Staff respects the careful thought and extensive work that went into the development of this proposal. It is evidence-based and rationally conceived, and the evidence provided by the study is both informative and useful to the City in formulating policy on emissions. However, as explained in staff’s report to Council of March 24, 2105, the federal Clean Air Act preempts local regulation of aircraft engines and emissions. Section 233 of the act provides that “No state or political subdivision thereof may adopt or attempt to enforce any standard respecting emissions of any air pollutant from any aircraft or engine thereof unless such standard is identical to a standard applicable to such aircraft under (this Act).” In State Air Resources Board v. Department of the Navy, 431 F. Supp. 1271 (ND Cal. 1977), the federal court explained that “The preemptive intent of Section 233 is explicit; the states are clearly preempted from adopting or enforcing regulation respecting emissions of any air pollutant from any aircraft or engine thereof... .” The court went on to explain that Congress intended to preempt state and local regulation of aircraft emissions because allowing the states to set 50 different standards for “moving sources” of pollution would (in the words of the Supreme Court) amount to impermissible harassment of the national aviation system and industry. This means that, although the suggested ordinance appears to have considerable merit, the City Council does not have the authority to adopt it because the Council, like other state and local bodies, has no power to adopt regulations governing aircraft emissions. They are the province of the federal government as illustrated by the EPA’s action of last June, when the EPA announced that it would begin initial efforts toward proposing 16 of 22 regulations on aircraft engine emissions. Proponents of the ordinance have argued that preemption does not apply because the City’s proprietary powers (as owners of the Airport) trump the preemptive effect of the Clean Air Act. Moreover, proponents of the ordinance and others have argued that, despite long odds, the City should adopt the proposed ordinance because of the importance of protecting the environment and public health and because they believe the City has little to lose and everything to gain. Unfortunately, staff must disagree on both points. As explained in the staff report of March 24, 2105, the court decision cited in support of adopting the ordinance is inapposite. Rather than establishing that airport proprietors are not preempted from regulating emissions, it actually stands for the proposition that states (and cities) may base purchasing decisions about purchasing equipment on emissions, much as Santa Monica does in purchasing motor vehicles. As to potential risks, banning certain types of aircraft through regulatory action would undoubtedly provoke litigation. Aviation interests have already expressly threatened to challenge any attempt to ban aircraft based on emission ratings. Moreover, the FAA could, itself, institute action against the City. It could commence a Part 16 administrative proceeding, as it did when the City attempted to ban larger and faster jets to achieve runway safety. Or, it might issue a cease and desist order in the pending Part 16 proceeding, as it did previously in the runway safety litigation. If the FAA instituted a legal action, it would also likely seek a federal court injunction to halt implementation of the ban, just as the FAA did during the runway safety litigation. If history is any guide, a federal court would do so; and, depending upon its breadth, such an injunction could prevent the City from taking future actions to reduce the Airport’s adverse impacts while the City and the community await resolution of the disputes about the grant expiration and the City’s authority to control its land. This would be a significant loss of local control. The existing litigation will probably take years to resolve. During that time, it is crucial 17 of 22 that the city protect its proprietary authority to reduce adverse impacts of airport operations through lease terms, continue to repurpose the non-aviation land to recreational use, and assess and address needs for remediation. Thus, staff recommends against regulating emission by an ordinance limiting Airport access. Terminating FBO Leases or Closing the Western Parcel in Order to Reduce Operations and Adverse Impacts, Including Emissions Some Airport neighbors have proposed terminating the FBO leases or removing the Western Parcel form aviation use to reduce operations and attendant adverse impacts. As to the FBO’s, these residents argue that the City was obligated to maintain FBOs at the Airport only by the 1984 Agreement. Now that it has expired, they argue that the City, as proprietor/landlord, has the authority to terminate leases and thereby end the provision of aviation services, including fuel sales. As to the Western Parcel, they argue that it is not covered by the Instrument of Transfe r; so, the City can close it now. However, the FAA contends that the grant conditions remain in effect until 2023, and the agency interprets the grant conditions to require the provision of basic aviation services, which are among those provided by FBO’s. And, the Western Parcel is covered by the grant conditions. Thus, shutting down the FBO’s or attempting to close the Western Parcel would very likely trigger another Part 16 proceeding. Residents favoring these approaches argue that the FAA might simply step aside and allow the FBO’s to close or the Western Parcel to be removed from aviation use; and, in any event they echo the view that the City has little to lose and much to gain. The appeal of these proposed approaches in readily understandable. Witho ut aviation services, Airport operations would decline, which would diminish impacts. Without the Western Parcel, the Airport’s runways would be shortened and many aircraft, particularly larger jets, would be unable to use the Airport. Staff agrees with the premise that, in order to protect community health, safety and welfare, the City must depend upon and effectuate its rights as proprietor and landlord. Staff also agrees that the litigation is taking a frustratingly long time. Indeed, much 18 of 22 longer than it should in the case of the Part 16 proceeding wherein the FAA has extended its own deadline for issuing the initial Part 16 decision three times without meaningful explanation. Also, the City has waited months for the oral argument in the Ninth Circuit, though this waiting time is typical for that court. Meanwhile, Airport neighbors continue to suffer adverse impacts from Airport operations; and their frustrations mount. Nonetheless, staff cannot agree that the City should simply notify the FAA that the City is shutting down FBO’s or closing the Western Parcel. Staff’s considered opinion is that these actions would not bring faster relief and both would pose significant risk to the City’s short-term ability to reduce adverse impacts and perhaps even to its long-term success in achieving ultimate goals. The argument that the FAA might simply agree to allow the City to close the FBO’s or the Western Parcel is not supported by history or any applicable evidence. In the past, particularly during the runway safety dispute, the federal government acted aggressively to stop the City from curtailing operations. The FAA, itself, commenced the Part 16 proceeding challenging the City’s ability to conform usage of the Airport to its federal designation, which reflects its facilities. The Agency also issues a cease and desist order in that case, arguably stretching its authority to do so because it had not yet held a hearing. Moreover, when the case moved from the agency and into the court, the Justice Department assigned some of its most experienced and able attorneys to the runway safety litigation. Those same senior attorneys have been assigned to the current federal litigation, filed by the City to establish its authority to control use of the land. These are simply not the actions of an entity ready to step aside and duck a fight. And, there is other evidence of the FAA’s determination to keep SMO in operation. The FAA continues to push for long-term leases for its facilities at the Airport. Also, it is designing Nextgen on the assumption that SMO will continue to operate. And, senior FAA staff has told the City, they are “not in the business of closing airports.” Thus, the federal government’s conduct gives no hint that it is willing to allow the City to make a different use of the City’s land now occupied by the Airport. As Congressman Lieu’s 19 of 22 Chief of Staff confirmed at the meeting in Washington this summer, the FAA simply has no intention of voluntarily letting go of SMO. The hope that it might is apparently based on the agency’s actions as to other airports with different circumstances. It is true that the FAA occasionally agrees to allow an airport to close or steps aside from a closure fight (usually leaving the fight to private aviation interests). The example most often cited is Miegs Field in Chicago where Mayor Daily had the runway bulldozed in the middle of the night. However, the facts of that situation are quite different than Santa Monica’s. For example, Miegs Field was on land owned by the Chicago Park District and leased to the City for airport usage; and the Park District refused to renew the lease to the City. Thus, in contrast to Santa Monica, the owner of the land was not the operator of the Airport. This meant, among other things, that the land owner was not federally obligated through the receipt of airport improvement grants. Moreover, the FAA did not view Miegs Field as vital to aviation interests, given other airports in the vicinity. Its relative inaction on the Miegs closure probably reflects this fact and the federal and state politics surrounding the controversy. In any event, the Miegs experience does not establish bulldozing a runway as a viable means of asserting local control over an airport. And, it certainly does not establish a precedent upon which Santa Monica can rely given the difference in the circumstances. The FAA previously determined that use of the Airport was a local land use matter after expiration of the 1984 Settlement Agreement, but the agency reversed its position on local control years ago. For the last few years, it has continuously asserted that Santa Monica has ongoing grant obligation until 2023, that the FAA has perpetual reversionary rights as to the land occupied by the Airport, and that the Airport’s continued operation as a reliever for Los Angeles International Airport is vital to national interests. These assertions and the Agencies other actions belie the supposition that the FAA would stand idly by if the City acted to shut down FBO’s or close the Western P arcel to aviation use. Instead, the likely result would be a federal injunction that would preserve the status quo and could prevent the City from taking any action to bring relief to Airport neighbors 20 of 22 while the legal disputes are ongoing. Therefore, staff opposes attempting to reduce emissions and other adverse impacts by either terminating FBO leases or attempting to close the Western Parcel to aviation use. Unfortunately, there are no shortcuts to establishing the City’s authority to control use of the land. The City can only establish control by judicial decision or Congressional action. Congressional action is possible, but very unlikely in the near future. The legal process is slow; however, it does achieve results, and is ongoing. While it is, the City’s decision about the Airport should be carefully considered in order to maximize the chances of ultimate success in the courts. The land is the City’s most valuable physical asset. And, the community demands that the land be used in a manner that serves the community’s interests. The struggle for control and locally- determined use of this City asset is more likely to succeed if conducted strategically and thoughtfully with a constant eye on the ultimate prize. However, this does not mean that the City’s ultimate goals are unattainable or that adverse impacts cannot be reduced while the City moves towards its long-term goals. Reduction of emissions through lease provisions is one area where gains may be attained in the relatively near future and should be pursued. Alternatives Instead of taking action as the Airport’s proprietor and operator, the City could wait on external developments to alleviate the problems posed by emissions. As described in this report, cleaner fuels already exist and they are becoming available. The two fuel providers at the Airport have already agreed in settlement of litigation brought by the Center for Environmental Health to begin providing cleaner fuel. Also, aircraft engines are becoming more efficient. However, this progress is slow. And, meanwhile the community suffers, the City is at legal risk, and the Airport operates in a manner that is inconsistent with the City’s core environmental values. Therefore, staff recommends against waiting for the federal government or aviation interests to solve the community’s emissions problem. 21 of 22 Council could also consider incentivizing emissions reductions. For instance, Council could explore committing City resources to assisting lessees and aircraft owner/operators with a conversion to clean fuels in order to speed up the process. For example, the City could subsidize all or a portion of the cost of obtaining the certification necessary to use low lead or no lead fuel. Staff is not recommending this approach at this time for reasons including cost and a likely lack of community support. Or, as discussed above, the City could ban certain aircraft with certain engine ratings, terminate FBO leases, or attempt to close the Western Parcel. These actions would please some. However, they would likely not achieve the short term goal of achieving relief from adverse impacts and could be very detrimental to accomplishment of the City’s long term-goals. Such actions would be very likely to draw legal challenges from aviation interests or the FAA, itself. The City would likely not prevail against those challenges and might very well end up enjoined from further action to alleviate adverse Airport impacts. Thus, staff recommends against these alternatives. However, Council may wish to consider more moderate measures, such as reducing the hours of FBO operations to curtail adverse impacts or ending all aviation leasing on the Western Parcel in order to minimize adverse impacts and prepare for potential future uses. Overall, staff continues to counsel a steadfast but measured approach including: regaining control of the land through the pending legal proceedings and by working with members of Congress; effectuating the voters’ vision for the land by repurposing the non-aviation land and taking other steps to ready the land for the future; and using all lawful means to reduce adverse impacts of Airport operations. And, if certain of the particular measures recommended in this report for reducing emissions prove to be unworkable or inadequate to reduce emissions, Council can always explore additional measures. Next Steps If Council directs staff to modify lease provisions relating to fuel sales and use, staff will work to modify the leases and report back to Council. Depending upon Council’s exact direction and the results of staff’s work, that report will either be made by Information 22 of 22 Item or in conjunction with the report to Council on subleasing. Staff will also return with information on costs and benefits of taking over all fuel sales and on developing an emissions cap if so directed. Financial Impacts and Budget Actions Modification of lease provisions, including limitations on fuel sales and restriction on flights schools’ use of specific fuels could impact Airport revenues, though impac ts are difficult to predict. If Council takes action that fosters litigation, there will be costs, which are also difficult to predict because they depend on the nature of the challenge. The costs of exploring a greenhouse gas emissions cap are unknown at this time. Consulting services would obviously be required. So, costs could be significant. Likewise cost of taking over all fuel sales would need to be assessed. Prepared By: Marsha Moutrie, City Attorney Approved Forwarded to Council Attachments: A. March 24, 2015 Staff Report (Web Link)