A few weeks ago U.S. Representatives Ted Lieu and Karen Bass organized a meeting in Washington where Santa Monica officials and local residents could express their grievances about Santa Monica Airport to Federal Aviation Administration (FAA) officials. The meeting had no concrete effect because the FAA had declared ahead of time that its representatives would not respond to anything that was said there, but the meeting did result in Reps. Lieu and Bass promising to press the FAA to issue an overdue decision in an administrative proceeding brought against the City by the National Business Aviation Association (NBAA) and other aviation interests.
By way of background, the case Lieu and Bass referred to involves a grant of money Santa Monica received from the FAA for airport upgrades under a contract entered into in 1994. The contract obligated the City to assure continued operation of the airport, but for no longer than 20 years, i.e., the City’s obligations under the contract would terminate no later than 2014. This is important because the City was not going to accept any money from the FAA that would tie the City’s hands beyond the expiration of another agreement with the FAA, from 1984, that required the City to operate the airport only to July 1, 2015. (The City’s obligations under the 1994 contract are often referred to as “grant assurances,” and the case is often referred to as the “grant assurances case.”)
In 2003 the 1994 contract was amended to increase the amount of the FAA’s grant by about $240,000 because work contemplated in the 1994 agreement proved to be more expensive than anticipated. The amendment, however, left the remaining terms of the contract, including its 2014 expiration date, unchanged. Nonetheless, last year the NBAA was the lead plaintiff in an FAA administrative law proceeding demanding that the FAA tell the City that it was bound, because of the 2003 amendment, to keep the airport operating until 2023, i.e., 20 years after the increase in the grant.
For months now the grant assurances case has been fully briefed. The delay maintains the status quo at the airport, which must please the aviation parties who brought the action. Santa Monica wants a decision. Any decision (for reasons I’ll discuss below).
Last week Lieu and Bass acted on their promise and sent a letter to the FAA that not only asked the agency to make up its administrative mind, but also forcefully expressed the City’s case why the 2003 amendment did not extend the contract term. (You can read the letter here.)
The decision in the grant assurances case is of tremendous importance—but not, I would argue, for what the decision might be. Whatever the decision is, it will free the City to take drastic action regarding the airport.
More background. Santa Monica has brought its own lawsuit against the FAA to determine whether a 1948 agreement requires the City to operate the airport “in perpetuity.” The case now languishes, on appeal from a procedural decision against the City, in the Ninth Circuit. But the 1948 agreement should not apply to a large parcel of land (known as the “Western Parcel”) that includes 2,000 feet of SMO’s 5,000-foot runway. If the City is not otherwise obligated (such as because of the grant assurances) to keep the airport operating, then regardless of the enforceability of the 1948 agreement the City should be able to close down the Western Parcel and reduce the runway to not more than 3,000 feet. In that event the largest private jets would not be able to use SMO.
(Important parenthetical: the FAA disputes this, and says that the 1948 agreement would be violated if the City terminated aviation on the Western Parcel. But if the FAA does bring an action against the City on this issue, it will be better to litigate first over the Western Parcel than over the airport as a whole.)
But why do I say that the actual decision in the grant assurances case is not important?
What is hamstringing the City from pulling the trigger on the Western Parcel is not whether the FAA might rule that the 2003 amendment extended the grant assurances to 2023, but rather the fact that the case is still pending. The City Council decided over a year ago that if the 2003 increase in the grant did extend the term of the grant assurances, then to resolve the matter the City would repay the FAA the $240,000. While the City has made strong arguments on both procedural and substantive grounds for why the FAA should dismiss the case, in practical terms the only issue is whether the City gets to keep the $240,000.
In a post two weeks ago, I wrote that the City need not make any strategic decisions regarding the airport until it receives the FAA’s decision in the grant assurances case. True enough, but the Lieu/Bass letter focuses the mind. Why? It’s one thing for the City to be patiently waiting for the FAA to announce a decision in the case, but it’s quite another when two members of Congress call the FAA out on their delay.
The FAA’s decision should come soon, but no matter what the decision is, the City’s strategy should be the same: announce a closing date, as soon as practicable, for all aviation operations on the Western Parcel.
Thanks for reading.