Santa Monica Airport: Why it Matters

Santa Monica Airport: Why it Matters — Originally published in BusinessAir Magazine, September 2014, Volume 24, No. 9.

The Santa Monica Airport (SMO) in Santa Monica, California has been embroiled in litigation for decades over limitations on use, environmental concerns and possible closure. While Santa Monica Airport’s survival is of great importance to the Los Angeles area, and of particular interest to my law firm, which has its office at the airport, there are far greater implications arising out of the ultimate decisions that are made surrounding its future. The issues surrounding the possible closure of this airport could very well impact hundreds of other airports in the United States.

In order to understand the SMO issue, we must return in time to the era of the Second World War. During the war, the federal government leased SMO from the city in order to provide protection for the Douglas Aircraft Company plant. From 1942 to 1945, Douglas produced some 30,000 military warplanes at SMO, including the C-47 Skytrain transport plane and the SBD Dauntless dive bomber. This scenario was played out across the country as the federal government leased hundreds of airports and spent millions of dollars to create a comprehensive wartime system of aircraft development, construction and testing.

In 1944, with the end of the war in sight, Congress passed the Surplus Property Act of 1944, which allowed the federal government to relinquish its interest in these valuable airport properties and return their operation back to the local owners, but only if certain conditions to continue airport operation were met and maintained. It was in this way that the federal government turned a wartime necessity into a peacetime asset, establishing a sophisticated nationwide network of vastly enhanced airports that enabled a massive postwar expansion in commercial and general aviation across the United States.

To implement the Surplus Property Act, the War Assets Administration created “instruments of transfer.” In August 1948, the federal government and the City of Santa Monica executed such an agreement which contained the language on which Congress had insisted: “That no property transferred by this instrument shall be used, leased, sold, salvaged or disposed of by the [city] for other than airport purposes without written consent of the Civil Aeronautics Administration [and its successor, the Federal Aviation Administration (“FAA”)].”

In addition to the instrument of transfer, the City and the FAA entered into a grant agreement in 1984. Under this agreement, the City received $10.2 million in federal grant funds between 1985 and 2003 through the FAA’s Airport Improvement Program. The grant assurances that attach to the acceptance of these monies last for 20 years. However, the City interprets that as 20 years from the date of the grant agreement, while others have argued that it is 20 years from the date that the last money was received in 2003, which would mean an end date of at least June 2023, if not longer, under the terms of the instrument of transfer.

The City of Santa Monica filed suit in federal court in Los Angeles in October 31, 2013 in order to establish that the City has the right to determine the future of the Airport. The FAA responded with a motion to dismiss, which was granted in its entirety on February 13, 2014. In April 2014, the City filed a notice of appeal. Briefs in the appellate case were scheduled for filing with the Ninth Circuit Court of Appeals in September of this year.

In other recent activity, the National Business Aviation Association (NBAA) and several other parties have filed a complaint with the FAA concerning SMO. The complaint, filed on July 2 with the FAA’s Part 16 Airport Proceedings Docket, requests that the FAA exercise its jurisdiction under Part 16 of the Federal Aviation Regulations to determine if the City’s Grant Assurance obligations remain binding and effective through at least August 2023. The City filed a Motion to dismiss on grounds of failure to state claim, jurisdiction, and in August, NBAA and the other parties filed an answer to the motion to dismiss. The City argues that the Grant Assurance obligations will end on July 1, 2015. Recently NBAA President and CEO Ed Bolen said, “The continuing attempts by the city of Santa Monica to close its community airport fly in the face of their legal obligations and disregard the importance of the airport as a general aviation gateway to Southern California.”

The controversy with SMO will not be resolved anytime soon and could ultimately end up before the United States Supreme Court. While the issues are extremely complex, it is important to understand that this is not an isolated situation. The SMO case may have broad implications. The core issue is land grant and the instrument of transfer. The hundreds
of airports in the United States that were transferred back to local governments after World War II also utilize instruments of transfer that have similar language prescribed by Congress. This language reflects the fact that Congress intended that these properties be used as airports in perpetuity. The ultimate resolution of this issue could impact many other airports around the country and the future of business, corporate and general aviation in America.
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Please contact Amanda Applegate at 877-237-5398 or aapplegate@aerlex.com.