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NBAA Appeals FAA Santa Monica Financial Compliance Decision
Kate O'Connor December 12, 20190

The National Business Aviation Association (NBAA) is appealing an FAA
decision regarding city handling of federal grant funds at
California’s Santa Monica Airport (SMO). As previously reported by
AVweb, the FAA issued a determination (PDF: https://nbaa.org/wp-content/uploads/aircraft-operations/airports/smo/20191108-FAA-16-16-02-Directors-Determination.pdf
) in November that stated that the City of Santa Monica had failed to
comply with its grant obligations for reasons including inadequately documenting loans made to the airport and operating with landing fees methodology and rates that did not reflect the airport’s use. NBAA’s
appeal (PDF: https://nbaa.org/wp-content/uploads/aircraft-operations/airports/smo/20191209-FAA-16-16-02-Complainants-Appeal.pdf
) contends that the FAA ruling needs to include all transfers of funds
named in the original complaint along with correcting alleged
mathematical errors. It also calls for a refund of “excessive” landing
fees collected by the city.

“Although the FAA did find that a significant number of loans between
the city and the airport are invalid and/or charged excessive
interest, further rulings by FAA are required and NBAA therefore is
appealing other parts of FAA’s Determination that have not fully
addressed the loan issues, or the airport’s high landing fees and the interconnected surplus in airport accounts,” said NBAA Director of
Airports and Ground Infrastructure Alex Gertsen. “Corrective action on
these issues must be taken by the FAA, not just to rectify the
incorrect and possibly illegal actions at SMO, but also to maintain a consistent national policy that airport finances must be properly
documented, and landing fees thoroughly justified.”

The original Part 16 complaint against the City of Santa Monica was
filed in February 2016. The FAA entered into a settlement agreement
with the city in 2017, which included the highly contested decision to
allow the airport’s runway to be shortened and “stipulated that the
FAA was to send a letter to private parties that have filed Part 16
complaints raising issues within the scope of the Agreement requesting
that the parties withdraw those complaints.” Along with several other
parties, NBAA and AOPA declined to withdraw their complaints, leading
to the FAA’s Nov. 8 determination. ---------------------------------------------

https://nbaa.org/wp-content/uploads/aircraft-operations/airports/smo/20191209-FAA-16-16-02-Complainants-Appeal.pdf

1
Jol A. Silversmith, Esq.
Barbara M. Marrin, Esq.
KMA Zuckert LLC
888 17th Street, N.W., Suite 700
Washington, DC 20006
(202) 298-8660
jsilversmith@kmazuckert.com
bmarrin@kmazuckert.com
Richard K. Simon, Esq.
1131 Camino San Acacio
Santa Fe, NM 87505
(310) 503-7286
rsimon3@verizon.net
December 9, 2019
BY ELECTRONIC MAIL AND HAND DELIVERY
Office of the Chief Counsel
Attention: FAA Part 16 (Airport Proceedings Docket)
AGC-610
Federal Aviation Administration
800 Independence Ave. S.W.
Washington, D.C. 20591
9-AWA-AGC-Part-16@faa.gov
RE: Mark Smith, et al. v. City of Santa Monica, California,
FAA docket no. 16-16-02
Notice of Appeal and Brief
Motion for Interim Order
Summary of Appeal
Pursuant to 14 C.F.R. § 16.31 and § 16.33, this is an appeal by the Complainants of the
November 8, 2019 Director’s Determination in the above-captioned
docket – specifically, of
certain of its findings on issues #1 and #3.
In regard to issue #1, the Director’s Determination held that some of
the identified transfers
of funds made by the City of Santa Monica (“City” or “Santa Monica”)
to the Santa Monica
Municipal Airport (“SMO” or “Airport”) did not constitute loans and/or
that the applicable interest
was excessive or impermissible, and ordered reimbursement of certain
principal and interest
payments made by the Airport to the City as corrective action.
However, based on the law and the
facts, all of the identified transfers should have been deemed not to
qualify as loans. Additionally,
Complainants believe there are mathematical and other errors in the
Director’s Determination that
require correction.
2
In regard to issue #3, the Director’s Determination held that the
City’s current landing fees
– and the underlying methodology – cannot be shown to be consistent
with FAA requirements
because of subsequent factual developments, and accordingly should be
revised as corrective
action. Complainants believe that the Director’s Determination should
have addressed the specific
compliance issues presented in the Complaint, to ensure that the
corrective action is itself
compliant, and that those issues do not evade review. Importantly, the subsequent developments
include an excessive and growing surplus at the Airport, which has for
years affected, and
continues to affect, the landing fees – a matter which the Director’s Determination should have
addressed and required to be resolved as part of any corrective
action.
Motion for Interim Order
Pending the submission of corrective action by the City, and its
approval by the FAA,
Complainants request that the Associate Administrator enter an interim
order suspending the
collection of landing fees at the Airport.
The FAA has the authority in a Part 16 proceeding to order the
suspension of airport
practices suspected to be non-compliant pending a final decision and
corrective action. The FAA
previously has exercised this authority to address compliance issues
in Santa Monica. See U.S. v.
Santa Monica, C.D.Cal. no. 08-2695, slip op. (May 16, 2008), affirmed
330 Fed. Appx. 124 (9th
Cir. 2009). See also Aircraft Owners and Pilots Association v. City of
Pompano Beach, Florida,
no. 16-04-01, Director’s Determination (December 15, 2005), at 46.
Although the Director’s Determination deferred any decision regarding
the propriety of the
City’s collection of landing fees, their continued imposition on
Airport tenants and users is a matter
of immediate importance and warrants interim relief, pursuant to 14
C.F.R. § 16.11 and § 16.19,
for reasons including that:
• The Complainants have demonstrated, in prior pleadings and in this
appeal, that the landing
fees were adopted and imposed unlawfully, inter alia, by manipulating
financial materials
presented to the public and the decisionmakers; by adopting a
methodology which ignores
the substantial non-aeronautical revenues and ongoing surpluses at the
Airport; by ignoring
the principles of reasonableness previously laid out for the City in
Bombardier Aerospace
Corp. v. City of Santa Monica, no. 16-03-11; and by adopting a
facially unreasonable
landing fee of $5.48 per 1,000 pounds.
• The Complainants understand that in response to the corrective
action required by the
Director’s Determination, the City intends to maintain its existing
landing fee methodology
when it re-computes its landing fees. That stratagem ignores the
Airport’s substantial nonaeronautical
income, its burgeoning surplus, and other FAA revenue use principles.
The
result, given the increased airfield expenses associated with runway
truncation and greatly
reduced total landed weight due to the diminished operations at the
Airport, would be an
increase in the already unreasonable and confiscatory fees.
• The City now seeks further delay in the present proceedings and
endeavors to thwart them
entirely by invoking the potential for discussions with the
Western-Pacific Region
3
regarding Airport finances, even while asserting that the Region does
not actually have
authority to enter into those discussions.
The FAA can and should take notice that the annual landing fee
collections at the truncated
Airport are expected to total only $490,000 in FY2019-20 and beyond,
according to the City’s
Adopted Biennial Budget for FY2019-21 (publicly available at https://finance.smgov.net/budgetsreports/annual#/).
1
That is a miniscule component of the Airport’s operating revenues –
reported
to total more than $13.6 million in FY2018 by the City’s Comprehensive
Annual Financial Report
(“CAFRs”) – as well as miniscule relative to the Airport’s surplus.
Yet the revised landing fees
have been a substantial burden, ongoing since 2013, on individual
Airport tenants and users. The
Airport clearly can defer this income for at least the duration of
this proceeding, if not permanently.
It also should be clear from the City’s current motion to extend the
filing deadline for its
appeal that, despite this Part 16 proceeding already having been
pending for almost four years, the
City will seek to delay any determination regarding its landing fees,
or any final order. The City
has a right to utilize the procedures authorized by Part 16, but its
tactics should not be allowed to
further penalize those paying the fees. The Associate Administrator
should enter an interim order
requiring the City to suspend the collection of landing fees unless
and until a final order is issued
which finds such fees to be compliant.
Procedural Issues
On December 4, 2019, the City sought an extension of its deadline to
file an appeal,
premised on separate discussions that might occur between the City and
the Western-Pacific
Region, based on an informal determination issued by the Region on
October 21, 2019 – despite
disputing that the Region even had authority to require the
discussions. See id., at 2-4. Any such
discussions should occur in conjunction with – and be subservient to –
this proceeding; they should
not and cannot moot this appeal. See, e.g., Platinum Aviation v. Bloomington-Normal Airport
Authority, Illinois, no. 16-06-09, Final Decision and Order (November
28, 2007), at 15 (“FAA is
required to enforce the federal statutes to protect the federal
interest in the Airport”); Centennial
Express Airlines v. Arapahoe County Public Airport Authority, no.
16-98-05, Final Agency
Decision (February 18, 1999), at 4 (duplicative Part 13 proceedings consolidated into Part 16
proceeding to ensure that the FAA complied with Part 16 requirements). Moreover, the
permissible methodology for landing fees must be confirmed in this
proceeding before any
meaningful discussion can be had regarding their compliance.
Irrespective of when – or if – the
City files its own appeal, the FAA should promptly resolve the issues
hereby briefed; this
proceeding has already been pending for nearly four years, and the
matters on appeal are of great
significance not just to the Airport but also national FAA policy.
Indeed, a final decision should
be expedited. As the FAA is aware, Part 16 was specifically “intended
to expedite substantially
the handling and disposition of airport-related complaints.” See Rules
of Practice for FederallyAssisted
Airport Proceedings, 61 Fed. Reg. 53998, 54002 (October 16, 1996).
1 “Administrative or official notice is the administrative law
counterpart to judicial notice.” See Bodin v. County of
Santa Clara, California, no. 16-11-06, Final Agency Decision (August
12, 2013), at footnote 22. Likewise, the FAA
can and should take notice of the other CAFRs and City documents cited
in this appeal, also available from its website.
4
The Appeal
Issue #1 – The City has engaged in revenue diversion additional to
that identified in the
Director’s Determination, via inadequately documented loans and other practices.
The first issue identified in the Complaint was revenue diversion – an
issue that the FAA
has repeatedly confirmed to be a top priority for agency enforcement.
See, e.g., In the Matter of
Revenue Diversion by the City of Los Angeles, at Los Angeles
International, Ontario, Van Nuys
and Palmdale Airports, no. 16-96-01, Record of Determination (March
17, 1997), at 15. The
Director’s Determination concurred that certain of the identified
transfers of funds did not comply
with Santa Monica’s revenue use obligations, as explicated in the
FAA’s Policy and Procedures
Concerning the Use of Airport Revenue, 64 Fed. Reg. 7696, 7718
(February 16, 1999) (“Revenue
Use Policy”). For these transfers, the Director’s Determination
generally requires that any
repayments of capital or interest made within the six year period
before the Complaint was filed
(back to February 5, 2010; see 49 U.S.C. § 47107(m)(7)) – except, in
the case of capital only, if
the repayment was made within the six year period after the transfer
was made (see 49 U.S.C. §
47107(k)(5)) – must be reimbursed to airport accounts, with statutory
interest (see 49 U.S.C. §
47107(n)-(o)). Any outstanding principal balances for transfers made
more than six years ago
must be erased from airport accounts. The Complainants accept and
endorse these findings, but
submit this appeal for the reasons set forth below.
Additional Transfers from the City to the Airport Were Inadequately
Documented
Although the Director’s Determination concluded that many of the
transfers identified in
the Complaint were inadequately documented so as to constitute loans,
it nevertheless found that
three of the transfers – with principal exceeding $6.5 million – did
constitute valid loans, because
the documentation was “reasonably contemporaneous,” despite having
been executed between
three and fifteen months after the transfers. See id., at 7-8. No
authority was cited for this novel
interpretation of the Revenue Use Policy, and the Complainants
respectfully disagree. This is a
significant issue, given both the direct financial implications for
the Airport,
2 and the overall
implications of allowing airport sponsors to retroactively deem fund
transfers to actually be loans.
Simply put, the standard applied by the Director’s Determination was
in error because it is
not the standard mandated by the Revenue Use Policy. The requirement
that a transfer be
documented to be a loan is not that documentation be “reasonably contemporaneous”; the
requirement is that the documentation exist “at the time [the loan]
was made.” Only if the latter
standard is met may an airport sponsor “repay the loan principal and
interest from airport funds.”
64 Fed. Reg., at 7718. Given that the purpose of the Revenue Use
Policy was to prevent improper
revenue diversion, it should be obvious that the FAA intended airport
sponsors to be bound by
what was said – and only what was said – alongside a fund transfer;
there was no intention to allow
loans to be made on unspecified terms, or to allow a retroactive
declaration of their terms. Such
practices would transparently undercut the interests of airports and
their users. The potential for a
sponsor to abuse an airport by later dictating loan terms that would
never be acceptable in an arm’s-
2 Those implications include the calculation of the Airport’s landing
fees and the growing surplus at the Airport, as
discussed below in connection with issue #3.
5
length transaction is evidenced by what the City actually did (which
the FAA held impermissible)
– refinancing non-interest bearing loans as interest-bearing loans.
The FAA does not appear to have provided any further guidance
regarding this section of
the Revenue Use Policy. Complainants did previously suggest that the
FAA could look to the use
of the term “contemporaneous” – not, however, to the use of the phrase “reasonably
contemporaneous” – for guidance. In doing so, Complainants emphasized
that the term has been
interpreted to mean events “arising within hours or days, but not
months or years apart.” See
Shapiro v. Secretary of Health and Human Services, 101 Fed. Cl. 532,
footnote 10 (2011)
(emphasis added and internal citations omitted). See also OSHA
Standard Interpretation
1904.7(b)(3)(ii) and (b)(3)(iii), 2007 WL 1732831 (May 15, 2007) (“contemporaneous,” as used
in guidance for the procurement of a second medical opinion, in most
instances would include
same-day recommendations, but “a recommendation provided during a
year-end review of injuries
and illnesses recordkeeping information would almost never be
considered ‘contemporaneous’”).
Moreover, the meaning of the language used in the Revenue Use Policy
should be clear on its face.
See, e.g., Seattle Lumber Co. v. Richardson & Elmer Co., 120 P. 517,
518 (Wash. 1912) (language
requiring delivery of document “at the time” of delivery of material
held “too plain for
construction”). See also In re C.L.Whiteside & Associates Construction
Co., Inc., 118 B.R. 886,
888 (S.D.Fla.Bankr. 1990) (relying on documents which
contemporaneously and “clearly
document[ed]” a transfer to conclude that it comprised a loan).
Accordingly, the Associate Administrator should find that because
documents created
months after the date of a transfer are insufficient for that transfer
to be deemed a loan, the three
transfers still at issue were not loans, and appropriate reimbursement
is due to the Airport.
• On November 30, 2004, the City transferred $2,839,729 to the
Airport. There is no
evidence that the documents which assert that this transfer was a loan
were created any
earlier than June 23, 2005 – when the first signature was affixed –
and they were not
finalized until August 3, 2005, when the last signature was affixed.
See Exhibits 15g and
16a to the Complaint. As discussed above, this documentation –
finalized more than nine
months after the date of the transfer – is inconsistent with the
Revenue Use Policy
requirement that a loan be “clearly documented … at the time it was
made.” Accordingly,
to the extent that any repayments of interest were made by the Airport
on or after February
5, 2010 (the applicable six-year statute of limitations), and any
repayments of principal
were made after November 30, 2010 (the end of the six-year window for
airport sponsors
to recover non-loan capital contributions), they must be reimbursed,
with statutory interest,
and any outstanding balances erased from Airport accounts. The
Director’s Determination
and the record do not appear to enable an exact calculation of the
amount to be reimbursed,
although it appears that the principal has been fully repaid, with
$2,224,720 of those
payments having occurred after November 30, 2010. See City’s Answer
(July 1, 2016),
Exhibit G. The FAA should require that the City provide additional documentation, so the
necessary calculations can be performed.
• On an unknown date in April 2009, the City transferred $400,000 to
the Airport. There is
no evidence that the document which asserts that this transfer was a
loan was created any
earlier than July 13, 2009 – when the first signature was affixed –
and it was not finalized
until July 24, 2009, when the last signature was affixed. See Exhibit
16b to the Complaint.
6
As discussed above, this documentation – finalized approximately three
months after the
date of the transfer – is inconsistent with the Revenue Use Policy
requirement that a loan
be “clearly documented … at the time it was made.” Accordingly, to the
extent that any
repayments of interest were made by the Airport on or after February
5, 2010, and any
repayments of principal were made after April 2015, they must be
reimbursed, with
statutory interest, and any outstanding balances erased from Airport
accounts.3
The
Director’s Determination and the record do not appear to enable an
exact calculation of the
amount to be reimbursed. The FAA should require that the City provide additional
documentation, so the necessary calculations can be performed.
• On an unknown date between July 1, 2011 and June 30, 2012, the City transferred
$3,309,648 to the Airport. There is no evidence that the document
which asserts that this
transfer was a loan was created any earlier than October 10, 2012 –
when the first signature
was affixed – and it was not finalized until October 12, 2012, when
the last signature was
affixed. See Exhibit 16c to the Complaint. An almost identical
document was
subsequently signed on dates between March 21, 2013 and March 28,
2013; the only
substantive change appears to be the applicable interest rate (see
Exhibit 16d to the
Complaint). As discussed above, this documentation – finalized at
least three months and
potentially more than fifteen months after the date of the transfer –
is inconsistent with the
Revenue Use Policy requirement that a loan be “clearly documented … at
the time it was
made.” Moreover, because the date of the transfer is unknown, the FAA
should deem it to
have occurred on the date least favorable to the City for the purposes
of reimbursement,
July 1, 2011. Generally, “the FAA may require [an airport sponsor] to
produce records
sufficient to support the amounts claimed”; unverified claims will not
be recognized. See
Application of the Airport and Airway Improvement Act to the Proposed
Lease of the
Albany County Airport, 15 U.S. Op. Off. Legal Counsel 26, footnote 7
(February 12,
1991).4
Accordingly, to the extent that any repayments of interest were made
by the
Airport on or after February 5, 2010, and any repayments of principal
were made after July
1, 2017, they must be reimbursed, with statutory interest, and any
outstanding balances
erased from Airport accounts.5
The Director’s Determination and the record do not appear
to enable an exact calculation of the amount to be reimbursed. The FAA
should require
that the City provide additional documentation, so the necessary
calculations can be
performed.
Based on the foregoing, the additional transfers for which the
Associate Administrator
should require reimbursement are:
3 The City’s CAFRs indicate that the Airport repaid $1,000,000 in
advances from other funds – presumably, repayment
of principal for transfers that the City asserts were loans – in
FY2018, and a further $1,070,786 in FY2016. But the
CAFRs do not specify the exact dates; nor do they clarify which
transfers were thereby repaid.
4 See also FAA Order 5190.6B, § 15.12; In the Matter of Revenue
Diversion by the City of Los Angeles, at Los
Angeles International, Ontario, Van Nuys and Palmdale Airports, no.
16-96-01, Record of Determination (March 17,
1997), at 20.
5 See footnote 3.
7
Transfer Amount Date Funded Date Documented
$2,839,729 November 30, 2004 August 3, 2005
$400,000 April 2009 July 24, 2009
$3,309,648 Between July 1, 2011 and June 30, 2012 October 12, 2012
For One Transfer, the Director’s Determination Did Not Address the
Excessive Interest Rate
The Director’s Determination correctly found that the rate of interest
on any loan from the
City to the Airport must be consistent with the rate of return
received by the City for other
investments. In an apparent oversight regarding one loan – the
$400,000 transferred on an
unknown date in April 2009 for which interest was set at 8% by the
belated documentation – the
Director’s Determination fails to apply this requirement, even though
the City acknowledged that
during the relevant timeframe its average return on investments was
2.85% (see City’s Answer
(July 1, 2016), Exhibit F). If the FAA continues to maintain that this
transfer was adequately
documented to comprise a loan, excessive interest payments since
February 5, 2010 must be
reimbursed, with statutory interest.
The Director’s Determination Includes Significant Calculation Errors
and Omissions
In connection with the $2,839,729 transfer made by the City to the
Airport on November
30, 2004, the Director’s Determination states that principal
repayments of $2,859,090 and
$188,873 subsequently were made, and that as a result the principal
has been overpaid by
$188,873, an amount which must be reimbursed. See id., at 8. But that
math does not add up.
Based on these figures, the principal was overpaid by $208,234, and
thus an additional $19,361
must be reimbursed (with statutory interest).
Additionally, the Complaint alleged that among the transfers made by
the Airport to the
City was a payment of $115,000 at an unknown date in FY2007 (i.e.,
between July 1, 2006 and
June 30, 2007). See Exhibit 13 to the Complaint. The City has
acknowledged the authenticity of
the document upon which the Complainants relied. See City’s Answer
(July 1, 2016), at 17. But
the City has provided no documents or discussion to justify treating
this transfer as a loan. Nor
has the City identified any evidence that this transfer was ever
repaid. Unfortunately, the
Director’s Determination likewise failed to discuss this transfer. The Director’s Determination
should have deemed this issue to be conceded, and a further $115,000
reduction in the Airport’s
outstanding balance to the City to be required, along with
reimbursement of any interest payments
since February 5, 2010 (with statutory interest).
In finding that certain interest payments must be reimbursed to the
Airport, the Director’s
Determination appears to rely on the interest paid through 2016, the
year that the Complaint was
filed and thus the most current data available in the record (see id.,
at 7-8). The City, in its July 1,
2016 Answer, acknowledged that for certain transfers the interest rate
had been excessive
(presuming that they were valid loans), and in a letter dated
September 29, 2016 proposed
8
corrective action in the amount of $33,818 for those loans, effective
as of September 30, 2016.
6

But interest payments have continued to be made to the City by the
Airport up to the present day
– presumably based on transfers: (i) that the City asserted were valid
but the Director’s
Determination now has ruled do not constitute loans at all, and (ii)
that the Director’s
Determination now has ruled cannot be interest-bearing, even if they
constitute loans.
7
At a
minimum, the Director’s Determination should have specified that its calculations of the
reimbursement due for interest payments were subject to revision based
on subsequent interest
payments, and that the City, as part of the required corrective
action, should identify what interestrelated
transactions have occurred since 2016, so the necessary calculations
can be performed.
Finally, it appears that the Director’s Determination utilized an
inappropriate dataset for its
two calculations of specific amounts of interest paid prior to and
into 2016 that must be reimbursed
by the City (see id., at 7-8).
8
In making those calculations, the Director’s Determination relied on
data in the City’s Exhibit G, which accompanied the City’s July 1,
2016 Answer in this docket.
But Exhibit G was provided by the City to recalculate the interest
that should have been paid on
certain loans for which the City acknowledged the interest rate had
been excessive. Exhibit G
does not record the actual interest payments made by the Airport to
the City. See City’s Answer
(July 1, 2016), at 16. As a result, the reimbursement proposed by the Director’s Determination is
too low, since the actual interest payments made by the Airport to the
City were higher than those
memorialized in Exhibit G. The Director’s Determination and the record
do not appear to enable
an exact calculation of the amount to be reimbursed. The FAA should
require that the City provide
additional documentation, so the necessary calculations can be
performed – for both these two
cases as well as for the other directives in the Director’s
Determination that interest be reimbursed
but for which no specific calculations were provided by the FAA.
9
Issue #3 – The Director’s Determination should have addressed the
issue of whether the
methodology used by the City to compute landing fees was compliant, to
ensure that it does
not evade review and that the City’s corrective action is meaningful; additionally, the
Director’s Determination should have specifically addressed the
ongoing and growing
Airport surplus.
The third issue identified in the Complaint was the imposition of a
revised set of landing
fees at the Airport, effective August 1, 2013, which was alleged to be
facially excessive based on
the Airport’s financial situation as well as to have been premised on
inputs and methodology that
were specifically impermissible. This is not the first time that the
FAA has been called upon in a
6 This amount, along with $1,069,328 to address the underpayment of
rent by Santa Monica College (for a total of
$1,103,146), was credited to the Airport in FY2017 as a special item,
according to the City’s CAFRs.
7 The City’s CAFRs indicate that the Airport paid $69,367 in interest
on long-term obligations in FY2018, $76,731 in
FY2017, and $129,214 in FY2016.
8 In particular, $454,592 for the prior non-interest bearing transfers refinanced in 2005 and 2009 and $383,173 for the
November 30, 2004 transfer.
9 Additionally, the Director’s Determination does not attempt to
calculate the statutory interest due on payments of
principal and interest made by the Airport, which will turn on the
dates that those payments were made and the
Treasury’s Current Value of Funds Rate (“CVFR”) in effect on each of
those dates. Presumably the City is expected
to make those calculations, based on the date that reimbursement
actually is made, but those calculations also should
be subject to verification.
9
Part 16 proceeding to require the City to bring its landing fees into compliance with its federal
obligations. See Bombardier Aerospace Corp. v. City of Santa Monica,
no. 16-03-11. In fact, the
City specified that the revised landing fee regime it adopted in 2013
was intended to finally resolve
the issues still pending from that docket. See Exhibit 27 to the
Complaint. Despite the significance
of this issue, the Director’s Determination devoted less than a page
of analysis to it – and did not
substantively engage the Complaint, instead finding that since the
Complaint had been filed, the
factual situation of the Airport had significantly changed, and
thusthe City should generally update
its fees as a form of corrective action.
The Complainants do not dispute that the factual situation of the
Airport has changed since
the Complaint was filed. But the Director’s Determination nevertheless
should have addressed the
associated legal issues identified in the Complaint. The methodology
utilized by the City in 2013
to calculate landing fees was inconsistent with the Revenue Use
Policy. To the extent that the
Director’s Determination requires corrective action by the City but
does not specify the
methodological parameters for that corrective action, the same issues
may arise again – yet evade
review, given that Part 16 does not ensure that the Complainants will
be able to participate in,
object to, or appeal from a corrective action process. See, e.g.,
Keathly v. City of McKinney,
Texas, no. 16-03-14, Director’s Determination (October 13, 2004), at
17. The FAA therefore not
only had the capability but the responsibility to address the
allegations of non-compliance made
in the Complaint. Because the Director’s Determination failed to do
so, it is now incumbent upon
the Associate Administrator to address them, to ensure that Santa
Monica’s methodology is
currently and will in the future be in compliance with its continuing
federal obligations.
Further, one of the subsequent changes in the Airport’s factual
situation has been the
continued growth of a surplus. That surplus was already excessive at
the time of the Complaint,
and based on public records has skyrocketed since to almost $13
million. This figure will be
enhanced by the finding in the Director’s Determination on issue #1
and should be further
enhanced by the issues raised on appeal of issue #1 by the
Complainants. Given that the Director’s
Determination has established that developments subsequent to the
Complaint are relevant to and
will be considered in connection with issue #3, and the overall unique circumstances of this

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