Buchalter's Aviation Group Wins Major Victory in Ninth Circuit

On November 1, 2017, the United States Court of Appeals for the Ninth Circuit handed down a sweeping victory for Buchalter’s client Bonner County, owner and operator of Sandpoint Airport in Sandpoint, Idaho.
 
The airport was sued in 2012 by real estate developer SilverWing at Sandpoint, LLC for actions the county took in order to achieve compliance with federal aviation regulations and specific safety directives from the Federal Aviation Administration.  SilverWing sought tens of millions of dollars in damages under 42 U.S.C. § 1983 for alleged inverse condemnation and violation of equal protection in addition to a state law claim for breach of the covenant of good faith and fair dealing arising from a “through-the-fence” access agreement.
 
After prevailing on summary judgment in the U.S. District Court for the District of Idaho, Buchalter’s Aviation Practice Group, led by attorneys Barbara Lichman and Paul Fraidenburgh, won a complete victory in the Ninth Circuit on every issue across the board, including the affirmance of an attorney fee and cost award totaling almost $800,000 (which is likely to increase after appellate fees and costs are added).
 
With respect to the preempted state law claim, the Ninth Circuit held: 

“The FAA preempts the fields of ‘aviation safety,’ Montalvo v. Spirit Airlines, 508 F.3d 464, 468 (9th Cir. 2007), and ‘aircraft operations,’ Burbank-Glendale-Pasadena Airport Auth. v. City of Los Angeles, 979 F.2d 1338, 1340 (9th Cir. 1992). When the County’s airport was found to be in noncompliance by the FAA, due to specific safety and operations concerns with SilverWing’s development, the FAA required the County to implement a Corrective Action Plan (“CAP”). The CAP included limiting future residential access to the airport and pursuing alternatives to the current ‘through-the-fence’ arrangements, which allowed airplanes to access the municipal airport from SilverWing’s land. It was not the County which frustrated SilverWing’s plans; it was the FAA. Thus, SilverWing’s claim is preempted.”

Likewise, the court affirmed the dismissal of the claims under 42 U.S.C. § 1983, explaining:
“SilverWing’s claims under 42 U.S.C. § 1983 fail. Although the County, in voting to submit a new Airport Layout Plan (“ALP”) to the FAA, took official action to ensure the airport’s compliance with federal law, the ‘moving force’ behind the action was the FAA’s requirement that the County change the airport’s ALP. Thus, the challenged conduct was not pursuant to any County ‘policy or custom’ and cannot serve as the basis for a § 1983 lawsuit. See Monell v. Dep’t of Soc. Servs., 436 U.S. 658, 694 (1978).
Finally, the court affirmed the substantial award of attorney fees and costs, stating:
“The district court did not abuse its discretion by awarding Rule 54(d)(1) costs and attorney’s fees to the County. The County is a ‘prevailing party’ within the meaning of Rule 54(d)(1) because it obtained a judgment with respect to all of SilverWing’s claims except the one ultimately remanded to state court. San Diego Police Officers’ Ass’n v. San Diego City Emps. Ret. Sys., 568 F.3d 725, 741 (9th Cir. 2009). As such, it is entitled to costs unless SilverWing can show why a cost award would be ‘inappropriate or inequitable.’ Ass’n of Mexican-Am. Educators v. California, 231 F.3d 572, 591 (9th Cir. 2000) (en banc). No such showing has been made here. Furthermore, the ‘through-the-fence’ agreement between the parties provided that attorney’s fees were to be awarded to the party deserving of costs in any action brought ‘to enforce’ the agreement. Because the § 1983 claims were brought, at least in part, to enforce the ‘through-the-fence’ agreement, it was not error for the court to award fees also for those claims.
 
Paul Fraidenburgh, who successfully argued the case in the Ninth Circuit on behalf of the airport, commented on the decision: “This is a significant victory not just for Sandpoint Airport but for all public airports in the United States because it confirms that a federally-regulated airport cannot be held liable for actions taken to achieve compliance with federal law.  Section 1983 cannot be used as an end-run around that rule.  Municipalities are insulated from liability under Section 1983 when their actions are motivated by a desire to achieve compliance with federal law rather than a local policy or custom.  The Ninth Circuit correctly decided each of these issues and upheld our substantial fee award.  We are thrilled to have won yet another significant victory for our long-time friends and clients in Bonner County, as well as for airports across the country.”
 

Land Trade and Airport Expansion Expected to Put Mammoth Mountain on "Must Ski" Map

Usually regarded as a local ski area for ski buffs in Northern and Southern California, to which it is readily accessible by car, Mammoth Mountain Ski Area (“MMSA”) is preparing to come into the 21st Century with a new lodge, updated lifts, and, perhaps most important to proponents of the development, an expanded airport.  The expected transformation will be accomplished by the December 12, 2014 passage of the National Defense Authorization Act to which was attached an amendment specifically targeted at the MMSA.  The amendment provides for a land trade of over 1,500 acres of public and private property in proximate counties, for approximately 21 acres of United States Forest Service (“USFS”) land surrounding Mammoth Mountain Inn, which is currently leasing that property as the center of ski operations of the MMSA.  In addition, the Bill allows for a “cash equalization option” to facilitate the exchange, by which MMSA can make up any deficiency in the value of the property conveyed to the USFS with a cash equivalent.  
 
Most important in MMSA’s view is the expansion of the airport.  

In August, 2014, the Federal Aviation Administration (“FAA”) approved a new Airport Layout Plan (“ALP”) for the Mammoth Yosemite Airport (“Airport”) which includes proposed runway and associated parallel taxiway extensions, land acquisition for those improvements, as well as a terminal expansion.  MMSA believes that “the combination of the Mammoth Mountain land trade and the FAA approval of an expanded commercial airport in Mammoth Lakes is a game changer. . .,” “now, for the first time, the mountain owns the land it resides on and can make improvements it can own.  Plus the new airport will allow for flights from around the country.”

Environmental groups, not unexpectedly, deplore the new events.  Mammoth Mountain is located on the east side of the Sierra Nevada, surrounded by valuable natural resources, including the Owens and Walker Rivers, which are home to a variety of species fast losing habitat elsewhere.  The debate over the expansion will be more clearly articulated during the environmental review process for the land exchange, pursuant to the National Environmental Policy Act, 42 U.S.C. § 4321, et seq. (“NEPA”), which will start upon the signing of the Bill authorizing the land exchange.  
 
Moreover, the FAA’s approval of the ALP was based on the satisfaction of certain conditions including that: (1) the proposed runway, taxiway extensions and land acquisition are not approved for short term developments; (2) FAA approve a terminal study that includes acceptable forecasts for use of the terminal; and (3) all development must comply with NEPA.  Therefore, development depends not only on the success of the contemplated land purchases, but also upon satisfaction of environmental requirements.  In California, those requirements involve not only NEPA, but also the California Environmental Quality Act, Cal. Pub. Res. Code § 21000, et seq. (“CEQA”) as well, with its much more rigorous analytic requirements.
 
In summary, although the land trade and associated airport expansion may be seen as a long term benefit to real estate development and the skiing public from outside California, the environmental controversy over the protection of the Eastern Sierra Wilderness will rage for many years to come. 
 

The FAA Proposes Changes to its Funding Contracts with Airports

On April 13, 2012, as a result of the February 14, 2012 passage of the Federal Aviation Administration Modernization and Reform Act of 2012 (“FMRA”), the Federal Aviation Administration (“FAA”) proposed modifications to the “grant assurances” incorporated into FAA’s contracts with airports that receive FAA funding for physical improvements and/or noise compatibility purposes.  These changes were made in order to ensure the consistency of the grant contracts with the changes arising out of FMRA.  The revisions primarily address three categories of actions: (1) permission for “through the fence” operations under specified conditions; (2) exceptions to current restrictions on use of airport revenues; and (3) revision to rules governing use of revenues gained from disposal of airport property subsidized by FAA. 

(1) Grant Assurance 5, “through the fence” arrangements, whereby proximate, off-airport, aviation-related development, either residential or commercial, is now allowed access to airport property through the airport’s security fence under specified circumstances.  FMRA has restored the opportunity for “through the fence” arrangements which, after 9/11, were prohibited due to security concerns.  Consequently, Grant Assurance 5, subsection g, was revised to provide the terms under which “through the fence” arrangements may operate. 
 
(2) Grant Assurance 15, “Veteran’s Preference,” which previously included only “Vietnam era veterans,” now includes “Persian Gulf veterans, Afghanistan-Iraq war veterans, disabled veterans” and business owned and operated by disabled veterans from those conflicts;

(3) Grant Assurance 25, governing use of airport revenues, to add two new exceptions to the general rule that “[a]ll revenues generated by the airport and any local taxes on aviation fuel established after December 30, 1987, will be expended by it for the capital or operating costs of the airport; the local airport system; or other local facilities which are owned or operated by the owner or operator of the airport and which are directly and substantially related to the actual air transportation of passengers or property; or for noise mitigation purposes on or off the airport.”  Grant Assurance 25.a.  The first exception, set forth in new section a.(2) deals with the FAA’s financing of the sale of a “privately owned airport to a public sponsor.”  It provides that the limitation set forth above on the uses of revenue will not apply under certain specified conditions applicable to the prior owner of the private airport.  Those conditions require, among other things, that, in the event of a sale to a public airport, the prior owner will repay FAA “an amount equal to the unamortized portion of any airport improvement grant made to the private owner for use other than land acquisition after October, 1996 plus an amount equal to the Federal share of the current market value of any airport land acquired with an airport improvement grant,” made after October 1, 1996.  A second revision also exempts revenues derived from mineral extraction, production or lease at a general aviation airport;

(4) Grant Assurance 29, also dealing with the new rules governing “through the fence” access, requiring amendment to airport layout plans (“ALP”) to include “all proposed and existing access points used to taxi aircraft across the airport’s property boundary;” and

(5) Grant Assurance 31, governing use of proceeds from disposal of real property.  Previously, proceeds from the disposal of airport real property which equal the “portion of the proceeds of such disposition which is proportionate to the United States’ share of the cost of acquisition of such land” were limited, with the permission of the Secretary, to reinvestment in another eligible airport improvement project at the airport or within the national airport system, or repayment into the aviation trust fund.  The amendment now prescribes certain criteria by which the Secretary shall make the determination on the use of funds, including, in descending order: (1) reinvestment in an approved noise compatibility project; (2) reinvestment in an approved project that is eligible for grant funding under 49 U.S.C. § 47117(e); (3) reinvestment in an approved airport development project that is eligible for grant funding under 49 U.S.C. §§ 47114, 47115 or 47117; (4) transfer to an eligible sponsor of another public airport to be reinvested in an approved noise compatibility project at that airport; and (5) paid to the Secretary for deposit in the Airport and Airway Trust Fund.  77 Fed.Reg. 22376, 22378 (the criteria prescribed for allocation of proceeds from the sale of land for noise compatibility purposes under Grant Assurance 31, subsection a, are substantially similar). 

Comments on the proposed revisions are due no later than May 14, 2012.