Petition for Writ of Certiorari — City & County of San Francisco v. Federal Aviation Administration

Supreme Court brief1992

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No. 91- DEC 49 199t ;

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IN THE oul anal

Supreme Court of the Gnited States

OcTOBER TERM, 1991

Ciry AND CouNTY OF SAN FRANCISCO and

THE AIRPORTS COMMISSION OF THE

Ciry AND COUNTY OF SAN FRANCISCO,

Petitioners,

U.S. FEDERAL AVIATION ADMINISTRATION,

BARRY Harris, ACTING ADMINISTRATOR,

FEDERAL AVIATION ADMINISTRATION, and

JAMES B. Busey IV, ACTING SECRETARY OF

TRANSPORTATION,

Respondents.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Of Counsel:

LOUISE H. RENNE STEVEN S. ROSENTHAL*

City Attorney HAROLD J. MCELHINNY

DONALD J. GARIBALDI JONATHAN BAND

Airports General Counsel MORRISON & FOERSTER

CRAIG M. MCCABE 2000 Pennsylvania Ave., N.W.

Deputy City Attorney Suite 5500

San Francisc) Intl. Airport Washington, D.C. 20006

San Francisco, CA 94126 (202) 887-1500

(415) 876-2236 Attorneys for Petitioners

*Counsel of Record

Dated: December 19, 1991

PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203

QUESTIONS PRESENTED

1. Whether a state or local agency, by accepting

federal grant funds under statutes and regulations

that are silent on the issue, subjects its otherwise

final adjudicatory determinations to de novo review

and redetermination by the Federal agency that ad-

ministers the grant program.

2. Whether an airport proprietor has the authority

to adopt a long-noticed deadline on the admission of

additional noisy aircraft when it has a reasonable or

rational basis for concluding that the deadline would

decrease the noise of airport operations.

TABLE OF CONTENTS

OPINIONS AND ORDERS BELOW ...........c.cccceeeeeeees

JURISDICTION wccrcssccscessscnsssnsssannencssssssansnasssanasannsqnnse

CONSTITUTIONAL AND STATUTORY PROVISIONS

ENVOL VED cccscccscsssssccassssccsesosessssnnenaccasssnsesenansanéaceses

STATEMENT OF THE CASE. ............ccccccesereseseeceees

San Francisco’s 1978 Noise Abatement

TROIRTIOR | os csccsiannccacsatnnbinentensneonitmensasvenens

B. The Burlington Waiver Application to Op-

EO ¢

erate Q707 Aircraft at SFIA .......

The Airport Grant Program and the San

Francisco Airport Grants ............ccsceseeees

The FAA Enforcement Action ...............

The Opinions of the ALJ and of the FAA

PGT OIE «ic sincisscinantedanabiasintaiaenaganeie

The Opinion of the Court of Appeals ....

REASONS FOR GRANTING THE WRIT .................45

A. The Question of Whether a Federal Gran-

tee Can be Found in Default Under Its

Grants on the Basis of a Redetermination

of Its Otherwise Final Adjudicatory De-

terminations, Where the Grant Statutes

and Regulations are Silent on the Issue,

Implicates Important Issues of Federal-

ism and of Limits on the Spending Power

and Should Be Decided By This Court ..

The Scope of Airport Proprietor Power

to Control Noise From Airport Opera-

tions Is of Great Public Importance and

Only This Court Can Resolve the Conflict

“ the Lower Courts on the Scope of This

QUOT nenensnsninecsatianteniaaiaamaals

CONCLUSION .cccsnssscsanssnssnsssnessaiasunanencaspenasasnansyneabias

APPENDIX A Opinion of the United States Court

of Appeals for the Ninth Circuit (August 21,

DGBT) .nainnnasctsdnsakonessiaucncencinaiennanaelaaenienaal

iii

APPENDIX B Order Denying Rehearing, Sugges-

tion for Rehearing En Banc, and an Extension

of Time (November 12, 1991) ............ccccc eee

APPENDIX C Administrator’s Decision and Finai

Order of Noncompliance & Default (December

SUNT III TiNiddiish ub bhtesdbdesetsnusssoscessienacnbacssccbesasicons

APPENDIX D Initial Decision of Chief Adminis-

trative Law Judge Kane (August 9, 1988) .....

APPENDIX E Order Denying Application for Grant

Funds (December 12, 1988) ...............c..ceseeeeees

APPENDIX F FAA Order on Reconsideration

a cceaeumnebans

APPENDIX G San Francisco Airports Commission

Denial of Burlington Air Application (April 15,

TTA lelbatuadibabunvsnavehidsbsinebasasénaceceasaceesaevenccne

APPENDIX H San Francisco Airports Commission

Noise Abatement Regulation (May 17, 1978) .

APPENDIX I Excerpts from Brief of Petitioner

City and County of San Francisco (March 1,

ITI cic ddaneuabidsndbbseheediancanbundensocnssnciasen

25a

28a

58a

97a

TABLE OF AUTHORITIES

CASES: Page

Air Transport Ass’n of Am. v. Crotti, 389 F. ~_

Be OUD cctecesecsssoinsinicitintiannisnedninnpnciiten 23

Alaska Airlines v. City of Long Beach, Nos. 88-

67745, 89-55278 (Sth Cir. October 24,

SITET. siesissinscieannssiadsanchadiniinsbadinientdesiepbibannintednnnens 16,26,28

Arrow Air, Inc. v. Port Auth. of N.Y., 602 F. Supp.

BS Sc Ts SIDE saiiactncensnqnscnnbeneinccatiaiinsniceinn 23,24

Baker v. Burbank-Giendale-Pasadena Airport Au-

thority, 39 Cal. 3d 862, 218 Cal. Rptr. 293,

705 P.2d 866 (1985), cert. denied, 475 U.S. 1017

EIT ssnnuindnisheksonudbeinieshasudinidetanesaananibaminihenmdenainnetes 5,24

Bieneman v. Vity of Chicago, 864 F.2d 463, (7th

Cir. 1988), cert. denied, 490 U.S. 1080

EATITE. sthuintshssdanakdehsmncseesunsiaspabbanatnnsadedbiiediiantakunss 25

British Airways Bd. v. Port Auth. of N.Y. & N.J.,

fs & TF ge Re , , Pen 23

British Airways Bd. v. Port Auth. of N.Y. & N.J.,

564 F.2d 1002 (2d Cir. 1977) ..................0000000 23

City and County of San Francisco v. Engen, 819

ee RD Se Gs, BD ctaictsicnancateinscdianincie 10

City and County of San Francisco v. Municipal

Court, 141 Cal. App. 3d 470, 190 Cal. Rptr.

Ne EE snikisiccnencadnecnastsdastinteaiiadbitiidsuiiantantnntede 5

City of Burbank v. Lockheex Air Terminal, 411 U.S.

EE SITET catcisnissbisicncassacdndietdndgabbiinniinniuntiatasians 23,25,26

City of New Orleans v. Dukes, 427 U.S. 297

TTD Sensnleuihasiciaunsitacacentasnnsassitapnaunaasbenheltthitninneaininases 15,27

Global Int’l Airways Corp. v. Port Auth. of N.Y.

& N.J., 727 F.2d 246 (2d Cir. 1984), reh’g de-

nied, 731 F.2d 127 (2d Cir. 1984) .................. 23,24

Global Int’l Airways Corp. v. Port Auth. of N.Y.

& N.J., 731 F.2d 127 (2d Cir. 1984) .............. 23

Table of Authorities Continued

Page

Greater Westchester Homeowners Ass’n v. City of

Los Angeles, 26 Cal. 3d 86, 160 Cal. Rptr. 733,

603 P.2d 1329 (1979), cert. denied, 449 U.S.

SD CED winacasacechscocecscienkaaebatiieansasanminmueanitaia 5,24,25

Gregory v. Ashcroft, 111 S.Ct. 2395 (1991) ........... 20

Grove City College v. Bell, 465 U.S. 555 (1984) .... 19

Guardians Association v. Civil Service Commission

of the City of New York, 463 U.S. 582

CRIED Kcarnisccsacsncinninndiinascssiasiplasiisetniddanlsmmiaan 19

Hanover Tp. v. Town of Morristown, 108 N.J.

Super. 461, 261 A.2d 692 (1969) ........0......... 24

Harrison v. Schwartz, 319 Md. 360, 572 A.2d 528

EXE cccnsissacesnsnasanssibanitsakignasiaseueaanaiand 24

Hendrick Hudson District Board of Education v.

Rawley, 458 U.S. 176 (1962) ...........00000000000000 19

Huron Portland Cement Co. v. City of Detroit, 362

Cc BGR GEGIED snccsatenstvinsscnsesadmbiasinaan 25

In re Airport Small Claims Actions, Nos. 116824,

et al. (Sup. Ct. Marin Co., Oct. 11, 1985) ..... 5

Krueger v. Mitchell, 112 Wis. 2d 88, 101, 332

FW A Ey CD GREOED énsicidansninnemeteaitanvasinn 24

Middlesex County Ethics Comm. v. Garden State

Bar Ass'n, 457 U.S. 423 (1982) ..........,.ccccccc00 20

Minnesota v. Clover Leaf Creamery Co., 449 U.S.

GD GROG ED ccsisnictasinscncsisnansihisiteasinietasnmbiainanmiciaias 28,29

National Aviation v. City of Hayward, Cal., 418 F.

Same. GET GUD. Ci, BGG cicensseracenisnessnessanace 23

Northeast Phoenix Homeowners’ Ass’n v. Scottsdale

Municipal Airport, 130 Ariz. 487, 636 P.2d

SOD COMED citnschsnnsicchiedecsecieenncrcoaeoe 24

Ohio Civil Rights Comm’n. v. Dayton Christian

Sahaele, EFF Wh. GIS Tee ckceastcaacdineiaaas 20

Table of Authorities Continued

Owen v. City of Atlanta, 157 Ga. App. 365, 277

S.E.2d 338, aff'd, 248 Ga. 299, 282 S.E.2d 906

(1981), cert. denied, 456 U.S. 972 (1982) .......

Pennhurst State School and Hospital v. Halderman,

GBA UE. “3 CED enecrinnsinctbenncssnintntneenianianniinns

People v. Sims, 32 Cal. 3d, 468, 186 Cal. Rptr. 77,

GER FSG Ge CER enckisensescsetininieeamnnstaaicanicns

Pike v. Bruce Church, Inc., 397, U.S. 137 (1970) .

Pirolo v. City of Clearwater, 711 F.2d 1006 (11th

CaP. BED ceaseciesenecsecssseusnmnieueseiliaindisiinionlinuiiatnins

Rosenbalm Aviation, Inc. v. Port Auth. of N.Y. &

N.J., 636 F. Supp. 212 (S.D.N.Y. 1986) ........

Santa Monica Airport Ass'n City of Santa Monica,

GES F.2d 100 (Sth Cir. 196]}) ...ccccccccccccccscccesess

School Board of Nassau County v. Airline, 480 U.S.

BER CREE) cersssesverecsssstunianninsinenapiedatinadienden

South Dakota v. Dole, 483 U.S. 203 (1987) ...........

United States v. Carolene Products Co., 304 U.S.

EGBG GRO tcccertccinincicssiiniatiibaiiaddeaaintntieandia

University of Tennessee v. Elliott, 478 U.S. 788

(RBGED ccvessevstinsuntessenseninniennanansiianaeaamnaiaa

Ursin v. New Orleans Aviation Bd., 506 So.2d 947

ee SS GS ee

Vance v. Bradley, 440 U.S. 93 (1979) ................0..

Western Air Lines v. Port Auth. of N.Y. & N.J.,

658 F. Supp. 952 (2d Cir. 1987), aff'd 817 F.2d

222 (S.D.N.Y. 1986) cert. denied sub nom.,

Delta Air Lines v. Port Auth. of N.Y. & N.J.,

GS UE. BESS Glee wcnicncnseneneneietans

Will v. Michigan Dept. of State Police, 109 S.Ct.

TOBE CINUE ccenerasenisneaetacn aaa eee

Williamson v. Lee Optical of Oklahoma, Inc., 348

U.S. 483 (1955) ......... seussinheiiaiaillaesgacnnatnaeasanaaiiine

Page

23,24

24,26

15,26

vii

Table of Authorities Continued

Statutes and Regulations:

GD TRAC. BOGE cncesecscrsccssescencessese seeinbindahecieaiiciias

GD DERG. BED ~ cecnenrsecnnetencsenspcsnsnnscvscnsenentsnnmsesccven:

GD CDRS. BRET cncsccstecsssssccsvnctsersisnstccsmnsssistnneeneenmnnse

Pe ee

QD UBC. app. BUBB ccrrccsrecerccccccessccccsccscescssccccnssosces

GD UB. Gap. BUBBBD cncccccccceccnssnccessssccsenscssssscenvens

49 U.S.C. app. 2201 et S€q .........cceseceeeseeceseeeeneeeenes

49 U.S.C. app. SBOBlaN 12) ...............cccccccccccrseseees _

AD UBC. GED. BBG ccrrccccccccccveeccscssecccsccssssescsccccosees

49 U.S.C. app. 220GaNSNB) .................ccccccccsccsereess

GD UBC. aap. BRBRIAME) qncccccecrcccsecccccecccescsessenssceses

GD UDG. cep, SRRBIT) ancocccccccesscccecsesenecccenscssenes

Cal. Civ. Proc. Code § 1094.5 (1980) ..............:.000+

BG GHB TUG BED GRICE) cccrrccccscccscsnccsenisesceinennennee

BE Gio TRAE cacecscensctccccsceccescsseunsessvnsencncsscsunnees

Other Authorities:

H.R. Rep. No. 842, 92d Cong. 2d Sess. (1972) .....

S. Rep. No. 1160, 92d Cong., 2d Sess., reprinted

Se . Bt ee ee

S. Rep. No. 1353, 90th Cong., 2d Sess., reprinted

So gt ht ee

56 Fed. Reg. 48628, 48652 (Sept. 25, 1991) .........

<a 2~

-) — CO © OO OW

gS _

ur 00 U1 GO OO GO

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1991

No. 91-

City AND COUNTY OF SAN FRANCISCO and

THE AIRPORTS COMMISSION OF THE

CiTy AND CoUNTY OF SAN FRANCISCO,

Petitioners,

Vv.

U.S. FEDERAL AVIATION ADMINISTRATION,

BARRY HARRIS, ACTING ADMINISTRATOR,

FEDERAL AVIATION ADMINISTRATION, and

JAMES B. Busey IV, AcTING SECRETARY OF

TRANSPORTATION,

Respondents.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

The City and County of San Francisco and the Airports

Commission of the City and County of San Francisco (re-

ferred to collectively hereafter as ‘San Francisco’) re-

spectfully petition for a writ of certiorari to review the

judgment of the United States Court of Appeals for the

Ninth Circuit in this case. That court affirmed in part and

reversed in part an order of the Administrator of the

Federal Aviation Administration (“FAA Administrator’’)

that found that San Francisco’s 1978 Noise Abatement

Regulation exceeded the lawful authority of an airport pro-

prietor to control noise impacts from airport operations.!

OPINIONS AND ORDERS BELOW

The opinion of the United States Court of Appeals for

the Ninth Circuit is reported at 941 F.2d 1891 and is

reproduced at app., infra, la. The FAA Administrator’s

Decision and Final Order of Noncompliance and Default

is reproduced at app., infra, 28a, and the Initial Decision

of Chief Administrative Law Judge is reproduced at app.,

infra, 58a.

JURISDICTION

The judgment of the court of appeals was entered on

August 21, 1991. On November 7, 1991, Justice O’Connor

extended the time within which to file a petition for

certiorari to and including December 19, 1991. A-326. The

jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

CONSTITUTIONAL AND STATUTORY PROVISIONS

INVOLVED

The Spending Clause, Article 1, § 8, of the United States

Constitution provides that ‘‘Congress shall have power to

lay and collect Taxes, Duties, Imposts and Excises, to pay

the Debts and provide for the Common Defence and gen-

eral Welfare of the United States. ...”

‘San Francisco is not seeking review of the portion of the Ninth

Circuit’s judgment which reviewed a separate order of the FAA Ad-

ministrator denying San Francisco’s application for airport grant funds

for fiscal years 1986 and 1987. App., infra, 20a-22a. The Ninth Circuit

held, in reviewing that order, that the FAA had unlawfully failed to

approve San Francisco’s application for grant funds and directed that

the FAA approve the application. Jd.

Grant Assurance No. 20 of the airport grants issued

under the Airport Development Assistance Program pro-

vides, in relevant part:

Public use and benefit. It [the Sponsor] agrees

that it will operate the Airport for the use and

benefit of the public, on fair and reasonable

terms, and without unjust discrimination. ...

The San Francisco Airports Commission’s 1978 Noise

Abatement Regulation is set forth at app., infra, 124a.

STATEMENT OF THE CASE

A. San Francisco’s 1978 Noise Abatement Regulation

San Francisco International Airport (‘“‘SFIA’’) is situated

on San Francisco Bay in the midst of densely populated

San Mateo County.? Since the mid-1960’s, when turbojets

began frequent operations at SFIA, residents of neigh-

boring communities have vehemently and persistently pro-

tested to San Francisco the noise of aircraft operations at

SFIA. The noise impact of SFIA increased in the 1970’s.

In 1976, noise monitoring by San Francisco showed that

13,000 homes containing 35,000 residents and 17 schools

were within the 65 CNEL noise contour of SFIA.* By

* SFIA is owned and operated by the City and County of San Fran-

cisco through an independent agency established by the San Francisco

Charter, the Airports Commission of the City and County of San Fran-

cisco (‘Airports Commission’’).

’ The 65 CNEL noise contour defines the area in which the CNEL,

a measurement of cumulative noise, equals or exceeds 65. Under Cal-

ifornia law, it is unlawful to operate an airport if there are any resi-

dences within the 65 CNEL noise contour, unless the airport proprietor

has been granted a variance by the Director of the California Depart-

ment of Transportation. 21 Cal. Admin. Code § 5012. R.318 at 13; R.319

at Exhibit 6, p.8. (‘‘R.”’ refers to the consecutive numbers in the Cer-

tified List of Record filed by the FAA with the Ninth Circuit.)

1980, 15,500 homes containing 41,900 residents and 20

schools were within the 65 CNEL noise contour.‘

In an effort to ameliorate the noise impact of SFIA,

the Airports Commission in 1978 adopted its first Noise

Abatement Regulation (‘1978 Regulation”). App., infra,

124a. The 1978 Regulation prohibited Stage 1 aircraft types

(the most noisy category then operating at SFIA) from

operating after January 1, 1985 unless they had been ret-

rofitted and certified by the FAA by that date as meeting

Stage 2 requirements (the intermediate noise category).

App., infra, 127a (Part 1). In addition, Stage 2 aircraft

types not operating at SFIA at the time the 1978 Reg-

ulation was adopted were required to commence operations

at SFIA, if at-all, by January 1, 1985. App., infra, 127a

(Part 2). All aircraft operators were, thus, given over six

years to bring themselves into compliance with the 1978

Regulation, which when fully effective after January 1,

1985, would require operators at SFIA to use either a

Stage 3 aircraft type (the least noisy category) or a

‘“‘grandfathered’”’ Stage 2 aircraft type.®

The 1978 Regulation also provided a procedure whereby

aircraft operators could seek a waiver from the Regula-

tion.* This provision contains hearing procedures under

which waiver applications would be heard by the Airports

‘The data on the noise impact of aircraft operations at SFIA was

presented in the FAA proceeding and was not disputed by the FAA.

‘ The Airports Commission adopted a successor noise abatement reg-

ulation on January 22, 1988 (‘1988 Regulation”). R.168. The 1988

Regulation provides for the phased elimination of all Stage 2 aircraft

operating at SFIA. On January 1, 1989, each operator at SFIA was

required to have at least 25% of its total operations at SFIA using

Stage 3 aircraft. In subsequent phases, each operator will be required

to have at least 50%, 75% and, ultimately, all operations using Stage

3 aircraft.

* Although the 1978 Regulation refers to a “variance,” all the parties,

the FAA, and the court of appeals have used the term “waiver.”

Therefore, waiver will be used in this petition.

Conimission and specifies the public interest factors under

which waiver applications would be decided. App., infra,

128a-130a. The 1978 Regulation expressly provides that

‘fujnder no circumstances will the Airports Commission

extend the time of compliance with the Regulation beyond

January 1, 1985.’’ App., infra, 1302. No judicial review

was sought of the 1978 Regulation by any affected party

as provided by California law.

In 1979 the Supreme Court of California decided Greater

Westchester Homeowners Ass’n v. City of Los Angeles, 26

Cal. 3d 86, 160 Cal. Rptr. 733, 603 P.2d 1329 (1979), cert.

denied, 449 U.S. 820 (1980), which held that an airport

proprietor is liable on a nuisance theory for injuries sus-

tained by nearby residents from noise caused by aircraft

using the airport.? On the basis of Greater Westchester,

noise-impacted residents brought over 350 small claims ac-

tions in four organized waves against San Francisco al-

leging a continuing nuisance because of the noise generated

by SFIA, forcing San Francisco to incur over $800,000 in

costs and legal fees to defend itself.* Ultimately San Fran-

cisco was held liable in nuisance for damages incurred in

1981 and 1982 for failing to respond properly ‘‘to the acute

noise problems at the airport.” In re Airport Small Claims

Actions, Nos. 116824, et al. (Sup. Ct. Marin Co., Oct. 11,

1985).°

"Greater Westchester was reaffirmed in 1985 by the California

Supreme Court in Baker v. Burbank-Glendale-Pasadena Airport Au-

thority, 39 Cal. 3d 862, 218 Cal. Rptr. 293, 705 P.2d 866 (1985), cert.

denied, 475 U.S. 1017 (1986), in which the court held that a resident

could treat a noise claim against an airport proprietor as a continuing

nuisance, thus permitting plaintiffs to bring repetitive nuisance claims

every time a plane takes off.

*R.318 at 14. See City and County of San Francisco v. Municipal

Court, 141 Cal. App. 3d 470, 190 Cal. Rptr. 340 (1983).

*R.45 at Exhibit 24.

B. The Burlington Waiver Application to Operate

Q707 Aircraft at SFIA

Boeing 707s are Stage 1 aircraft and, pursuant to Sub-

part E of Part 91 of the Federal Aviation Regulations, 14

C.F.R. § 91.303, have not been permitted to operate in

the United States since January 1, 1985. As a result, many

707s which had been operating in the United States were

placed in service in other parts of the world or were moth-

balled. In the fall and winter of 1984/85, Burlington Air

Express (‘Burlington’), an all-cargo carrier, bought over-

seas several mothballed 707s and had them retrofitted to

meet the FAA’s Stage 2 requirements by placing sound

absorbing material in the engine casings.'° These “‘hush-

kitted’”’” 707s, commonly referred to as Q707s, received

Stage 2 type certification from the FAA in March 1985,

app., infra, 120a. Because the Boeing 707 already pos-

sessed an original type certificate from its previous op-

eration in the United States, the FAA did not require the

Q707 to meet the Stage 3 levels it requires of all aircraft

applying for original type certificates after November 1975.

Burlington contracted to purchase the Q707s without

making any inquiries as to whether they could operate at

SFIA; it erroneously assumed that a retrofitted Stage 2

aircraft could operate at any airport in the United States."

Burlington first learned that the Q707 could not operate

at SFIA under the 1978 Regulation in August 1985 and,

thereafter, filed a formal waiver application with the Air-

ports Commission.

On March 18, 1986, the Airports Commission held a

duly noticed adjudicatory hearing on the Burlington waiver

application. Written and oral evidence was received. Bur-

lington submitted extensive written submissions and the

oral testimony of several witnesses, including that of the

R.370 at 1390.

R370 at 1401-03; R.318 at 21-22.

engineer who invented and was in charge of installation

of the Q707 ‘“‘hush kit.’”” The FAA made a written sub-

mission over the signature of the FAA Chief Counsel and

FAA representatives were present at the hearing. Written

or oral evidence was also submitted by members of the

public and by the Airports Commission staff. The Airports

Commission sought detailed noise data on the Q707 from

Burlington, the company installing the Q707 hush kit, and

the FAA, but was rebuffed by a claim that such data was

confidential and proprietary. As a result, the information

on the noise characteristics of the Q707 considered by the

Commission was limited to that publicly available. The pub-

licly available information indicated that the Q707, as it

actually would be operated at SFIA (full-weight, full-

thrust), would be louder in the critical takeoff mode than

any other aircraft operating at SFIA. A transcript and

formal adjudicatory record was prepared of the hearing.”

At its meeting on April 15, 1986, the Commission

adopted a decision denying Burlington a waiver from the

1978 Regulation. The Commission’s decision contained 38

findings setting forth the legal and factual basis for its

decision. App., infra, 116a-122a. The Commission found,

inter alia, that operating the Q707 ‘‘would affect a sig-

nificant increase in CNEL [noise] values in three of the

four community areas surrounding SFIA’”’ and that San

Francisco could incur additional nuisance liability to resi-

dents of surrounding communities were the Q707 permit-

“ted to operate. App., infra, 122a. The Commission further

found that, as it would actually be operated at SFIA, the

Q707 would be “louder in takeoff mode” than any other

aircraft at SFIA. App., infra, 121a-122a. Perhaps the crit-

ical finding of the Commission was that

were the Airports Commission to grant to [Bur-

lington] a waiver or variance to operate at SFIA

‘* See R.45 at Exhibit 12 (the transcript of the Commission hearing).

on the basis of the facts set forth above, it could

be required to grant waivers or variances to other

similarly situated carriers seeking to operate the

Q707 which, in turn, could result in a significant

increase in the noise of the fleet currently op-

erating at SFIA ....

App., infra, 122a. No party sought judicial review of the

Commission’s decision as permitted by California law. Cal.

Civ. Proc. Code § 1094.5 (1980).'%

C. The Airport Grant Program and the San Francisco

Airport Grants

The Airport and Airway Development Act of 1970

(““AADA”’), 49 U.S.C. 1701 et seg., provided federal grant

support for airport development projects, 49 U.S.C. 1714,

the funds for which were taken from a trust fund derived

from taxes on air transportation activities, 49 U.S.C. 1742.

The AADA was repealed in 1982 and replaced by the

Airport and Airway Improvement Act of 1982 (‘‘AAIA’”’),

49 U.S.C. app. 2201 et seg., which similarly provides grant

funding for airport development projects, 49 U.S.C. app.

2204, through funds which have their ultimate source in

taxes imposed on aviation fuel and on air transportation

users, 26 U.S.C. 9502. Both the AAIA and the AADA

provide a statutory entitlement to a specified level of grant

funding to “primary airports,’’ of which SFIA is one, based

upon the number of passengers enplaned at the airport.

See, eg., 49 U.S.C. app. 2202(a)(12), 2205(a)(2)(B),

2206(a)1).

The AADA and the AAIA both require that an airport

proprietor seeking grant funding for a project provide an

‘8 Since the denial of its waiver request, Burlington has operated its

flights from Oakland International Airport, app., infra, 8a. Given the

runway configuration of Oakland Airport and its location on the eastern

edge of San Francisco Bay, Burlington’s operations create less noise

impacts on surrounding communities than would its operations at SFIA.

R.45 at Exhibit 6, p.8; R.45 at Exhibit 13, p.7.

assurance that the “airport to which the project relates

will be available ... on fair and reasonable terms and

without unjust discrimination. ...’’ 49 U.S.C. app.

2210(aX1); 49 U.S.C. 1717. The FAA has never, prior to

this case, formally construed this assurance. No regulation

or policy statement has ever been adopted by the FAA

construing for grant recipients what would constitute ‘‘fair

and reasonable terms’ or “unjust discrimination.” This

case was tried before the FAA, and decided by the FAA

Administrator, on the basis that the proper test for com-

pliance with this grant assurance is derived from the ‘‘ap-

plication of appropriate decisional law.” FAA

Administrator’s Decision, app., infra, 5la.

This case was limited, during the course of the FAA

proceedings, to a single issue: Whether San Francisco

breached its assurance to make SFIA available upon ‘“‘fair

and reasonable terms and without unjust discrimination,”’

which issue was to be determined by reference to the

existing decisional law with respect to airport proprietor

noise abatement authority.

D. The FAA Enforcement Action

On April 2, 1986, while Burlington’s waiver request was

still pending before the Commission, Burlington filed a

complaint with the FAA based upon its contention that

the Commission had unlawfully refused” to permit it to

operate the Q707 aircraft at SFIA. On July 7, 1986, the

‘* San Francisco entered into twelve grants under the AADA program

between 1971 and 1981, three of which were entered into after the

1978 Regulation had been adopted. San Francisco also entered into six

grants under the program established under the AAIA between 1982

and the commencement of this proceeding. San Francisco has not en-

tered into grants since 1986. The AADA and AAIA grant assurances

remain in effect for the useful life of the project, but not to exceed

20 years from acceptance of the grant.

FAA Chief Counsel initiated an enforcement action against

the Commission, FAA Docket No. 13-86-2.

The FAA enforcement action was assigned to Chief Ad-

ministrative Law Judge Kane (“‘ALJ’’) for a hearing. As

a result of the Airports Commission’s Motion to Dismiss,

four of the five grounds given by the FAA for its en-

forcement action were dismissed. The only basis for relief

which remained was the claim that San Francisco had

breached its ADAP Grant Assurance No. 20 requiring it

to operate SFIA ‘‘on fair and reasonable terms, and with-

out unjust discrimination.’’"*

The hearing on the FAA Notice commenced on May 2,

1988, and lasted eight days. Significantly, the FAA never

contested the evidence supporting San Francisco’s deter-

mination that the January 1, 1985 deadline on additional

Stage 2 aircraft types had resulted in a decrease of the

CNEL noise impact area of SFIA due to the resulting

shift to Stage 3 aircraft types by operators at SFIA.”

Similarly, the FAA never contested the evidence support-

‘s The FAA notice initiating the enforcement action also stated that,

pending the completion of the administrative process, no further FAA

airport grants would be made to San Francisco. See City and County

of San Francisco v. Engen, 819 F.2d 873 (9th Cir. 1987) (court held

it had no jurisdiction to review this suspension of further grants).

‘6 The ALJ also determined, in response to prehearing motions, ‘‘that

the proper test for compliance with Assurance No. 20 must be the

same as the test for compliance with Federal statutes and case law,”

noting that “‘{if] the test under Assurance No. 20 ... were not the

same, the Administrator would have carte blanche to override the effect

of the Federal Statutes and case law by different interpretation of the

grant agreements.” R.131 at 10 & n.6.

'7 Indeed, Burlington’s witness testified on cross-examination that if

Burlington were not able to use the Q707, the most likely replacements

would be the B-757 and the DC-70 series aircraft, both of which are

Stage 3 and (according to FAA testimony) significantly quieter than

the Q707. R.283 at 23-24 (Burlington witness); R.365 at 654-58 (FAA

witness).

ing San Francisco’s determination that granting Burling-

ton a waiver to operate the Q707 at SFIA would undermine

its noise abatement policy and result in the influx of a

large number of new Stage 2 aircraft, which in turn would

increase SFIA’s noise impact area and increase San Fran-

cisco’s exposure to nuisance liability.'*

Instead, the principal fact the FAA sought to prove at

the hearing was that, contrary to the finding of the Com-

mission, some aircraft models that have operated at SFIA

since January 1, 1985 are as loud or louder than the Q707.'9

The FAA proved this fact by introducing into evidence

proprietary noise data that had not been submitted during

the Airports Commission hearing process. Further, the

FAA succeeded in refuting the publicly available data upon

which the Airports Commission had relied by uncovering

a previously unknown error in an FAA-sponsored study

of the noise characteristics of B-707s.

In written briefs and arguments to the ALJ, San Fran-

cisco presented two principal legal contentions: First, San

Francisco contended that the FAA’s claim of unjust dis-

crimination can not be upheld, under the existing case law,

unless it can be determined that San Francisco did not

have a rational or reasonable basis to believe its 1978

Regulation would reduce the noise impacts of SFIA or the

potential noise liability of San Francisco. Judged under

such a standard, the 1978 Regulation and San Francisco’s

actions with respect to the Q707 would clearly have to be

upheld. Second, San Francisco contended that the FAA

‘*Over 127 B-707s and 135 DC-8s had been retrofitted by the time

of the hearing. R.324 at 27-28. Miami International Airport, which is

a gateway airport somewhat smaller than SFIA that did not restrict

retrofits, had 256 weekly operations of retrofitted Q707s and DC-8s.

R.324 at 28-29; R.325 at Exhibit 10.

‘* ALJ Kane and the FAA Decision refer to 15 such aircraft models.

However, 9 of these aircraft have not operated at SFIA since January

1, 1985. App., infra, 66a-67a; R.318 at 41-42.

staan

did not have the power under the grant agreements to

find San Francisco in default on the basis of a review and

redetermination by the FAA of an otherwise final adju-

dicatory determination of the Airports Commission, at least

where Commission procedures had been fair and reason-

able. Thus, the FAA could not rely, in its determination

of default, upon a determination that at full weight, full

power takeoff the Q707 was not as noisy as the Commis-

sion had determined, especially since full power Q707 noise

data had not been submitted by the FAA or Burlington

during the Airports Commission hearing process.”

E. The Opinions of the ALJ and of the FAA Admin-

istrator

The ALJ on August 9, 1988 issued an initial decision

finding San Francisco in default under its ADAP grants.

The ALJ reaffirmed that he was determining default ‘‘as

though this case were being brought before a federal court

and as though no grant agreement were in existence,”’

app., infra, 7la.*4 The ALJ went on, however, to reject

San Francisco’s rational basis test and the cases on which

it relied and further rejected San Francisco’s contention

that it could “ratchet down’’ noise by setting a deadline

for noisy aircraft, grandfathering those aircraft that met

the deadline and excluding those that failed to meet the

* Under order of the ALJ, the noise data on the Q707 was finally

provided San Francisco's outside counsel some twenty months after the

Airports Commission's decision. Over the Commission’s objection, the

ALJ ordered that no member of the Airports Commission or of the

Commission staff could see the Q707 noise data. To this date, the

Commission has not seen the data that “disproves’’ the finding chal-

lenged by the FAA.

* “It is concluded, therefore, that any discrimination which the Com-

mission is prohibited by the Federal Statute and case law from prac-

ticing is likewise prohibited by Assurance No. 20 of the grant

agreements. Similarly, any discrimination which the Federal Statutes

and case law permits is permitted by Assurance No. 20.’’ App., in/ra,

73a.

deadline. For the ALJ, the decision turned on the fact

that grandfathered aircraft that were noisier than the Q707

were permitted to operate at SFIA while the Q707 could

not operate because it failed to meet the regulatory dead-

line.

The ALJ also specifically rejected San Francisco’s pro-

cedural argument. Even though the FAA and Burlington

never gave full-weight, full-thrust noise data to the Com-

mission at its hearing, the ALJ nevertheless made the

extraordinary finding that it was “irrational” of the Com-

mission to reject the FAA’s bald assertion that the Q707

was not the noisiest aircraft operating at SFIA. The ALJ

conceded that “{t]he Commission was clearly confronted

with severe restrictions on its access to the information

underlying the noise certification of the Q707 at full power

and maximum takeoff weight during the period when it

was deciding to exclude the airplane.” App., infra, 85a.

The ALJ, nevertheless, found that the Commission was

not rationally entitled to treat FAA testimony about the

noise level of the Q707 as “just another piece of data,”

not entitled to more credence than any other evidence

being received by the Commission. The ALJ never re-

sponded directly to the Commission’s contention that San

Francisco never agreed, as part of its grant agreements,

to permit the FAA to determine the issue of default on

the basis of a review and redetermination of the Com-

mission’s final adjudicatory determination.

On appeal, the FAA Administrator affirmed, finding San

Francisco in default under the ADAP grant agreements

because San Francisco had permitted six ‘‘grandfathered’”’

aircraft models noisier than the Q707 to operate at SFIA

after January 1, 1985 while excluding the Q707. While

acknowledging that a finding of default must be deter-

mined by “application of appropriate decisional law,” app.,

infra, 51a, the FAA Administrator expressly rejected San

“The FAA Administrator conceded that this was ‘“‘a case of first

Francisco’s argument, based on numerous decisions of this

Court, that its noise abatement regulation must be upheld

so long as San Francisco had a rational or reasonable basis

for concluding that the 1978 Regulation would contribute

to the objective of controlling cumulative noise from SFIA,

app., infra, 48a-49a.

The FAA Administrator’s decision never questioned the

uncontested evidence that admission of the Q707 would

increase the noise impact of SFIA nor the evidence that

the noise impact area of SFIA had been decreasing sub-

stantially after the 1985 deadline. Similarly, it was not

disputed that, on the basis of the FAA’s noise data, the

Q707 was noisier than all but six aircraft types operating

at SFIA and noisier than 98.5% of all aircraft operations

at SFIA.

The FAA Administrator also rejected San Francisco's

argument that there was no legal basis for finding a de-

fault on the basis of evidence that was unavailable to the

Commission, concluding that: “[T]he question of the ac-

curacy or completeness of submissions by parties to the

Commission during the waiver process are [sic] irrelevant,

as are the specific fact findings associated with the waiver

process.” App., infra, 51a, n.19. The FAA Administrator

did not question the ALJ’s finding that the Commission

had been denied noise data on the Q707 at the time of

its hearing on the waiver application. The FAA Admin-

istrator also never set forth his legal basis for concluding

that the airport grant agreements permitted him to find

San Francisco in default on the basis of facts that were

not available when the Commission acted.”

impression.”’ App., infra, 44a. No prior FAA administrative proceeding

or court decision had ever interpreted the grant assurance.

* The FAA Administrator also denied San Francisco's motion for

reconsideration, app., infra, 101a.

F. The Opinion of the Court of Appeals

The court of appeals affirmed the Administrator’s De-

cision and Final Order of Noncompliance and Default on

the basis of the FAA Administrator’s finding that San

Francisco’s noise regulation allowed planes that were

equally noisy or noisier than the Q707 to operate at SFIA.

The court of appeals concluded that “it was not unrea-

sonable for the FAA to interpret the statute as requiring

more than that San Francisco’s regulation reduce noise,”

app., infra, 17a, although the court of appeals (like the

FAA) never explicitly sets forth what higher standard San

Francisco’s regulation was required to meet. The court of

appeals explicitly rejected San Francisco’s contention that

its regulation must be upheld if it had a rational or rea-

sonable basis for believing that its actions would decrease

noise or potential noise liability and, further, explicitly re-

jected San Francisco’s contention that its 1978 Regulation

is a lawful exercise in “‘grandfathering’”’ under City of New

Orleans v. Dukes, 427 U.S. 297 (1978), app., infra, 17a-

18a.*4

In reaching its conclusion, the court of appeals mistak-

enly assumed that it was reviewing for reasonableness an

independent construction by the FAA Administrator of 49

U.S.C. app. 2210(aX1), even though the case had been tried

and decided by the FAA on the basis that the grant as-

surance required nothing more than what is already re-

* The court of appeals questioned whether grandfathering was oc-

curring under the 1978 Regulation since the regulation grandfathered

airplane types and not individual planes. The court of appeals conjec-

tured that takeoffs and landings of noisier aircraft than the Q707 could

be increasing. In fact, operations by the six noisier aircraft had been

declining. In any event, numerous lawful grandfathering schemes op-

erate in the same manner as the 1978 Regulation. Indeed, the court

of appeals referenced one such scheme. See Western Air Lines v. Port

Auth. of N.Y. & N.J., 658 F. Supp. 952 (S.D.N.Y. 1986), aff'd 817 F.2d

222 (2d Cir. 1987) cert. denied sub nom., Delta Air Lines v. Port Auth.

of N.Y. & N.J., 485 U.S. 1006 (1988).

quired of San Francisco under applicable decisional law.

The court of appeals also found it of no consequence that

admission of the Q707 alone or the opening of SFIA to

other aircraft that had not met the January 1, 1985 dead-

line would increase the noise impacts of SFIA upon its

surrounding communities, app., infra, 17a.

The court of appeals did not explicitly reject San Fran-

cisco’s contention that the FAA had no legal authority to

base a finding of default on the basis of a de novo review

and redetermination of the Commission’s April 15, 1986

adjudicatory determination. Nevertheless, by relying upon

the Q707 noise data as the factual basis for its decision

upholding the FAA, the court of appeals was clearly re-

jecting San Francisco’s contention, app., infra, 7a-8a.*°

* Because the court of appeals decision does not deal explicitly with

this issue, we reproduced in the Appendix the relevant portion of the

brief to the court of appeals, app., infra, 131a.

*e San Francisco submitted out of time a petition for rehearing and

suggestion for rehearing en banc shortly after the court of appeals

issued the decision in Alaska Airlines v. City of Long Beach, Nos. 88-

67745, 89-55278 (9th Cir. October 24, 1991) (‘‘Alaska Airlines”’). The

petition was based upon a conflict between the decision in this case

and the decision in Alaska Airlines. The court of appeals denied per-

mission to file the petition out of time, app., infra, 25a.

REASONS FOR GRANTING THE WRIT

A. The Question of Whether a Federal Grantee Can

be Found in Default Under Its Grants on the Basis

of a Redetermination of Its Otherwise Final Ad-

judicatory Determinations, Where the Grant Stat-

utes and Regulations are Silent on the Issue,

Implicates Important Issues of Federalism and of

Limits on the Spending Power and Should Be De-

cided By This Court.

This petition ra.ses the substantial and recurring ques-

tion of the relationship between the Federal Government

and the States and local governments when a dispute arises

under a federal-state or local grant program. This case

involves one of the largest of these grant programs, the

program under which airport proprietors receive grants

for the construction, repair, and improvement of airport

and airway facilities and for certain noise abatement proj-

ects.2” As is the case with other federal-state or local grant

programs, the governmental airport proprietor enters into

a grant agreement with the federal agency administering

the program, in this case the FAA, and thereby agrees

to comply with various grant assurances or conditions con-

tained in the agreement.

The FAA asserted in this case the power to determine

default under the grant assurance on the basis of its in-

dependent fact-finding process by which the FAA would

determine facts and reach conclusions based on those facts

without any deference whatsoever to the local govern-

mental process.” San Francisco, in the 1978 Noise Abate-

* See Airport and Airway Improvement Act, 49 U.S.C. app. 2201 et

seq.

** These facts upon which the FAA relied in determining default have

still not been made available to the San Francisco Airports Commission.

The noise data on the Q707 were disclosed to San Francisco’s outside

legal counsel under a protective order which prohibits disclosure to any

ment Regulation, established a fair and reasonable fact-

finding process whereby an operator seeking a waiver from

the Regulation was given the right to an adjudicatory hear-

ing before the Airports Commission. Burlington exercised

its right to a hearing, in which the FAA and members of

the public also participated.*® No participant has contended

that the Commission’s conduct of the hearing was not fair,

reasonable and in accordance with California law.*

San Francisco had no notice when it signed the airport

grant agreements that it had given up important aspects

of its sovereignty, by which it was free to make regulatory

decisions by means of fair and reasonable procedures and

by which it was free to reach rational conclusions from

the facts found by means of those procedures. Not only

had the San Francisco decisional process been in place

since 1978 before many of the relevant grants had been

signed, but the grants contained no language, explicit or

otherwise, to suggest that they empowered the grant-ad-

ministering agency to supplant the administrative proc-

esses of the governmental airport proprietor.*!

San Francisco official. San Francisco was unsuccessful in getting the

ALJ’s protective order modified to permit disclosure of the noise data

under protective order to the Airports Director and the Airports Gen-

eral Counsel.

* Burlington participated in the hearing through the submission of

written and oral evidence. The FAA, although present at the hearing,

participated only through the submission of written evidence.

%* Under California iaw, the Airports Commission acted as an adju-

dicatory body when it held the noticed hearing on March 18, 1986. At

the hearing, the Airports Commission received written and orai testi-

mony, oral testimony was transcribed, written testimony was placed in

a formal record, and the Commission prepared a written decision based

on the record before it. As a result, the Commission’s factual findings

have binding and preclusive collateral estoppel effect under California

law. People v. Sims, 32 Cal. 3d, 468, 477-479, 186 Cal. Rptr. 77, 82-

85, 651 P.2d 321, 325-28 (1982).

| Neither had the FAA adopted regulations or published policies which

stated that the FAA intended to supplant grantee administrative de-

In Pennhurst State School and Hospital v. Halderman,

451 U.S. 1 (1981), this Court emphasized the voluntary,

consensual and contractual nature of grant programs:

[L]jegislation enacted pursuant to the spending

power is much in the nature of a contract: in

return for federal funds, the States agree to com-

ply with federally imposed conditions. The legit-

imacy of Congress’ power to legislate under the

spending power thus rests on whether the State

voluntarily and knowingly accepts the terms of

the ‘“‘contract.”’

451 U.S. at 17; see also Guardians Association v. Civil

Service Commission of the City of New York, 463 U.S. 582,

596, cert. denied, 463 U.S. 1228 (1983) (plurality opinion

of White, J.) (“[T]he receipt of federal funds under typical

Spending Clause legislation is a consensual matter: the

State or other grantee weighs the benefits and burdens

before accepting the funds and agreeing to comply with

the conditions attached to their receipt.’’); Hendrick Hud-

son District Board of Education v. Rawley, 458 U.S. 176,

204 n.26 (1982).

This Court has also stated in Pennhurst and in cases

decided thereafter that Congress must express its intent

to impose conditions on federal grant funds ‘‘clearly,”’ ‘“‘un-

ambiguously,” and “with a clear voice,” so that grant

recipients “‘can knowingly decide whether or not to accept

those funds.” Pennhurst, 451 U.S. at 17, 24; see also Grove

City College v. Bell, 465 U.S. 555, 575 (1984) (‘‘Congress

is free to attach reasonable and unambiguous conditions

to federal financial assistance that educational institutions

are not obligated to accept.’’); South Dakota v. Dole, 483

U.S. 203, 207 (1987); see also School Board of Nassau

County v. Arline, 480 U.S. 278, 289 (1987) (Rehnquist,

C.J., dissenting).

terminations for purposes of determining a default under the airports

grants program.

20)

These constraints on grant programs derive not only

from limits on the spending power but also reflect impor-

tant federalism considerations. Because the power of Con-

gress to legislate in areas traditionally regulated by the

States ‘‘is an extraordinary power in a federalist system,”

it is a power that this Court ‘“‘must assume Congress does

not exercise lightly.”” Gregory v. Ashcroft, 111 S.Ct. 2395,

2400 (1991). As a result, this Court has imposed ‘‘the

requirement of clear statement” on Congress, so that the

Court is assured that the Congress has clearly and man-

ifestly intended to preempt state or local legislative judg-

ments. Will v. Michigan Dept. of State Police, 109 S.Ct.

2304, 2308 (1989).

When this Court has in the past considered the rela-

tionship between state or local administrative processes

and federal fact-finding, this Court has upheld the preclu-

sive effect of fair and reasonable state or local adminis-

trative processes, unless Congress has clearly manifested

its intent to permit federal review or redetermination. Uni-

versity of Tennessee v. Elliott, 478 U.S. 788 (1986). This

court has repeatedly stated that principles of federalism

and comity require deference to, and not interference with,

the lawful processes of state and local administrative agen-

cies. University of Tenn., 478 U.S. at 796-99; Ohio Civil

_ Rights Comm’n. v. Dayton Christian Schools, Inc., 477 U.S.

619, 627-29 (1986); Middlesex County Ethics Comm. v. Gar-

den State Bar Ass’n, 457 U.S. 423 (1982).

The airport grant program, like other federal-state or

local government grant programs, was clearly enacted by

Congress under the spending power for the purpose of

providing financial assistance to grantees for specified cat-

egories of projects. Congress was not purporting to adopt

a regulatory program pursuant to its Commerce Clause

powers and was certainly not purporting to prescribe the

procedures to be used by local airports when adopting or

enforcing noise abatement measures. Congress clearly

knew how to prescribe the procedures to be used by local

airport proprietors, when it wished to do so. See Airport

Noise and Capacity Act of 1990, Section 9304, 49 U.S.C.

App. 2153.

Both the court of appeals and the FAA rejected San

Francisco’s contention that it had never received clear and

unambiguous notice that that its fair and reasonable ad-

ministrative process would be entirely supplanted by an

FAA fact-finding process under which the FAA could re-

view and redetermine final adjudicatory determinations of

the Commission. As a result, San Francisco never had

notice that it could be found in default on the basis of

facts which were never available to it when it made the

decision which allegedly constituted the default. If the

FAA’s position is not overturned, grantees could find

themselves in default on the basis of facts and circum-

stances of which they had no possible knowledge and in-

deed despite, as in this case, a fair and reasonable

procedure for gathering the relevant facts at the time of

the alleged default.

Even were San Francisco’s position to be upheld, Con-

gress or a grant-administering agency possessing appro-

priate statutory authority would have the power to provide

for de novo review and redetermination of grantees’ ad-

judicatory determinations, provided the grantee was pro-

vided a clear and unambiguous notice of that fact at the

time it entered into the grant. When an agency provides

such advance notice to grantees, political constraints or

the refusal of grantees to participate in the grant program

would serve as a check on the grant-administering agency.

Whether the FAA has authority to review state or local

agency adjudicatory determinations, at least where the

state or local agency has engaged in a fair and reasonable

administrative process, is clearly of decisive importance to

this case.** Both the FAA Administrator’s Decision and

% With the passage of San Francisco’s 1988 Noise Abatement Reg-

the court of appeals decision is based upon the finding

that aircraft are noisier than the Q707 at full power and

maximum takeoff weight. There is no dispute, and the ALJ

expressly found, that the Airports Commission did not have

access to Q707 proprietary noise data at the time of its

waiver decision, app., infra, 85a. Indeed, the Q707 noise

data was only made available by order of the ALJ to San

Francisco’s outside counsel twenty months after the waiver

denial. Further, the FAA itself first detected an error in

the publicly available data upon which the Airports Com-

mission relied in its waiver decision—an FAA-sponsored

study—a full two years after the waiver denial. Therefore,

a finding that the FAA did not have the authority to

review and redetermine de novo the adjudicatory deter-

minations of the Airports Commission would necessitate a

reversal of the FAA Administrator’s determination and a

remand under which any FAA default determination could

not involve redetermination of the Airports Commission’s

adjudicatory determination.*

For the foregoing reasons, San Francisco respectfully

suggests that this issue raises important federalism and

Spending Clause issues that require resolution by this

Court.

ulation, Burlington was invited to apply for a variance to operate at

SFIA. The Commission stated that any Burlington variance application

would be decided ‘‘fairly and without any pre-conceived outcome’’ by

an independent hearing officer. R.319 at Exhibits 15, 17. The Airports

Commission has, thus, not had an opportunity to consider the Q707

noise data upon which the FAA relied.

% The FAA would, thus, function much the way this Court functions

in reviewing decisions of state courts. Except in certain narrow cir-

cumstances, this Court does not review and redetermine issues of fact

or questions of state law determined by state courts.

B. The Scope of Airport Proprietor Power to Control

Noise From Airport Operations Is of Great Public

Importance and Only This Court Can Resolve the

Conflict of the Lower Courts on the Scope of This

Power.

The scope of the authority of an airport proprietor to

take action to control the noise from airport operations is

an issue of overwhelming public importance over which

the lower courts are in clear disarray. According to the

FAA, in 1990 an estimated 2.7 million individuals were

within the 65 DNLdB noise contours around the nation’s

airports. Transition to an All Stage 3 Fleet Operating in

the 48 Contiguous United States and the District of Co-

lumbia, 56 Fed. Reg. 48,628, 48,652 (1991).** Virtually all

major airports have adopted noise abatement measures,

the nature and form of which vary widely.** These airport

proprietor noise abatement measures have been challenged

in a substantial number of cases in the eighteen years

since this Court’s decision in City of Burbank v. Lockheed

Air Terminal Inc., 411 U.S. 624 (1973).**

* The 65 DNLGB is a measure of sound level used by the FAA, in

which the 24-hour average sound level is obtained after the addition

of ten decibels to sound levels for periods between 2200 and 700 local

time. See Airport Noise Compatibility Planning, 14 C.F.R. Part 150

(1991).

*s Noise abatement measures are in effect at 147 airports in the

United States. 1991 Airport Noise Summary, National Business Aircraft

Association, Inc.

%* See e.g., Global Int’l Airways Corp. v. Port Auth. of N.Y. & N.J..

731 F.2d 127 (2d Cir. 1984); Global Int’l Airways Corp. v. Port Auth.

of N.Y. & N.J., 727 F.2d 246 (2d Cir. 1984); Pirolo v. City of Clear-

water, 711 F.2d 1006 (11th Cir. 1983); British Airways Bd. v. Port

Auth. of N.Y. & N.J., 564 F.2d 1002 (2d Cir. 1977); British Airways

Bd. v. Port Auth. of N.Y. & N.J., 558 F.2d 75 (2d Cir. 1977); Rosenbalm

Aviation, Inc. v. Port Auth. of N.Y. & N.J., 636 F. Supp. 212 (S.D.N.Y.

1986); Arrow Air, Inc. v. Port Auth. of N.Y., 602 F. Supp. 314 (S.D.N.Y.

1985); National Aviation v. City of Hayward, Cal., 418 F. Supp. 417

(N.D. Cal. 1976); Air Transport Ass’n. of Am. v. Crotti, 309 F. Supp.

The courts that have been called upon to review the

lawfulness of these noise abatement regulations, where

they have articulated standards of review at all, have

adopted standards which range from the rational or rea-

sonable basis test advocated by San Francisco,” to one

which virtually impose a per se ban on certain forms of

noise abatement regulation.*

Moreover, several state courts have imposed nuisance

or tort law liability upon airport proprietors for their fail-

ure to undertake noise abatement activities.*® These cases

have effectively laid down a requirement that airport pro-

prietors adopt any measures that could feasibly lessen the

noise impacts on surrounding residents.*° Indeed, San

58 (N.D. Cal. 1975); Harrison v. Schwartz, 319 Md. 360, 572 A.2d 528

(1990); Hanover Tp. v. Town of Morristown, 108 N.J. Super. 461, 261

A.2d 692 (1969).

* F.g., Santa Monica Airport Ass’n City of Santa Monica, 659 F.2d

100, 104, n.5 (9th Cir. 1981) (Airport proprietor should be allowed to

enact noise ordinances “‘if it has a rational belief that the ordinance

will reduce the possibility of liability or enhance the quality of the city’s

human environment.’’); Global Int’l Airways Corp. v. Port Auth., 727

F.2d at 251 (‘{TJhe reasonable prospect of a beneficial effect is suf-

ficient’’ to uphold the Port Authority’s noise regulation.) Arrow Air,

Inc. v. Port Auth. of N.Y., 602 F. Supp. at 319-320 (S.D.N.Y. 1985)

(reasonableness and discrimination determined based on standard in

City of New Orleans v. Dukes.)

% F.g., Pirolo v. City of Clearwater, supra; Harrison v. Schwartz,

supra; Hanover Tp. v. Town of Morristown, supra.

%® See, e.g., Northeast Phoenix Homeowners’ Ass'n v. Scottsdale Mu-

nicipal Airport, 130 Ariz. 487, 636 P.2d 1269 (1981); Baker, supra;

Greater Westchester, supra; Owen v. City of Atlanta, 157 Ga. App. 365,

277 S.E.2d 338, aff'd, 248 Ga. 299, 282 S.E.2d 906 (1981), cert. denied,

456 U.S. 972 (1982); Ursin v. New Orleans Aviation Bd., 506 So.2d

947 (La. App. 5th Cir. 1987); Krueger v. Mitchell, 112 Wis. 2d 88, 101,

332 N.W.2d 733, 739 (1983).

* The Solicitor General argued in an amicus curiae brief in opposition

to the grant of certiorari in the Greater Westchester case that an airport

proprietor’s state common law nuisance liability for noise is not

Francisco was found liable in nuisance on just such a the-

ory. See p.3, supra. The Seventh Circuit recently held that

the common law remedies of Illinois for airport noise and

pollution have not been preempted by federal law. The

Court reasoned that if Burbank allowed the state some

role in governing noise from its airports, the state can

choose to exercise that role through its state courts. Biene-

man v. City of Chicago, 864 F.2d 463, 470-72 (7th Cir.

1988), cert. denied, 490 U.S. 1080 (1989). Local airport

proprietors are literally caught between the Scylla of vary-

ing and uncertain constraints on their authority to adopt

noise abatement measures and the Charybdis of nuisance

or tort liability if they fail to take all effective action to

control noise.

The “{cjontrol of noise is of course deep-seated in the

police powers of the States,” City of Burbank v. Lockheed

Air Terminal, 411 U.S. at 638, as is the control of other

threats to the quality of the environment. Huron Portland

Cement Co. v. City of Detroit, 362 U.S. 440 (1960). Despite

the absence of any explicit preemption of state or local

authority over control of the noise from airport operations

in prior federal legislation,*#! this Court in Burbank held

preempted by federal law. Amicus Curiae In Opposition to Petition for

Certiorari, City of Los Angeles v. Westchester Homeowners Ass’n, 449

U.S. 820 (1980) (No. 79-1406).

*' Indeed, the committee reports on the 1968 and 1972 federal avia-

tion legislation relied upon by the Burbank majority stated that the

legislation was not intended ‘‘to effect any change in the existing ap-

portionment of powers between the Federal and State and local gov-

ernments.”’ S. Rep. No. 1353, 90th Cong., 2d Sess. (1968), reprinted

in 1968 U.S.C.C.A.N. 2688, 2693. Similar statements appear in the

House and Senate Reports on the Noise Control Act of 1972. H.R.

Rep. No. 842, 92d Cong. 2d Sess. (1972); S. Rep. No. 1160, 92d Cong.,

2d Sess. 10-11, reprinted in 1972 U.S.C.C.A.N. 4655, 4663-64. The

latter statements are quoted in Burbank, 411 U.S. at 634. San Fran-

cisco believes that the dissent in Burbank, concluding that there was

no implied preemption of local noise abatement authority, represented

the better view of the law. See Burbank, 411 U.S. at 640-654 (Rehn-

that a municipality acting in its governmental capacity was

prohibited from adopting a curfew on jet flights into an

airport located within its boundaries. However, this Court

left open the possibility that such a regulation could be

adopted by a municipality acting in its capacity as an air-

port proprietor. Burbank, 411 U.S. at 635-36 n.14.

Subsequent to Burbank, all courts that have considered

the question have upheld the authority of an airport pro-

prietor to take action to limit the noise impact of airport

operations although the courts have differed widely as to

the scope of that authority. In the proceedings before the

FAA and the court of appeals, San Francisco relied upon

the standard that had been enunciated by the Ninth Circuit

in 1981: “(The airport proprietor] should be allowed to

define the threshold of its liability, and to enact noise

ordinances under the municipal proprietor exemption if it

has a rational belief that the ordinance will reduce the

possibility of liability or enhance the quality of the city’s

human environment.’ Santa Monica Airport Ass'n v. City

of Santa Monica, 659 F.2d 100, 104 n.5 (9th Cir. 1981).

This standard was recently reaffirmed by a different panel

of the Ninth Circuit than that which considered this case.

Alaska Airlines v. City of Long Beach, slip op. at 14547.

On facts analogous to those presented by San Francisco's

noise abatement rules, the federal courts in New ‘York

upheld an airport proprietor rule “grandfathering’’ non-

stop flights from Denver into LaGuardia Airport even

though the rule contained no cap on the number of “‘grand-

fathered’’ flights allowed to operate along the route. West-

ern Air Lines v. Port Authority of N.Y. & N.J., 658

F.Supp. 952 (S.D.N.Y. 1986), affd, 817 F.2d 222 (2d Cir.

1987), cert. denied, 485 U.S. 1006 (1988).

Both the FAA and the court of appeals clearly rejected

the standard being advocated by San Francisco without

quist, J., dissenting). In view of events since 1973, it may now be

appropriate for the Court to revisit its holding in Burbank.

articulating an alternative standard which would define

when an airport proprietor’s noise abatement regulation

was not “fair and reasonable’’ or constituted “unjust dis-

crimination.”” To the extent the court of appeals enunciated

a standard at all, the standard was a vague one as to

whether the noise abatement regulation is “inconsistent

with a fair and efficient national air transportation sys-

tem,” app., infra, 16a. The FAA and the court of appeals

also rejected San Francisco’s reliance upon cases in which

this Court has been asked to determine, under the Equal

Protection Clause, whether local economic regulation is

unfair or unjustly discriminatory.

As this Court has articulated the test it has adopted

under the Equal Protection Clause, there can be little doubt

that San Francisco’s 1978 Noise Abatement Regulation

would be upheld. San Francisco had an entirely adequate

basis for concluding that a long-noticed deadline on new

Stage 2 entrants at SFIA, especially as part of a policy

which called for the phased elimination of all Stage 2 air-

craft, would control airport noise by excluding a noisy class

of aircraft and by encouraging a shift to the less noisy

Stage 3 aircraft. Under this Court’s rational or reasonable

basis test, it would hardly be irrelevant, as the FAA and

court of appeals found, that even on the FAA’s noise data

the Q707 was noisier than all but a handful of aircraft

operating at SFIA, amounting to just 1.5% of SFIA’s op-

erations, and that admission of the Q707 could lead to the

admission of hundreds of equally noisy Stage 2 aircraft

retrofitted after January 1, 1985.

Under the Equal Protection Clause, where a local eco-

nomic classification is challenged as discriminatory courts

must “presume the constitutionality of the statutory dis-

criminations and require only that the classification chal-

lenged be rationally related to a legitimate state interest.”

City of New Orleans v. Dukes, 427 U.S. 297, 303 (1976).

Governmental bodies are not required to convince courts

of the correctness of their legislative judgments. Instead,

“those challenging the legislative judgment must convince

the court that the legislative facts on which the classifi-

cation is apparently based could not reasonably be con-

ceived to be true by the governmental decisionmaker.”

Vance v. Bradley, 440 U.S. 93, 111 (1979). Those chal-

lenging governmental action “cannot prevail so long as ‘it

is evident from all the considerations ... that the question

is at least debatable.’ ’’ Minnesota v. Clover Leaf Creamery

Co., 449 U.S. 456, 464 (1981) (quoting United States v.

Carolene Products Co., 304 U.S. 144, 153-54 (1938)). More-

over, state regulatory bodies ‘“‘may take one step at a time,

addressing itself to the phase of the problem which seems

most acute to the legislative mind ... [and] may select

one phase of one field and apply a remedy there, neglect-

ing the others.”’ Williamson v. Lee Optical of Oklahoma,

Inc., 348 U.S. 483, 489 (1955).

Although the FAA Administrator asserted that ‘‘the

Commission's noise control regulation implicated both the

Supremacy Clause and the Commerce Clause,” app., in/ra,

49a, (emphasis supplied), the FAA staff never alleged,

much less did the FAA Administrator actually find, that

San Francisco’s noise abatement regulation constituted a

burden on interstate commerce or that it was otherwise

preempted by federal law. Neither the FAA nor the court

of appeals was prepared to hold that San Francisco’s noise

abatement ordinance, which applies equally to interstate

and intrastate flights, violated the Commerce Clause. In-

deed, the Ninth Circuit in Alaska Airways upheld the Long

Beach noise abatement regulation against a Commerce

Clause attack, applying a standard under which “the or-

dinance would violate the commerce clause only if the

particular means chosen to achieve its goals were irra-

tional, arbitrary or unrelated to these [noise abatement]

goals.” Alaska Airways, slip op. at 14551.#

“ Under this Court's decisions under the dormant Commerce Clause,

this Court has held that where a state or local agency “‘{is] legislating

Given the varying and uncertain standards adopted by

the lower courts on the scope of an airport’s proprietors

noise abatement authority, only this Court is in a position

to end the disarray and adopt a uniform standard. While

Congress last year adopted certain procedural require-

ments before an airport proprietor can adopt a restriction

on Stage 2 aircraft, Congress expressly provided that

‘nothing in this subtitle shall be deemed to eliminate, in-

validate, or supersede—(1) existing law with respect to

airport noise or access restrictions by local authorities.”’

Airport Noise and Capacity Act of 1990, Section 9304(h),

49 U.S.C. app. 2153(h). Controversies as to scope of airport

proprietor noise authority will, thus, continue under the

recent legislation.

Moreover, because of the complete record in this case

and the extensive arguments and opinions below, this case

represents an especially appropriate vehicle to resolve the

appropriate scope of the airport proprietary noise abate-

ment authority.

in areas of legitimate local concern, such as environmental protection

... [and where] a statute regulates ‘evenhandedly’ and imposes only

‘incidental’ burdens on interstate commerce,” the local regulation can-

not be struck down unless “ ‘the burden imposed on such commerce

is clearly excessive in relation to the putative local benefits.’ Min-

nesota v. Clover Leaf Creamery Co., 449 U.S. at 471, quoting Pike vy.

Bruce Church, Inc., 397 U.S. 137, 142 (1970). In this case the FAA

never made findings as to the “local benefits’’ of the 1978 Regulation

and, indeed, the ALJ excluded evidence which San Francisco sought

to introduce demonstrating the substantial noise benefits of the regu-

lation. The record was, therefore, inadequate to make a Commerce

Clause finding.

CONCLUSION

The petition for a writ of certiorari should be granted.

Of Counsel:

LouIsE H. RENNE

City Attorney

DONALD J. GARIBALDI

Airports General Counsel

CRAIG M. McCABE

Deputy City Attorney

San Francisco Intl. Airport

San Francisco, CA 94126

(415) 876-2236

Dated: December 19, 1991

Respectfully submitted,

STEVEN S. ROSENTHAL*

HAROLD J. MCELHINNY

JONATHAN BAND

MORRISON & FORESTER

2000 Pennsylvania Ave., N.W.

Suite 5500

Washington, D.C. 20006

(202) 887-1500

Attorneys for Petitioners

*Counsel of Record

APPENDIX

APPENDIX A

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Crry AND CounTY OF SAN

FRANCISCO; THE AIRPORTS

COMMISSION OF THE CrTy AND

ia a cia No. 89-70055

etitioners,

‘ . FAA No.

; 1386-2

cag AVIATION ADMINISTRATION; OPINION

ARTMENT OF TRANSPORTATION,

NATIONAL TRANSPORTATION SAFETY

BOARD,

Respondents.

County oF SAN MATEO,

Petitioner,

¥. No. 89-70053

FEDERAL AVIATION ADMINISTRATION; > FAA No.

DEPARTMENT OF TRANSPORTATION, 1386-2

NATIONAL TRANSPORTATION SAFETY

BOARD,

Respondents.

Crry AND COUNTY OF SAN

FRANCISCO; THE AIRPORTS

COMMISSION OF THE CITY AND

CounTy OF SAN FRANCISCO,

Petitioners,

Vv.

FEDERAL AVIATION ADMINISTRATION;

DEPARTMENT OF TRANSPORTATION,

NATIONAL TRANSPORTATION SAFETY

BOARD,

Respondents,

BURLINGTON AIR EXPRESS

(**BURLINGTON’’),

Respondent-Intervenor.

Crry AND COUNTY OF SAN

FRANCISCO; THE AIRPORTS

COMMISSION OF THE Crry AND

CounTy OF SAN FRANCISCO,

Petitioners,

FEDERAL AVIATION ADMINISTRATION;

DEPARTMENT OF TRANSPORTATION,

NATIONAL TRANSPORTATION SAFETY

Boarb,

Respondents.

No. 89-70057

FAA No.

1386-2 .

No. 89-70482

FAA No.

1386-2

Crry AND CounTy oF SAN

FRANCISCO; THE AIRPORTS

COMMISSION OF THE CITy AND

County OF SAN FRANCISCO,

Petitioners,

Vv.

FEDERAL AVIATION ADMINISTRATION;

DEPARTMENT OF TRANSPORTATION,

NATIONAL TRANSPORTATION SAFETY

BOARD,

Respondents.

Counry oF SAN MATEO,

Petitioner,

Vv.

FEDERAL AVIATION ADMINISTRATION;

DEPARTMENT OF TRANSPORTATION,

NATIONAL TRANSPORTATION SAFETY

BOARD,

Respondents.

No. 89-70483

FAA No.

1386-2

No. 89-70500

FAA No.

1386-2

Petition to Review a Decision of the

Federal Aviation Administration

Argued and Submitted

November 5, 1990—San Francisco, California

Filed August 21, 1991

Before: James R. Browning, Harry Pregerson and

Stephen S. Trott, Circuit Judges.

Opinion by Judge Browning

SUMMARY

Administrative Law

Affirming in part and reversing in part a decision of the

Federal Aviation Administration, the court of appeals held

that San Francisco’s ban of certain aircraft from its airport

unjustly discriminated against the aircraft in violation of its

grant assurance.

The FAA denied petitioner City and County of San Fran-

CiscO airport improvement grants from the Airport and Air-

way Trust Fund. To receive funds, an airport proprietor must

Submit a grant application to the Secretary of Transportation

assuring the airport to which the project relates will be avail-

able for public use on fair and reasonable terms and without

unjust discrimination. San Francisco submitted grant applica-

uons for fiscal years 1986 through 1989. The FAA rejected

the applications on the ground San Francisco had violated the

assurance of nondiscrimination by unjustly discriminating

against a retrofitted aircraft through a noise abatement resolu-

tion. Such regulation prohibited such aircraft from continuing

operations at the Airport. An ALJ determined that San Fran-

cisco had breached its assurance that it would operate the Air-

port without unjust discriminauon. The FAA affirmed.

[1] At the outset, the court rejected San Francisco’s conten-

tion that the court should decide de novo as a matter of con-

tract interpretation whether San Francisco violated its grant

assurance. This contention misunderstood the nature of fed-

eral regulation of airport noise. [2] The court noted that the

federal government regulates aircraft and airspace perva-

sively, preempting regulation of aircraft noise by state or local

governments. [3] The power delegated to airport proprietors

to adopt noise control regulations is limited to regulations that

are not unjustly discriminatory. [4] Courts have recognized

both the delegation of regulatory power to airport proprietors

and the limitation of this power to the issuance of nondiscrim-

inatory regulations. [5] Grants must be offered upon terms

and conditions the Secretary of Transportation considers nec-

essary to meet the requirements of the statute, and a grant

application may not be approved unless the Secretary is satis-

fied that regulatory and statutory requirements have been met.

[6] The court accorded substantial deference to the interpre-

tation adopted by the agency charged with administering the

statute. Deference was especially appropriate because Con-

gress expressly mandated FAA enforcement of the statute by

the Secretary, and application of the statute to airport noise

regulations requires technical expertise. [7] Here, the FAA

approved the ALJ’s holding that because San Francisco’s

noise regulation allowed planes that were equally noisy or

noisier to operate at the airport and increase in number with-

out limit, while exciuding the aircraft at issue based on a char-

acteristic that had no bearing on noise, the regulation violated

the statutory requirement and grant assurance that the airport

would be available without unjust discrimination. [8] The

court agreed with the FAA. The central issue was whether

San Francisco’s regulation was unjustly discriminatory within

the meaning of the statute, and the Second Circuit’s Concorde

Cases were sound authority for the conclusion that it was. [9]

In this case, use of noise control regulations by an airport pro-

prietor to bar aircraft on a basis other than noise, or without

a factual basis, was found to be inconsistent with a fair and

efficient national air transport system. This test of “unjust

discrimination” was a permissible construction of the statu-

tory language and the policy it serves. [10] The court rejected

San Francisco’s suggestion that a state contract defense could

authorize it to adopt a noise regulation prohibited by federal

law. [11] San Francisco argued Burlington failed to exhaust

its administrative remedies by not seeking a waiver of the

1988 regulation. However, the FAA correctly concluded that

such an application would have been futile.

[12] In 1987, Congress imposed a 180-day limit on the time

the FAA could take to consider airport improvement grant

applications. [13] The statutory language is mandatory, leav-

ing the FAA no discretion. It compels timely approval or

denial of grant applications. [14] The FAA argued the statute

did not apply retroactively and so did not compel approval of

grants for the years 1986 and 1987. San Francisco agreed, but

noted it refiled the grant applications for these years after the

statute was amended. The FAA pointed to no bar to refiling

applications for previous years. The court therefore held the

refiled applications were subject to the 180-day limitation

period in the same way as newly filed ones. Therefore, the

FAA was directed to approve San Francisco’s applications for

those years. [15] It was not an abuse of the district court’s dis-

cretion in denying San Mateo County (where the airport is

located) more than limited intervenuon.

COUNSEL

Steven S. Rosenthal, Morrison & Foerster, Washington, D.C.,

for the petitioners. Porter Goltz, Deputy County Counsel,

County of San Mateo, Redwood City, California, for the peti-

tioners.

John A. Bryson, United States Department of Justice, Wash-

ington, D.C., for the respondents.

John W. Simpson, Kelley Drye & Warren, Washington, D.C.,

for the intervenor.

Kenneth R. Williams, Deputy Attorney General, and Larry A.

Thelen, Department of Transportation, Sacramento, Califor-

nia, for the amicus.

OPINION

BROWNING, Circuit Judge:

The City and County of San Francisco petitions for review

of a decision of the Federal Aviation Administration (FAA)

denying San Francisco’s applications for airport improvement

grants from the Airport and Airway Trust Fund. We affirm in

part and reverse in part.

The Airport and Airway Trust Fund is made up of amounts

equivalent to taxes on aviation fuel and air transportation

received by the Treasury. See 26 U.S.C. § 9502 (1988).

Money from the Trust Fund is allocated, pursuant to The Air-

port and Airway Improvement Act of 1982, 49 U.S.C. app.

§§ 2201-27 (1988), to finance the operation and improvement

of major airports. Potential recipients include “primary

airports” like San Francisco International Airport. See 49

U.S.C. app. §§ 2202(a)(12), 2205(a)(2)(B).

To receive funds from the Trust Fund, an airport proprietor

must submit a grant application to the Secretary of Transpor-

tation assuring the “airport to which the project relates will be

available for public use on fair and reasonable terms and with-

Out unjust discrimination. ...” 49 U.S.C. app. § 2210(a)(1).

San Francisco submitted grant applications for fiscal years

1986 through 1989. The FAA rejected the applications on the

ground San Francisco had violated the assurance of nondis-

crimination by unjustly discriminating against a retrofitted

Boeing 707 airplane (Q707) through a Noise Abatement Res-

olution adopted by San Francisco's Airports Commission in

1978 (“1978 Regulation’).

The FAA establishes standards for aircraft noise levels

through a certification system. See 49 U.S.C. §§ 1423, 1431.

Aircraft are certified as Stage 1 (not allowed to operate in the

U.S. after 1985), Stage 2, and Stage 3 (most quiet) based on

the decibels they emit. See 14 C.F.R. Part 36 (1991). Stage 1

aircraft may be retrofitted to meet Stage 2 standards; the Q707

involved in this case is such a retrofitted Stage | aircraft.

San Francisco’s 1978 Regulation prohibited aircraft from

continuing operations at the Airport after January 1, 1985

unless certified as Stage 2 (or Stage 3) or retrofitted to meet

Stage 2 certification requirements. Aircraft like the Q707 that

had been retrofitted to meet Stage 2 certification requirements

could begin operations at the Airport after January 1, 1985,

only if the FAA had certified at least one plane of the same

type as meeting Stage 2 requirements before January 1, 1985.

Because FAA regulations required Stage 3 certification for

new aircraft after November 1975, the practical effect of San

Francisco’s regu!ation was that only Stage 3 aircraft and

“grandfathered” Stage 2 aircraft were allowed to operate at

the Airport after January 1, 1985.

Burlington Air Express, an all-cargo carmer, applied to the

San Francisco Airports Commission in August 1985 for a

waiver of the 1978 Regulation so it could operate several

retrofitted Q707s at the Airport. These planes received Stage

2 certfication from the FAA in March 1985, three months

after San Francisco’s cutoff date of January 1, 1985. Burling-

ton’s waiver application was denied. Since the denial, Bur-

lington has operated its Q707s from Oakland Airport across

San Francisco Bay.

While Burlington’s waiver request was pending before the

Commission, Burlington filed a complaint with the FAA. The

FAA’s Chief Counsel issued a Notice of Proposed Cease and

Desist Order, alleging exclusion of Burlington’s Q707 aircraft

was unjustly discriminatory in violation of section 2210(a)(1)

and San Francisco’s grant assurance.‘ The notice suspended

airport improvement grants to San Francisco.

After a hearing, a Department of Transportation Adminis-

trative Law Judge held San Francisco had breached its assur-

ance that it would operate the Airport without unjust

discrimination. The Administrator of the FAA affirmed, hoid-

ing the 1978 Regulation unjustly discriminatory because it

‘The Chief Counsel alleged the exclusion violated other statutes, but

these charges were laier dismissed.

allowed planes that were equally noisy or noisier than Q707s

to operate at the Airport and to increase in number without

limit while excluding the Q707, based on a characteristic —

date of type-certification as meeting Stage 2 requirements —

that had no relationship to noise. The FAA denied San Fran-

cisco’s grant applications and withheld approval of new

grants while the regulation remained in effect. San Francisco

petitioned for review in this court.

[1] We reject at the outset San Francisco’s contention we

should decide de novo as a matter of contract interpretation

whether San Francisco violated its grant assurance. This con-

tention misunderstands the nature of federal regulation of air-

port noise. It also misunderstands the role of the Airport and

Airway Improvement Act, which denies federal funds to air-

port proprietors who exceed their regulatory authority by

denying use of an airport on an unjustly discriminatory basis.

[2] The federal government regulates aircraft and airspace

pervasively, preempting regulation of aircraft noise by state or

local governments. City of Burbank v. Lockheed Air Terminal,

Inc., 411 U.S. 624, 633 (1973). However, Congress reserved

a limited role for local airport proprietors in regulating noise

levels at their airports. See Santa Monica Airport Ass'n v. City

of Santa Monica, 659 F.2d 100, 104 (9th Cir. 1981)

(“Congress intended that municipal proprietors enact reason-

able regulations to establish acceptable noise levels for air-

fields and their environs.”); see also City of Burbank, 411

U.S. at 635 n.14.; San Diego Unified Port Dist. v. Gianturco,

651 F.2d 1306, 1316 (9th Cir. 1981).

[3] Congress made it clear, however, that the power dele-

gated to airport proprietors to adopt noise control regulations

is lumited to regulations that are not unjustly discriminatory.

When the Federal Aviation Act was amended in 1968 to

extend the FAA’s authority to regulate aircraft noise, the Sen-

10a

ate Report accompanying the bill quoted with approval a let-

ter from the Secretary of Transportation. The letter set forth

the existing limited authority of airport proprietors to adopt

nondiscriminatory noise regulations and stated that the 1968

amendment would not alter that limited authority:

the proposed legislation will not affect the rights of

a State or local public agency, as the proprietor of an

airport, from issuing regulations or establishing

requirements as to the permissible level of noise

which can be created by aircraft using the airport.

Airport owners acting as proprietors can presently

deny the use of their airports to aircraft on the basis

of noise considerations so long as such exclusion is

nondiscriminatory.

S. Rep. No. 1353, 90th Cong., 2d Sess. (1968), reprinted in

1968 U.S. Code Cong. & Admin. News 2688, 2694.

[4] Courts have recognized both the delegation of regula-

tory power to airport proprietors and the limitation of this

power to the issuance of nondiscriminatory regulations. See

City of Burbank, 411 U.S. at 635 n.14 (quoting the Secretary

of Transportation’s letter); British Airways v. Port Auth. of

New York (Concorde I), 558 F.2d 75, 84 (2d Cir. 1977) (a

local airport proprietor “is vested only with the power to pro-

mulgate reasonable, nonarbitrary and non-discriminatory reg-

ulations that establish acceptable noise levels for the airport

and its immediate environs”); British Airways v. Port Auth. of

New York, 564 F.2d 1002, 1011 (2d Cir. 1977) (Concorde II)

(maintaining “a fair and efficient system of air commerce...

mandates that each airport operator be circumscribed to the

issuance of reasonable, nonarbitrary and nondiscriminatory

rules defining the permissible level of noise which can be cre-

ated by aircraft using the airport”).

Although Congress has revisited the issue of how best to

control airport noise on a number of occasions, it has declined

lla

to alter the delegation to airport proprietors of the limited

noise control authority described in the Secretary's 1968 let-

ter. See S. Rep. No. 1160, 92d Cong., 2d Sess. (1972),

reprinted in 1972 U.S. Code Cong. & Admin. News 4655,

4663 (accompanying Noise Control Act of 1972) (“[t]his does

not address responsibilities or powers of airport operators

...’); S. Rep. No. 52, 96th Cong., 2d Sess. 13 (1980),

reprinted in 1980 U.S. Code Cong. & Admin. News 89, 101

(accompanying Aviation Safety and Noise Abatement Act of

1979) (“[NJothing in the bill is intended to alter the respective

legal responsibilities of the Federal Government and local air-

port proprietors for the control of aviation noise.”).’

[5] The conditions Congress imposed on the grant to local

airport proprietors of money from the Airport and Airway

Trust Fund are designed in part to insure the maintenance of

conditions essential to an efficient national air transport sys-

tem, including access to airports on a reasonable and nondis-

criminatory basis. Section 2210(a) of the Airport and Airway

Improvement Act of 1982 requires the Secretary of Transpor-

tation to obtain certain assurances from airport proprietors as

a condition of receiving a grant from the Fund. The first of

these conditions is that the Secretary must

receive assurances in writing, satisfactory to the Sec-

retary that - (1) the airport to which the project

relates will be available for public use on fair and

reasonable terms and without unjust discrimination

*Neither the FAA or this Court has considered whether the Airport

Noise and Capacity Act of 1990, 49 U.S.C. app. §§ 2151-58, alters this

division of responsibility since the Act was passed after the administrative

proceedings were completed. We also note, but do not consider, Congress’

1990 declaration that the Airport and Airway Improvement Act “should be

administered in a manner consistent with” the goal of “preventing unjust

and discriminatory practices, including as they may be applied between

category and class of aircraft.” 49 U.S.C.A. app. $ 2201(a)(5) (1991) (em-

phasis added).

12a

49 U.S.C. app. § 2210(a)(1).* Grants must be offered upon

terms and conditions the Secretary considers necessary to

meet the requirements of the statute, 49 U.S.C. § 2211(a), and

the Secretary may not approve a grant application unless the

Secretary is satisfied that this and other requirements of the

statute have been met. 49 U.S.C. app. § 2208(b)(1)E.

Pursuant to this statutory scheme, San Francisco received

grant offers requiring San Francisco to assure the Secretary,

in language tracking the statute, that it would operate its Air-

port on a fair and reasonable basis and without unjust discrim-

ination. A grant agreement based on such an offer is not an

ordinary contract, but part of a procedure mandated by Con-

gress to assure federal funds are disbursed in accordance with

Congress’ will. Whether San Francisco violated this assurance

depends upon whether its regulation conflicted with the statu-

tory condition imposed by section 2210(a)(1) and incorpo-

rated in the grant contract.‘

[6] While we review questions of statutory interpretation

de novo, we accord substanual deference to the interpretation

adopted by the agency charged with administering the statute.

Utility Reform Project v. Bonneville Power Admin., 869 F. 2d

437, 442 (9th Cir. 1989). The FAA’s interpretation of what

constitutes unjust discrimination within the meaning of

section 2210(a)(1) will be upheld unless it is unreasonable.

See id. Deference is especially appropriate because Congress

*The conditioning of federal grants to airport proprietors on assurances

the airport will be available “for public use on fair and reasonable terms

aod without unjust discnmination” has a long history. The language in the

present Act is taken directly from its predecessor, the Airport and Airway

Development Act of 1970, Pub. L. No. 91-258, Title I, § 18, 84 Stat. 229

(1970), which continued the language from its predecessor, the Federal

Airport Act, Pub. L. No. 79-377, § 11, 60 Stat. 176 (1946).

“Because the relevant language in the 1982 airport improvement act and

its 1970 predecessor is identical, see supra note 3, it is irrelevant whether

the particular grant assurances al issue were made pursuant tO one act or

the other.

13a

expressly mandated FAA enforcement of the statute by the

Secretary (who delegated that duty to the Administrator) and,

as the administrative record in this Case demonswrates, appli-

cation of the statute to airport noise regulations requires tech-

nical expertise.

The Administrative Law Judge found San Francisco had

excluded the Q707 under the noise regulation because San

Francisco had concluded the Q707 was noisier in takeoff than

any other aircraft using the Airport. The ALJ found San Fran-

cisco’s determination had been mistaken, and that other air-

craft permitted to use the Airport under the regulation were as

noisy or noisier than the Q707. The FAA Administrator

stated:

[San Francisco] has apparently abandoned its con-

tention that the aircraft’s takeoff noise exceeded that

of all other aircraft at [the Airport]. Indeed,

[San Francisco] concedes the correctness of the Ini-

tial Decision’s factual findings that during the period

the Q707 has been denied permission to operate at

the Airport, 15 other models of aircraft, emitting as

much or more noise than the Q707, have been per-

mitted to operate there; and that operators of these

airlines have been permitted to increase the number

of flights with these aircraft types. [San Francisco]

also does not dispute that at least 560 takeoffs and

landings are performed each month at [the Airport]

by six aircraft models noisier than the Q707.

The factual assumption on which San Francisco denied a

waiver to the Q707 was similarly mistaken. San Francisco

based the denial on its conclusion the Q707 met Stage 2 stan-

dards through the use of thrust cutbacks and decibel tradeoffs,

l4a

and would therefore be noisier in takeoff than all other aircraft

at the Airport. The ALJ found, on substantial evidence, many

aircraft models operating at the Airport, including aircraft

models conducting more than half the departures from the

Airport in 1985, also met Stage 2 requirements through the

use of cutbacks and tradeoffs, and, as mentioned earlier, some

of these planes were as noisy or noisier in takeoff than the

Q707.

[7] The Administrator approved the ALJ’s holding that

because San Francisco’s noise regulation allowed planes that

were equally noisy or noisier than Q707s to operate at the

Airport and increase in number without limit, while excluding

the Q707 based on a characteristic that had no bearing on

noise (date of type-certification as meeting Stage 2 require-

ments), the regulation violated the requirement of section

2210(a)(1) and of San Francisco’s grant assurance that the

Airport would be available “without unjust discrimination.”

The Administrator noted

[e}xclusion of the Q707 based on the date of modifi-

cation, rather than the date of complying operation is

neither rational nor reasonable. The date of retrofit is

irrelevant to the amount of noise an aircraft emits.

[8] We are satisfied that the Administrator’s interpretation

of section 2210(a)(1), and therefore of the grant assurance,

was reasonable. The Administrator held the

issue to be resolved was whether [San Francisco’s]

actions were discriminatory, as demonstrated by the

evidentiary record and application of appropriate

decisional law. In this respect, the ALJ’s reliance on

the Concorde Cases was proper.

We agree with the Administrator. The central issue was

whether San Francisco’s regulation was unjustly discrimina-

tory within the meaning of the statute, and the Second Cir-

15a

cuit’s Concorde Cases were sound authority for the

conclusion that it was.°

Concorde I recognized that the interest in a safe and effi-

cient national air transport system reflected in the federal leg-

islative scheme required that local airport proprietors exercise

their power to control airport noise in a reasonable and non-

discriminatory fashion and in conformity with federa’ law,

including specifically the requirement that airports be

“available for public use on fair and reasonable terms and

without unjust discrimination.” 558 F.2d at 85. Concorde II

applied this principle to enjoin an airport proprietor from fur-

ther delaying access to its airport by a supersonic plane when

the record established the supersonic plane sausfied the

decibel-based noise standard applied by the airport proprietor

to subsonic aircraft that were permitted to use the airport. The

court stated the decision was based in part upon the court’s

obligation to enforce “the proprietor’s observance of the strict

Statutory obligation to make his facility available for public

use on fair and reasonable terms, and without unjust discrimi-

nation ....” 564 F.2d at 1011.

In Concorde II, as in the present case, the action of an air-

port proprietor purporting to exercise delegated authority to

reguiate noise was held to constitute “unjust discrimination”

*The FAA Administrator rejected San Francisco’s contention that the

equal protection clause provides the measure of legality of San Francisco’s

noise regulation. San Francisco argued New Orleans v. Dukes, 427 U.S.

297 (1976), provided the appropnate test. As the Administrator noted,

however, New Orleans v. Dukes applies only when the Equal Protection

Clause alone is invoked and not, as in this case, “when local regulation is

Challenged under the Supremacy Clause as inconsistent with relevant fed-

eral laws... .” 427 U.S. at 304 0.5.

San Francisco’s argument its exclusion of the Q707 was valid because

it had a reasonable belief the Q707 was noisier than all other planes is

based on its mistaken reliance on equal protection law and was properly

rejected by the FAA. In any event, the ALJ found San Francisco did not

have such a reasonable belief.

16a

within the meaning of the statute when the action resulted in

denial of use of the airport to planes that met noise standards

applied to other aircraft allowed use of the eT Concorde

II, 564 F.2d at 1012.°

[9] In the present case, as in the Concorde Cases, use of

noise control regulations by an airport proprietor to bar air-

craft on a basis other than noise, or without a factual basis,

was found to be inconsistent with a fair and efficient national

air transport system. This test of “unjust discrimination” is a

permissible construction of the language of section 2210(a)(1)

and the policies it serves.

San Francisco argues its noise regulation is valid because

San Francisco had a rational basis for believing the regulation

would reduce Airport noise levels by eliminating the Q707,

admittedly a noisy aircraft, and encouraging a shift to quieter

Stage 3 aircraft. The argument rests in part upon the conten-

tion that equal protection law provided the appropriate test for

*Similarly, in Santa Monica Airport Ass’n. v. City of Santa Monica, we

struck down a ban on the operation of jet aircraft on the basis of noise

under the commerce and equal protection clauses because the quality and

quantity of noise emitted by the jets had no greater tendency to immtate and

annoy than that emitted by permitted prop planes. Sania Monica, 659 F.2d

100, 105 (9th Cir. 1981), affirming 481 F. Supp. 927, 943-44 (C.D. Cal.

1979). Although the statutory prohibition against “unjust discrimination”

was not applicable, the district court indicated it would have rejected an

argument that “grant agreement rights and the Federal Aviation Act obli-

gations are any broader or different than the constitutional issues.” 481

F. Supp. at 946.

San Francisco’s reliance on Global Int’! Airways v. Port Auth. of New

York 727 F.2d 246 (2d Cir. 1984) (Global 1), as support for its regulation

is misplaced. Global / held airport proprietor noise regulations could be

aimed at reducing cumulative noise levels rather than barring aircraft that

exceeded a maximum decibel level, but also noted aircraft could only be

denied use of an airport “on the basis of non-discriminatory noise criteria.”

Global I, 727 F.2d at 248. The court did not decide whether the noise reg-

ulation before it was unjustly discriminatory. See Global Int’! Airways v.

Port Auth. of New York, 731 F.2d 127, 130 0.1 (2d Cir. 1984) (Global IN.

17a

evaluating the regulation, a contention the Administrator

properly rejected. See supra note 5. Moreover, it was not

unreasonable for the FAA to interpret the statute as requiring

more than that San Francisco’s regulation reduce noise, since

the statute required the Airport be available “without unjust

discrimination,” a requirement obviously important to an effi-

cient national air transport system dependent upon flights by

particular aircraft to various airports along a national route.

Exclusion of jet-propelled or supersonic aircraft would have

reduced noise, yet the discmmunatory exclusion of these

planes was held to be beyond the power of local airport pro-

pnietors. See Santa Monica, 659 F.2d at 105; Concorde II, 564

F.2d at 1012.

San Francisco also argues it reasonably denied the Q707 a

waiver because allowing Burlington’s Q707s to operate

would increase the cumulative noise level at the Airport by

“opening the floodgates” to operauons by Q707s owned by

others as well as to other Stage | aircraft retrofitted after the

cut-off date. Again, the FAA was not required to approve a

discriminatory regulatory scheme simply because it may have

had the effect of reducing noise. It was only because of the

1978 Regulation that the Q707 had to apply for a waiver in

the first place; that San Francisco might find non-

discriminatory grounds for barring the Q707 once the waiver

Stage was reached does not validate the discriminatory regula-

tory scheme itself.

San Francisco argues its 1978 regulation is a lawful exer-

cise in “grandfathering” under New Orleans v. Dukes, 427

U.S. 297 (1976), which rejected an equal protection challenge

to a local regulation that banned pushcart vendors but

exempted vendors who had operated eight years or more. See

also Western Air Lines v. Port Auth. of New York, 817 F.2d

222, 226 (2d Cir. 1987) affirming 658 F. Supp. 952, 959-60

(S.D.N.Y. 1986) (uphoiding an exercise of “grandfathering”

in airport regulation). The FAA questioned the applicability

of Dukes to this case, which does not involve an equal protec-

18a

tion challenge and does involve an explicit statutory prohibi-

tion against unjust discrimination. In any event, San

Francisco’s 1978 Regulation does not grandfather planes, but

types of planes. The number of takeoffs and landings by air-

craft as noisy or noisier than the Q707 at San Francisco Air-

port could actually increase rather than decrease as a result of

the regulation, refuting the contention it was simply an exer-

cise in “grandfathering.”

San Francisco argues it cannot ban the noisiest types of air-

craft from its Airport because five of the six models noisier

than the Q707 are Boeing 747s, crucial for long-distance

international travel, and it would be impractical and an undue

burden on interstate commerce to ban them. Even if true, this

would not justify exclusion of the Q707 on the basis of a fac-

tor — date of type-certification as meeting Stage 2 standards

— unrelated to noise.

San Francisco asserted a defense of impossibility to the

allegation it had breached its grant assurances, claiming its

noise regulation was necessary to comply with California law.

California requires airport proprietors to meet certain noise

standards or obtain a variance to continue operating. See Cal.

Pub. Util. Code §§ 21661-669.6; 21 Cal. Code of Regulations

§§ 5000-90. See also Air Transport Ass'n of America v.

Crotti, 389 F. Supp. 58, 61-62 (N.D. Cal. 1975) (descnbing

California’s regulatory scheme). In 1982 San Francisco

obtained a variance from the California Department of Trans-

portation requiring that San Francisco “not knowingly permit

or authorize any activity in conjunction with the Airport

which results in an increase of the size of the noise impact

area....” The version of the variance still in force commits

San Francisco to “continue reducing the number of dwelling

units located within the 65 [decibel] or greater’ range of the

Airport. San Francisco argues that admitting the Q707 would

violate the terms of this variance.

19a

[10] We reject San Francisco’s suggestion that a state con-

tract defense could authorize San Francisco to adopt a noise

regulation prohibited by federal law. Assuming the contrary,

however, there is no merit in the defense. As the FAA pointed

out, San Francisco failed to show that admitting the Q707

would violate the variance. Moreover, we note that the 1978

Regulation was not the only method San Francisco might

choose to comply with the variance; the Q707 could be barred

from operating at the Airport if the regulation barring it was

not unreasonably discriminatory.’

[

In 1988, San Francisco adopted a new noise regulation

requiring, effective in 1989, all carriers conduct at least 25%

of their operations at the Airport with Stage 3 aircraft. Since

Burlington has announced it will continue to use only Stage

2 aircraft, San Francisco argues the new regulation will pre-

vent Burlington from operating at the Airport independently

of the 1978 Regulation, and therefore, mooted any previous

violation of San Francisco’s assurance based on the 1978

Regulation.

Even if Burlington were to buy enough Stage 3 planes to

comply with the 25% requirement, however, its remaining

Q707s still would be excluded, while other operators combin-

ing “grandfathered” Stage 2 retrofits with Stage 3 aircraft

"Because San Francisco was not required by California law to adopt its

1978 Regulation, the FAA correctly held California was not a necessary

party to the admunistrative proceeding. California, as amicus Curie, agrees

California law did not subject San Francisco to imconsistent obligations

and that Califormmia was not a necessary party. However, Californi> urges

us to reject language in the FAA Admunistrator’s ruling that California's

efforts at airport noise control through variances are preempted by federal

law, arguing the Admunistrator’s broad language about federal preemption

stems from a misreading of our decision in San Diego Unified Port Dist.

v. Gianturco, 651 F.2d 1306 (9th Cir. 1981). Resolution of the issue is not

necessary tO Our decision, and we decline to address it.

20a

would not be. Thus, San Francisco’s regulatory scheme con-

tinues to discriminate against the Q707.

{11] San Francisco argues Burlington failed to exhaust its

administrative remedies by not seeking a waiver of the 1988

resolution. The FAA correctly concluded such an application

would be futile: the same discrimination against the Q707

exists under the 1988 regulation as under the 1978 Regula-

tion, for which a waiver was denied.

(12] In 1987, Congress amended the Airport and Airway

Improvement Act to impose a 180-day limit on the time the

FAA may take to consider airport improvement grant applica-

tions. The amendment, codified at 49 U.S.C. app. § 2218(b)

(1), provides:

The Secretary may not withhold approval of a grant

application ... for a violation of an assurance or

other requirement of this chapter unless —

(A) the Secretary provides the applicant with an

opportunity for a hearing; and

(B) within 180 days after the date of such applica-

tion or the date the Sec? wary first knows of such

noncompliance, whichever is later, the Secretary

makes a determination that the violation has

occurred.

The parties agree the FAA did not deny or approve San Fran-

cisco’s grant applications for fiscal years 1986 through 1989

within the mandated period. San Francisco argues the FAA is

required by section 2218(b) to set aside the airport improve-

ment funds at issue even if we uphold the FAA’s decision that

the noise regulation violates the statute and San Francisco’s

assurance. We agree in part.

2la

[13] The statutory language is mandatory, leaving the FAA

no discretion. It compels timely approval or denial of grant

applications. The House bill originally set the limit at 90 days.

The Senate-House conference extended the deadline to 180

days with the stated expectation that the FAA “will adopt pro-

cedural schedules which will permit cases to be completed in

180 days, without depriving parties to the cases of procedural

due process.” H.R. Conf. Rep. No. 484, 100th Cong., 1st Sess.

69, reprinted in 1987 U.S. Code Cong. & Admin. News 2533,

2644. The purpose of the amendment can be inferred from the

deadlines placed on appropriations of entitlement funds. If

such funds are not obligated to an airport by the end of the

second fiscal year following the final year to which the enti-

tlement applies, the entitlement will lapse. See 49 U.S.C. app.

§ 2207(a). Delay in approving the grant application, or in

administrative review of a denial, would put the funds in dan-

ger of lapsing without a final judgment that could be judi-

cially reviewed. See City and County of San Francisco v.

Engen, 819 F.2d 873, 875 (9th Cir. 1987). Congress appar-

ently sought to avoid this danger by mandating a prompt deci-

sion by the FAA.

[14] The FAA argues the statute does not apply retroac-

tively and so does not compel approval of grants for the years

1986 and 1987. San Francisco agrees, but notes it refiled the

grant applications for these years after the statute was

amended. The FAA points to no bar to refiling applications

for previous years. We hold the refiled applications are sub-

ject to the 180-day limitation period in the same way as newly

filed ones.

The FAA argues grant approval would be meaningless.

Section 2218(b) allows the Administrator to continue to with-

hold already-obligated payments for another 180 days without

a hearing or decision. The FAA argues it had a total of 360

days to decide whether or not to withhold payment, and met

that deadline. It would be a “useless gesture,” the FAA con-

22a

cludes, to order grant approval when the Administrator may

refuse to pay.

We disagree with the FAA’s reading of the statute. If Con-

gress had wanted to establish a single 360-day period for

grant approval and fund disbursement, it could easily have

said so. This case does not require us to decide whether the

FAA may decline to disburse the funds generated by the Ccur-

rent grant applications, and we leave that question to another

day.

Finally, the FAA argues San Francisco should be estopped

from invoking the 180-day time limit because San Francisco's

own refusal to abide by a tighter discovery schedule caused

the delay. San Francisco presented evidence it proposed the

discovery schedule in reliance on the FAA’s representation

the proceeding was not the required statutory “hearing” under

section 2218(b). The FAA does not suggest the discovery pro-

posal was improperly motivated. In any case, even under the

FAA’s proposed schedule, completion of the hearing and

administrative appeal process within the required period

would have been difficult if not impossible.

Although the FAA admits it failed to approve or deny

San Francisco’s fiscal year 1986 and 1987 applications within

the statutory period, it argues its December 12, 1988 decision

finding San Francisco in violation of grant assurances for the

1986 and 1987 fiscal years, and rejecting San Francisco’s

applications for these years and while the discriminatory regu-

lation remained effective, disposed of the need to consider

future grant applications until San Francisco cured the default.

We agree. It would be a useless paper-shuffling for the FAA

to respond each year to a grant request premised on identical

circumstancés as the grant request rejected the previous year.

San Francisco was entitled to have its applications approved

under the statute only for the 1986 and 1987 fiscal years.

23a

The County of San Mateo (San Mateo) appeals the ALJ’s

decision to deny it full intervenor status. San Mateo was not

allowed to offer tesumony, file motions, or participate in

arguments and settlement negotiations, although it did file

briets and observe the proceedings. Intervention in FAA pro-

ceedings is permissive under FAA regulations if the interve-

nor “has a property or financial interest thai may not be

adequately represented” and “intervention will not unduly

broaden the issues or delay the proceedings.” 14 C.F.R.

§ 13.51 (1991). San Mateo’s interest in this case stems from

San Francisco International Airport’s location in San Mateo

County, and the effects of Airport noise on at least 20,000

County residents. The ALJ concluded San Francisco could

adequately represent San Mateo’s interest in enforcing the

regulation.

San Mateo argues San Francisco could not adequately rep-

resent its interests because San Mateo and San Francisco Air-

port had been adversaries in previous state noise variance

permit proceedings. However, the relevant consideration is

whether the interests of the parties diverged in this proceed-

ing, not in any other. See United States v. American Tele-

phone and Telegraph Co., 642 F.2d 1285, 1293 (D.C. Cir.

1980) (adequacy of representation must be assessed in rela-

tion to the specific purpose of intervention). San Francisco

had the same incentive as San Mateo to support the 1978

noise regulation. It was not an abuse of discretion to deny San

Mateo County more than limited intervention.

[15] We affirm the FAA’s determination that the 1978 Reg-

ulation violated San Francisco’s grant assurance. We also

affirm the FAA’s decision that California was not a necessary

party to the administrative proceeding, and the FAA’s deci-

sion to deny San Mateo County full intervenor status. How-

24a

ever, we direct the FAA to approve San Francisco’s

applications for fiscal years 1986 and 1987 because the FAA

failed to comply with 49 U.S.C. app. § 2218(b).

AFFIRMED in part, REVERSED in part. Each party to

bear its own costs on appeal.

DFo

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 89-70055

CITY AND COUNTY OF SAN FRANCISCO; THE

AIRPORTS COMMISSION OF THE CITY AND COUNTY

OF SAN FRANCISCO,

Petitioners,

FEDERAL AVIATION ADMINISTRATION; DEPARTMENT

OF TRANSPORTATION, NATIONAL TRANSPORTATION

SAFETY BOARD,

Respondents.

No. 89-70053

COUNTY OF SAN MATEO,

Petitioner,

FEDERAL AVIATION ADMINISTRATION; DEPARTMENT

OF TRANSPORTATION, NATIONAL TRANSPORTATION

SAFETY BOARD,

Respondents.

26a

No. 89-70057

CITY AND COUNTY OF SAN FRANCISCO: THE

AIRPORTS COMMISSION OF THE CITY AND COUNTY

OF SAN FRANCISCO,

Petitioners,

FEDERAL AVIATION ADMINISTRATION; DEPARTMENT

OF TRANSPORTATION, NATIONAL TRANSPORTATION

SAFETY BOARD,

Respondents,

BURLINGTON AIR EXPRESS (“BURLINGTON’’),

Respondent-Intervenor.

No. 89-70482

CITY AND COUNTY OF SAN FRANCISCO: THE

AIRPORTS COMMISSION OF THE CITY AND COUNTY

OF SAN FRANCISCO,

Petitioners,

FEDERAL AVIATION ADMINISTRATION; DEPARTMENT

OF TRANSPORTATION, NATIONAL TRANSPORTATION

SAFETY BOARD,

Respondents.

Zia

No. 89-70483

CITY AND COUNTY OF SAN FRANCISCO; THE

AIRPORTS COMMISSION OF THE CITY AND COUNTY

OF SAN FRANCISCO,

Petitioners,

FEDERAL AVIATION ADMINISTRATION; DEPARTMENT

OF TRANSPORTATION, NATIONAL TRANSPORTATION

SAFETY BOARD,

Respondents

No. 89-70500

COUNTY OF SAN MATEO,

Petitioner,

FEDERAL AVIATION ADMINISTRATION; DEPARTMENT

OF TRANSPORTATION, NATIONAL TRANSPORTATION

SAFETY BOARD,

Respondents.

ORDER

Before: BROWNING, PREGERSON and TROTT, Circuit

Judges.

San Francisco’s petition for rehearing and suggestion

for rehearing en banc is untimely, See Fed.R.App.P. 35(c),

40(a), and an extension of time is denied. San Francisco’s

petition will not be filed.

28a

APPENDIX C

U.S. DEPARTMENT OF TRANSPORTATION

FEDERAL AVIATION ADMINISTRATION

WASHINGTON, D.C.

FAA Docket No. 13-86-2

In Re

San Francisco Airports Commission

ADMINISTRATOR’S DECISION AND FINAL ORDER

OF NONCOMPLIANCE AND DEFAULT

SYNOPSIS:

The Administrator has determined that actions of the

San Francisco Airports Commission excluding a Burlington

Air Express Stage 2 compliant Q707 aircraft from San

Francisco International Airport violate Assurance No. 20

of grant agreements between the Commission and the Fed-

eral Aviation Administration under the Airport and Airway

Development Act of 1970, which require the Commission

to operate the airport for the use and benefit of the public

on fair and reasonable terms and without unjust discrim-

ination. Accordingly, the Federal Aviation Administration’s

temporary suspension of funding approvals for San Fran-

cisco International Airport projects is affirmed and made

final. In addition, no further applications for grant funds

involving the San Francisco International Airport shall be

approved until the Commission complies with its grant

obligations.

I. BACKGROUND

The San Francisco Airports Commission (‘‘Commis-

sion’’), operator of the San Francisco International Airport

(“SFIA”’), for the proprietor, the City and County of San

29a

Francisco, is charged with actions constituting unjust dis-

crimination and, thus, noncompliance with and default of

certain contractual obligations (assurances) contained in

various grant agreements entered into with the Federal

Aviation Administration (FAA) for receipt of Federal

funds. The charge is based on the Commission’s refusal,

pursuant to its noise abatement regulations, to permit Bur-

lington Air Express, a cargo airline, to operate FAR (Fed-

eral Aviation Regulation) Part 36 (14 C.F.R. Part 36) Stage

2 compliant retrofitted Boeing Q707 aircraft at SFIA, be-

ginning in 1985, while, at the same time, allowing as noisy

or noisier Stage 2 aircraft to operate.

In November 1984, Burlington purchased eight used

B707-300, Stage 1 aircraft, which were to be operated by

Southern Air Transport (“SAT’’) under lease. Over the

next year, the aircraft were retrofitted with hush kits to

satisfy the Stage 2 noise standards of Part 36 and were

redesignated as Q707s. On March 6, 1985, the FAA issued

a supplemental type certificate for the first of the retro-

fitted aircraft, finding it in compliance with the Part 36

Stage 2 noise standards. By April 16, 1985, seven of the

planes had been certificated as Stage 2 noise compliant.

On September 20, 1985, Southern Air Transport sought

permission to operate the Q707 at SFIA, beginning No-

vember 1, 1985, by filing an application for a waiver! of

Commission Resolution 78-0131, a 1978 noise abatement

regulation which provided, in part:

In order to continye operating at San Francisco

International Airport all commercial jetpowered

transport type aircraft, which are of an aircraft

type now operating at San Francisco Interna-

' Pursuant to this Resolution, the Commission permitted aircraft types

not previously operated at SFIA (e.g., the Q707) to commence opera-

tions only if the aircraft type had been certified by the FAA as meeting

Part 36 requirements prior to January 1, 1985. The Resolution also

autnorized a ‘‘waiver’” of this date requirement by the Commission.

30a

tional Airport must: (1) be certified under the

Federal Aviation Regulations-Part 36 Noise

Standards; or (2) be replaced prior to January 1,

1985, with an aircraft that is certified under Fed-

eral Aviation Regulations-Part 36: or (3) receive

currently approved retrofit mocifications so as to

be in compliance with FAR 36 as implemented

by Subpart E, FAR Part 91. Retrofit modifica-

tions must be accomplished no later than January

1, 1985.

In order to operate at San Francisco Interna-

tional Airport all commercial jetpowered trans-

port type aircraft, subsonic or supersonic, which

are of a type not presently operating at San

Francisco International Airport must be certified

under Federal Aviation Regulations-Part 35 Noise

Standards prior to commencing operation.

On October 17, 1985, Louis A. Turpen, Director of Air-

ports, denied the request for a waiver of Resolution 78-

0131. The reasons stated for denial were that the Q707’s

compliance with Part 36 Stage 2 standards relied on the

“decibel tradeoff’ and “thrust cutback”’ procedures of Part

36; that the Q707’s noise at takeoff was 2dB higher than

the maximum authorized for Stage 2 compliance, which

would make that aircraft noisier at takeoff than any other

aircraft at SFIA;° and that the Airport was required to

reduce its noise impact area under the terms of its vari-

ance from a California noise law. FAA Counsel Notice,

Exh. 8.

Following the Commission’s denial of waiver, negotia-

tions about operating the Q707 at SFIA ensued among

? These procedures, specifically permitted by Part 36 to achieve Stage

2 standards, are set out at 14 C.F.R. § 36.7(c) and § 36.5(b), and are

described in the Initial Decision (“‘I.D."’) at 4-5, n. 3.

3 See, n. 4, infra.

3la

the Commission, FAA officials, Burlington, and SAT, but

these efforts were not successful. During this time, the

Commission also adopted, on December 17, 1985, Airport

Operations Bulletin 85-07-AOB, which stated that waivers

would not be granted for any aircraft type that relied on

“cutback”’ or “‘tradeoff’’ to meet Stage 2 noise standards

on take off. FAA Counsel Notice, Exh. 12. In addition, a

series of letters to the Commission from various FAA

officials affirmed the validity of the cutback and tradeoff

provisions and cautioned the Commission that its exclusion

of the Burlington Q707 appeared arbitrary and unjustly

discriminatory under applicable Federal statutes and grant

agreements. See, e.g., FAA Counsel Notice, Exh. 11.

On January 9, 1986, the Airport Director informed an

FAA official that further consideration of Burlington’s re-

quest would require resubmission of the waiver application,

this time as a request for a variance, in order to “‘exhaust

administrative remedies.’’ FAA Counsel Notice, Exh. 13.

Burlington sought the variance, and the Commission re-

ceived information regarding the application on March 18,

1986. The Commission issued Resolution 86-0073 on April

15, 1986, denying Burlington a variance and affirming its

earlier decision not to permit Q707 aircraft to operate at

SFIA.* FAA Counsel Notice, Exh. 16. On May 1, 1986,

Burlington requested reconsideration of the Commission’s

Resolution (FAA Counsel Notice, Exh. 17); on May 12,

the Airport Director denied reconsideration. FAA Counsel

Notice, Exh. 18.

Following the Commission’s initial refusal in October

1985, and after negotiations proved unsuccessful, Burling-

ton filed a complaint with the Federal Aviation Adminis-

‘One of the Resolution’s findings was that without cutback, the Q707

was “‘significantly louder in takeoff mode than any other aircraft per-

mitted to operate at SFIA since January 1, 1985.’’ Exh. 16. Evidence

at hearing demonstrated that this finding was incorrect. Initial Decision

at 7-9. The Commission subsequently abandoned this contention.

32a

tration on April 2, 1986, pursuant to 14 C.F.R. § 13.5

(FAA Counsel Notice, Exh. 1). The Commission responded

on June 24, 1986, denying that its actions were arbitrary

or discriminatory.

On July 7, 1986, the Federal Aviation Administration’s

Office of Chief Counsel (‘‘FAA Counsel’) commenced an

enforcement proceeding against the Commission by filing

a ‘‘Notice of Proposed Cease and Desist Order’ (“FAA

Notice’) charging that unjustly discriminatory, unreason-

able, arbitrary, and in violation of statute (49 U.S.C. 1701

et seqg.; 49 U.S.C. 2201 et seg.; and 49 U.S.C. 1349(a)) and

of various assurances in grant agreements for Federal

funding for SFIA the Commission had entered into with

the FAA. On the same day, FAA Counsel temporarily

suspended approval of Commission applications for Federal

airport funds, pending the outcome of this proceeding.

On January 22, 1988, the Commission repealed its 1978

Resolution (78-0131), replacing it with a new resolution

(Resolution 88-0016), which serves as the basis for the

Commission’s continuing exclusion of the Q707. Section

4(a) of Resolution 88-0016 states:

... [a]n aircraft will be permitted to commence

or continue operation at SFIA only if it is a

Stage 3 aircraft or a Stage 2 aircraft of a type

of Stage 2 aircraft operating at SFIA on or be-

fore January 1, 1985.

II. APPEAL OF PREHEARING RULINGS

This proceeding, initiated by the July 7, 1986 Notice of

Proposed Cease and Desist Order, was assigned to United

States Department of Transportation Chief Administrative

Law Judge (ALJ) William A. Kane, Jr., on August 27,

1987. The proceeding has been lengthy, due, at least in

part, to a number of motions and related rulings, both

procedural and substantive, filed prior to the commence-

ment of hearing on May 2, 1988. Following issuance of

33a

the ALJ’s Initial Decision on August 9, 1988, the Com-

mission, FAA Counsel, Burlington, SAT, and San Mateo

County appealed, pursuant to 14 C.F.R. § 13.20, the Initial

Decision and various rulings rendered by the ALJ during

the course of the proceeding. Parties filed briefs on Sep-

tember 19, 1988, and reply briefs on October 11. Appeals

concerning the various prehearing rulings will be consid-

ered first.

A. Dismissal of Charges

The July 1986 Notice contained five charges. FAA

Counsel charged that the Commission’s actions in exclud-

ing Burlington were: (1) a violation of § 18 of the Airport

and Airway Development Act of 1970, 49 U.S.C. § 1701

et seq. (‘1970 Act’’) and (2) a violation of §511 of the

Airport and Airway Improvement Act of 1982, 49 U.S.C.

§ 2201 et seg. (‘1982 Act’’), both of which require written

assurances from grantees that the airport to which a fed-

erally funded project relates ‘“‘... [will be available for

public use on fair and reasonable terms and without unjust

discrimination. .. .’’; (3) a violation of assurances contained

in the grant agreements between the Commission and the

FAA executed under the 1970 Act; (4) a violation of iden-

tical assurances contained in grant agreements executed

under the 1982 act, in all of which the Commission prom-

ised that SFIA ‘will be available for public use on fair

and reasonable terms and without unjust discrimination’;

and (5) a violation of § 308(a) of the Federal Aviation Act,

49 U.S.C. § 1439(a), which prohibits an airport from pro-

viding an ‘“‘exclusive right for the use of any landing area

or air navigation facility upon which federal funds have

been expended.”

On March 13, 1987, the Commission failed a motion to

dismiss or to strike the July 1986 Notice.* On August 13,

*FAA Counsel and Burlington each filed an answer opposing the

motion on April 10, 1987; the Commission filed a reply on April 20,

34a

1987, the ALJ issued an order® granting, in part, the Com-

mission’s motion and ordering the case to proceed to hear-

ing on only one of the charges: the alleged violation of

Assurance No. 20 of grant agreements entered into be-

tween the Commission and the FAA under the 1970 Act.’

FAA Counsel and Burlington appeal the ALJ’s dismissal

of three of the charges.

1. 1982 Act Statutory and Grant Assurance Charges

FAA Counsel and Burlington contend that the ALJ’s

dismissal of the Notice’s statutory and grant assurance

charges based on the Airport and Airway Improvement

Act of 1982, on the grounds of lack of subject matter

jurisdiction, was in error. The ALJ ruled that he lacked

jurisdiction to consider charges based on the 1982 Act

because the procedural regulations governing this case, 14

C.F.R. Part 13, had not been updated to list the 1982 Act

among the statutes covered by these procedural regula-

tions.’

The procedural regulations of 14 C.F.R. Part 13, “‘In-

vestigative and Enforcement Procedures,” contain the rules

of practice for FAA hearings (Subpart D). These are not

substantive regulations. Part 13 contains no guidelines re-

1987; and FAA Counsel and Burlington filed sur-replies on April 30,

1987.

* Petitions for reconsideration of the August 13 order were filed, and

the ALJ vacated portions of that order and issued an amended order

on November 3, 1987. That order reiterated the dismissal of all but

one of the Notice charg?»

’The ALJ also made substantive rulings on several matters in his

August 13, 1987 order. Certain of those rulings are also appealed, and

are treated separately in this Decision and Final Order.

* Because the procedural regulations list the Airport and Airway De-

velopment Act of 1970, the Administrative Law Judge did not dismiss

the charge of grant assurance violation related to grants under that

Act; however, the ALJ dismissed the 1970 Act’s statutory charge,

finding that the 1970 Act had been repealed by enactment of the 1982

Act. No party has appealed dismissal of that charge.

35a

garding the manner in which charges of statutory or con-

tractual violations related to the Airway and Airport

Improvement Act of 1982, or any other statute, are to be

interpreted. Substantive standards of the 1982 Act are set

forth in that Statute; Congress created the standards and

assigned the FAA the duty of implementing and enforcing

them. The Part 13 regulations are procedural only; as such,

they are not, and cannot be, jurisdiction for a proceeding.

Even if no Part 13 regulations existed, the FAA could

enforce its grant agreements as long as due process was

afforded the grant recipients.

It is unclear why the ALJ misapprehended the proce-

dural nature of the Part 13 regulations, or why he failed

to distinguish procedural from substantive regulations. Re-

gardless of his reasons, however, I find that the ALJ’s

dismissal of the charges related to the 1982 Act was clear

error.

FAA Counsel urges that I issue a ruling on the 1982

Act charges, pursuant to the authority of §§ 509 and 511

of the 1982 Act. In support of this argument, FAA Counsel

points out that the 1982 Act did not substantively change

the applicable nondiscrimination requirements of the 1970

Act, and that the grant assurances the Commission agreed

to as a condition for receipt of Federal funds under both

Acts are identical. Given the identity of the statutory pro-

visions and grant assurances, it is likely that the record

established in this proceeding and affirmance of the ALJ’s

substantive finding of discrimination under the 1970 Act

grant assurances, discussed infra, would be sufficient to

support a determination that the Commission violated grant

assurances it entered under the 1982 Act. The Commis-

sion, however, contends that this case must be remanded

to the ALJ for further proceedings, should it be deter-

mined that dismissal of the charges related to the 1982

Act was improper.

However, I find I need not formally decide this issue.

In view of the affirmance of the ALJ’s substantive findings

36a

and imposition of the remedy sought by FAA Counsel,

infra, additional determinations based on the 1982 Act and

associated grant agreements would not affect the outcome

of this proceeding.

2. Exclusive Right Charge

FAA Counsel and Burlington also appeal the ALJ’s Au-

gust 138, 1987 dismissal of the charge that the Commis-

sion’s actions violated § 308(a) of the Federal Aviation Act,

49 U.S.C. § 1849(a), which prohibits the grant of an ‘‘ex-

clusive right” for the use of any federally funded landing

area or air navigation facility.

The ALJ dismissed this charge on the grounds that an

exclusive right cannot be granted to an “indefinite uni-

verse of persons;” that FAA Counsel had cited no prec-

edent in support of its interpretation of § 308(a); and that

the FAA had not made public its interpretation of this

statutory provision.

On appeal, FAA Counsel and Burlington contend that

the ALJ erred because an exclusive right had been con-

ferred on those carriers the Commission had allowed to

operate at SFIA while excluding Burlington’s Q707. FAA

Counsel further contends that the ALJ failed to afford

proper deference to its interpretation of § 208(a), noting

that the FAA’s policy interpretation of that provision was

published in the Federal Register in 1965.

Review of the ALJ’s August 18, 1987 Order (at 11-12)

shows that the ALJ was particularly concerned with the

failure of FAA Counsel to identify the party or parties to

whom an exclusive right had been granted, finding no

support in case law for the proposition that an exclusive

right is granted to an entire class of persons who are not

otherwise excluded. The ALJ found that the claim that

“everyone in an indefinite universe of persons ... could

be granted an exclusive right... because one party was

denied that right’”’ was not an interpretation of § 308(a)

37a

supported by the language of the statute or relevant prec-

edent.

On appeal, FAA Counsel still has failed to identify any

such precedent. Moreover, while there is no doubt that

Burlington has been ‘“‘excluded,’’ this does not mean that

an ‘‘exclusive right’’ has been afforded the numerous other

carriers serving SFIA. Thus, I find that ALJ’s dismissal

of the § 308 charge in this proceeding was not error.

This ruling should not be understood as meaning, or

even implying, that an ‘exclusive right” can be conferred

only on a single beneficiary. The case law is to the con-

trary. See, e.g., Midway Airlines v. County of Westchester,

584 F. Supp. 436 (S.D.N.Y., 1984). Indeed, not even the

Commission advocates such a narrow definition. However,

application of § 308(a) to the circumstances of this case

would be an overly broad reading of that statute.

B. Additional Charges/Amendment of Notice

FAA Counsel asserts that the ALJ also erred in refusing

to permit amendment of its Notice to include charges that

the Commission had excluded eight other operators who

had sought permission to operate retrofitted Stage 2 Q707

and DC-8 aircraft at SFIA.’ Order of the ALJ, February

16, 1988.

FAA Counsel contends that, contrary to the ALJ’s find-

ing, inclusion of these additional charges would not have

unduly burdened or delayed this proceeding. FAA Counsel

also points out that under Part 13 (14 C.F.R. § 13.45), a

complaint can be amended up to 10 days before hearing,

* Except for Burlington, no carrier has filed a formal complaint as-

serting exclusion from SFIA. If the Commission attempts to exclude

other carriers operating Q707 or DC-8 aircraft, FAA Counsel can com-

mence appropriate action at that time. In view of the principles es-

tablished by this decision, such a future proceeding should be handled

expeditiously.

38a

and the request to amend was filed more than 90 days

before hearing in this case.

In general, ALJ rulings of this sort are entitled to de-

ference and should be reversed only if there is a showing

of a clear abuse of discretion. Thus, while the ALJ could

have permitted amendment, FAA Counsel has not shown

an abuse of discretion sufficient to reverse the ALJ’s de-

termination. Indeed, in view of the inordinate amount of

time this proceeding has consumed, the possibility that

inclusion of additional charges would have further bur-

dened or delayed this proceeding supports the ALJ’s den-

ial.

C. State of California

The Commission alleges error in the ALJ’s refusal to

determine whether exclusion of the Q707 was required by

California airport noise variances. Order of November 3,

1987; Initial Decision at 6, n. 4. The Commission submits

that its required compliance with the California noise var-

iance law ‘“‘compelled’’ the Airport to exclude the Q707,

and the ALJ’s refusal to rule on this issue combined with

subsequent affirmance of the Initial Decision will result in

the Commission facing inconsistent obligations of State

and Federal law.*°

This argument must be rejected. Efforts by the State

of California to enforce noise conditions on variances is-

sued to airport proprietors are preempted as a matter of

Federal law. San Diego Unified Port District v. Gianturco,

There has been no showing that admitting the Q707 would be

inconsistent with the variance. Over time, is it likely that the noise

contour at SFIA will continue to shrink, regardless of whether the

Q707 operates, as additional Stage 3 aircraft are introduced by the

airlines. While each flight adds a discrete amount of noise, the operation

of some number of Q707 flights cannot, by itself, violate the variance,

since its effect is not qualitatively different from adding flights with

any aircraft—whether relatively noisy B-727s or quieter, Stage 3 air-

craft.

39a

651 F.2d 1306 (9th Cir. 1981), cert. den., 455 U.S. 1000

(1982), citing City of Burbank v. Lockheed Air Terminal,

411 U.S. 624 (1973).

Similarly, the Commission asserts that the ALJ im-

properly refused to join the State of California as a party

to this proceeding, based on the noise variance law. The

ALJ denied the Commission’s motion on the ground that

the State was not a party to the grant agreements at

issue. As Gianturco, supra, makes clear, the ALJ’ s de-

termination that the effect of the California noise variance

law was irrelevant to this proceeding was correct.

Finally, the Commission argues that because the Cali-

fornia noise variance law compelled its exclusion of the

Q707, the Commission has a ‘“‘complete defense” to any

claim that it breached the grant agreements."' In other

words, adherence to California law made the Commission’s

performance under the grant assurances impossible, and

non-performance resulting from impossibility discharges all

contractual duties. Of course, this argument must be re-

jected. As the State is preempted from taking action

against the Airport, there is no “impossibility’’ and no

discharge.

D. San Mateo County

San Mateo County, California, appeals the ALJ’s ruling

of March 17, 1987, refusing to grant the County full party

status as an intervenor.

Intervention in a part 13 proceeding is limited to per-

sons who demonstrate that they may be bound by the

order to be issued, or who demonstrate a property of

financial interest not adequately represented by existing

‘'In this regard, the Commission understands that violation of the

grant assurances by the Commission in excludii.g the Q707 is a breach

of the grant, or contract, between the Commission and the FAA. As

the Commission obviously recognizes, the breaching party bears the

liability.

40a

parties. Intervention is not a matter of right. 14 C.F.R.

§ 13.15.

San Mateo sought intervention on the grounds that San

Francisco International Airport is located within that

County; County residents are affected by SFIA noise; and

it had a financial interest, based on tax revenues received

from the Airport. The County, however, did not contend

that these tax revenues would be adversely affected by

any order that might issue, nor did the County show that

its interests would not be adequately represented by the

Commission.

The ALJ found that the County would not be bound by

any proceeding order. He further found that the County

alleged no interest that could not be adequately repre-

sented by the Airport Commission. In these circumstances,

San Mateo was permitted to intervene, but the ALJ denied

the County full party status, to avoid undue broadening

of the issues or unwarranted delay.

It is within the ALJ’s sound discretion to limit partic-

ipation of intervenors in an appropriate manner. The limit

on San Mateo’s participation (submission of written plead-

ings and briefs) was appropriate; and the County has failed

to demonstrate any abuse of discretion or any harm re-

sulting from the ALJ’s refusal to permit the County to

offer witnesses or cross-examine witnesses of other par-

ties.

E. Certification Challenzge/Discovery

FAA Counsel and SAT assert error by the ALJ in a

series of rulings permitting the Commission to challenge

the validity of the FAA’s determination that the Q707

complies with Stage 2 certification requirements. SAT also

objects to the ALJ’s permitting the introduction of evi-

dence on prior FAA certification determinations.

The ALJ also authorized substantial discovery relating

to FAA certification processes and data, including issuance

4la

of subpoenas against private manufacturers (the Boeing

Company and Shannon/Tracor, manufacturer of the re-

trofit hush kit used on Q707s).”

FAA Counsel and SAT contend that allowing this chal-

lenge to the validity of the FAA’s certification data, and

the associated discovery, was unwarranted; that it resulted

in unnecessary expansion of the proceeding; and that it

improperly transformed the proceeding from a noncom-

pliance and default case involving alleged breaches of con-

tractual obligations into a hearing on the correctness of

FAA noise determinations, a matter acknowledged as Fed-

erally preempted.

Section 611(bX1) of the Federal Aviation Act of 1958

(FAAct), as amended by the Noise Control Act of 1972,

provides that the FAA, after consultation with the Sec-

retary of Transportation and the Environmental Protection

Agency, “shall prescribe and amend standards for the

measurement of aircraft noise.. .”’ Section 611(b\(2) pro-

hibits issuance of an original type certificate unless the

Administrator has prescribed standards and regulations

which apply to such aircraft and which protect the public

from aircraft noise consistent with the highest degree of

safety in air commerce or air transportation.'? Thus, the

plain words of § 611 make clear the exclusive authority of

* The Initial Decision describes this process: The Commission was

given liberal permission by the judge over the vigorous objection of

other parties to probe into the certification processes. ... Liberal dis-

covery by the Commission was permitted against the Federal Aviation

Administration. Every opportunity was given the Commission to show

that the Q707 was noisier on takeoff at full thrust and maximum takeoff

weight than the FAA contends. By the subpoenas to Boeing, the Com-

mission was allowed to try to establish that other Boeing aircraft were

noisier than shown by FAA's records."’ Initial Decision at 9-10.

* Section 611(b) should be read in conjunction with § 603, which

authorized the FAA Administrator to issue type certificates, and § 609,

which provides that only the Administrator may re-examine or inves-

tigate Part 36 certificates.

42a

the FAA to set the standards for the measu.. nent of

aircraft noise and to establish specific noise standards for

the certification of aircraft.

The legislative history of section 611, described in City

of Burbank v. Lockheed Air Terminal, 411 U.S. 624 (1973),

indicates the FAA’s exclusive authority for noise meas-

urements and aircraft certifications, confirming Federal

preemption of state and local actions involving the meas-

urement of aircraft noise and certification:

The Federal Aviation Act reav'res a delicate bal-

ance between safety and «ciency, 49 U.S.C.

§ 1348(a), and the protection of persons on the

ground. 49 U.S.C. § 1348(c). Any regulations

adopted by the Administrator to control noise

pollution must be consistent with the “highest

degree of safety.”” 49 U.S.C. § 14381(d\(3). The

interdependence of these requires factors a uni-

form and exclusive system of federal regulation

if the congressional objectives outlined in the

Federal Aviation Act are to be fulfilled.

Id. at 638-39.

Section 611 expressly permits local airport noise regu-

lation by proprietors; however, local authority to regulate

does not extend to the Federally preempted areas of stand-

ards for noise measurement or certification of aircraft.'*

Moreover, as the Supreme Court noted in Burbank, 411

U.S. at 635, n. 14: “Airport owners acting as proprietors

can presently deny the use of their airports to aircraft on

the basis of noise considerations so long as such exclusion

is nondiscriminatory.”’

In these circumstances, I find that the ALJ improperly

enlarged the scope of this proceeding, thereby permitting

‘Challenges to the certification of an aircraft type may be raised

by filing a complaint with the Administrator, pursuant to § 1002(a) of

the FAAct; however, the Commission never did so.

48a

the Commission to challenge the FAA’s noise standards

for certification of the Q707, a Federally preempted subject

matter.

I have also concluded that the ALJ erred in allowing

the extensive discovery which took place in this case and

in admitting evidence that sought to dispute the FAA’s

noise determinations. Although, as a practical matter, this

error is legally harmless, since the data adduced by the

discovery and introduced into evidence at the hearing, did

not reveal any discrepancies in the FAA’s determination

of the noise levels of the Q707 or the other aircraft with

which it was compared, there is, nonetheless, reason to

be concerned about the effect the ALJ’s discovery rulings

may have on future cases. The broad discovery authorized

by the ALJ is one of the principal reasons why this case

has taken so long, and it is now clear that this discovery

was totally unnecessary. More important, in view of the

FAA’s statutory responsibilities in the areas of aircraft

certification and noise control, considerable deference

should be shown to its noise determinations; and discovery

should be limited to situations where the requesting party

demonstrates reason to believe the FAA’s data and con-

clusions are incorrect. No such demonstration was made

here.

III. ALJ’S INITIAL DECISION

On August 9, 1988, the ALJ issued his Initial Decision

(“I.D.”), finding that the Commission’s exclusion-of Bur-

lington’s Q707s was a violation of Assurance No. 20 of

grant agreements entered into with the FAA under the

1970 Act, for the reason that the Commission had failed

to operate the airport for the use and benefit of the public

on fair and reasonable terms and without unjust discrim-

ination. However, consistent with his earlier ruling con-

cerning the scope of his jurisdiction under Part 13, the

ALJ refused to extend this finding to assurances of grant

44a

agreements the Commission had entered into under the

1982 Act.

The ALJ based his decision on record evidence dem-

onstrating that Stage 2 aircraft as noisy as, or noisier,

than the Q707 had been permitted to operate at SFIA,

and that these types of aircraft were allowed to commence

and continue operations at SFIA under the Commission's

regulations, while the Burlington Q707 was excluded. I.D.

at 7-11.

The ALJ further noted that notwithstanding liberal per-

mission to the Commission, over the vigorous objections

of other parties, to inquire into the FAA’s noise certifi-

cation of the Q707, the Commission had failed to show

any substantial flaw in the way the FAA had determined

‘the noise levels of the aircraft, with or without thrust

cutback. I.D. 9-11.

Because the question of what constitutes an unfair, un-

reasonable or unjustly discriminatory action on the part

of an airport proprietor, under the 1970 and 1982 Acts

and related regulations, in excluding a particular aircraft

type is a case of first impression for the FAA, the ALJ

properly looked to relevant Federal case law, particularly,

the Second Circuit Court of Appeals’ decisions in the so-

called Concorde Cases (British Airways Board v. Port Au-

thority of New York and New Jersey, 558 F.2d 75 and

564 F.2d 1002 (2d Cir. 1977) (Port Authority’s exclusion

of the supersonic Concorde from operating at New York’s

John F. Kennedy Airport in the late 1970’s was unrea-

sonable and discriminatory because that aircraft satisfied

the noise standards that the Port Authority had applied

to subsonic aircraft). ai

The ALJ rejected the Commission’s contention that its

actions in excluding the Q707 were justified because it had

a ‘‘rational belief’ that the Q707 was noisier than other

Stage 2 aircraft and, thus, exclusion would reduce possible

liability and enhance the quality of the environment, citing

45a

a footnote in Santa Monica Airport Association v. City of

Santa Monica, 659 F.2d 100, 104, n. 5 (9th Cir. 1981).

However, the ALJ stated that it was not enough that the

Commission may have “rationally believed’’ that the clas-

sifications in its regulations might reduce the possibility

of liability or enhance the quality of the environment.

Rather, the ALJ concluded that these classifications must,

in fact, be capable of achieving these purposes under an

objective, not subjective, standard. I.D. at 19.)

Applying this standard to the proceeding, the ALJ con-

cluded that the Commission’s Resolutions did not bear a

“rational relationship” to the twin goals that were outlined

in the Santa Monica case. Specifically, he noted that the

exclusion of the Q707 would not, in fact, reduce the Com-

mission’s financial liability, or improve the environment,

because it was continuing to allow noisier planes to operate

at SFIA. I.D. at 16-18.

The ALJ also rejected the Commission’s arguments that

it was permissible to “ratchet down” the noise at SFIA

by addressing noise problems on a piecemeal basis and

that its exclusion of the Q707 was part of a legitimate

form of “‘grandfathering,’’ whereby existing carriers would

not be disturbed, but new entrants would be excluded; and

comparable grandfathering had been upheld by the courts

in cases arising under the Equal Protection Clause. I.D.

at 23-25.

The ALJ further found that Burlington’s decision not

to seek a variance under the Commission’s new 1988 Res-

olution did not preclude a finding that the 1988 Resolution

was violative of Assurance No. 20. The ALJ noted that

there is a limit beyond which Burlington no longer should

be required to exhaust its administrative remedies. I.D. at

34-35.

Based on his determination that the Commission’s ac-

tions violated Assurance No. 20, the ALJ ruled that the

FAA could continue to withhold the Commission’s funding

46a

under the grant agreements entered into under the 1970

Act. However, consistent with his earlier rulings regarding

the scope his jurisdiction under 14 C.F.R. Part 13, the

ALJ refused to approve the withholding of funds under

grants that had been entered into under the 1982 Act.

The ALJ also declined to address the issue of whether the

current temporary suspension of approval of the- Commis-

sion’s grants subsequent to July 7, 1986 should be af-

firmed. I.D. at 37-40.

IV. APPEAL OF INITIAL DECISION

The Commission appeals the ALJ’s determination that

the Commission’s exclusion of Burlington’s Q707 aircraft,

on the ground that the Q707 aircraft type had not been

certificated as Stage 2 compliant and operated at San

Francisco International Airport prior to January 1, 1985,

as required by Commission Resolution'®, while at the same

time permitting noisier or equally noisy aircraft models to

continue or commence operations at the Airport, violated

Assurance No. 20 of grant agreements entered into be-

tween the Commission and the Federal Aviation Admin-

istration, under the Airport and Airway Development Act

of 1970, 49 U.S.C. § 1701 et seg., which require the Com-

mission to operate the Airport for the use and benefit of

the public on fair and reasonable terms and without unjust

discrimination.

The Commission also appeals the ALJ’s determination

that continued exclusion of the Burlington Q707 aircraft

under Commission Resolution 88-0016 (January 22, 1988)

violated Assurance No. 20 of the grant agreements in the

‘Ss Included within this finding of unjust discrimination is the ALJ’s

subsidiary determination that the Commission violated Assurance No.

20 by its refusal to grant a waiver of Resolution 78-0131 on the basis

that the Q707 was significantly louder in takeoff mode than any other

aircraft permitted to operate at SFIA. The record demonstrated that

the Commission was incorrect.

47a

same unfair, unreasonable, and unjustly discriminatory

manner.

The Commission contends that the ALJ’s findings are

erroneous and result from a failure to properly apply the

“rational basis’’ test, commonly used in challenges brought

under the Equal Protection Clause of municipal regulations

promulgated under police powers, to review the airport

noise abatement regulations. The Commission asserts that

under the rational basis standard, its exclusion of the Q707,

pursuant to Resolution 78-0131, on the grounds that it

was not Stage 2 certificated until after January 1, 1985,

is rationally related to a permissible purpose—the Airport’s

control of noise, particularly cumulative noise. Comm. Br.

at 19-22.'° Moreover, asserting that its noise abatement

resolutions are nothing more than ‘“‘economic regulations”

(citing Santa Monica Airport Ass’n v. City of Santa Mon-

ica, 481 F. Supp. 927, 935 (C.D. Cal. 1979), aff'd 659 F.2d

100 (9th Cir. 1981)), similar to regulations commonly en-

acted by municipal authorities under their police powers

(for the health and welfare of citizens), the Commission

also argues that its decision not to grant Burlington a

‘6 Contrary to the Commission’s assertions on brief that exclusion of

the Q707 was based on its policy of reducing cumulative noise impact,

the record reveals that the Commission’s exclusion of the Q707 was

based on its determination that the aircraft was louder in takeoff mode

than any other aircraft at the Airport. The ALJ found that the evidence

showed this determination was incorrect, and the Commission has ap-

parently abandoned its contention that the aircraft’s takeoff noise ex-

ceeded that of all other aircraft at SFIA. Indeed, the Commission

concedes the correctness of the Initia. Decision’s factual findings that

during the period the Q707 has been denied permission to operate at

the Airport, 15 other models of aircraft, emitting as much or more

noise than the Q707, have been permitted to operate there; and that

operators of these airlines have been permitted to increase the number

of flights with these aircraft types. The Commission also does not

dispute that at least 560 takeoffs and landings are performed each

month at SFIA by six aircraft models noisier than the Q707. I.D. at

10-11.

48a

waiver of its Resolution excluding Stage 2 aircraft certif-

icated after January 1, 1985 must be found reasonable and

non-discriminatory under the Equal Protection Clause’s ra-

tional basis test because of the Commission’s belief that

the classification expressed by the resolution was rationally

related to a permissible goal of abating airport noise.

Comm. Br. at 27-28.

Relying on New Orleans v. Dukes, 427 U.S. 297 (1976),

the Commission asserts that under the rational basis test,

deference to its ‘legislative’ determination regarding the

desirability of its noise classification is required.'’ In Dukes,

the Supreme Court describes tiie rational basis test for

Equal Protection Clause challenges to municipal regula-

tions enacted under police powers, holding that unless the

classification trammels fundamental personal rights or is

based on inherently suspect distinctions, the constitution-

ality of such a classification is established with a showing

only that it is rationally related to a-legitimate govern-

mental interest. Jd. at 303. Given that test, the Commis-

sion asserts, its classifications under Resolution 78-0113

cannot be found unreasonable, arbitrary, or discriminatory.

The Commission’s reliance on the rational basis test is

misplaced; and the fundamental error of the Commission’s

argument is nowhere better demonstrated than by Dukes.

As the Court explains, the rational basis test applies only

‘7 The Commission argues that its legislative classifications, 1.e., noise

abatement resolutions, are entitled to the deference traditionally ac-

corded legislative classifications enacted by Congress or state legisla-

tures. This assertion is no more than another aspect of the Commission's

misplaced reliance on Equal Protection Clause principals as the proper

standard for review of its resolutions. The question is not the deference

to be afforded the resolutions, but rather whether the Commission

violated its contractual obligations by passing a discriminatory resolu-

tion and applying it to exclude an operator from SFIA in an arbitrary

and unreasonable way. Put another way, this proceeding is not a chal-

lenge to the Commission’s capacity to promulgate resolutions, but rather

an examination of whether that resolution is related to discriminatory

behavior violative of a contractual obligation.

49a

to Equal Protection Clause challenges to regulations pro-

mulgated under a municipality’s police powers; the test is

not valid where the challenged regulation was promulgated

under other authority:

We emphasize again that these principles, of

course, govern only when no constitutional pro-

vision other than the Equal Protection Clause

itself is apposite. Very different principles govern

even economic regulation when constitutional

provisions such as the Commerce Clause are im-

plicated, or when local regulation is challenged

under the Supremacy Clause as inconsistent with

relevant Federal laws or treaties.

427 U.S. 304, n. 5.

In fact, the Commission’s noise control regulation im-

plicates both the Supremacy Clause (see, e.g., City of Bur-

bank v. Lockheed Air Terminal, 411 U.S. 624 (1973)), and

the Commerce Clause (see, e.g., Santa Monica Airport

Ass'n v. City of Santa Monica, supra; Concorde Cases, 558

F.2d 75 and 564 F.2d 1002 (2d Cir. 1977); Initial Decision

at 16). It is well settled that the pervasive Federal scheme

of regulation of airspace and air carriers, including noise

control, preempts conflicting state and local laws. Burbank,

supra, at 625. Similarly, state and local noise regulations

found to be burdensome on interstate commerce are

deemed in conflict with the Commerce Clause and are also

invalid. Santa Monica, 481 F. Supp. at 937, quoting Pike

v. Bruce Church, 397 U.S. 187, 142 (1970).

However, within the Federally preempted control of

aviation, Congress has concluded and the courts have con-

sistently held that airport proprietors retain the authority

and responsibility to regulate local operation of their air-

ports, including noise, as long as there regulations are

“reasonable, nonarbitrary, and nondiscriminatory.”” Bur-

bank, 411 U.S. at 635-36, n. 14, and 649; British Airways

v. Port Authority of New York (Concorde I), 558 F.2d 75,

50a

84; British Airways v. Port Authority of New York (Con-

corde II), 564 F.2d 1002, 1011 (2d Cir. 1977).

Thus, the promulgation of noise control regulations and

actions pursuant to those regulations by the Commission

under this ‘‘proprietor exception” is properly reviewed by

determining whether they are reasonable, arbitrary, and

discriminatory"*; not by the rational basis test applicable

to Equal Protection Clause challenges.

Consequently, the Commission’s argument that the ALJ

erred by applying an improper standard of review is with-

‘8 At the heart of the Commission’s assertions of error regarding the

Initial Decision’s finding of discrimination, perhaps at the heart of this

protracted dispute, is the Commission’s apparent misunderstanding of

the scope of its authority to regulave airport noise under the ‘‘propri-

etor’s exemption.”” The Commission contends that as a proprietor, it

has the authority to independently evaluate the noise levels of aircraft

in regulating airport noise; and, despite conceding the FAA’s authority

and responsibility to certificate aircraft compliance with Part 36 noise

standards, asserts that it is not precluded from independently assessing

aircraft noise levels and denying access to SFIA on the basis of those

assessments. Comm. Br. at 47-48. The Commission is simply wrong.

While is can regulate permissible levels of noise created by aircraft

using SFIA, this local regulatory control does not include the power

to invade federal regulation—in this case, the establishment and cert-

ification of aircraft noise levels. Nor does is include the power to dis-

criminate. Thus, the Commission could bar all aircraft noisier than

Q707s, or establish a curfew for such aircraft, but it cannot deny access

to a Q707 Stage 2 aircraft, when other similarly certificated aircraft

are permitted to serve the airport, on the grounds that the Commis-

sion’s independent assessment of the Q707’s noise levels led it to con-

clude that the Q707 was noisier than the other aircraft. In support of

its contention that it may independently evaluate noise levels as a

proprietor, the Commission misconstrues 14 C.F.R. § 36.5, which states

that: “‘[njo determination is made [under Part 36], that these noise

levels are or should be acceptable or unacceptable for operation at,

into, or out of, an airport.’’ This regulation is not the source of pro-

prietor authority to independently assess aircraft noise levels. Rather,

consistent with local regulation of airport noise, § 36.5 simply says that

no airport must accept aircraft solely on the basis of Part 36 certifi-

cation.

5la

out merit. Although the ALJ may have had some confusion

about the scope of the Commission’s noise control au-

thority, the ALJ properly understood that the issue to be

resolved was whether the Commission’s actions were dis-

criminatory, as demonstrated by the evidentiary record

and application of appropriate decisional law. In this re-

spect, the ALJ’s reliance on the Concorde Cases was

proper.

In making the determination that unjust discrimination

in violation of Assurance No. 20 was occurring, the ALJ

found first that the Commission excluded the Q707 under

its 1978 Resolution on the grounds that it had been retro-

fitted to comply with Stage 2 standards after January 1,

1985. The ALJ further found that the Commission contin-

ued that exclusion under its 1988 Resolution on the grounds

that the Q707 was not a type of Stage 2 aircraft that had

been operating at SFIA on or before January 1, 1985."

'*The Commission offers a number of arguments in support of its

1978 and 1988 Resolutions that serve to illuminate only the Commis-

sion’s singular understanding of the nature and extent of its proprietor

exemption for noise control. For example, the Commission contends

that the factual findings of its April 15, 1986 waiver denial are pre-

clusive for purposes of this Order’s determination of whether the Com-

mission violated its grant assurances. The Commission, however,

misdefines this case. The issue to be decided is not whether the Com-

mission should have granted the waiver, but whether the Commission

has violated the terms of its grant assurances. Thus, the question of

the accuracy or completeness of submissions by parties to the Com-

mission dur

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