In re. Naples Airport Authority
Initial Decision
FAA Docket 16-01-15



FAA Docket No. 16-01-15

June 30, 2003


This matter is before the Hearing Officer pursuant to 14 C.F.R. Part 16 and the Hearing Order of April 10, 2003, issued by James W. Whitlow, Deputy Chief Counsel, Federal Aviation Administration. This proceeding is an appeal by the City of Naples Airport Authority, Naples, Florida, of the Determination issued by the Federal Aviation Administration Director of Airport Safety and Standards on March 10, 2003, finding that the Stage 2 ban established by the Airport Authority is preempted by federal law, and as currently implemented by the Authority, is unreasonable and unjustly discriminatory in violation of 49 U.S.C. §47107(a)(1) and Grant Assurance 22.

Upon review of the record of this proceeding, and upon due consideration of all arguments offered by the parties and participants, the Director’s Determination is affirmed, in part, and reversed, in part. I find that:

1. National Business Aircraft Association v. City of Naples Airport Authority, 162 F.Supp.2d 1343 (M.D. Fla. 2001) is not binding on the FAA in its administrative adjudication of the issues raised in the Notice of Investigation.

2. The proprietary powers exception to Federal preemption does not require evidence of actual or potential liability due to excessive aircraft noise. Accordingly, the Stage 2 ban is not preempted by Federal law.

3. The Airport Noise and Capacity Act of 1990 (ANCA), 49 U.S.C. §47521, et seq., does not affect the applicability of the statutory and contractual grant assurance obligations under 49 U.S.C. §47107(a)(1) and Grant Assurance No. 22 to the City of Naples Airport Authority’s Stage 2 ban.

4. The City of Naples Airport Authority’s Stage 2 ban is not consistent with its statutory and contractual obligation to make its airport available for public use on reasonable terms to all types, kinds, and classes of aeronautical activities.

5. The City of Naples Airport Authority’s Stage 2 ban is consistent with its statutory and contractual obligation to make its airport available for public use without unjust discrimination to all types, kinds, and classes of aeronautical activities.

Background and Procedural History

The Naples Municipal Airport (“APF” or “Airport”) is a public use airport, constructed in 1941, which is operated by the City of Naples Airport Authority (“NAA” or “Airport Authority”), under a 99 year lease from the City of Naples. The Airport Authority is an independent entity established by the Florida Legislature pursuant to the City of Naples Airport Authority Act, Chapter 69-1326, Laws of Florida, which provides that the City of Naples has authority to appoint Board members to the NAA. [1, 2] The Airport, comprised of two 5,000 foot runways in an area of 732 acres adjacent to the City and unincorporated Collier County, is considered a commercial service airport and is classified as a primary airport. [3] It serves as the base of operations for 370 aircraft and accounts for approximately 138,185 operations each year, more than 92,000 of which are itinerant. [4]

[Editor's note: footnotes are in a separate file.]

The planning and development of the Airport has been financed, in part, with funds provided by the FAA under the Airport Improvement Program (AIP), authorized by the Airport and Airway Improvement Act of 1982, (AAIA), as amended, 49 U.S.C. Section 47107 et seq. Since 1982, the Airport has received $14,617,978 in Federal airport development assistance. [5]

Prior to the current Stage 2 ban, the NAA had participated in several studies under Part 150 of the Federal Aviation Regulations. [6, 7] In 1987, the NAA presented a series of measures in the areas of land use and airspace/operations which were approved by the FAA in 1989. The approved measures included, inter alia, preferential runway use and flight tracks; noise abatement departure and approach profiles; comprehensive planning, including the incorporation of the DNL 65 dB contour into the City and County comprehensive plan updates as an airport noise zone; acquiring vacant parcels of land in the DNL 65 dB contour; and obtaining easements on property in this contour. [8]

In 1996, the NAA submitted to the FAA a revised Part 150 Noise Compatibility Program. This Plan proposed, inter alia, a nighttime curfew of Stage 1 aircraft; a series of land use measures regarding the purchase of certain property and of easements for property near the Airport; and a measure that would create a “buffer of compatible land use” around the airport within the DNL 60 dB contour. [9] Noise exposure maps (NEM) were submitted with this revised NCP, showing the DNL contours for 75 dB, 70 dB, and 65 dB for 1996 and 2001. The FAA approved the NCP in 1997, stating, in part, that the “NAA has adopted the DNL 65 dB noise contour as the threshold of incompatibility for residential areas, but for zoning and land use planning this measure recommends that the area within the DNL 60dB noise contour apply the same standards as Part 150 recommends for the DNL 65 dB noise contour as a buffer to ensure that residential land noise sensitive uses are not developed too close to the Airport.” [10] The FAA also noted that this measure was “within the authority of the local land use planning jurisdictions.” [11] The FAA also approved the nighttime Stage 1 curfew, but disapproved certain other proposals made by the NAA. [12]

The NAA submitted an update to its NCP in 1998, proposing a 24 hour ban on Stage 1 aircraft and explaining that this measure would address non-compatible land use by significantly reducing the number of people and residences within the DNL 65 dB contour. [13] Revised NEM’s for 1998 and 2003 were also included in this NCP. The Stage 1 ban was approved by the FAA on March 2,1999. [14] As a result of the Part 150 efforts, there is no residential land within the DNL 65 dB contour.

After approval of the Stage 1 ban, the NAA commenced a series of actions leading to the current ban on Stage 2 aircraft. Soon after the FAA’s approval, the Mayor of the City of Naples requested that the NAA look at Stage 2 aircraft in order to reduce further noise around the Airport. [15] In August 1999, the NAA began work with its consultant to study restrictions on the operation of Stage 2 aircraft. [16] On June 22, 2000, the NAA issued Resolution #2000-7, inviting public comment on the proposed Stage 2 restriction and setting January 1, 2001, as the date for its implementation. [17] The proposed ban prohibited Stage 2 aircraft from using APF. [18] The NAA’s Part 161 Study was released on June 30, 2000. [19] The Study, conducted by the NAA’s consultant, Harris Miller Miller & Hanson, Inc. (HMMH), stated that it reflected a deference to the City of Naples and to Collier County in having as NAA’s goal the minimization of residential land use within the DNL 60 dB contour to the maximum feasible extent. The Study concluded with the recommendation that the NAA pursue the implementation of a 24 hour restriction on Stage 2 operations. [20]

The FAA submitted preliminary comments to the Part 161 Study on August 21, 2000, stating that “[i]t is not clear that the City of Naples and Collier County have in fact determined that residential use is non-compatible within the DNL 60 dB contour.” [21] The FAA also questioned whether the local ordinances prohibit residential development in this contour, and whether the two jurisdictions had permitted residential development in what was previously approved by the FAA in 1997 as a “buffer” area within the DNL 60 dB contour. Moreover, the FAA advised that as ANCA did not supersede pre-existing law, including that related to grant assurances, its review of the proposed restriction was not limited to determining its compliance with ANCA. It further noted that this situation was the first time in which the FAA addressed the issue of the reasonableness of an access restriction designed to mitigate noise within the DNL 60 dB contour when land uses in the DNL 65 contour were currently compatible. [22] On September 18, 2000, the FAA followed up its earlier comments, noting that certain aspects of the proposed ban could be inconsistent with the obligation to provide reasonable access to the airport (Grant Assurance 22a), and again questioning whether the local authorities had determined that land within the DNL 60 dB contour was non-compatible. [23] The FAA also asked the NAA for information on any liability concerns it may have due to noise exposure, stating that “while local airport restrictions are generally preempted, the courts have denied a limited exception to this preemption for local airport proprietors, based on their legitimate interest in avoiding liability for excessive noise generated by airports they own.” [24]

The NAA responded to the FAA letters on October 24, 2000, stating that the proposed restrictions would comply with Grant Assurance 22a, and including information regarding the liability issue. The NAA contended that the proposed restriction would be reasonable and not unjustly discriminatory. This letter further advised that the local governments and the Airport Authority selected a reasonable threshold of land use compatibility [DNL 60 dB] based upon their reasonable assessment of potential liability.” [25]

On November 16, 2000, the NAA passed Resolution #2000-8, implementing the Stage 2 ban, effective January 1, 2001. [26]

By letter of December 27, 2000, the FAA began an effort to initiate “informal resolution” of NAA’s “apparent noncompliance” with ANCA and 14 C.F.R. Part 161, and it recommended that the NAA delay implementation of the ban. [27] Several FAA representatives attended an NAA Board meeting on January 18, 2001, at which time the FAA officials discussed matters regarding compliance with Part 161 and the need to evaluate the proposed ban pursuant to the grant assurances. [28] Subsequent to this meeting, the FAA sent correspondence to the NAA wherein it advised the Authority that it would review the proposed restriction to determine not only whether it complied with Part 161, but also whether it was consistent with the Airport’s grant assurances. [29] In this correspondence, the FAA also expressed its preliminary opinion that the Stage 2 ban, addressing the circumstances at Naples between 60 and 65, was unreasonable and was not permitted under the Airport’s grant assurances. The FAA’s focus was on the determination of non-compatibility for land within the DNL 60 dB contour; the lack of legitimate liability concerns; and the noise complaint data relied upon to support the ban. By letter of March 19, 2001, the NAA notified the FAA that it would develop a Supplemental Analysis to the Part 161 Study to resolve some of the concerns raised by the FAA, and that it would continue to defer enforcement of the ban. [30]

The parties met to review the scope of work to be submitted to HMMH. [31] A draft of the Supplemental Analysis, which was provided to the FAA on June 23, 2001, addressed several issues which the parties had previously discussed, including an analysis of non-restrictive alternatives and a review of actions taken by the City of Naples and Collier County regarding property development with the DNL 60 dB contour. [32] The Supplemental Analysis noted that the population within the DNL 60 dB contour was estimated to be 1,306 for the year 2005. [33] The population within this contour would be decreased to 370 with a 24 hour Stage 2 jet ban. [34] Most of the population within this contour is located to the southwest of the Airport. [35]

The NAA had not begun enforcement of the ban, and eventually decided that it would continue deferring enforcement until March 2002. [36]

On October 31, 2001, Paul L. Galis, Deputy Associate Administrator for Airports, advised the NAA that the Supplemental Analysis complied with the consultation, notice, and analysis requirements of Subpart C of Part 161. [37] Part 161 does not provide the FAA with authority to approve (or disapprove) a Stage 2 restriction. However, Mr. Galis reminded the NAA that airport access restrictions are subject to other requirements; that the Part 161 requirements are “largely procedural”; and that serious questions remain regarding the ban’s compliance with the grant assurances, and in particular with regard to the use of the DNL 60 dB contour to justify the access restriction. Accordingly, Mr. Galis advised that the FAA would issue a Notice of Investigation, (NOI) in accordance with 14 C.F.R. Part 16.

On October 31, 2001, David L. Bennett, FAA Director, Airport Safety and Standards, issued an NOI to the Airport Authority in accordance with the FAA Rules of Practice for Federally-Assisted Airport Proceedings, 14 C.F.R. Part 16, Subpart D, regarding its proposed ban of operations by Stage 2 aircraft at Naples Municipal Airport (APF). [38] In the NOI, the FAA advised that it was initiating an investigation into the legality of the NAA’s ban of Stage 2 aircraft. Although noting that the NAA had followed the procedures set forth in 14 C.F.R. Part 161, it advised that “compliance with the requirements of the grant obligations is a separate matter.” The FAA stated that it had “serious concerns that the ban was contrary to federal law and related sponsor Federal grant assurance obligations.” The NOI gave the Airport Authority thirty days to respond. Pending its investigation, the FAA requested that the NAA continue its suspension of the ban. The NAA was cautioned that if a determination is made that it is in noncompliance with the sponsor’s obligations and if the NAA proceeds to enforce the ban, the Airport Authority could be found to be ineligible to receive FAA grants and receive payments under existing grants.

The NOI reviewed the legal framework regarding the federal involvement in airport noise regulation, and stated that in enacting access restrictions, airports are governed not only by the Airport Noise and Capacity Act of 1990 (ANCA) 49 U.S.C. Section 47521 et seq. and Part 161, but also by preexisting Federal law, and in particular, their grant assurances, implementing the provisions of 49 U.S.C. Section 47107(a)(1) through (6). The NOI focused on Grant Assurance 22, entitled “Economic Nondiscrimination, which provides, in part, that a sponsor of a federally obligated airport:

“… will make its airport available as an airport for public use on reasonable terms, and without unjust discrimination, to all types, kinds, and classes of aeronautical activities, including commercial aeronautical activities offering services to the public at the airport.” Grant Assurance 22(a).

“…may establish such fair, equal, and not unjustly discriminatory conditions to be met by all users of the airport as may be necessary for the safe and efficient operation of the airport.” Grant Assurance 22(h).

The NOI also raised the issue of federal preemption and the proprietor exception, stating that local aircraft noise restrictions are generally preempted but that an exception has been recognized for a proprietor’s legitimate interest in protecting itself from liability for damages resulting for excessive noise generated by aircraft using its airport. [39]

On December 3, 2001, the NAA replied to the NOI asserting that the NOI “states no grounds for finding violations of federal law or related grant assurance obligations”. [40] In particular, the NAA claimed that the NOI (1) writes requirements into ANCA that do not exist and were intentionally excluded by Congress; (2) demand justifications for the restriction that have no basis in any requirement imposed by statue, regulation, or prior judicial decision; (3) imposes requirements for use restrictions that likely could not be satisfied under any conditions; (4) exceeds the jurisdiction and mandate of the agency by attempting to relevant the FAA’s application of grant agreement provisions above the clear mandate of Congress as expressed both in ANCA and other federal aviation statues: (5) allows the FAA not only to ignore the decision of a Federal District Court that is directly on point but also to apply wholly different standards to the same issues: and (6) renders the exhaustive and costly Part 161 process a nullity.

After further investigation, and upon review of Federal law and FAA policy, on March 10, 2003, Mr. Bennett issued his Director’s Determination, finding that the NAA’s Stage 2 ban is preempted by Federal law; and that the ban is not consistent with the NAA’s statutory and contractual obligation to make its airport available for public use on reasonable terms and without unjust discrimination to all types, kinds, and classes of aeronautical users. The Director therefore ordered that pursuant to 49 U.S.C. § 47106(d), unless and until the NAA rescinds or takes formal action to cease enforcement of the ban on the use of the Naples Municipal Airport by Stage 2 aircraft, the FAA withhold approval of any application submitted by NAA for amounts apportioned under 49 U.S.C. Section 47114(a) and (d) and any application by the NAA for discretionary grants authorized under 49 U.S.C. §47115. Director’s Determination, at 93.

On March 31, 2003, NAA filed its appeal of the Director’s Determination, pursuant to 14 C.F.R. Section 16.109.

On April 10, 2003, FAA Deputy Chief Counsel Whitlow issued a Hearing Order, acknowledging the appeal and requiring that the Hearing Officer address the following issues: 1) Whether the NAA has a propriety interest in reducing noise from aircraft using the airport sufficient to bring the Stage 2 ban within the scope of the proprietary powers exception to Federal preemption, such that the Stage 2 ban is not preempted by Federal law.

2) Whether the NAA’s ban on Stage 2 aircraft is consistent with its statutory and contractual obligation to make its airport available for public use on reasonable terms to all types, kinds, and classes of aeronautical activities.

3) Whether the NAA’s ban on Stage 2 aircraft is consistent with its statutory and contractual obligation to make its airport available for public use without unjust discrimination to all types, kinds, and classes of aeronautical activities.

4) Whether the Airport Noise and Capacity Act of 1990 (ANCA), 49 U.S.C. §47521, et seq., affects the applicability of the statutory and contractual grant assurance obligations under 49 U.S.C. §47107(a)(1) and Grant Assurance No. 22 to the NAA’s Stage 2 ban.

5) Whether the National Business Aircraft Association v. City of Naples Airport Authority, 162 F.Supp.2d 1343 (M.D. Fla. 2001) is binding on the FAA in its administrative adjudication of the issues raised in the Notice of Investigation. Prior to the hearing, twelve petitions to participate were filed pursuant to 14 C.F.R. Section 16.207(c). After giving the parties an opportunity to comment on these Petitions, the Hearing Officer approved the Petitions filed by the Aircraft Owners and Pilots Association (AOPA): the National Business Aircraft Association/General Aviation Manufacturers Association (MBAA/GAMA); the Air Transport Association of America and the Regional Airline Association (RAA/ATA); the City of Naples; Collier County, Florida; and the American International Council-North America (ACI-NA). [41] In accordance with 14 C.F.R. §207(c), the participants’ involvement in this proceeding was limited to the submission of post-hearing briefs. [42]

The hearing in this matter was held from June 3 to June 9, 2003, in Tampa, Florida, pursuant to 14 C.F.R. Part 16, Subpart F, as supplemented by the aforesaid Hearing Order. The parties offered the testimony of 13 witnesses and introduced documentary evidence. In accordance with 14 C.F.R. §16.233(b), the direct and rebuttal evidence from all witnesses except one was submitted in writing prior to the hearing. [43] The witness testimony and documentary evidence, along with the administrative record from the Director’s Determination, the pleadings and briefs filed by the parties; Orders issued by the Hearing Officer; and the briefs filed by the participants, constitute the record in this proceeding. 14 C.F.R. §16.233. In accordance with §16.229(a), the burden of proof of noncompliance with an Act or any regulation, order, agreement or document of conveyance issued under the authority of an Act is on the FAA.

This Initial Decision will discuss first the three legal issues which require resolution before determining whether the Stage 2 ban conflicts with the NAA’s statutory and contractual obligations. [44]


I. Whether National Business Aircraft Association v. City of Naples Airport Authority, 162 F.Supp.2d 1343 (M.D. Fla. 2001) Is Binding On The FAA In Its Administrative Adjudication Of The Issues Raised In The Notice Of Investigation

In National Business Aircraft Association v. City of Naples Airport Authority, 162 F.Supp. 2d 1343 (M.D. Fla. 2001), plaintiff (NBAA) challenged the NAA’s ban on Stage 2 jets by alleging that the ban violated the Commerce Clause and the Supremacy Clause of the United States Constitution. The FAA was not a party to this case. The Court recognized the broad authority of the FAA, noting that it has preempted certain areas of aviation, both expressly and impliedly. Id., at 1349. However, upon reviewing motions for summary judgment filed by both parties, the Court granted the NAA’s motion, concluding that the plaintiff had failed to raise a genuine issue of material fact as to the reasonableness or nondiscriminatory nature of the NAA’s ban on Stage 2 operations and as to whether the ban violates the Commerce Clause. The Court examined whether the ban was reasonable or discriminatory in the context of the preemption argument, although it was skeptical that this examination was necessary. Id. at 1352-1354. The Court did not discuss the NAA’s statutory or grant obligations, noting that plaintiffs had not argued that the Airport Authority was in violation of its requirements under 49 U.S.C. §47107(a)(1). Id., at 1352.

The Airport Authority asserts that the FAA is bound by this district court decision by reason of the doctrines of res judicata, collateral estoppel, issue preclusion, comity, and general equitable principles, contending that it would be unfair to allow the agency to abstain from participation in the NBAA case and then initiate its own investigation after the court dismissed the plaintiff’s action. However, for the reasons noted below, I find that NBAA is not binding on the FAA’s administrative adjudication of the issues raised in the Notice of Investigation.

The federal courts, recognizing the important role which the FAA has in overseeing our the nation’s aviation system, including its airspace and airports, consistently have rejected the argument that state court decisions relating to the federal airport grant programs can bind the FAA when it had not been party to the state court action. For example, in another case which involved a Part 16 hearing, Arapahoe County Public Airport Authority v. FAA, 242 F.3d 1213 (10th Cir. 2001), the Colorado Supreme Court had granted the Authority’s request for a permanent injunction, barring the use of the airport by an air carrier. The Tenth Circuit rejected the preclusive effect of the state court decision, noting that to accept its preclusive effect “…would frustrate the FAA’s ability to discharge its statutory duty to interpret and implement federal aviation statutes governing the enforcement of grant assurance. See 49 U.S.C. §47122.” Arapahoe, at 1221. The Court of Appeals expressed its concern that state court rulings on matters related to federal grant assurances “…would lead to inconsistent enforcement of the federally mandated assurances, potentially jeopardizing the efficiency and quality of access to our Nation’s air transportation system.” Id. See also, American Airlines v. City of Dallas, 202 F.3d 788, 801 (5th Cir. 2000), where the Court, recognizing the important federal interests in the field of aviation, affirmed the Department of Transportation’s failure to give preclusive effect to a state court judgment, stating that it is up to the Secretary to decide what is “necessary and satisfactory” for purposes of ensuring compliance with 49 U.S.C. §47107.

Although these basic principles reflecting the paramount federal interest in aviation are applicable to the present case, the question here of course deals with the impact of a federal, rather than a state court decision. Thus, a closer analysis of the doctrines of res judicata and collateral estoppel is unavoidable in order to determine whether NBAA is binding on the FAA.

The elements of both res judicata and collateral estoppel are set forth in I.A. Durbin v. Jefferson National Bank, 793 F.2d 1541 (11th Cir. 1986). The Court first stated that res judicata or claim preclusion refers to the preclusive effect of a judgment in foreclosing relitigation of matters that were litigated or could have been litigated in an earlier suit. It then announced the following elements for the application of this doctrine: (1) there must be a final judgment on the merits; (2) the decision must be rendered by a court of competent jurisdiction; (3) the parties, or those in privity with them, must be identical in both suits; and (4) the same cause of action must be involved in both cases. Id., at 1549. See also Ragsdale v. Rubbermaid, 193 F.3d 1235, 1238 (11th Cir. 1999); Citibank, N.A. v. Data Lease Financial Corp., 904 F.2d 1498, 1501 (11th Cir. 1990); Olmstead v. Don Defosset, et al., 205 F.Supp.2d 1316, 1322 (June 5, 2002).

A glance at these criteria leads to the quick conclusion that claim preclusion will not bar the FAA from addressing the issues pending in this Part 16 proceeding. The most glaring omission is the absence of the FAA from the NBAA litigation. Further, although the concept of “privity” is not subject to a rigid definition, it cannot be stretched so far as to cover the relationship between the agency and plaintiff in that case.

The Courts have had occasion to explain what is meant by “privity” in the context of a res judicata argument. For example, in Hart v. Yamaha-Parts Distributors, Inc., 787 F.2d 1476 (11th Cir. 1986), the Court described privity as a “relationship between one who is a party of record and a nonparty that is sufficiently close so a judgment for or against the party should bind or protect the nonparty.” Id., at 1472, citing Southwest Airlines Co. v. Texas International Airlines, 546 F.2d 84, 95 (5th Cir. 1977). The court further explained that the privity relationship could be indicated where the nonparty has succeeded to the party’s interest in property; where the nonparty controlled the original suit; where the nonparty’s interest were presented adequately by the party in the original suit; and where the party and nonparty have concurrent interests in the same property right. Id., at 1476, citing 1B Moore’s Federal Practice Section 0.411[1] at 392. The Supreme Court has stated that privity may be found where a non-party substantially controls or is represented by a party to the action. Montana v. United States, 440 U.S. 147, 154 (1979).

The Courts look very closely at attempts to find privity between a governmental agency and a private litigant and are wary of restricting the government’s rights to take action on behalf of its programs or the public interest when it had not been party to a previous lawsuit. In Perchitti v. United States, 955 F.2d 674 (11th Cir. 1992), a criminal case, the Court of Appeals affirmed the District Court’s decision declining to apply issue preclusion against the federal government, which would have prevented the federal government from re-litigating a suppression issue. [47] The appellant had been successful in presenting a motion to suppress when he was brought up on state charges. However, after prevailing on that motion in state court, the appellant was indicted in federal court on the same conduct. The state prosecutor was appointed as a Special Assistant United States Attorney to prosecute this case. The Eleventh Circuit explained that privity could be found where a non-party substantially controls, or is represented by, a party to the action; or where the party estopped was “so closely related to the interest of the party to be fairly considered to have had his day in court.” Id., at 676, citing United States v. Bonilla Romero, 836 F.2d 39. (1st Cir. 1987), cert. denied 488 U.S. 817 (1988). Another requirement for privity, Perchitti explained, is that there must be a “substantial identity” of the parties such that the party to the action was the virtual representative of the party estopped. Perchitti, at 676, citing Aerojet-General Corp. v. Askew, 511 F.2d 710, 719, (5th Cir.), cert. denied, 423 U.S. 908 (1975). The Court concluded that even though the local prosecutor was also involved in the federal trial, and even though the local charges arose in part based upon investigatory help from the federal government, there was no privity between the state and local governments. Cf., Montana, supra, where the federal government was estopped from relitigating an issue which was litigated in state court by a party whose litigation had been totally financed and controlled by the federal government.

Perhaps most instructive for the case at hand is the decision in Herman v. South Carolina National Bank, 140 F.3d 1413 (11th Cir. 1998), where the Court held that the Department of Labor was not barred by res judicata from taking an action to recover statutory civil penalties and other remedies for violations of the Employee Retirement Income Security Act of 1874 (ERISA). Prior to the initiation of the action by the Department of Labor (DOL), private litigants brought a class action suit. Although DOL was advised that the parties were settling, it advised that it was continuing its investigation and that it would not be bound by settlement. The case brought by the private litigants was settled and all claims were dismissed with prejudice.

The Court of Appeals reversed the District Court’s decision that DOL was barred under res judicata based upon the private litigant’s settlement. The Court stated that this doctrine does not apply unless “the parties to both actions, or those in privity with them, are identical.” Id., at 1424, citing Richardson v. Alabama State Bd. of Education, 935 F.2d 1240, 1244 (11th Cir. 1991). It further noted that a nonparty to a prior decision cannot be bound by it unless he had sufficient identity of interest with a party that his interest are deemed to have been litigated”. Herman, at 1424, citing In re Birmingham Reverse Discrimination Employment Litigation, 833 F.2d 1492, 1498 (11th Cir. 1987) aff’d sub nom. Martin v. Wilks, 490 U.S. 755 (1989). The Court concluded that res judicata did not apply because the Secretary of DOL was not a party to the settlement and has “national public interests separate and distinct” from those of the private litigants. Herman, at 1424. The Court cited a series of cases from other circuits recognizing that the national public interests in bringing an ERISA enforcement action are wholly distinct and separate from those of private litigants who seek redress for individual grievances. These decisions note that under ERISA’s statutory framework, private plaintiffs do not adequately represent, and are not charged with representing the broader national public interests represented by the Secretary.

There is no evidence that the FAA controlled, funded, or directed NBAA’s litigation, or that it played any substantive role in that case. Indeed, there is nothing in the record demonstrating any involvement in this litigation by the FAA. Although the NAA notes that NBAA and the FAA had been communicating regarding the Stage 2 ban, and cites the sequence of events regarding the NBAA case and the Part 16 investigation, these factors are not sufficient to establish privity under any of the standards announced by the courts.

Further, in filing its complaint NBAA represented its membership, not the FAA or the public interest. NBAA’s interests were narrow; and its litigation tailored to represent the concerns of its individual members. The NAA asserts that the focus of both NBAA and the FAA was on the Stage 2 ban. However, in examining the relationship between NBAA and the FAA for purposes of a privity determination, it is appropriate to look at the nature of the organizations and the interests which they represent. I cannot conclude that NBAA, a private organization, represented the interests of the FAA or the public in its complaint against the NAA. Clearly, NBAA did not have any authority to represent the FAA or any permission from the agency to represent its interests in that case. In fulfilling its statutory obligations, the FAA must consider broad policy issues, ensure consistency in the implementation of its many programs across the county, be cognizant of national implications of its actions, and in particular, protect the integrity of the federal grant program. Given the FAA’s broad responsibilities over the nation’s airways and airports, and in particular its exclusive authority to implement and enforce compliance with the airport grant program, I find that the FAA was not in privity with NBAA, an organization which represents only one segment of the wide spectrum of the aviation community. Indeed, it would be inconsistent with the broad powers given to the FAA by Congress and the obvious need for a consistent and expert treatment of the nation’s air transportation system to allow private litigants to essentially usurp the authority of the FAA by filing private lawsuits and creating precedent which ties the hands of the agency.

While most Courts look at the issue of whether a nonparty is in privity with a party when examining the application of res judicata, some courts have also looked at whether the party served as the “virtual representative” of the nonparty, so as to satisfy this element of res judicata. Whether virtual representation is considered an extension of privity or merely an alternate method of analyzing the ingredients of the res judicata recipe is not always clear. The Courts have not precisely defined the limitations of this concept or distinguished it from the concept of privity. At times it seems to be just another tool to determine whether the element of privity has been met. In any event, it does not support the NAA’s argument for the same reasons noted above. For example, in Jaffree v. Alabama, the Court stated that virtual representation supports a finding of privity “when the respective interests are closely aligned and the party to the prior litigation adequately represented those interests.” citing Delta Air Lines v. McCoy Restaurants, Inc., 708 F.2d 582, 587 (11th Cir. 1983). The Court noted the additional relevant factors are “participation in the first litigation, apparent consent to be bound, apparent tactical maneuvering, and close relationships between the parties and nonparties.” Jaffree, at 1467, citing 18 Wright & Miller, Federal Practice & Procedure, sec. 4457, at 494-499. . See also Pollard v. Cockrell, 578 F.2d 1002, 1008 (11th Cir. 1978), concluding that virtual representation “demands the existence of an express or implied legal relationship in which the parties to the first suit are accountable to the non-parties who file a subsequent suit raising identical issues.” [48] Regardless of the breadth of this concept, for all of the reasons noted above, I find that NBAA did not serve as a virtual representative of the FAA. [49]

In its Reply to the FAA’s Notice of Investigation, the NAA relied upon NLRB v. Donna-Lee Sportswear Inc., Co., 836 F.2d 31 (1st Cir. 1987), in arguing for the preclusive effect of NBAA. Although this decision was not cited in the NAA’s post-hearing brief, I have examined the arguments which both parties have made with regard to that decision, and I conclude that Donna-Lee is distinguishable from the present proceeding and does not support a finding of either res judicata or collateral estoppel. In Donna-Lee, the Court applied res judicata against the NLRB, which sought to rule on an unfair labor practice charge after a federal court, in a case brought by the union, had determined that the contract was invalid. The NLRB was not a party to that case, and the issue in Donna-Lee was whether the Board could be considered to be in privity with the union.

Several factors distinguish Donna-Lee from this Part 16 case. First, the Court determined that the issue in the initial action before the district court and the subsequent proceeding before NLRB was identical, in that both proceedings involved the question of the validity of the contract. The Court concluded that the legal interests and relationship of the NLRB and the union local were so closely identified that they should be bound. However, the issues in NBAA and this Part 16 proceeding are not identical. The most obvious difference is that the NBAA Court did not consider the matter of the NAA’s compliance with its statutory and contractual obligations under its grant assurances. In Donna-Lee, the Court also noted that the NLRB has no power to investigate the alleged unfair labor practice allegation until a formal charge was filed by the union, whose interests were determined by the district court’s decision. However, the FAA, has the responsibility and independent authority to investigate issues of noncompliance with an airport’s grant assurances. 49 U.S.C §47101-47137; 14 C.F.R. §16.101. See e.g. Northwest Airlines v. County of Kent, 510 U.S. 355 (1994). The FAA’s investigation of NAA’s Stage 2 ban was independent of charges brought by a party, and was unrelated to the action brought by NBAA.

Another distinction between these two proceedings is that in Donna-Lee the Court found that the union and the General Counsel for the Board took identical positions in the unfair labor practice investigation. However, as the FAA points out in the Director’s Determination, NBAA is not even a party to this Part 16 investigation and has interests which are, in any event, different from those of the FAA. [50] The interests of the FAA are not “virtually identical” to that of NBAA.

In Donna-Lee, the Court also recognized the “general policy that the Government should not be precluded from litigating issues of public importance which may have been decided in an earlier action between private parties.” Id., at 35, citing U.S. v .Mendoza, 464 U.S. 154 (1984). However, it was persuaded that there were no broad policy questions involved in that proceeding, and that the determination of the Court would not have a wide ranging effect on labor relations. Id., at 35. However, there is much more at stake in this Part 16 investigation than the private interests of private litigants. At issue here are major legal and policy issues which could have significant impacts on the nation’s aviation system. This case involves far more than a mere contract dispute between two private parties, and it requires the resolution of issues which implicate the broad responsibilities of the federal government over the airports which serve as the foundation for this system.

For similar reasons, NLRB v. Heyman, 541 F.2d 796, also referenced by both parties earlier in the Part 16 proceeding, is neither controlling nor persuasive. In Heyman, both the court and the Board addressed the same contract issue, and the union raised the same issues before the Board as it had raised before the Court. Here, the FAA is examining a grant compliance issue which was not raised by NBAA or considered by the Court. In addition, the statutory scheme set out by Congress to handle contract disputes references the overlapping jurisdiction of the courts and the NLRB. No such scheme exists with regard to the issues in this Part 16 proceeding.

In conclusion, the FAA and NBAA are not in privity, and NBAA did not serve as the virtual representation of the FAA so as to preclude the agency from considering the issues in this hearing under the doctrine of res judicata. [51]

Although the NAA’s post-hearing brief focuses on the concept of res judicata, I also find that NBAA is not binding on the FAA under the concept of collateral estoppel as well. I.A. Durbin, supra, identified the elements of collateral estoppel or issue preclusion, which forecloses relitigation of an issue of fact or law that has been litigated and decided in a prior suit. It described the requirements of this principle as follows: (1) the issue at stake must be identical to the one involved in the prior litigation; (2) the issue must have been actually litigated in the prior suit: (3) the determination of the issue in the prior litigation must have been a critical and necessary part of the judgment in that action; and (4) the party against whom the earlier decision is asserted must have had a full and fair opportunity to litigate the issue in the earlier proceeding. I.A. Durbin, at 1549. See also CSX Transportation, Inc. v. BMW E, 2003 LEXIS 7484 (April 21, 2003); Citibank, supra, at 1501, n.6; Olmstead, supra, at 1323.

The most critical element of collateral estoppel which is obviously missing is that the FAA, which was not a party (or in privity with a party) in the court action, did not have an opportunity to litigate the issues pending in this administrative proceeding. It would be inconsistent with the agency’s broad responsibilities in administering the federal aviation laws, and in particular in ensuring compliance with grant assurances by airport sponsors, to consider it barred from fulfilling its responsibilities when private parties independently seek redress for their alleged injuries. See United States v. East Baton Rouge Parish School Board, 594 F.2d 56, 58 (5th Cir. 1979)(citing the general principle that the federal government will not be barred from independent litigation by the failure of private party); Herman v. South Carolina, supra, at 1426; United States v. Barnette, 10 F.3d 1553, 1561 (11th Cir. 1994) (rejecting the application of res judicata in a situation where the there was a specific statutory remedy which would have been unavailable to the government.).

Moreover, as already noted herein, the issues in NBAA are not identical to those in this Part 16 proceeding. In fact, NBAA did not have a legal right to raise grant compliance issues in its litigation. Four T’s, Inc, v. Little Rock Municipal Airport Commission, 108 F.3d 909, 916 (8th Cir. 1997). The administration and enforcement of aviation laws, including grant agreements, are fundamentally within the authority of the FAA. See 49 US.C. §47101 et seq.; New England Legal Foundation, supra; Arapahoe, supra; American Airlines, supra.

The Airport Authority also argues that whether described as res judicata or comity, equitable principles require that NBAA be considered binding on the FAA in this proceeding. However, the Airport Authority has not cited any legal authority for its argument in this regard, and for the reasons noted above I conclude that NBAA does not have preclusive effect in this matter.

In conclusion, I find that NBAA is not binding on the FAA in its administrative adjudication of the issues raised in the Notice of Investigation.

II. Whether The NAA Has A Proprietary Interest In Reducing Noise From Aircraft Using The Airport Sufficient To Bring The Stage 2 Ban Within The Scope Of The Proprietary Powers Exception To Federal Preemption, Such That The Stage 2 Ban Is Not Preempted By Federal Law.

The FAA argues that although an airport proprietor, pursuant to the proprietary exception to federal preemption of aviation noise (discussed below) can regulate aircraft noise at its airport, the exception is based upon the liability of the proprietor for excessive noise and can only be exercised by a proprietor with actual or potential liability. The FAA contends that the NAA does not face any such actual or potential liability and is therefore preempted from enacting access restrictions to control noise. In these circumstances, the agency concludes, an airport access restriction would be per se unreasonable. The Airport Authority disputes that its actions herein are even subject to a preemption doctrine, claiming that ANCA provides the authority for the Stage 2 ban. Assuming, arguendo, that the preemption doctrine applies, the NAA states that the proprietary powers exception does not require a showing of actual or potential liability for aircraft noise. Finally, the NAA argues that the FAA is not in a position to evaluate the Airport Authority’s liability concerns, and that the agency did not meet its burden of proof on this point.

At the outset, the issue of federal preemption -- regardless of its scope -- must be considered in evaluating the NAA’s Stage 2 ban. It is by means of the proprietary exception to federal preemption, rather than pursuant to any authority granted by ANCA, that the ban has been imposed. This statute, and in particular, 49 U.S.C. §47524(b), merely provides for a process by which proposed restrictions of Stage 2 aircraft are to be reviewed. [52] It describes certain requirements which an airport operator must fulfill in analyzing and publishing a proposed restriction. However, by itself this section does not provide the authority for a restriction in an area which the federal government has a long history of preemption, and where its control is so extensive. See City of Burbank v. Lockheed Air Terminal, 411 U.S. 624 (1973) (explaining the pervasive nature of federal preemption in this area.) The FAA, the agency charged with implementing ANCA, has consistently taken the position that this statute “…in no way grants airport operators any authority they did not have prior to the Act.” 56 Fed. Reg. 48662 (1991). This Act did not alter the fundamental relationship between an airport proprietor and the federal government regarding the regulation of aircraft noise. Instead, it provided a mechanism for an airport to use in proposing access restrictions which are still subject to the substantive limitations of the proprietary powers exception. Furthermore, there is nothing in the legislative history of ANCA which can be interpreted as superceding the long line of preemption cases which both parties have cited in their pleadings.

As noted previously, the FAA has broad responsibilities to regulate and oversee aviation. In general, the oversight and implementation of aviation laws is assigned to the FAA under the FAA Act of 1958, as amended and recodified at 49 U.S.C. §40101 et seq. For example, the federal government has exclusive sovereignty over the airspace of the United States. 49 U.S.C. §40103(a). Congress has provided the FAA with extensive and plenary authority regarding the efficient use and management of the navigable airspace, air traffic control, air navigation, facilities, and the safety of aircraft and persons and property on the ground. See, for example, 49 U.S.C. §40103(b)(1) and (2); §44701 et seq. The FAA has exercised its aviation safety authority by regulating the certification of airmen, aircraft, air carrier, air agencies, and airports, under 49 U.S.C. §44701 et seq. The FAA has promulgated a vast array of regulations set forth in Title 14 of the Code of Federal Regulations which are designed to fulfill the role given to it by Congress.

In the area of aircraft noise, the federal government’s role is similarly paramount. Pursuant to 49 U.S.C §44715, the FAA in 1969 issued noise regulations, set forth in 14 C.F.R. Part 36, which describe noise standards for the certification of aircraft and under which the stage classifications at issue in this proceeding were created. In 1979, Congress passed the Aviation Safety and Noise Abatement Act (ASNA), 49 U.S.C. §47501, which directed the FAA to issue regulations governing noise measurement at airports and to identify land uses compatible with various exposures to noise. In addition, ASNA authorizes the agency to provide grants to airport sponsors for sound mitigation efforts, including the development of noise exposure maps (NEM); comprehensive noise compatibility planning, soundproofing, land acquisition, and other measures designed to mitigate aircraft noise around airports. [53] The agency promulgated regulations at 14 C.F.R. Part 150 in order to implement this statute.

Additional major legislation providing authority to the FAA in the area of aircraft noise is the Airport Noise and Capacity Act (ANCA), 49 U.S.C. §4721, which, inter alia, provided for the phase out of certain classes of aircraft, and for the review of access restrictions. The latter aspect of ANCA resulted in the promulgation of 14 C.F.R. Part 161.

The Supreme Court in City of Burbank v. Lockheed Air Terminal, 411 U.S. 624 (1973), first addressed the relationship between a municipality and the federal government regarding the regulation of aircraft noise. The Court held that the federal government had preempted the regulation of aircraft noise by state or local governments. Thus, local curfews or other restrictions on the use of an airport were beyond the police power of a local government. The Court based its opinion on “the pervasive nature of the scheme of federal regulation of aircraft noise…” [54] Id., at 633. This basic principle has not been altered in the years since Burbank, and indeed it is not this precise holding which forms the controversy over the issue of preemption. However, despite finding federal preemption over aircraft noise, the court referred to a June 22, 1968, letter from the Secretary of Transportation, which left open the possibility that a State or local public agency acting as a proprietor of an airport could regulate aircraft noise at its airport. Id., at 635 n.14.

Although the courts have not clearly described the scope of what has been referred to as the either “proprietary powers exception” or the “proprietor exception”, the initial basis for this exception was generally considered to be the liability which an airport proprietor can incur for allowing excessive noise. See Griggs v. Allegheny County, 369 U.S. 84 (1962). In San Diego Unified Port District v. Gianturco, 651 F.2d 1303 (9th Cir. 1981), cert. denied sub nom. Department of Transportation v. San Diego Unified Port District, 455 U.S. 1000 (1982), the Court looked at Griggs and Burbank, concluding that:

Since airport proprietors bear monetary liability for excessive aircraft noise under Griggs…, fairness dictates that they must also have power to insulate themselves from that liability. But be- fore an entity may posses this power, it must bear the responsibil- ity, either actual or potential, for excessive aircraft noise.
Id., at 1316-1317 (footnotes omitted.). See also Pirolo v City of Clearwater, 711 F.2d 1006, 1009 (11th Cir. 1983), reh’g denied, 720 F.2d 688 (11th Cir. 1983), wherein the court first commented upon the series of federal cases which indicate that potential liability is the determining factor in whether noise regulations are within the proprietor exception, but did not decide the question of whether the City of Clearwater’s potential liability would justify the exercise of its proprietary power to regulate aircraft noise because the City had contracted away its proprietary powers to impose the noise restriction.

However, some courts have gone further in applying, or at least describing the extent of the proprietary powers exception. For example, in British Airways Board v. Port Authority of New York, 558 F.2d 75, 83 (2nd Cr. 1977), aff’d as modified, 564 F.2d 1002 (2nd Cir. 1977), the court stated:

Indeed, since the operator controls the location of the facility, acquires the property and air easements and is often able to assure compatible land use, he is liable for compensable takings by low-flying aircraft [citing Griggs]. The right of the proprietor to limit his liability by restricting the use of his airport has been thought a corollary of this principle. It is perhaps more important, however, that the inherently local aspect of noise control can be most effectively left to the operator, as the unitary local authority who controls airport access. It has always seemed fair to assume that the operator will act in a rational manner in weighing the commercial benefits of proposed service against its costs both economic and political.
The court added that “…Congress has reserved to proprietors the authority to enact reasonable noise regulations, as an exercise of ownership rights in the airport, because they are in a better position to assure the public weal.” Id., at 85.

In Santa Monica Airport Association v. City of Santa Monica, 659 F.2d 100 (9th Cir. 1981), the court, in referring to Burbank and Griggs, explained that the Supreme Court’s decision to leave open the scope of the proprietary powers exception in Burbank was based upon Griggs and the fact that “[M]unicipal airport owners needed some means of limiting their liability under Griggs. Environmental quality control ordinances by municipal proprietors are among those means.” Santa Monica, at 103. The court then affirmed the noise ordinances enacted by the city (as the proprietor). However, in a footnote the Court rejected the plaintiffs’ argument that the proprietor exception should be limited to regulations necessary to avoid Griggs liability, stating that the city “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.” [55] Id., at 104. n.5.

In another case from the 9th Circuit, Alaska Airlines v. City of Long Beach, 951 F.2d 977, (9th Cir. 1992), the court, in upholding the proprietor’s noise restrictions, determined that although an indemnity clause allowed a right of recovery against the airport users, it did not alter the proprietor’s underlying liability. The court then added that the rationale for the exemption extends “beyond purely financial concerns”, citing its previous language in the footnote from Santa Monica. However, it is significant to note that in Alaska, the airport proprietor was actually faced with numerous noise-related nuisance and inverse condemnation claims.

In National Helicopter Corp. of America v. City of New York, 137 F.3d 81 (2nd Cir. 1998), the court again appeared not to focus on the issue of liability when it allowed the city to impose weekday and weekend curfews based upon the exercise of its proprietary powers, acknowledging the federal government’s general preemption of this area and the more limited role for the local proprietor. However, there was no discussion of liability, and the court referred to the proprietor exception as allowing proprietors to issue “…reasonable, nonarbitrary and non-discriminatory regulations of noise and other environmental concerns at the local level.’’ Id., at 88, citing British Airways Board, supra, at 84.

The question in this Part 16 proceeding is not whether the federal government has preempted the field of aviation noise -- for there can be no doubt that it has -- nor is it whether the regulation of airport noise at the local level is limited to the airport proprietor -- as there can be no doubt about this issue as well. The significant question is whether an airport proprietor must demonstrate some degree of actual or potential liability from excessive aircraft noise in order to exercise this authority, or whether its status as an airport proprietor is sufficient to bring it within the exception to federal preemption. On this question, as the survey of cases above reflects, the courts have not clearly spoken. Contrary to the NAA’s assertion, the FAA’s position would not reverse “decades of established law”. [56] On the other hand, it is equally evident that the cases cited by the agency are not dispositive. The only issue which thus far has seemed to matter to the courts is that the entity enacting the noise restrictions was, in fact, the airport proprietor, with all the powers and responsibilities which normally flow from having operational control of an airport. The trend in the courts’ analyses has been to move beyond liability as the sole basis of the proprietary powers exception, while still precluding the exercise of police powers by a municipality which is not a proprietor. If liability has been an issue to the courts, they have appeared to consider it inherent in the proprietor’s role as the operator of the airport, and have not required specific proof of pending or potential lawsuits. Although the absence of any holdings which have specifically addressed this issue gives the FAA the opportunity to argue for its significance and inclusion in the preemption discussion, making this factor a required element for the proprietary powers exception would appear to expand the criteria for application of the exception beyond which the courts have determined is necessary. Accordingly, even discounting the expansive dicta of some of the cited decisions, I do not find that proof of actual or potential liability must be shown by an airport proprietor in order to fall within the scope of this exception to federal preemption. To the extent that actual or potential liability remains the basis for the proprietary powers exception, no further indicia of liability needs to be shown other than proof that the entity is the proprietor of the airport.

Accordingly, I find that the proprietary powers exception to Federal preemption does not require evidence of actual or potential liability due to excessive aircraft noise. Accordingly, the Stage 2 ban is not preempted by Federal law.

Continued in Part Two