Land Use Regulation Considerations for Real Estate Transactions
Involving Civil Airports and Surrounding Developments



Law 331, Real Estate Transactions
Gonzaga University School of Law, Fall 1994

By Richard Glover
November 22, 1994


Table of Contents

I Introduction and Scope

II Airport Operations Generally

III NEPA As a Land Use Regulation

A. FAA Authority to Regulate Airport Operations
B. The Scope of NEPA
C. The Compliance Process
1. Categorical Exclusions
2. Environmental Assessments
D. Problems with the FAA Approval Process
1. Jurisdiction
2. Nature of a Federal Action
3. Adequacy of the FAA's Studies
4. Standard of Review
E. Conclusion of NEPA Requirements
IV. Restrictions on Structures Constituting Hazards to Air Traffic
A. What Kinds of Structures Must Be Reported?
B. When Must Notice Be Given?
C. Determination of Hazard
D. Legal Effect of Designation As a Hazard
E. The Effect of Hazards Near a Proposed Airport
V. Notification Requirements for New Airports, and Safety Review

VI. Local Zoning Restrictions

VII. Conclusion

Appendix: Excerpts from the FAA's "Airport Environmental Handbook"


I Introduction and Scope

The use of real estate as an airport facility is common practice. Transactions involving the development of airports and related facilities are subject to control by local, state and federal regulation. These regulations operate as land use restrictions on the airport development and surrounding land.

Federal regulation of airport facilities is handled by the Federal Aviation Administration (FAA), an agency of the U.S. Department of Transportation. The FAA has been given authority to promulgate regulations for the safe use and designation of air transport facilities in the United States. As a federal agency, they are bound by the requirements of the National Environmental Policy Act (NEPA) to enact regulations that consider environmental impacts. Hence, NEPA has become a land use regulation for the development of airports. NEPA requirements must be met to obtain FAA approval of an airport.

As part of the FAA statutory duties to develop a safe system of airports and facilities, the FAA has promulgated regulations requiring notice of proposed structures near airports. These structures are reviewed to determine if they constitute a hazard to air traffic. This makes the FAA regulations for such structures a form of land use regulation.

State and local governments have the power to enact zoning regulations that apply directly to airport operations. These ordinances must be complied with, or variances obtained from them, for a airport operator or developer to legally proceed with the airport.

The following is a discussion of these land use restrictions as they relate to an airport development. NEPA's impact as a land use regulation on the FAA airport approval process is examined. The FAA authority to regulate structures that may be hazards to air traffic is discussed. FAA aeronautical studies and zoning regulations as they apply to airport operations and development are discussed.


II Airport Operations Generally

An airport project can be prospective or retroactive: a buyer or developer may wish to designate a new airport or expand an established one. A seller or commercial developer may wish to dismantle all or part of an existing airport to use the land in an alternate capacity. The role of the FAA is much more expansive in the former case. However, when old airports are closed, the resulting traffic flow changes, if any, to other airports are well within the scope of FAA authority. A typical airport actually consists of several "industries", including aircraft fuel storage, sales, and ground transportation links. City services are typically involved in the form of power, water and sewage. Some type of construction is common, usually hangars and commercial buildings, sometimes involving very extensive terminals.

Airports are best located some distance away from population centers (but not too far, for obvious reasons), and sometimes involve first time development of pristine land. Each of these factors may invoke a specific environmental statute, or similar land use regulation not involving the FAA. Fuel storage, for example may involve compliance with the Federal Toxic Substances Control Act, as well as a State Underground Tankage Act. These statutes are land use regulations, and are considerations for a developer or operator. However, they are not a topic of this discussion. The only environmental statute discussed will be NEPA as enacted by the FAA. Real estate surrounding an airport is subject to regulation by the FAA. The FAA makes a determination if proposed buildings or structures will be a hazard to air traffic.

The FAA must maintain clear zones for aircraft to pass on their way to and from the airport. This makes intuitive sense: the front page of USA Today will likely have many color photos of the aftermath should a land owner decide to erect his own Eiffel Tower next to a busy airport. Strangely, the FAA has no legal authority to prevent such a construction or use, but the determination of a structure as a hazard is an important consideration to the prospective buyer or developer.

Airports exist in a community at the pleasure of the local zoning board. Even existing airports can be eliminated by rezoning the property. A general limitation is essentially one of preemption by specific legislation. Obviously, a prospective purchaser must be fully informed of the zoning restrictions: the planned airport project may be prohibited.


III NEPA As a Land Use Regulation

The following discussion focuses on the impact NEPA has on airport operations. Within the FAA's authority is the control and regulation of the designation, construction, maintenance, and operation of all civil airports in the United States. FAA actions are considered "Federal Action" within the meaning of the National Environmental Policy Act (NEPA).

Activities by States, municipalities, corporations or individuals must conform to the regulations promulgated by the FAA in compliance with NEPA. Environmental factors must be weighed by the FAA before granting approval of a project.

The FAA regulations promulgated under NEPA, and a look at the litigation that has ensued from those regulations are examined. The topics of litigation examined are jurisdiction, nature of FAA actions, adequacy of FAA actions, and standard of judicial review.


A. FAA Authority to Regulate Airport Operations

The FAA has been granted broad powers by Congress to regulate air traffic and commerce. [FN1] Even though the FAA is technically an Executive Agency under the Department of Transportation, specific powers and responsibilities have been granted to it by statute. The FAA has been given authority to promulgate regulations for the "safe use and conduct of all airspace in the US". [FN2] This gives the FAA regulatory authority for the designation of "airports" in the U.S. In Northwest Airlines, Inc. v. Minnesota,{FN3} the U.S. Supreme Court noted that the commencement of movement of an aircraft on the ground marked the beginning of the FAA's arm. The FAA has promulgated specific internal regulations to include all airport designations, relying on the broad language of "all airspace operations."

One conspicuous exception is the topic of noise pollution. Surely no one would argue that noise levels "impact the quality of the human environment". It is no surprise that the FAA has been granted specific authority and responsibility to deal with increased noise levels connected with air travel [FN4]. Their approach is in reality twofold: airport planning, the topic of this discussion, and aircraft design standards, a topic best left to engineers.


B. The Scope of NEPA

The FAA recognizes the burden placed upon it for environmental concerns by NEPA, but it makes no effort to hide its priorities{FN5}. "The FAA's objective is to enhance environmental quality and avoid or minimize adverse environmental impacts that might result from a proposed Federal action in a manner consistent with the FAA's principle mission to provide for the safety of aircraft operations." [FN6] This "manner consistent" language is the administrative part of NEPA: an agency must "consider" environmental factors in taking Federal action. [FN7] What action is taken after considering these factors is generally up to the agency. NEPA directs agencies to consider the impacts of a proposed action, including specific things [FN8]. The FAA language of seeking to "avoid or minimize adverse ... impacts", [FN9] is consistent with "all practical means consistent with other essential considerations..." in NEPA §101(b). The FAA is responsible for carrying out its functions with regard to the enabling statute from Congress. [FN10]


C. The Compliance Process

The Airport Environmental Handbook is the FAA's regulatory means of complying with NEPA: it sets out each step of the process of obtaining environmental approval of the sponsor's project. These FAA orders make frequent reference to the CEQ (Council on Environmental Quality) regulations. These regulations were promulgated by an independent council when NEPA was first adopted in 1969, and represent the format and scope the environmental studies must use. The FAA is quick to point out that environmental approval is not equivalent to approval of the project: it is just one step in the process. The FAA is not an active participant in most projects. The sponsor (the developer or proponent of the project) will be active in preparing the environmental studies, and the FAA's function in the process is almost exclusively executory. The FAA will not do any Environmental studies: only review a sponsor's plan for adequacy.

Ultimately, the agency will take one of three actions on the sponsors plan. 1) Approve as a categorical exclusion, 2) do an environmental assessment (EA), then an EIS (environmental impact statement) if indicated or 3) do an environmental assessment (EA), and report a FONSI (finding of no significant impact).

1. Categorical Exclusions: Eleven actions are categorically excluded, and will not require further study. [FN11] If a developer seeks approval of one of these types of projects, environmental approval is almost certain, and the paperwork will be minimal. The agency is quite specific about these items, and recognizes the "cumulative effect" provision of NEPA is deciding these categorical exclusions. [FN12] In other words, multiple developments may require further study, even though each action is individually excluded. Certain "transactions" are categorically excluded, but are subject to EA and EIS or FONSI if they have specific results, or certain characteristics. [FN13] This is a means for the FAA to retain a case-by-case control over borderline projects. The FAA is much more specific with its treatment of a cumulative impact, giving examples as a means of clarifying CEQ §1508.7, and complying with the meaning of CEQ §1508.25 (sections dealing with cumulative impacts). [FN14]

2. Environmental Assessments: Fortunately, the FAA is quite specific about the content of the Environmental Assessments. [FN15] Here is where the agency will address other specific statutes to insure compliance. While "consideration" of certain impacts is necessary under NEPA, specific activity is not. Specific action MAY be required under other statutes, precluding the adoption of the sponsor's plan.

Once the EA is complete, within the meaning of CEQ §1508.9, the FAA reviews it as required by CEQ §1506.5(b). Input from the review process is to be contained in it as well. [FN16] Adoption of the final product makes the document an official government publication. This permits the FAA to use it in determining if an EIS or FONSI will result.

The FAA makes this Environmental Assessment (EA) available to the public as required by CEQ §1506.6, with the exception being if the Environmental Assessment (EA) is to be part of a finding of no significant impact (FONSI) or a draft EIS to be made available in a reasonable time.{FN17}

i. FONSI: The FAA is the sole evaluator of the EA. If "no thresholds indicating the potential for significant impact are exceeded for the proposed action....the FAA decision will be to prepare a [FONSI]". [FN18] The decision to proceed with an EIS or approve by FONSI is left to the FAA. The format of the FONSI is simple [FN19], and the finding is coordinated with necessary agencies and published. The airport project then receives environmental approval.

ii. EIS Required: If the FAA requires an EIS to be completed on the project, it addresses the preparation, content and processing of it. [FN20] The FAA references the CEQs extensively in preparing an EIS. [FN21] The FAA has adopted the CEQ recommended format. [FN22] Specific environmental impacts are to be studied: the list is exhaustive. [FN23] Problems with licensing or other statues are to be addressed in each category. [FN24] Specific distributions are made of the draft EIS, including distribution to the public. [FN25] Comments from these distributions are incorporated into a new draft, if the comments show the original to be inadequate. An EIS is a lengthy and exhaustive document, often running thousands of pages long, and encompassing several volumes.

The final EIS is distributed, and opened to comment. A decision can be made 30 days after publication of the final EIS, or 90 days after any draft EIS. [FN26] The FAA has the authority to approve or disapprove the action based on the EIS. The decision they make is recorded (ROD) and is generally only subject to judicial review under an arbitrary and capricious standard. Conditional approval is possible.


D. Problems with the FAA Approval Process

Challenges have been made to the FAA in following and implementing NEPA requirements. A sampling of the litigation conducted in connection with the FAA's NEPA responsibilities follows:

Jurisdiction

The statute enabling the FAA to make airport approvals has specific requirements as to jurisdiction. [FN27] A challenge to the FAA's approval of a 20 year plan for the expansion of Chicago's O'Hare Airport was made in Suburban O'Hare Com'n v. Dole [FN28] in U.S.District Court. The Court dismissed the claim for lack of subject matter jurisdiction. The approval authority for the airport plan itself is given to the FAA under 49 USC §1486. In this section, review of FAA orders is vested exclusively in the Courts of Appeals. A challenge made to the FAA's action under NEPA does not give the District Courts an independent source of review. [FN29] Since all the FAA's orders for approval of airport operations are final orders under 49 U.S.C. Chapter 20, all the challenges to their actions are necessarily going to be done in the Court of Appeals. Making such orders in compliance with NEPA does not avoid this requirement.

The plaintiffs challenged the FAA's decision to skip an EIS of a new runway in City of Southlake v. F.A.A. [FN30] In 1974, an EIS was completed for the development of the DFW airport. It included a plan for the new runway (13R). The airport planners reconsidered the new runway in 1983, just before the construction for it was to begin. The FAA decided that the construction plans were still consistent with the original EIS after doing a "technical assessment", and required no further action by the planners. The adjacent city discovered that the new runway will have significantly higher noise levels than contemplated by the EIS or technical assessment, and claim a new EIS is necessary. They wish to stop use of the completed runway until this is done, and went to U.S. District Court for an injunction. The Court dismissed the action for lack of subject matter jurisdiction, finding that the decision not to require another EIS of the runway in 1983 was a final order by the FAA, reviewable only by the Court of appeals, under 49 USC §1486. The first time this issue came up, [FN31] the District Court found that it had jurisdiction, but was overturned by the Fourth Circuit. [FN32]


Nature of a Federal Action

The FAA faced a challenge to its actions involving changes to flight patterns aloft in Runway 27 Coalition, Inc. v. Engen. [FN33] In a District Court action (not an airport approval, but an airspace use question, so 49 U.S.C. §1486 is not applicable), the plaintiffs alleged that the FAA did not properly study the changes it made in departure tracks and flight procedures for an existing runway at the Boston Logan Airport. The plaintiffs argued NEPA applies to approving airspace uses. The Court reviewed the procedures the FAA made to comply with NEPA and the CEQ regulations. In their own procedures, the FAA requires study of flight procedures aloft where they are over noise sensitive areas. Specific types of procedure changes are listed as requiring EAs.

The Court did an impressive job of dealing with the technical issues of the air traffic situation. In its analysis, they found that even though no "new" areas of noise sensitivity are affected, the areas previously studied were impacted in a new way. This made the FAA action subject to a new environmental assessment (EA) required by NEPA. Now comes the fun part: the FAA claimed that it has the authority to categorically exclude such actions, and really could exempt itself from doing an environmental review. This is of course true, and they would only be subject to an "arbitrary or capricious" standard of review of such an action. But, the Court essentially found a "smoking gun" in the FAA's procedures:

Defendants next argue that even if the agency action in this instance was not within categorical exclusions, it was nevertheless also not among the categorical inclusions, and that the agency made an implicit, if not explicit, determination, that the agency action was not a "major Federal action significantly affecting the quality of the human environment" and that this determination was not arbitrary, capricious, based on clearly erroneous findings of fact, or otherwise contrary to law. In significant part, the defense argument is founded on the premise that the agency was free, in its discretion, to authorize Runway 27 departure practices that imposed on individual plaintiffs significant harmful effects from noise of aircraft below 3,000 feet passing above their residences as long as the agency reasonably found that no feasible alternative procedures and practices for departures from Runway 27 would produce less overall harm to the whole community served by Logan Airport. One problem with this contention is that the agency did not make any explicit finding of this kind. For the reasons stated...above, I conclude that agency action cannot be supported by a contention that the record would have supported a particular finding when the record also discloses no basis for inferring that such a finding was in fact made. [FN34]
The Court is going to hold the agency's feet to the fire. If they say they will do something in a proscribed manner, they cannot later claim that they will not this time, because NEPA allows them the discretion. Eventually, the Court requires the FAA to do an environmental assessment (EA), and to take appropriate action on it: prepare either a FONSI or EIS.

The FAA was involved at an airport in Michigan that required cleaning up a hazardous waste site in Miron v. Menominee County [FN35]. The airport grounds were ordered to be cleaned up with a special procedure from a County Court. The FAA was asked to help fund the cleanup with a grant under the Airport Improvement Act by the local department of natural resources, a county agency delegated authority for the cleanup by the EPA. The FAA funded the cleanup, and did so without an Environmental Assessment (EA), considering the grant of money categorically excluded, since it was not a "major federal action."

The plaintiffs, the nearby landowners, had concerns about the FAA funding what appeared to be expansion of the airport. They claimed that the purpose of cleaning up and filling the dump site was to expand the airport and increase airport operations. The Court notes that there is merit to considering funding by a federal agency for a local project a major federal action, but finds distinguishing factors in this case. The FAA had not granted money for anything but the cleaning up of a site and the installation of a security fence during the cleanup operations. No airport plan for expansion or change was approved. The Court rejected a claim made by the plaintiff that "... significant federal funding turns what would otherwise be a local project into a major federal action...." [FN36] by noting that the funding was not specifically for an expansion project.

While [funding may generally constitute federal action], the Court remains unpersuaded that it applies under the unique circumstances presented here. Not only are the primary actors state and local governments, but their actions are specifically required by court order. The Court remains unpersuaded that the funding by the FAA of remedial action which the local governmental entities are judicially compelled to undertake, irrespective of the source of funds, is sufficient, without more, to transform the project into a major federal action... Award of the grant does not constitute approval of an airport layout or expansion plan and does not constitute a commitment to install or approve installation of the proposed lighting system. Again, the environmental effects associated with the landfill containment would occur irrespective of, and are not contributed to by, the instant federal involvement. [FN37]
The Court ultimately found this to be a grounds for determining that the plaintiff would not succeed on the merits of their claim, (an environmental assessment (EA) was necessary) an essential element of the requested injunction, and dismissed the case.


Adequacy of the FAA's Studies

In Citizens Against Burlington, Inc. v. Busey, [FN38] the plaintiffs challenged the approval of an airport in Toledo OH, saying that the FAA had failed to consider the alternatives to the proposed action. The Court sets forth the requirement of reasonableness in the agency's choice of alternatives, and pronounces that it will in general defer to the agency's choice. While a definition of reasonableness is not forthcoming from Judge Clarence Thomas' opinion, he does give some guidance: "When an agency is asked to sanction a specific plan,... the agency should take into account the needs and goals of the parties involved in the application." [FN39]

In approving airports, the FAA must defer to the directives given to it by Congress: to promote the building of a safe and effective air transport system of airports and facilities. [FN40] Where a municipality wishes to expand its facilities to encourage growth and to service its population, the FAA must attempt to accommodate their request, essentially by Congressional mandate. A "no action, no airport" proposal is in conflict with this mandate, and therefore not considered reasonable. The Court looks to NEPA as a decision assisting tool, and the scope of the environmental alternatives is narrowed. "[A]n agency should always consider the views of Congress, expressed, to the extent that the agency can determine them, in the agency's statutory authorization to act, as well as in other congressional directives." [FN41] The Court emphasized that the FAA need only consider the environmental impacts of the proposed airport itself, not alternatives to providing air transport facilities in the region. To require otherwise would put the FAA in a position of developer and city planner, something not authorized by Congress, or contemplated by NEPA.

In the same case, the Court addresses the requirements of CEQ §1506.5(c), regulating the use of contractors selected to prepare the EIS. The Court goes to the dictionary to define "prepare", and concludes that the FAA just "rubber-stamped" the work of a outside consultant. [FN42] The use of contractors is possible, but they must be selected by the FAA, and the Court found evidence that this was not done. In fact, the contractor here may have had a conflict of interest in the project (in that they had a financial stake in the approval of the airport), the specific problem the CEQ regulation was written to avoid. The plaintiff thought this should invalidate the EIS already prepared, but the Court disagreed: they saw no evidence that the EIS was improperly prepared, since there was no disclosure statement by the contractor. If there turns out to be, in fact, a conflict, then there would have been factual grounds for suspecting the EIS was not properly completed, and further action would have been necessary. [FN43]

The new Denver International Airport was the subject of litigation in Allison v. Department of Transportation. [FN44] The plaintiffs were owners of a nearby "residential airpark." While the basis of their claims was inadequacy of the environmental study done on the new Denver airport, one need not be a rocket scientist to realize that their concern was property values, not environmental protection. Their homes were built around a private small airport, and designed for recreational aviation. This use would have been terminated by the new big airport, since big airports make the airspace over such small airports unusable by those small aircraft.

The plaintiffs alleged that the FAA violated section 4(f) of the D.O.T. Act, 49 USC §303(a) which protects wildlife refuges, public park, historical sites, and recreational lands. Their claim was that by allowing construction of the new airport, the nearby Barr Lake State Park would be subjected to noise pollution, and this is a "use" of the land.



Continued in Part Two