SUBJECT: The Airport Noise Control Program Remedies

PURPOSE

Questions have recently arisen about the remedies available for curfew violations. The issues concerning the means of seeking compliance for curfew violators during the curfew have periodically arisen since the Airport Noise Control Program was adopted in 1984, including during the adoption of the 1997 Airport Master Plan.

This Office has previously addressed such issues and questions during the 1997 Airport Master Plan process and with the Curfew Monitoring Committee since its inception in 1999. This is the first opportunity we have had to respond to Council inquiries on these issues since 1998, however. This memorandum is intended to provide the background and legal framework for curfew enforcement issues.

BACKGROUND

When the Airport Noise Control Program was adopted in 1984, it was adopted by Council Resolution as an Airport Rule and Regulation, and it was not codified into an ordinance. City records indicate that the intent was to enforce the Program as a civil matter, not through criminal proceedings. Therefore, no fines or penalties under the Municipal Code have ever been established for the Program.

In 1990, Congress enacted the Airport Noise and Capacity Act of 1990 (ANCA). The Act provides for the phaseout of Stage 2 aircraft over 75,000 pounds by the year 2000, with certain limited exceptions. ANCA also imposes FAA oversight and approval on any new restrictions involving Stage 3 aircraft. ANCA, and the regulations implementing it, make many traditional aircraft operating noise regulations by local airport proprietors infeasible without the agreement of the air carriers or other operators affected by the restriction.

The FAA also approves any proposals to modify grandfathered (pre-ANCA) restrictions that affect Stage 3 aircraft. Extensive and extremely burdensome cost-benefit analyses are required, with extensive public processes, before any proposed new or modified restrictions could be presented to the FAA. The FAA has, in general, taken a very guarded and restrictive view of proposals to impose new or modified restrictions.

Additionally, in the process of clarifying the grandfathered status of the City’s Airport Noise Control Program with the FAA, FAA officials relied upon City records and Municipal Code provisions in existence at the time of adoption of the Program in determining that the Program was mandatory, even though its means of enforcement was through civil proceedings. FAA headquarters staff understands that the curfew is enforced through civil, not criminal, proceedings. Therefore, any effort by the City to impose fines and penalties, or to enforce in a manner different than was anticipated at the time of adoption of the Airport Noise Control Program as administered until 1990, would require FAA approval.

Discussion

All airport users are legally obligated to comply with all Airport rules and regulations, whether or not they have agreements with the City, pursuant to Municipal Code § 25.06.010 and Resolution No. 57211 (Airport Noise Control Program resolution). In enforcing the curfew, it is critical to be mindful of the complexity of operations by scheduled air carriers. An air traffic control delay, weather, or a mechanical delay in some other part of the country can easily affect an aircraft which is scheduled to operate at SJC at some point in its flight. Therefore, Airport staff seeks verification from aircraft operators of the reasons for the delay through any intermediate stops enroute to SJC.

In addition, aircraft operators frequently change staff at the Airport, and in their own flight operations and planning groups. It is necessary to continually educate and inform the aircraft operators of the curfew, the need to comply, and of what constitutes compliance.

This effort is undertaken principally by Airport staff, and often this Office participates in that effort as well.

1. Remedies Currently Available

The City may enforce violations of the curfew using several different civil remedies available to it.

1) The purpose of issuing strongly worded warning letters to the aircraft operators is to ensure that the operators are fully advised of the curfew parameters, and to ensure that the operators are paying attention to the restrictions. Frequently, once a recurring problem is identified to the appropriate people within an aircraft operator’s company, the operator will make changes to its operation to rectify the situation. This Office issues such letters to ensure that there can be no question, in terms of potential litigation, that an operator had full notice and adequate opportunity to modify its operations, in case further action by the City becomes necessary.

2) Second, once it is determined that an operator is not willing to work towards compliance with the City, the City can issue a notice of default or termination of a leasehold, operating agreement, or permit to the operator. A copy of the notice may be sent directly to the CEO of the operator. Most CEO's understand the importance of compliance and do not want their company to be considered violators. Most companies, especially public companies, do not want to be declared in default. This is an extremely serious step, which should not be taken unless there were no other alternative.

3) If the violator is not a leaseholder, but operates as a subtenant or licensee of a leaseholder (e.g. from an FBO) the City could issue a notice to the leaseholder of default by reason of the failure of the subtenant/licensee to conform to the City's Airport Noise Control Program, which is expressly required in every lease and operating agreement or permit. This would subject the City’s tenant to default and put pressure on the violator.

4) The City is able to seek specific compliance or termination for breach from any tenant who refuses to comply with the Program. Also, in the event curfew operations result in any claims against the City which cause the City to incur litigation or other related expenses, the City can seek full indemnity from any tenant engaged in, or facilitating, such conduct.

5) The City may take action, as proprietor of the Airport, to entirely prohibit use of the Airport by anyone who evidences or states an intent to engage in continued or deliberate violations of Airport rules or regulation. The City is able to seek injunctive relief for violations of the curfew restrictions under state law and its Municipal Code (SJMC §§ 25.06.010, 1.08.015) that requires adherence to Airport rules and regulations. Injunctions can be enforced by the threat of contempt of court. In addition, a pattern of violations will allow an action for unfair business practices as an unfair business practice. Civil penalties of up to $2,500 for each violation are among the remedies available.

6) In the process of discussing curfew violations with aircraft operators, we have sometimes entered into supplemental agreements pursuant to which the operator specifies actions to be taken to avoid future violations. These agreements are voluntary, good faith agreements on behalf of the operator, and are specific to that company’s operations at SJC. The City, pursuant to ANCA, cannot require such agreements as a condition of operating at SJC, nor does it make sense to have such a supplemental agreement unless it specifies the steps the company is willing to undertake to avoid future violations.

2. Ability to Adopt an Administrative Fine or Penalty Program

As mentioned above, the ability of the City to now impose or modify the means available to enforce the Airport Noise Control Program is substantially limited by federal law. Even if the Council were able to now impose administrative fines, we would strongly caution against such a program since curfew violators would be likely to be treat such fines as a “cost of doing business”. We think the possibility of injunctive relief or contractual breach are greater deterrents.

3. Curfew Provisions in the Leases

Even though the curfew, as specified in the Airport Noise Control Program, is included in the Airport Rules and Regulations and, therefore, automatically applies to all Airlines, irrespective of contractual relationships, nonetheless, there is contractual language in all of the current airline Master Leases which requires compliance with the curfew. Under the Master Lease, the City is required to notify and consult with the airlines before it adopts new Airport Rules and Regulations. The Airport staff followed this notification and consultation process when the City adopted the Airport Noise Control Program in 1984. Therefore, although a particular lease does not contain a specific reference to the Airport Noise Control Program, it is incorporated into the document as an Airport Rule and Regulation. Thus, violation is not merely a violation of the Rules and Regulations but also a violation of the Master Lease.

Language referencing the obligation to abide by all Airport Rules and Regulations, including the curfew, has been specified in all leases since shortly after the Program was adopted by City in 1984. Thus, both the Airport Noise Control Program and the current City practice pre-date ANCA. For example, the Ground Lease for the Terminal A Addition, entered into in 1990, contains a specific clause obligating the tenant to abide by the curfew. Such provisions are also included in agreements with other aircraft operators, such as FBOs and air cargo users.

In 1997, this Office was directed to assess the possibility of negotiating for the payment of penalties for curfew violations in future Master Leases with the airlines. We previously reported to the City Council in March 1998, that it is not possible for the City to adopt such a requirement as a matter of generally applicable policy. Since many of the Councilmembers have joined the Council since that time, the analysis is restated below.

The implementing regulations of ANCA make clear that the FAA considers “restrictions” to include any new provisions in leases entered into after the Act, and that restrictions affected by ANCA include any program of airport use changes that has the direct or indirect effect of controlling airport noise. Thus, a City policy requiring such a new provision in every Airport lease would violate ANCA.

Fines and penalty provisions are generally enforced as a matter of criminal or administrative, not civil, law. Thus, the inclusion of an automatic fine or penalty in a contract, without regard to actual damages incurred, is generally unenforceable. Liquidated damages provisions, which do not amount to a fine or a penalty, may be enforceable as a matter of contract law, but may preclude other types of remedies.

Furthermore, any change in the language in the amendment to the airline leases would have to be agreed upon by the airlines. Further, possible inclusion of a provision requiring payment of a monetary sum in an agreement with an airline would have to be considered on a case by case basis to ascertain whether it would comply with ANCA or be proper in a particular contract.

Conclusion

It is not possible to adopt a program of administrative or criminal fines and penalties. Nor is it possible to impose fines and penalties as a matter of policy or to unilaterally include a monetary payment into leases with Airlines under ANCA.

Language requiring adherence to the Airport Noise Control Program is currently in all agreements with aircraft operators at the Airport. The City has not required any other form of agreement concerning the curfew as a condition of coming onto the Airport previously, and cannot institute such a new policy today consistent with ANCA. The use of supplemental agreements with aircraft operators is properly undertaken when it is possible to identify specific steps that the operator is willing to take to avoid future violations.

As with other City codes, and rules and regulations, the objective of any enforcement procedure or mechanism is to obtain compliance. The Airport Noise Control Program is inherently complex to implement due to the complexity of passenger, air cargo, charter, and GA aircraft operators. To the extent that any operator demonstrates good faith in working with the City to modify its operations in order to comply with the curfew, obtaining such relief in the near term has always been the first priority. Given the parameters of the Program and its status under ANCA, it is necessary to work with the available enforcement mechanisms on a case-by-case basis with curfew violators.

RICHARD DOYLE

City Attorney

By: Evet S. Loewen

Chief Deputy City Attorney