The Federal Aviation Administration (FAA) published a notice announcing the finalization of FAA’s Policy Regarding Processing Land Use Changes on Federally Acquired or Federally Conveyed Airport Land (the “Policy”). The new Policy is available here. The Policy addresses how the FAA will review and approve sponsor requests to make land use changes involving non-aeronautical and mixed use of airport property as well as “interim uses of the land that contribute to the financial self-sufficiency of the airport.”

FAA published a draft Policy in September 2022 and received comments from airport sponsors, industry groups and airport consultants. While the final Policy responds to some sponsor concerns, the final Policy leaves many of the commentors’ questions unaddressed. More significantly, the final Policy is newly expanded to apply to “interim uses of the land that contribute to financial self-sufficiency of the airport” with no new definition or explanation of the implications of this addition. The FAA’s stated purpose in adopting the Policy is to “simplify the procedures required to make a land use change and to protect airport land by limiting the use of releases to the actual sale or disposal of airport property.” However, the Policy does not appear to achieve that objective since it both allows considerable agency staff discretion on a case-by-case basis and has the potential to fundamentally change the way that the FAA considers and approves sponsor requests for non-aeronautical development.

Applicability. While the Policy is entitled “Policy Regarding Land Use Changes on Federally Acquired or Federally Conveyed Airport Land,” the actual text indicates that its application is both more narrow and more broad. Specifically, FAA clarifies that the Policy does not apply to aeronautical and airport purposes land uses and to land acquired for noise compatibility purposes.  Notwithstanding those limitations, just as with the draft of the Policy, the Policy is not limited to property in which there is a federal financial interest.  Footnote 7 in the Policy explicitly states that the Policy applies in all situations “where a land use impacts the safe and efficient operation of aircraft or safety of people and property on the ground related to aircraft operations” regardless of whether the subject property was acquired with federal assistance.  In effect, the Policy applies “[w]hen the FAA retains approval authority over a proposed land use change” (i.e., after application of Section 163 of the FAA Reauthorization Act of 2018).

FAA clarifies that the Policy is not retroactive. It will not apply to land that FAA has previously released for non-aeronautical use under a Letter of Release or a Deed of Release. The Policy nevertheless states that existing interim or concurrent use approvals will be subject to review under the Policy when those approvals expire.

When Approval is Required; Types of Land Uses. The final Policy retains the four originally-proposed types of uses of airport property, but amends and adds additional clarification to these definitions. New language adopted after the draft Policy is shown in italics below. These definitions are critical for determining whether the FAA approval will be required.

Of note, a critical change is the addition of the phrase “land that may be needed in the future for an aeronautical purpose and revenue from an interim use of the land contributes to the financial self-sufficiency of the airport” to the definition of “Airport Purpose.” As discussed in more detail below, the Policy does not provide clear explanation for this addition, which could lead to confusion.

Approval Process. Under the new Policy, sponsors must now formally request approval for a change in land use and must obtain written approval or consent for all affected property. The final Policy newly directs that a sponsor’s request must include:

• Relevant documentation on the property and its manner of acquisition;
• A description of the current use of the property;
• The current and future aeronautical demand of the airport and the relevant property; and
• The proposed use of the property, including the proposed length of the use.

When determining whether a land use is non-aeronautical or mixed-use, the FAA “will review the primary purpose of the requested use rather than examining each individual component of the request as aeronautical or non-aeronautical.” If the FAA determines that the proposal involves a non-aeronautical or mixed use, it will consider whether to approve the request based on “the obligating documents, the current and future aeronautical need for the property, and the requested land use.”

The Policy does not provide a timetable for agency review.  The FAA also indicates that the written approvals and consents issued under this Policy are not a final agency actions subject to judicial review; FAA declined to provide a process for appeal of agency decisions.

Time-Limited Approvals; NEPA Implications. An important change from the draft Policy is that FAA approval of, or consent to, a non-aeronautical or mixed-use land use may not always be limited to the duration of a specific lease term (instead the duration of approvals “will be dependent upon the circumstances at the airport.”)  Rather, approval will be subject to district office discretion and will depend on the circumstances at the airport and may be permitted for the duration of the proposed use. However, all approvals must state that the land will be returned to aeronautical use at the end of the approved period.

This new approval process reflects two key changes to existing procedures. First, the Policy expressly states that the interim and concurrent use process set forth in FAA Order 5190.6B is superseded. This is a significant change from previous practice, in which the FAA sometimes approved more open-ended concurrent or interim land uses and did not always require any reassessment of its approval actions for renewals of leases. Second, the Policy announces that FAA will only release federal obligations when an airport sponsor plans to sell airport land. Thus, the prior practice of allowing a permanent redesignation of land to non-aeronautical use will no longer be an available option.

Finally, the final Policy expressly declines to answer the question of whether or not the new FAA approvals are federal actions that that would be subject to the National Environmental Policy Act (“NEPA”) environmental review process.  On its face, however, the new approvals and consents appear to fit the definition of “federal actions” subject to NEPA. FAA’s failure to address this issue will create extraordinary complexity for sponsors in the near term until the agency opines formally on: (1) whether these approvals are subject to NEPA review; and (2) if so, what level of NEPA review is required. 

Open Questions and Issues. While the final Policy resolves some of the questions raised in comments to the September 2022 draft, it unfortunately leaves many questions unanswered and even adds some additional uncertainty. For example:

• It is not clear how the Policy will dovetail (if at all) with the FAA’s existing Section 163 determination process. The Policy makes no specific mention of that existing process, and it remains to be seen whether the FAA will seek to combine the consideration of its approval authority and its actual approval into one streamlined application. It appears, however, that the intent of the Policy is to apply to all airport property – regardless of its funding source – if such property remains subject to FAA jurisdiction under Section 163.
• It is not clear how the Policy will apply in practice to non-aeronautical or “mixed-use” land uses that are already in effect. The Policy states that it is not retroactive, but that existing interim/concurrent use approvals will be reviewed under the Policy “when the existing approval expires.” In practice this will not be easy to determine. The Policy itself states that FAA does not “approve” leases. Because approvals of interim or concurrent leases in the past have not always expressly included an expiration date, it will be difficult for sponsors to identify the point at which existing uses become future “changes in land uses” that are subject to the Policy.
• The Policy provides no explanation for how to interpret or apply the new reference to “interim uses of land that contribute to the financial self-sufficiency of the airport” – which now require FAA written approval or consent.
• The language in the Policy is not consistent in explaining whether FAA’s intent is to regulate the land itself, the use of the land, specific projects, or some combination of the three. This becomes particularly difficult to interpret for complex airport projects that may involve multiple parcels that were acquired in different manners, that involve multiple types of “uses,” and, for ongoing projects, that are in the process of receiving various approvals.
• The agency has apparently decided not to provide definitive or rigid direction or guidance to the Airport District Offices on implementation of the Policy.  Instead, the Policy repeatedly indicates that implementation or interpretation will subject to coordination between sponsors and their ADO.  This decision to allow considerable local staff flexibility will undoubtedly lead to different application of the Policy amongst ADOs.

For more information or advice on how the new Policy may affect specific airport uses or projects, please contact Peter J. Kirsch, Catherine M. van Heuven, or Nicholas M. Clabbers.