FAA Releases Final Policy on Processing Land Use Changes

On December 8, the Federal Aviation Administration (FAA) released a final policy that outlines how the agency will process and evaluate an airport sponsor's request to use federally acquired or federally conveyed airport land for non-aeronautical or mixed-use purposes. The new policy represents a meaningful change in how the agency processes these types of requests. If an airport wants to use federally acquired or federally conveyed land for non-aeronautical or mixed-use purposes, the airport must now obtain a letter of approval or consent from FAA for the proposed use.
 
Based upon our initial review, we wanted to share four takeaways: 

• Despite strong opposition from AAAE and the airport community, FAA's final policy largely adopted the positions outlined in its original proposal that was released in fall 2022. While clarifications were made in various areas, FAA incorporated relatively few notable changes into the final policy.

• One significant, positive change pertains to the duration of FAA's approval or consent for a land use change request. The policy states that the length of approval will be dependent on the circumstances and not limited to a specific lease term. The use could be approved so long as the land is not needed for aeronautical use. AAAE and airports voiced strong objections to any policy that would require airports to submit lease agreements to FAA for approval or request approval for lease agreement extensions. FAA at least suggests that the period of approval could include lease extensions negotiated between the airport and lessee, eliminating the need for multiple approvals.

• In our comments, we strongly urged FAA to restrain from reviewing every single project that the airport proposes for a certain piece of land. Allowing airports to work with FAA early to designate areas as non-aeronautical before engaging with private developers is critical to providing airports with certainty over how the land can be developed and used. FAA's policy is unclear as to whether an airport can request approval before the airport begins negotiations with a prospective developer or whether the airport must submit its request based on a specific project that has already been negotiated.

• AAAE and the airport community raised questions about the need for this policy update, noting that the existing policies have been sufficient, and no major issues have arisen. According to FAA, the purpose of the policy is to ensure that airport land-acquired using federal funding-can adequately serve future aeronautical demand, especially emerging entrants such as advanced air mobility (AAM) and unmanned aircraft systems (UAS) operators.

You can view FAA's final policy, which was published in the Federal Register today, here. The new policy will take effect on Monday, January 8, 2024. We will be carefully monitoring implementation of the new procedures to ensure FAA is not negatively impacting airport development projects and processing airport requests and issuing letters of approval or consent in an expeditious manner. If necessary, we will raise concerns with FAA and urge the agency to make changes to its policy.

 
Background. Under current law, FAA has the authority to convey federal surplus property and provide funding for airports to acquire land when the land is needed for 'airport purposes,' such as for an aeronautical use (e.g., runway protection zone) or to serve as a noise buffer. Airports have received land from the federal government for decades through a number of different programs. This federally conveyed or federally acquired land must typically be used for airport purposes unless FAA approves or consents to a non-aeronautical use.
 
FAA's Proposed Policy Statement. In September 2022, FAA released a proposed policy for the purpose of clarifying its practice for processing requests from airports for land use changes on federally acquired or federally conveyed land. As proposed, FAA would require airports to obtain a letter of consent or approval for any non-aeronautical and mixed use project or lease, which would be valid for the duration of the lease term. FAA also proposed to limit releases only to circumstances where the airport proposes the sale or conveyance of federally acquired or federally conveyed land.
 
In October 2022, AAAE submitted comments acknowledging that FAA has the authority to approve non-aeronautical land use designations on federally acquired or federally conveyed land. However, we expressed significant concerns that FAA's proposal to review specific projects and leases would be an unnecessary overreach into airport land use decision making, inhibit non-aeronautical land development, consume a significant amount of FAA and airport resources, and make it more difficult for airports to remain as financially self-sustaining as possible. We urged FAA to reconsider the proposed framework and maintain existing policies.
 
For additional information on AAAE's response to FAA, please view our October 17 comments and October 19 Regulatory Alert.
 
Summary of FAA's Final Policy on Processing Land Use Changes. FAA's new policy outlines the agency's procedures for processing requests from airports to use federally acquired or federally conveyed airport land for non-aeronautical and mixed-use purposes. A summary of some of the key provisions is provided below. 

• FAA's Stated Need for Policy Update: FAA emphasized that its role is to ensure that federally acquired or federally conveyed land is available to serve aviation needs, including future aeronautical demand. The policy is important because new entrants, such as AAM and UAS operators, may have the ability to use land previously deemed inaccessible due to its distance from the runway and taxiway environment. FAA wants to make sure that land is available to meet these needs. AAAE and many airports had raised questions over why this policy change was necessary.

• Applicability: Types of Land Use Subject to Policy: FAA's policy provides that the use of airport land will fall into one of four categories: (1) aeronautical use; (2) airport purpose; (3) non-aeronautical use; or (4) mixed use. The agency defines and explains each of these terms. If land will be used for an aeronautical use or airport purpose, no consent or approval is needed. As a result, the policy regarding the review and evaluation process is focused on land that will be used for mixed or non-aeronautical purposes. Based on our initial review, FAA's definitions did not significantly change from the original proposal, despite our requests for clarifications.

• Process for Requesting Land Use Changes: If an airport proposes to use federally acquired or federally conveyed land for either mixed or non-aeronautical purposes, FAA must issue an approval or consent before the airport can move forward. The policy explains how they will process these types of requests. First, an airport's request will have to include (a) documentation on how the land was acquired, (b) the current use of the property, (c) information about current and future aeronautical demand for the airport and the land, and (d) the proposed use of the property, including anticipated length of the use. FAA will evaluate the request based on several factors and either deny the request or issue a letter of approval. One major change in the final policy from the original proposal is that FAA no longer requests the length of the lease.

• FAA Approval of Land Use Change or Individual Projects: FAA's policy provides that airports must submit information about the 'proposed use of the property, including the anticipated length of the use,' as part of the request for a land use change. In our comments, we emphasized that airports should be able to obtain FAA consent or approval prior to negotiating a potential non-aeronautical project with developers because neither party wants to condition a project on an uncertain and lengthy FAA review. Based on our initial review, the policy is unclear as to whether an airport can request approval before the airport begins negotiations or whether the airport must submit its request based on a specific project.

• Standard for FAA Issuing Approval: FAA's policy acknowledges that the review of an airport's request 'involves a certain level of discretion by the FAA and the airport sponsors.' However, the agency indicates that the primary considerations will include: (a) reasonableness and practicality of the sponsor's request; (b) effect of the request on needed aeronautical facilities; (c) the net benefit to civil aviation; and (d) compatibility of the proposal with the needs of civil aviation. Despite requests from AAAE and the airport community, FAA made no major updates to the original proposal to better clarify under what circumstances the agency will provide approval or consent.

• Duration of FAA's Approval or Consent: If FAA issues an approval for land to be used for mixed or non-aeronautical purposes, the policy states that the duration of the approval or consent will be dependent on the circumstances at the airport and may be permitted for the duration of the approved use. The agency also emphasizes that the letter of approval must include a requirement that the land be available for aeronautical use at the end of the approval period. In the original proposal, FAA stated that the approval would be limited to the duration of the lease term. This is the most significant change from the original policy because FAA suggests that the period of approval could include any potential lease extensions negotiated between the airport and lessee. 

• Relationship to Section 163 Determinations: AAAE and the airport community asked for clarity over how the proposed framework co-exists with a separate Section 163 determination process. While FAA did not significantly elaborate, the agency did note that airports will not have to resubmit documentation that may have already been provided to FAA for a Section 163 analysis. FAA may also issue a letter of approval or consent concurrently with a Section 163 determination.

• Requesting Release of Federal Obligations: FAA's policy provides that the agency will only release federal obligations when the airport sponsor proposes the sale or conveyance of federally acquired or federally conveyed airport land that meets FAA release requirements. We strongly opposed this in the original policy statement, arguing that there are some parcels of land that will never be needed for aeronautical use and the policy would make it more challenging for airports to dispose or sell the land. FAA failed to even address comments that were submitted on this portion of the policy.

What's Next? FAA's new policy on processing land use changes for federally acquired or federally conveyed land will take effect on Monday, January 8, 2024. In the meantime, we will be carefully monitoring FAA's implementation of the new procedures, including potential impacts on future airport development projects for non-aeronautical and mixed-use purposes and the length of time the agency is taking to process requests from airports.