Non-aeronautical Development and Section 163

When Section 163 of the FAA Reauthorization Act of 2018 first came to light, C&S Companies Director Kelly Moulton, CM, ENV-SP, said, “it sounded like the ‘easy button,’ right? This is going to be the solution to everything. Get the FAA no longer involved in non-aeronautical development – this is great.

"It’s not quite as easy as we were all hoping."

To make it a bit easier, aviation experts from C&S Companies and Kaplan Kirsch & Rockwell created a guidebook, “Navigating Section 163: A Guide to Facilitating Non-aeronautical Development at Your Airport.” The guide published in September 2021 is available at www.section163.com. Its focus is non-traditional and non-aeronautical projects.

While Section 163 can simplify the airport land development process, in many cases, as the guide points out, it also adds additional considerations and federal decision points to the mix. The authors of the guide recently provided an overview of Section 163 during a virtual summit hosted by the Northeast Chapter of AAAE.

Catherine van Heuven, partner, Kaplan Kirsch & Rockwell, said Section 163 significantly changes FAA's scope of authority:

• On land use regulations (Do you need to get "a release," a release from the federal obligation to use the land for airport purposes?) and
• On proposed Airport Layout Plan (ALP) changes (Do you need FAA approval for a proposed ALP change?).

Van Heuven said there’s a logical role for FAA to be reviewing what’s happening on an airport because they have the expertise of aeronautical activities. But, she said, in recent years, as economic pressures increased on airports, they looked at undeveloped real estate and the potential to get additional sources of revenue from non-aeronautical development. 

“What airports found was that it was extremely complex to get through the regulatory process to actually realize any kind of revenue opportunities on non-aeronautical projects, and they were just losing opportunities right and left,” she said. “When private developers understood what it meant to develop on an airport and the amount of time it might take to go through NEPA (National Environmental Policy Act review/airport environmental review) and to secure the necessary federal approvals, airports lost out on a lot of opportunities.” Van Heuven said developers weren’t interested in spending the time or money for environmental reviews and the additional regulatory processes. 

She said, “The direction to Congress (leading to Section 163) was ‘help us figure this out. Help us figure out how to maximize our opportunities to get better revenue generating opportunities off a plan that FAA really doesn’t need to be regulating because it’s outside their scope of expertise.’”

“Under the new law,” the guidebook states, “FAA’s authority to regulate on-airport land use is limited to only development that affects the airfield and aircraft operations or implicates federal funding.”

“I think it’s really important to look at the actual words here because this is an extraordinary reduction," she said. 

Section 163(a) limits the FAA’s authority to directly or indirectly regulate an airport owner or operator’s acquisition, use, lease, encumbrance, transfer, or disposal of land, any facility upon such land, or any portion of such land or facility. 

“That’s like everything we do with our airport land,”  van Heuven said.

And, that's the "easy button"  part of it – FAA is no longer going to regulate these things, she commented.

However, she said, “going back to congressional intent, there is an intent to ensure that FAA still regulates those areas in its core areas of expertise.”