The DC Circuit has vacated and remanded the Federal Aviation Administration’s (FAA) no hazard determinations for 130 wind turbines in Nantucket Sound, finding that the FAA failed to follow its own handbook in determining whether the proposed turbines would have a “substantial adverse effect” on air navigation.

The Cape Wind project has drawn considerable attention, as the first offshore wind farm in U.S. waters. Yet the project also has been highly controversial. Opponents eager to see Cape Wind killed or relocated have brought multiple lawsuits, including an unsuccessful challenge under state environmental law and current litigation in federal court over claimed impacts on cultural resources, alleging harm to views of Nantucket Sound important in Native American rituals. While the deficiencies identified in the DC Circuit’s decision may be remedied by the FAA on remand, the project faces further hurdles before it can be constructed and begin operating.

On October 28, 2011, the DC Circuit issued an opinion finding that the petitioners had standing to challenge the FAA’s Determinations of No Hazard (DNH) and that the FAA’s failure to apply its handbook guidelines left the determinations “inadequately justified.”

Under 14 CFR Part 77 (Part 77), the FAA evaluates certain proposed structures to determine whether they would result in an obstruction to navigable airspace or interfere with air navigation. Part 77 hazard determinations, by themselves, are advisory in nature and have no independent binding effect. However, other state, local, or contractual requirements may condition approval on valid FAA DNHs, which effectively gives them legal effect.

Cape Wind LLC notified the FAA as required under Part 77, and the FAA ultimately determined that the proposed wind farm would not pose a hazard to air navigation, provided mitigating measures were implemented. The FAA issued DNHs for all 130 turbines in the project. The Department of Interior (DOI) as lessor of the project area had the ability to revoke the lease if the FAA determinations were not obtained.

The threshold question addressed by the Court was whether the two petitioners –the Town of Barnstable and the Alliance to Protect Nantucket Sound – had standing to bring the petition for review, since the FAA DNHs are advisory in nature. Citing Lujan, the Court found that, given the importance the DOI gave to the DNHs, petitioners had standing based on the likelihood that the DOI would “rethink the project” if faced with a “FAA determination that the project posed an unmitigable hazard.”

On the merits, the Court found that the FAA’s DNHs were arbitrary and capricious because they departed from internal agency guidelines regarding whether the proposed construction would have a “substantial adverse effect” on air navigation. By relying only on one section in the FAA’s Handbook without considering the other guidance, the Court found that the FAA failed to supply “any apparent analysis of the record evidence concerning the wind farm’s potentially adverse effects” on planes operating under visual flight rules.

This decision gives significant weight to the FAA’s own internal guidance, even though the FAA argued that the handbook “largely consists of criteria rather than rules to follow.” Although the court agreed with the FAA on the point, it nevertheless noted that “any sensible reading of the handbook. . .would indicate that there is more than one way in which the wind farm can pose a hazard” and faulted the FAA for abandoning its own established procedure and catapulting “over the real issues and analytical work required by its handbook.”

The decision is also noteworthy in that it reflects the trend towards states, local governments, and other entities imposing requirements that condition approval or agreements on valid FAA DNHs, thereby effectively giving the determinations legal effect.