EVERETT — A federal court has denied an appeal by the city of Mukilteo and others who are trying to stop regular commercial passenger flights from coming to Paine Field.

The ruling announced Friday cleared the biggest remaining legal hurdle for a company looking to build a terminal there.

Mukilteo Mayor Jennifer Gregerson said the setback for her side in the Ninth U.S. Circuit Court of Appeals wouldn’t stop the city from demanding a “full accounting of impacts” as any proposals move ahead.

“We disagree with the ruling, and believe that there are legal errors in its findings,” Gregerson said in an email Saturday. “We are considering our options. We still believe that commercial air service is not the right use at the airport and are committed to protecting the quality of life of our community.”

Propeller Airports entered an option-to-lease agreement a year ago with Snohomish County, which runs the airport. The New York-based company intends to build a two-gate passenger terminal. CEO Brett Smith is hoping for a dialogue with commercial-air opponents. So far, that hasn’t materialized.

“Clearly we are pleased with the Ninth Circuit’s decision,” Smith said in an email. “What’s important now is that we work together with the city of Mukilteo and the entire community, to develop a solution that works for all and provides real benefit.”

The case involved the Federal Aviation Administration’s 2012 finding that about two dozen daily takeoffs and landings by passenger jets at Paine Field would have no significant impact on surrounding communities. The assessment considered potential impacts from noise, traffic and pollution.

The cities of Mukilteo and Edmonds sued in federal court, joined by the Save Our Communities group and two neighbors serving as individual plaintiffs. They all argued that federal regulators improperly limited their review, considering impacts from too few potential flights, among other alleged errors.

A three-judge panel disagreed.

The court’s written decision says that the FAA based its assessment on reasonable projections for air traffic. The decision “does not open the floodgates” to other airlines hoping to serve Paine Field, they reasoned, because further approvals would be necessary to expand. Opponents could challenge any future expansion proposals.

The court also rejected the argument that the FAA’s decision should be thrown out because it was somehow biased. The agency fulfilled its obligations under national environmental law, the court concluded.

Judges Richard C. Tallman, Diarmuid O’Scannlain and Marsha S. Berzon heard the federal appeals case. Tallman wrote the opinion.

Friday’s decision was a long time in coming. The case was argued in June 2014, but both sides later requested that the proceedings be put on hold because the airlines that originally explored the possibility of commercial flights at Paine Field appeared to lose interest. The case resumed after Propeller Airports began pursuing its terminal project. The size of the proposed operations remained the same, with up to a dozen flights per day.

The option to lease gives Propeller up to three years to design an acceptable terminal and perform environmental studies. No plans have been submitted yet.

If the plans are approved, the company could sign a 30-year lease with Snohomish County for 10.7 acres of airport land where it could build the passenger terminal and parking facilities. There’s also the possibility of two 10-year extensions.

The company expects to pay the county about $429,000 per year in rent. The county also would receive a cut of operating revenue from air service and parking.

Propeller has not disclosed which airlines or destinations figure into its plans.

Mukilteo sued Snohomish County and Propeller Airports in King County Superior Court last year, seeking to void the lease agreement. The court ruled in favor of Snohomish County and Propeller, but Mukilteo has appealed.

The proposed terminal would add about 8,340 takeoffs and landings per year, according to previous studies. Paine Field has been handling more than 100,000 annual flights in recent years, including private aircraft and Boeing jets.

Noah Haglund: 425-339-3465, nhaglund@heraldnet.com. Twitter: @NWhaglund.