The AHTA prohibits any state or political subdivision from imposing a tax, fee, head charge, or other charge on an individual traveling in air commerce; the transportation of an individual traveling in air commerce; the sale of air transportation; or the gross receipts from that air commerce or transportation. 49 U.S.C. 40116(b).
States and subdivisions are allowed under the AHTA, however, to impose taxes including property taxes, net income taxes, franchise taxes, and sales or use taxes on the sale of goods or services; and reasonable rental charges, landing fees, and other service charges from aircraft operators for using airport facilities of an airport owned or operated by that State or subdivision. 49 U.S.C. 40116(b).
Airports receiving federal funds under the AIP are bound to a "revenue retention requirement." The AIP grant recipient certifies that all revenue generated by the airport will be expended only for the capital and operating costs of the airport or local facilities directly related to actual air transportation. 49 U.S.C. 47107.
In Northwest Airlines, Inc. v. County of Kent, Mich., 114 S.Ct. 855 (1994), the Supreme Court held that the user fee structure at Kent International Airport did not violate the AHTA.
At Kent International Airport, fee schedules were differentiated based on the type of user. The airport's fee allocation system differentiated between three types of airport users: (i) commercial air carriers; (ii) general aviation users; and (iii) airport concessionaires. Airport costs relating to air-operations were allocated only to commercial airlines and general aviation users. Terminal maintenance costs were allocated to commercial airlines and concessionaires based on the square footage of spaced leased. Additionally, general aviation users were only assessed twenty percent of their allocated costs. Using this fee structure the airport generated surplus revenues of about $1 million per year.
Northwest argued that the fees charged by the airport were unreasonable and therefore violative of the AHTA because:
The concessionaires were not assessed air operation costs;
The user fee generated a surplus; and
General aviation users were assessed only twenty percent of their allocated costs.
The Supreme Court applied the reasonableness test established in Evansville-Vanderburgh Airport Authority District v. Delta Airlines, Inc., 405 U.S. 707 (1972). A fee will be found reasonable if:
the fee is based on some fair approximation of use of the facilities;
it is not excessive in relation to the benefits conferred; and
it did not discriminate against interstate commerce.
The Supreme Court held that fees were reasonable and did not violate AHTA. Specifically, the Court found that:
the airport's allocation of costs were a "fair, if imperfect, approximation of the use of facilities for whose benefit they are imposed;"
the undercharges to general aviation users were exempted from AHTA because no evidence was presented that general aviation users were engaged in interstate commerce; and
the Court does not have the authority to review surplus fees because the AHTA only requires that fees charged not be "excessive in relation to costs incurred by the taxing authorities."
In Air Transport Association v. City of Los Angeles, 844 F. Supp. 550 (C.D. Ca. 1994) ("LAX Decision"), the Air Transport Association and several airlines sued challenging landing fee increases at LAX based upon diversion of revenues for off-airport purposes to fund city police and fire department.
District court dismissed the suit on the basis that no private right of action exists to challenge airport rates in federal court. Note: In October 1996, FAA and DOT initiated investigations into basis for the diversion of the airport funds.
In Northwest Airlines, Inc. v. FAA, 14 F.3d 64 (D.C. Cir. 1994), the Memphis-Shelby County Airport Authority petitioned FAA for permission to impose a $3.00 passenger facility charge (PFC) under the Federal Aviation Act (Act).
The Act provides that airports can petition the FAA to impose a PFC on passengers but that the PFC can only be used to fund certain specific projects.
The airport petitioned the FAA to impose a PFC to fund four projects and a fifth alternative project if the FAA disapproved of any of the first four. In the airport's notice to the petitioner and other airlines, however, the airport failed to provide any details on the fifth project.
The FAA approved the PFC and the funding of the fifth project if any of the first four projects could not be implemented.
Petitioners argued that FAA was required to consider the potential economic and competitive burden of the PFC on the industry and that the funding of the fifth project was inappropriate.
The court held that proof of economic impact of the PFC was not required under the Act. Rather, the court found that in evaluating the PFC the FAA was required to consider only the criteria specified in the Act which does not include the potential economic and competitive burden of the PFC on the airlines. The court did find, however, that the funding of the fifth project was improper because the airport failed to give notice of the project and thus, PFC funds could not be used for that project.
This statute grants the Secretary of the Department of Transportation the authority to determine whether a fee imposed by an airport is reasonable.
The statute provides that DOT's review of the fee is initiated at the request of the airport or by the airline so long as the airline's request is within 60 days of the airline's receipt of written notice of the airport's intent to raise the fees.
According to the statute, the Secretary can find fees reasonable under either the compensatory or residual methodology.
The statute also requires the Secretary to establish procedures for the review of fee disputes. These procedures can be found at 14 C.F.R. 302.601.
The FAA's policy regarding airport rates and charges provides that airports can make fair and reasonable distinctions between rates paid by airport users without violating the federal prohibition against unjustly discriminating among airport users. In addition, fees charged to air carriers for usage must be "fair and reasonable." The policy, however, does not define "reasonable," and there is an absence of case law on this issue. If an airlines challenges a fee as unreasonable, it is the airline's burden to prove unreasonableness.
For non-aeronautical, such as concessionaires in the terminals, the Policy contains no restrictions on fees. Non-airfield assets need to be tied to costs but may be set by "any reasonable method, so long as the methodology is applied on a consistent basis . . . and is justified." The Policy requires that fees for "non-airfield" assets must not result in the generation of excessive profits or rates of return.
The Policy provides that a peak pricing system that allocates the airports limited resources using price during periods of congestion is not considered unjustly discriminatory.
The FAA has established new rules of practice for filing and adjudicating compliance issues involving federally assisted airports that are "intended to expedite substantially" the handling of complaints other than involving fee disputes. The New Part 16 regulations, published in the October 16, 1996 Federal Register, would be used in place of Part 13 regulations for certain proceedings.
The new Part 16 procedures cover compliance matters arising under the Airport and Airway Act of 1982; certain airport-related provisions of the Federal Aviation Act of 1994; and the Surplus Property Act; predecessors of those acts, and regulations, grant agreements and documents of conveyance issued or made under those acts.
Allegations of illegal diversion of airport revenue would be resolved under Part 16 regulations as they relate to an airport grant assurance required by the former Airport and Airway Act of 1982, now codified in Title 49 U.S. Code. Part 16 also would be used to adjudicate alleged violations of the Anti-Head Tax Act, on the prohibition against granting of exclusive use of federally funded aeronautical facilities and of obligations contained in property deeds for certain property.
In Board of County Commissioner v. FAA, 18 F.3d 953 (D.C.Cir. 1994), the FAA's approval of a plan to relocate the cargo facilities at Denver National Airport without requiring a supplemental environmental impact statement was upheld by the United States Court of Appeals for the District of Columbia. The FAA determined in its Record of Decision ("ROD") that the environment would not be significantly affected by the proposed relocation. Petitioners challenged the FAA's decision on the basis that the ROD was erroneous and that the FAA failed to ensure that the relocation complied with the Clean Air Act.
The court rejected petitioners argument that the decision in the ROD was erroneous since the relocation would actually reduce exhaust emissions below the levels in the original. Moreover, the court found that the FAA determined in 1989 that the airport complied with the Clean Air Act and that the airport was under a continuing duty to notify the FAA of any nonconformity in subsequent plans. Thus, the FAA was not required to review the airport's Clean Air Compliance as part of its ROD.
In City of Grapevine v. Department of Transportation, 17 F.3d 1502 (D.C. Cir. 1994) cert. denied 115 S.Ct. 635 (1994), the petitioners opposed expansion of Dallas/Fort Worth International Airport (DFW) after FAA's approval of funding for expansion on the grounds that: (1) the FAA categorically excluded certain items from its Final Environmental Impact Study (FEIS); (2) the FAA failed to consider certain alternatives to the expansion; (3) the FAA erred in determining that the expanded airport would not create noise that would interfere with the historical use of nearby properties; and (4) the FAA did not complete the review process required by the National Historic Preservation Act (NHPA).
The court held that FAA Order 5050.4A allows the FAA to exclude certain items on a categorical basis in the FEIS. The court rejected petitioners argument that despite the FAA Order, FAA was still required to consider the "overall cumulative impact of the proposed action and the consequences of subsequent related actions." The court held that FAA did indeed consider alternatives to the expansion but found that they could not be completed in a timely manner.
The court found that FAA's application of residential noise standards to "historic" sights was appropriate since the historic sights in question were being used as private residences. Court held that the FAA has not violated the NHPA since the approval of the airport expansion was conditioned upon the successful completion of a subsequent reevaluation.
In Board of Commissioners v. Isaac, 18 F.3d 1492 (10th Cir. 1994), the FAA decision to withdraw proposed funding for a cargo hub at Front Range Airport near the new Denver International Airport (DIA) resulted in this lawsuit. Petitioners requested funding for expansion of Front Range Airport because they believed that the proposed air cargo facilities at DIA were inconveniently located and did not provide access to interstate highways.
The FAA approved the request and allocated money to the project for the fiscal year 1992. Any funding after 1992 was conditioned on the enactment of "new legislation." Accordingly, the expansion project began and carriers and service businesses signed lease options. Meanwhile, DIA determined to relocate its air cargo facilities so that they would be more convenient. Air carriers withdrew from the Front Range Airport and returned to DIA. Thus, Front Range Airport was left without the signed leases contemplated when the project was first proposed. The FAA then withdrew funding for the Front Range expansion project.
Petitioners sought review of the FAA's decision to withdraw funding of the project claiming that no substantial evidence existed to support the FAA's withdrawal and that the FAA's decision was arbitrary and capricious.
The court held that the FAA's determination to fund the Front Range project in the first place was based on the assumption that DIA was not a viable cargo facility. Thus, the decision to withdraw funding was not arbitrary and capricious. The court also held that the APA prohibits the court from reviewing a FAA decision to withdraw tentative funding because such a decision is committed to the agency's discretion.
| Previous Page | Table of Contents | Next Page |