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. us. Depor1me<1t 

a Tronsponotion 

"-deral AvkJIIon 

Admlnlstrutlon 

r.t4R I 7 a:l2 

The Honorable Christopher s. Bond 

United states Senator 

Office of Constituent services 

312 Monroe Street 

Jefferson City, Missou~i 65101 

Dear Senator Bond: 

100 lndepot"<ience Ave •• s.w . Wuhingtan, O.C, 20581 

Thank you for your correspondence ·of January 16, 1992, seeking 

clarification of the limitations on the imposition of a ·use tax 

on·aviation fuel at federally-funded airports. After reviewing the material you provided, I believe that the collection of 

this use tax at federally-funded airports under a recently enacted Missouri law would be in conflict with grant assurances 

provided by those airports and could jeopardize the airports' continuing eligibility for·future.Federal grants • 

. The ·Missouri Use Tax 

As described in senator Dennis Smitn•s letter, Missouri has 

enacted a new use tax on aviation fuel. The tax is scheduled 

to take effect on July 1, 1992. The tax would be imposed at 

the state level, but the tax revenue would be placed in a Local 

Use Tax Fund. The revenue would be distributed out of that 

fund to local governments in proportion to those governments' share of locally imposed sales tax revenue. There are no 

limitations on the use of this tax revenue by the local 

government. 

' Based on this description, it appears that the use tax is a 

state tax, even though the tax revenue will be distributed to 

l.ocal governments. 

Federal Legal Requirements for Aviation FUel Taxes 

The imposition of state use taxes on aviation fuel at 

federally-tunded airports is governed by Section 1113 of the 

Federal Aviation Act of 1958, as amended (FAAct), 49 u.s.c. 

App. § 1513, and by section 511 of the Airport and Airway Improvement Act of 1982 (AAIAct), as amended, 49 u.s.c. 

App. 2210. 
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Section 1113 of the FAAct expressly permits States to impose a 

use tax on aviation fUel. 4i u.s.c. App. I 1513(~) •. ~As, 

wardair Canada. Inc. y, florida pepart;ent of Reyenue, 477 U.S, 1, 106 S.ct, 236i (1U6) I Booky Mountain Airwaya. Inc, 

y, Pitkin county, 674 f, Supp. 212 (D. CO 1987): In Be Monior, 

69 B.R, 588 (Bankr. N.D. Ohio 1986). 

section 1113 generally prohibits the imposition ~y state and 

local governmenta of head taxes and other taxes on air 

transportation and air commerce. Section 1113(~) states 

exceptions to the general prohibition, including the following: 

Except as provided for in aubsecti_on (d) of 

this section, nothing in this section shall 

prohibit a state (or political subdivision 

thereof ••.• )from the levy or collection of 

taxes other than those enumerated in 

subsection (a)l of this section, including 

·, , • sales or use taxes on the sale of goods 

or services , , • 

Even though Section lll3(b) permits state use taxes on aviation 

fuel, section 511 of the AAIAct limits the uses a state may prescribe for taxes collected at federally-assisted airports receiving airport grant funds. Section Sll(a) sets forth 

requirements that must be met by recipients (sponsors) of 

Federal Airport Improvemen~ Program grants before projects contained in project grant applications may be approved by the 

Secretary of Transportation. A state tax plan that would make 

it impossible for a sponsor-to meet the enumerated requirements could jeopardize continued Federal fUnding of airport and noise 

abatement projects at the sponsor's airports. 

Section 5ll(a) (12), 49 o.s.c. i .22lil(a) (12), specifically addresses the use of revenue·generated at the airport. As 

originally enacted in 1982, Section S11(a)(l2) read as follows: 

••• ~11 revenues generated by the airport, if 

it is a public airport, will be expended for 

the capital or operating costs Of the airport, the local airport system, or other local 

facilities which are owned or operated by the 

owner or operator of the airport • • • 

Following the adoption of Section 5ll(a)(l2), some controversy 

arose concerning whether certain taxes on aviation fuel would 

be covered by the restrictive language. To avoid future 

confusion over taxes on aviation fuel,, Congress amended 

Section 5ll(a)(l2) and added Section 5ll(d), 49 u.s.c. App. 

i 2210(d), in the Airport and Airway Safety and Capacity Expansion Act of 1987 (Pub·. L. No. 100-223). As amended, 

Section 511(a)(l2) now provides that: 
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• • • all revenues generated by the airPort, if 

it is a public airport, and any local taxes on 

aviation fuel (other than taxes in effect on 

December 30, 1987) will be expended for the 

capital or operatinq costs of. the airport, the 

local airport system, or other local facilities 

that are owned or operated by the owner or 

operator of the airport and directly and 

substantially related to the actual air 

transportation of passengers or property • • • 

section Sll(d) in turn states: 

Nothing in subsection (a)(l2) of this section 

shall preclude the use of state taxes on 

aviation fuel to support a State aviation 

program or preclude the use of airport revenue 

.on or off the airport for noise mitigation 

purposes. 

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For Section Sll(d) to have any meaning, state aviation fuel 

taxes must be considered airport revenue subject to the 

limitation of Section Sll(a)(l2). section Sll(d) expands the 

types of uses that state aviation fuel tax revenue may be put 

to include state "aviation programs" and "noise mitigation [measures] on or off the airport." l:f that revenue were not 

already l;imited by Section 51l(a)(12}, Congress would not have 

needed to give express permission to use the tax revenue for 

additional purposes. Moreover, the listing of these two 

purposes would not have prevented the use of this tax revenue 

for other purposes. It follows that Congress, having expressly permitted two specific uses of aviation fuel taxes, necessarily excluded other non-airport-related purposes. 

Application of Federal Requirements to Missouri Tax 

The Missouri aviation fuel use tax appears to be a use tax on 

the sale of goods expressly peraitted by section 1113(b) of the 

FAAct. As a state tax on aviation fuel, it would be subject to 

Section 51l(a)(12) and 511(d) of the AAIAct when imposed at a 

federally-funded airport. Accordingly, unless the tax revenue 

collected at the airport were used to fund the airport and 

airport related activities of the airport sponsor, a state 

aviation program, or a noise mitigation project, this tax plan could jeopardize the grant compliance ~;tatus of 

federally-funded airports in the State of Missouri. The risk 

of noncompliance could be eliminated by directing the tax 

revenue generated at Missouri's federally-funded airports away from the Local Use Tax Fund and by restricting the use of that 

revenue to the purposes permitted in the AAIA. 
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Thank you again fo.r you correspondence. If you have any further questions, please let us know, 

A copy of this letter is baing forwarded directly to 

Senator Dennis smith. 

Sincerely, 

Enclosure 

Transmitted Correspondence 

cc: Washington Office 

Dennis smith 

Missouri Senate 

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