BEFORE THE UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION

AIR TRANSPORT ASSOCIATION OF AMERICA, INC. d/b/a AIRLINES FOR AMERICA, et al. Complainants,
v. PORT OF PORTLAND, OREGON, Respondent. DocketNo. 16-16-04

REBUTTAL OF THE PORT OF PORTLAND
Pursuant to 14 C.F.R. 

### § 16.23(f) and the June 10, 2016 Order granting the unopposed Motion ofthe Port ofPortland for an Extension ofTime, Respondent, the Port ofPortland, Oregon ("Port"), hereby files this Rebuttal inresponse to the Reply filed by the AirTransport Association ofAmerica, Inc. d/b/aAirlines for America ("A4A"), andAlaskaAirlines, Inc., AmericanAirlines, Inc., Atlas Air, Inc., Fedex Express Airlines, HawaiianAirlines, Inc., JetBlue Airways, Inc., SouthwestAirlines Co., UnitedAirlines, Inc., United Parcel Service Co., andAir Canada (collectively, "Complainants"). The Port incorporates in this Rebuttal all ofthe arguments made in, and the exhibits submitted with, its Answer, and reiterates those arguments
as ifrestated herein. ARGUMENT Complainants appear convinced that ifthey continue repeating the same argument, they
canprevent the Port from using airportrevenue to pay its sewerbill, an operating cost oftheAirport. 1 According to Complainants, the Port should be prohibited from using Airport revenue to paytwo components ofthe City's sewer user charge-the Stormwater Charge and the Superfund Charge-becausethey are not directly and substantially related to the Airport and because the Port is receiving no value. To reach their conclusions, Complainants: (i) ignore the facts, (ii) rewrite Federal statutes byimputing text where there is none and ignoring text where it is inconvenient to their arguments, (iii) dismiss well-considered agency guidance three years in the making, and (iv) misinterpret (and misrepresent) FAApolicy and precedent. The testimony ofComplainants' newly-proffered witnesses does not alter the underlying facts orprovide any
new legal perspective. Fundamentally, Complainants assert that because the charges at issue are being assessed by a municipality and separately identified inthe monthly bill, they are not "real" utility charges. Complainants disregard the nature ofnetwork utilities, the way in which the City charges for
sewer services to all ofits ratepayers, and the consequences ofnot paying a sewerbill. The Stormwater and Superfund Charges are presumptively lawful utility charges that are imposed on all City ratepayers without discrimination and that the Port, as a ratepayer, cannot avoid or refuse to pay. 

### I. COMPLAINANTS MISINTERPRET FEDERAL AIRPORT REVENUE USE STATUTORY LANGUAGE. Complainants contend that the statutory language makes plain-andlegislative history supports-that airport revenues may notbe used to pay the Stormwater and Superfund Charges. Reply at 3, 8, 12-15. They argue that the statutory definition ofpermissible operating costs

1 The Port notes that on May 30, 2016, the U.S. District Courtfor the District ofOregon dismissed with prejudice the complaint Complainant A4Ahad filed against the City. Air TransportAss 'n of Am., Inc. v. Jordan, No. 3:16-cv-00230-HZ, Opinion and Order (D. Or. May 30, 2016) (holding that A4A did not have standing to bring claim against City); seeAnswer at 3. 2requires "payments to third parties to be 'directly and substantially related.to the air transportation ofpassengers orproperty."' Id. at 3; see also id. at 4, 9, 10, 20, 27. They also claim that such third partypayments "must 'reflect[] the value ofservices and facilities provided to the airport."' Id. at 3 (alteration in original); see also id. at 5, 10, 16, 20, 21, 27. Complainants are wrong. Their position rests upon a gross misreading ofthe statute. The "directly and substantially related" language has no application to this case. Complainants' reliance on "the value ofservices" statutory language is likewise misplaced. Reply at 3, 10-11. To reach that position, Complainants conflate statutory text that they believe supports their position while totally ignoring a significant statutory exception that, quite clearly, prevents the resultthat they seek. 

### A. The term "directly andsubstantially relatedto"does notmodify "airport" operating costs. Complainants' position rests upon a contrived reading ofsections 47133(a)(l) and 47107(b)(l).2 They concede that airportrevenue may be used to pay for airport operating expenses,3 but then misconstrue the statute as limiting on the types of airport operating costs that may be paid for with airport revenues under section 47133(a)(l).4 Complainants assert that "a cost cannot be deemed to be an airport 'operating cost' unless, at a minimum, itis 'directly and substantially related to the air transportation ofpassengers orproperty.'" Reply at 9 (citing 49 U.S.C. 

### §§ 47133(a), 47107(b)(l)). Below, in redline form, is what the Complainants wish the law to say:

2 49 U.S.C. §§ 47133(a)(l), 4710l(b)(l). 3 "Congress dictated thatpayments be limitedto the capital or operating costs ofthe airport." Reply at 9. 4 They likewise impermissibly readthe parallel language ofsection 47107(b)(1)(C) as modifying the language of section 47107(b)(l)(A). 

### 3[T]he revenues generatedby an airport that is the subject ofFederal assistance may notbe expended for any purpose other than the capital or operating costs ef that are directly and substantially related to
- (1) the airport; (2) the local airport system; or (3) any other local facility that is owned or operatedbythe person or entity that owns or operates the airport that is directly and substantially relatedto the air transportation ofpassengers or property. Butthat is not howthe statute reads. "The short answer is that Congress did not write the statute that way." Russello v. United States, 464 U.S. 16, 23 (1983) (internal citations omitted). The law allows airport revenue to pay without limitation the capital and operating costs associated with three distinct categories offacilities: (1) the airport; (2) the local airport system; or (3) any other local facility that is owned or operatedbythe person or entity that owns or operates the airport that is directly andsubstantially relatedto the air transportation ofpassengers or property. 49 U.S.C. § 47133(a) (emphasis added). Similarly, section 47107(b)(l) directs the Secretary of Transportation to require airport sponsors to make an assurance that airport revenues will be expended only on operating and capital costs for the same three kinds offacilities. In both statutory sections, the phrase "directly and substantiallyrelated to the air transportation ofpassengers orproperty" serves only to identify and limit the third kind of facility that falls within the reach ofthe statute, i.e., "any other local facility
... that is directly and substantially related to the air transportation ofpassengers or property" and "that is owned or



### 4operatedby the person or entity that owns or operates the airport." 5 That is a category of facilities, not costs. "[W]here Congress includes particular language in one section ofa statute but omits it in another section ofthe same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion." Russello, 464 U.S. at 23 (internal citations omitted). See also Nat'[ Fed'n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2583 (2012). The statute authorizes the use ofairport revenue to paythe capital and operating costs ofthe "airport" and the "local airport system." The canons ofstatutory construction proscribe the conflation of language from one subsection into another. This reasoning applies here and defeats Complainants' efforts to read the text ofsection 47133(a)(3) as limiting the scope ofthe whole of 47133(a). 6 The correct interpretation is also "mandatedby the grammatical structure ofthe statute" in the sense that punctuation and paragraph structure mustbe given effect to parse the correct meaning. United States v. Ron PairEnters., Inc., 489 U.S. 235, 241 (1989). 7 Complainants attempt tojustify their rewriting ofthe statute onthe grounds that statutes must be construed as a whole. Reply at 9-10. While it is true that statutes shouldbe read as a whole to harmonize provisions with one another, see Reply at 9-10 (and cases cited therein), Complainants' proposedreading distorts the statute bymisreading language from one provision

5 49 U.S.C. § 47133(a)(3); see also 49 U.S.C. § 47107(b)(l)(C). 6 Again, the same is true as regards section 47107(b)(l)(C) and the whole ofsection 47107(b)(l). 7 The grammar ofsection 47133(a) proves that the limiting phrase modifies the singular noun "facility" rather than the plural noun "costs." The verb in the limiting phrase is singular: "is directly and substantially related." Therefore, itrefers to "other local facility" and not "costs." In addition, the language ofsection 47133(a)(3) stands separate and apart from the language ofsections 47133(a)(l) and (a)(2). Each ofthese provisions are separated by semicolons. Thatmeans thatthey are separate and independentprovisions and the language ofone does not modify any ofthe others. Semicolons are ''usedto connect independent clauses." AmericanHeritage Dictionary 1582 (4th ed. 2006) (emphasis added). The text that Complainants rely upon serves to identify the "other local facilit[ies]" whose capital and operating costs can be paid from airport revenues, namely, those "otherlocal facilit[ies]" owned bythe airport sponsorthat must be "directly and substantially related to the air transportation ofpassengers or property." 49 U.S.C. § 47133(a)(3). The same is true as regards sections 47107(b)(l)(C) and 47107(b). 5into another. See, e.g., Russelo, 464 U.S. at 23. In contrast, the Port's reading harmonizes the subsections of47133(a) and 47107(b)(l). Clearly, the statute permits the use ofairport revenues to pay the operating and capital costs ofthe three differentkinds offacilities identified in each of the three separate subsections. This case concerns utilitybills of"the airport" and not of"other local facilit[ies]." The charges at issue are not capital or operating costs of"other local facilities owned or operatedby the" Port. Rather, they are operating costs ofthe Airport because they are a component ofthe utility charges assessed for sewer services provided to the Airport. Furthermore, the plain and ordinary meaning ofthe phrase "operating costs" covers the costs ofoperating a business. See Answer at 23.8 Businesses pay their utility bills. Bills for utility service are standard operating expenses ofan airport. It is not surprising thatnowhere in the revenue use statutes is there any language prohibiting a sponsor from treating a charge contained in an airport's utilitybill as an airport operating expense. The Stormwater and Superfund Charges here are components ofthe sewer user charges that are assessed against all City ratepayers. Answer at 16; see also Section III supra. As with any otherratepayer, ifthe Port does notpay its sewerbill the Cityhas the right to, among other things, suspend sewer service to the Airport. The Port cannot selectivelyrefuse to payportions ofits utility bills, and it need not do so. Congress authorized the Portto use Airport revenues to pay its utility bills, including its seweruser charges, as an operating expense ofthe Airport.

8 Indeed, that is how the phrase has previously been explained to a Congressional committee. "The phrase 'capital or operating costs' in [now 49 U.S.C. § 47107(b)] is not defined. The Supreme Court has stated, however, that 'it shouldbe generally assumed that Congress expresses its purposes through the ordinary meaning ofthe words it uses.' Escondido Mut. Water Co. v. LaJolla Bandof Mission Indians, 466 U.S. 765, 772 (1984). 'Capital costs' and 'operating costs' are generally understood as referring, collectively, to all ofthe costs incurred by a business." Reply Ex. 4,AirportRevenueDiversion: HearingBefore the Subcommittee onAviation of the Committee on Commerce, Science, and Transportation, 104th Cong. 161 n.12 (1996) (Memorandum ofC. Dean McGrath, Jr., Acting General Counsel, Department ofTransportation). 6Because the statute plainly provides that airport revenues maybeusedto pay the "operating costs" ofthe "airport," Complainants' resort to legislative history is not only unnecessary, butunavailing. "Itis elementary that the meaning ofa statute must, in the first

· instance, be sought inthe language inwhich the act is framed, and ifthat is plain, and ifthe law

is within the constitutional authority ofthe lawmaking body which passed it, the sole function of the courts is to enforce it according to its terms." Caminetti v. United States, 242 U.S. 470, 485 (1917). See also RonPairEnters., 489 U.S. at 241 (same). 

### B. Complainants' ignore that section 47107subsection (k) 

### recognizes an exceptionfor usespreviously authorized undersubsection (b). Complainants also claim that Congress required thatpayments made by the Port "to a thirdparty ... must 'reflect[] the value ofservices and facilities provided to the airport."' Reply at 3 (alteration in original) (citing 49 U.S.C. 47107(k)(2)(A)); see also Reply at 10-11 (additionally referencing 49 U.S.C. 47107(k)(2)(B)). But again, Complainants misread the relevant statute. 9 Section 47107(k) is the Congressional mandate for the establishment ofrevenue use policies andprocedures. Within it, subsection 47107(k)(2) sets outthe categories ofairport
revenue use that the policy "shall prohibit" as a minimum. Preceding the list ofcategories, however, is an important exception. Specifically, the statute states that the "[p]olicies and procedures to be established
... shall prohibit, at a minimum, the diversion ofairportrevenues (except as authorized undersubsection (b) of this section)." 49 U.S.C. § 47107(k)(2) (emphasis added).

9 Complainants' reference to FAA's recently proposedpolicy onPassenger Facility Charges ("PFC Policy") (Reply at 22) is irrelevant. 49 U.S.C. § 40117 is an entirely different statutory regime for the use ofPFCs, which outlines specific "eligible airport-relatedproject(s)." Incontrast, with regard to airport revenues, Congress granted a general authorization that airportrevenues maybe used for airport capital and operating costs. 7Complainants ignore the parenthetical exception and wrongly assert that the payment of
an operating costwith airport revenue is prohibitedunless itmeets the conditions set forth in subsections (k)(2)(A) or (B). Complainants' reading ofthe statute violates a "cardinal principle ofstatutory construction" that a statute shouldbe read "to give effect
... to every clause and word." Duncan v. Walker, 533 U.S. 167, 174 (2001) (internal citation omitted) (quotingMarket Co. v. Hoffman, 101 U.S. 112, 115-16 (1879)) ("a statute ought, uponthe whole, to be so construed that, ifit canbe prevented, no clause, sentence, orword shall be superfluous, void, or insignificant"). The exception is significant. As discussed above, subsection 47107(b) authorizes the use ofairport revenue to pay for airport operating costs. Because "subsection (b) ofthis section" is excepted from the limitation of subsection 47107(k)(2), Complainants are wrong when they argue that "[section] 47107(k)(2)(A) makes it clear thatpayments made bythe airport to a third party (such as the City) must 'reflect[] the value ofservices and facilities provided to the airport."' Reply at 3 (emphasis omitted) (alternation in original). As with their reading of sections 47107(b) and 47133(a), Complainants' interpretation of47107(k) has nothing to do with theplain language ofthe statute. Because the language ofsection 47107(k) is clear, it is not appropriate to resort to legislative history, as Complainants advocate. "[T]he inquiry should end
... where, as here, the statute's language is plain." Ron PairEnters., 489 U.S. at 241. But even ifFAA were to consider the Complainants' legislative history argument, it is unavailing. First, as the Port has shown, the Airport is receiving value for the sewer user charges itpays to the City: it receives
sewer services. Answer at 16. In the City'sjudgment, the Airport also receives the benefit ofa drained roadway system that must be used to access the Airport. Id. at 25. Moreover, the City

8provides utility service to the Airport and other ratepayers based "on the cost ofproviding those services to its ratepayers." Answer, Ex. 1-,r-,r 6-8. This satisfies any concern as to the value of service provided. "The FAA generally considers the cost ofproviding the services orfacilities to the airport as a reliable indicator ofvalue." Policy andProcedures Concerning the Use of AirportRevenue, 64 Fed. Reg. 7696, 7720 (Feb. 16, 19999) ("Revenue Use Policy"). Second, Complainants fail to show anywhere where Congress displayed concern over an airport using airport revenue to pay its utility bills. 10 The legislative history evinces far different concerns, i.e., the problem ofsponsor abuse and discriminatory exactions. "[I]t was feared that local officials would be tempted to raise airport fees rather than local taxes [so] those fees could be used for non-airport projects." Reply at 12 (quoting H. Rep. No. 104-74, at 37 (1996)). That is notwhat is happening here. The City does not own or operate the Airport. The City cannot, by means ofbookkeeping, impose charges onthe Airport as it could ifit were the Airport sponsor. Andthe City is notraising Airport charges "ratherthan" raising revenue from its ratepayers. On the contrary, the City has used a nondiscriminatory methodology to charge the Airport for Stormwater and Superfund Charges the same as all othersimilarly situated ratepayers. 

### II. COMPLAINANTS' OBJECTIONS TO THE DIRECTOR'S LETTER ARE WITHOUT MERIT. As the Port explained at length in its Answer, FAA already has previously considered and opined twice as to whether the Port's payment ofthe Stormwater and Superfund Charges is a properuse ofairport revenue. Both times the agency found the payments to be proper-once orally, and once in a written letter from Director Randall Fiertz, FAA Office ofAirport

10 To the contrary, the legislative history shows that Congress intended for airports to pay operating costs within the ordinary and plain meaning ofthe term. See supra note 8. 

### 9Compliance and ManagementAnalysis. Answer at 16 (citing Answer Ex. 2

## iii! 6-7, 9; Complaint Ex. 12 ("Director's Letter")). Complainants dismiss the Director's Letter as "reflect[ing] solely his personal opinion." Reply at 6. They also contend that the conclusions therein "contradict[] every Director's Determination and Final Decision and Order which the FAAhas publishedpursuantto 14 C.F.R. Part 16, Rules of Practice for Federally-AssistedAirportEnforcementProceedings, on the subject ofrevenue diversion." Reply at 33. Complainants are wrong onboth counts. 

### A. The Director'sLetteris more than a "personalopinion." The Director's Letter is entitled to deference. The Director's Letterproffers an interpretation ofthe agency's Revenue Use Policy as it applies to the facts ofthis case. The Supreme Courthas accorded "deference to an agency's interpretation of[its] regulations." Perez
v. Mortgage BankersAss 'n, 135 S. Ct. 1199, 1213 (2015) (Thomas, J., concurring). That deference "has been applied to formal and informal interpretations alike." Id. at 1214. "Agencies maynowuse these [interpretations] notjustto advise the public, but also to bind them." Id. at 1212 (Scalia, J., concurring). After all, ifan interpretive rule gets deference, the people are boundto obey it on pain ofsanction, no less surely than they are bound to obey substantive rules, which are accorded similar deference. Interpretative rules that command deference do have the force oflaw. Id. (emphasis in original). Imagine ifthe Porthad disagreed with the Director's Letter and refused to paythe City utility charges and, as a result, had its sewer service discontinued, leading to the closure ofthe Airport orportions thereof. Itwould no doubt have to answer to its bondholders, FAA, the public, the passengers, and the airlines tojustifyits actions. The Port could notreasonably disregard the guidance in the Director's Letter.

10Complainants' dismissal ofthe Director's Letter also cannotbe reconciled with the effort and input that ledup to it. As the Port discussed inits Answer, the Director's Letter was the culmination ofa three-year long consultative process. Answer Ex. 2 

## if 3; Answer at 20. The Port commenced the process in the summer of2012, before the City adopted Ordinance No. 185610, "whenthe Citywas considering modifying the stormwater charge imposed onproperties located inthe Multnomah County Drainage District." Answer Ex. 2 

### if 3; Answer at 20. In order to address concerns raisedby some ofits tenant airlines, the Port contacted FAA seeking guidance
as to whether the charges under the proposed ordinance wouldbe considered a cost ofairport operation and maintenance. Answer at 20; Answer Ex. 2

## iii! 4-5. In so doing, the Port engaged in oral and written communications with, among others: Patricia Deem, an attorney inthe Office ofRegional Counsel, Northwest Mountain Region; Kevin Willis, Manager ofAirports Compliance Division at FAA Headquarters; and Joelle Briggs, Manager ofAirports Compliance Division at the Western Mountain Region. Id. 

## iii! 5-6. Bytelephone call on September4, 2012, FAA representatives confirmed that the Port's use ofAirport revenue to pay for the then-still proposed Stormwater Charge and Superfund Charge would be appropriate. Answer at 20-21; Answer Ex. 2 

### iii! 6-7. After the Ordinance was adopted, Complainants vigorouslypursuedtheir ownround of discussions with DOT and FAA, in which the Port voluntarily and fully participated. As Complainants explain, what followed was an extensive exchange that included:
• meetings with DOT and FAA officials at DOT and FAAheadquarters in Washington, D.C., in May, June, and again (including Portrepresentatives) in July of2014; Complaint

### iii! 83, 84, and 86;
• followed by a legal memorandum from Complainants' counsel to Susan Kurland, DOT's Assistant Secretary for Aviation and International Affairs; and Kathryn Thompson, DOT's Acting General Counsel; Complaint

### if 85; Complaint Ex. 9; 11• followed by a legal advocacy letter from ComplainantA4A's counsel to Kathryn Thompsonrestating the arguments made during the in-person meetings and submitting evidence; Complaint**~** 87-92; Complaint Ex. 1 

### O;
• followed by a nearly three hour in-person meeting on September 16, 2014 in Portland with eightrepresentatives from DOT and FAA, including Paul Geier, DOT Assistant General Counsel, Litigation; Ron Jackson, DOT Assistant General Counsel, Operations; Randy Fiertz, FAA Director ofAirport Compliance; David Duchow, FAA Revenue Use Specialist, Airport Compliance; Scott Mitchell, an attorney from FAA ChiefCounsel's Office, Airport LawBranch; Joelle Briggs; and Patricia Deem; as well as representatives from the Port, the Multnomah Drainage District, and the City; Complaint

## iii! 93-109; and
• followed byrepeated contacts with "FAA and DOT officials for information regarding how the agencies planned to respond to the [Complainants'] challenges to the contested charges;" Complaint

## ii 110. The Director's Letter is the culmination ofthis process. Itwas sent to Complainant A4A's counsel with copy to the Port, the City, and the Multnomah County Drainage District. See ComplaintEx. 12. Far from constituting a "personal opinion," the Director's Letter was based on extensive review ofthe facts and discussions with Complainants, the Port, and the City, and was issued inresponse to the Complainants' requests, after considering their written legal analysis. Itwas issued bythe Director ofthe Office ofAirport Compliance and Management Analysis, the FAA official who oversees airport compliance throughout the nation, in a collaborative effort with a myriad ofother DOT and FAA offices. See Complaint Ex. 12 at 1 (noting that the letter responds to Complainants' written request to Kathryn Thomson and that Ms. Thomson had asked Mr. Fiertz to respond). The Director's Letter is much more than a "personal opinion." Fundamentally, airports must be able to rely on FAA guidance such as the Director's Letter. In any event, Complaints' summary dismissal ofthe letter is irrelevant because they have failed to show that its reasoning is unsound.

12

### B. Complainants misrepresentFAApolicy andPart 16 precedenton revenue diversion. Complainants' unsupported assertion that the Directors' Letter "contradicts every Director's Determination and Final Decision and Order whichthe FAAhas published pursuant to 14 C.F.R. Part 16," and witness Shaffer's declaration repeating the assertion are withoutmerit. Reply at 33 (emphasis added); Reply Ex.**1~46.** There is no Part 16 determination addressing the matters raised here. While FAAhas issued several determinations and orders concerning its
revenue use policy, not one deals with the issue ofwhether airport revenues can be usedto pay for utility charges when such charges are assessedby an independentmunicipal utility in a nondiscriminatory manner on all similarly situated ratepayers. 11 The only Part 16 case that Complainants cite in their Reply (at 29) is not dispositive of the issues here. 12 Fundamentally, the LAX case concerned whether the City ofLos Angeles was using airport revenue to subsidize other non-airport city functions and singling out the airport for particular charges to fund those activities. Here, the City and Port are independent ofeach other;

11 Moreover, the airport revenue use Part 16 decisions that cover similar issues deal, for the most part, with costs that were being assessed or imposedby airport sponsors, not thirdparties. See, e.g., SkydanceHelicopters, Inc. v. Sedona Oak-CreekAirportAuth., FAA DocketNo. 16-02-02, Director's Determination at 37 (Mar. 7, 2003); In re RevenueDiversion by the City of L.A. atL.A. Int'!, Ontario, Van Nuys & PalmdaleAirports, FAA DocketNo. 16- 01-96, Record ofDetermination (Mar. 17, 1997). Other revenue use Part 16 cases have addressed an airport's decision to set charges for rent and other costs as anotherpotential cause ofrevenue diversion, butthese cases are notrelevanthere. See, e.g., Clarke v. City of Alamogordo, FAADocketNo. 16-05-19, Director's Determination at 24 (Sept. 20, 2006). 12 Complainants also attempt to make hayout ofa resolutionproposed by a Chicago Alderman calling on airlines to voluntarily impose a surcharge onpassengers flying through O'Hare and Midway airports to fund additional police officers to combat crime throughout the City ofChicago. Reply at 31. Any comparison to this case is inapposite. Theproposed Chicago surcharge targeted that city's airports and would have been imposed onpassengers who happened to travel through them. Here, the City is targeting neither the Airport nor its passengers. Rather, the disputed charges are being imposed on all City sewerratepayers. Also, in Chicago the airports would have received nothing inreturn for the surcharge. Here, the Airport is receiving sewer network services. 

### 13there is no concern ofsponsor abuse. 13 In the LAX case, FAA was addressing costs related to human resources that were being imposed in a discriminatory, arbitrary, and unverifiable manner against only the airport. 

### See Answer at 39 (discussing the merits ofthe case). Here, FAA is addressing utility costs that the Port, as a ratepayer, is obligated to payto an entirely separate municipal entity and in line with the obligations ofotherratepayers ofthatmunicipality. The LAX case is inapposite and provides little orno guidance. 

### III. THE STORMW ATERAND SUPERFUND CHARGES ARE PRESUMPTIVELY LAWFUL UTILITY CHARGES IMPOSED IN ACCORDANCE WITH THE SCHEME OF STATE UTILITY REGULATION. Complainants contend that Federal aviation lawprecludes the use ofairport revenues to pay third-partyutility charges that are presumptively lawful under state law. Thatposition has
no merit when measured against the Federal statutes at issue andbasic utility law. Indeed, it defies common sense and the realities ofairport operation. The City's sewer user charges are legislative enactments. They are presumptively lawful utility charges. Ifthe Port fails to pay, then the City can stop service and render the airport unfit for use. Local law provides a comprehensive scheme ofutility regulation including a forum for challenges to, and review of, all utility charges. 14 Congress cannot have intended to: (i) preclude the use ofairport revenues to

13 Complainants argue that "there is no merit to the Port's argument that Congress did not intend for 49 U.S.C. § 47133(a) to apply to local governments that do not own or operate an airport, except for the narrow category of 'aviation fuel taxes."' Reply at 17 (quoting Answer at 33). Complainants are wrong. Congress spoke to one, and only one non-sponsor charge in section 47133: "local taxes on aviation fuel at public airports." 49 U.S.C. § 47133(b)(l). Under the doctrine ofexpressio unius est exclusio aterius the statutory "inclu[sion] [of] one thing implies the exclusion ofthe other." Black'sLawDictionary 661 (9th ed. 2009). Complainants have things exactly backwards. Because non-sponsor aviation taxes are the only non-sponsor charges expressly mentioned in section 47133 (and insection 47107(b)), those statutory provisions shouldbe construed to not apply to any other form of lawful non-sponsor charge. 14 E.g., Portland City Code ("PCC") 17.36.110, 22.02.010 through -040 (providing administrative review and code hearing processes to challenge sewer assessments or charges). 14pay lawful utility charges, (ii) supplant the scheme oflocal utility regulation, or (iii) subject the Portto the risk ofinconsistent rulings and conflicting legal obligations. 

### A. The Cityprovides andcharges for sewer andstormwaterservice. Despite deregulation in significant sectors ofthe industry, many utility services throughout the country are provided in accordance with the traditional utility model, i.e., "in exchange for a monopoly franchise, the company accepts the strict legal obligation to serve all customers onreasonable terms." 15 Such utilities are "entitledto charge rates designed to yield a reasonable rate ofretum." 16 The City's Bureau ofEnvironmental Services ("BES") provides
sewer services, including stormwater services as a traditional municipal utility. Answer Ex. 1 

## iii! 3-4. That BES is a municipal utility and not a privately-ownedutility is largely immaterial. The service rights and duties ofa private utility are "generally applicable" to a municipal utility. 17 The Portland City Charterbroadly defines "sewer" to encompass the entirety ofthe system "necessary orproper for the disposal ofsanitary sewage, or for drainage including storm water drainage" as well as "other acts and things" necessary or appropriate for these purposes. Portland, Or. Charter§ 9-102, 

### see Answer Ex. 1, Attachment B. City law also authorizes the Cityto "fix fees and charges for connection oruse orboth ofsewers and sewage purification or disposal systems to be paid byproperty which is served or is capable ofbeing served for use of the sewage disposal system." Portland, Or. Charter§ 11-302, 

### see Answer Ex. 1, Attachment B.

15 Alfred E. Kahn, Who ShouldPay forPower-PlantDuds?, Wall St. J., Aug. 15, 1985. 16 James Bonbright, Albert K. Danielson & David R. Kamerschen, Principles of Public Utility Rates 208 (1988). 17 12 Eugene McQuillan, The Law of Municipal Corporations 770 (3d ed. 2006) ("McQuillan"). 15All ofthis accords withthe City's home rule authority under state law. Answer Ex. 1if3, Attachment A§ 1(5). 18 Itis immaterial to whether the charges are lawful utility charges that the two charges appear as separate line item charges onthe ratepayerutility bill. The City developed, enacted, and charges the Stormwater Charge and Superfund Charge as part ofits sewerutility charges. See Answer Ex. 1, Attachment H; Answer Ex. 3, Portland City Code ("PCC") 17.36.050 (enacting sanitary sewer charges, the Stormwater Charge, and the Superfund Charge as part of the overall sewer charges); Complaint Ex. 10; seegenerally Answer Ex. 1. As a matter of legislation they are enacted as "SewerUser Charges" pursuant to Portland City Code Chapter 17.36 and charged to "ratepayers." "Ratepayers who receive a direct or indirectbenefit from City stormwater management services are subject to the user charge." Answer Ex. 3, PCC 17.36.050(F). As a matter ofutility law, the City enjoys substantial discretion in developing utility charges. 19 It "is not obligated to employ any single formula or combination offormulas to

18 "Homerule is the authority grantedto Oregon's cities byArticle XI, section 2, andArticle IV, section 1(5), ofthe Oregon Constitution-adoptedbyinitiative petition in 1906-toregulate to the extentprovided in their charters." Rogue Valley Sewer Servs. v. City of Phx., 357 Or. 437, 445, 353 P.3d 581, 585 (Or. 2015). 19 Complainants claim (Reply at 26) that the "Fees imposed on PDX" do not comport with the fmdings ofthe Black and Veatch survey ("Survey") ofstormwater management. The Survey shows that stormwater fees across the country are typically based on impervious area (AnswerEx.l, Attachment E at 13) and that storm water fees must necessarily include an offsite componentbecausepublic streets and land are typically exempt from stormwater user charges. Id. at 15. Complainants also argue that the Stormwater Charges "are notproportional to any contribution bythe Airport to stormwater management requirements in the City" and that they "are in no sense 'voluntary' for the Airport." Reply at 26. Complainants are wrong on both counts. First, the Stormwater Charge is, in fact, proportional. With the discount given for the onsite component, the charge is roughlyproportional to the property's contribution to stormwater runoff(i.e., the total charge is much lower whenthe property does not sendrunoffinto the City's system). Second, the voluntary reduction that the Surveyreferences relates to credits for the management ofonsite stormwaterrunoff. See Answer Ex. 1, Attachment E at 17 ("Stormwater credit[s] serve[] a key role in enhancing the perception of'user fees' by affording the customers opportunities to reduce the magnitude ofthe user fees commensurate with extent ofonsite stormwater management.") (emphasis added). Ratepayers can voluntarily avoid the onsite component ofthe Stormwater Charge bymanaging their own onsite stormwater. The Port is receiving full credit for the onsite component ofthe Stormwater Charge due to its location in a drainage district. Answer at 7-8, ,,30, 34. As Mr. Biery explained, the credit is given "inrecognition ofthe fact that those drainage 16determine what are in each case 'just andreasonable rates."' Gearhart v. Pub. Util. Comm 'n of Or., 255 Or. App. 58, 63, 299 P.3d 533, 538 (2013) (Or. Ct. App. 2013) (quoting Pac.NW Bell
v. Sabin, 21 Or. App. 200, 224, 534 P.2d 984, 996 (Or. Ct. App. 1975) (describing kindred ratemaking powers ofthe Public Utility Commission ofOregon)). Separate line itemutility charges such as the Stormwater and Superfund Charges are both lawful and common. See, e.g., McQuillan, at 814-5 (proper for municipal utility to include separate fuel-adjustment clause on electric bill). The City could have rolled the Stormwater Charge and Superfund Charge into a single sewer charge, or could have rendered them opaque in some other manner, but chose to not do so. Itcould change its ratemaking practices and do so in the future. Forratemaking purposes, however, "the critical factor is the reasonableness ofthe rate ordinance as a whole." McQuillan, at 815. B. The Stormwater andSuperfund Charges arepresumptively lawfuland musthepaidto ensure continuedsewer service attheAirport. "Generally speaking,
... rates set by a municipality are presumed to bevalid and reasonable until the contrary has been established; and the burden ofovercoming the presumption ofvalidity and reasonableness rests with the challenging party." McQuillan, at 827. 20 Here, the Stormwater Charge and Superfund Charge have force oflaw as provisions of the City Code. Answer Ex. 3, PCC 17.36.050 (F), (G). It is not the case, as Complainants suggest, "thatthe costs in question maybe characterized as 'utility charges' or 'utility fees' in
somegeneralsense." Reply at 10 (emphasis added). They are set forth in the City Code as

districts manage much ofthat on-site storm water." Answer Ex. 1

### 1 17. 20 See also Elliotv. City of Pac. Grove, 54 Cal. App. 3d53, 58, 126 Cal. Rptr. 371, 374 (Cal. Ct. App. 1975); Water Works Bd. of Birmingham v. Barnes, 448 So. 2d 296 (Ala. 1983). 17utility charges and, like all legislative acts, they are valid21 unless and until found otherwise by a competent forum. 22 As things standnow, the City bills all sewer charges, including the Stormwater and Superfund Charges, and the Port must paythem. Ifthe Port fails to pay the Stormwater or Superfund Charges applicable to the Airport, it is subject to discontinuance ofsewer service to the Airport. "Itis the general rule
... that
... a municipality furnishing a utility service to the public
... may prescribe and enforce a rule or regulation thatprovides for the shutting offofthe service from a consumerwho has defaulted in payment therefor." 64 Am. Jur. 2dPublic Utilities § 48 (2011). Here, City law expressly provides for the discontinuation ofwater or sewer services for nonpayment ofutility charges. Charges not paid in accordance with the due date in the bill or invoice may be subject to water shutoffpursuantto Title 21 ofthis Code. The Director, with approval ofthe Commissioner-in-Charge, may also discontinue sanitary sewer service by disconnecting andplugging the sewer service line to properties whose delinquent user charges exceed $10,000 for a period of90 days ormore. PCC 17.36.080(D). Without sewer service many, ifnot most, ofthe Airport buildings and facilities, including the passenger terminal building, could notbe lawfully occupied. PCC 8.20.200 provides inrelevantpartthat:

21 By dismissing the BieryDeclaration as "provid[ing] no support for finding that the Fees are lawful," Reply at 11 n.14, Complainants ignore the black letter law principle that municipal utility charges such as the Stormwater and Superfund Charges are legislative enactments and thus positive law. See, e.g., McQuillan, at 827. 22 Complainants could file a complaintinthe Multnomah County Court at any time challenging the lawfulness ofthe Stormwater Charge and the Superfund Charge onthe very factual grounds they allege here, i.e., that they are being charged for services unrelated to the Airport. See, e.g., Anderson v. City of Portland, Case No. 1112-15957, slip op. at 26 (Multnomah Cty. Cir. Ct. Mar. 10, 2014) (Opinion on Cross-Motions for Partial Summary Judgment) (holding "thatmonies paidinto the [City dedicated] funds bywater and sewerratepayers [can] be spent only on matters that are reasonably related to the water and sewer services providedbythe City"). See also State of Or. v. City of Portland, Case No. 15CV09584, slip op. at 5 (Multnomah Cty. Cir. Ct. June 16, 2016) (affirming final administrative decision that the OregonAirNational Guard benefits directly or indirectly "from City stormwater management services"). Complainants plainly have standing to do so. "[T]he City directly bills several entities at [the Airport] for sanitary, stormwater, and [Superfund] charges. These are Federal Express, Skywest Airlines, and Horizon Air. Those entities regularly paytheirbills and, to myknowledge, have voiced no separate objections to the fees assessed." AnswerEx.**1~22.** Were Complainants to do so andprevail, the decision would operate to the benefit ofall similarly situatedratepayers within the City. Butunless and until a courtwithjurisdiction declares that the Stormwater and Superfund Charges are unlawfully included as part ofthe Cityutility fees, the Port mustpay them or subject itselfto termination ofservice. 18When upon investigation orinspectionbythe City Health Officer, or any ofhis assistants, it shall have been found that any building, property or place inwhich anyperson orpersons ... engage in any occupation, or assemble, is kept or permitted to be or remain in anunsanitary or filthy condition,
... [or] inwhich the drainage orplumbing is so defective orunsanitary as to constitute a danger to health
... it shall be the duty ofthe Health Officer to notify inwriting the owner, agent or occupant ofsuch building orproperty, stating therein the condition or thing to be corrected, and requiring that the same be corrected within a reasonable time to be specified in such notice. Ifwithin such time the conditionbe not remedied, it shall be the further duty ofthe Health Officerto post or cause to be posted in a conspicuous place on such building orproperty a notice stating that suchbuilding orproperty has been found to be dangerous to health andunfit for occupancy. C. Complainants'position fails to acknowledge utility ratemaking andthe range of utility services andcharges. Ratemaking is an expert undertaking vested here in the municipal utility as a matter of state law.23 Whenutilities construct a rate structure, they typically develop a revenue requirementreflecting the utility's anticipated allowable operating expenses, investment in property used to provide utility service, and, in the case ofa non-profit municipal utility, the cost ofdebt service.24 These costs are then allocated to customers.25 This type ofratemaking is precisely what the City has done in developing its overall sewer charges, including the Stormwater Charge and the Superfund Charge at issue. Answer Ex. 1, Attachment H; see generally Answer Ex. 1.

23 "Itis theproduct ofexpertjudgmentwhich carries a presumption ofvalidity." FPCv. Hope Nat. Gas Co., 320 U.S. 591, 602 (1944). 24 Gearhart, 255 Or. App. at 63, 299 P.3d at 538. Municipalutility rates maybut need not include some legitimate element ofprofit. McQuillan, at 834. 25 Alfred E. Kahn, The Economics of Regulation 151 (1988). 19Utility ratemaking and regulation is complex.26 FAA should nottake onthe task of assessing what utility charges, orportions ofcharges, are properly paid from airport revenues. Nothing in sections 47133(a) and 47107(b) evidences Congress's intent that FAA should do so. Considerations offederalism counsel against it. Itmust be presumed that Congress was well
aware ofthe scheme ofstate utility regulation when it authorized the use ofairport revenues to pay airport "operating costs," including localutility charges. Complainants' argument that "the City is not providing any service to the Airport in exchange for the Fees" (Reply at 16) cannot get around the fact that the City is providing the Airport continued sewer service,27 andbills for those services in a manner consistent with utility ratemaking practice, including the aggregation ofvarious capital and operating expenses. Ofcourse, the Port is not defending the City utility fees orthe merits ofany ofthe various capital and operating expenses reflected in the rates. Instead, the Port merely shows the propriety ofits payments ofthe charges. Butit is worth noting that commissions, courts, and Congress have rejected the Complainants' proposition thatratepayers should not have to pay for utility stormwater charges orutility superfund remediation costs. For example, in a case arising in the context ofthe Clean Water Act, the Multnomah County Circuit Courthas recently affirmed an administrative decision that, underthe Portland City Code, the Oregon AirNational

26 Every year, there are thousands ofrate filings, rate enactments, andpublic utility commission andjudicial decisions. Ratemaking is the subject oftreatises and text books. See, e.g., James Bonbright, Albert K. Danielson & David R. Kamerschen, Principles of Public Utility Rates (1988); Alfred E. Kahn, The Economics of Regulation (1988); Leonard Saul Goodman, The Process ofRatemaking (1998). There are a myriad ofprinciples governing what costs are properly charged to whatratepayers in what circumstances. 27 The City's sewer and stormwater drainage systems are related. Some City expenditures, for example, affectboth systems. "The StormWater Systemincludes elements such as the 'Big Pipes' [at a cost of$1.4 billion] that were constructed to comply with a regulatory order to reduce the number ofyearly combined sewer overflows into the Willamette River." Answer Ex.**1~6.** The Superfund Charge is also directly related to the City's sewer and stormwater services. "Because the City was named as a potentially responsible party due to its ownership and operation ofthe sewer and stormwater conveyance system, it assesses a Portland Harbor Superfund Charge against all Portland ratepayers, including both sanitary sewer customers and storm water customers." Id.**~** 24. 20Guard is a ratepayer andmust pay the City's Stormwater charge because it "receive[s] a direct or indirect benefit from City Stormwater management services." State of Or. v. City of Portland, Case No. 15CV09584, slip op. at 5 (Multnomah Cty. Cir. Ct. June 16, 2016) (quoting BES administrative decision). The Oregon AirNational Guardbase is located atthe Airport.28 Itis also the case that, by act ofCongress, the Federal government is paying the City stormwater charges associated withthe Federal government's possessory interest ofproperty within the City ofPortland,29 including the off-site stormwater charge because the "reasonable service charges payableby federal agencies
... include
... stormwater assessments."3

# °Congress acted, in part, to undo Federal nonpayment arising from the U.S. Government Accountability Office's "conclu[sion] that federal agencies could notpaythe District ofColumbia's stormwater assessmentbecause itwas a 'tax."'31 As regards superfund remediation costs, courts and commissions have permitted recovery from ratepayers because "[t]he cost ofdelivering utility service reasonably encompasses current costs ofdoing business, including necessary costs of complying with legally mandated environmental remediation." Citizens Util. Bd. v. Ill. Commerce Comm 'n, 166 Ill. 2d 111, 124, 651 N.E.2d 1089, 1096 (Ill. 1995). See also NY. State Elec. & Gas Corp., 90 PUR4th 322 (N.Y. Pub. Serv. Comm'n 1988) (proper for utility to charge ratepayers environmental site restoration costs).

28 The Portland AirNational Guard Base is located at the Airport. History of the PortlandInternationalAirport (Feb. 3, 2014), https://www.142fw.ang.af.mil/resources/factsheets/factsheet.asp?id=l8092. The Court affirmed the agency finding that the Oregon AirNational Guard is a state agency. State of Or. v. City of Portland, Case No. 15CV09584, slip op. at 3. The Courtnoted the agency's finding that the Oregon AirNational Guardhadto pay the stormwater charge "orface the same consequences as any delinquent ratepayer." Id. at 2 (quoting BES determination ofSept. 9, 2014). 29 And elsewhere across the Nation. 30Reimbursement orPayment Obligations of the Federal Government Under Section 313(C)(2)(B) of the Clean WaterAct, Office ofLegal Counsel at 1 (Feb. 25, 2011), https://www.justice.gov/olc/opinion/reimbursement-orpayment-obligation-federal-government-under-section-313c2b-clean-water. 31 Id. at 3 n.2. 21Here, the City is providing the Airport sewer services. The City sewer service is a networkutility: the system elements are planned and operated to provide sewer and related stormwatermanagement services throughoutthe City on a coordinated, integrated, and interconnected basis. 32 Ifchallenged, the City could seek to defend the Stormwater and Superfund Charges as networkutility costs necessary andproper incidentto the provision of
sewer service. Whether the two charges at issue here wouldwithstandjudicialreview as part of the overall sewer charges is immaterial. As things stand now, they are presumptively lawful components ofthe City seweruser fees, lawfully charged to the Port as a result ofthe Port's possessory interest inthe Airport. As a result, the Stormwater and Superfund Charges are presumptively lawful operating costs ofthe Airport. The shortcomings ofComplainants' position are particularly clear in the context of bundled utility charges. Because the Cityhas determined that the Stormwater and Superfund Charges are sewer charges, it could have bundledthe associated costs into the metered sewer charge. Under Complainants' theory ofthe case, FAA would then be putto the task of disaggregating the City sewer charge and determining what portion was directly and substantiallyrelated to the Airport and what was not. Such unscrambling ofbundledrates would involve disaggregating and/or reallocating labor and material costs, capital costs, administrative and general costs, taxes, pensionbenefits, depreciation, and the whole host ofcosts that would be included in bundled sewer charges. CfAnswer Ex. 1, Attachment H at 4 (discussingjudgment issue ofallocating maintenance functions within a combined sewer and stormwater drainage system). Congress could not have intended for the FAA to do so.

32 See, e.g., Answer Ex. 1, Attachment H at 17 (discussing the "major sanitary sewer and stormwater drainage facilities that serve the entire community"); Kahn, The Economics of Regulation 157-8 (discussing the economic efficiencies ofcoordinated investment planning for network facilities). 

### 22Moreover, under Complainants' "no benefit to the airport" theory, virtually every kind of utility charge at some point in time would be subject to second-guessing. Ratepayers benefit from utility expenditures in a variety ofways, even ifthe benefit is not obvious. Cancelled utilityplant and facilities are a classic example offacilities subject to challenge onthe grounds that theyprovide no user benefit. But although cancelled or abandoned facilities provide ratepayers no direct service benefit, they are frequently recovered inrates onthe grounds of reasonable systemplanning, a benefit that ratepayers do enjoy.33 The extent to whichnetwork facilities benefit particular customers is yet another example ofa "no benefitto the ratepayer" challenge. Compare Ill. Commerce Comm 'n v. FERC, 721 F.3d 764, 774 (7th Cir. 2013) (appropriate to charge ratepayers for transmission facilities located hundreds ofmiles away basedupon presumption ofbenefit to entire network) with Ill. Commerce Comm 'n v. FERC, 576 F.3d470 (7th Cir. 2009) (rejecting and remanding charge to ratepayers for different network transmission facilities also located hundreds ofmiles away). Under Complainants' theory ofthe case, airport sponsors across the country could find themselves subjectto unlawful revenue use challenges for having paidthose portions oftheir electric utility bills attributable to cancelled generating plants or for remotely located transmission lines. IV. COMPLAINANTS' READING OF THE STATUTE WOULD LEAD TO ABSURD RESULTS. "All laws should receive a sensible construction. General terms should be so limited in their application as not to lead to injustice, oppression, or an absurd consequence." United States
v. Kirby, 74 U.S. 482, 486 (1868). See alsoAm. Water Works Ass'n v. EPA, 40F.3d1266, 1271

33 See, e.g., David Schlissel & Bruce Biewald, Nuclear PowerPlant Construction Costs 8-9 (July 2008),http://www.synapse-energy.com/sites/default/files/SynapsePaper.2008-07.0.Nuclear-Plant-ConstructionCosts.A0022_ O.pdf(discussing utility recovery ofcancellednuclearplant costs).
23(D.C. Cir. 1994) (agencyproperly rejected reading ofstatute which "would lead to absurd results"). Complainants' interpretation of49 U.S.C. §§ 47107(b) and 47133(a) mustbe rejected
onthese grounds. Complainants contend that Congress intended to preclude airports from paying utilitybills imposed under state law. In that circumstance, the supplying utility can and generally will discontinue service for nonpayment. Here, the resulting discontinuance ofCity
sewer service would render the Airport inoperable. That is an absurd outcome and wouldresult in, among otherthings, an "artificialrestriction[] on airport capacity" contrary to the purposes of the statute. 49 U.S.C. § 4710l(a)(9). Itwouldbe gross economic waste. Complainants disregard the presumptive legality ofthe Storm water and Superfund Charges as a matter ofstate law. They dismiss as "irrelevant" the fact thatthe charges "are among various utility charges the Port incurs as a consequence ofowning and operating the Airport." Reply at 4 (quoting Answer at 2). And they do not argue that Federal law preempts the two utility charges.34 The essence ofComplainants' position is that FAA should engage in a detailedparsing ofthe various constituent components ofa utility bill, such as a sewer service bill, and evaluate the extent to which each ofthe components is directly and substantially related to the Airport. Then, the argument goes, FAA should tell the Port that, unlike all similarly situated ratepayers receiving the utility bills, the Port may notpayportions ofthe bill because doing so violates Federal law and Grant Assurances. IfComplainants were correct, the Portwouldbe prohibited from using Airport revenues to pay its utilitybill, butrequired to pay the bill under state law. This would have significant real-world consequences. Only four outcomes are possible: (i) discontinuance ofairport utility

34 "Complainants are not making a preemption argument and FAA does notneedto find thatthe federal laws and policies against diversion ofairport revenue preempt Ordinance 185610 and the Fees in their entirety to find the Fees constitute unlawful revenue diversion." Reply at 18. 24sewer service for reason ofnonpayment, (ii) payment from some unidentified non-airport revenue, (iii) self-supply, or (iv) elimination ofthe charges due to successful state law challenge. Interpreting the revenue use statutes in a waythat leads to the closure ofan airport (or even some ofits buildings and facilities) for nonpayment ofsewer services is obviously absurd. The use of non-airportrevenues to payutility bills attributable to an airport is likewise absurd: it defeats the legislative purpose "that airports should be as self-sustaining as possible," 49 U.S.C. § 47101(a)(l3). More importantly, itbegs the question ofwhere the necessary funds would
come from (particularly in the case ofairport sponsors whose only public asset is the airport itself). Requiring an airport to self-supply a utility service (even iflegally, economically, and practically feasible), is contrary to efficiency, an objective which runs throughout the statute. See generally 49 U.S.C. § 4710l(a), (b). 35 The fourth and lastpossibility is thatthe airport sponsor challenges the fees before the state utility commission or in state court and obtains a ruling that the fees are unlawful as a matter ofstate law.36 This is anuncertain and timeconsuming process, and service would likelybe discontinuedpendente lite for non-payment. Complainants fail to acknowledge the logical outcomes oftheir arguments, and FAAneed not go down thatpath. The Stormwater and Superfund Charges are presumptively lawful utility charges attributable to the Airport and properlypaid out ofairport revenues as airport "operating costs." That shouldbe the end ofthe matter.

35 Utilities exist in order to provide and "perform[]
... essential public service[s]." Black'sLawDictionary 1686 (9th ed. 2009). A "publicutility
... [is] a business or service engaged inregularly supplying the public with some commodity or service that is ofpublic consequence oruseful to the public." 64 Am. Jur. 2dPublic Utilities § 1 (2011). 36 There can be no plausible argumentthat the Port should have challengedthe two charges in state court. The Port acted in accordance with the guidance ofthe Director's Letter that it is permissible to use airport revenues to pay the Stormwater and Superfund Charges. 25

### V. THE STORMW ATER AND SUPERFUND CHARGES ARE NOT UNLAWFUL TAXES. Complainants argue that "because the City lacks power to taxthe Airport, the Fees are unlawful." Reply at 46. This argument is unavailing. As a threshold matter, as discussed above, the sewer charges are presumptively lawful utility charges and no further inquiry is necessary. But ifFAA chooses to address the utility fee versus tax issue, it should do so through the lens of Federal law. See Answer at 41 n.20 (citing W AirLines, Inc. v. Bd. of Equalization, 480 U.S. 123, 129-30 (1987)). This analysis would allow FAAto conclude thatthe sewer charges, ifthey
are "taxes" under Federal law, are not prohibitedby, and thus permissible under, the Anti-Head TaxAct ("AHTA"). The statutes at issue here are Federal laws, and the analysis ofwhether a particular charge is a "tax" for purposes ofthis Federal law is different than the analysis ofwhether the charge is a "tax" under a state law.37 See Folio v. City of Clarksburg, 134 F.3d 1211, 1217-18 (4th Cir. 1998) (fmding city's argument inFederal court that an assessment is a tax under Federal law, although the city maintained in state court that it is not, permissible); Lightwave Techs., L.L.C. v. Escambia Cty., 43 F. Supp. 2d 1311, 1315 (S.D. Ala. 1999) (finding right-of-way fee to be a tax for the purposes ofa Federal law and declining to consider the argument thatunder state law, the county has no authority to tax). Complainants ignore the fact that a charge maybe classified

37 The tax versus fee analysis under federal law takes "apractical and sensible approach" and is not "a set ofrigid rules or elements" from which follows "amechanical conclusion." Hexom v. Or. Dep 't ofTransp., 177 F.3d 1134, 1137 (9th Cir. 1999). A commonly employed analysis infederal courts considers: "(1) What entity imposed the fee? (2) Whatparties are being assessed the fee? (3) Is the revenue generatedbythe fee expended for general public purposes orused for the regulation and benefit ofthe parties upon whom the assessment is imposed?" McCleod v. Co/um. Cty., 254 F. Supp. 2d 1340, 1345 (S.D. Ga. 2003). 26differently for the purposes ofstate and Federal law. 38 This is precisely what happened inthe context ofFederal governmentpayments for local utility stormwater charges. GAO held that they were a tax for Federal purposes, prompting Congress to enact legislation finding thatthey
were permissible service charges. 39 Complainants further argue that the Port's distinctionbetween taxes imposed on an entity
as a property owner and those imposed on an entity as a property occupantruns "directly contrary" to the Director's Letter. Reply at 45. There is no inconsistency. The Director's Letter found that the "stormwater management charge is an operating cost ofthe airport, because it arises as a legal obligation incident to the airport'spossessory interest in land necessary for the provision ofaeronautical services." Complaint Ex. 12 at 1 (emphasis added). A "possessory interest" is "[t]he presentright to control property, including the right to exclude others, by a person who is not necessarily the owner." Black'sLawDictionary 1284 (9th ed. 2009). Some of the Complainant airlines have a possessory interest andpay the stormwater charges as airport tenants even though they do not own the underlying airport property. Answer Ex. 1ii22. The Director's Letter tied the obligation to paythe Stormwater and Sewer Charges to the Port's

38 While the Port explicitly does not concede that the two charges are a tax under Oregon law, Complainants' argument onthis point is wrong. Oregon law prohibits taxation of"all property" ofports. Or. Rev. Stat. § 307.090(1). The Port argued in its Answer (at 41 n.20) that the Stormwater and Superfund Charges are not a propertytax, because they are imposed on a property's occupantrather than its owner. See Reply at 45 (incorrectly characterizing the Port's argument as "assert[ing] thatthe Fees are not a 'tax' because they 'are imposed not on a property's owner, but on its occupant'") (citing, inpart, PortAnswer at 41 n.20). Even ifOregon law governed this analysis, Complainants have not shown that itprecludes a finding that the charges are a tax. Itmerely precludes a finding that they are aproperty tax under Oregon law. Complainants' argumentthat the Stormwater and Superfund Charges "therefore would be in excess ofthe City's authority" (Reply at 46) is similarly deficient. The cases that Complainants cite for this assertion concern analyses under other state laws. See Fulton Cty. TaxpayersAss'n v. City of At!., No. 1999CV05897, 1999 WL 1102795, at *4 (Ga. Super. Ct. Sept. 22, 1999) andBoltv. City of Lansing, 459 Mich. 152, 169, 587 N.W.2d 264, 272 (Mich. 1998). One case holds that the court "decides whether the state or local law is a tax, guided by 'federal law
...rather than
... state law labels,"' Cmty. Hous. Mgmt. Corp. v. City of NewRochelle, 381 F. Supp. 2d 313, 319 (S.D.N.Y. 2005) (quotingRobinson Prot. Alarm Co. v. City of Phi/a., 581F.2d371, 374 (3d Cir. 1978)). 39 See supra note 30. 27possessory interest in, not ownership of, the Airport,40just as the Port did in its Answer (at 41 n.20). The Port previously argued that "to the extent the [Stormwater and Superfund] Charges
are deemed to be a tax for purposes ofFederal law, they wouldbe outside the prohibition ofthe Anti-Head Tax Act." Answer at 41 n.20. Complainants do not take issue with this. Instead, their Reply argues a completely differentpoint, i.e., "thatthe fees "cannotbe found to be lawful under the Anti-Head Tax Act." Reply at 47. In doing so, Complainants continue to mischaracterize the safe harborprovision ofthe AHTA. Reply at 48. Complainants are mistaken that a tax mustbe within the specific list oftaxes enumerated in the statute to be withinthe exemption. The AHTA addresses "the permissible scope ofstate taxation in the area ofair commerce." Wardair Can. v. Fla. Dep 'tof Revenue, 477 U.S. 1, 16 (1986) (Burger, C.J., concurring) ("the final bill
... appears to be a compromise following careful consideration by Congress as to the permissible scope ofstate taxation in the area ofair commerce"). The statute permits a State orpolitical subdivision ofa State to levy or collect "taxes (except those taxes enumerated in subsection (b) ofthis section), includingproperty taxes, net income taxes, franchise taxes, and sales oruse taxes on the sale ofgoods or services." 49 U.S.C. § 40116(e)(l) (emphasis added). Complainants do notrebut the Port's argument that this list is merely illustrative ofthe type oftaxes that are permitted (Answer at 41 n.20), butrather assert that it is "irrelevant" because "nothing in the AHT A authorizes a government entity that does not own or operate an airport to impose
... utility charges that are notprovided in exchange for services or facilities

40 The Director's Letter further notes thatthe Port is the "ratepayer" inthis case, ComplaintEx. 12 at2-i.e., the Stormwater and Superfund Charges are levied onthe Portnot merely because it owns landwithin the City, but due to its status as a utility customer ofthe City. 28actually given to the airport." Reply at 48. Unlike the allowable charges section, the allowable taxes section ofthe AHTA does not limit the imposition ofsuch taxes to a State orpolitical subdivision that owns or operates the airport. Compare 49 U.S.C. § 40116(e)(2) (specifying that
a State orpolitical subdivision may levy or collect "reasonable rental charges, landing fees, and other service charges" from certainusers "ofan airport owned or operatedby that State or subdivision") (emphasis added) with 49 U.S.C. § 40116(e)(1) (having no such limitation). The statutory list is illustrative; the fact that the statutory exception contains a partial list does not
mean it does so to the exclusion ofall other types oftaxes. Further, nothing in the AHTA requires allowable taxes and charges to be "providedin exchange for services or facilities actually given to the airport," as Complainants allege. Reply at 48. Although there is value to the Airport associated with the sewer services it receives in exchange for the sewer charges it pays, such an analysis is notrequiredby the AHTA, and Complainants have offered no reason why it should be imposed. See, e.g., Travel Servs., Inc. v. Gov't of the Virgin Is., 904 F.2d 186, 189 (3d Cir. 1990), cert denied, 498 U.S. 939 (1990) (analyzing whether tax at issue is "atax on gross receipts :from the sale ofair transportation" without addressing this issue); City of Syracuse v. Comerford, 2003 WL 22471176, at *3 (N.Y. Sup. 2003), 

### aff'd, 13 A.D.3d 1109 (N.Y. App. Div. 2004) (holding that the equal value requirement of49 U.S.C. § 40116(d)(2)(A) does not apply to a property taxpermissible under the AHTA). The Stormwater and Superfund Charges are for actual costs that the City incurs for current services, not estimates related to new development. Answer at40; Answer Ex. 1

### ilil 6-7. Cf City and Cty. of Denver v. Cont'/AirLines, Inc., 712 F. Supp. 834, 840-41 (D. Col. 1989) (finding that costs related to development ofa new airport were not allowable "charges"). Complainants argue that "there is no linkage between the amount ofthe charges and any services

29actually provided to the Airport." Reply at 46. This is plainly wrong; the Portneeds to pay all of the sewer charges in order to maintain continued sewer service. See also Answer at 32-33 (explaining the City's position that "itis essentially impossible for anyone within Portland's boundaries to reach PDX without travelling on City streets," andnoting that "Complainants fail to show how the Airport could operate efficiently ifthe City failed to manage stormwater onthe City's rights-of-way"). Ifthe Stormwater and Superfund Charges were determined to be a tax under Federal law, they wouldbe permissible under the AHTA, and Complainants have failed to show otherwise. 

### VI. THE OPINIONS OF COMPLAINANTS' PROFFERED EXPERT WITNESSES ARE NOT HELPFUL TO THE TRIER OF FACT AND SHOULD BE ACCORDED NO WEIGHT. The core purpose ofexpert testimony is to "help the trier offact to understand the evidence or to determine a fact in issue." Fed. R. Evid. 702(a). OnReply, Complainants proffer the declarations ofwitnesses Shaffer, Jackson, and Stem. Witness Shaffer claims "particular expertise in federal policies and industry practice relating to airports and their relationships with airlines." Reply Ex.**1~1.** Mr. Jackson is proffered as an accounting expert. Reply Ex. 2**~** 

### 1. Witness Stem claims "extensive experience with 'bondtransactions and related tax and corporate issues."' Reply Ex. 3**~** 1 (quoting Chambers USA). Because none ofthese witnesses provides testimony helpful to the trier offact, their testimony shouldbe accorded no weight. 

### A. Witness Shaffer "[E]xpert testimony on points oflaw is largely inadmissible because itis not helpful under Rule 702."41 "When it comes to the content ofthe law that governs the rights and

41 Christopher B. Mueller & Laird C. Kirkpatrick, FederalEvidence Rule 702 § 7:12, at 837 (4th ed. 2013). 30obligations ofthe parties
... [it is for FAA itselfto] make [those] determination[s]."42 Mr. Shaffer is an attorney. In sum and substance, his profferedtestimony is legal argument and involves his interpretation of49 U.S.C. §§ 47133(a), 47107(b), 47107(k), FAA's Revenue Use Policy, Passenger Facility Charges regulations (which are wholly irrelevant to the issues here), the Director's Letter, FAA's Order 5190.6B, and the 2014 LAX Audit Report. Reply Ex. 1 

### iii! 16-59. The legal analysis and conclusions he offers, however, are not the province ofan expert witness. See, e.g., Nationwide Transp. Fin. v. Cass Info. Sys., 523 F.3d 1051, 1059 (9th Cir. 2008) (finding that expert's legal conclusions not only invaded the province ofthe trial judge, but constituted erroneous statements oflaw. In such a case, "[e]xperttestimony
... would have been not only superfluous butmischievous" (alteration in original) (internal citation omitted)). Moreover, his analysis is erroneous43 and largely repetitive ofComplainant's Reply, andhas no evidentiaryvalue. In addition, Mr. Shaffer relies upon hearsay and facts not in evidence. For example, he premises his testimony on "inform[ation] [from] counsel for A4A that no portion ofthe City's off site stormwater management service is used bythe Airport or its

42Id. 43 For example: quoting 49 U.S.C. § 47107(k)(2)(A) while purposefully omitting key exclusionary language (Reply Ex. 1if21); or suggesting thatutility fees are somehow analogous to marketing, promotional, or community activities (id. , 33), impact fees (id., 34), ground access projects orrail stations (id., 35), orpolice services (id.

, 56); orthat the statutory limitations onproject eligibility for Federal Improvement Program grants-in-aid and the use ofPFCs somehow instruct the use ofairportrevenue to pay for utility costs ofthe airport (id. ,,37-44). Likewise, Mr. Shaffer states categorically that "[i]t cannot be the case that a charge imposed onthe Airport qualifies as an 'operating cost' ofthe Airport simplybecause the governmental entity imposing the charge claims that the Porthas a legal obligation to pay it." Id. , 48. Such an absolutism ignores not only the obligation to payutility fees imposedbymunicipalities, but also taxes, settlements, consent decrees, and other types ofgovernment-imposed costs. See e.g., FAA Office ofthe ChiefCounsel, Opinion Letter (Nov. 30, 2007); FAA Office ofthe Chief Counsel, Opinion Letter (July 24, 2013) (concluding that the use ofairport revenue to pay for noise mitigation mandatedby state law outside ofthe 65 DNL contour is permissible as an operating expense ofthe airport); Vt. Stat. Ann. tit. 32, § 3659 (2016) (pursuant to which the City ofSouth Burlington, Vermont, imposes property taxes on the BurlingtonInternational Airport, which is owned and operatedby the City ofBurlington); see also Corey Burdick, Mediation Fails inAirportProperty Tax Dispute, S. Burlington's The Other Paper (undated), http://www.otherpapersbvt.com/mediation-fails-in-airport-property-tax-dispute.html (explaining that the current legal controversy between the cities ofBurlington and South Burlington is over the assessed value ofthe property, notthe validity ofthe tax itself). 31airline tenants."**Id.~** 14; 

### see**also~** 19 ("I am informed by counsel for A4A thatrepresentatives ofthe City ofPortland and the Port ofPortland do not dispute these facts"). The Port has denied that assertion, Answer at 7, and Declarant Bieryhas testified to the opposite and without contradiction, i.e., that "itis essentially impossible for anyone within Portland's boundaries to reach PDXwithout traveling on City streets." Answer Ex.**1~20** (internal quotation marks omitted). 

### B. Witness Jackson Mr. Jackson is a certifiedpublic accountant. He claims no expertise in matters ofutility operation, ratemaking, orutility law. Mr. Jackson concedes that "[a]s a general proposition, an airport is subject to utilitybills." Reply Ex. 2 

### if 22. He qualifies this "generalproposition" with the unsupported and erroneous assertion thatthis is "providedhowever thatthe utility bills are for services or facilities provided to the airport." 

### Id. He ignores or is unaware ofthe fact that a utility customer cannot pick and choose which portions ofa utilitybill it wishes to pay. The City
sewerbill has presumptively the force oflaw and must bepaid. Mr. Jackson raises the particular objection that the Stormwater and Superfund Charges
are not allowable costs under Attachment B to OMB Circular A-8744 because they do not "keep the subjectproperty 'in an efficient operating condition.'" Reply Ex. 2**~** 26. Butthat is exactly what they do. Bypaying its City seweruser charges, including the Stormwater and Superfund Charges, the Port continues to receive sewer service for the Airport, which is necessary for maintaining the efficient operation ofthe facility.

44 Codified at 2 C.F.R. 200.225. The Portnotes, however, that all references in the Revenue Use Policy are to OMB Circular A-87. 32C 

### Witness Stern Ms. Stem is a bond lawyer. She proffers testimony outside ofher area ofclaimed expertise and contends that "[t]o the extent that the Fees are considered to be 'costs ofutility services,' the 'utility services' are being providedto the City ofPortland

- and notto the Airport." Reply Ex. 3 

### if 16. Acting within its ratemaking powers, the City has found to the contrary. That is the law unless and until a body ofcompetentjurisdiction finds thatthe City exceeded its legal authority to impose the Stormwater and Superfund Charges on some or all ratepayers. Ms. Stem's testimony fails to come to grips with the basics ofutility law and how utilities function, and has no value to the trier offact. 

### D. The CoreDefect Common To Allof theseDeclarations Expert testimony is not helpful where itis based on "faulty logic" andreasoning.45 That is the case here. None ofthese three witnesses claim any expertise inmatters ofutility operation, ratemaking, or utility law. Their testimony is not credible when measured against the basic principles ofutility law discussed above. 46

45 Christopher B. Mueller & Laird C. Kirkpatrick, FederalEvidence 776 (4th ed. 2013). Cf Chaulk ex rel. Murphy v. Volkswagen of Am., Inc., 808 F.2d 639, 644 (7th Cir. 1986) (Posner, J., dissenting) (what is "absurd onits face
... cannot ... beprovedby some so-called 'experts'") (citation omitted). "Thetrial court should acceptunrebutted expert testimony onhighly technical matters, unless itis sopalpablyincredible, illogical and unreasonable as to be unworthy ofbeliefor otherwise open to doubt from some reasonable point ofview." Longv. Moore, 626 So. 2d 1387, 1389 (Fla. Dist. Ct. App. 1993). 46 Witness Shaffer objects to the fees, inpart, because they are based on "forecasts[s]" as opposed to actual costs. Reply Ex. 1

### if 29. Witness Shaffer apparently does notunderstand that the overwhelming majority ofcost ofservice utility rates, including the charges at issue here, are based on forecasted costs for purposes ofdeveloping the utility's anticipated revenue requirement. "Theratemaking process allows [the ratemaker] to setjust andreasonable rates based on its forecast ofthe utility's revenue needs." Gearhart, 255 Or. App. at 63, 299 P.3d at 538. 33Witnesses Shaffer, Jackson, and Stem all proffer the same core opinion: "the Fees are not operating costs ofthe Airportbecause they are not imposed in exchange for any service or facility actuallyprovided to orused bythe Airport." Reply Ex. 1

### -,r 4.47 Their testimony fails on this central point. First, contrary to the uncontroverted facts inthe administrative record, they base their "analysis" on Complainants' allegationthat the Airport is receiving no services related to the Stormwater and Superfund Charges.48 Second, all ofthem fail to understand the nature of networkutility services, orthat the charges in question are mere components ofthe seweruser charges applicable to the Airport. Lastly, their testimony fails to address the real world consequences oftheirpositions, and whathappens ifthe Port is prohibitedbyFederal law from paying a lawful utility bill ofthe Airport. As discussed above, all ofthe potential outcomes, including discontinuance ofsewer service for nonpayment and the attendant closure ofthe Airport, are absurd. Because Complainants' proffered experttestimony leads to absurd results, it is illogical and unsound and should be accordedno weight whatsoever.

47 See also Reply Ex. 2

### if4 (the "Fees are not an allowable use ofAirport revenues because they are not imposed in exchange for the provision ofany services orfacilities bythe Cityto the Airport"); Reply Ex. 3

### if 6 (fees are not operating costs ofthe Airportbecause they "are notbeing imposed in exchange for any services actuallyprovided to the Airport"). 48 Complainants create an echo chamber by citing to the declarations oftheir witnesses for this factual basis. See e.g., Reply at 36, n. 87; id. at 37 n 89. However, as noted above, the witnesses do nothave personal knowledge and cannot accurately andindependently attest to the facts ofthis case bytestifying to purported facts ofwhich, they admit, counsel for Complainants informed them. 34CONCLUSION As noted inthe Answer, Complainants fail to show that the Port's use ofairport revenue to pay for individual components ofthe City's seweruser fees violates Federal airport revenue
use restrictions. Complainants' Reply does no better. Therefore, for the foregoing reasons, Complainants' claims shouldbe dismissed.

June 24, 2016 Respectfully submitted,

# ~u9~**-'** PeterJ. Hopkins Anjali G. Patel Jessica R. Bell SPIEGEL & MCDIARMID LLP 1875 Eye Street, N.W. Suite 700 Washington, D.C. 20006 Email: pablo.nuesch@spiegelmcd.com Phone: (202) 879-4000 Fax: (202) 393-2866 Attorneys for the Port ofPortland

35Certificate ofService

I hereby certify that I have today, the 24th day ofJune, 2016, caused the foregoing Rebuttal ofthe Port ofPortland to be served electronically by orvia email, onthe following:
David Berg, Esq. Vice President & General Counsel Doug Mullen, Esq. Assistant General Counsel Air TransportAssociation ofAmerica, Inc. d/b/a Airlines for America 1275 Pennsylvania Avenue, N.W. Suite 1300 Washington, D.C. 20004 (202) 626-4234 Email: dberg@airlines.org dmullen@airlines.org Counsel for Complainants Roy Goldberg, Esq. Steptoe & Johnson LLP 1330 Connecticut Avenue, N.W. Washington, D.C. 20036 (202) 429-8028 Email: rgoldberg@steptoe.com