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. 

Docket No. 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 of the Port of Portland for an Extension of Time, Respondent, the Port of Portland, 

Oregon ("Port"), hereby files this Rebuttal in response to the Reply filed by the Air Transport 

Association of America, Inc. d/b/a Airlines for America ("A4A"), and Alaska Airlines, Inc., 

American Airlines, Inc., Atlas Air, Inc., Fedex Express Airlines, Hawaiian Airlines, Inc., JetBlue 

Airways, Inc., Southwest Airlines Co., United Airlines, Inc., United Parcel Service Co., and Air 

Canada (collectively, "Complainants"). The Port incorporates in this Rebuttal all of the 

arguments made in, and the exhibits submitted with, its Answer, and reiterates those arguments 

as if restated herein. 

ARGUMENT 

Complainants appear convinced that if they continue repeating the same argument, they 

can prevent the Port from using airport revenue to pay its sewer bill, an operating cost of the 
Airport. 1 According to Complainants, the Port should be prohibited from using Airport revenue 

to pay two components of the City's sewer user charge-the Stormwater Charge and the 

Superfund Charge-because they 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 by imputing 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) FAA policy and precedent. The testimony 

of Complainants' newly-proffered witnesses does not alter the underlying facts or provide any 

new legal perspective. 

Fundamentally, Complainants assert that because the charges at issue are being assessed 

by a municipality and separately identified in the monthly bill, they are not "real" utility charges. 

Complainants disregard the nature of network utilities, the way in which the City charges for 

sewer services to all of its ratepayers, and the consequences of not paying a sewer bill. 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-and legislative history 

supports-that airport revenues may not be used to pay the Stormwater and Superfund Charges. 

Reply at 3, 8, 12-15. They argue that the statutory definition of permissible operating costs 

1 The Port notes that on May 30, 2016, the U.S. District Court for the District of Oregon dismissed with prejudice 

the complaint Complainant A4A had filed against the City. Air Transport Ass '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); see Answer at 3. 

2 
requires "payments to third parties to be 'directly and substantially related.to the air 

transportation of passengers or property."' Id. at 3; see also id. at 4, 9, 10, 20, 27. They also 

claim that such third party payments "must 'reflect[] the value of services 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 of the statute. The 

"directly and substantially related" language has no application to this case. Complainants' 

reliance on "the value of services" 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 

result that they seek. 

A. The term "directly and substantially related to" does not modify 

"airport" operating costs. 

Complainants' position rests upon a contrived reading of sections 47133(a)(l) and 

47107(b)(l).2 They concede that airport revenue 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, it is 'directly and 

substantially related to the air transportation of passengers or property.'" 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 that payments be limited to the capital or operating costs of the airport." Reply at 9. 

4 They likewise impermissibly read the parallel language of section 4 7107 (b )(1 )(C) as modifying the language of 

section 47107(b)(l)(A). 

3 
[T]he revenues generated by an airport that is the subject of Federal assistance 

may not be 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 operated by the person or entity that 

owns or operates the airport that is directly and substantially related to the air 

transportation of passengers or property. 

But that is not how the 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 of facilities: 

( 1) the airport; 

(2) the local airport system; or 

(3) any other local facility that is owned or operated by the person or entity that 

owns or operates the airport that is directly and substantially related to the air 

transportation of passengers 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 of facilities. 

In both statutory sections, the phrase "directly and substantially related to the air 

transportation of passengers or property" serves only to identify and limit the third kind of 

facility that falls within the reach of the statute, i.e., "any other local facility ... that is directly 

and substantially related to the air transportation of passengers or property" and "that is owned or 

4 
operated by 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 of a statute but omits it in 

another section of the 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 of airport revenue to pay the capital and operating costs of the "airport" 

and the "local airport system." The canons of statutory construction proscribe the conflation of 

language from one subsection into another. This reasoning applies here and defeats 

Complainants' efforts to read the text of section 47133(a)(3) as limiting the scope of the whole of 

47133(a). 6 The correct interpretation is also "mandated by the grammatical structure of the 

statute" in the sense that punctuation and paragraph structure must be given effect to parse the 

correct meaning. United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241 (1989).7 

Complainants attempt to justify their rewriting of the statute on the grounds that statutes 

must be construed as a whole. Reply at 9-10. While it is true that statutes should be read as a 

whole to harmonize provisions with one another, see Reply at 9-10 (and cases cited therein), 

Complainants' proposed reading distorts the statute by misreading 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 of section 47107(b)(l). 

7 The grammar of section 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, it refers to "other local facility" and not "costs." In addition, the language of section 47133(a)(3) stands 

separate and apart from the language of sections 47133(a)(l) and (a)(2). Each of these provisions are separated by 

semicolons. That means that they are separate and independent provisions and the language of one does not modify 

any of the others. Semicolons are ''used to connect independent clauses." American Heritage 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 "other local facilit[ies]" owned 

by the airport sponsor that must be "directly and substantially related to the air transportation of passengers or 

property." 49 U.S.C. § 47133(a)(3). The same is true as regards sections 47107(b)(l)(C) and 47107(b). 

5 
into another. See, e.g., Russelo, 464 U.S. at 23. In contrast, the Port's reading harmonizes the 

subsections of 47133(a) and 47107(b)(l). Clearly, the statute permits the use of airport revenues 

to pay the operating and capital costs of the three different kinds of facilities identified in each of 

the three separate subsections. 

This case concerns utility bills 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 operated by 

the" Port. Rather, they are operating costs of the Airport because they are a component of the 

utility charges assessed for sewer services provided to the Airport. 

Furthermore, the plain and ordinary meaning of the phrase "operating costs" covers the 

costs of operating a business. See Answer at 23. 8 Businesses pay their utility bills. Bills for 

utility service are standard operating expenses of an airport. It is not surprising that nowhere in 

the revenue use statutes is there any language prohibiting a sponsor from treating a charge 

contained in an airport's utility bill as an airport operating expense. 

The Stormwater and Superfund Charges here are components of the sewer user charges 

that are assessed against all City ratepayers. Answer at 16; see also Section III supra. As with 

any other ratepayer, if the Port does not pay its sewer bill the City has the right to, among other 

things, suspend sewer service to the Airport. The Port cannot selectively refuse to pay portions 

of its utility bills, and it need not do so. Congress authorized the Port to use Airport revenues to 

pay its utility bills, including its sewer user charges, as an operating expense of the 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 

should be generally assumed that Congress expresses its purposes through the ordinary meaning of the words it 

uses.' Escondido Mut. Water Co. v. La Jolla Band of Mission Indians, 466 U.S. 765, 772 (1984). 'Capital costs' 

and 'operating costs' are generally understood as referring, collectively, to all of the costs incurred by a business." 

Reply Ex. 4, Airport Revenue Diversion: Hearing Before the Subcommittee on Aviation of the Committee on 

Commerce, Science, and Transportation, 104th Cong. 161 n.12 (1996) (Memorandum ofC. Dean McGrath, Jr., 

Acting General Counsel, Department of Transportation). 

6 
Because the statute plainly provides that airport revenues may be used to pay the 

"operating costs" of the "airport," Complainants' resort to legislative history is not only 

unnecessary, but unavailing. "It is elementary that the meaning of a statute must, in the first 

· instance, be sought in the language in which the act is framed, and if that is plain, and if the law 

is within the constitutional authority of the 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 Ron Pair Enters., 489 U.S. at 241 (same). 

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

exception for uses previously authorized under subsection (b). 

Complainants also claim that Congress required that payments made by the Port "to a 

third party ... must 'reflect[] the value of services 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 and procedures. Within it, subsection 47107(k)(2) sets out the categories of airport 

revenue use that the policy "shall prohibit" as a minimum. Preceding the list of categories, 

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 of airport revenues 

(except as authorized under subsection (b) of this section)." 49 U.S.C. § 47107(k)(2) (emphasis 

added). 

9 Complainants' reference to FAA' s recently proposed policy on Passenger Facility Charges ("PFC Policy") (Reply 

at 22) is irrelevant. 49 U.S.C. § 40117 is an entirely different statutory regime for the use of PFCs, which outlines 

specific "eligible airport-related project(s)." In contrast, with regard to airport revenues, Congress granted a general 

authorization that airport revenues may be used for airport capital and operating costs. 

7 
Complainants ignore the parenthetical exception and wrongly assert that the payment of 

an operating cost with airport revenue is prohibited unless it meets the conditions set forth in 

subsections (k)(2)(A) or (B). Complainants' reading of the statute violates a "cardinal principle 

of statutory construction" that a statute should be read "to give effect ... to every clause and 

word." Duncan v. Walker, 533 U.S. 167, 174 (2001) (internal citation omitted) (quoting Market 

Co. v. Hoffman, 101 U.S. 112, 115-16 (1879)) ("a statute ought, upon the whole, to be so 

construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or 

insignificant"). 

The exception is significant. As discussed above, subsection 4 7107 (b) authorizes the use 

of airport revenue to pay for airport operating costs. Because "subsection (b) of this 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 that payments made by the airport to a third 

party (such as the City) must 'reflect[] the value of services 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 of 47107(k) has nothing to do with 

the plain language of the statute. 

Because the language of section 4 7107 (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 Pair Enters., 489 U.S. at 241. But even if FAA 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 it pays to the City: it receives 

sewer services. Answer at 16. In the City's judgment, the Airport also receives the benefit of a 

drained roadway system that must be used to access the Airport. Id. at 25. Moreover, the City 

8 
provides utility service to the Airport and other ratepayers based "on the cost of providing 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 of providing the services or facilities to 

the airport as a reliable indicator of value." Policy and Procedures Concerning the Use of 

Airport Revenue, 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 of sponsor 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 not what is happening here. The City does not own or operate the Airport. The City cannot, 

by means of bookkeeping, impose charges on the Airport as it could if it were the Airport 

sponsor. And the City is not raising Airport charges "rather than" 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 other similarly 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 of the Stormwater and Superfund Charges is a 

proper use of airport 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 of Airport 

10 To the contrary, the legislative history shows that Congress intended for airports to pay operating costs within the 

ordinary and plain meaning of the term. See supra note 8. 

9 
Compliance and Management Analysis. 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 FAA has published pursuant to 14 C.F .R. 

Part 16, Rules of Practice for Federally-Assisted Airport Enforcement Proceedings, on the 

subject of revenue diversion." Reply at 33. Complainants are wrong on both counts. 

A. The Director's Letter is more than a "personal opinion." 

The Director's Letter is entitled to deference. The Director's Letter proffers an 

interpretation of the agency's Revenue Use Policy as it applies to the facts of this case. The 

Supreme Court has accorded "deference to an agency's interpretation of [its] regulations." Perez 

v. Mortgage Bankers Ass '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 may now use these [interpretations] not just to advise the public, but also to bind 

them." Id. at 1212 (Scalia, J., concurring). 

After all, if an interpretive rule gets deference, the people are bound to obey it on 

pain of sanction, 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 Port had disagreed with the Director's Letter and 

refused to pay the City utility charges and, as a result, had its sewer service discontinued, leading 

to the closure of the Airport or portions thereof. It would no doubt have to answer to its 

bondholders, FAA, the public, the passengers, and the airlines to justify its actions. The Port 

could not reasonably disregard the guidance in the Director's Letter. 

10 
Complainants' dismissal of the Director's Letter also cannot be reconciled with the effort 

and input that led up to it. As the Port discussed in its Answer, the Director's Letter was the 

culmination of a three-year long consultative process. Answer Ex. 2 if 3; Answer at 20. The Port 

commenced the process in the summer of 2012, before the City adopted Ordinance No. 185610, 

"when the City was considering modifying the stormwater charge imposed on properties located 

in the Multnomah County Drainage District." Answer Ex. 2 if 3; Answer at 20. In order to 

address concerns raised by some of its tenant airlines, the Port contacted FAA seeking guidance 

as to whether the charges under the proposed ordinance would be considered a cost of airport 

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 in the Office 

of Regional Counsel, Northwest Mountain Region; Kevin Willis, Manager of Airports 

Compliance Division at FAA Headquarters; and Joelle Briggs, Manager of Airports Compliance 

Division at the Western Mountain Region. Id. iii! 5-6. By telephone call on September 4, 2012, 

FAA representatives confirmed that the Port's use of Airport 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 vigorously pursued their own round 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 FAA headquarters in 

Washington, D.C., in May, June, and again (including Port representatives) 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 Complainant A4A's counsel to 

Kathryn Thompson restating 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 eight representatives from DOT and FAA, including Paul Geier, 

DOT Assistant General Counsel, Litigation; Ron Jackson, DOT Assistant 

General Counsel, Operations; Randy Fiertz, FAA Director of Airport 

Compliance; David Duchow, FAA Revenue Use Specialist, Airport 

Compliance; Scott Mitchell, an attorney from FAA Chief Counsel's Office, 

Airport Law Branch; 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 by repeated 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 of this process. It was sent to Complainant 

A4A's counsel with copy to the Port, the City, and the Multnomah County Drainage District. 

See Complaint Ex. 12. Far from constituting a "personal opinion," the Director's Letter was 

based on extensive review of the facts and discussions with Complainants, the Port, and the City, 

and was issued in response to the Complainants' requests, after considering their written legal 

analysis. It was issued by the Director of the Office of Airport Compliance and Management 

Analysis, the FAA official who oversees airport compliance throughout the nation, in a 

collaborative effort with a myriad of other 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 of the letter is irrelevant because they have 

failed to show that its reasoning is unsound. 

12 
B. Complainants misrepresent FAA policy and Part 16 precedent on 

revenue diversion. 

Complainants' unsupported assertion that the Directors' Letter "contradicts every 

Director's Determination and Final Decision and Order which the FAA has published pursuant 

to 14 C.F.R. Part 16," and witness Shaffer's declaration repeating the assertion are without merit. 

Reply at 33 (emphasis added); Reply Ex. 1~46. There is no Part 16 determination addressing 

the matters raised here. While FAA has issued several determinations and orders concerning its 

revenue use policy, not one deals with the issue of whether airport revenues can be used to pay 

for utility charges when such charges are assessed by an independent municipal 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 of Los 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 of each 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 imposed by airport sponsors, not third parties. See, e.g., Skydance Helicopters, Inc. v. 

Sedona Oak-Creek Airport Auth., FAA Docket No. 16-02-02, Director's Determination at 37 (Mar. 7, 2003); In re 

Revenue Diversion by the City of L.A. at L.A. Int'!, Ontario, Van Nuys & Palmdale Airports, FAA Docket No. 16-

01-96, Record of Determination (Mar. 17, 1997). Other revenue use Part 16 cases have addressed an airport's 

decision to set charges for rent and other costs as another potential cause of revenue diversion, but these cases are 

not relevant here. See, e.g., Clarke v. City of Alamogordo, FAA Docket No. 16-05-19, Director's Determination at 

24 (Sept. 20, 2006). 

12 Complainants also attempt to make hay out of a resolution proposed by a Chicago Alderman calling on airlines to 

voluntarily impose a surcharge on passengers flying through O'Hare and Midway airports to fund additional police 

officers to combat crime throughout the City of Chicago. Reply at 31. Any comparison to this case is inapposite. 

The proposed Chicago surcharge targeted that city's airports and would have been imposed on passengers 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 sewer ratepayers. Also, in Chicago the airports would have received 

nothing in return for the surcharge. Here, the Airport is receiving sewer network services. 

13 
there is no concern of sponsor 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 of the case). Here, FAA is 

addressing utility costs that the Port, as a ratepayer, is obligated to pay to an entirely separate 

municipal entity and in line with the obligations of other ratepayers of that municipality. The 

LAX case is inapposite and provides little or no guidance. 

III. THE STORMW ATER AND SUPERFUND CHARGES ARE 

PRESUMPTIVELY LAWFUL UTILITY CHARGES IMPOSED IN 

ACCORDANCE WITH THE SCHEME OF STATE UTILITY 

REGULATION. 

Complainants contend that Federal aviation law precludes the use of airport revenues to 

pay third-party utility charges that are presumptively lawful under state law. That position has 

no merit when measured against the Federal statutes at issue and basic utility law. Indeed, it 

defies common sense and the realities of airport operation. The City's sewer user charges are 

legislative enactments. They are presumptively lawful utility charges. If the Port fails to pay, 

then the City can stop service and render the airport unfit for use. Local law provides a 

comprehensive scheme of utility regulation including a forum for challenges to, and review of, 

all utility charges. 14 Congress cannot have intended to: (i) preclude the use of airport 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 of expressio unius est exclusio aterius the statutory "inclu[sion] [of] one thing 

implies the exclusion of the other." Black's Law Dictionary 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 in section 47107(b)), those statutory provisions should be 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). 

14 
pay lawful utility charges, (ii) supplant the scheme of local utility regulation, or (iii) subject the 

Port to the risk of inconsistent rulings and conflicting legal obligations. 

A. The City provides and charges for sewer and stormwater service. 

Despite deregulation in significant sectors of the 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 on reasonable terms."15 Such utilities are "entitled to charge rates designed to yield a 

reasonable rate ofretum."16 The City's Bureau of Environmental 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-owned utility is largely immaterial. 

The service rights and duties of a private utility are "generally applicable" to a municipal 

utility. 17 

The Portland City Charter broadly defines "sewer" to encompass the entirety of the 

system "necessary or proper for the disposal of sanitary 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 

City to "fix fees and charges for connection or use or both of sewers and sewage purification or 

disposal systems to be paid by property which is served or is capable of being served for use of 

the sewage disposal system." Portland, Or. Charter§ 11-302, see Answer Ex. 1, Attachment B. 

15 Alfred E. Kahn, Who Should Pay for Power-Plant Duds?, 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"). 

15 
All of this accords with the City's home rule authority under state law. Answer Ex. 1if3, 

Attachment A§ 1(5). 18 

It is immaterial to whether the charges are lawful utility charges that the two charges 

appear as separate line item charges on the ratepayer utility bill. The City developed, enacted, 

and charges the Stormwater Charge and Superfund Charge as part of its sewer utility 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; see generally Answer Ex. 1. As a matter of 

legislation they are enacted as "Sewer User Charges" pursuant to Portland City Code Chapter 

17.36 and charged to "ratepayers." "Ratepayers who receive a direct or indirect benefit from 

City stormwater management services are subject to the user charge." Answer Ex. 3, PCC 

17.36.050(F). 

As a matter of utility law, the City enjoys substantial discretion in developing utility 

charges. 19 It "is not obligated to employ any single formula or combination of formulas to 

18 "Home rule is the authority granted to Oregon's cities by Article XI, section 2, and Article IV, section 1(5), of the 

Oregon Constitution-adopted by initiative petition in 1906-to regulate to the extent provided 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 of the Black 

and Veatch survey ("Survey") of stormwater management. The Survey shows that stormwater fees across the 

country are typically based on impervious area (Answer Ex. l, Attachment E at 13) and that storm water fees must 

necessarily include an offsite component because public streets and land are typically exempt from stormwater user 

charges. Id. at 15. Complainants also argue that the Stormwater Charges "are not proportional to any contribution 

by the 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 roughly proportional to the property's 

contribution to stormwater runoff (i.e., the total charge is much lower when the property does not send runoff into 

the City's system). Second, the voluntary reduction that the Survey references relates to credits for the management 

of onsite stormwater runoff. 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 of the user 

fees commensurate with extent of onsite stormwater management.") (emphasis added). Ratepayers can voluntarily 

avoid the onsite component of the Stormwater Charge by managing their own onsite stormwater. The Port is 

receiving full credit for the onsite component of the Stormwater Charge due to its location in a drainage district. 

Answer at 7-8, ,, 30, 34. As Mr. Biery explained, the credit is given "in recognition of the fact that those drainage 

16 
determine what are in each case 'just and reasonable 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 of the Public Utility Commission of Oregon)). Separate line item utility 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. It could change its ratemaking practices and do so in the future. For ratemaking purposes, 

however, "the critical factor is the reasonableness of the rate ordinance as a whole." McQuillan, 

at 815. 

B. The Stormwater and Superfund Charges are presumptively lawful and 

must he paid to ensure continued sewer service at the Airport. 

"Generally speaking, ... rates set by a municipality are presumed to be valid and 

reasonable until the contrary has been established; and the burden of overcoming the 

presumption of validity 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, "that the costs in question may be characterized as 'utility charges' or 'utility fees' in 

some general sense." Reply at 10 (emphasis added). They are set forth in the City Code as 

districts manage much of that on-site storm water." Answer Ex. 1 1 17. 

20 See also Elliot v. City of Pac. Grove, 54 Cal. App. 3d 53, 58, 126 Cal. Rptr. 371, 374 (Cal. Ct. App. 1975); Water 

Works Bd. of Birmingham v. Barnes, 448 So. 2d 296 (Ala. 1983). 

17 
utility charges and, like all legislative acts, they are valid21 unless and until found otherwise by a 

competent forum. 22 As things stand now, the City bills all sewer charges, including the 

Stormwater and Superfund Charges, and the Port must pay them. 

If the Port fails to pay the Stormwater or Superfund Charges applicable to the Airport, it 

is subject to discontinuance of sewer service to the Airport. "It is the general rule ... that ... a 

municipality furnishing a utility service to the public ... may prescribe and enforce a rule or 

regulation that provides for the shutting off of the service from a consumer who has defaulted in 

payment therefor." 64 Am. Jur. 2d Public Utilities § 48 (2011 ). Here, City law expressly 

provides for the discontinuation of water or sewer services for nonpayment of utility charges. 

Charges not paid in accordance with the due date in the bill or invoice may be 

subject to water shutoff pursuant to Title 21 of this Code. The Director, with 

approval of the Commissioner-in-Charge, may also discontinue sanitary sewer 

service by disconnecting and plugging the sewer service line to properties whose 

delinquent user charges exceed $10,000 for a period of 90 days or more. 

PCC 17.36.080(D). Without sewer service many, if not most, of the Airport buildings and 

facilities, including the passenger terminal building, could not be lawfully occupied. PCC 

8.20.200 provides in relevant part that: 

21 By dismissing the Biery Declaration 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 complaint in the Multnomah County Court at any time challenging the lawfulness of the 

Stormwater Charge and the Superfund Charge on the 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 

"that monies paid into the [City dedicated] funds by water and sewer ratepayers [can] be spent only on matters that 

are reasonably related to the water and sewer services provided by the 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 Oregon Air National 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, storm water, and [Superfund] charges. These are Federal Express, Skywest Airlines, and 

Horizon Air. Those entities regularly pay their bills and, to my knowledge, have voiced no separate objections to 

the fees assessed." Answer Ex. 1~22. Were Complainants to do so and prevail, the decision would operate to the 

benefit of all similarly situated ratepayers within the City. But unless and until a court with jurisdiction declares that 

the Stormwater and Superfund Charges are unlawfully included as part of the City utility fees, the Port must pay 

them or subject itself to termination of service. 

18 
When upon investigation or inspection by the City Health Officer, or any of his 

assistants, it shall have been found that any building, property or place in which 

any person or persons ... engage in any occupation, or assemble, is kept or 

permitted to be or remain in an unsanitary or filthy condition, ... [or] in which 

the drainage or plumbing is so defective or unsanitary as to constitute a danger to 

health ... it shall be the duty of the Health Officer to notify in writing the owner, 

agent or occupant of such building or property, 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. If within such time the condition be not 

remedied, it shall be the further duty of the Health Officer to post or cause to be 

posted in a conspicuous place on such building or property a notice stating that 

such building or property has been found to be dangerous to health and unfit for 

occupancy. 

C. Complainants' position fails to acknowledge utility ratemaking and the 

range of utility services and charges. 

Ratemaking is an expert undertaking vested here in the municipal utility as a matter of 

state law.23 When utilities construct a rate structure, they typically develop a revenue 

requirement reflecting the utility's anticipated allowable operating expenses, investment in 

property used to provide utility service, and, in the case of a non-profit municipal utility, the cost 

of debt service.24 These costs are then allocated to customers.25 This type of ratemaking 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 "It is the product of expert judgment which carries a presumption of validity." FPC v. Hope Nat. Gas Co., 320 

U.S. 591, 602 (1944). 

24 Gearhart, 255 Or. App. at 63, 299 P.3d at 538. Municipal utility rates may but need not include some legitimate 

element of profit. McQuillan, at 834. 

25 Alfred E. Kahn, The Economics of Regulation 151 (1988). 

19 
Utility ratemaking and regulation is complex.26 FAA should not take on the task of 

assessing what utility charges, or portions of charges, are properly paid from airport revenues. 

Nothing in sections 47133(a) and 47107(b) evidences Congress's intent that FAA should do so. 

Considerations of federalism counsel against it. It must be presumed that Congress was well 

aware of the scheme of state utility regulation when it authorized the use of airport revenues to 

pay airport "operating costs," including local utility 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 and bills for 

those services in a manner consistent with utility ratemaking practice, including the aggregation 

of various capital and operating expenses. 

Of course, the Port is not defending the City utility fees or the merits of any of the 

various capital and operating expenses reflected in the rates. Instead, the Port merely shows the 

propriety of its payments of the charges. But it is worth noting that commissions, courts, and 

Congress have rejected the Complainants' proposition that ratepayers should not have to pay for 

utility stormwater charges or utility superfund remediation costs. For example, in a case arising 

in the context of the Clean Water Act, the Multnomah County Circuit Court has recently 

affirmed an administrative decision that, under the Portland City Code, the Oregon Air National 

26 Every year, there are thousands ofrate filings, rate enactments, and public utility commission and judicial 

decisions. Ratemaking is the subject of treatises 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 of principles governing 

what costs are properly charged to what ratepayers in what circumstances. 

27 The City's sewer and stormwater drainage systems are related. Some City expenditures, for example, affect both 

systems. "The Storm Water System includes 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 of yearly 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 of the sewer and storm water conveyance system, it assesses a Portland Harbor Superfund Charge against 

all Portland ratepayers, including both sanitary sewer customers and storm water customers." Id. ~ 24. 

20 
Guard is a ratepayer and must 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 Air National Guard base is located at the Airport.28 It is 

also the case that, by act of Congress, the Federal government is paying the City stormwater 

charges associated with the Federal government's possessory interest of property within the City 

of Portland,29 including the off-site stormwater charge because the "reasonable service charges 

payable by 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 not pay the District of Columbia's stormwater 

assessment because it was a 'tax. "'31 As regards superfund remediation costs, courts and 

commissions have permitted recovery from ratepayers because "[t]he cost of delivering utility 

service reasonably encompasses current costs of doing 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 Air National Guard Base is located at the Airport. History of the Portland International Airport 

(Feb. 3, 2014), https://www.142fw.ang.af.mil/resources/factsheets/factsheet.asp?id=l8092. The Court affirmed the 

agency finding that the Oregon Air National Guard is a state agency. State of Or. v. City of Portland, Case No. 

15CV09584, slip op. at 3. The Court noted the agency's finding that the Oregon Air National Guard had to pay the 

stormwater charge "or face the same consequences as any delinquent ratepayer." Id. at 2 (quoting BES 

determination of Sept. 9, 2014). 

29 And elsewhere across the Nation. 

30 Reimbursement or Payment Obligations of the Federal Government Under Section 313(C)(2)(B) of the Clean 

Water Act, Office of Legal Counsel at 1 (Feb. 25, 2011), https://www.justice.gov/olc/opinion/reimbursement-orpayment-ob ligation-federal-government-under-section-313c2b-clean-water. 

31 Id. at 3 n.2. 

21 
Here, the City is providing the Airport sewer services. The City sewer service is a 

network utility: the system elements are planned and operated to provide sewer and related 

stormwater management services throughout the City on a coordinated, integrated, and 

interconnected basis.32 If challenged, the City could seek to defend the Stormwater and 

Superfund Charges as network utility costs necessary and proper incident to the provision of 

sewer service. Whether the two charges at issue here would withstand judicial review as part of 

the overall sewer charges is immaterial. As things stand now, they are presumptively lawful 

components of the City sewer user fees, lawfully charged to the Port as a result of the Port's 

possessory interest in the Airport. As a result, the Stormwater and Superfund Charges are 

presumptively lawful operating costs of the Airport. 

The shortcomings of Complainants' position are particularly clear in the context of 

bundled utility charges. Because the City has determined that the Stormwater and Superfund 

Charges are sewer charges, it could have bundled the associated costs into the metered sewer 

charge. Under Complainants' theory of the case, FAA would then be put to the task of 

disaggregating the City sewer charge and determining what portion was directly and 

substantially related to the Airport and what was not. Such unscrambling of bundled rates would 

involve disaggregating and/or reallocating labor and material costs, capital costs, administrative 

and general costs, taxes, pension benefits, depreciation, and the whole host of costs that would be 

included in bundled sewer charges. Cf Answer Ex. 1, Attachment H at 4 (discussing judgment 

issue of allocating 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 of coordinated investment planning for network facilities). 

22 
Moreover, 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 of ways, even if the benefit is not obvious. Cancelled 

utility plant and facilities are a classic example of facilities subject to challenge on the grounds 

that they provide no user benefit. But although cancelled or abandoned facilities provide 

ratepayers no direct service benefit, they are frequently recovered in rates on the grounds of 

reasonable system planning, a benefit that ratepayers do enjoy.33 The extent to which network 

facilities benefit particular customers is yet another example of a "no benefit to 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 of miles away 

based upon presumption of benefit to entire network) with Ill. Commerce Comm 'n v. FERC, 576 

F.3d 470 (7th Cir. 2009) (rejecting and remanding charge to ratepayers for different network 

transmission facilities also located hundreds of miles away). Under Complainants' theory of the 

case, airport sponsors across the country could find themselves subject to unlawful revenue use 

challenges for having paid those portions of their 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 also Am. Water Works Ass'n v. EPA, 40F.3d1266, 1271 

33 See, e.g., David Schlissel & Bruce Biewald, Nuclear Power Plant 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 of cancelled nuclear plant costs). 

23 
(D.C. Cir. 1994) (agency properly rejected reading of statute which "would lead to absurd 

results"). Complainants' interpretation of 49 U.S.C. §§ 47107(b) and 47133(a) must be rejected 

on these grounds. Complainants contend that Congress intended to preclude airports from 

paying utility bills imposed under state law. In that circumstance, the supplying utility can and 

generally will discontinue service for nonpayment. Here, the resulting discontinuance of City 

sewer service would render the Airport inoperable. That is an absurd outcome and would result 

in, among other things, an "artificial restriction[] on airport capacity" contrary to the purposes of 

the statute. 49 U.S.C. § 4710l(a)(9). It would be gross economic waste. 

Complainants disregard the presumptive legality of the Storm water and Superfund 

Charges as a matter of state law. They dismiss as "irrelevant" the fact that the charges "are 

among various utility charges the Port incurs as a consequence of owning 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 of Complainants' position is that FAA should engage in a 

detailed parsing of the various constituent components of a utility bill, such as a sewer service 

bill, and evaluate the extent to which each of the 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 not pay portions of the bill because 

doing so violates Federal law and Grant Assurances. 

If Complainants were correct, the Port would be prohibited from using Airport revenues 

to pay its utility bill, but required to pay the bill under state law. This would have significant 

real-world consequences. Only four outcomes are possible: (i) discontinuance of airport utility 

34 "Complainants are not making a preemption argument and FAA does not need to find that the federal laws and 

policies against diversion of airport revenue preempt Ordinance 185610 and the Fees in their entirety to find the 

Fees constitute unlawful revenue diversion." Reply at 18. 

24 
sewer service for reason of nonpayment, (ii) payment from some unidentified non-airport 

revenue, (iii) self-supply, or (iv) elimination of the charges due to successful state law challenge. 

Interpreting the revenue use statutes in a way that leads to the closure of an airport (or even some 

of its buildings and facilities) for nonpayment of sewer services is obviously absurd. The use of 

non-airport revenues to pay utility 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, it begs the question of where the necessary funds would 

come from (particularly in the case of airport sponsors whose only public asset is the airport 

itself). Requiring an airport to self-supply a utility service (even if legally, 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 last possibility is that the 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 of state law. 36 This is an uncertain and timeconsuming process, and service would likely be discontinued pendente lite for non-payment. 

Complainants fail to acknowledge the logical outcomes of their arguments, and FAA need not go 

down that path. 

The Stormwater and Superfund Charges are presumptively lawful utility charges 

attributable to the Airport and properly paid out of airport revenues as airport "operating costs." 

That should be the end of the matter. 

35 Utilities exist in order to provide and "perform[] ... essential public service[s]." Black's Law Dictionary 1686 

(9th ed. 2009). A "public utility ... [is] a business or service engaged in regularly supplying the public with some 

commodity or service that is of public consequence or useful to the public." 64 Am. Jur. 2d Public Utilities 

§ 1 (2011). 

36 There can be no plausible argument that the Port should have challenged the two charges in state court. The Port 

acted in accordance with the guidance of the 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 tax the 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 if FAA 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 Air Lines, Inc. v. Bd. of Equalization, 480 U.S. 

123, 129-30 (1987)). This analysis would allow FAA to conclude that the sewer charges, if they 

are "taxes" under Federal law, are not prohibited by, and thus permissible under, the Anti-Head 

Tax Act ("AHTA"). 

The statutes at issue here are Federal laws, and the analysis of whether a particular charge 

is a "tax" for purposes of this Federal law is different than the analysis of whether 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 in Federal 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 of a Federal law and declining to consider the argument that under state law, the 

county has no authority to tax). Complainants ignore the fact that a charge may be classified 

37 The tax versus fee analysis under federal law takes "a practical and sensible approach" and is not "a set of rigid 

rules or elements" from which follows "a mechanical conclusion." Hexom v. Or. Dep 't ofTransp., 177 F.3d 1134, 

1137 (9th Cir. 1999). A commonly employed analysis in federal courts considers: "(1) What entity imposed the fee? 

(2) What parties are being assessed the fee? (3) Is the revenue generated by the fee expended for general public 

purposes or used for the regulation and benefit of the parties upon whom the assessment is imposed?" McCleod v. 

Co/um. Cty., 254 F. Supp. 2d 1340, 1345 (S.D. Ga. 2003). 

26 
differently for the purposes of state and Federal law.38 This is precisely what happened in the 

context of Federal government payments for local utility stormwater charges. GAO held that 

they were a tax for Federal purposes, prompting Congress to enact legislation finding that they 

were permissible service charges.39 

Complainants further argue that the Port's distinction between taxes imposed on an entity 

as a property owner and those imposed on an entity as a property occupant runs "directly 

contrary" to the Director's Letter. Reply at 45. There is no inconsistency. The Director's Letter 

found that the "storm water management charge is an operating cost of the airport, because it 

arises as a legal obligation incident to the airport's possessory interest in land necessary for the 

provision of aeronautical services." Complaint Ex. 12 at 1 (emphasis added). A "possessory 

interest" is "[t]he present right to control property, including the right to exclude others, by a 

person who is not necessarily the owner." Black's Law Dictionary 1284 (9th ed. 2009). Some of 

the Complainant airlines have a possessory interest and pay 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 pay the 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 on this point is wrong. Oregon law prohibits taxation of "all property" of ports. 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 

property tax, because they are imposed on a property's occupant rather than its owner. See Reply at 45 (incorrectly 

characterizing the Port's argument as "assert[ing] that the Fees are not a 'tax' because they 'are imposed not on a 

property's owner, but on its occupant'") (citing, in part, Port Answer at 41 n.20). Even if Oregon law governed this 

analysis, Complainants have not shown that it precludes a finding that the charges are a tax. It merely precludes a 

finding that they are a property tax under Oregon law. 

Complainants' argument that the Stormwater and Superfund Charges "therefore would be in excess of the 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. Taxpayers Ass'n v. City of At!., No. 1999CV05897, 1999 WL 1102795, at *4 

(Ga. Super. Ct. Sept. 22, 1999) and Bolt v. 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 New Rochelle, 381 F. Supp. 2d 313, 319 (S.D.N.Y. 

2005) (quoting Robinson Prot. Alarm Co. v. City of Phi/a., 581F.2d371, 374 (3d Cir. 1978)). 

39 See supra note 30. 

27 
possessory interest in, not ownership of, the Airport,40 just 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 of Federal law, they would be outside the prohibition of the 

Anti-Head Tax Act." Answer at 41 n.20. Complainants do not take issue with this. Instead, 

their Reply argues a completely different point, i.e., "that the fees "cannot be found to be lawful 

under the Anti-Head Tax Act." Reply at 47. In doing so, Complainants continue to 

mischaracterize the safe harbor provision of the AHTA. Reply at 48. 

Complainants are mistaken that a tax must be within the specific list of taxes enumerated 

in the statute to be within the exemption. The AHTA addresses "the permissible scope of state 

taxation in the area of air commerce." Wardair Can. v. Fla. Dep 't of 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 of state taxation in the area of air 

commerce"). The statute permits a State or political subdivision of a State to levy or collect 

"taxes (except those taxes enumerated in subsection (b) of this section), including property taxes, 

net income taxes, franchise taxes, and sales or use taxes on the sale of goods or services." 

49 U.S.C. § 40116(e)(l) (emphasis added). 

Complainants do not rebut the Port's argument that this list is merely illustrative of the 

type of taxes that are permitted (Answer at 41 n.20), but rather 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 not provided in exchange for services or facilities 

40 The Director's Letter further notes that the Port is the "ratepayer" in this case, Complaint Ex. 12 at 2-i.e., the 

Stormwater and Superfund Charges are levied on the Port not merely because it owns land within the City, but due 

to its status as a utility customer of the City. 

28 
actually given to the airport." Reply at 48. Unlike the allowable charges section, the allowable 

taxes section of the AHTA does not limit the imposition of such taxes to a State or political 

subdivision that owns or operates the airport. Compare 49 U.S.C. § 40116(e)(2) (specifying that 

a State or political subdivision may levy or collect "reasonable rental charges, landing fees, and 

other service charges" from certain users "of an airport owned or operated by 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 of all other types of taxes. 

Further, nothing in the AHTA requires allowable taxes and charges to be "provided in 

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 not required by 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 "a tax on gross receipts :from the sale of air 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 of 49 U.S.C. § 40116(d)(2)(A) does not apply to a property tax permissible 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 at 40; Answer Ex. 1 ilil 6-7. 

Cf City and Cty. of Denver v. Cont'/ Air Lines, Inc., 712 F. Supp. 834, 840-41 (D. Col. 1989) 

(finding that costs related to development of a new airport were not allowable "charges"). 

Complainants argue that "there is no linkage between the amount of the charges and any services 

29 
actually provided to the Airport." Reply at 46. This is plainly wrong; the Port needs 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 "it is essentially impossible for anyone within Portland's 

boundaries to reach PDX without travelling on City streets," and noting that "Complainants fail 

to show how the Airport could operate efficiently if the City failed to manage stormwater on the 

City's rights-of-way"). If the Stormwater and Superfund Charges were determined to be a tax 

under Federal law, they would be 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 of expert testimony is to "help the trier of fact to understand the 

evidence or to determine a fact in issue." Fed. R. Evid. 702(a). On Reply, Complainants proffer 

the declarations of witnesses 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 'bond transactions and related tax and corporate 

issues."' Reply Ex. 3 ~ 1 (quoting Chambers USA). Because none of these witnesses provides 

testimony helpful to the trier of fact, their testimony should be accorded no weight. 

A. Witness Shaffer 

"[E]xpert testimony on points of law is largely inadmissible because it is not helpful 

under Rule 702."41 "When it comes to the content of the law that governs the rights and 

41 Christopher B. Mueller & Laird C. Kirkpatrick, Federal Evidence Rule 702 § 7:12, at 837 (4th ed. 2013). 

30 
obligations of the parties ... [it is for FAA itself to] make [those] determination[s]."42 Mr. 

Shaffer is an attorney. In sum and substance, his proffered testimony is legal argument and 

involves his interpretation of 49 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 of an 

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 of the trial 

judge, but constituted erroneous statements of law. In such a case, "[ e ]xpert testimony ... would 

have been not only superfluous but mischievous" (alteration in original) (internal citation 

omitted)). Moreover, his analysis is erroneous

43 and largely repetitive of Complainant's Reply, 

and has no evidentiary value. 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 of the City's off site stormwater management service is used by the Airport or its 

42 Id. 

43 For example: quoting 49 U.S.C. § 47107(k)(2)(A) while purposefully omitting key exclusionary language (Reply 

Ex. 1if21); or suggesting that utility fees are somehow analogous to marketing, promotional, or community 

activities (id. , 33), impact fees (id., 34), ground access projects or rail stations (id., 35), or police services (id. 

, 56); or that the statutory limitations on project eligibility for Federal Improvement Program grants-in-aid and the 

use of PFCs somehow instruct the use of airport revenue to pay for utility costs of the airport (id. ,, 37-44). 

Likewise, Mr. Shaffer states categorically that "[i]t cannot be the case that a charge imposed on the Airport qualifies 

as an 'operating cost' of the Airport simply because the governmental entity imposing the charge claims that the 

Port has a legal obligation to pay it." Id. , 48. Such an absolutism ignores not only the obligation to pay utility fees 

imposed by municipalities, but also taxes, settlements, consent decrees, and other types of government-imposed 

costs. See e.g., FAA Office of the Chief Counsel, Opinion Letter (Nov. 30, 2007); FAA Office of the Chief 

Counsel, Opinion Letter (July 24, 2013) (concluding that the use of airport revenue to pay for noise mitigation 

mandated by state law outside of the 65 DNL contour is permissible as an operating expense of the airport); Vt. Stat. 

Ann. tit. 32, § 3659 (2016) (pursuant to which the City of South Burlington, Vermont, imposes property taxes on the 

Burlington International Airport, which is owned and operated by the City of Burlington); see also Corey Burdick, 

Mediation Fails in Airport Property 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 of Burlington and South Burlington is over the assessed value of the property, 

not the validity of the tax itself). 

31 
airline tenants." Id.~ 14; see also~ 19 ("I am informed by counsel for A4A that representatives 

of the City of Portland and the Port of Portland do not dispute these facts"). The Port has denied 

that assertion, Answer at 7, and Declarant Biery has testified to the opposite and without 

contradiction, i.e., that "it is essentially impossible for anyone within Portland's boundaries to 

reach PDX without traveling on City streets." Answer Ex. 1~20 (internal quotation marks 

omitted). 

B. Witness Jackson 

Mr. Jackson is a certified public accountant. He claims no expertise in matters of utility 

operation, ratemaking, or utility law. Mr. Jackson concedes that "[a]s a general proposition, an 

airport is subject to utility bills." Reply Ex. 2 if 22. He qualifies this "general proposition" with 

the unsupported and erroneous assertion that this is "provided however that the utility bills are 

for services or facilities provided to the airport." Id. He ignores or is unaware of the fact that a 

utility customer cannot pick and choose which portions of a utility bill it wishes to pay. The City 

sewer bill has presumptively the force of law and must be paid. 

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 subject property 'in an efficient operating condition.'" Reply Ex. 2 ~ 26. But that is exactly 

what they do. By paying its City sewer user 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 of the facility. 

44 Codified at 2 C.F.R. 200.225. The Port notes, however, that all references in the Revenue Use Policy are to OMB 

Circular A-87. 

32 
C Witness Stern 

Ms. Stem is a bond lawyer. She proffers testimony outside of her area of claimed 

expertise and contends that "[t]o the extent that the Fees are considered to be 'costs of utility 

services,' the 'utility services' are being provided to the City of Portland - and not to 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 of competent jurisdiction finds that the 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 of utility law and how 

utilities function, and has no value to the trier of fact. 

D. The Core Defect Common To All of these Declarations 

Expert testimony is not helpful where it is based on "faulty logic" and reasoning.45 That 

is the case here. None of these three witnesses claim any expertise in matters of utility operation, 

ratemaking, or utility law. Their testimony is not credible when measured against the basic 

principles of utility law discussed above.46 

45 Christopher B. Mueller & Laird C. Kirkpatrick, Federal Evidence 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 on its face ... 

cannot ... be proved by some so-called 'experts'") (citation omitted). "The trial court should accept unrebutted 

expert testimony on highly technical matters, unless it is so palpably incredible, illogical and unreasonable as to be 

unworthy of belief or otherwise open to doubt from some reasonable point of view." Long v. Moore, 626 So. 2d 

1387, 1389 (Fla. Dist. Ct. App. 1993). 

46 Witness Shaffer objects to the fees, in part, because they are based on "forecasts[s]" as opposed to actual costs. 

Reply Ex. 1 if 29. Witness Shaffer apparently does not understand that the overwhelming majority of cost of service 

utility rates, including the charges at issue here, are based on forecasted costs for purposes of developing the utility's 

anticipated revenue requirement. "The ratemaking process allows [the ratemaker] to set just and reasonable rates 

based on its forecast of the utility's revenue needs." Gearhart, 255 Or. App. at 63, 299 P.3d at 538. 

33 
Witnesses Shaffer, Jackson, and Stem all proffer the same core opinion: "the Fees are not 

operating costs of the Airport because they are not imposed in exchange for any service or 

facility actually provided to or used by the Airport." Reply Ex. 1 -,r 4.47 Their testimony fails on 

this central point. First, contrary to the uncontroverted facts in the administrative record, they 

base their "analysis" on Complainants' allegation that the Airport is receiving no services related 

to the Stormwater and Superfund Charges.48 Second, all of them fail to understand the nature of 

network utility services, or that the charges in question are mere components of the sewer user 

charges applicable to the Airport. Lastly, their testimony fails to address the real world 

consequences of their positions, and what happens ifthe Port is prohibited by Federal law from 

paying a lawful utility bill of the Airport. As discussed above, all of the potential outcomes, 

including discontinuance of sewer service for nonpayment and the attendant closure of the 

Airport, are absurd. Because Complainants' proffered expert testimony leads to absurd results, it 

is illogical and unsound and should be accorded no weight whatsoever. 

47 See also Reply Ex. 2 if 4 (the "Fees are not an allowable use of Airport revenues because they are not imposed in 

exchange for the provision of any services or facilities by the City to the Airport"); Reply Ex. 3 if 6 (fees are not 

operating costs of the Airport because they "are not being imposed in exchange for any services actually provided to 

the Airport"). 

48 Complainants create an echo chamber by citing to the declarations of their 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 not have personal knowledge and 

cannot accurately and independently attest to the facts of this case by testifying to purported facts of which, they 

admit, counsel for Complainants informed them. 

34 
CONCLUSION 

As noted in the Answer, Complainants fail to show that the Port's use of airport revenue 

to pay for individual components of the City's sewer user fees violates Federal airport revenue 

use restrictions. Complainants' Reply does no better. Therefore, for the foregoing reasons, 

Complainants' claims should be dismissed. 

June 24, 2016 

Respectfully submitted, 

~u9~ Peter J. 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 of Portland 

35 
Certificate of Service 

I hereby certify that I have today, the 24th day of June, 2016, caused the foregoing 

Rebuttal of the Port of Portland to be served electronically by or via email, on the following: 

David Berg, Esq. 

Vice President & General Counsel 

Doug Mullen, Esq. 

Assistant General Counsel 

Air Transport Association of America, 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