Randall S. Fiertz 

Director, Office of Airport Compliance 

and Management Analysis 

Federal Aviation Administration 

800 Independence Avenue, SW 

Washington, D.C. 20591 

San Francisco International Airport 

December 2, 2015 

VIA EMAIL AND U.S. MAIL 

randall.fiertz@faa.gov 

RE: Compliance with the Policy and Procedures Concerning the Use of Airport Revenue; Proceeds From 

Taxes on Aviation Fuel 

Dear Mr. Fiertz: 

The San Francisco International Airport (the "Airport") is submitting this letter to report on its compliance with 

the Policy and Procedures Concerning the Use of Airport Revenue; Proceeds From Taxes on Aviation Fuet 

(the "Amendment"), which amended the Policy and Procedures Concerning the Use of Airport Revenue

2 (the 

"1999 Policy") promulgated by the Federal Aviation Administration. 

Non-Sponsor State and Local Taxing Authorities: In compliance with Section IV.D of the amended 1999 

Policy, the Airport has sent the attached letters to all non-sponsor taxing authorities of which it has notice 

(including the State of California and several local taxing jurisdictions). The Airport has also taken reasonable 

action within its power to influence these jurisdictions to comply with the requirements of the Amendment, 

including ongoing dialogue with State and local officials both directly and through trade organizations. 

Sponsor Compliance: The Airport is an enterprise department of the City and County of San Francisco (the 

"City") that is operated by the City's Airport Commission. The City has accepted Federal assistance and 

executed grant agreements and other documents required for the receipt of such assistance at the Airport. The 

City is therefore considered an "airport sponsor" as defined in the 1999 Policy.3 The City and a related 

transportation agency receive a portion of the proceeds of the Bradley-Burns Local Uniform Sales and Use Tax 

that is levied on jet fuel dispensed at the Airport. The Airport and the City believe that a portion of this tax may 

be grandfathered pursuant to Section II.B.2 of the Policy, as amended, and may submit a request to the FAA in 

the near future for such a determination, and to report on further steps the City is taking to comply with the 

Amendment. 

In the meantime, please do not hesitate to contact David J. Stevens, Deputy City Attorney, at (650) 821-5064 

with any questions or for additional information. 

Attachments 

1 79 Fed. Reg. 66282 (Nov. 7, 2014). 

2 64 Fed. Reg. 7696 (Feb. 16, 1999). 

3 64 Fed. Reg. at 7716. 

AIRPORT COMMI~SION CITY AND COUNTY OF SAN FRANCISCO 

EDWIN M. LEE 

MAYOR 

LARRY MAZZOLA 

PRESIDENT 

LINDA S. CRAYTON 

VICE PRESIDENT 

ELEANOR JOHNS RICHARD J. GUGGENHIME PETER A. STERN 

Post Office Box 8097 San Francisco, California 94128 Tel 650.821 .5000 Fax 650.821.5005 www.flysfo.com 

JOHN L. MARTIN 

AIRPORT DIRECTOR 

cc: James Lomen, FAA San Francisco Airports District Office Manager 

The Honorable Edwin M. Lee, Mayor 

Jose Cisneros, City Treasurer 

Benjamin Rosenfield, City Controller 

Kate Howard, San Francisco Budget Director 

She1yl L. Bregman, Airport General Counsel 

Julian Potter, Chief Administrative and Policy Officer 

Status Letter from SFO to FAA vl 12-2-15 

San Francisco International Airport 

Octop~r 26,.2015 

The II9n_orable Edwin M. Lee 

Mayor, City & County of San Francisco 

#1 Dr. Carlton B. Goodlett Place, Room 200 

San Francisco, CA 94102 

ATIN; Kate Howard, Budget Director 

TRANSMITTED VIA EMAIL 

SUBJECT: Fed~ Aviation, Ad.rr_rini.~tration Policy on Proceeds from Taxes on Aviation Fue~ 

Dear Mayor Lee: 

As you are aw~e, my staf.fhas held}ir~Ihninacy discuSsions With your office regarding a ~ecent 

amendment to the Policy and Pro~dures Concerning the Use of Airport Revenue, first 

promulgated by the Federal Aviation Administration (FAA) in Feb_ruary, 1999 (s~ 64 Fed. Reg. 

7696). The volicy amendment was issued by the FAA on November 1, 2014, and can be found 

at 79 Feq. Reg, <'628.2_. The City and County of San Francisco and its Airport Commission have 

accepted many federal gran~~ for capital projects at San Francisco International. Aiiport and are 

therefore bound by various federal ·legal requii:eme,nts; inclu,qmg federal grant asSQiari.ces and 

FAA poiic.les and procedures. 

Federal law on the subject of the ~~ of airport revenues is embodied in the revenue use policy 

mentioned above and provides ~ airport revenues generally tnay oi:Lly be used fot 

airport-related purposes. The airport revenue use requirem~nts also apply to the procee4s pf 

state and local government tax.e.s on the sale of aviation fuel. The recent policy amendment 

confirms that state and local taxe$ on avi~tioQ fuel,. whether part of a general .sales tax or 

otherwise2 and whether imposed by ~ airport o~erator or by state ot loc~ taxi,ng Cl-uthoritl~s, ate 

subject to the fede.ral restrictions on the uses of airport revenue, Generally speaking, thi:s m~ail$ 

that proc~ds from ~es on ~yja:tion fuel m'ilst be us.ed for the capital or operating expenses of 

the airport where the fuel js solq, of the local airport ~ystem, or of either facilities owned or 

operated by the airport and directly ai::J.d Substantially related to ai:t tr~portation. 

The ·revenue restricpons apply to taxes· on all aviation fuel dispensed at an -airport, regardless of 

where the taxes on the sale of :(4el at fu,e a.Uport are collected, b~t not to revenues from ?JlY tax in 

effect on December 30, 1987. The policy' amendment ~oes '<;lpply to any "new assessment or 

imposition of a tax on aviation fuel, even if the tax could have been imposed earli~ under a 

statute enacted befor.e Dece.ml;>e~ 30,. 19.87.'; (See 79 Feq. Reg. 66282-01; Final Policy~ 

Section IV.D.4, subsections c and d:) The Br~dley-B\lfOs Local Uiriform S~es and Use Tax 

applies to avl.ation fuel dispensed at the Airport. As of January 1, 2008, state law Wa$ am,en4ed 

to distribute the proceeds of the Bradley-Bums Tax on jet fuel (:a type of aviation fuel) dispensed 

at the Airport equally to the City and to San Mateo County, (Rev. & Tax. Code, §§ 7Z04.03, 

7205; see aiso 18 Cal.Code.Regs. § 1802.) The Controller has informed us that the City's one 

AIRPORT COMMISSION CITY AND COUNTY OF SAN FRANCISCO 

EDWIN M. LEE 

MAYOR 

LARRY MAZZOLA 

PRESIDENT 

LINDA S. CRAYTON 

VICE PRESIDENT 

ELEANOR JOHNS RICHARD J. GUGGENHIME PETER A. STERN JOHN L. MARTIN 

AIRPORT DIRECTOR 

Po~t OfMl:9-8~8097 San Francl,scq. California 94128 Tel pSQ.821.SOO.O Fax 6S0.82i .SOOS www.fiysfo.com 
The Honorable Edwin M. Lee 

Mayor, City & County of San Francisco 

Page2 

October 26; 2015 

percent sb~e of Bradley-Bums tax rev~nue on jet fuel is transmitted to the City and is treated as 

General Fund revenue. The San Francisco Colinty Transportation Authority receiv~s· a 

one-quarter percent ~hare. We l3!e s;till reviewing the extent to which the City's "local U!X 

proceeds from jet fuel dispensed at the Airport are SU;bject to the revenU:e restrictjon:s. 

The FAA's policy amendinent became eft'ective.on December 8, 2014, but the FAA has provided 

a ~ee-ye~ tran,sition peri.od. for state a,nd loc~ goyernments to comply. WiVrin one year of the 

effective date (December 8, 2015), state and lQcal govep'rments must Sl.lbmit to the FAA a,n 

·~action plan" for compliance. The action plan should reflect the process for amending state· and 

local tax laws as necessary to comply with the amended policy, and "detail the process necessary 

to develop reporting requi::r;em.ept& and tracking systems for discrete infonnation on ·aviation fuel 

tax revenues." As the FAA points out, this three-year trc;msition period should provide "state and 

local governments sufficient time to plan for restructuring of general revenues to adapt to the 

dedication of aviatioh fu~J ~ revenue ~o airports and ·state aviation programs.;, 

The policy amendment also empowers the S. Secretary of T~spottation to impose a civil 

penalty or seek other.sanctions, such as an injunction,. on state and local governments that fail to 

eom.ply With these reqUirements. 

Should you have any que~ti<>ns reg~ding the FAA Fuel Tax Policy changes~ ple~e contact 

Deputy City Attorney Dave Stevens at (650) 821-5064. 

cc: RW14all S. :fi~rtz, Fe4eta1 Aviati.on Administration 

Jose Cisneros, Treasurer 

Sheryl L. Bregman,, Akp.ort General Counsel 

Julian Potter, SFO, Chi~f ACbninisfratiye aQ.d Policy Officer 
San Francisco International Airport 

October 26,2015 

Mr. Beh Rosenfield TRANSMITTED VIA EMAil Controller, City & County of S~ Francisco 

#I Dr. Carlton R (Joodle~ :Place, Room 316 

San Francisco, CA 94102 

SLmJE.CT: F~d,etal Aviation A.d.ministtation Policy on Proceeds from Taxes on Aviation Fuel 

Dear .Mr·. Rosenfield: 

As yo-q are aware, _my staff has held preli.ri:llnary discussions with your office regarding a recent 

amendment to the Pol~cy ~d ProceQ.u:tes Concerning the Use of Airport Revenue, :fjrst 

prorimlgated by the Federal Aviation Adnllnistration {FAA) in Fe.btuary, 1999 (see 64 Fed. Reg. 

7696). Th¢ policy amendment was issued by the FAA on Nqvember 7, 2014, and can be found 

at 79 Fed. Reg. $6282. The City and County of San Francisco and its Airport Commission h.av~ 

accepted many federal grants for capital projects at San Francisco International Allport and are 

therefore bound by vario'lls federal legal r~ql,liremep.ts, inc~u.Qihg fedetal grant assti.rances and 

FAA policies and procedures. 

. . 

Fecierallaw on the subject of the use of .airport revenues is embodied in the revenue use policy 

mentioned above and provide$ that airport revenues geilei"ally may only be used for 

airport-related purposes. The airport revenue use r~quireD;le~~s also apply to the P.tocee.ds 6f sW.te ahd local government taxes on the sale of aviation fuel. The recent policy amendment 

con;firms that state and local taxes on aviation fuel, whether part of a general sales tax or 

otherwise, and whether imp()sed by an <Wport o.perator or .by state or local taxing authorities, are 

subject to the federal restrictions on the u.Ses of airport revenue. Generally speaking, this means 

that proceeds from taxes on aviation fuel must be used for the capital or operating e?qJenses of 

the airport wh~re the fu,el is sold, of the local airport system, or of other facilities owned or 

operated by the airport and directly and stjbstantially related to ·84' transportation. 

The revenue restrittions apply to taxes on ·all aviation fuel dispensed at an airport, regardless of 

wher~ tP.e taxes on ~e sale of fuel at the airport are collected, but not to revenues from any tax in 

effect on December 30, 1981. The policy amendtnent c}oes· apply to an}'" "p.ew assessment or 

imposition of a tax on aviation fuel, even if th~ tax could have been impos~ earlier under a 

st<ttute enacted b~fore December 30, 1987." (See 79 Fed. Reg. 66282-01; Final Policy, 

Section IV.D.4, l)ubsectic>ns c ahd, d.) The Bradley-Bums Local Uniform Sales and Use Tax 

.applies to aviation fuel dispensed at the Airport. As of January 1, 2008, state law was amended 

to. distribute the proce.eds of the Bradley-::Bums Tax on jet fuel (a type of aviation fq.el) dispe~ed 

at the Airpprt ,equally to the CitY and to San Mateo County. (Rev. & Tax. Code, §§ 7204.03, 

7205; see also 18 Cal.Code.Regs. § 1802.) The Controller has informed us that the City's one 

percent share ofBradley-Burns tax revenue onjet fuel is transmitted to the City and'is treated as 

General Fund revenue. The San Francisco Co.rinty Transportation Authority receives a 

AIRPORT COMMISSI O~ CITY AND COUNTY OF SAN FRANCISCO 

EDWIN ·M. LEE 

MAYOR 

LARRY MAZZOLA 

PRESIDENT 

LINDA S. CRAYTON 

VICE PRESIDENT 

ELEANOR JOHNS RICHARD J. GUGGENHIME PETER A. STERN JOHN L. MARTIN 

AIRPORT DIRECTOR 

Post 0~1097 San Francisco, California 94128 Tel 650.821.5000 Fax 650.821.5005 www.flysfo.com 
Mr. Ben R9senf1.eld 

Controller, City & County of San Francisco 

Page2 

Oqt6ber 26,2015 

one-quarter percent share. We are still re\jewmg the extent to which the City's local tax 

proceeds from jet fuel dispensed at the Airport are subject to the revenue restrictioil.S. 

The FAA's policy .amendment became effective on December 8, 2014, but the FAA has provided 

a three-year transition period for state and local governments to comply. Within one year of the 

effective date (December 8, 2015), state and local gove:rnm,ents· D;lUst submi,t to the FAA an 

"action plan" for compliance. The action plan should reflect the proc~ss for amending state and 

local tax laws as necessary to comply with the amended policy, ·and "detai~ the process neces.sary 

to develop reporting reqUirements and tracking Sy-stems for discrete information on aviation fuel 

tax revenues." As the FAA. points o1,1t, this !hree-year transition period shol.lld provide "state and 

local governments sufficient time to plan for restructuring of general ;revenues to adapt to the 

dedication of aviation fuel tax revenue to airports and state aviation ·programs;'' 

The policy amendment als.o empowers the U.S. Secret~ of Transporta,tion to impose a civil 

penalty or seek other sanctions, such as an injunction, on st~t~ and loc~l governments ¢tat fail to 

comply with these requirements. 

Should you have aiJ..Y questiohs regarding the FAA Fuel Tax Policy changes, please con"Q,lct 

Deputy City Attorney Dave Stevens at (650) 821-5064. 

v/1/)~­

J~ Airport bitector. 

cc: Ri:l.ndall S. Fiertz, Federal Aviation Administration 

Jose Cisneros, Treasurer 

Sheryl L. Bregman, Airport General Counsel 

Julian Potter, SFO, Chief Administrative and Policy Officer 
Mr. JobP th.iaP.g 

California State TJ:easuter 

Post Office Box 942809 

Sacramento, CA 94209-0001 

San Francisco International Airport 

Octo bet 26, 2015 

_TRANSMITTED VIA EMAIL 

SUBJECT: Feder.al A. viation Adrn.iulstration Policy on Proceeds from Taxes on Aviatiqn f~el 

Dear.MJ;. Chiang: 

As th.~ All:Port Director of San Fr;mcisco International Airport, which is operated by th~ ;Airport 

Commission_ of the City and Co@ty of Sap Francisco, i .am writing to you in connection with a 

recent amendment to the Policy and Procedures Concerning the Use of Airport Revenue, first 

J?IOmulgated .. by the F.ederal Aviation Administration (FAA) 4'1 February, l999 (see 64 Fed. Reg. 

7696). 'The policy a,mendment, which was issued by the FAA on November 7, 20.14, cap. be 

fo1.1Il4 at 79 f.e4~ :Reg,, 69282 ~d r~quites the City to inforin you of its provisions and take 

reasonable actions within the poweJ; of'the City to influence state and local tax laws to co.rifonn 

to those· requirements. I understand that the FAA has rece4tly visite4 with S~te of Californla offici~s oh this matter and that :internal discussions are t.a!Q.ng place. I am wri~g tQ aftmn the 

Airport's support for these di~cbs$knis and to urge the State to comp~y with the provisions of the 

FAA's policy amendment to the extent applicable. 

The City has accepted many FAA grants for capital projects at the Airport and is therefore bound 

by vatious fede!W legal .requirernents, mcluding federal grant assurances and FAA policies and 

procedures. Federal law on the subject ofthe use of airport rev~nue is embodied in the Revenue 

Use Policy mentioned above and provides that airport reven11es ·generally may only be U$e<l for 

airport..:related p~oses. The airport revenue use requirements also apply to thE? proceeds of 

certain state and loc~ goyetnment taxes on the sale of aviation fuel. 

The recent policy amendment confirms that state and lo.cal trows OJ:l avi~tion fuel, w4~th.¢r p¥1: of 

a general sale.s tax or otherwise, and. whether imposed by an .airport operator or by state or local 

taxing authorities, are subject to. the f'ederal·testrictions on the uses of-airport revenue. Generally 

speaking, this means that proceeds from ~~son ayiation fu~l mllSt be used for. the capital or 

operating expenses of the airport where the fuel is sold, of the lqcal airport sy&t~Ill; or of Qther 

fapiilties owned or operated by. the airport and directly and substantially related to a# 

transporta,tion. Xn .adqitiqn, S,tat~ taxes on aviation fuef may be used to support state aviation 

programs. These restrictions do not apply to taxes in ~ff(!ct on or befo're December 30, 1987, 

The FAA's policy amendment became effective on December 8, 2014, but the FAA has provided 

a three"'year transition period for state and local governments to comply. Within one year of the 

effective date (December 8, 2015), state and local governments must submit to the FAA an 

AIRPORT COMMISSION CllY ANO COUNTY ,OF SAN FRANCISCO 

EDWIN 1\'1• LEE 

MAYOR 

LARRY MAZZOLA 

PRESIDENT 

LINDA S. CRAYT.ON 

VICE PRESIDENT 

ELEANOR JOHNS RICHARD J. GUGGENHIME PETER A,. 'STERN JOHN L. MA'RTIN 

.(1lRPORT DIRECTOR 

Post Offit.:l!l-6~8097 San Francisco, California 94 i 28 Tel 6so. 821.5000 Fax 650.821 .5005 www.fiysfo.com 
Mr. John Chiang 

California State Treasurer 

Page2 

October 26, 2015 

"action plan" for compliance. The action plan should reflect the process for amending state and 

local tax laws as necessary to comply with the amended policy, and "detail the process necessary 

to develop reporting requirements and tracking systems for discrete information on aviation fuel 

tax revenues." As the FAA points out, this three-year transition period should proviae "state and 

local governtnents with sufficient thne to plan for restructuring of general revenues to a.Qapt to 

the dedica~on of aviation fuel tax revenue to airports and state aviation programs." 

' ' 

The FAA s policy amendment also empowers the U.S. Secretary of Transportation to impose a 

civil pe.halty or seek other sanctions, such as an injunction, on state and local governments that 

fail to comply with these requirements. 

As you know1 the State of California· is a non-sponsor jurisdiction that rec~ives tax revenues 

from aviation fuel dispens.ed at the San Francisco International Airport. We have identified two 

state taxes that apply to aviation fuel: the Sales and Use Tax (Rev. & T~. Code, § 6001 et seq.) 

and the Motor Vehicle Fuel Tax (Rev. & T~. Code, § 7301 et seq.). With other members of the 

California Airports Council, we urge the State of California to comply with the provisions of the 

FAA's policy amendment to the extent that revenues from those taxes are restricted under the 

policy ~endment. 

Should you have any questions regarding the FAA Fuel Tax Policy cha,nges, please c~ntact 

Deputy City Attorney Dave Stevens at (650) 821-5064. 

cc: State Senators Jerry Hill, Mark Leno and Mike McGuire 

State Assembly Members David Chiu, Kevin Mullin, Philip Y. 'Ting and Jim Wood 

Califortlia State Board of Equalization 

Randall S. Fiertz, Fed~ Aviation.Administration 

Sheryl L. Bregman, Airport General Counsel 

Julian Potter, SFO, Chief Administrative and Policy Officer 
Mr~ Jolm. Maltbie1 Cotmty Manager 

County Qf San Mateo 

400 CoWlty Cent~r 

Redwood City, CA 94063-1655 

San Francisco lnte·rnational Airport 

Ocrob¢r26, 2015 

TRANSMITTED VIA EMAIL 

S"()BJBCT.: federal Aviation Admiiiistration Policy on Proceeds from Taxe~ on Aviation FlJel • · . . 

Dear Mr. Maltbie: 

Thank you for :tp_e,¢ting' With Leo F~rmin and my staff recently reg"!!ding ~ :qum1Jer of.i$$ues of' 

COpmton in:teJ;"est to tp.e $~ Ftancis¢o International Airport and San Ma:teo County. ;\s promised 

in an :earlier mee~g, I ~ wr,itirlg to Y<!\1. in coj:lp.eGtion with recent changes· in fe.deral 

regulations that niay impact the Cm.~ty .as the recipient c;>fcer.tain We~ that app~y _to .aviat1on .. fuel 

dispen~ed ·at the. Allport. The Federal Ayiation Administratiqn (FAA) rc;c~ntly amendecl its 

Policy cpiq Proce4QI~S Con~e.tQing the 'us~ of Allport Revenue, which was first promulgated by 

the. FAA in Febn1ary, 1999 (see 64 Fed. Reg. 76.9()), The pollcy amendment wasJssued by the 

FAA on November7 2014 (see 79 Fed~ R~g. 66282) and 'ieqQ.ites the City and County of San 

Frandsco, as the operator· (or "~onsor") ·of the San Francisco ln~~matjo~ Airpoq, to infow 

:YO\l of its provisioliS and take reasonable actions within the power of the City to influence St~;tt~ 

and local tax J~ws to con;f.onp. to those teqtili:ei;ilents. 

The City has ac.cepted many FAA grants for capital projects at the Airp9rt and is therefore bound 

by vanpus federal iegal requirements, .including federal grant ass~ces ·and FAA polici~s an,d 

procedur.es. Fed.erall.a'V'( on the subject ofthe l!Se of airport revenue is embodied in the Revenue 

Use Policy mentioned above and provide~ tP..~t airport revenues .gen-erally may only be us.ed for 

airpoft-:telated _purposes. The airport revenue use requirements also apply to th~ ptoceed_s_ qf· 

certl:l.ip. state anq local go"Vei.nineiit taices on the sale of .aviation fuel. We have identified San 

Mateo C~)'[JP.ty" as a non-sponsor jllri.sdiction that receives tax revenues from .aviation fuel 

dispensed at the Airport. 

The recent pqlicy ~endnient c_on:fi.r.tns that state and local taxes .. G>n aviation ·fuel,, whether· part of 

a general sale_s tax or otherwis~. and whether iinpos~d by ~ ~ort op,erato;r or by' state or local 

taxing authorities, are subject to .the 'federal restrictions Qn tb:,e uS.·es. or airport revenue. G:en~rally 

speaking, this means that pro.ceeds from taxes on aviation fuel must be used for the capital or 

Qperatil!g expens~s of the ali-port where the fuel is s6Id, of the local iliport system, or of other 

facilities ovvned ·or opel;'ated by the ~rport and ill,rec'Uy and, substantially related to air 

transportation. These restrictions do not apply to taxes m effect o.n 9r before December ~(), 

1987. 

The FAA's policy amendment became effective on December 8~ 2014, but the FAA has provided 

a tbtee-yeat1;r~itioll period· tor state and local govertunents to comply. Within one year of the. 

AIRPORT COMMISSION CITY AND COUNTY OF.SAN FRANCISCO 

EDWIN M. LEE 

/>!AYOR 

LAR~Y ~AZZOLA 

PRf!SIDENT 

LINDA S. CRAYTON 

VIC~ PRESIDEI'{T 

ELEANOR JOHNS RiCHARD J. GUGG.ENHIME PETER A. STERN JOHN L. MARTIN 

AIRPORT DIRECTOR 

Post 0~~~8097 Sfin Francisco, Califorria ~41?8 ·rel650.?21.5000 Fax 650.'1 21.50.Q5 www.flysfo.c;om 
Mr. John M~tbie, County Manager 

County of San Mateo 

Page2 

October 26, 2015 

effective date (December 8, 2015), state and local governments must submit to the FAA an 

"action plan" for compliance. The action plan should reflect the process for amending state and 

local tax laws as necessary to comply with the Amended "Policy, and "detail the process 

necessary to develop reporting requirements and tracking systems for discrete information on 

avi~tion fuel tax revenues." As the FAA points out, this three-year transition period should 

provide "state ~d local govei'Ill)lents sufficient time to plan for restructuring of general revenues 

to adapt to the dedication of avia4on fuel tax revenue to airports and state aviation programs.'; 

The FAA's policy (!!Uehdmetit also empowers the U.S. Seeretary of Transportation to impose a 

civil penalty or _seek other sanctions, such as an injunc~ion, on s~te ~d locCl.l governments that 

fail to comply with these requirements. · 

We have idep.tified two San Mateo Col.inty taxes that apply to aviation fuel dispensed at the 

Airport: the San Mateo County Br~dley Bums Local Uniform Sales and Use Tax and the San 

Mateo County Retail Transactions and Use Tax. My staff will be contacting you iQ. the near 

future to propose another meeting to discuss this matter and identify ways that the County and 

the Airport can work together to help the County comply with these FAA regulations. 

Should you have any questions regarding the FAA Fuel Tax Policy changes, please contact 

Deputy City Attorney Dave Stevens at (650) 821-5064. 

John L. Martip. 

Airport Director 

cc: Jim Saco, Budget Director, County of San Mateo 

Randall S. Fiertz, Federal Aviation Administration 

Sheryl L. Bregman, Airport General Counsel 

Julian Potter, San Francisco International Airport 
San Francisco International Airport 

October 26, 2015 

The Honor~:Qle Karyl Matsumoto, Chair 

San Mateo County Transportation Authority 

1250 San Carlos Avenue 

TRANSMTITED VIA El\'IAIL 

P.O. Box 3006 

San Carlos, CA 94070-1306 

SUBJECT: Federal Aviation Administration Policy on Proceeds from Taxes on Aviation Fuel 

Dear Chait Matsumoto: 

As the Airport Director of the :San -Francisco International Airport, which is operated by the 

Airport Commission of the City and eounty of San Francisco, I am writing to you in -connection 

with a, recent arilendment to the Policy anq Procedures Conceriring the Use of Airport _Revenue, 

:first promplgated by fife .Fed~ral AviatiqnAdministra~Qll (fAA) in february, l99~ (see 64 :Fed. 

Reg. 7696). The policy amendment was -issued by the FAA on November 7, 2014 (see 79 Fed. 

Reg, 66282) and requires the City, as the operator (or "sponsor") of.the Airport, to infonn you.of 

its provisions and take re~on~ble actions Within the pow~r of the City to i.Ii:fluence state anq 

lpcal tax laws to con.fQ·nn to :fupse _requirements. We have identified two San Mateo County 

Transportation Authority taxes that apply to aviation fuel dispei;J.Sed at the Airport that may be 

impacted by the FAA policy amendment, as further explained below. 

The City has accepted many FAA grants for capital projects at the Airport and is therefore bound 

by various federal legal requiremen~, inGlu~g federal grant assurances and FAA policies and 

procedures. Federal law on the subject of the use of airport revenue is embodied in the Revenue 

Use Policy mentioned abov~ and provide~ that airport reveril)¢~ .generally may only be u5ed for 

airport-related plirp9ses. The a4J?o:rt teven~~ use requll;ement~ also ~pply to the· proceeds of 

certain state -and local government taxes on the sale of aviation fuel. 

The recent policy ame_ndmeilt eonfums that state and loc~ t~es on aviation fuel, w.hetl;ier p~ of 

a geperal sales tax or otherwisE!, and whether impose<;! by a,p. ahp<;>rt ope]:ator or by state or local 

taxing authorities, are subject to the federal restrictions on the uses of airport revenue. ·Generally 

speaking, this means that proceeds from taxes on aviation fuel must be Used for the capital or 

operating expenses of the ·airport where the fuel is sold, of the .loc.al airport system, or of other 

£acUities oWn.e<;l or operated by the ~ort ap.d 4jrectly and subst~tially related to air 

transportation. These restrictions do not apply to taxes in .effect .on or before December 30, 

1987. 

The FAA's policy amendment became effective on December 8, 2014, but the FAA has provided 

a three-year transition period for state and local goVeinmentS to comply. Within one year ·of the 

effective date (December 8, 2015), state and local governments must submit to the FAA an· 

AIRPORT COMMISSION CITY AND COUNTY OF SAN FRANCISCO 

EDWIN M . ~eE 

MAYO'R 

LARRY MAZZO~A 

PRESIDENT 

LINOfl S. CRAYTON 

VICE PRESIDENT 

ELEANOR JOHNS RICttARD J. GUGGENHIME T~R A. STERN JOHN L. MARTIN 

AIRPORT DIRECTOR 

Post dW~~0~7 San Francisco, California 94128 Tel 650.821 .5000 Fax 650.821 5005 www.flysfo.com 
The Honorable Karyl Matsumoto, Chair 

San Mateo County Transportation Authority 

Page2 · 

October 26, 2015 

"actio11 plan" fot complianc¢. The action plan should reflect the process for amendi.ng state and 

local tax laws as necessary to comply with the A.i:nendeq Policy, and "detail the process 

necessary to dev.elop reporting requi!emep.ts and tracking systems for disc;~rete infoqn~on on 

aviation fuel tax revenues." As the FAA points out; this tbre~-year transition peri.od sbould 

provide "state and local governments sufficient time to plan for restructuring of general revem.1es 

to adapt to the dedication of aviation fuel tax revenue to airports and state aviation progra.nls." 

The F AA'·s policy amendment also empowers the U.S. Secretary of Transportation to i:nJ.pose a 

civil penalty· or seek other sanctions, such as an injunction, on state and local governments that 

fail to· comply with these requirements. 

We have identified two San Mateo County Transportation Authority taxes that apply to aviation 

fuel dispensed at the Airport: the Sari Mateo County Bradley-Burns Local Uniform Sales and 

Use Tax (0 .. 25% to county transportation) and the San Mate.o CoUn.ty Transportation Authority 

Transportation, Tax (lv.ieasure A). My staff will be cop.tacting you in the near future to propose a 

meeting to discuss this matter and identify ways that the Transportation Authority .and the 

Airport can work together to help the Transportation Authority comply with these FAA 

regulations. 

Should you have any questions regarding the FAA Fuel Tax Policy changes, ple~se contact 

Deputy City Attorney Dave Stevens at (650) 821-5064. 

John L. Martin 

Ait:port Director 

cc: R~dall S. Fiertz, F¢detal Aviation A~stration 

Sheryl L. Bregman, Airport General ·Counsel 

Julian Potter~ SFO, Chief Adininistrative and Policy O:fficet 
Sah Fran~isco lnternc;ition<!l Airport 

October 2'6, 2015 

Mr. Jim Jiwtnett TRANSMtfTED ViA EMAIL 

General·Manag((r and Chief Executive Officer 

San Mateo County Transportation Authority 

i2so s:m Carlos Avenue 

P.O; Box 3006 

San Carlos, CA _94070-1306 

SUBJECT: Federal Aviation Adniinistration Policy on Proceeds :from TaX.es on AViation Fuel 

Dea,r Mr. Hartnett: 

As the Airport Difector of the San Francisco International Airport, which is operated by the. 

Airpo.rt Co~sion, .pf.th~ -C.ity a)ld CoWicy QI San Francisco, i ;atn 'writing to you :i.P. c6nne¢tlon 

wi~ a recent arp.en~efl.t to the J;>olicy and Proce{iures Concerning the Use of A4Port R~Venue, 

first prom~gated by the Federal Aviation Administration (FAA) in Feb~, 1999 (see 64 Fed. 

R~g. 7~~"6~_. The policy amendm.ep.t ~as issued by the FAA on November 7, 2014 (see 79 Fed. 

Reg; 66282) and requires the City~ as the operator (or "sponsor'') of the Airport, to irifotm you of 

its ptpvi~ions and t~e f~cnable ~cti'ons within the. power of the CitY to influe,nce state ~d. 

local tax laws to conform to tb,ose requirements. ·we haye identified 'two San Mateo County 

Transportation AuthoritY taxes that apply to aviation fuel dispen.Sed at the Airport· that m..ay ·be 

impacted, by·fu¢ FAA policy am~dnient, as further explaineci below. 

'f4e City has ~cc~pted m~y FAA ;grants. for .capital projects at the Airport ~d is therefore bound 

by various federal legal requirements~ including federal grant assurances .and FAA policies anci 

procedure.s. Fedetallaw on the subject of th~ U.Se ¢fairport revenue is embodied in the R.ev~nue 

·use ~olicy men,ij,9ned _above and prov~dt~S that ?irport teyenu~s gen~r~y may only be used for 

airporl-rcilat~d purpos~s, The ~orl revenue '\}l)e requirements. also apply to the proceeds of 

9€rtain state and local government faxes on the ~ale of aviatipn fueL . · 

The recent p(llicy a,m~ndmeJJ.t co:ofilms th.a,t state ap.<;lloq~ ~€$ op. avia:tio~ fuel, whethe;r pan of 

a g¢neral sates ta,x or othe~se~ ~d whether imposed by an airport operafor or by state .or local 

taXing authorities, are subject to the federal restrlctloils t>n the lises of airport revenue. Generally 

speaJ,ting, this m~ans that· proceeds from ta,xes on aVi~tion fuelm~t be us~d for the c.apiW or 

oper~ting e{{,pens~ of ~e ainJqrt where the fq.el is soJd, of th~ loc~ airpt:)rt s.yste~ 0r of other 

facilities ··owned O! operated by the airport and directly and substantially· related to air 

trilllSportation. These restrictions do not apply to taxes in effect .on .or before December 30, 

1987 .. 

The FM's policy arilendineht b.e.cam:e effective on D.ecembet 8, 20.14, b,ut the FAA has proVided 

4 three-year t.r~sition period for ,staie <UJ.d !99~ govetnto,ez;i~ t9 comply. Within one y~ of the 

AIRPORT COMMISSION CITY A"'O q:>U~TY QF SAN FRANCISCO 

EDWIN M. LEE 

MAYOR 

LARRY MAZZOLA 

PRESI_DENT 

liNDA S. CRAYTON 

VICE PRESIDENT . 

EL.EANOR JOHNS RICHAR~ J. (it.IGGEJ\IHIME PETER Jl. STERN 

Post Office Box 8097 San Frahcisco,"California 94128 Tel 650.821.5000 Fax 650.821.5005 www.flysfo.com {AOl04ilS.2.J 

JOHN L. :MARTIN 

A,-RPORT DIIIEi::'roR 
Mr. Jim Hartnett 

General Manager anq. Chief Executive Officer 

San Mateo County Transportation Authority 

Page2 

Octobet26, 2015 

effective date (December 8, 2015), state and local governments must submit to the FAA an 

"action plan" for compliance. The action plan s"P,ould.r:eflect the process for a.IQ.ending state and 

local tax .laws as necessary to comply with the Amendeq Policy, an.d "detail tij.e ptocess 

necessary to develop reporting requirements and trac~g systems for discrete informatio:p on 

avjation fu.el ta;x reve~ues." As the FAA points otrt, this three-year transition period .should 

provide "state and local goverp:ments sufficient tii;ne to plan for restructuring of general revenues 

to adapt to the dedication -of aviation fuel tax revenue to airports and ~~te aviatiop. progran1s." 

The FAA's policy ~endment also empowers the U.S. Secretary ofTrans_portation to impose a 

civil penaltY or seek other sanctions, such as an injunction, on state and local governments that 

fail to comply with these requirements. 

We have icien,tineq two Sflll 'Ma.teo Coup.ty J'ransportation Authority taxes that apply to aviation 

fuel dispensed at the Airport: the San,. Mateo County Bradley-BUI1ls Local Unifonn Sales and 

Use Tax (0.25% to county transportation) and the San Mateo County TranwofU!.tion Authority 

Transportation Tax {Measure A). My staff will be contacting you in the near future to propose a 

meeting to discuss· this matter and identify ways that the Transportation Authority and :the 

Airport ~an work together to J:telp the Transportation A.uthority comply with these FAA 

regulations. · 

Should you have any questions regarding the FAA Fuel Tax Policy changes, please contact 

Deputy City Atto,mey Dave Stevens at (650) 821-5064. 

·' 

John L -Martin 

Airport Director 

cc: Randall S. Fiertz, Federal Aviation Administration 

Sheryl L Bx:egm~~ Airport Gen.ei:al Counsel 

Julian Potter, SFO, Chief Administrative and Policy Officer 
San Francisto International Airport 

October 26~ 2015 

The Honorabie Scott Wiener, Chair TRANSMITTED VIA EMAIL 

S~ lirlmcisqo TranSPortation Authority Board. Ci Hall · . . . ty . 

1 Dr. Carl top. ~ GooQlett Place, Room 444 

San Francisco, CA 94102-4689 

sm,}ECT: .Fe9.era:I A.viatlon Adtriinistt:ation Policy on Proceeds from Taxes on A v:iation Fuel 

Dear Chafr Wiener: 

As the . .AU:Port Pirectpr of San Francisco Internatio.iJ.al Airport, which. is operated by the Aiip~rt 

Commission o.f tb:e G.ity ~d Com;ty .of S~ Fran~jsco, I am "Writing t6 you in conneeti~ "With a 

recent amendment t9 the Policy and PJ.:qc·edure.s GQnc~rping th-e Use of :Nrport Revenue, :titst 

promhlgate.dby the Federal Aviation Administration in February; 1999 (see ~4 Fed. Reg, 769,6). 

The p9fio/ ru;D.e;nd,tnerit was. iSsued by the FAA, on No~ember 7~ 2014~ and can ·be found at 

79· Fed. Reg. 6928~. 'Ille City and CQunty of Sa,n Et~cisco ~d i~ A.irport Commission have 

accepted many federal gn;tnts for capital proje9ts at the San l"r<Plcisco ,Iri.tematfonai Allport and 

are therefore bound by various federallegalrequirements, inCl"Qding federal grant ~Sut@.9¢s ~d. rAA policies ~W,.d procedtrr~. The City and the San Franciseo Courizy Transportation Authority 

:each rece~ve a ~hai:e of the :Sradl~y-Burns ta,k revenue on jet fuel dispensed at the Airport, the 

use of whicP, is pote:J,11;i.ally ~pacted by the recent policy ~en~ent. My sta.ff has h~ld 

prelim.iruiry·discussions with the Mayor's office and the CityControllerregarcfulg this J:p.atter~ 

Federal. law on the subject ofth~ \\Se of afrporttevenues is embodied in the revenue use policy 

IQ.en:fioned ab<;>ve a,nd provides th~t ~ori: reVetl.ues ge.:p.era)~y m~y <?IllY be used fQr ~crtrelated purposes. The airport -revenue use reqUirements also apply to the proceeds of ,state and 

local govei:ninent taxes on the sale of a:viatio:i:l fuei. The re.cent policy .amendment .confi:rnls that 

$ie and ~peal ~es on avi(}ti~:>n :fiiel, whether p~ of a g'e)l~ta{ s~es tax or othetwise, and 

wP,etb.er in.J.posed by an ail:port ope:~;ator Qr by stat~ pr lqc~ -tmQ:ng ~~tb:orities, are ~qject to "l;h,e 

federal restrictions on the uses of airport revenu~. Generally speakip,g, tiM~ p;1eans th~t proceeds 

:frQin taxes on avl~tio:r.i fuel must he used for the capital or op.eratfu,g ·expenses of the aiiport 

w4~re the ~I ill sold, qf ¢.~ l<:>c.a.l ~ort syste~ or of othet facilities o\viled or operated by the 

ail:port and direCtly an4 substan~ally re~a~ed tQ ~ transpottati:on. · · 

The revenue restrictions apply to "taXes oil all aviati·on fuel di5pensed at an airport, regardless of 

wl;lere ¢.~taxes on the ~al~ of fuel ?tthe ~ort ~e cQilected, but-not to.revenues from any tax in 

effect on Dece!llper 30, 1987. The policy amenqmep.t does apply ~Q .a:t:l.Y 'new ~~essmeht or 

jmpos!ti0n. of a taX' on aviation fuel, even ff the tax could have been imposed earlier under a 

statut~ epJicteq b~fore DeceJPb¢r 30, 19~7.'' (See 79 .Fed. Reg. 6628;2.:0l: Einal Policy~ 

Section IV.DA, subsections c and d.) The Bradley-Bums Local Uniform "Sales an~ Use Tax 

AIRPORT COMMI.SSION CITY AND COUNTY OF SAN FRANCIScO 

EDWIN M. LEE 

MAYOR 

LARRY MAZZOLA 

PRESIDENT 

LINDA S. CRAYTON 

VICE PRESIDENT ' 

ELEANOR JOHNS RICHARD J. GUGGENHIME PETER A. ST.fRN 

Post O.ffice Box 8097 San Francisco, California 94 T 28 Tel 650.821.5000 Fax 650.821.5005 wiNw.flysfo.com {1) 0304J:Zg ) 

JOHN L. MARTIN 

·.AifiPORT DIRECTOR 
The Honora.ble Scott Wiener, Chair 

San Francisco Transportati~lQ. A~thority Board 

Page2 

October 26,2015 

applie~ to c:tviatipn fuel cljspensed a,t the Airport~ As .of Jantiaty 1, 2008, state law was amended 

to distribute the proce~ds of the Bradley-Bums tID~; on jet fuel (a type of aviation fuel) dispensed 

at the Airport equally to the City and to San Mateo County. (Rev. &; Tax. Code, §§ 7204.03, 

7205; see also 18 Cal.Code.Regs. § 1802.) The Transportati.on Authority receives a one-cwarter 

percent share ofBradley-Btnns tax revenue onjet fuel dispensed at the Airport. 

The FAA's policy amendment became effective on DecemberS, 2014, but the FAA has pi'o'vided 

a three-year transition period for state and local governments to comply. Within one year of '!he 

effective date (De.cember 8, 2015), state and local governments must submit to the FAA an 

"action plan'; for compljance. The action plan should refl~ct the process for amending state and 

local tax laws as necessary to comply witl;l the ame.nded policy, and ''.detail the proc.ess necessary 

to develop reporting requirements and tracking systems for discrete information on aviation fuel 

tax revenu¢s." As the FAA points out, this tbree-yeat transition period should provide "state and 

local governments s1lfficient tin)e to plan :for te.structurihg of general revenues to adapt to the 

dedicati9n of aviation fuel tax revenue 1p airports and stat.e aviation pto.gr~s." 

The policy amendment also empowers the U.S. Secretary of Transportation to impose a civil 

pe-nalty or seek other s~ctions, such as ·an ihjunction, oil state and local govetninents that fail to 

comply with these requirements. 

Should you have any questions regarding the FAA Fuel Tax Policy changes, please contact 

Deputy City Attorney Dave Stevens .at ·(650) 82.1-5064. 

~y~­

Airport 

J~~ Director 

cc: Randall'S. Fiertz, Federal Aviation Administration 

Sheryl L. Bregman, Airport General Co'Unsel 

J~ian Pottet, SFO, Chief A~sttative ap.d PQljcy Offlc;:er 
Ms. Tilly Chang 

Executive Director 

S~ F.r.ancisco Transportation Autherity 

145$ Marl<et Street, 22nd Floor 

San Francisc<;>, CA 9410.3 

San Francisco International Airport 

October 26,2015 

.TRANSMITTED VIA EMAIL 

SUBJECT: Federal Aviation Administration Policy on Proceeds from Taxes on Aviation Fuel 

. . 

As the Airport Director of San Francisco Interna1ional.Airp0rt, which is operated by the Airport 

Coz:nnllssion of the City and County of San Francisco, l am vVrlt.W.g 'p you ll,i c.onn.ection 'with a 

re~ent arn,~~dme.nt to the Policy and ·Procedures Concer~g the Use,of Allport Revenue~ firs:t 

promUlgated by th~ Fede~ A-viation AdminiStration ih'February, 1999 (see 64 Fed. Reg, 7696). 

The policy amendment was issueQ. by ~e FAA on November 7, 2014, and can be found at 

79 Fed. .Reg. 66282. The. City and Co~ of San Fran~sco and its Nrport CoJ.fui'J.ission have 

ce;pled l;llBhyfederal gtants for capital projects at the San FraJ?.c"iS9Q )l:lterna1;ioill\l Airport and 

. are tb,eryf<;>re botQl.d by vailous federal legal requirements, including federal grant assurances and 

FAA policies and proced\ll'e~. The City ~d the San Francisco County Transportation Authority 

each receive a share of fh:e Bradley-Bums tax revenue on jet f4el diSJ?ensed at the AUpqrt, the 

use of which is potentiai.ly impacted by the· recent policy ~endment. .MY stw. has held 

preliminary 4i~cussions with the Mayor's office and the City Controller regarding this matter. 

Federal law on the subject of ihe use of airport revenues is embodied iit tte revenue use policy 

mentione_d ~bove and proVides that airport revenues generally may only be used for airportrelate<;! p'ilrppses. The airpqrt revenue :USe :teqJ.lirements also apply to the proceeds of state and 

local gov:emment taxes op. the $ale of a,vi~tipn' fu,el. The recent policy amendment confinns that 

state and local taxes on aviation fuel, whethe-r part of a general sales tax or o~etw.ise, and 

whether imposed l?Y an airport operator or by state or local taxing authotiti~s. are subject to ti:te 

fede~ testriPtions on ~e U$es of airport revenue. Generally speaking, this means that proceeds 

· :troJD. taxes on .ayiatiop. f1,1~1 m~t be used f~r the Qa:{>jtal ot O:{>¢fatih~ expenses of the airport 

where. the fuel is sold~ of the\ local airport syStexn,. or of other facilities owne~ 'Or operated by the 

airport and directly arid substantially related to air transportation. 

The revenue restrictions apply to 'tc,lXes .OP. all aviation fu~l dispen.Sed at an airport, reg.ardless of 

where the taxes on:the sale of fuel .at the -airport are collect~d, but not tQ f.eVenu.es froni any taX in 

effect on December 30, 1987. The policy amendment does apply to any "new assessmep.t or 

imposition of a tax on ·aviatio..n :fuei, even if the tax could have been imposed earlier under a 

statute enacted before December 30, 1987." (See 79 Fed. Reg. 69282-0l; Final Policy, 

S~ctipn Iy.D.4, subsections .c and ~.) The Bradley-Bums Local Uniform Sales and Use Tax; 

a,pplies t<? av~ation fuel. dispensed. a~ ~e Airport. As of January 1, 2008, state law was amended 

AIRPORT COMMISSION CITY AND COUNTY OF SAN FRANCISCO 

EDWIN M.LEE 

MAYQ~ 

LARRY MAZZOLA 

PRESIDENT 

LINDA S. CRAYTON 

VICE PRESIOENT 

ElEANOR JOHNS RICHARD J. GtJGGENHIME PETER A. STERN JOHN L.'MARTIN 

AIRPORT DIRECTOR 

Post O(IbS~\W5. ~097 San Frilncisco, C~lifornia 94128 lei 650.8215000 Fax 650.8215005 www.flysfo.com 
Ms. Tilly Chang 

Executive Director 

San Francisco Transportation Authority 

Page2 

October 26,2015 

to distribute the proceeds of the Bradley-.Burns Tax on j~t fuel (a type of aviation fuel) dispensed 

at the Airport equally to the City and to San Mateo County. (Rev. & Tax. Cod~, §§ 7204.03, 

7205; see also 18 Cal.Code.Regs. § 1802.) The Transportation Authority receives a one:..quarter 

percent. share ofBradley-Burns tax revenue on jet fuel dispensed at the )\.irport. 

The FAA's policy amendment oecame effective on December 8, 2014, but the FAA has provided 

a three-year transition period for state and local government$ to comply. Within one Y¢Clf of the 

effectiv~ date (Pecerriber 8, 2015), state and local governments must .submit to the FAA an 

·~action plan" for compliance. The ;iCtion plan should reflect the process for amending state and 

local tax laws as necessary to comply with the amen,cled policy, and "de.tai1 the process necessary 

to develop reportfu.g requirements and tracking systems for discrete information on aviation fuel 

tax reve1;11,1es~" As. the FAA points out~ this three-year transition period should provide "state and 

l6'cal government$. sufficie:o.t tim~ to p~an for resnvetuiing of general revenues to adapt to the 

dedication ·of aviation fuel tax reven,ue to airports and sta,te aviation programs." 

The policy amendment also empowers the U.S. Secretary of Transportation to impose a civil 

penalty or seek Qth~r sanctiqns, sucP. .as an injunction, on state and local governments that fail to 

comply ~th $e~re req¢rementl). · · 

ShoUld you have any questions: regarding the FAA Fuel Tax Policy changes, please contact 

Deputy C,ity Atto~ey Dave Stevens at (650) 821-5064. 

Airport Director 

cc: Randall S . .Fiertz~ Federal Aviation Administration 

Sheryi L. Bregman~ Ahport General Counsei 

Julian Potter, SFO, Chief A~tta:tive and Policy Offi.cet