1111 

1111 

LOS ALAMOS COUNTY 

Public Works Department 

1000 Central Avenue, Suite 160 • Los Alamos. NM 87544 

Phone (505) 662.a150 

Website: www.losalamosnm.us 

November 16, 2015 

Demesia Padilla, Cabinet Secretary 

New Mexico Taxation & Revenue Department 

P.O. Box 630 

Santa Fe, NM 87504-0630 

COUNTY COUNCIL 

Kristin Henderson 

Council Chair 

David lzraelevitz 

Counc~ Vice-Chair 

Councilors 

James A. Chrobocinski 

Steven Girrens 

Susan O'Leary 

Rick Reiss 

Pete Sheehey 

COUNTY MANAGER 

Harry Burgess 

Re: Federal Aviation Administration Policy Regarding Use of Aviation Fuel Tax Revenue and 

Deadline to Submit Action Plan by December 8, 2015. 

Dear Secretary Padilla: 

I am the Deputy County Manager and Chief Financial Officer of the Incorporated County of Los Alamos, which 

operates the Los Alamos Airport. I am writing to alert you to federal compliance restrictions on the use of State 

and local tax revenues derived from the sale of aviation fuel, and a deadline for State officials to submit an action 

plan to address compliance by December 8, 2015. 

Federal Revenue Use Policy 

As an airport sponsor/operator that has accepted federal grant assistance, the County is bound by multiple federal 

policies, procedures, and legal requirements, including federal assurances made by the County to the Federal 

Aviation Administration ("FAA") when accepting federal grants. Federal law on the subject of the use of airport 

revenue is embodied in the Policy and Procedures Concerning the Use of Airport Revenue (the "Revenue Use 

Policy"), first promulgated by the FAA in February, 1999, at 64 Fed. Reg. 7696. Under federal law, airport 

revenues generally may only be used for airport-related purposes. 

These airport revenue use requirements apply to proceeds from certain State and local govenunent taxes on 

aviation fuel, as well as to revenues received directly by an airport operator. A recent "Policy Amendment," issued 

by the FAA on November 7, 2014, is published at 79 Fed. Reg. 66282, and specifically concerns the use of the 

proceeds from any State or local tax on aviation fuel. The Policy Amendment requires that the County inform you 

of its provisions, and take reasonable actions within the power of the County to influence the State to confonn to 

those requirements. I have included a copy of the Policy Amendment with this letter for your review. 

The Policy Amendment confirms that State and local taxes on aviation fuel, whether part of a general sales tax or 

otherwise, and whether imposed by an airport operator or by State or local taxing authorities, are subject to the 

federal restrictions on the uses of airport revenue. See 79 Fed. Reg. at 66287. 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 local airport system, or of other facilities owned or operated by the airport and directly and 

substantially related to air transp01tation. 64 Fed. Reg. at 7718. In addition, State taxes on aviation fuel may be 

used to support State aviation programs. 79 Fed. Reg. at 66287. These restrictions do not apply to "grand fathered" 

taxes in effect on or before December 30, 1987. 
State Aviation Fuel Taxes and Compliance 

In order to comply with the Policy Amendment, the State must identify all New Mexico state and local taxes on 

aviation fuel, determine whether grandfathering exists, and if not, whether use of the tax revenue complies with 

the Policy Amendment. 

We have been advised that the sale of aviation gasoline, aviation jet fuel and other aviation fuel in the State of 

New Mexico is subject to taxation under New Mexico law, which includes the following 

• An excise tax of .17 cents a gallon is assessed on gasoline that is used in aircraft propelled by 

engines other than turbo-prop or jet-type engines, pursuant to NMSA 1978 § 7-13-3. 

• A gross receipts tax of 5.125% is assessed on the sale of jet fuel, pursuant to NMSA 1978, § 7-9-

4. 

The grandfathering provision found in the Policy Amendment would apply to the use of the State sales tax on jet 

fuel if the above or any other applicable taxes were in effect on December 30, 1987, and have not changed in 

character or use in any substantial way since that date. However, if the above or any other applicable aviation 

fuel taxes were imposed after December 31, 1987, tax revenues derived therefrom would be subject to the Revenue 

Use Policy and the Policy Amendment. 

If the grandfathering provision does not apply, the State must identify the extent to which revenues derived from 

the applicable taxes are set aside properly for local airport purposes and State aviation programs in compliance 

with the Policy Amendment. Please note that the FAA recently clarified that the tax revenue use requirements 

are met when the state appropriates money for local airport purposes or State aviation programs from its general 

fund in an amount equal to or exceeding the local and State aviation fuel tax proceeds collected. See, "Questions 

for the FAA from NASAO Members February 25,2015 and July 15, 2015", attached. 

Deadline to Submit Action Plan 

We urge the State to take whatever action is necessary to address these compliance issues, ensure compliance with 

federal requirements, and appropriately advise the FAA. The FAA has concluded that there is a need for all 

affected entities to have sufficient time to come into compliance with the Policy Amendment which became 

effective in December 2014. The FAA further understands that changes to bring State and local taxes into 

compliance may require State legislation. In this regard, the FAA requires that State officials submit by December 

8, 2015, an action plan to initiate the process to amend any non-compliant State laws on use of aviation fuel tax 

revenues. See, 79 FR 66286, Response to Comment 4. 

Penalties for Non Compliance 

The FAA's Policy Amendment empowers the U.S. Secretary of Transportation 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. 

79 Fed. Reg. 66288. Failure to submit an action plan may also delay or preclude federal grant funding. 

If you have questions or require further information, please contact Mr. Randall S. Fiertz, Director, Office of 

Airport Compliance and Management Analysis, Federal Aviation Administration, 800 Independence Avenue, 

SW, Washington, DC 20591. 

Respectfully, 

Steven Lynne 

Deputy County Manager/Chief Financial Officer 
encl: Policy Amendment 

Questions for the FAA from NASAO Members 

cc: Dan Moran, Grants Administrator, Aviation Division 

Randall Fiert;., r 1\1\ 

w/encl. 

w/encl. 
66 282 Federal Register I Vol. 79, No. 216 I Friday, November 7, 2014 I Rules and Regulations 

dated April17, 2012, except airplanes on 

which modification status "32-64" is marked 

on the identification plato: Within 20,000 

flight hours or 10 years after September 24, 

201J. (the effective date of AD 2013-16-Q8), 

whichovor occurs first, install a new jam nul 

having part number 49606-5, in accordance 

with Part B of the Accomplishment 

Instructions of Bombardier Service Bulletin 

670BA-32-Q31, Revision C. dated Aprilt7, 

2012; and Goodrich Service Bulletin 4960Q32- 64 R3. dated December 15. 2011. 

(j) Retained Credit for Previous Actions With 

Change to Paragraph (j)(l)(iii) ofThis AD 

(1) This paragraph restates the credit 

provided by paragraph (j)(1) of AD 2013-16-

08. Amendment 39-17546 (78 FR 51055, 

August 20, 2013). with a change to the 

service information citation in paragraph 

(j)(t)(iii) of this AD. This paragraph provides 

credit for the actions required by paragraphs 

(g) and (i) of this AD, if those actions were 

performed before September 24, 2013 (the 

effective date of AD 2013-16-o8). using the 

service information specified in paragraph 

(j)(l)(i), (1)(1)(ii), or (j)(1)(iil) of this AD, 

which is not incorporated by reference in this 

AD. 

(i) Bombardier Service Bulletin 670BA-32-

031, dated March 14,2011. 

(ii) Bombardier Service Bulletin 670BA32-Q31. Revision A, dated june 9, 2011. 

(i ii~ Bombardier Service Bulletin 670BA32-031, Revision B. dated July 29, 2011. 

(2) This paragraph restates the credit 

provided by paragraph (j)(2) of AD 2013-16-

08, Amendment 39- 17546 (78 FR 51055, 

August 20, 2013), with no changes. This 

paragraph provides credit for the actions 

required by paragraph (h) of this AD, if those 

actions wore performed before September 24, 

2013 (tho effective date of AD 2013-16-08). 

using the service information specified in 

paragraph (j)(2)(i) or (j)(2)(ii) of this AD. 

which is not incorporated by reference in this 

AD. 

(i) Bombardier Service Bulletin 670BA-32-

033, dated March 14.2011. 

(ii) Bombardier Service Bulletin 670BA32-033, Revision A, dated July 29, 2011. 

(k) Retained Parts Installation Limitations 

With Change to Paragraph (k)(2) ofThis AD 

(1) This paragraph restates the parts 

installation limitation specified in paragraph 

(k)(l) of AD 2013-16-oS, Amendment 39-

1754& (78 FR 51055, August 20, 2013), with 

no changes. As of September 24, 2013 (the 

effective date of AD 2013- 16-Q8), no person 

may install on any airplane an MLG 

retraction actuator assembly having any part 

number and serial number identified in 

paragraph 1.A., Effectivity, of Bombardier 

Service Bulletin 670BA- 32-Q31, Revision C. 

dated April17, 2012, unless that retraction 

actuator assembly has been inspected as 

specified in paragraph (g) of this AD, and all 

applicable corrective actions (i.e., 

replacement of the retract actuator) specified 

in paragraph (g) of this AD have been done. 

Repeat the inspection specified in paragraph 

(g) of this AD thereafter at the intervals 

specified in paragraph (g) of this AD. 

(2) This paragraph rostatos the parts 

installation limitation specified in paragraph 

(k)(2) o£ AD 2013- 16-o8. Amendment 39-

17546 (78 FR 51055, August 20, 2013), with 

a revised part name. As of the effective date 

of this AD. no person may install on any 

airplane an MLG dressed shock strut having 

any port number and serial number identlriud 

in paragraph t.A .. Effectivity, of Bombardier 

Service Bulletin 670BA- 32- 033, Revision B, 

dated June 26, 2012, unless that retraction 

actuator assembly has been inspected and all 

applicable corrective actions have been done, 

in accordance with the Accomplishment 

Instructions of Bombardier Service Bulletin 

670BA-32- 033, Revision B. dated June 26, 

2012. 

(I) Other FAA AD Provisions 

The following provisions also apply to this 

.AD: 

(1) Alternative Methods of Compliance 

(AMOCs): The Manager, New York Aircraft 

Certification Office (ACO), ANE-170. FAA, 

has the authority to approve AMOCs for this 

AD. if requested using the procedures found 

in 14 CFR 39.19. In accordance with 14 CFR 

39.19, send your request to your principal 

inspector or local Flight Standards District 

Office, as appropriate. II sending information 

directly to the ACO, send it to ATTN: 

Program Manager. Continuing Operational 

Safety. FAA. New York ACO, 1600 Stewart 

Avenue, Suite 410, Westbury, NY 11590; 

telephone 516-228- 7300; fox 516- 794-5531. 

Before using any approved AMOC, notify 

your appropriate principal inspector, or 

lacking a principal inspector. the manager of 

the local flight standards district office/ 

certificate holding district office. The AMOC 

approval letter must specifically reference 

this AD. 

(2) Contacting the 1\llanufocturer: for any 

requirement in this AD to obtllin corrective 

actions from a manufacturer, the action must 

be accomplished using a method approved 

by the Manager, New York ACO, ANE- 170, 

Engine and Propeller Directorate, FAA; or 

Transport Canada Civil Aviation (TCCA); o.r 

Bombardier's TCCA Design Approval 

Organization (DAD). If approved by the DAO. 

the approval must include the DADauthorized signature. 

(m) Related Information 

(1) Refer to Mandatory Continuing 

Airworthiness Information (MCAI) Canadian 

Airworthiness Directive CF-2011-36R1. 

dated October 3, 2012, for related 

information. You may examine the MCAI in 

the AD docket on the Internet at http:// 

IVIVw.regulations.gov/ 

#!documentDetail;D=FAA-201'1-0483-0002. 

(2) Service information identified in this 

AD that is not incorporated by reference is 

available at the addresses specified in 

paragraphs (n)(4), (n)(S), and (n)(6) of this 

AD. 

(n) Material Incorporated by Reference 

(1) Tho Director of the Fedorol Register 

approved the incorporation by reference 

(ffiR) of the service information listed in this 

paragraph under 5 U.S.C. 552(a) and 1 CFR 

part 51. 

(2) You must use this service information 

as applicable to do the actions required by 

this AD, uuless this AD specil1cs otherwise. 

(3) The following service information was 

approved for IBR on September 24, 2013 (78 

FR 51055, August 20, 2013). 

(i) Bombardier Service Bulletin 670BA- 32-

031, Revision C. dated April17, 2012. 

(ii) Bomb<•rdier Service Bulletin 670BA32-033, Revision B. dated june 26, 2012. 

(iii) Goodrich Service Bulletin 4900Q-32-

46 R2, dated November 11, 2011. 

(iv) Goodrich Service Bulletin 4960Q-32-

63 Rl , dated May 17,2011. 

(v) Goodrich Service Bulletin 4960Q-32-64 

R3, dated December 15, 2011. 

(4) For Bombardier service information 

identified in this AD. contact Bombardier. 

Inc., 400 Cote.Vertu Road West, Dorval. 

Quebec H4S 1 Y9. Canada: telephone 514-

855-5000; fax 514-855- 7401; email thd.crj@ 

aero.bombardier.com; Internet http:// 

www.bombardier.com. 

(5) For Goodrich service information 

identified in this AD, contact Goodrich 

Corporation, Landing Gear, 1400 South 

Service Road, West Oakville L6L 5Y7, 

Ontario, Canada: telephone 905-825-1568; 

email jean.breed®goodrich.com; Internet 

http://www.goodrich.com/TechPubs. 

(6) You may view this service information 

at the FAA, Transport Airplane Directorate, 

1601 Lind Avenue SW., Renton. WA. For 

information on the availability of this 

material at the FAA, call 425-227-1221. 

(7) You may view this service information 

that is incorporated by reference at the 

National Archives and Records 

Administration (NAR.A). For information on 

the availability of this material at NARA, call 

202-741-6030, or go to: http:// 

WIVIv.archives.gov/federol-register/cfrlibrlocotions.html. 

Issued in Renton, Washington, on October 

28, 2014. 

Jeffrey E. Duven, 

Manager, Transport Airplane Directorate, 

Aircraft Certification Service. 

(f'R Doc. 2014- 26437 Filed 11-6-14; 6:45am) 

BILLING CODE 4910-1 :}-P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Chapter I 

[Docket No. FAA-2013-0988) 

Policy and Procedures Concerni1ng the 

Use of Airport Revenue; Proceeds 

From Taxes on Aviation Fuel 

AGENCY: Federal Aviation 

Administration (FAA). DOT. 

ACTION: Final Policy Amendment. 

SUMMARY: This action adopts an 

amendment to tho FAA Policy and 

Procedures Concerning the Use of 

Airport Revenue published in the 

Federal Register at 64 FR 7696 on 

February 16, 1999 ("Revenue Use 

Policy"). This action confirms FAA's 

long-standing policy on Federal 

requirements for the use of proceeds 
Federal Register/Val. 79, No. 215/Friday, November 7, 2014/Rules and Regulations 66283 

from taxes on aviation fuel. Under 

Federal law, airport operators that have 

accepted Federal assistance generally 

may use airport revenues only for 

airport-related purposes. Local taxes on 

aviation fuel are subject to airport 

revenue use requirements. State taxes 

on aviation fuel (imposed by either an 

airport sponsor or a non-sponsor) are 

subject to use either for a State aviation 

program or for airport-related purposes. 

The statutory revenue use requirements 

apply to certain State and local 

government taxes on aviation fuel, as 

well as to revenues received directly by 

an airport operator. This document 

formally adopts, through an amendment 

to the Revenue Use Policy, FAA's 

interpretation of the Federal 

requirements for use of revenue derived 

from taxes on aviation fuel. 

DATES: This document is effective 

December 8, 2014. 

FOR FURTHER INFORMATION CONTACT: 

Randall S. Fiertz, Director, Office of 

Airport Compliance and Management 

Analysis, Federal Aviation 

Administration, 800 Independence 

Avenue SW., Washington, DC 20591, 

telephone (202) 267-3085; facsimile 

(202) 267- 5257. 

SUPPLEMENTARY INFORMATION: 

Availability of Documents 

You can get an electronic copy of this 

Policy and all other documents in 

docket FAA 2013-0988 using the 

Internet by: (1) Searching the Federal 

eRulemaking portal at http:// 

www.regulations.gov/searcb; (2) Visiting 

FAA's Regulations and Policies Web 

page at http:lhvww.faa.govlregulations_ 

policies/policy _guidance/; or (3) 

Accessing the Government Printing 

Office's Web page at http:// 

www.gpoaccess.gov/index.html. 

You can also get a copy by sending a 

request to the Federal Aviation 

Administration, Office of Airport 

Compliance and Management Analysis, 

800 Independence Avenue SW., 

Washington, DC 20591, or by calling 

(202) 267- 3085. Please make sure to 

identify the docket number, notice 

number, or amendment number of this 

proceeding. 

Authority for the Policy Amendment. 

This Policy Amendment is published 

under the authority described in 

Subtitle VII, part 8, chapter 471, section 

47122, and the Federal Aviation 

Administration Authorization Act of 

1994, § 112(a), Public Law 103-305, 49 

U.S.C. 47107(1)(1) (Aug. 23, 1994). 

Background 

On November 21, 2013, FAA 

published a proposed amendment to its 

policy on Federal requirements for the 

use of proceeds from taxes on aviation 

fuel. (78 FR 69789, November 21, 2013). 

This action finalizes the amendment of 

FAA's Revenue Use Policy. Under 

Federal law, airport operators that have 

accepted Federal assistance generally 

may use airport revenues only for 

airport-related purposes. The revenue 

use requirements apply to the proceeds 

from certain State and local government 

taxes on aviation fuel, as well as to 

revenues received directly by an airport 

operator. This document formally 

adopts FAA's interpretation of the 

Federal requirements for use of 

revenues derived from taxes on aviation 

fuel. Briefly, an airport operator or State 

government submitting an application 

under the Airport Improvement Program must provide assurance that revenues 

from State and local government taxes 

on aviation fuel will be used for certain 

aviation-related purposes. These 

purposes include airport capital and 

operating costs, and State aviation 

programs. The policy amendment 

applies prospectively to use of proceeds 

from both new taxes and to existing 

taxes that do not qualify for 

grandfathering from revenue use requirements. For existing taxes that do 

not qualify for grand fathering (which 

are State or local taxes on aviation fuel 

in effect on December 30, 1987), the 

FAA will allow for an up to three-year 

transition period from the effective dat·e 

of this document. 

The FAA invited public comment on 

the policy interpretation question, in 

part due to the interests of sellers and 

consumers of aviation fuel, and of State 

and local government taxing authorities 

on limits on the use of proceeds fmm 

taxes touching aviation fuel. The notice 

also solicited comments about whether 

there are other reasonable 

interpretations of the statute as it relates 

to local taxes that were not enumerated 

in the published notice of proposed 

clarification that should have been 

considered by the FAA. 

The comment period for the notice of 

proposed clarification closed on January 

21, 2014. The FAA extended the 

comment period for thirty days until 

March 3, 2014 (79 FR 5318, January 31., 

2014) in order to provide the public 

additional time to submit comments on 

the proposed Policy amendment. 

Executive Order 13132 (Feder alism) 

Executive Order 13132 establishes 

certain principles and criteria that apply 

to regulations, legislative comments, 

and other policy statements that have a 

substantial direct effect on States, or on 

the relationship between the national 

govemment and the States or on the 

responsibilities among the various 

levels of government. Because States 

have flexibility in designing general 

sales taxes subject to the limited 

restriction on the use of aviation fuel tax 

proceeds, State decisions will ultimately 

influence, regulate, and control 

implementation of taxes, including 

those touching aviation fuel. 

While this final policy amendment 

does not impose substantial direct 

requirement costs on State and local 

governments, this amendment may have 

Federalism implications due to effects 

on the use of the proceeds for taxes 

assessed on aviation fuel. FAA believes 

that the Federalism implications (if any) 

are substantially mitigated because the 

plain language of the statute at issue, 49 

U.S.C. 47133, and the detailed 

legislative history, reflect strong 

Congressional intent that aviation fuel 

taxes be used for airport purposes and 

State aviation programs. 

In compliance with the requirement 

of Executive Order 13132 that agencies 

examine closely any policies that may 

have Federalism implications or limit 

the policy making discretion of the 

States, FAA engaged in efforts to consult 

with and work cooperatively with 

States, local governments, and political 

subdivisions, including participating in 

conference calls with representatives 

from the National Governors 

Association, US Conference of Mayors, 

National Conference of State 

Legislatures, National League of Cities, 

and National Association of State 

Aviation Officials. In addition, FAA 

reached out to certain states on an 

individual basis and interested trade 

groups including Airlines for America; 

American Association of Airport 

Executives; and Airports Council 

International-North America. 

Furthermore, we published the 

proposed amendment for notice and 

comment, and received comments from 

Kentucky, Iowa, and Georgia. This 

notice responds to these comments. Through consultation, meetings and 

teleconferences as part of a robust 

public engagement process, FAA has 

balanced the States' interests in meeting 

its taxing obligations, and Congress' 

intent to ensure that taxes on aviation 

fuel are expended for airport purposes. 

By doing so, the FAA has complied with 

the requirements of Executive Order 

13132. 

Comments Received on the Proposed 

Policy Amendment 

The FAA received 25 substantive 

comments on the proposals, from 

airport operators; industry and 

nonprofit associations representing 

airports, air carriers, business aviation 
66284 Federal Register I Vol. 79, No. 216 I Friday, November 7, 2014 I Rules and Regulatio ns 

and airport service businesses; an air 

carrier; State government agencies; and 

private citizens. This summary of 

comments reflects the major issues 

raised and does not restate each 

comment received. The FAA considered 

all comments received even if not 

specifically identified and responded to 

in this notice. 

A majority of commenters supported 

the general purpose of the policy (and 

the underlying statutes): using airport 

revenue for airport purposes and using 

State and local aviation fuel tax revenue 

for a.irport purposes or State aviation 

programs. Commenters representing 

airlines and airport users all supported 

the FAA's proposed amendment of the 

Revenue Use Policy regarding 49 U.S.C. 

§47107(b) and §47133. An air carrier 

expressed the position that there is no 

ambiguity in the 1987 amendment to 

section 47107, and maintained that 

there are no other possible correct 

interpretations of these statutes. The comments requesting a change in 

the proposed policy tended to focus on 

several issues: 1. The unfairness of holding airport 

operators responsible for the actions of 

State and local government taxing 

authorities, particularly non-sponsor 

governments. 

2. The intent of§ 47133 to require 

compliance by non-sponsor State and 

local governments. 

3. Defining the portion of general 

sales taxes collected on aviation fuel as 

an 'aviation fuel tax,' and the 

administrative burden of identifying the 

aviation fuel component of general 

taxes. 

4. Time allowed before full 

compliance with §47133 is required. 

5. Clarifying that "noise mitigation" 

refers only to mitigation of aircraft 

noise. 

6. How FAA will enforce §47133 with 

respect to jurisdictions that are not 

parties to an AlP grant agreement. 

7. The proposal requires a federalism 

analysis under Executive Order 13132. 

8. Suggestions for editorial changes to 

the proposed policy language. 

1. Comment: Airport operators should 

not be held responsible for State and 

local taxes outside of the airport 

operator's control. 

The majority of commenters, 

including all of the airport and 

government commenters, argued that 

proposed new paragraph IV.D.2 would 

unfairly hold airport operators 

responsible for the imposition of taxes 

over which they had no conlrol. Airport 

operators are typically local 

governments, either cities or counties, 

or public airport authorities. These local 

entities contend that they have no 

control over State and local taxes, and 

therefore have no ability to eliminate a 

Stale or local tax that is not in 

compliance with Federal requirements 

for use of airport revenue. These 

commenters state that in many cases, an 

airport operator does not have control 

over local taxes, i r the airport is located 

in a different jurisdiction than the 

operating government entity. They note 

that port authorities and airport 

authorities may not have any taxing 

power, and therefore have no ability to 

control even local taxes on the airport. 

Beyond the complaint that this 

provision is unfair, the Airport Council 

International-North America (ACI-NA) 

raised additional objections to 

paragraph IV.D.2. First, 49 U.S.C. 

47107(b) requires an airport sponsor to 

provide an assurance that the airport 

will remain in compliance with revenue 

use requirements. However, no local 

airport sponsor could actually provide 

that assurance because the airport 

sponsor has no ability to prevent a 

noncomplying Stale tax. Airport 

sponsors would find it impossible to 

provide assurance that other 

government agencies would comply 

with the revenue use statutes for the life 

of an AIP grant. Further, sponsors 

should not be required to agree to a 

condition that would subject the airport 

to sanctions with no ability to correct 

the noncomplying condition. Second, 

ACI- NA argues that holding airport 

sponsors responsible for State taxes is a 

federalism issue, as "an attempt to 

change the relationships" between 

Federal, and State and local 

governments. ACI-NA commented that 

the proposal does not comply with 

Executive Order 13132 on federalism, 

because the agency did not conduct a 

federalism analysis on the impacts on 

State taxing authority and the 

relationship between State and local 

governments and airport sponsors. The 

American Association of Airport 

Executives (AAAE) also suggested that 

the proposal may be in violation of the 

reservation of State powers in the U.S. 

Constitution, and urged FAA to conduct 

a federalism analysis of this proposal 

because of the impact on State and local 

government relations. 

Response: Upon entering into an AIP 

grant agreement, an airport sponsor does 

in fact provide assurances that local 

taxes on aviation fuel will be in compliance with §§47107(b) and 47133, 

as required by Congress. The grant 

assurances provided by airport sponsors 

include Grant Assurance 25, which 

provides, in relevant part: "All revenues 

generated by the airport and any local 

taxes on aviation fuel established after 

December 30,1987, will be expended by 

it for the capital or operating costs of the 

airport; the local airport system; or other 

facilities which are owned and operated 

by the owner or operator of the airport 

and which are directly and substantially 

related to the actual air transportation of 

passengers or property . . .. "Moreover, 

airport sponsors often can have 

influence on the taxation of aviation 

activities in their States and localities, 

and the FAA expects airport sponsors to 

use the influence they have to shape 

State and non-sponsor local taxation to 

conform to these Federal laws. 

However, the FAA agrees with the 

majority of commenters that it would be 

unfair to penalize airport sponsors for 

taxes imposed by another entity. Thus, 

the FAA is revising paragraph IV.D.2 to 

acknowledge the differences in taxes 

that are and are not controlled by the 

airport sponsor, for purposes of grant 

compliance. For taxes within the airport 

sponsor's direct control, the airport 

sponsor must comply with the revenue 

use requirements of§§ 47107(b) and 

47133. Further, in instances of unlawful 

revenue diversion where the sponsor is 

in control of the taxes, an airport 

sponsor can also be subject to 

administrative action in which the 

Secretary may withhold amount from 

funds that would otherwise be made 

available to the sponsor, including 

funds that would otherwise be made 

available to a Stale, municipality, or 

political subdivision thereof (including 

any multimodal transportation agency 

or transit authority of which the sponsor 

is a member entity) as part of an 

apportionment or grant made available 

pursuant to Title 49. (See 49 U.S.C. 

47107(n)(3).] 

For taxes imposed by non-sponsor 

State and local governments, the airport 

sponsor will be expected to advise those 

entities of Federal requirements for use 

of aviation fuel tax revenues, and to take 

action reasonably within the sponsor's 

power to tailor State and local taxation 

to conform to the requirements of 

§§ 4 7107(b) and 47133. If a 

noncompliant tax is adopted by a nonsponsor State or local government, 

notwithstanding the airport sponsor's 

advice and efforts, the FAA would not 

take enforcement action against the 

airport sponsor out of fairness to the 

sponsor who is not responsible for the 

noncompliance. However, the FAA will 

pursue enforcement action pursuant to 

49 U.S.C. 46301 or 4 7111 (f) against a 

non-sponsor State or local government 

that violates the Revenue Use Policy or 

the limitations in 49 U.S.C. 47133. This 

is similar to the approach that the FAA 

has taken to compliance with the 

obligation in grant assurance No. 21 to 
Federal Register I Vol. 79, No. 216 I Friday, November 7, 2.014 I Rules and Regulations 6628 5 

maintain compatible land use around 

the a irport. 

Accordingly, as revised, paragraph 

IV.D.2 will state that assurance 25 will 

be considered an enforceable 

commitment with respect to taxes on 

aviation fuel imposed by the airport 

operator or owner itself; for taxes 

imposed by non-sponsor State and local 

jurisdictions, an airport sponsor will be 

expected to inform taxing authorities of 

Federal requirements and take 

reasonable action within the sponsor's 

power to influence State and local tax 

laws to conform to those requirements. The comments on federalism and 

federalism analysis are discussed 

separately under Comment 7. With 

respect to the comment that the 

proposal raises issues regarding the 10th 

Amendment of the U.S. Constitution, 

the FAA appropriately presumes the 

constitutionality of the statutes 

implemented by this policy. 

2. Comment: FAA should not enforce 

compliance by State and local 

governments that are not airport 

sponsors. 

The Georgia Department of Law, on 

behaH of the Georgia Department of 

Transportation and the Georgia 

Department of Revenue (GDOT/GDOR). 

filed comments objecting to several 

elements of the proposed policy. GDOT/ 

GDOR commented that applying 

sanctions for violation of§§ 47107 and 

47133 to entities that are not airport 

sponsors is "unprecedented and 

illogical." (The FAA notes that 

sanctions would apply to non-sponsors 

under §47133 and §47111(£), whereas 

§ 47107 is binding only on parties that 

have signed a grant agreement with 

FAA.) GDOT/GDOR bases its argument 

primarily on the observation that most 

FAA policy statements on revenue use 

and revenue diversion refer to airport 

sponsors, and do not mention nonsponsor entities. 

Response: It is true that FAA 

published policy on revenue use refers 

to airport sponsors, but that fact alone 

does not deal with the breadth of 

§ 47133, which imposes a federal 

statutory obligation on certain nonsponsors. Also, contrary to COOT/ 

GDOR's comments, the FAA has not 

been silent on this issue. In the few 

circumstances involving the issue of a 

non-sponsor imposing a tax on aviation 

fuel, the FAA has communicated a 

consistent message that compliance 

with§ 47133 is required. Tho FAA 

letters to non-sponsors describing this 

obligation are cited in the notice of 

proposed policy at 78 FR 69790-69691. 

Copies of FAA's letters are posted in 

Docket No. FAA-2013- 0988. The 

Federal Register Notice also explained 

why FAA believed that there were 

"compelling reasons" for its past 

interpretations that support the 

adoption of an amendment to the 

Revenue Use Policy. 78 FRat 69792. 

CDOT/GDOR argue that imposing 

sanctions (and therefore compliance) on 

non-sponsor governments is both unfair 

and contrary to the logical enforcement 

of the former Airport and Airway 

Improvement Act of 1982 (AAIA). as 

amended and recodified, 49 U.S.C. 

47101, et se. However, as noted, §47133 

imposes an obligation on entities that 

are not airport sponsors. First. the 

language of§ 47133 (a) imposes a 

limitation on the use of local taxes on aviation fuel, regardless of whether the 

tax is imposed by a sponsor or nonsponsor. Second, §47133 (c) limits the 

use of State-imposed taxes on aviation 

fuel to State aviation programs. Uses of 

tax revenues beyond these permissible 

uses are a violation of Section 47133. 

Therefore, the obligation to enforce 

compliance with the statute, using 

available sanctions for noncompliance, 

is not only logical but is required as part 

of the FAA's statutory responsibility for 

~mplementation of the AAIA. 

GDOT/GDOR's posits that there 

should be no sanction on a non-sponsor 

government for violation of§ 47133. But 

that would be contrary to the language 

of§ 47133 which makes no distinction 

between sponsor or non-sponsor entities 

for purposes of the limitation on the use 

of aviation tax revenues. Moreover, 

FAA's civil penalty enforcement 

authority in 49 U.S.C. § 46301 

specifically authorizes the imposition of 

civil penalties for a violation of§ 4713 3 

and does not exclude non-sponsors from 

its coverage. GOOT/GDOR's 

interpretation would effectively mean 

that non-sponsor governments are 

allowed to disregard the requirements of 

§47133 and render the statutory 

requirement virtually meaningless. 

Importantly, Congress did not limit 

FAA's enforcement authority in 49 

U.S.C. § 47111 (f) to just airport 

sponsors, but rather permitted judicial 

enforcement to restrain "any violation" 

of chapter 471 - that includes the 

requiremen ts of§ 47133-by any person 

for a violation. "Any violation" 

encompasses violations by non-sponsors as well as airport sponsors. This 

expansive authority is based on the 

plain language of section, 47111(0. and 

supported by a review of the legislative 

history and prior versions of the law 

under consideration. These prior 

versions limited enforcement to the 

airport sponsor. See 140 Cong. Rec. 

87139- 02, 1994 WL 27189 (noting that 

under the bill, "such court shall have 

jurisdiction to enforce obedience thereto 

by a writ of injunction or other process, 

mandatory or otherwise, restraining 

such airport sponsor from further 

violation of such section or assurance 

and requiring their obedience thet·eto.") 

However, Congress ultimately expanded 

this authority by explicitly stating in 

section 47111 (f) that "such court shall 

have jurisdiction to enforce obedience 

thereto by a writ of injunction or other 

process, mandatory or otherwise, 

restraining any person from further 

violation." (emphasis added) 

Given that the FAA interprets section 

47111 and 47133 to obligate nonsponsor State and local governments to 

use proceeds from aviation fuel taxes for 

certain purposes, the FAA does not 

agree that the same sanctions that apply 

to other aviation statutes would not 

apply to § 47133. Congress expressly 

provided for such sanctions by 

including§ 47133 in the statutory 

provisions that can be enforced by civil 

penalty in 49 U.S.C. 46301. In addition as noted, compliance with§ 47133 by 

non-sponsor State and local 

govemments may be enforced by 

application to the U.S. district court for 

judicial enforcement under 49 U.S.C. 

47111(f). 3. Comment: Defining the taxes on 

aviation fuel collected as part of a 

general sales tax is not supported by 

legislation and would be an 

administrative burden to State and local 

governments. 

The American Association of Airport 

Executives (AAAE) commented that 

applying the revenue use requirements 

to generally applicable taxes, such as 

sales taxes and taxes on all fuel 

products, is not supported by the 

legislative history and incorrectly 

interprets §§ 4 7107(b) and 47133. Both 

AAAE and GDOT/GDOR commen ted 

that it would be difficult and costly for 

State and local governments and 

taxpayers to segregate revenues 

collected on aviation fuel from the rest 

of a general tax collection. The FranklinHart Airport Authority, Georgia, 

expressed concern that redirecting some 

local taxes on aviation fuel to the airport 

could lead those jurisdictions to reduce 

other, non-tax support for the airport. 

The comment suggested that for that 

reason the proposed policy could be a 

hardship for the airport, but d id not 

assert that the proposed amendment 

was incorrect. One individual 

commented that an airport receives the 

same general benefit as other taxpayers, 

and that general taxes on aviation fuel 

sales should be retained by State and 

local governments to pay for these 

general community services. 

Response: AAAE and one individual 

were the only commenters that 
66286 Federal Register/Val. 79, No. 216/Friday, November 7, 2014/Rules and Regulations 

specifically objected to the proposed 

amendment that general taxes collected 

on aviation fuel sales are ''tuxes on 

aviation fuel." The FAA's rationale for 

clarifying that. general sales taxes also 

collected on aviation fuels constitute 

"taxes on aviation fuel" is based on the 

plain reading of the statute. The Airport 

and Airway Safety and Capacity 

Expansion Act of 1987, Pub. Law No. 

100- 223, amended the airport grant 

revenue assurance provision to include, 

with in the scope of revenue retention, 

"any" taxes on aviation fuel. The 1994 

recodification, which removed the word 

"any" from the statutory text as 

recodified in 49 U.S.C. 47107(b), did not 

make any substantive changes in the 

law. See Public Law 103- 272, 108 Stat. 

1378: 

Certain general and permanent laws of the 

United States, related to transportation, are 

revised. codified, and enacted by subsections 

(c)-(e) of this section without substantive 

change as subtitles ll. III, and V-X of title 49. 

United States Code, "Transportation". Those 

laws may be cited as "49 U.S.C. " 

Section l.(a) 

Ad ditionally, determining that the 

statute did not include general taxes 

would permit States to tax aviation fuel 

as "general" taxes without limit, and 

would be inconsistent with the 

purposes of the revenue use statutes. 

The FAA continues to believe that 

applying the requirements of 

§§47107(b) and 47133 to the portion of 

general taxes collected on aviation fuel 

sales, in addition to aviation-specific 

fuel taxes, is the most reasonable 

interpretation of those statutes, and 

most consistent with the congressional 

intent of the legislation on use of 

aviation fuel tax revenues. AAAE. 

which does not represent local 

governments but whose membership, 

representing airports and organizations 

that support the airport industry, has an 

interest in this issue, and GDOT/GDOR 

commented on the burden of reporting 

fuel sales as separate from other items 

taxed under the same ordinance. 

As explained more fully below, the 

FAA would permit a State a reasonable 

amount of time to bring itself into 

compliance through an "action plan," 

which takes account of the State's 

legislative schedule, if necessary. And 

while we appreciate that there could be 

some additional work required to track 

the amount of "general" tax revenue 

attributable to aviation fuel, the FAA is 

charged with implementing §47133, 

which does not carve out an exception 

for revenue generated through a general 

tax. We believe that the FAA's 

acceptance that a State will require lime 

to bring itself into compliance will 

afford the State sufficient time to 

develop a mechanism for administering 

taxes in accordance with this policy. 

With respect to the comment that 

.aviation fuel tax revenues should 

support general government services, 

the FAA notes, first, that general sales 

taxes of all other products and services 

a t an airport other than aviation fuel 

sales do go to support State and local 

general programs. Also, where nonsponsor State and local governments 

provide services directly to the airport, 

those jurisdictions can charge for those 

services and be reimbursed from airport 

funds. 

4. Comment: The FAA should clarify 

the time line allowed for jurisdictions 

imposing taxes that affect aviation fuel 

to come into compliance with the 

policy. 

GDOTIGDOR requested a more 

definitive lime for Georgia state agencies 

and local jurisdictions to comply with 

the announced policy, and specifically 

requested that the FAA provide at least 

180 days from the final policy effective 

date. GDOT/GDOR based this request on 

the time required to set up tracking 

systems for aviation fuel sales, and to 

amend State laws that mandate use of 

tax proceeds in a manner inconsistent 

with the FAA policy. Airlines for 

America and the Air Line Pilots 

Association filed joint comments urging 

that FAA limit any grace period before 

compliance is required to 60 days, and 

that if jurisdictions require more time, 

they can stop collecting the taxes untiL 

the tax law is brought into compliance. Response: The notice of proposed 

policy amendment stated that FAA 

would allow a reasonable time for 

noncomplying tax laws to be brought 

into compliance with federal law. By 

this notice FAA is announcing a formal 

amendment to its Revenue Use Policy; 

the policy underlying this amendment 

may not have been followed previously 

by affected State and local government 

non-sponsors- despite the existence of 

DOT/FAA's legal opinions on this 

subject. The amendment we adopt today 

is a final decision and amends FAA's 

Policy and Procedure Concerning the 

Use of Airport Revenue as set forth 

below. The amendment binds the FAA 

and the Secretary of Transportation, as 

well as airport sponsors and non-airport 

sponsors (including a State, a political 

subdivision of a State, and a political 

authority of at least 2 States) covered by 

this Policy. 

Therefore, after considering on this 

matter, the comments we have received 

and the potential difficulties with 

requiring immediate compliance, FAA 

has concluded that there is a need for 

all affected entities to have sufficient 

time to come into compliance with the 

final policy announced today. GDOT/ 

GDOR itself requested additional time to 

come into compliance with the policy. 

While comments were limited to 

agencies of the State of Georgia and a 

few local jurisdictions in Georgia, the 

FAA understands that other States may 

have laws that require, or at least allow, 

proceeds of general taxes on aviation 

fuel to be used for purposes other than 

airports or State aviation programs. 

The FAA further understands that 

changes to bring Stale and locallaxes 

into compliance may require State 

legislation. The Georgia legislature 

meets each year from January through 

March. Accordingly, in Georgia, the 

State and local taxes at issue could not 

practically be amended until early 2015. 

A legislative season from January to 

March or April is common to many 

other States as well. On this basis, the 

FAA believes that State and local 

officials should prepare an action plan 

to initiate the process to amend any 

non-compliant State laws and local 

ordinances as necessary to conform to 

federal law on use of aviation fuel tax 

revenues. The action plan should detail 

the process necessary to develop 

reporting requirements and tracking 

systems for discrete information on 

aviation fuel tax revenues. The plan 

may include a reasonable transition 

period, not to exceed three years, during 

which the FAA would agree, in an 

exercise of its prosecutorial discretion, 

not to enforce the revenue use 

requirement against a non-sponsor State 

or local government. State and local 

govemments should submit an action 

plan to the FAA within a year of the 

effective date of this notice. 

Initiation of an action plan would 

provide State and local governments 

sufficient lime to plan for restructuring 

of general revenues to adapt to the 

dedication of aviation fuel tax revenue 

to airports and State aviation programs 

within a reasonable transition period, 

not to exceed three years from the 

effective date of this notice. 

Demonstration of an action plan 

detailing (1) a commitment to undertake 

the legislative process; and (2) the 

timeframe for action within the three 

year period, will demonstrate voluntary 

compliance with federal obligations. 

5. Comment: The policy should make 

clear that "noise mitigation" refers only 

to mitigation of aircraft noise. 

The National Association of State 

Aviation Officials commented that the 

reference to off-airport noise mitigation, 

as an acceptable use of aviation fuel tax 

proceeds, should be revised to clarify 

that this refers only to noise related to 

aircraft operation. 
Federal Register/Vol. 79, No. 216/Friday, November 7, 2014/Rules and Regulations 66287 

Response: The definition of "noise 

mitigation" was not the subject of the 

proposed amendment. While the phrase 

"noise mitigation" in Section 47133 

commonly refers t.o aircraft noise, we 

decline here to reach whether the 

statute precludes consideration of other 

sources of noise for mitigation purposes. 

In addition, we note that the statute 

provides for use of airport revenues on 

and off airport for noise mitigation 

purposes. 6. Comment: FAA should clarify how 

it will require non-airport sponsors to 

comply with the policy. 

The Iowa Public Airports Association 

requested clarification on how parties 

that have not entered into a grant 

agreement with the FAA would be 

required to comply with the federal 

requirements for use of aviation fuel tax 

revenues. Response: The preamble of the notice 

of proposed policy noted that there are 

two means of enforcing compliance 

with § 47133 by non-sponsor State and 

local governments: civil penalties, 

under 49 U.S.C. 46301(a). and 

application to the U.S. district court for 

judic ial enforcement under 49 U.S.C. 

4 7111(f). While not an issue in Iowa, 

States that have entered into block grant 

agreements with the FAA under 49 

U.S.C. 47128 could also be subject to 

action for breach of that agreement. The 

FAA agrees that the agency's 

enforcement process should be 

described in the policy statement itself. 

Accordingly, new language has been 

added to Section IX.E., Sanctions for 

Noncompliance, for this purpose. 

7. Comment: The proposal ajfects the 

relationship between federal, State and 

local governments, and therefore 

requires a federalism analysis under 

Executive Order 13132. ACI-NA and AAAE commented that 

the proposal does not comply with 

Executive Order 13132 on federalism, 

because the proposed policy is not 

required by statute, and because the 

agency did not conduct a federalism 

analysis on the impacts on State taxing 

authority and the relationship between 

State and local governments and airport 

sponsors. Response: First, to the extent the 

comment referred to paragraph IV.D.2 of 

the proposed policy, holding airport 

sponsors responsible for taxation 

beyond their control, that issue is 

resolved by the changes to paragraph 

IV.D.2 in the final policy. 

Second. the FAA does not agree that 

the proposed policy is not required by 

statute. In the notice of proposed policy, 

the FAA analyzed each of the key terms 

of the statute with reference to the 

legislative intent of the revenue use 

legislation, to the meaning of the statute 

as a whole, and to the consistent use of 

terminology throughout the AAIA. 

Several commenters not only supported 

the FAA amendment, but commented 

that no other interpretation of the 

statute was reasonably possible. Even if 

a n alternative interpretation of certain 

terms were theoretically permissible, a 

policy interpreting the statute in a 

manner that substantially undermined 

the legislative purpose of the statute is 

not a viable option for the agency. 

Accordingly, the FAA believes that the 

policy as adopted correctly implements 

the revenue use legislation adopted by 

Congress. The policy is, therefore, 

required by statute for purposes of the 

executive order. Because this policy 

simply implements the explicit mandate 

set forth in section 47133, the 

requirements of Executive Order 13132 

and DOT's Guidance on Federalism 

(July 21, 1988). are not triggered. 

Thus, although a federalism analysis 

of this policy is not required by 

Executive Order 13132, the FAA did 

engage in efforts to consult with and 

work cooperatively with States, local 

governments, political subdivisions, and 

interested trade groups. Through 

consultation, meetings and 

teleconferences as part of a robust 

public engagement process, FAA has 

balanced the States' interests in meeting 

its taxing obligations, and Congress' 

intent to ensure that taxes on aviation 

fuel are expended for airport purposes 

or for State aviation programs consistent 

with the mandate set forth in 49 U.S.C. 

47133. 

In addition to that engagement 

process, the FAA also published the 

policy amendment for notice and 

comment in the Federal Register, 

soliciting comment from State and local 

governments, as well as other interested 

parties. The only cost information 

submitted by any commenter was 

received from the Franklin-Hart Airport 

Authority, which expressed concern 

that redirecting some local taxes on 

aviation fuel to the airport could lead 

those jurisdictions to reduce other, nontax support for the airport. However, the 

anticipated cost would result not from 

the agency's policy itself, but from the 

expected actions of local governments 

in reducing voluntary support for the 

airport. 

For the above reasons, the FAA finds 

that further analysis of the adopted 

policy for federalism issues is not 

required by Executive Order 13132. 

8. Comment: The final policy should 

include certain grammatical and style 

changes. 

Response: Delta Airlines and Airlines 

For America recommended certain edits 

for grammar and clarity: 

Paragraph II.B.2: Clarify the phrase 

"on or off the airport." 

Paragraph JV.D.1: Clarify that only 

State aviation fuel taxes may be used for 

State aviation programs. Paragraph IV.D.4.b: Clarify that 

§§47107(b) and 47133 apply to taxes on 

the use of aviation fuel. 

In each case the proposed edits more 

accurately describe the requirements of 

§§ 47107(b) and 4 7133 as stated in prior 

FAA policy, and do not make any 

substantive change in the policy 

proposed in the notice. Accordingly, the 

FAA has made the requested edits in the 

final policy. 

Final Policy 

For the reasons set out above, the 

FAA amends the Policy and Procedure 

Concerning the Use of Airport Revenue, 

published in the Federal Register at 64 

FR 7696 on February 16, 1999, as 

follows: 

1. Section II, Definitions, paragraph 

B.2, is revised to read: 

State or local taxes on aviation fuel 

(except taxes in effect on December 30. 

1987) are considered subject to the 

revenue-use requirements in 49 U.S.C. 

47107 (b) and 47133. However, revenues 

from a State tax on aviation fuel may be 

used to support a Slate aviation 

program, and airport revenues may be 

used on or off the airport for a noise 

mitigation purpose. 

2. In Section IV, Statutory 

Requirements for the Use of Airport 

Revenue, renumber paragraphs D and E 

as paragraphs E and F, and add a new 

paragraph D to read as follows: 

D. Use of Proceeds from Taxes on 

Aviation Fuel. 

1. Federal law limits use of the 

proceeds from a State or local 

government tax on aviation fuel to the 

purposes permitted in those sections, as 

described in IV.A. of this Policy. 

Proceeds from a tax on aviation fuel 

may be used for any purpose for which 

other airport revenues may be used, and 

proceeds from a State tax may als.o be 

used for a State aviation program. 

2. Airport sponsors that are subject to 

an AlP grant agreement have agreed, as 

a condition of receiving a grant, that the 

proceeds fTom a State or local 

government tax on aviation fuel will be 

used only for the purposes listed in 

paragraph 1. This assurance is 

considered an enforceable commitment 

with respect to taxes on aviation fuel 

imposed by the airport operator. For 

taxes on aviation fuel imposed by nonsponsor State government and otlner 

local jurisdictions, airport sponsors are 
66288 Federal Register/Val. 79, No. 216/Friday, November 7, 2014/Rules and Regulations 

expected to inform taxing authorities of 

Federal requirements for use of aviation 

fuel lax revenues and to take reasonable 

action within their power to influence 

State and local tax laws to conform to 

those requirements. 

3. The Federal limits on use of 

aviation fuoltax proceeds apply at an 

airport that is the subject of Federal 

assistance (as defined in Section U.b.2 of 

this Policy), whether or not the airport 

is currently subject to the terms of an 

AlP grant agroomont. and regardless of 

the State or local jurisdiction imposing 

the tax. 

4. The limits on uso of aviation fuel 

tax revenues established by section 

47107(b) and section 47133: 

a. Apply to any tax imposed on 

aviation fuel by either a State 

government or a local government 

taxing authority whether or not acting as 

a sponsor or airport owner or operator; 

b. Apply to any tax on aviation fuel. 

whether the tax is imposed only on 

aviation fuel or is imposed on other 

products as well as aviation fuel. 

However, the limits on use of revenues 

apply only to the amounts of tax 

collected specifically for the salo, use, 

purchase or storage of aviation fuel. and 

not to tho amounts collected for 

transactions involving products other 

than aviation fuel under the same 

general tax law: 

c. apply to taxes on all aviation fuel 

dispensed at an airport, regardless of 

where the taxes on the sale of fuel at tho 

airport are collected; and 

d. apply to a new assessment or 

imposition of a tax on aviation fuel, 

even if the tax could have been imposed 

earlier under a statute enacted before 

December 30, 1987. 

3. In Section IX, Monitoring and 

Compliance, add a new paragraph h. to 

E.1 to read as follows: 

h. For a non-sponsor State or local 

government that fails to comply with 

requirements for use of proceeds from a 

tax on aviation fuel. the Secretary may 

assess a civil penalty as described in 

E.l.g, or apply to a U.S. district court for 

a compliance ardor. In addition, for a 

State government that participates in the 

Slate Block Grant Program under 49 

U.S.C. 47128, the FAA may have 

additional sanctions for violation of the 

State's commitments in its application 

for participation in the program. 

Issued in Washington, DC, on November 3, 

2014. 

Randall S. fiertz, 

Director, Office of Airport Compliance ond 

Management Analysis. 

(FR Doc. 2014-2R401l Pllod 11-6-14: H:45 umJ 

BILLING, CODE 4910-13-P 

DEPARTMENT OF COMMERCE 

Bureau of Industry and Security 

15 CFR Part 744 

(Docket No. 141 029906-4906-01) 

RIN 0694-AG31 

Venezuela: Implementation of Certain 

Military End Uses and End Users 

License Requirements Under the 

Export Administration Regulations 

AGENCY: Bureau of Industry and 

Security, Commerce. 

ACTION: Final rule. 

SUMMARY: In response to the Venezuelan 

mil itary's violent repression of tho 

Venezuelan people, the Bureau of 

Industry and Security (BJS) amends the 

Export Administration Regulations 

(EAR) in this final rule to impose 

license requirements on the export, 

reexport, or transfer (in-country) of 

certain items to or within Venezuela 

when intended fo1· a military end use or 

end user. This change complements an 

existing U.S. arms embargo against 

Venezuela for its failure to cooperate in 

areas of counterterrorism. 

DATES: Effective date: This rule is 

effective November 7, 2014 

FOR FURTHER INFORMATION CONTACT: 

Foreign Polley Division, OHice of 

Nonproliferation and Treaty 

Compliance, Bureau of Industry and 

Security, Phone: (202) 482-4252. 

SUPPLEMENTARY INFORMATION: 

Background 

Starting in February 2014, the 

Venezuelan military was instrumental 

in implementing a violent crackdown 

on anti-government protests. The 

government's repression included direct 

violence against protesters, detentions 

of protesters and political leaders, and 

acts of intimidation, resulting in 

numerous deaths and injuries. On July 

30, 2014, the Department of State 

imposed visa restrictions against 

Venezuelan government officials. 

including members of the Venezuelan 

military, who participated or were 

complicil in human rights violations 

and undermined democratic processes. 

The actions and policies of the 

Venezuelan military undermine 

democratic processes and institutions 

and thereby constitute an unusual and 

extraordinary threat to the national 

security and foreign policy of the United 

States. 

In response to abuses committed by 

the Venezuelan military on the 

Venezuelan people, the U.S. 

Government is imposing "military end 

use" and "military end user" license 

requiremunts on Venezuela. 

Military End Use and End User 

Restrictions 

It is generally the policy of the United 

States Government to facilitate U.S. 

exports for civilian end uses, while 

preventing exports that would enhance 

the military capability of certain 

destinations and thereby threaten the 

national security and foreign policy of 

the United States and its allies. In 

furtherance of this policy. the Bureau of 

Industry and Security (BIS) established 

a license requirement for certain itoms 

intended for "military end uses" in a 

final rule published June 19, 2007 (72 

FR 33646). Specifically, that final rule 

established a control, based on 

knowledge of a "military end use," on 

exports and reexports of certain items 

on the Commerce Control List (CCL) 

that otherwise would not require a 

license to a specified destination. The 

"military end use" control initially 

applied to certain items exported, 

reexported or transferred (in country) to 

the People's Republic of China. 

Subsequently, BJS applied "military end 

use" and "military end user" controls to 

Russia in a final rule published 

September 17, 2014 (79 FR 55608). 

Imposition of Military Restrictions on 

Venezuela 

To implement the U.S. Government's 

response to the abuses by the 

Venezuelan military, in this rule, BIS 

amends § 744.21 of the EAR to apply 

"military ond usc" and "military end 

user" license requirements to 

Venezuela. Specifically, BTS amends 

§ 744.21 by adding "or Venezuela" after 

"Russia," wherever that name appears, 

including in the heading of the section. 

Items subject to these license 

requirements are those listed in 

Supplement No. 2 to Part 744. 

This final rule also adds a paragraph 

(h) to address the effects of these new 

license requirements on transuctions 

under contract prior to the effective date 

of this rule. 

Saving Clause 

Shipments of items removed from 

eligibility for export or reexport under a 

license exception or without a license 

(i.e., undor the designator "NLR") as a 

result of this regulatory action that were 

on dock for loading. on lighter, laden 

aboard an exporting carrier, or en route 

aboard a carrier to a port of export, on 

November 7, 2014, pursuant to actual 

orders for export or reexport to a foreign 

destination, may proceed to that 

destination under the previously 

applicable license exception or without 
Aviation Fuel Tax Revenue Issue 

Questions for the FAA from NASAO Members 

February 25, 2015 and Updated July 15, 2015 

Recently, the FAA provided an additional response to questions from Michigan and Georgia. We've 

added those responses below to the earlier responses received from the FAA. 

FAA's Answer to Question from Michael Trout, Executive Administrator for the 

Michigan Department of Transportation (MDOT)-Office of Aeronautics 

Question: 

Have you determined whether the use of "offsets" or "amounts equal to" the tax collected on aviation 

fuel is acceptable for t he purpose of compliance with the Revenue Use Policy. As the portion of our sales 

tax in question is constitutionally dedicated to other purposes (educationL we are contemplating as part 

of an action plan a methodology to accurately record the amount being collected and then a mechanism 

to allocate that amount from other state sources to state aviation programs. Any Insight would be very 

helpful. 

Response: 

Yes, we have concluded that offsets are permitted. Aviation fuel tax statutory requirements are met 

by a State appropriating money for airport purposes from its general fund in an amount equal to or 

exceeding the aviation fuel tax proceeds collected, and remitting such funds into the State aviation 

program fund, or to the applicable airport revenue account. 

We want to point out your question raises another issue since you reference that a portion of the 

aviation fuel sales tax being constitutionally dedicated to other purposes. The FAA's Policy and 

Procedures Concerning the Use of Airport Revenues {64 Fed. Reg. 7696, February 16, 1999} provides 

for taxes on aviation fuel in effect on December 30, 1987 to be "grandfathered". We do not have 

sufficient data concerning the constitutionally dedicated portion of the taxes and cannot comment 

further on the grandfathering of the aviation fuel taxes. Guidance regarding the process to determine 

whether a tax is eligible for grandfathered status is posted at regulotions.gov, Docket FAA-2013-0988. 

In proceeding with a permitted offset, the State and local governments interested in making an offset 

need to confirm that such actions are lawful and consistent with applicable State and local laws, and 

advise FAA accordingly. Additionally, the action plan should confirm that requirements are in place to 

ensure the appropriations are implemented and enforceable by state or local agencies; the State will 

also need to account for and remit to the State aviation fund or to a local airport entity the dollar 

amount of the revenues generated from the state or local aviation fuel tax, as applicable. The State 

must have appropriate controls in place to ensure tax revenues are promptly remitted to the 

appropriate airport revenue accounts and State aviation program accounts. 

Aviation Fuel Tax Grandfathering Action Plans 

The FAA Policy and Procedures Concerning the Use of Airport Revenue; Proceeds From Taxes on 

Aviation Fuel, (79 Fed. Reg. 66282, November 7, 2014) {Amendment) provides that proceeds from 

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taxes on the sales of aviation fuel (imposed by either an airport sponsor or a non-sponsor) are 

required to be used for airport-related purposes except for taxes that qualify for grandfathering from 

revenue use requirements. State taxes on aviation fuel may also be used for a state aviation program. 

Taxes on aviation fuel that qualify for grandfathering are state or local taxes on aviation fuel in effect 

on December 30, 1987. Any amendments of the grandfathered tax statutes that make substantive 

changes after December 30, 1987, do not qualify for continued grandfathered status. FAA will need to 

receive justification from state and local taxing authorities to make a determination of the 

grandfathered status of existing state and local taxes in effect on December 30, 1987. 

The guidance provided on the following scenarios should assist airport sponsors and non t!lsponsors to 

determine an appropriate course of action and/or development of an action plan for aviation fuel 

taxes that may or may not qualify for grandfathered status: 

{1) State and/or local tax statute in effect on December 30, 1987, and has been amended forward 

requiring that funds be used for airport or state aviation purposes - no grandfathering issue; 

statement from entity confirming use of taxes in compliance with the Jaw. 

(2) State and/or local tax statute in effect on December 30, 1987, or thereafter, exempts aviation fuel 

tax -no grandfathering issue; statement from entity confirming the use of taxes in compliance with 

the law. 

(3) State and/or local tax statute in effect on December 30, 1987, without any changes since 

enactment; proceeds used for other than airport purposes; and no current grandfathering 

determination -submit action plan providing written justification why tax on aviation fuel qualifies 

for grandfathered status, with the following: 

a. True and correct copies of original legislation and/or tax code and summary explanation of Jaw 

reflecting tax was in effect on December 30, 1987, and unchanged; 

b. Document identifying the purpose and applicability of the tax, the use of proceeds, and any 

administrative costs charged for the collection and allocation of the proceeds of the aviation fuel tax; 

c. Document must identify the tax rate or rates, credits, or exemptions; and 

d. Document detailing commitment to advise of any subsequent amendments that could affect 

grandfathered status. 

(4) State and/or local tax statute in effect on December 30, 1987, ond amended in subsequent 

periods, proceeds used for other than airport purposes, and no current grandfathering determination 

- submit action plan providing written justification why tax on aviation fuel qualifies for 

grandfathered status for portion of tax in effect on December 30, 1987, with the following: 

a. True and correct copies of original legislation and/or tax code and summary explanation of law 

reflecting tax was in effect on December 30, 1987, and the amendments; 

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b. Document identifying the effective date of the aviation fuel tax, the purpose and applicability of 

the tax, the use of the proceeds, and any administrative costs charged for the collection and allocation 

of the proceeds of the aviation fuel taxes; 

c. Document identifying the tax rate or rates, credits, or exemptions; and 

d. Document detailing commitment to advise of any subsequent amendments that could affect 

grandfathered status. 

(5) State and/or law tax statute not in effect on December 30, 1987, and not eligible for 

grandfathered status-submit action plan to correct non-compliant law with the following: 

a. True and correct copies of the legislation and/or tax code, and summaries of the legislation 

creating the tax on aviation fuel; 

b. Document identifying the effective date of the aviation fuel tax, the purpose and applicability of 

the tax, the use of the proceeds, and any administrative costs charged for the collection and allocation 

of the proceeds of the aviation fuel taxes; 

c. Summaries of any amendments and/or recodifications of the tax code; 

d. Document identifying the tax rate or rates, credits, or exemptions; and 

e. Detail the commitment to undertake the legislative process, including the process necessary to 

develop accounting, tracking, and reporting mechanisms to provide for discrete information on 

aviation fuel tax revenues, and disclosure of a reasonable transition period (not to exceed three years) 

to implement the necessary processes to become compliant with the Amendment. 

In developing an action plan, GDOT and GDOR submitted the following questions 

to the FAA for clarification regarding the New Policy: 

1. If the AAIA [Airport and Airway Improvement Act of 1982 (49 U.S.C. § 47101, et seq.)] requires that 

the proceeds from a particular tax on aviation fuel imposed by a local taxing jurisdiction (e.g., a county 

or a municipality) be used by that jurisdiction for airport improvement or aviation-related purposes 

{hereinafter "airport purposes"), may that requirement be satisfied by the State's appropriation of 

monies for airport purposes from its general fund? 

Yes. The AAIA requires the proceeds from local aviation fuel taxes imposed by a particular 

jurisdiction be used by that jurisdiction for the capital or operating costs of (a) the airport; (b) 

the local airport system; or (c) other local facilities owned or operated by the airport owner or 

operator and directly and substantially related to the air transportation of passengers or 

property. Additionally, in accordance with 49 U.S. C.§ 47133, a State tax on aviation fuel may 

be used to support a State aviation program, and airport revenue may be used on or off the 

airport for a noise mitigation purpose. 

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We have concluded that these aviation fuel tax statutory requirements may be satisfied by 

the State's appropriation of monies for airport purposes from its general funds. We are 

labeling this type of action as an offset, and are permitting offsets when the State 

appropriates money for airport purposes from its general fund in an amount equal to or 

exceeding the aviation fuel tax proceeds collected, and then remits such funds into the 

applicable airport revenue account. The same is true for a State aviation fuel tax; the State 

could appropriate monies from its general fund and deposit an amount equal to or exceeding 

the State aviation fuel tax proceeds into the State aviation program fund. 

State and local governments interested in making an offset would need to confirm that such 

actions are lawful and consistent with applicable State and lo·callaws, and advise FAA 

accordingly. Additionally, appropriate enforceable administrative or legislative initiatives 

would need to be in place, as well as accounting, tracking, and reporting systems, to ensure 

airport revenue accounts and State aviation program accounts receive on a continuing basis 

during each fiscal year an amount equal to the full amounts collected for aviation fuel taxes. 

2. If the answer to Question No. 1 is "yes," would the State's appropriation for that purpose have to 

be reflected in a specific line item in the State's annual budget? 

Yes, the State's appropriation from its general fund for airport purposes would have to be 

reflected in a specific line item in the State's annual budget. A specific line item for airport 

purposes in a State's annual budget appropriation is a component of the required accounting, 

tracking, and reporting mechanisms that is required to be explained in the action plan to 

ensure airport revenue accounts receive on a timely basis an amount equal to or exceeding 

the amounts collected as aviation fuel taxes. The action plan should confirm that 

requirements are in place to ensure the appropriations are implemented and enforceable by 

state or local agencies as applicable. See Question No. 4 for information regarding 

appropriated funds, payment, and reconciliation requirements. 

3. If the answer to Question No. 1 is "yes," and the local taxing jurisdictions do not use any of those 

tax proceeds for airport purposes, must the State's appropriation at least be equal to the total amount 

of tax on aviation fuel derived by all local jurisdictions in the State in order to comply with the AAIA's 

requirements? For example, if local sales taxes on aviation fuel state-wide total $100 million (none of 

which is used by the local taxing jurisdictions for airport purposes), would the State's appropriation for 

airport purposes have to be at least $100 million? 

We understand the question to ask whether the State is required to appropriate and pay an 

amount equal to the aviation fuel tax proceeds levied and collected within a local jurisdiction 

when such proceeds are not used for airport purposes. Yes, the amount of the State's annual 

appropriation for airport purposes must be at least equal to or exceed the total amount of 

aviation fuel taxes derived by all local jurisdictions in the State. 

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4. If the answers to Questions No. 1 and 3 are both "yes," may the State's appropriation for airport 

purposes for its upcoming fiscal year (July 1-July 30) be based on the local tax collected on aviation fuel 

for the most recently completed fiscal year? 

As noted above, the answers to Questions No. 1 and 3 are "'yes." The answer to Question No. 

4 is yes. The State's payment of collected aviation fuel taxes to airport sponsors may come 

from appropriated funds in one fiscal year based on the local .aviation fuel taxes collected 

during the immediate prior fiscal year, provided the payments made are reconciled with 

amounts collected in accordance with Generally Accepted Accounting Standards (GAAP) and 

such payments are made on a timely and prompt basis within defined reporting periods. The 

State's action plan should detail the process for collection, timely reconciliation and prompt 

payment of appropriated funds within defined reporting periods. 

5. If the answers to Questions No.1 and 3 are both "yes," would the funds appropriated by the State 

for airport purposes have to be used or distributed in a way that matched up with each local 

jurisdiction's tax collections on aviation fuel, or could the appropriated funds be used or distributed 

more generally? For example, if all local taxes on aviation fuel equaled $100 million statewide, but only 

$1 million was attributable to a particular jurisdiction, would $1 million of the State's appropriated funds 

have to be distributed or used in that particular jurisdiction for airport purposes? Or would it suffice that 

$100 million in appropriated funds are used state-wide for airport purposes, regardless of how much a 

local jurisdiction has received in taxes on aviation fuel and where the appropriated funds are used? 

As noted above, the answers to Questions No. 1 and 3 are "yes." State appropriated funds for 

airport purposes have to be used or distributed to match each local jurisdiction's tax 

collections on aviation fuel. Thus, the $1 million of appropriated funds attributable to a 

particular jurisdiction for airport purposes must be used in that local jurisdiction for 

permissible airport projects or programs. It does not suffice that $100 million in appropriated 

funds is used state-wide for airport purposes. 

The following are the original questions from the states and the FAA's response: 

/. First, it is clear that 1987 is the grandfather point. For clarity, a tax in place before then 

and unchanged is grandfathered, but what if there is a tax in place before 1987 which 

has been amended either to change the rate, or to add or subtract what is covered (for 

example when Virginia changed its sales tax laws 25 years or so ago to exclude certain 

foods and medicines). Does that change the grandfathered status? 

o It could since it depends on 

• Exempted aviation fuel, then added back in-not exempted 

• Rate changed from 4% to 6%, then only the 4% revenue is 

"grandfathered"- the overage must be used for airport purposes 

• What if tax "sunsets" but was then extended? Depends on if gap. 

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• Amendments to the legislation may or may not result in exempt status. 

FAA will need to review the enabling and amendment language. 

o Grandfather cutoff date for existing aviation fuel taxes is December 30, 

1987. FAA will need to receive documentation filed with the action plans to 

determine the grandfather status of aviation fuel taxes. Amendments to 

legislation may or may not result in negating the grandfathered status 

depending on the amendment Itself. FAA will need to review the legislation 

or amendments to aviation fuel taxes in order to confirm compliance with 

the federal requirements. 

If. What will be the enforcement mechanism for states and localities that do not come into 

compliance? Will funds be withheld? Other? 

o I( state or locality is an airport sponsor: treat as normal revenue diversion 

(finding of non-compliance, civil penalties, withholding of transportation 

grants, filing with U.S. district court to seek enforcement of order). 

o If state or locality is NOT an airport sponsor: impose civil penalties AND apply 

to U.S. district court for a cease and desist order. 

Ill. How will Block Grant states be impacted? Are there some additional penalties possible 

for block grant states? 

o If block grant state is levying a tax on aviation fuel contrary to the revenue use 

requirements and the FAAs Revenue Use Policy, it could be a breach of contract 

between FAA and Block Grant State. 

o Sponsors and non-sponsors would be treated same whether under a block 

grant or not. 

IV. One state has a general state sales tax on jet fuel. The state statutory provisions 

dedicating jet fuel sales taxes to aviation in the state passed in 1993. However, there 

were certain constitutional provisions in place in the state before 1987 that dedicate a 

portion of any general sales taxes to three other purposes (education, conservation, 

parks and soils). A legal interpretation was given in that state that said because the 

constitutional provisions dedicating general sales taxes to those other purposes were in 

effect before 1987, they are grandfathered in and the state should be in compliance with 

the FAA's policy. Does the FAA agree with that interpretation? 

o In general, FAA would agree, but we would want to make sure that 

i. The general sales tax subject to the constitutional provision was in place 

before December 30, 1987, and unchanged thereafter. 

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ii. In general, if the revenue diversion was lawful, FAA would not be 

concerned with how the funds are spent - if tax was in place before 

December 30, 1987. 

V. If a state has a tax that is subject to the FAA's policy and the revenue from that tax 

is constitutionally earmarked for non-aviation purposes: 

1. May the state come into compliance with the FAA policy by exempting aviation fuel from 

that tax? 

o Simply, yes. If aviation fuel is exempt from any state or local tax, there would be 

no issue. 

o This would be the easiest solution as far as FAA is concerned. 

2. Assuming the answer to the first question is yes, how long will the state have to 

implement such an exemption without incurring penalties or sanctions (assuming that until 

the exemption kicks in, the revenue will continue to be distributed according to the 

constitutional earmark)? 

o The state will have one year (from December 8, 2014) to include the exemption of 

taxes on aviation fuel in the action plan. 

o Exemption to be implemented within a reasonable transition period, not to exceed 

three years (no later than December 8, 2017}. 

3. Will the FAA be providing formal notification to states on whether they are potentially 

not in compliance? 

o Not unless the FAA receives a complaint or notification. 

o Too many possible state/municipality combinations for FAA to provide direct 

notification. 

4. If so, when will that occur? 

o Not applicable - won't occur. 

VI. Is the FAA policy limited to aviation fuel sales tax revenue from all NPIAS airports or only 

federally obligated NPIAS airports? 

o The issue is whether the aviation fuel is being taxed. The limits on use of aviation 

fuel tax revenues apply to any tax imposed on aviation fuel by either a State 

government or a local government taxing authority whether or not acting as a 

sponsor or airport owner or operator. 

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o NPIAS does not come into consideration within the guidelines of the amendment. 

The restrictions on use of aviation fuel tax proceeds apply regardless of whether or 

not the airport is currently subject to the terms of an AlP grant agreement. 

VII. If only federally obligated airports: For the purpose of the FAA policy, does accepting a 

plannir]g grant only (no construction grants) result in an airport fa fling under this new policy? 

o For this purpose, an airport receiving a planning grant is deemed as having 

"received federal assistance" and therefore, this policy applies. (See clarification in 

the 2014 amendment to the grant assurances at 79 Fed. Reg. 18733, April 3, 2014.} 

o A sponsor undertaking a federally funded planning project is subject to the 

revenue use requirements. 

VIII. Offsets. 

Can tax on aviation fuel revenue be coflected and used for non-airport/state aviation system 

purposes and then be off-set by equal or higher expenditures from the state/municipality on 

state aviation programs/airports? 

o Under review by FAA. 

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