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U.S. Departme"t 

of Transportatiqn 

Federal Aviation 

Administration 

DEC 23 Z009 

Ronald S. Depue, Esq. 

.. . . 

! . 

SHAMBERG, WOLF, McDERMOTT & DEPUE 

308 North Locust Street, Suite 501 

P.O.Box460 

Grand Island, NE 68802-0460 

Re: Proposed State Sales Tax on Aircraft Fuel 

Dear Mr. Depue: 

800 Independence Ave., S.W. 

Washington, D.C. 20591 

Thls letter is in response to your Nove,mber 17 request by electronic mail, on behalf of the Hall 

County Airport Authority, operator of the Central Nebraska Regional Airport in Grand Island, for 

an advisory opinion from the Federal Aviation Administration (FAA) concerning a proposed state 

tax on aviation fuel. You advise that Nebraska has a statewide general sales tax upon retail sales 

of products and service, but tbat since at least 1992, the sale of aircraft fuel has been exempt from 

the sales tax by state statute. You further advise that the Nebraska Legislature is proposing to 

repeal the current state sales tax exemption on aircraft fuel and make the aircraft fuel tax proceeds 

. payable to the state general fund. you the:refore request .an opinion concerning whether the 

proposed sales tax upon aircraft fuef~ould \iiqlate;49U.S.C. § 40116 (the Anti-Head Tax Act), 49 

U.S.C. § 47107, or other federal statutes, rules; or regulations. 

Title 49 U.S.C. § 40116, the AntirHead Tax Act, permits a state to levy and collect sales or use 

taxes on the sale of goods or services which could include aviation fuel. However, in accordance 

with 49 U.S.C. §§ 47107(b) and47l33, for those airports that have accepted FAA airport 

development grants or are the subject of federal assistance, state or local taxes on aviation fuel are 

considered to be "airport. revenue" _and i:rsing such tax revenue for non-airport purposes is 

prohibited. According to the FAA's Policy and Procedures Concerning the Use of Airport 

Revenue, 64 Fed: Reg. 7696,7716 (Feb. 16, 1999), 

State or local taxes on aviation})td ~exc~p\taxes "in effect on December 30, 1987). are 

. considered to be airportreveriu~ciffibjeqt tothh revenue-use requirement. However, revenues 

from state taxes on aviation fuef may be lisi:d to support state aviation programs or for noise 

mitigation purposes, on or off the aitj)ort · · 

Since the passage of the Airport and Airway Improvement Act (AAIA) on September 3, 1982, 

Congress has required that all revenue accruing to grant-obligated airports be used for the airport's 

capital or operating costs. On December30, 19p," tJ;le Airport and Airway Safety and Capacity 

Expansion Act amended this revenue u.~i"; j'eq~jreme.iit to include local taxes on aviation fuel, such 

that the provision then read, " ... allr9'vim~es, genepit~d by the airport, if it is a public airport, and . . . . ' . 

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any local taxes on aviation fuel (other than taxes in effect on December 30, 1987) will be expended 

... "for airport purposes. This provision is currently codified at 49 U.S.C. §§ 47107(b)(I) and 

47133(a) .. Congress also added that the revenue use requirement "does not prevent the use of a· 

State tax on aviation fuel to support a State aviation-program or the use of airport revenue on or off 

the airport for a noise mitigation purpose". 49 U.S.C. § 47107(b)(3). 

In short, therefore, while a sales tax on aviation fuel is permitted in accordance with § 40116, the 

proceeds derived from such a tax ·are subject to the revenue use requirements of 49 U.S.C. §§ 

47107(b)(l) and47133(a). . ,•,; ·, .\ 

'. ·1 ·(•. ' ,I (1 : 

Any action by the State Legislature .i8 irnpo~,e a sales tax on aviation fuel sold on an airport and to 

use the proceeds derived from the tax to support non-aviation activities would be inconsistent with 

federal law. Monies from such a tax would have to be spent to support either (1) the capital or 

operating costs of the airport, the local airport system, or other local f<tcilities owned or operated 

by the airport owner or operator and directly and substantially related to the air transportation of 

passengers or property, or (2) a state aviation program or for a noise mitigation purpose. 

Accordingly, enactment of the legis)a.t,io11 to:·P~rinit general use of the proceeds from the aviation 

fuel tax could jeopardize continued fed;;ial funding of airport and noise abatement projects at 

federally-assisted airports throughoutThe Stat; ofNebraska. 

This letteris based upon the accuracy of the representations provided to the FAA in your 

November 17 commuoication. This letter provides only the present views of the FAA Counsel' i 

Office regarding relevant federal requirements. It does not preclude or constrain the FAA's 

. enforcemeot discretion or preclude any changes in our legal views. This letter also does not bind 

. the FAA to any particular resolution in the event that a complaint is filed regarding the issues 

addressed herein: 

If you have any questions, please do not hesitate to contact either Jonathan Cross (202-267-7173) 

or Elizabeth Newman (202-267-7713) :of my staff.; ' . :.... 'j II 

Sincerely, 

D~4- 4- Rl((" 

Daphoe A. Fuller 

Assistant Chief Counsel for 

Airports aud Environmental Law 

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.:/.' If. :>':·).1 '·.~it' r;.':; r'! '\ii· ~-;'t' 

.: .... 1 . • 

cc: Charles Erhard, Manager, Aiiporl Compliance 

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