UNITED STATES DEPARTMENT OF TRANSPORTATION 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

CHANDLER AIR SERVICE 

 Complainant, 

v. 

CITY OF CHANDLER, ARIZONA 

 Respondent. 

FAA Docket No. 16-13-05 

RESPONDENT CITY OF CHANDLER, ARIZONA’S REBUTTAL IN SUPPORT OF ITS 

MOTION TO DISMISS AND ANSWER 

Designation of persons to receive service for the City of Chandler, Arizona: 

Kay Bigelow, Acting City Attorney 

Chandler City Attorney’s Office 

P.O. Box 4008 

Chandler, AZ 85244-4008 

Kay.Bigelow@chandleraz.gov 

Telephone: 480-782-4645 

Facsimile: 480-782-4652 

W. Eric Pilsk 

Daniel S. Reimer 

Kaplan Kirsch & Rockwell LLP 

1001 Connecticut Ave., NW, Suite 800 

Washington, D.C. 20036 

epilsk@kaplankirsch.com 

dreimer@kaplankirsch.com 

Telephone: (202) 955-5600 

Facsimile: (202) 955-5616 
i 

TABLE OF CONTENTS 

I. INTRODUCTION ............................................................................................................ 1 

II. ARGUMENT .................................................................................................................... 3 

 A. The City Has No Obligation To Extend The Runway ................................................ 3 

 B. CAS Has Failed To Show That The Claims Asserted In Its Complaint 

Have Any Merit .......................................................................................................... 6 

 1. The City Has Not Violated Assurance 5 ............................................................... 6 

 2. CAS Appears to Have Abandoned Its ANCA Claim ........................................... 7 

 3. The City’s Collection of Its Pre-1987 Tax on Fuel Sales Does Not 

Violate Revenue Diversion Rules ......................................................................... 8 

 4. The City Has Not Economically Discriminated Against CAS ............................. 9 

 C. None of CAS’s Newly Asserted Claims Have Any Merit ........................................ 12 

 1. Ordinance 3888 Is Not An Unreasonable Restriction on Access ....................... 13 

 2. The City’s Decision to Approve the Vestar Development in 2003 

Did Not Violate Assurance 21 ............................................................................ 16 

 3. The City’s Decision Not to Extend the Runway Did Not Violate 

Assurance 24 ....................................................................................................... 18 

 4. The City Has Implemented an Adequate Pavement Maintenance 

Program in Compliance with Assurance 11 ........................................................ 19 

 5. None of CAS’s Remaining Factual Assertions Demonstrate Any 

Violation of a Federal Obligation ....................................................................... 21 

III. CONCLUSION ............................................................................................................... 24 

 
ii 

TABLE OF AUTHORITIES 

FAA DECISIONS 

41 North 73 West, Inc, dba Avitat Westchester v. Westchester Cnty., N.Y., FAA 

Docket No. 16-07-13, Director’s Determination (June 12, 2008) ...............................11, 22

Aero Ways, Inc. v. Del. River & Bay Auth., FAA Docket No. 16-09-12, Director’s 

Determination (Aug. 30, 2010) ................................................................................7, 20, 21 

ALCA, et al. v. Miami-Dade Cnty., Fla., FAA Docket No. 16-08-05, Director’s 

Determination (Aug. 31, 2010) ............................................................................................4

Heide v. Carol Molnau, et al., FAA Docket No. 16-04-11, Final Agency Decision 

(July 7, 2006) ...............................................................................................................12, 13 

Henrihetta and Lindsay Tulloch v. City of Harlingen, Tex., FAA Docket No. 16-

05-07, Director’s Determination (Aug. 21, 2006) .............................................................12 

In the Matter of City of Santa Monica Cal., FAA Docket No. 16-02-08, Final 

Agency Decision and Order (July 8, 2009) .......................................................................15

Jeff Bodin & Garlic City Skydiving v. Cnty. of Santa Clara, Cal., FAA Docket 

No. 16-11-06, Final Agency Decision (Aug. 12, 2013).......................................................7 

JetAway Aviation, Inc. v. Montrose Cnty., Colo., FAA Docket No. 16-08-01, 

Director’s Determination (July 2, 2009) ..............................................................................4

Northern Air, Inc. v Cnty. of Kent, Mich., FAA Docket No. 16-11-10, Director’s 

Determination (March 28, 2013) ...................................................................................4, 18 

Pac. Coast Flyers, Inc., et al. v. Cnty. of San Diego, Cal., FAA Docket No. 16-04-

08, Director’s Determination (July 25, 2005) ......................................................................4 

Santa Monica Airport Ass’n v. City of Santa Monica, Cal., FAA Docket No. 16-

99-21, Final Agency Decision (Feb. 4, 2003) ......................................................................4 

Thermco Aviation, Inc. v. Cnty. of Los Angeles, et al., FAA Docket No. 16-06-07, 

Final Agency Decision (Dec. 17, 2007)...................................................................4, 18, 19 

Town of Fairview, Tex. v. City of McKinney, Tex., FAA Docket No. 16-99-04, 

Director’s Determination (July 26, 2000) ..........................................................................14 

Truman Arnold Co. v. Chattanooga Metro. Airport Auth., FAA Docket No. 16-

11-08, Director’s Determination (Oct. 4, 2013) ................................................................10 
iii 

STATUTES AND PUBLIC LAWS 

49 U.S.C. § 47107 ............................................................................................................................8 

49 U.S.C. § 47133 ........................................................................................................................8, 9 

REGULATIONS, ORDERS, AND AGENCY GUIDANCE 

14 C.F.R. § 16.21 .......................................................................................................................3, 12 

14 C.F.R. § 16.23 ...................................................................................................1, 3, 6, 12, 14, 21 

U.S. Dep’t of Transp., Federal Aviation Admin., AC No. 150/5380-6B Guidelines and 

Procedures for Maintenance of Airport Pavements, Appendix A (Sept. 28, 2007) ......................20 

U.S. Dep’t of Transp., Federal Aviation Admin., Order 5190.6B, Airport Compliance Manual

(Sept. 30, 2009)............ ..............................................................................................4, 15, 19, 20 
1

UNITED STATES DEPARTMENT OF TRANSPORTATION 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

CHANDLER AIR SERVICE 

 Complainant, 

v. 

CITY OF CHANDLER, ARIZONA 

 Respondent. 

FAA Docket No. 16-13-05 

RESPONDENT CITY OF CHANDLER, ARIZONA’S REBUTTAL IN SUPPORT OF ITS 

MOTION TO DISMISS AND ANSWER 

Respondent, City of Chandler, Arizona (the “City”), respectfully submits this Rebuttal in 

Support of its Motion to Dismiss and Answer, in accordance with 14 C.F.R. § 16.23, as amended 

by 78 Fed. Reg. 56135 (Sept. 12, 2013), and the FAA’s Letter Orders dated August 27, 2013, 

and October 22, 2013.

I. INTRODUCTION 

In its Reply, Chandler Air Service (“CAS”) makes clear what it seeks in this case: to 

compel the City to operate the Chandler Municipal Airport (the “Airport” or “CHD”) in the 

manner CAS prefers. Indeed, Mr. Walkup makes no bones about this, and frankly pleads 

“Guilty” to telling the City “how to run their airport.” Declaration of John Walkup on the 

Purpose of the Complaint at ¶ 45 (“Walkup Dec. 1”). Having failed to persuade the City to adopt 

CAS’s preferred plan for the Airport, CAS invokes the grant assurances in an effort to compel 

the City to construct a runway extension, using City funds and Airport revenues (but not voterapproved bonds), because CAS’s business plan is premised on an extended runway. Similarly, 
2

CAS seeks to compel the City to revise its pricing policy for commercial self-service fuel to 

reflect CAS’s cost structure in order to allow CAS to maximize profits and revenues. As the 

City demonstrated in its Answer and Memorandum in Support of Motion to Dismiss and Answer 

(“Memorandum”), however, the City has no obligation to assure that CAS achieves its business 

objectives or to adopt development policies that favor CAS. 

In an attempt to mask this fundamental flaw in its Complaint, CAS uses its Reply, and in 

particular the two declarations submitted by Mr. Walkup, as an opportunity to assert new claims, 

and to recast the history of CAS at the Airport to portray CAS as the victim, somehow, of the 

City’s poor management. Accordingly, CAS gives vent to complaints and gripes that have 

accumulated over almost 25 years regarding almost every agreement CAS has negotiated with 

the City and regarding almost every Airport planning decision the City has made. But Part 16 is 

not a forum for the general “airing of grievances.” The FAA is concerned with an airport 

sponsor’s current compliance with its federal obligations. As demonstrated in detail below, none 

of CAS’s long list of grievances demonstrates that the City is in violation of any federal 

obligation. 

In general, most of CAS’s grievances are little more than disagreements about matters of 

policy and business practices, and personal ire over interpersonal conduct, that simply do not 

implicate federal obligations. Further, most of CAS’s grievances relate to incidents that occurred 

many years ago, and, therefore, are time-barred by the general six-year statute of limitations for 

asserting violations of grant assurances. Other grievances raise issues relating to the way nowconsummated agreements were negotiated or with certain terms of those agreements that are not 

actionable because CAS has consented to those agreements. Whether considered separately or 
3

collectively, none of the grievances raised in CAS’s Reply demonstrate a violation of any of the 

City’s federal obligations. 

II. ARGUMENT 

In its Complaint, CAS asserted that the City had violated four specific federal 

obligations: Assurance 5 (Preserving Rights and Powers), the Airport Noise and Capacity Act of 

1989 (“ANCA”), Assurance 25 (Airport Revenues), and Assurance 22 (Economic 

Nondiscrimination). In its Answer and supporting Memorandum, the City demonstrated that 

none of those claims had any merit. In its Reply, CAS appears to abandon its ANCA claim and 

offers little new evidence or legal support for its Assurance 5, 25, and 22 claims. Instead, CAS 

seeks to salvage its Complaint by expanding its scope to assert new claims under Assurances 

22(a), 21, 24, and 11. Other than its Assurance 21 claim, these new claims were not addressed in 

CAS’s pre-complaint resolution letters, as required by 16 C.F.R. § 16.21, and none were set forth 

in the Complaint, together with all supporting evidence, as required by 16 C.F.R. § 16.23(b). 

Accordingly, the newly asserted claims should be dismissed outright. Nonetheless, the City will 

show that those late-asserted claims lack any merit in order to resolve this dispute finally in this 

proceeding. 

A. The City Has No Obligation To Extend The Runway 

The central theory of CAS’s Complaint is that the City is required to extend the runway 

because an extension to 5,700’ is recommended in the Airport’s Master Plan Update and is 

depicted as “ultimate” development on the Airport Layout Plan (“ALP”). Indeed, CAS appears 

to maintain that the City was obligated to follow through on the 1998 Master Plan Update (“1998 

MPU”) that called for a runway of 6,800 feet, and further is obligated to use airport funds to 

allow construction to proceed immediately. See Reply at 23. Under CAS’s theory, every action 
4

by the City that is inconsistent the 1998 MPU, and every action that is inconsistent with the 

immediate extension of the runway, violates the City’s federal obligations. 

As the City explained in its Answer and supporting Memorandum, however, the grant 

assurances do not obligate the City to construct facilities proposed in a master plan or shown on 

an ALP. See generally U.S. Dep’t of Transp., Federal Aviation Admin., Order 5190.6B, Airport 

Compliance Manual, at ¶ 7.18 (Sept. 30, 2009) (“FAA Airport Compliance Manual”) 

(summarizing obligations under Assurance 29); Director’s Determination, JetAway Aviation, Inc. 

v. Montrose Cnty., Colo., FAA Docket No. 16-08-01, at 23-25 (July 2, 2009) (no requirement to 

build facilities shown on an ALP); Director’s Determination, Pac. Coast Flyers, Inc., et al. v. 

Cnty. of San Diego, Cal., FAA Docket No. 16-04-08, at 35 (July 25, 2005) (no requirement to 

build facilities in a master plan). Similarly, “[a] sponsor is not required to develop any and all 

parcels of land in a manner consistent with the wishes of any one party, but rather may exercise 

[its] proprietary rights and powers to develop and administer the Airport’s land in a manner 

consistent with the public’s interest.” Final Decision and Order, Santa Monica Airport Ass’n v. 

City of Santa Monica, Cal., FAA Docket No. 16-99-21, at 19 (Feb. 4, 2003).1

Implicitly recognizing that the grant assurances do not impose a general duty on the City 

to construct the runway extension, CAS asserts in its Reply that a series of grants the City 

accepted in the late 1980s and early 1990s imposed a specific obligation to construct the runway 

extension. Reply at 20. But a review of those grants, copies of which are attached collectively 

as Exhibit 1 (omitting standard form attachments), shows that is not the case. Those grants were 

 

1

 See also Final Agency Decision, Thermco Aviation, Inc. v. Cnty of Los Angeles, et al., FAA Docket No. 16-06-

07, at 19 (Dec. 17, 2007) (“the federal obligations [do not] require sponsors to adhere to the location preferences of 

current tenants and subtenants when planning for the future development of the airport.”); Pac. Coast Flyers at 28; 

Director's Determination, ALCA, et al. v Miami-Dade Cnty, Fla., FAA Docket No. 16-08-05, at 31 (Aug. 31, 2010); 

Director’s Determination, Northern Air, Inc. v Cnty. of Kent, Mich., FAA Docket No. 16-11-10, at 23 (March 28, 

2013). 
5

all for the acquisition of the property “for future airport development,” primarily to construct the 

runway to its current length, including taxiways and safety zones. Indeed, several of the grants 

refer only to a runway length of 4,850 feet, and none refer to any further runway construction. 

Moreover, all of the land acquired with those grants is necessary for the current runway 

configuration and for the ultimate extension to 5,700 feet, including future runway safety areas 

and runway protection zones. Accordingly, the City has complied with the terms of those grants 

by acquiring land needed for future Airport development. 

In a final attempt to support its argument that the City was locked into the 6,800 foot 

runway, CAS implies that the 1998 MPU somehow required the City to extend the runway to 

6,800 feet because the 1998 MPU concluded that the “do nothing” alternative was unacceptable. 

Reply at 20. But the City has never proposed to “do nothing;” it has always proposed to extend 

the runway. The 2007 Master Plan Update (“2007 MPU”) concluded that a 5,700 foot runway, 

while shorter than the 6,800 foot runway previously proposed, 

accommodates a wide range of aircraft while enhancing the level of operational 

safety at the Airport. It is believed that this alternative will garner greater 

acceptance from Airport users, ADOT and the FAA because the runway will be 

able to accommodate the greatest number of Airport users possible with an 

enhanced level of safety. 

2007 Master Plan Update at 4-18-19, attached as Exhibit 2 to Declaration of Lori Quan in 

Support of Answer (“Quan Dec. for Answer”). The City accepted that recommendation and 

amended the ALP accordingly, although it has not yet constructed the extension. The 2007 MPU 

reflects sound planning principles and is consistent with the City’s federal obligations. Again, 

CAS may not agree with the City’s decisions, but the grant assurances do not provide CAS with 

a basis to compel the City to make a different decision. 
6

B. CAS Has Failed To Show That The Claims Asserted In Its Complaint Have 

Any Merit 

CAS’s Complaint was not supported by any evidence whatsoever, and failed to meet the 

basic pleading standards of 14 C.F.R. § 16.23. In an effort to salvage its Complaint, CAS has 

attached to its Reply a number of documents and two declarations by CAS’s owner, Mr. Walkup. 

Even considering this additional material, however, CAS has failed to substantiate the claims 

asserted in its Complaint. 

1. The City Has Not Violated Assurance 5 

In its Complaint, CAS asserted that Ordinance 3888 violates Grant Assurance 5 because 

Ordinance 3888 “deprives the City of its discretion to utilize airport funds generated on the 

Airport for the development of the Airport as provided in the various ALPs created with federal 

funds.” Complaint at ¶ 23. In its Memorandum, the City showed that CAS’s claim rests on a 

false premise because the City has no obligation to extend the runway, and therefore has not 

deprived itself of the authority to carry out its obligations as a sponsor. Further, the City showed 

that the City had not surrendered any municipal authority regarding the Airport because the City 

Council retains the power to amend or repeal the Ordinance or otherwise take action as needed to 

meet its federal obligations. 

In its Reply, CAS offers no new evidence or legal authority to support its claim. CAS 

simply repeats its argument that allowing voters to vote on bond issues for a runway extension 

amounts to a surrender of City Council authority. Reply at 23. CAS seems to rest its argument 

on the theory that Ordinance 3888 must be a surrender of power because the electorate has twice 

refused to approve a bond issue for a runway extension and the City has not proceeded anyway. 

That is simply incorrect. Assurance 5 does not prohibit the City from seeking or heeding input 

from the public on issues of municipal concern, even if it is not legally required to do so. Nor is 
7

the City barred from delegating authority, provided that the City Council retains the ultimate 

authority to take action as needed to comply with federal obligations. Final Agency Decision, 

Jeff Bodin & Garlic City Skydiving v. Cnty. of Santa Clara, Cal., FAA Docket No. 16-11-06, at 

41 (Aug. 12, 2013). Ordinance 3888 does not remove that power from the City Council and 

therefore does not violate Assurance 5. 

In a further attempt to find fault with Ordinance 3888, CAS argues that Ordinance 3888 

was unnecessary because the City did not need to issue new bonds to pay for its portion of the 

runway extension because it could have drawn on untapped bonding authority from a 1993 bond 

issue, which CAS claims was intended to pay for the runway extension. Reply at 21-22. Even if 

this point had any legal significance, it is factually incorrect. The 1993 bond issue authorized 

bonds in the amount of $695,000 for the following specific Airport uses: 

To resurface the runway, taxiway and parking apron at the municipal 

airport; 

To acquire land for runway protection zones, roadways, the development 

of the south taxiway into aircraft apron space and future fixed based 

operators developments; 

To construct grading, drainage and parking aprons and infrastructure. 

City of Chandler, Informational Report and Sample Ballot, Special Bond Election, at 2 (May 18, 

1993), a true copy of which is attached as Exhibit 2. Plainly, the 1993 bond issue did not relate 

to a runway extension, and the bond proceeds could not have been used for a runway extension 

project without further voter approval to change the scope and permitted uses of the bonds.2

 

2. CAS Appears to Have Abandoned Its ANCA Claim 

In its Complaint, CAS argued that Ordinance 3888 violated ANCA. As the City 

demonstrated, claims under ANCA are beyond the FAA’s Part 16 jurisdiction. CAS offers no 

 

2

 As the documents attached to CAS’s Reply at Exhibit 13 show, there was an issue with the City incorrectly 

charging the Airport fund for certain bond interest payments for bonds unrelated to Airport projects. The City 

discovered the error and has refunded those funds to the Airport. See Director’s Determination, Aero Ways, Inc. v. 

Del. River & Bay Auth., FAA Docket No. 16-09-12, at 13 (Aug. 30, 2010) (no compliance issue under Part 16 if the 

alleged violation has been cured). 
8

response to that argument. Nor does CAS respond to the City’s arguments that the ANCA claim 

fails on the merits because planning decisions about potential future airport construction are not 

“noise and access restrictions” under ANCA. Apparently abandoning its ANCA claim, CAS 

recasts its ANCA claim as an Assurance 22(a) claim arguing that Ordinance 3888 is an 

unreasonable restriction on access. Reply at 19-24. That argument has no more merit than its 

now-abandoned ANCA theory, however. See infra at 13-16. 

3. The City’s Collection of Its Pre-1987 Tax on Fuel Sales Does Not 

Violate Revenue Diversion Rules 

In its Complaint, CAS alleged that the City’s collection of a use tax on the sale of 

aviation fuel constituted revenue diversion because the tax receipts are collected by the City and 

paid into the City’s General Fund. In its Memorandum, the City showed that the tax was 

grandfathered under 49 U.S.C. §§ 47107(b) and 47133(a) because it was in effect prior to 

December 30, 1987. In its Reply, CAS offers no response other than to state that there is no 

record of tax collections prior to 1989 and to repeat its argument that the tax was not in effect 

prior to 2006 because that is when the City instituted a process to collect back taxes. Reply at 

25. Neither point has merit. 

First, as CAS’s Reply admits, its own accountant realized that the tax on aviation fuel had 

been in effect before 2006 and began to pay the tax voluntarily. Id. As the City explained in 

detail, the tax had been in effect since 1960 and had been collected regularly from the Airport 

and another aviation fuel seller in the City. Declaration of Lee Grafstrom in Support of Answer 

(“Grafstrom Dec. for Answer”) at ¶¶ 9-10. The tax was “in effect” prior to December 30, 1987, 

and it is therefore not subject to the revenue use rules. 

Second, CAS has not met its burden of proof because it has failed to present any evidence 

to support its contention that the use tax was not applied to aviation fuel sales prior to December 
9

30, 1987, even though the tax was in effect. Nonetheless, the City has continued to investigate 

its records and, based on the recollection of City employees and their review of City practices 

and policies, it appears that the City did collect taxes on the sale of aviation fuel at the Airport 

prior to December 30, 1987. Declaration of Lee Grafstrom in Support of Rebuttal at ¶ 5, 

attached as Exhibit 3 (“Grafstrom Dec. for Rebuttal”). However “in effect” is defined, the City’s 

tax on aviation fuel sales has been in effect since before December 30, 1987, and is therefore 

grandfathered pursuant to 49 U.S.C. § 47133(a).3

4. The City Has Not Economically Discriminated Against CAS 

CAS has focused its economic discrimination claim on the theory that the City unfairly 

competes with CAS’s commercial self-service fueling operation by setting prices that CAS 

believes are too low. Complaint at ¶¶ 33-37. Specifically, CAS argues that the City improperly 

“subsidizes” its commercial self-service fueling station by using state grant funds to pay for 

certain improvements, thus enabling it to adopt a cost structure that is lower than CAS’s cost 

structure. As the City demonstrated in its Answer and supporting Memorandum, this argument 

lacks merit because CAS dominates fuel sales at the Airport, belying any claim of competitive 

disadvantage, and because the City sets its fuel price at a reasonable level above its own costs. 

Memorandum at 32-33. In its Reply, CAS repeats its argument that the City unfairly competes 

because the City used state grant funds to help pay for drainage improvements that included 

replacing the pavement around the City’s self-service fueling station. Reply at 27. 

As the Director has recently confirmed, however, there is no Federal obligation for an 

airport sponsor’s commercial operation to match the pricing policies or cost structure of a 

 

3

 In any event, as explained in the City’s Answer and supporting Memorandum, the City’s annual subsidy payment 

to the Airport far exceeds the amount of tax collected on the sale of aviation fuel. Accordingly, those tax receipts 

are effectively returned to the Airport making any allegation of revenue diversion moot. Furthermore, the City notes 

that it has addressed and resolved with the ADO an issue not raised in the Complaint regarding increases in tax rates 

since 1987. 
10

competing private FBO. Director’s Determination, Truman Arnold Co. v. Chattanooga Metro. 

Airport Auth., FAA Docket No. 16-11-08, at 27 (Oct. 4, 2013). As long as the prices for services 

are reasonable and non-discriminatory, a service provider, including the airport sponsor, may set 

prices as it sees fit. Id. Moreover, the Director specifically rejected the notion that an airport 

sponsor could not use grant funds, or other public funds, to construct facilities that competed 

with private FBO facilities. Id. at 49. As the Director explained: 

The fact that [grants] and/or favorable financial terms are available to airport 

sponsors and not private operators does not constitute a violation of the sponsor’s 

Federal obligations. Private operators also seek the most advantageous funding 

sources and financial terms available to them. It is reasonable to expect the same 

from airport sponsors. 

Id. Accordingly, the City did not violate its federal obligations by using state grant funds to 

replace the pavement around the City’s self-fueling station. 

CAS attempts to bolster its economic discrimination argument by suggesting that the City 

imposed certain requirements on CAS when CAS initially built its self-serving station that the 

City did not impose on itself. Reply at 26-27. First, CAS does not indicate what specific 

conditions were allegedly imposed improperly. Accordingly, this argument fails for lack of 

specificity and proof. Second, the City required that CAS meet certain conditions in order to 

construct a new facility, whereas the City’s facility had been in existence for many years. Any 

difference in treatment is justified by those different circumstances. Finally, the City approved 

CAS’s fuel license in approximately 1994, Walkup Dec. 1 at ¶ 7, and CAS constructed its 

commercial self-service fueling station in 2006. Whatever conditions of that construction CAS 
11

takes issue with were imposed well over six years ago, and any complaints about those 

conditions are therefore barred by the statute of limitations.4 Infra at 12-13. 

CAS’s other complaints about the City’s price-setting practices are without merit. CAS 

continues to assert that the City prices its commercial self-service fuel below cost. Reply at 14-

15; Walkup Dec. 1 at ¶¶29-30. As the City explained, this is not true; the City uses a pricing 

formula that accounts for all costs and requires that the City sell fuel above its costs. 

Memorandum at 33. Indeed, CAS concedes this point, although it faults the City for not making 

a larger profit. Reply at 15. Paradoxically, CAS also tries to prove that the City loses money by 

comparing reported fuel revenue to certain costs. Walkup Dec. 1 at ¶ 30 & Ex. 29. But, as 

Airport staff have explained to CAS before, and as the name of the line item makes clear, the 

“Airport Ops Fund-5300, Operating Supplies/Aviation Fuel” line item includes a broad category 

of Airport expenses in addition to fuel-related costs. Thus, CAS relies on an “apples-to-oranges” 

comparison that is meaningless. 

Similarly, CAS points out that the City’s costs of providing the commercial self-service 

fueling station have decreased between 2009 and 2013, suggesting that the current formula 

somehow fails to capture all of the City’s costs. Walkup Dec. 1 at ¶ 29. That inference is 

unfounded. The City’s baseline costs have decreased for two reasons. First, the City has hired a 

new Airport Manager at a lower salary, so the allocation of those salary costs has decreased as 

well. Declaration of Lori Quan in Support of Rebuttal (“Quan Dec. for Rebuttal”) at ¶ 2, 

attached as Exhibit 4. Second, the formula has been refined to reflect lower than anticipated 

labor costs associated with the self-service fueling station. The 2009 formula was the first year 

the City used the pricing formula and was based on estimates of staff time to determine costs. 

 

4

 Furthermore, CAS agreed to those conditions, and cannot now attempt to get out of that agreement by seeking to 

strike certain conditions as discriminatory. Director’s Determination, 41 North 73 West, Inc, dba Avitat Westchester 

v. Westchester Cnty., N.Y., FAA Docket No. 16-07-13, at 26-27 (June 12, 2008). 
12

By 2012, the City had been able to track actual staff time spent per fuel load and adjusted the 

labor costs accordingly. Id. at ¶ 3. Accordingly, the City’s fuel pricing policy reflects the City’s 

actual costs to operate the self-service fueling station, and requires the City to sell AvGas above 

those costs. 

CAS’s true motives are revealed when it faults the City for abandoning a policy adopted 

for a period of time in 2007 to require that fuel be sold at 7% above costs. Walkup Dec. 1 at 

¶ 27. CAS approved of that approach because “CAS fared better through that time” while the 

City’s sales “plummeted.” Id. This reveals starkly that CAS is interested only in forcing the 

City to set its prices at a high enough level to allow CAS to sell self-service fuel with no genuine 

competition. No understanding of the City’s federal obligations requires it to set fuel prices in a 

way that harms consumers but benefits CAS. 

C. None of CAS’s Newly Asserted Claims Have Any Merit 

As explained above, CAS attempts to salvage its Complaint by adding new claims to this 

proceeding in its Reply. This tactic fails as a threshold matter for three basic reasons. First, 

none of these claims were set forth in the Complaint, which is required to contain a complete 

statement of CAS’s case pursuant to 16 C.F.R. § 16.23(b). Second, with the exception of the 

Assurance 21 claim, none of these new claims were raised in the letters that purport to comprise 

CAS’s pre-complaint resolution efforts pursuant to 16 C.F.R. § 16.21. 

Third, as detailed below, CAS’s claims under Assurances 22(a), 21, and 24, as well as the 

miscellaneous claims asserted by Mr. Walkup in his declarations, are barred by the six-year 

statute of limitations applicable to claims under the grant assurances. Director’s Determination, 

Henrihetta and Lindsay Tulloch v. City of Harlingen, Tex., FAA Docket No. 16-05-07, at 25 

(Aug. 21, 2006) (declining to consider claims that arose more than six years before the complaint 

was filed as barred by the statute of limitations); Final Agency Decision, Heide v. Carol Molnau, 
13

et al., FAA Docket No. 16-04-11, at 44 (July 7, 2006) (applying six-year statute of limitations 

pursuant to 28 U.S.C. § 2401(a) to alleged violations of grant assurances that occurred more than 

six years before the complaint was filed). 

In addition to these threshold defects, CAS fails to meet its burden of demonstrating that 

the City has violated any of its Federal obligations. Accordingly, all of CAS’s claims should be 

dismissed on the merits. 

1. Ordinance 3888 Is Not An Unreasonable Restriction on Access 

Apparently conceding that its ANCA claim is beyond the FAA’s Part 16 jurisdiction, 

CAS attempts to recast its challenge to Ordinance 3888 as a claim under Assurance 22(a) for 

imposing an unreasonable restriction on access. Reply at 20-23. This claim is unavailing. 

First, this claim is barred by the statute of limitations because it is asserted more than six 

years after the alleged access restriction was adopted. Supra at 12-13. CAS’s theory is that 

Ordinance 3888, and the City’s decision not to extend the runway, constitute an access 

restriction. Reply at 20-23. The predecessor to Ordinance 3888, Ordinance 2122, was adopted 

on February 8, 1990, was subsequently modified on November 18, 1998, and was amended to its 

current form on February 22, 2007. Quan Dec. for Answer at ¶ 7. The City electorate last voted 

on bonds for a runway extension on May 25, 2007. The only evidence CAS offers to show that 

it has been injured by the decision not to extend the runway was the departure of a potential subtenant and business partner in approximately 2000 following a vote on Airport bonds. Walkup 

Dec. 1 at ¶ 15. The Complaint in this matter was filed on or about July 3, 2013, over six years 

after Ordinance 3888 was adopted, over six years after the last vote on a runway bond issue, and 

over thirteen years after the 2000 bond vote. Accordingly, CAS’s challenge to Ordinance 3888 

is barred by the statute of limitations. 
14

Second, CAS lacks standing to challenge the City’s refusal to extend the runway because 

any injury CAS might suffer is highly speculative on several levels. Fundamentally, CAS asserts 

that the City’s decision not to extend the runway deprived CAS of future benefits in the form of 

expected future profits and business opportunities. See Walkup Dec. 1 at ¶ 3. Thus, the alleged 

injury is a future injury. “When a litigant alleges only future injury, as the basis for standing, he 

must demonstrate a realistic danger of sustaining direct injury.” Director’s Determination on 

Remand, Town of Fairview, Tex. v. City of McKinney, Tex., FAA Docket No. 16-99-04, at 17 

(July 26, 2000) aff’d Final Decision and Order (Jan. 23, 2001). The fact that CAS pays fees and 

rents to the airport does not, as CAS contends, establish standing per se for future injury. Reply 

at 23-24. At most, CAS’s payment of rents and fees confers standing to allege revenue 

diversion, as set forth in 16 C.F.R. § 16.23(a). But the mere payment of rents and charges does 

not confer standing to allege future injury under Assurance 22 based on anticipated economic 

benefits from future growth due to an extended runway. 

Here, it is pure speculation that the City Council would approve an extended runway 

even if Ordinance 3888 were invalid. It is also speculation that CAS would secure additional 

business and profits if the runway were extended. CAS fails to provide any evidence that it 

would in fact do so,5

 and any number of intervening events could cause CAS not to benefit from 

an extended runway. For example, anticipated traffic could not materialize, or a new FBO may 

open business at the Airport and attract business that CAS assumed it would secure. Moreover, 

CAS has no legal right to expect those future profits; the City has no obligation to ensure those 

profits; and CAS is not therefore injured by its failure to realize them. Accordingly, CAS has 

 

5

 CAS refers to a parts company that withdrew from sub-lease discussions with CAS about four months after the 

2000 bond proposal failed. Walkup Dec. 1 at ¶ 15. However, CAS provides no evidence that the reason for that 

change was the failure of the bond proposal. 
15

failed to meet its burden of showing standing due to its failure to realize anticipated future 

profits. 

Third, even if the FAA reaches the merits of CAS’s Assurance 22 claim, the claim fails 

for the simple reason that a decision regarding how or whether to build future facilities at an 

airport does not implicate Assurance 22(a). Ordinance 3888 is currently codified at Chandler 

Municipal Code § 8-10, and it provides as follows: 

8-10. - Extension of runway; physical limitations. 

To guarantee to the citizens of the City of Chandler the continued quiet enjoyment 

in and to the homes, schools, churches and work places, the Chandler Municipal 

Airport shall not be permitted to accommodate, in any fashion, aircraft which 

require for takeoff a runway longer than 5,700 feet. Extension of the runway shall 

require voter approved bonds, which specify that the bond monies are for the 

purpose of extending the runway. 

In addition, the Chandler Municipal Airport shall not be designed to 

accommodate aircraft that weigh in excess of 75,000 pounds maximum gross 

weight, and/or have a wingspan of 79 feet or more. 

Attached as Exhibit 20 to Quan Dec. for Answer. As the plain language of Ordinance 3888 

makes clear, the Ordinance addresses only the size, characteristics, and funding of potential 

future runway construction; it does not purport to, and is not applied to, restrict in any way 

aircraft from operating at CHD today or on the airfield in its ultimate condition. Quan Dec. for 

Answer at ¶ 9. 

CAS does not, and cannot, cite any authority for the proposition that Assurance 22(a)’s 

regulation of access restrictions applies to decisions about future construction. See generally 

FAA Airport Compliance Manual, Chaps. 13 & 14 (future runway extension projects or other 

infrastructure development projects are not on in the list of airport sponsor actions that are 

subject to grant obligations relating to airport access). The only authority CAS cites, Final 

Agency Decision and Order, In the Matter of the City of Santa Monica, Cal., FAA Docket No. 

16-02-08 (July 8, 2009), Reply at 3, addresses an attempt to restrict certain current operations, 
16

mostly jets, from an airport.6

 Ordinance 3888 does not do that, and therefore is not an access 

restriction. 

Moreover, CAS’s theory of Assurance 22(a) would transform every planning decision not 

to expand an airport beyond a given point into an impermissible access restriction because every 

decision to expand only to a certain point necessarily limits capacity beyond that point. That 

theory finds no support in the language of Assurance 22(a) itself, which addresses only 

restrictions on current access. Furthermore, it is contrary to FAA’s well-established 

understanding of an airport operator’s proprietary authority to decide for itself how to expand or 

enlarge airport facilities, including the power to change airport master plans and Airport Layout 

Plans to reflect changed conditions and planning goals. Supra at 4. 

2. The City’s Decision to Approve the Vestar Development in 2003 Did 

Not Violate Assurance 21 

As part of its attempt to recast its ANCA claim as a claim under the Grant Assurances, 

CAS asserts that the City’s approval of the Vestar commercial development in 2003 violated 

Assurance 21 by somehow allowing for the construction of an incompatible land use. Reply at 

22. This new claim fails for two reasons. 

First, this claim is barred by the statute of limitations. Supra at 12-13. The City 

approved the Vestar project in 2003. CAS was aware of that decision because Mr. Walkup 

participated in the zoning hearings. Walkup Dec. 1 at ¶ 20. The Complaint was filed on or about 

July 3, 2013, over ten years after the Vestar development was approved. CAS is therefore timebarred from bringing these claims now. 

 

6

 CAS attempts to fit this case into the Santa Monica paradigm by characterizing Ordinance 3888 as a “jet ban” 

because it was adopted originally in response to an initiative measure seeking to ban jets. Reply at 20-21. But as 

the City has made clear, Ordinance 3888 does not operate to ban or otherwise restrict access by jets or any other 

aircraft type. Quan Dec. for Answer at ¶ 9. Ordinance 3888 is a permissible declaration of the City’s current policy 

on the construction of additional runway facilities in lawful exercise of the City’s proprietary power regarding future 

airport development. Supra at 4. 
17

Second, even if the claim is not time-barred, it is without merit because Assurance 21 

does not prevent an airport sponsor from making land use decisions that may require changes in 

future development plans. Assurance 21 is, on its face, concerned with assuring that land uses 

near an airport are compatible with current airport operations in matters such as noise, wildlife 

hazards, and building height: 

Compatible Land Use. It will take appropriate action, to the extent reasonable, 

including the adoption of zoning laws, to restrict the use of land adjacent to or in 

the immediate vicinity of the airport to activities and purposes compatible with 

normal airport operations, including landing and takeoff of aircraft. 

Assurance 21 addresses the need to adopt land use laws that protect “normal airport operations, 

including landing and takeoff of aircraft.” Id. Assurance 21 does not impose an absolute 

prohibition on changing land use laws in ways that might require reconsideration of proposed 

potential future airport operations. 

The Vestar development is a commercial development that is compatible with normal 

Airport operations from a noise perspective. The Vestar development does not include wildlife 

hazards that could pose a danger to aircraft operations, nor does the height of the project exceed 

any obstruction standard. The development does not interfere with or limit current Airport 

operations. The Airport continues to control all of the land it needs for current operations and 

almost all of the land it needs for projected future expansion. In addition, the development 

facilitated the realignment of Germann Road to remove the road from current and projected 

future runway protection zones. Thus, the City has preserved compatible land uses around the 

airport while meeting other important City goals in full compliance with Assurance 21. 

CAS would fundamentally change the scope of Assurance 21 by requiring airport 

sponsors to preserve compatibility with potential future development and potential future 

operations, even when those potential plans are subject to change. Nothing in the language of 
18

Assurance 21 supports such a reading. Further, that theory is inconsistent with FAA’s general 

recognition that airport sponsors may revise airport master plans and airport layout plans, and 

FAA’s general recognition that airport sponsors are not obligated to build facilities shown on 

such plans. Supra, at 4. If airport sponsors are not required to build those facilities, and may 

decide not to build them at all, there is no basis to require airport sponsors to take actions to 

assure future land use compatibility with projects that may never be built. 

3. The City’s Decision Not to Extend the Runway Did Not Violate 

Assurance 24 

CAS next argues that the decision not to extend the runway violates Assurance 24 by 

depriving the City of potential future revenues. This claim fails for two reasons. First, for the 

reasons detailed above, the claim is time-barred because the decision not to extend the runway 

was made more than six years before the Complaint was filed. Supra at 12-13. Thus, any 

alleged violation is barred by the statute of limitations. 

Second, CAS’s claim rests on a fundamental misunderstanding of Assurance 24. CAS 

argues that Assurance 24 requires the City to extend the runway in order to increase operating 

income. Reply at 24. But Assurance 24 does not require revenue maximization. As the Director 

recently explained “Grant Assurant 24 does not require the sponsor to establish a fee and rental 

structure designed to maximize the Airport’s profit potential, as the Complainants seem to 

imply.” Director’s Determination, Northern Air Inc., et al. v. Cnty. of Kent, Mich., FAA Docket 

No. 16-11-10, at 53 (March 28, 2013). Assurance 24 simply requires airport sponsors to seek to 

establish a schedule of rents and charges at a level that allows the airport to be self-sustaining 

and that does not generate unnecessary surpluses. Id. If those basic standards are met, airport 

sponsors enjoy broad discretion to make business decisions about airport development priorities. 

Id. See also Director’s Determination, Thermco Aviation, Inc., et al. v. Cnty. of Los Angeles, et 
19

al., FAA Docket No. 16-06-07, at 19 (June 21, 2007), aff’d, Final Decision and Order (Dec. 17, 

2007) (noting airport sponsor’s proprietary discretion regarding financial business matters). The 

FAA recognizes, moreover, that local market conditions may not support rents and charges at a 

high enough level to cover airport expenses by themselves. Airport Compliance Manual at 

¶¶ 17.5 & 17.6. At CHD, the City has elected to keep rents and charges at a relatively modest 

level and to make contributions from City revenues to assure that the Airport is financially 

solvent. 

It is true that the City could reduce its subsidy payments by finding ways to increase 

Airport revenues. For example, the City could increase rents and charges at the Airport, 

including the amounts it collects from CAS and other Airport users. As CAS knows, however, 

such an approach is likely to be met with resistance from CAS and other Airport users. See 

Walkup Dec. 1 at ¶ 29. Likewise the City could invest in new facilities in the hope of attracting 

new business and increasing operating income through increased traffic. The City has opted, 

however, to continue its subsidy and not seek additional revenue through extending the runway 

in the hope of increasing other Airport revenues. Such business decisions about airport 

management are vested in the City’s discretion. Thermco Aviation, supra, at 19. CAS may not 

agree with that approach, but because the City’s decision has not resulted in unreasonable rents 

and charges, the City is in compliance with Assurance 24. 

4. The City Has Implemented an Adequate Pavement Maintenance 

Program in Compliance with Assurance 11 

CAS argues that the City is in violation of Assurance 11 because the City has had to 

repair the SanTan Apron, which is located adjacent to CAS’s self-service fueling station. Reply 

at 27. CAS’s theory appears to be that because there were problems with the SanTan Apron that 

required repair, the City’s pavement maintenance program is ineffective. This claim is patently 
20

without merit. Assurance 11 requires airport sponsors to inspect and monitor pavement 

condition on a regular basis, document those inspections, and be able to make repairs in a timely 

manner. See Airport Compliance Manual at ¶ 7.6; U.S. Dep’t of Transp., Federal Aviation 

Admin., AC No. 150/5380-6B, Guidelines and Procedures for Maintenance of Airport 

Pavements, Appendix A (Sept. 28, 2007). Assurance 11 does not require airport sponsors to 

assure that no pavement problems ever occur. 

In compliance with Assurance 11, the City follows a proactive approach to pavement 

maintenance that includes daily inspections and more detailed examinations of pavement 

condition on a regular basis. Quan Dec. for Rebuttal at ¶ 4, attached as Exhibit 4. Following 

that program, the City has implemented a number of pavement repair projects in recent years, in 

addition to the SanTan Apron project. Id. With respect to the SanTan Apron, the City has been 

aware that soil conditions under the SanTan Apron made it susceptible to cracking and that it 

would need to be rebuilt. That project has been on the City’s capital improvement plan since 

2011, although then-current conditions did not require immediate action. Id. at ¶ 5. In late 2012, 

problems with the Apron increased and reached a point where repairs were needed in the near 

future. The City promptly implemented a temporary repair using a hot mix, while also 

expediting the permanent rebuilding solution. To provide a permanent solution, the City secured 

a federal grant in 2013, put the project out to bid in September, 2013, awarded the bid in October 

2013, and began construction in November, 2013. As of December 13, 2013, construction is 

almost complete, and final completion is expected before the end of the year. Id. at ¶ 6. To the 

extent the there was ever an issue, the City has completely addressed it and is currently in 

compliance. See, Aero Ways, supra, at 13 (no compliance issue under Part 16 if the alleged 

violation has been cured). 
21

5. None of CAS’s Remaining Factual Assertions Demonstrate Any 

Violation of a Federal Obligation 

In addition to the issues under specific grant assurances discussed above, CAS has used 

its Reply, and in particular the two declarations of Mr. Walkup, to let loose a series of complaints 

and grievances about how the City has treated CAS for more than 20 years. On their face, those 

complaints primarily relate to petty matters about inter-personal relationships between an FBO 

and an airport sponsor that have accumulated over many years. Although the City generally 

disputes CAS’s characterization of events, a detailed response is not necessary to show that they 

do not rise to the level of a compliance issue. Indeed, CAS makes no systematic effort to 

connect these grievances to any specific grant obligation. CAS apparently presents these 

grievances as a kind of broadside against the City in an attempt to portray the City in a bad light, 

and as somehow singling CAS out for poor treatment. None of these grievances merit 

substantial attention. 

As a general matter, Part 16 practice discourages this kind of fact “dump” because it 

imposes an unfair burden on the agency, and the respondent, to sort out what the complainant is 

alleging. See Aero Ways, supra, at 15 (a complainant does not meet its burden of proof by 

simply submitting unorganized documents with its pleadings). Here, although CAS has 

attempted to support its grievances with documentary evidence, neither the Reply nor the 

affidavits provide exhibit numbers, or internal page references, making it very difficult to piece 

together what documents purport to support which grievances. Further, CAS has now had two 

opportunities to lay out its case in a coherent manner with supporting information as required by 

14 C.F.R. § 16.23, and it has failed both times. CAS’s inability to articulate and document its 

case underscores the fundamental lack of merit to the Complaint. 
22

More specifically, most of the grievances CAS raises related to events that occurred 

many years ago. For example, CAS complains of: 

• The way its fuel license was negotiated in the early 1990s. Walkup Dec. 1 at 

¶¶ 6-7. 

• Conditions placed upon CAS’s fuel license in the 1990s. Id.

• The way the City handled several Airport bond issues and planning processes in 

the 1990s and early 2000s. Id. at ¶¶ 11-15. 

• The way its self-fuel license was negotiated in 2005-2006. Id. at ¶ 16. 

• Conditions placed upon CAS’s self-service fueling license, including its term. Id.

• The manner in which the 2007 bond issue was handled. Id. at ¶ 20-23. 

Each of those events occurred more than six years before the Complaint was filed, and 

claim regarding those events are therefore barred by the statute of limitations. Similarly, most of 

those grievances relate to the manner in which various agreements were negotiated, or with 

specific terms of those agreements. But, CAS ultimately accepted those agreements and those 

terms, and cannot now challenge those terms as somehow discriminatory or improper. 

Director’s Determination, 41 North 73 West, Inc, dba Avitat Westchester v. Westchester Cnty., 

N.Y., FAA Docket No. 16-07-13, at 26-27 (June 12, 2008). 

Even with respect to current events, CAS’s grievances do not indicate a compliance 

issue. For example, CAS complains that the City has not executed an agreement for CAS to use 

and manage the transient parking area. Walkup Dec. 1 at ¶ 10. But CAS has in fact been using 

and managing the transient parking area as if the agreement were fully executed, and therefore 

has not been harmed. Quan Dec. for Rebuttal at ¶ 8. Similarly, CAS’s current fuel license is in 

effect until 2017, and the City is under no obligation to begin negotiating a renewal at this time. 

The City is currently reviewing in a comprehensive manner a wide range of Airport user issues, 

including the transient parking and fuel services, and plans to be in a position to address future 
23

fuel licenses and the transient parking issue based on the results of that analysis. Quan Dec. for 

Rebuttal at ¶ 8-9. 

The balance of Mr. Walkup’s declarations, and CAS’s other grievances, are little more 

than an attempt to rewrite the history of the Airport in a way that paints CAS as a victim, 

somehow, of City policies, or to portray the City as exercising poor business judgment in the 

management of the Airport. The basic thrust of these grievances is undercut by CAS’s 

concession that the City has, in fact, responded to input from CAS and other Airport businesses 

on issues such as rates and charges, Walkup Dec. 1 at ¶ 29, and moving the Airport from the 

City’s Public Works Department to the Economic Development Department. Id. at ¶ 33. 

Further, CAS concedes that its own business has expanded. Id. at ¶ 39. CAS’s grievances boil 

down to frustration that the City has not followed CAS’s other suggestions on how to run the 

Airport, including extending the runway or adopting the kind of business plan for the Airport that 

CAS advocated. FAA generally gives airport sponsors wide latitude to manage their airports, to 

plan for future development, and to establish reasonable rates and charges. Supra at 4, 10, 18-

19. Nothing in CAS’s Complaint or Reply suggests that the City has exceeded its authority or 

violated any federal obligation in exercising that judgment. Again, CAS may not agree with the 

City’s management philosophy and business plan, but neither CAS nor the FAA can compel the 

City to adopt the business plan CAS prefers. 

 


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