UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION WASHINGTON, D.C.

Sound Aircraft Services, Inc. Complainant,
v. Town of East Hampton, NY Respondent. FAA Docket No. 16-14-07

RESPONDENT TOWN OF EAST HAMPTON, NEW YORK’S BRIEF IN SUPPORT OF ITS ANSWER TO THE COMPLAINT Designation of persons to receive service fo r the Town of East Hampton, New York:
Elizabeth Vail Town Attorney Town of East Hampton 159 Pantigo Road East Hampton, NY 11937 EVail@EHamptonNY.Gov W. Eric Pilsk Catherine van Heuven Kaplan Kirsch & Rockwell LLP 1001 Connecticut Ave., NW, Suite 800 Washington, D.C. 20036 epilsk@kaplankirsch.com cvanheuven@kaplankirsch.com Telephone: (202) 955-5600 Facsimile: (202) 955-56162 I. INTRODUCTION East Hampton Airport (“Airpor t” or “HTO”), which is owne d and operated by the Town of East Hampton, New York (“Town”), needs to implement a large number of capital and other major rehabilitation projects in order to assure safety and an efficient airfield. The Town estimates that it will cost over $10 million to implement those projects. In June 2014, after careful analysis, the Town concluded that exis ting Airport revenues, primarily lease payments, landing fees, and fuel flowage fees, would be insu fficient to pay for those projects and provide an adequate reserve for contingencies. In orde r to assure adequate revenues, the Town Board voted to increase Airport landi ng fees by 10% and to increase its fuel flowage fee from $0.15 to $0.30. Even those measures will not be sufficient to pay for all of the pr ojects, however, and the Town is actively pursuing additional revenue enhancement measures. The landing fee went into effect in June and the new fuel flowage fee went into effect on July 1, 2014. The new fees have not had a negative effect on operati ons at the Airport and in the p eak summer months of July and August, overall traffic volume and fuel sales volume increased compar ed to prior years. The controlling Federal Aviation Administration (“FAA”) compliance rule states explicitly that “the FAA will not ordinarily in vestigate the reasonableness of a general aviation airport’s fees absent evidence of a progressive accumulation of surplus aeronautical revenues.” Despite this rule, Sound Aircraft Services, In c. (“Sound Aircraft”), the largest fixed-base operator (“FBO”) at the Airport, asserts that th e newly adopted landing and fuel flowage fees violate Sponsor Assurances 24 and 25 without pro ffering any evidence either that the Town has progressively accumulated surplus revenues at th e Airport or that it has spent any of those revenues for a non-airport purpose, an all but impossible allegation in any event less than six months after the new fees were implemented. More fundamentally, the Complaint ignores the fact that the Airport faces subs tantial capital needs and other fina ncial obligations that cannot be3 met with current revenue streams. The new fees are necessary to keep the Airport self-sustaining given the Airport’s capital needs. Sound Aircraft attempts to get around that fundamental flaw by asserting that the increased fees will in the future lead to unreasonable surpluses that Sound Aircraft speculates will be spent for non-airport purposes. But Sound Aircraft does not present a shred of evidence to support those suppositions. Because assertions about possible future actions do not articulate a present violation of Sponsor Assurance 24 or 25, and because S ound Aircraft cannot meet its burden of proof based on speculation, its claims must be dismissed. Sound Aircraft attempts to conjure a present violation by arguing that the Town failed to adopt the new fees in accordance with the proce dures set forth in the FAA’s Rates and Charges Policy. But, the Rates and Charges Policy does not set forth any manda tory procedures for general aviation airports. Rath er, the Policy recognizes that ge neral aviation airports may set fees by ordinance, as explicitly permitted by the Town’s lease with Sound Aircraft, and that the Policy was not intended to change the way genera l aviation airports set fees. The “procedures” to which Sound Aircraft refers are actually sugges tions for commercial service airports to follow in setting rates and charges; th ey are not mandatory procedures that general aviation airports must follow when amending long-standing landing and fuel flowage fees. Fundamentally, Sound Aircraft’s Complain t fails because it does not present any evidence or argument to contradict the fact that the Town needed to raise its fees because: (1) the Airport did not generate suffi cient revenue under the old fees to meet its foreseeable capital and other needs; and (2) the new fees are necess ary to pay for projects th e Town needs in order to maintain a safe and efficient Airport. The new fees are necessary to make the Airport selfsustaining, will not lead to the ac cumulation of an “inappropriate surplus,” and will be dedicated4 to meeting Airport financial obligations. The new fees are, therefore, consistent with the Town’s obligations under Assurances 24 and 25 and the Comp laint fails to state a claim of any violation of the Town’s fede ral obligations. II. STATEMENT OF FACTS A. Overview of Airport East Hampton Airport is a public-use Genera l Aviation airport located in the Town of East Hampton in Suffolk County, New York. Th e Town owns the Airport and maintains and operates it for the benefit of the Town and its re sidents and visitors. There are currently two FBOs at the Airport: (1) Sound Aircraft, and (2) Myers Aero Fuels (“Myers”). Sound Aircraft is the largest FBO at the Airport. Both FBOs o ffer general aviation services including aircraft fueling and tie-down locations for based and tran sient aircraft. Declaration of J. Charlton (“Charlton Dec.”) at ¶¶ 5, 8. The Airport serves a wide-variety of helic opters and fixed-wing ai rcraft. There are approximately 161 based aircraft at HTO. While th ere is no service from commercial airlines at the Airport, there are flight services that pr ovide non-scheduled, on-dem and flight services. Charlton Dec. at ¶ 5. The Airport has two distinct seasonal dema nd characteristics. During the summer season (roughly Memorial Day to Labor Day), itinerant airc raft are the largest user group. During this season, HTO serves as a destination airport for su mmer residents and visitors to the Hamptons, including individuals that use pr ivately-owned or corporate jets and helicopters. Approximately 70 percent of the Airport’s annual operations occur during the summer season. During the peak season, the Airport can experience over 350 operati ons in a single day. During the off-season, local operations make up a much larger component of overall operations and the Airport experiences approximately 15 operations per day. Charlton Dec. at ¶ 6.5 B. Airport Finances and Fees The Town’s stated goal is “to operate and maintain the airport as economically and efficiently as possible with the costs of doing so being fairly allocated among those users who benefit from its utility.” Char lton Dec. Exhibit 6 at II-74 (2007 Master Plan Update). Revenue to support the Airport is derive d from a variety of s ources, including rental s and leases, landing fees, advertising income, vending machines, intere st on investments, and fuel flowage fees. E.g ., Declaration of C. Kagel (“Kagel Dec.”) Exhi bit 3 (Approved 2015 Airpor t Budget at p. 236). The Town also maintains an Airport Fund with reserves for use towardAirport expenses. A summary of the past several years’ of Airport revenue and expenses as well as the year end totals for the Airport Fund is provi ded in the table below. Year Airport Revenues Airport Expenses Airport Fund (Year End Totals) 2011 $4,129,131 $3,762,341 $2,100,297 2012 $4,253,788 $4,886,784 $1,467,293 2013 $5,035,215 $5,012,152 $1,490,354 2014* (YTD) $4,550,714 $4,554,705 - 2015 ** (Adopted) $4,886,374 $4,886,374 - See generally, Kagel Dec. Exhibit 3 (Approved 2014 a nd 2015 Airport Budgets); Kagel Dec
. Exhibit 2 (Table of year-e nd Airport Fund totals). The Town sets a budget each November for the forthcoming year. The Airport is accounted for in a special reve nue fund. Airport f unds are not commingledwith the Town’s general operations fund. The annua l budget for the Airport reflects the Town’s best estimate of expenses and revenues for the coming year. As the year unfolds, amendments to the budget are often necessary. Generally, the Town does not amend its budget every time actual revenues differ from the approved budget. However, the Town is required to amend the Approved Budget to remedy any negative variance ( i.e ., when expenses exceed the budgeted amount) in the6 approved budget as soon as possible. For exampl e, the Town may move funds from one Airport line item to another to account for an unexpectedincrease in expenses in a particular area ( e.g ., snow removal). Because the Town purchases all aviation fuel for the Air port and then sells the fuel to the FBOs, the Town often needs to pa ss a budget amendment to increase both the revenue and expense line for aviation fuel when the need for fuel exceeds the initial budget projections. E.g., Kagel Dec. Exhibit 1 (Resolution 2014-1239, airport budget modification). Finally, the Town can increase the budget for a particular expe nse by transferring reserves from the Airport Fund. All budget amendments are set forth in a resolution and approved by the Town Council at a public meeting. See generally, Kagel Dec. at ¶¶ 3-6. Two chief sources of revenue at the Airport are fuel flowage fees and landing fees. The Town assesses a fuel flowage fee on the fuel it se lls to the FBOs. Both FBO leases include the obligation to pay the fuel flowage fee. Charlton Dec. ¶ 11. The FBO leas es state clearly that “from time to time, the Town Board by resoluti on may amend the fuel flow fee ...” Charlton Dec. Exhibit 3 at 6 (Sound Aircra ft Lease); Charlton Dec. Exhibit 4 at 3 (Myers Lease, Third Amendment). This provision has existed in Sound Aircraft’s lease since it commenced operations in 1995. Until June 30, 2014, however, the fuel flowage fee at the Airport had remained unchanged at 15 cents per gallon for more than two decades. Declaration of Arthur Malman (“Malman Dec.”) at ¶¶ 14, 23. As ear ly as 2002, the Town formally recognized the need to increase this fee as one measure of a comprehensive plan to improve the Airport’s financial performance. Malman Dec. ¶ 31(b); Malman Dec. Exhibit 17 (2002 Airport Economic Study). And since 2002, the retail price of fuel has grown from about $2.50 per gallon to over $7.00 per gallon. Malman Dec. Exhibit 16 (June 2, 2014, BFAC Finance Subcommittee Minutes at p. 3).7 Landing fees are another signifi cant source of revenue at the Airport. The amount of the landing fee varies for differe nt classes of aircraft ( e.g ., single-engine, twin-engine, etc.). The Town has historically raised landing fees at the Airport at regular interval s. In recent history, landing fees were increased in 2006, then ag ain in 2008, 2013 and most recently in 2014. For example, the landing fee for a single-engine pr op aircraft was raised to $5 in 2006, $7 in 2008, $10 in 2013, and $11 in 2014. Currently, the highe st landing fee is assessed for multi-engine turbine aircraft weighing over 50,000 pounds. That fee was raised to $100 in 2006, $400 in 2008, $600 in 2013 and $660 in 2014. See generally , Malman Dec. ¶¶ 19(b), 38; Malman Dec. Exhibit 25 (2006, 2008 and 2013 Landing Fee data); Charlton Dec. Exhibit 2 (2014 landing fee data). This highest fee is onl y assessed on about 2 percent of the operations at the Airport. C. Fuel Farm and Fuel Sales at the Airport There is one fuel farm at the Airport th at has two below-ground tanks: one 8,000 gallon Avgas tank and one 12,000 gallon Jet-A fuel tank. The current fuel farm is antiquated and undersized. There is also a critical need to update the detection systems and necessary containment areas to avoid futureenvironmental issues. Charlton Dec. at ¶¶ 9, 17. The Town has already secured environmental approval for upgr ades to the existing fu el farm and also for construction of a second fuel farm near Taxiway G, to provide a dditional fuel storage. Charlton Dec. Exhibit 7 at 2 (2010 Final Generic Envir onmental Impact Statement (“GEIS”) for HTO). The Town purchases all aviation fuel delivered to the Airport from AvFuel Corporation. The Town then sells the fuel to the two FBOs, which, in turn, sell the fuel to their customers. The Town coordinates regularly with the FBOs to en sure that there is sufficient fuel available at the Airport to meet demand. In the summer, during peak season, this may require up to three deliveries per day on a busy day. The Town sells fu el to the two FBOs at the actual price it paid8 to AvFuel plus the Town’s fuel flowage fee. In turn, the FBOs sell fuel to their customers at their own price. 1 The Town has no control over the FBO’s price, nor does it receive any percentage of any profits fr om the FBO’s fuel sales. See generally , Charlton Dec. at ¶¶ 9-12; Malman Dec. Exhibit 22 at 9-16 (Transcript of June 17, 2014, Town Work Session) (Testimony of prior Airport Di rector Brundige). Sound Aircraft’s fuel sales account for approxi mately 80% of the total fuel sales at the Airport; Myers sells the remaini ng 20%. Malman Dec. Exhibit 22 at 16 (Transcript of June 17, 2014, Town Work Session). In 2013, Sound Aircraft sold a total of 655,744 gallons of Jet-A fuel and 29,081 gallons of 100LL fuel and Myers sold 68,301 gallons of Jet-A fuel and 16,149.5 gallons of 100LL. Collectively, this represents almost 770,000 ga llons of fuel sold in 2013. Charlton Dec. Exhibit 5 (Fuel Data). D. Comprehensive Airport Management Plan The Town is in the midst of a comprehensive effort to address safe ty, noise, and airport operations. In 2007, the Town completed a Master Plan Update and bega n consideration of a range of costly airport improvements. Charlt on Dec. Exhibit 6 at III-201 (2007 Master Plan Update). In 2010, the Town completed an e nvironmental review on 14 specific projects, including runway rehabilitation, fuel farm upgrad es and installation of a seasonal air traffic control tower. Charlton Dec. Exhibit 7 at 2 (2010 GEIS). The FAA issued conditional approval for the revised Airport Layout Plan (“ALP”) inSeptember 2011. Charlton Dec. Exhibit 8 (2011 ALP Conditional Approval Letter) . Immediately thereafter, the Town commissioned its consultants to develop an “effective, comprehens ive, and aggressive” Airport Management Plan for the Airport. Charlton Dec. Exhibit 9 at 4 (December 2011 PowerPoint presentation). Among

1 For example, on June 17, 2014, Sound Aviation’s list price was $6.75 and Myers’ list price was $6.16 – a 59 cent difference. Malman Dec. Exhibit 22 at 16 (Transcript of June 17, 2014, Town Work Session) (Testimony of Councilwoman Bu rke-Gonzalez).9 the key underlying assumptions was that the Air port must be financially self-sustainable. Charlton Dec. Exhibit 9 at 5 (December 2011 PowerPoint presentation). The consultants identified 44 possible measures, organized across six categories ( i.e ., rules and regulations, capital improvements, voluntary measures, etc.). Charlton Dec. Exhibi t 9 at 10-18 (December 2011 PowerPoint presentation). In 2012 and 2013, the Town completed several critical items on th is list, including installing a temporary seasonal Ai r Traffic Control Tower and s ecuring federal approval for a permanent seasonal Air Traffic Control Tower, preparing an updated Airport Security Plan, settling environmental claims over the fuel farm, and installing costly new data collection technology. Charlton Dec. ¶ 15. In November 2013, the Town approved its 2014 budget. Malman Dec. ¶ 8; Malman Dec. Exhibit 4 (Resolution 2013-1216, adopting 2014 Budge t). One month later the Town approved the 2014-2018 Airport Capital Improvement Plan (“AC IP”), which identifies capital projects that had secured FAA conditional approval and that had also completed environmental review pursuant to the New York State Environmental Qu ality Review Act (“SEQRA”). Malman Dec. ¶ 9; Malman Dec. Exhibit 6 (Resolution 2013-1278, approving ACIP). The total projected cost of the projects included in the 2014-2018 ACIP is approximately $5.26 million. Id
. The Town also identified an additional $5.19 million in capital costs for the Airport. Those projects had been initially included in the proposed ACIP butwere subsequently withdrawn because they were not yet contained in the Airport Master Plan and had not yet undergone environmental review under SEQRA. Those projects are listed separately on an Airport Maintenance Plan (“AMP”) that totals almost $5.2 million. See Malman Dec. ¶ 10; Malman Dec. Exhibit 7 (December 3, 2013, Town Work Session Minutes).10 The Town has already initiated several of the capital projects id entified on the 2014-2018 ACIP. For example, the Town has hired c onsultants to address airspace obstructions surrounding the airport and recently approved a $260,000 bond issue to fund the installation of a new Automated Weather Observing System (“AWOS ”). Charlton Dec. at¶ 16; Malman Dec. Exhibit 11 (Town Resolutions re: Obstruction Anal yses). The Town has also commenced work on much-needed projects not identified in the ACIP. For example, the Town has already appropriated over $100,000 on a multi-phase noise an alysis. The Town also issued bonds for $710,000 to fund the repair of lighting for Taxiway “A” and a rehabilitation of Runway 4-22 as a taxiway. That work is already complete. In ad dition, the Town has also hired an engineer to evaluate the condition of existing infrastructure, and has hired consultants to examine airspace obstructions. Malman Dec. Exhi bit 8 (Town Resolutions re: noise analysis), Exhibit 9 (Town Resolutions re: Taxiway “A” lighting), and E xhibit 10 (Town Resolutions re: Runway 4-22 repair). Knowing that the Ai rport was facing a long list of costly maintenance and capital expenses, and other contingencies, the Town co mmenced a careful review of Airport finances. E. The Airport Finance Subcommittee The Town has had a Budget Advisory Committee since 2008. In 2010, the Town renamed the committee the Budget and Financial Advisory Committee (“BFAC”), in recognition of “the expanded scope of revi ew and recommendations it desi res the Committee to undertake.” Malman Dec. Exhibit 3 (Resolution 2014-147). At the February 4, 2014, Work Session, the Town directed the BFAC to conduc t a financial analysis of the Ai rport. Malman Dec. Exhibit 1 (February 4, 2014 Town Meeting Minutes) an d Exhibit 2 (February 4, 2014, statement of Councilwoman Burke-Gonzalez). Two days late r, on February 6, the Town passed Resolution 2014-147 (attached as Malman Dec. Exhibit 3) di recting the BFAC to “undertak[e] a financial analysis of the East Hampton Town Airport in cluding airport income a nd expenses as well asnew rev e and poli c
commun BFAC A has bee n Dec. Ex h

T Malman underlyi n increase d Subcom m wide ra n controls, Subcom m preventi v Meeting enhance March 8 , fuel flo w that fee. Subcom m e nue stream s
c y decisions i ty member s A irport Fina n
n meeting ap h ibit 16 (Su b I n 1. T he primary at the fir s
n g financial dand expe n
m ittee Meet i
n ge of issu e

and airport
m ittee Meet i
v e maintena n

Minutes at Airport rev e

, 2014, the S
w age fee an d

Malman D
m ittee also r s , which ca n by the Boar
s to assist th e
n ce Subcom m p proximatel y b committee M
n itial Anal ys work of t
s t Subcom m

data and w
n ses better i ng Minutes
e s related t o tfinances g i ng Minutes
n ce” at the A 1)) and the
e nues almo s S ubcommitt e dthe fact th a

ec. Exhibit
r eviewed fi n n serve as a
r d.” The To
e BFAC in t
m ittee (“Su b y once a mo n M eeting Mi n s es and Pre l t he Subco m
m ittee meeti
w ays in whi c

controlled. ” at 1). Ac c
o Airport fi n g enerally. E

at 1). Rec o A irport (Ma l

need to pay
s t from its f i
e e discussed
a t the FBO l e

16 (March 8
n ancial data f

11 baseline of wn identifi e t his process. b committee” )

n th since it
n utes). l iminar y D e
m mittee, as

ng on Feb r
c h revenues

” Malman
c ordingly, t h
n ances, inc l E
. g ., Malm a
o gnizing the l man Dec. E

for that w o i rst meeting
.

the approp r
e ases inclu d 8 , 2014, Su b f

or the last f agreed upo n
e d certain B F

Collective l ). Malman D was create d

e bt Capacit y explained b
ruary 14, 2

from exist i Dec. Exhi b h e Subcom m l uding FBO
a n Dec. Ex h

“dramatic u E xhibit 16 ( M
o rk, the Sub c

. For examp
r iateness of t d e language p b committee f ive years ( 2 n data for f u F AC memb e l y, this grou p D ec. ¶ 5. T h din Februar y

y Anal y sis b y BFAC C 2 014, woul d i ng assets c a b it 16 (Fe b
m ittee set ou t

s, airport m h ibit 16 (Fe b
u nderspendi n M arch 8, 201

c ommittee d p le, at its s e t he current 1 p ermitting th Meeting M i 2 009 – 201 3 u rther discu s
e rs and addi t p is known a h e Subcom m y 2014. M a

C hairman A dbe “revi e
a n be reaso n b ruary 14, 2 tto underst a
m aintenance ,

b ruary 14, 2
n g on annu a 4, Subcom m d iscussed w a
e cond meeti n 1 5 cent per g h e Board to i nutes at 1). 3 ), including s sions t ional
a s the
m ittee
a lman

A rthur
e wing
n ably 2 014,
a nd a

, cost 2 014,
a l and
m ittee
a ys to
n g on g allon

raise The
non-12 bondable expenses such as Outside Professionals and Subcontracts ( i.e ., non-recurrin g planning and development, capital, and litigation costs). Malman Dec. ¶¶ 6-7. The Subcommittee meetings were open to the public. Cindy Herbst (formerly Cindy Tuma), the owner of Sound Aircraft attend ed many of the Subcommittee meetings and participated in informal discussions with Subc ommittee members about Ai rport financial issues, 2 so that she was generally aware of the issues being discussed before the general public. Malman Dec. ¶ 5(a). During March 2014, the Subcommittee continued to investigate Airport finances and future capital needs in order to better understa nd future revenue needs. Subcommittee members prepared a preliminary analysis showing the abili ty of the Airport to carry additional debt for capital improvements. At its March 29 mee ting, which was attended by Ms. Herbst, the Subcommittee agreed to formalize that analysis, taking into account poten tial changes in annual operations, to provide a baseline on expected revenue levels under different operational scenarios so the Town could make informed decisions on how operational decisions would affect Airport finances. To complete that analysis, the Subcommittee undertook ex tensive fact-finding, including outreach to Town officials, Airport personnel, and both FBOs. Malman Dec. Exhibit 13 (May 5, 2014, letter from Subcommittee tr ansmitting analysis to Town Board). That analysis was set forth in the Subcom mittee’s Progress Report No. 1, a Preliminary Debt Capacity Analysis, and an accompanying Re solution. In the Preliminary Debt Capacity Analysis, the Subcommittee outlined its examination of various operating scenarios (including

2 Those informal discussions, both in person and by email, addressed a number of issues, including FBO operations and fuel flowage fees. See generally , Malman Dec. ¶¶ 25-29; Malman Dec. Exhibit 16 (BFAC Subcommittee Minutes) (documenting Ms. Herbst’s attendance at meetings); Complaint, Certification of C. Herbst at ¶¶ 4-19 (documenting communications with Town and Subcommittee members). For example, Subcommittee members participated in an extended telephone conference on April 11, 2014, with AvFuel Corporation (the fuel supplier at the Airport), and Cindy Herbst to address fueling operations and the fu el farm at the Airport. During the call, the group discussed many options, including increasing the fuel flowage fee. Malman Dec. ¶ 29.13 the status quo and various leve ls of reduced revenue due to varying levels of helicopter operations) to examine how much debt the Town could support from Airport revenues. The assumptions were deliberately “conservative” because the Subcommittee did not want to overstate profits or understate expenditures, and in turn, overstate likely debt capacity. 3 E.g ., Malman Dec. ¶¶ 13-15. Based on the analysis, the Subcommittee concluded that under existing revenue streams the Town could support debt levels between $5.1 to $8.5 million, depending on the operating scenario, but that the Airport Fund balance at the end of 2018 would be less than $1.5 million. 4 See generally, Malman Dec. at ¶¶ 12-19; Malm an Dec. Exhibit 12 (April 26, 2014, Preliminary Debt Capacity Analysis); Malman Dec. Exhibit 14 (Subcommittee Presentation re: April 26, 2014, Preliminary Debt Capacity Analysis); Malman Dec. Exhibit 15 (Transcript of May 20, 2014, Town Work Session) (Subcommittee’s public presentation of April 26, 2014, Preliminary Debt Capacity Analysis). The Subcommittee compared that range of re venues and debt coverage to the approved 2014 Airport Budget, as well as the ACIP and AMP, which, coll ectively, presented a total of over $10 million in needed expenditures at the Ai rport. In addition, the Subcommittee also considered the need to be able to fund a number of non-bondable expenses, including

3 Sound Aircraft alleges that the “Sub-Committee admitted that increasing the Landing Fees by 5% annually would be aggressive.” Complaint ¶ 11. That allegati on misconstrues the Subcommittee’s statement in order to create the false impression that the 10% increase finally adopted is somehow unreasonable. In presenting its analysis of current revenue streams, the Subcommittee assumed that most fees would not increase at all, because they had not increased for many years, but that landing fees would increase at 5% because they had increased at regular intervals over the prior 10 years. When discussi ng that assumption, the Sub-Co mmittee explained that “And landing fees, this is the only mildly aggressive assumpti on. We assumed that landing fees would be increased by 5% a year going forward.” Malman Dec. Exhibit 15 at 12 (Transcript of May 20, 2014, Town Meeting) (testimony of P. Wadsworth). This characterization was in the context of the generally conservative assumptions, for example, that expenses would grow by a non-aggressive 3% a year. Id . at 19 (testimony of P. Wadsworth). See also Malman Dec. ¶ 13 (it is “common practice to base a debt capacity analysis on conser vative assumptions”). Plainly, nothing in that statement implies that any increase in the landing fees would be unreasonably “aggressive.” 4 Although the Town is currently examining potential us e restrictions at the Airport, it is important to recognize that even the “status quo” scenario studied by the Subcommittee ( i.e ., the scenario examining financial impacts with no use restrictions) predicted minimal reserves remaining in the Airport Fund in 2018. Thus, the need for additional revenue exists regardless of what action the Town takes with regard to use restrictions.14 professional fees and litigation expenses while maintaining an adequate reserve. The Subcommittee summarized its conclusions in the Progress Report as follows: The SubCommittee has questions as to the adequacy of the fund balances (reserves) to pay for non-bondable expe nditures such as litigation and consultant’s fees in the event the To wn Board adopts an aggressive noise abatement policy.

... Accordingly, the SubCommittee has be gun to explore revenue enhancement opportunities, such as paid parking, in creased fuel flowage fees and increase lease revenues. Revenue enhancemen ts, which would help (i) increase available debt service coverage to support increased capital improvement programs and/or (ii) build reserves to guard against continge ncies and/or (iii) reduce borrowing, will be the primary focus of the Subcommittee’s continuing work. Malman Dec. Exhibit 12 at 1, 3 (April 26, 2014, Preliminary Debt Capacity Analysis). On May 20, the Subcommittee presented its Pr ogress Report No. 1 and Preliminary Debt Capacity Analysis to the Town Board at a Town Board Work Session. At the meeting, the Subcommittee made clear that the Preliminary De bt Capacity Analysis was simply a starting point for discussion and that it did notsatisfactorily address known contingencies and nonbondable expenditures, such as litig ation and consultant fees. In response to a question by the Supervisor, the Subcommittee outlined the various revenue enhancement opportunities under review, including an increase in the fu el flowage fee to up to 30 cents. See, e.g., Malman Dec. Exhibit 15 (Transcript of May 20, 2014, Town Meeting) at 21 (P. Wadsworth testimony regarding fuel flowage fee increase) and id . at 23 (P. Wadsworth te stimony regarding landing fees). BFAC Chairman Malman stressed that the Subcommittee was not working “in a glass cage here trying to come up with numbers.” Malman Dec. Exhibi t 15 at 25 (Transcript of May 20, 2014, Town Meeting). To the contrary, as Malman testified, the Subcommittee had consulted extensively with other airports, various fuel suppliers , and also directly with SoundAircraft, Dec. Ex h

B to meet increase s Malman supplem e to 30 ce n runway r 17, 2014 Analysis I n that is th FBOs r e Subcom m share in included farm to i transferr i

5 S o after 2022 that the S testimony Sponsor A the Airpor t of A. Mal m Myers Fue l h ibit 15 at 2 5 I n 2. B ased on the expected n
s that coul d

Dec. ¶ 19
. e ntal debt c a
n ts a gallo n
r epairs, and , Subcomm i )
. n considerin g h e largest re v
e alized sub s
m ittee, over

the fuel pr o considerati o i ncrease re v i ng all contr

o und Aircraft when the 20 y u bcommittee makes clear, h A ssurances and

t self-sustaini n m an). l , and Long 5 -26 (Trans c
n itial Reven u

conclusion
n eeds, the S dincrease r

. For exa m
apacity anal y
n as well as

terminal ro o i ttee Minute s

g how to in c
v enue item i
s tantial pro f

the course
o fits at the A
o n of differ e
v enues to th e
r ol of fuel d e

paraphrases t e y ear term of c u d id not feel c h owever, that t

the purpose o n g. Malman D e Island Airc r
c ript of May
u e Enhanc e that the ex i S ubcommitt e
r evenues al m
mple, on M y sis that ex a instituting p
o f upgrades.
s ); Malman

c rease reven u i n the Airp o f its from f u of several m A irport (est i
e nt ways to
e Town su c
e livery, testi

e stimony by S u u rrent federal g c onstrained b y the Subcommi t f the fee incre e c. Exhibi t 15

15 r aft. E.g., M 20, 2014, T o e ment Reco m

sting sourc e
e e turned i
m ost imme d ay 17, 201 4
a mined the e p aid parkin g

Malman D Dec. Exhi bi

u es, the Su b
o rt’s budget
u el sales. M
m eetings, di s i mated to b e structure th
c h as hiring

ng and reco r

u bcommittee C g rants will ex p y the Sponsor ttee understoo d a ses is to ens u at 24 (Transcr M alman De c

own Meeti n
m mendatio
e s of Airpor t i ts attentio n d iately with 4 , the Sub c
e ffects of in c g to cover c D ec. ¶ 32; M

i t 18 (May 1

b committee f

and the Su b M alman D e scussed wa y
e $1.4 milli e managem e an FBO ju s
r d -keeping t
C hair Arthur M p ire, apparentl y

Assurances. d that the To w u re that the To w r ipt of May 20 , c . at ¶¶ 25-3
n g). 5
o ns

trevenue w
n to exami n

no initial
c ommittee d
c reasing the
c osts for fu e M alman Dec.

1 7, 2014, dr a

f

ocused on f b committee
e c. ¶ 21. A y s in which i on). Part o
e nt and ope r
s t for fuel m t o the FBO s
M alman about y in order to c

Complaint ¶ w n currently m w n can meet i

, 2014, Town M 0 & 39; M a

ere not suf fi
n ing specifi c

expenses. d iscussed a fuel flowa g
e l farm upg r

Exhibit 16
a ft Debt Cap

f uel sales be c believed th a A ccordingl y

the Town m
o f that disc u
r ation of th e
m anagemen t
s . The disc u

the Town’s o c reate the imp r

12. Mr. Ma l must comply w i

s obligation t o M eeting) (Tes t a lman

fi cient
c fee

E.g ., draft g e fee
r ades, (May p acity

c ause
a t the y , the
m ight
u ssion
e fuel t , and
u ssion

o ptions r ession l man’s ith the o make t imony16 also included consideration of an explicit profit-sharing plan, such as allocating gross fuel profits evenly between the Airport and FBOs. As part of its research for that concept, Subcommittee members sought to obtain information from the FBOs about profit margins on fuel sales. However, the FBOs are not required to provide proprietary financial information to the Town, and in fact, were reticent to provide such info rmation. Accordingly, the profit-sharing concept did not seem to be a fruitful approach. See, generally, Malman Dec. ¶¶ 21, 30; Malman Dec. Exhibit 16 (June 2, 2014, Subcommittee Minutes); Ma lman Dec. Exhibit 22 at 25-30 (Transcript of June 17, 2014 Town Work Session) (testim ony of P. Wadsworth regarding Subcommittee analysis of fuel flowage fees). As an alternative to profit sharing, the Subcommittee discussed the option of simply increasing the fuel flowage f ee. “If the ... formula were really too high, the FBO would volunteer proprietary data . If the financial data were no t forthcoming then the town could assume its then [sic] fixed higher fuel flowage fee was at or below the right price point.” Malman Dec. Exhibit 16 (June 2, 2014, Subcom mittee Minutes at 2). The Subcommittee researched fuel flowage fees at comparable faci lities and concluded thatan increase to the twodecade old fuel flowage fee would be reasonable. E.g., Malman Dec. ¶¶ 26, 31(c); Malman Dec. Exhibit 16 (June 2, 2014, Subcommittee Minutes at 1-3). Malman Dec. Exhibit 21 at 7 (Subcommittee’s June 17, 2014, Presentation). Th erefore, at its June 2, 2014, meeting, the Subcommittee agreed to immediately recommend ra ising the fuel flowage fee from 15 cents to 30 cents. The Subcommittee deferred further cons ideration of the fuel management issues. Malman Dec. Exhibit 16 (June 2, 2014, Subcommittee Minutes at 3). At the same meeting, the Subcommittee also agreed to recommend that the Town increase landing fees by 10% be fore the busy season had passed. Malman Dec. Exhibit 16 (June17 2, 2014, Subcommittee Minutes at 3). This recommendation was the result of extensive review of historic landing fees at HTO, the recognitionthat past increases had had a limited, if any, effect on airport operations, a comprehensive review of landing fees at comparable airports, and review of a detailed analysis provided by the Town’s consultant, DY Associates, all of which indicated that raising the land ing fees by 10% was reasonable. Malman Dec. at ¶¶ 39-40; Malman Dec. at Exhibit 26 (table comparing land ing fees at comparable airports) and Exhibit 27 (Town consultant’s comparison of future landing fee options). At the June 3 Town Board Work Session, th en-Airport Director Brundige discussed two proposed resolutions: Resolution 2014-672 (rai sing the landing fees by 10%) and Resolution 2014-673 (raising the fuel flowage fee to $0.30 per ga llon). Malman Dec. Exhibit 19 at 3 (June 3, 2014, Town Work Session Minute s). Cindy Herbst attended and spoke in opposition to the fee increases. Id
. At the Town Board Meeting two days later on June 5, the Town Board considered both resolutions. Cindy Herbst testifie d again at that meeting. As sh e had at the June 3 meeting, Ms. Herbst argued that the fuel flowage fee increa se would have a direct negative impact on her business. She also requested “proper and fair notice” for the increase to take effect rather than implementing the increase immediately. She did not object to the proposed landing fee increase. Malman Dec. Exhibit 20 at 3-7 (Transcript of June 5, 2014, Town Meeting) (testimony of C. Herbst). In response, the Town passed Re solution 2014-672, increasi ng the landing fees, but tabled Resolution 2014-673, increasing the fuel flow age fee, in order to accommodate further discussion. 6 Malman Dec. Exhibit 20 at 25 (Transcript of June 5, 2014, Town Meeting); Malman Dec. Exhibit 28 (Resolution 2014-672).

6 Sound Aircraft notes that the Town adopted the increased fees without also amending the Town budget. Complaint at ¶¶ 14, 21. But the Budget is adopted once a year and there is no requ irement that the budget be18 The Town Board then held an extensive, public discussion of operations at the fuel farm and the proposed fuel flowage fee increase at its June 17, 2014, Work Session. Malman Dec. Exhibit 22 (Transcript of June 17, 2014 Town Work Session). At that meeting, the Subcommittee presented a detailed discussion on th e fuel flowage fee issue to explain the bases for its recommendation to increase fuel flowage fees. The goal of th e presentation was to explain why that particular increase was fair to both the Town and the FBOs, who remained able to make a reasonable profit on fuel sales. In brief, the Subcommittee focused on several factors: (1) that the fee had not been increased in 20 years; (2) that other ai rports were charging comparable fees; (3) that the fuel flowage fee is the only compensation that the Town receives for owning, operating and maintaining the fuel farm , incurring carrying costs for fuel storage and accounts receivable, and assuming liability for fuel farm operations; and (4 ) that the fuel farm was badly in need of costly repairs. See generally id .; see also Malman Dec. Exhibit 21 (June 17, 2014, Subcommittee Presentation). Cindy Herbst testified again at th e June 17 meeting. Malman Dec. Exhibit 22 at 3-8 (Transcr ipt of June 17, 2014 Town Work Session). Two days later, at the June 19 Town Boar d Meeting, the Town Board heard testimony once again from Cindy Herbst and others opposed to the fuel flowage fee increase. Malman Dec. Exhibit 24 at 3-10 (Transcript of J une 19, 2014, Town Meeting). The Town Board ultimately passed the Resolution 2014-673 (attached as Malman Dec. Exhibit 23) to increase the fuel flowage fee to 30 cents. However, in dir ect response to the concerns of the FBOs, the effective date of the increase was deferred to Ju ly 1. As Councilman Van Scoyoc concluded: ... we’ve heard from both the FBOs and members of the public. And I just want to make it clear that the initiative is really about increasing revenues and trying to get our airport in order. amended every time revenues increase. Kagel Dec. at ¶¶ 3- 5. In any event, if this is an issue – which the Town denies – it arises under state or Town law; there is no federal obligation to amend an airport b udget document every time fees are increased.T h w l o ru h T k n i n

... [ T e q o v t h Malman Council w the Tow n funds, if 27, 2014

T evaluati o Capacit y as well a that eve enhance m As a r e enhance m T here’s a nu m

ave gone w i w e believe th o cked into t u les. We b e as not kept T own in ord e

n ow this n u n crease per g

... T ]he Town q uipment. W v er 20 year s h e airport sa f

Dec. Exhi b
w oman Burk
n has the fi n we decide th , Town Me e O 3. T he Subcom m
o n of Airpor t y Analysis t o
a s new costs n with the
m ents to en s
e sult, the S
m ent optio n m

ber of m a i thout attent i h at we can m t he FAA’s f e lieve that, I pace with th e r to provide u mber has b e g allon on th e

has a resp o W e’re in a p s old. ... Ag a f

e, and cont i b it 24 at 3 2 k e-Gonzalez
n ancial abil i h at that is t h
e ting Minute

n g oin g Exa
m ittee has c tFinances.
o account fo r identified o

recent fe e
s ure that the S ubcommitt e s such as l a intenance i s i on for a nu m m ove forwar d

f unding, an d I think for th h e increase s that servic e e en talked a e fuel.
o nsibility t o p osition wh e a in, this is r e i nue to impr o 2 -33 (Trans c

later noted : i ty to opera t h e best cour s

s). mination o f
c ontinued t o Following t
rthe new f e
o ver the co u
e increases,

Airport re m
e e has foc easing unu s

19 s sues that, I mber of yea r dwith repai r dbe an air p h e last 22 y s in fuel, or e . And that

– about, it’s 1 0

o provide t h e re that real l e ally all abo u o ve on the m
c ript of Ju n
: “We hav e t e and mai n
s e of action. ”

f Capital a n
o meet appr o t he fee incre
e es, the hig h

rse of the y e

the Town
m ains financ i

used its r e
s ed Airport think ever y r s. We’re i n r s at the air p p ort that’s o y ears of this

with the re q

–and just a f 0 0% increas
h e fuel far m ly needs to u t revenue a m aintenance
n e 19, 201 4
e adjusted a i
n tain a safe

” Charlton

n d Mainten a

o ximately o ases, the S u h e r -than-anti c

e ar. This u p

must still i ally self-su s
e cent atten t

land and p y body reco g n a position w p ort without o bligated to

fuel flowa g quirements f

o r -instance , s e, but it’s a

mwith up-t o

be address e a nd trying to

.” 4 , Town M e i rport fees t ai rport with Dec. Exhib i

a nce Costs
o nce a mon t
u bcommittee

cipated traf f p dated anal y

pursue a d
s taining. M t ion on ad p aid parkin g g nizes,

w here being FAA g e fee,

of the

, and I

2.5%

o -date e d, it’s

make

e eting). A n t o make sur e h out federal i t 11 at 3 (A u

t h to contin u updated its f ic at the Ai r y sis demons t d ditional re v

alman Dec. ditional re v g . Malman n d as
e that grant
u gust

u e its

Debt
rport, trates
v enue

¶ 45.
v enue

Dec.20 Exhibit 16 (BFAC Subcommittee Minutes) ( see especially , minutes from June 21, 2014, and August 22, 2014). F. Airport Budget Amendments Following the implementation of the landing f ee and fuel flowage fee increases, the Town has made the necessary budget amendments. For example, in October, the Town Board passed Resolution 2014-1186, which recognized th e increase in landing fees but also a corresponding increase in the costs for billing se rvices for the company that monitors landing fees and a spike in outside professional fees for legal services for the remainder of the year. Charlton Dec. Exhibit 12 (Res olution 2014-1186). Similarly, inNovember, the Town Board passed Resolution 2014-1295, transferring excess Airport Landing Fee Revenues to cover expenses for the proposed Obstruction Study. Ch arlton Dec. Exhibit 13 (R esolution 2014-1295). G. Airport Operations and Fuel Sales Follo wing Implementation of New Fees In the several months following implementa tion of the new landing and fuel flowage fees, there is no evidence that the new fees have had a negative impact on operations, fuel sales, or the FBOs. The Airport has purchased and re-s old larger than expected volumes of aviation fuel in 2014. As depicted in the table below, So und Aircraft’s fuel sales were actually higher in July, August and September 2014 – after the fuel flow age fee was in effect – than they were for the corresponding months in 2013. 2013 (Total Gallons Sold) 2014 (Total Gallons Sold) July 151,662.1 156,724.1 August 164,427.3 192,560.9 September 61,522.8 78,579.5 October 39,906.6 40,037.9 November 19,656.2 26,731.621 See generally , Charlton Dec. ¶ 13; Charlton Dec. Exhibit 5 (fuel data from 2013 and 2014 ); see also Kagel Dec. Exhibit 1 (Res olution 2014-1239) (adding an additional $400,000 to aviation fuel expenses and a corresponding $400,000 in revenue from the sale of aviation fuel). As a result, the Town is unaware of any negative imp acts to Sound Aircraft caused by the increase in airport fees. In fact, it appears that Sound Aircraft has actually increased its prices by more than the additional 15 cents in fuel flowage fee – th ereby increasing its own gross margins. Malman Dec. ¶ 44. III. SUMMARY OF APPLICABLE LEGAL STANDARDS A. Part 16 Jurisdiction FAA’s authority to adjudicate disputes under Part 16 is defined, a nd limited, by 14 C.F.R. § 16.1(a), which authorizes FAA to adjudicate dis putes arising under certai n laws and provisions. Disputes arising under laws not set forth in Section 16.1 may not be addressed in a Part 16 proceeding. Final Agency Decision and Order, In re Compliance with Federal Obligations by the City of Santa Monica, Cal. , FAA Doc. No. 16-02-08, at 29 (July 8, 2009). B. Burden of Proof 14 C.F.R. § 16.29(b) places the burden of proof squarely on the complainant: [T]he burden of proof rests with the Co mplainants (who are bringing the action), not the Respondent. It is the Complainan ts’ responsibility to provide a concise but complete statement of the facts re lied upon to substantiate each allegation. Director’s Determination, M. Daniel Carey and Cliff Davenport v. Afton-Lincoln Cnty. Mun. Airport Joint Powers Bd. , FAA Docket No. 16-06-06, at 28 (Jan. 19, 2007) (citing 14 C.F.R. § 16.23(b)(3)). A complainant must also provide “all documents then available in the exercise of reasonable diligence, offered in support of the complaint . . .” 14 C.F.R. § 16.23(b)(2). See also Director’s Determination, Aero Ways, Inc
. v. Del. River & Bay Auth., FAA Docket No. 16-09- 12, at 15 (Aug. 30, 2010) (“The burd en of proof falls upon the Co mplainant to establish and22 substantiate each allegation made.”); Director's Determination, SeaSands Air Transp., Inc. v. Huntsville-Madison Cnty. Airport Auth., FAA Docket No. 16-05-17, at 14 (Aug. 28, 2006) ( “ the Complainant carries the burden to show, by a preponderance of proof, that a sponsor has violated its federal grant assurances.”). Inferences and arguments from the apparent absence of contrary evidence are not sufficient to meet this burden. Scott Meyer v. City of Cincinnati , FAA Docket No. 16-12-14 at 25 (Director’s Determination Sept. 12, 2014) (“First-person accounts of conversations and an abundance of argumentative opinion and criticism do not equate to substantial and credible evidence. In a formal Part 16 complaint, the co mplainant has the burden of proof to establish the complaint’s allegations by a preponderance of substantial and reliable evidence.”). C. Airport Sponsor Assurance 24, Fee and Rental Structure Sponsor Assurance 24 provides that an airport sponsor: will maintain a fee and rental st ructure for the facilities andservices at the airport which will make the airport as selfsustaining as possible under the circumstances existing at the particular airport, taking into acc ount such factors as the volume of traffic and economy of collection. As the FAA has recognized in its Airport Co mpliance Manual (FAA Order 5190.6B, hereinafter “Compliance Manual”): The requirement [in Assurance 24] recognizes that individual airports will differ in their ability to be fully self-sustaining, givendifferences in conditions at each airport. The purpose of the selfsustaining rule is to maintain the ut ility of the federal investment in the airport. Compliance Manual ¶ 17.5. Under this principle, airport s ponsors have wide latitude to set rates and charges. Airport rates a nd charges are also s ubject to the general requirement to be reasonable and non-discriminatory. Charges for aeronautical uses of th e airport must be reasonable. For aeronautical users, the FAA considers charges that reflect the cost of the services or facilities satisfies the self-sustaining requirement. Accordingly, the FAA does not consider the self-23 sustaining obligation to require the sponsor to charge fair market value rates to aeronautical users. Id. at ¶ 17.10. Accordingly, “fees for the use of the airfield genera lly may not exceed the airport’s capital and operating costs of providing the airfield.” Id. It is permissible, however, for an airport sponsor to set rates charges at a le vel designed to create reserves, hedge against contingencies, and facilitate financing: Reasonable reserves and other funds to facilitate financing and to cover contingencies are not considered revenue surpluses. The sponsor must use any surplus funds accumulated in accordance with the Revenue Use Policy
. Id. at ¶ 17.9. Given the discreti on airport operators enjoy, the FAA will not ordinarily question rates and charges at a general aviation airport unless the airport sponsor is progressively accumulating substantial surplus revenue: The FAA will not ordinarily investigate the reasonableness of a general aviation airport’s fees absent evidence of a progressive accumulation of surplus aeronautical revenues. Id. See also id . at ¶ 17.10 (same). The FAA has provided further explanation on ho w it will apply these requirements in the Policy Regarding Airport Rates and Charges (Rates and Charges Policy , Compliance Manual Appendix D). The Rates and Char ges Policy sets forth five pr inciples that establish the substantive standards for assess ing the reasonableness of airport rates and charges for domestic
users: 1. In general, the Department re lies upon airport proprietors, aeronautical users, and the mark et and instituti onal arrangements within which they operate, to ensure compliance with applicable legal requirements. Direct Federal intervention will be available, however, where needed.24 2. Rates, fees, rentals, landing f ees, and other service charges (‘‘fees’’) imposed on aeronautical users for aeronautical use of airport facilities (‘‘aeronautical fees’’) must be fair and reasonable. 3. Aeronautical fees may not un justly discriminate against aeronautical users or user groups. 4. Airport proprietors must maintain a fee and rental structure that in the circumstances of the airport makes the airport as financially self-sustaining as possible. 5. In accordance with relevant Federa l statutory provisions governing the use of airport revenue, airp ort proprietors may expend revenue generated by the airport only for statutorily allowable purposes. Compliance Manual at App. D, p. 49. Recognizing that disputes between airport s ponsors and aeronautical users regarding fees are likely, the FAA has provided recommendations for consultati on and negotiation that it hopes will avoid disputes and the need for FAA intervention. See id. at ¶1.1. Those recommendations are not mandatory, however, and the FAA expressl y recognizes that: “Federal law does not require a single approach to airport rate setting.” Id. at ¶ 2.1. “Airport pr oprietors may set fees for aeronautical use of airport facilities by ordi nance, statute, or re solution, regulation, or agreement.” Id. When a dispute involving airport fees reaches the FAA, however, the FAA’s role is focused on the substance of the fee: “In considering such a dispute [over the reasonableness of airport fees], the FAA’s role is to determine whether the airport proprietor is in compliance with its grant obligations and statutory obli gations relating to airport fees.” Id. at p. 48. However, the “FAA proceeding is not intended to provide a m echanism for adjudication the respective rights of the parties to a fee dispute.” Id. The FAA adjudication process is focused, therefore, on the reasonableness of the fee, not on the pr ocedures by which a fee was adopted.25 The FAA has explained that the Rates and Ch arges Policy applies in a more limited manner to general aviation airports compared to air carrier airports. See Policy Regarding Airport Rates and Charges , 61 Fed. Reg. 31994, 31997 (June 21, 1996). This reflects, in part, the fact that the requirements of 49 U.S.C. § 47129 – which largely prompted promulgation of the Rates and Charges Policy – do not apply to general aviation airports. Id. This difference in approach also reflects the fact that “airport propri etors, especially proprietors of general aviation airports, may use different methods for setting f ees than those commonly used for setting fees paid by airlines. The Department reiterates its commitme nt to apply the policy flexibly in evaluating general aviation fees
. ” Id. (emphasis added). For example, the Department “understands that many airport proprietors apply a single charge, e.g., a fuel flowage fee, to general aviation users for the use of all aeronautical facilities. The Department does not intend to disturb this practice [by requiring sophi sticated cost allo cation systems].” Id. Accordingly, the FAA approaches the reasonabl eness of general aviation airport fees at a very high level. First, “the FAA will not ordinarily undertake an investigation of the reasonableness of a general aviation airport’s fe es absent evidence of a progressive accumulation of aeronautical revenues.” Compliance Manual at ¶ 17.9Second, general aviation airports are not required to set fees accordingly to any particular formula, but simply pursuant to a “reasonably transparent and not unjustly discriminatory 

### . . . cost allocation methodology.” 61 Fed. Reg. at 31997. D. Airport Sponsor Assurance 25, Airport Revenue The prohibition against revenue diversion is set forth in Sponsor Assurance 25: 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 op erating costs of the airport; the local airport system; or other local facilities which are owned or26 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; or for noise mitigation purposes on or off the airport. See also 49 U.S.C. § 47107(l); 49 U.S.C. § 47133; FAA, Policy and Procedures Concerning the Use of Airport Revenue , 64 Fed. Reg. 7696 (Feb. 16, 1999) (“Revenue Use Policy”) at 7697; In general, airport revenue may be used for th e operating and capital costs of the airport: Sponsors may use their airport reve nue for the capital or operating costs of the airport, the local airpor t system, or other local facilities owned or operated by the airport owner or operator and directly and substantially related to the ai r transportation of passengers or property. []Operating costs for an airport ma y be both direct and indirect and may include all of the expenses and costs that are recognized under the generally accepted accounting pr inciples and pr actices that apply to the airport enterprise f unds of state and local government entities. Compliance Manual at ¶ 15.9(a). It is permissible for an airport sponsor to “use airport revenue to pay lobbying and attorney fees to the extent th ese fees are for services in support of airport capital or operating costs thatare otherwise allowable.” Id. at ¶ 15.9(d). See also Revenue Use Policy at § V(A)(5) (same). As discussed above, the sponsor assurances do not prohibit an airport sponsor from accumulating a reasonable re serve or providing for contingencies, provided that such reserves are ultimately used for a llowable airport purposes. Compliance Manual at ¶ 17.9. IV. ARGUMENT A. Sound Aircraft’s Challenges to the New Landing Fee and Fuel Flowage Fee Must Be Dismissed As Not Ripe A Part 16 complaint is not ripe if the alleged violation is a matter of speculation regarding possible future outcomes and there is no evidence that the complainant is currently harmed. See27 Northwest Airlines, Inc., v. Indianapolis Airport Auth. , FAA Docket No. 16-07-04 at 36-37 (Director's Determination August 18, 2008), aff'd , (Final Decision and Order); Drake Aerial Enterprise, LLC v. City of Cleveland, Ohio , FAA Docket No. 16-09-02 at 20 (Director's Determination February 22, 2010). See also Scott Meyer v. C ity of Cincinnati , FAA Docket No. 16-12-14 at 25 (Director’s Determ ination Sept. 12, 2014) (noting th at the Part 16 process is concerned only with current compliance. This principle is also re flected in 14 C.F.R. § 16.23(b)(4), requiring complainants to allege how it has been substa ntially and directly affected by the alleged violation. As a threshold matter, the Complaint fails to state a claim because Sound Aircraft fails to make any allegation, or offer any proof, showing th at Sound Aircraft has been harmed or directly affected by the new fees. Nor could it. The expe rience to date shows that overall operations in the months following the new fees were higherthan last year, and fuel sales have also increased. See generally , Charlton Dec. ¶ 13; Charlton De c. Exhibit 5 (fuel sales data). Moreover, a challenge to rates and charges at a general aviation airport under Sponsor Assurance 24 is not ripe “absent evidence of a progressive accumu lation of aeronautical revenues.” Compliance Manual at ¶ 17.9. “Reasonable reserves a nd other funds to facilitate financing and to cover contingencies ar e not considered revenue surpluses.” Id. Sound Aircraft does not offer any proof that there has been a pr ogressive accumulation of airport revenues. Nor could it. The new fees have been in place for less than six months and there simply can be no evidence of a progressively accumulating surp lus in such a short period of time. As detailed below, the new fees are necessary to pay for a number of capital projects that will be built in the coming years. Sound Aircraft does not directly challenge that evidence, and certainly does not rebut it. Accordingly, Sound Aircraft fails to present any reason to think that28 the new fees are impermissible under Assurance 24. The test of the propriety of the fees will come as those projects are actually implemented and paid for, and future Airport expenses are compared to future Airport revenues. The fees cannot be rejected i mmediately after adoption based only on Sound Aircraft’s ba seless fears that the fees are too high. Accordingly, Sound Aircraft’s challenge to the new landing and fu el flowage fees under Sponsor Assurance 24 must be dismissed as unripe. Similarly, a violation of Sponsor Assura nce 25 requires that airport revenue be spent for non-airport purposes. Sound Aircraft’s theory under Assurance 25 is based entirely on speculation that a surplus will accumulate and that airport re venue will be spent for non-airport purposes. Complaint at ¶¶ 44-51. But Sound Aircraft does not o ffer any proof that any airport revenue from the new fees has already been spent for non-airport purposes. Nor does it offer any proof that the Town will spend airport revenues for non-airport purposes. As detailed above, the Town increased the fees to meet the expected costs of a number of Airport projects and expenses. U nder Sponsor Assurance 24, the Town is permitted to set fees at a level to pay for those expenses, and there is no viable theory under Assura nce 25 that an airport sponsor has impermissibly used airport revenue simply by accumulating airport revenue to meet future airport expenses. In any event, there is no current violation of Sponsor Assurance 25 absent an allegation that airport revenue has been spent for non- airport purposes. Because Sound Aircraft fails to make, much less prove, that al legation here, its challenge to the new landing and fuel flowage fees under Sponsor Assura nce 25 must be dismissed as unripe. B. The New Landing Fee and Fuel Flowage Fee Are Appropriate and Comply With Sponsor Assurance 24 Sound Aircraft challenges both the Town’s ne w landing fee and its new fuel flowage fee under Assurance 24. Although Sound Aircraft asserts the same th eories and arguments againstb oth fee s are almo s

T structure circumst a claim u n actions o structure Determi n and prot e airport. C sponsor Norther n
reasonab of aeron a T plainly j u demonstr expense s not hav e determi n fees, we r s , the Comp l
s t identical, T h 1. A i T he fundam e that make s
a nces at th a
n der Grant A
o r inaction s .” Norther n
n ation Marc h
e cting the f e C ompliance to design i t
n Ai r at 53. leness of a g
a utical reve n T he 10% la n

u stified un d
r ated that p r
s . Supra at
e been self- s
n ed that add
r e necessary l aint sets fo r and to avoi d h e Fees are i rport to b e
e ntal obligat i
s the airport
a t airport.” C A ssurance 2
s have imp a
n Air, Inc. v h 28, 2013).
e deral inves t

Manual at ¶ t s schedule Accordingl y g eneral avia t
n ues.” Com p
n ding fee in c d er this stan
r ior Airport 1 3-14. In o t
s ustaining g itional reve n for the Airp r th the chall drepetition,

Reasonabl e e Self-Suffic i i on under S p tas financi a C ompliance 4, the Com p
a cted the A
v . County o f The focus t ment in the ¶

5. Moreo v of rates an d y , “the FAA t ion airport’ s p liance Ma n
c rease and t dard. First , revenues w t her words, g iven future
n ue sources p ort to beco m
29 enge to eac h the Town w e , Non-Disc r i ent p onsor Ass u
a lly self-sus

Manual at p lainants m A irport's ab i f Kent , FA A

under Spon s airport, not
v er, “ Grant A dcharges ar

will not or d
s fees absen t
n ual at ¶ 17. 9 the new 30

, the analys
w ere insu ff i c under the p r

capital an d , including
m e self-sust a h fee separa t
w ill respond t

r iminator y,

u rance 24 is
s taining as p

¶¶ 17.9 & 1
must first es t

i lity to ma i A Docket N o

s or Assuran c in chargin g A ssurance 2 4
r ound the p d inarily und e t evidence o 9 cent fuel fl o
s is of the B F
c ient to me e
r ior revenu e dother nee d

the increas e
a ining. Id. a t t ely. Beca u t o both argu m

, and Desi gn to “maintai n p ossible un d 1 7.10. “ In o t ablish that t i ntain a se l
o . 16-11-10
c e 24 is on s g “market ra t 4 does not o p rofit margi n
er take an in v
o f a progres s

o wage fee a F AC Finan c
e t expected
e structure, th d s. The S u
e d landing a t14-19 u se the argu m
m ents toget h
n ed to Allo w

n a fee and r d er the part i
o rder to sus t t he Respon d l f-sustainin g at 53 (Dire c
s elf-sustain a t es” for usi n
o bligate an a i

n s of its F B
v estigation o
s ive accumu l

a t the Airpo r
c e Subcom m capital and h e Airport w
u bcommitte e
a nd fuel fl o m ents h er.
wthe

r ental i cular t ain a d ent's g rate
c tor’s
ability
n g the i rport B Os.”
o f the l ation

rt are
m ittee

other
w ould
e thus
o wage30 Second, the Subcommittee reviewed comparab le airports and concluded that the proposed increases were generally consistent. Finally, increasing fuel flowage fees and landing fees is a permissible and traditional way for a general aviation airport to meet its obligations under Assurance 24. Rates and Charges Policy, 61 Fed. Reg. at 31997. The Subcommittee’s analysis shows that the fuel flowage fee and la nding fee increases would address most, but not all, of the Airport’s revenue needs. Supra at 19-20. Those basic, and uncontested, facts establish that the new fees are reasonable and fully compliant with Assurance 24. Further, the method by which the Town adopted the new fees was reasonable, transparent and non-discriminatory. The fees themselves ar e non-discriminatory because they apply to all aeronautical users, and not even Sound Aircraftalleges they are discriminatory. The fee structure was adopted through a pub lic process that simply compar ed future financial needs to existing revenues and concluded that additional revenues were necessary to meet those obligations. That process was both transparent and reasonable, a nd easily satisfies Assurance 24. Third, Sound Aircraft has failed to meet it bur den of proof that th e Town has violated Assurance 24. Sound Aircraft doe s not present any financial anal ysis of the Ai rport revenues and future expenses and capital needs demonstra ting (1) that the new fees are not necessary, (2) that the new fees have led to an unreasonable surp lus, or (3) that the new fees will lead to an unreasonable surplus. Sound Aircraft does not offe r any evidence tending to show that the prior revenues were sufficient to meet future operatin g, capital, and other expenses. Nor does it offer any evidence that the capital and other expenses set forth in the ACIP and the AMP, or the other contingencies identified by the Subcommitt ee, are not appropriate Airport expenses. 7 In short, Sound Aircraft has failed to offer any affirmativ e proof that the new fuel flowage fees and
7 Indeed, Sound Aircraft appears to be talking out of both sides of its mouth on this issue. At public hearings, Sound Aircraft chided the Airport for not maintaining the fuel farm and other Airport facilities while simultaneously arguing that the Town should not raise the money to pay for those improvements.landing f argumen t is insuff i 12-14 at 2

I g Charges As detai l

S required b ecause t Airports. consulta t to settin g upon by Charges “Federal

8 S o assumed i n underlyin g Debt Cap a streams c o would co n recommen the Airpor t f

ees are in a ton negativ i cient to me e 2 5 (Director ’ N o 2. C o g noring the Policy, Sou n l ed below, S

a. Ina d ound Aircr a by the Rat e t he Rates a n First, the t ion” and su g g new rates a

Sound Air c Policy, in g law does n o

o und Aircraft n the Prelimi n g analysis. C o a city Analysis e o uld support. n tinue at curr e dation for a 1 0 t ’s financial n e a ny way inc e inference s
e t it burden

’ s Determin a o ne of Sou n o mpliance plain lang u
n d Aircraft r ound Aircr a d equate No
a ft argues th
e s and Char
n d Charges P

plain lang u g gests that “
a nd charges
c raft (Comp l g eneral, acc o
o t require a s

points out th a n ary Debt Ca p o mplaint at ¶ 1 e xamined the p As part of th a e nt rates, whi c 0 % increase r e e eds, and that a onsistent w i
s and argum e

of proof. S c
a tion Sept. 1 2
n d Aircraft’

u age and e x
r ests its arg u
a ft’s theories

t ice h at it did n
r ges Policy. P olicy does n
u age of the

“ airport pro p . 61 Fed. R l aint at p. 1
o mmodates d
s ingle appro a

a t the 10% in c p acity Analysi 1 4. That fund p re-increase st a a t analysis, th e c h annual 5% e flected the co n alarger increa s 31 i th Assuran c
e nts based o
c ott Mey er v 2 , 2014).

s Theories S

x press purp o
u ment on p r

lack any m e

n ot receive t

Complain t
n ot impose m

Rates and C p rietors sho u R eg. at 3201 8

2 n. 67), is d ifferent rat
a ch to airpo r

c rease in the l a s, implying th a mentally mis u a tus quo to de t e Sub-Commi t

increases in n clusion that f s e in the landi n c e 24. 8 Ins t
o n a selectiv e
v . Cit y o f

Ci n
S upports a

o se of Assu r
r ocedural c h
e rit and sho u

the notice o tat ¶ 27. T
m andatory p r C harges Po l
u ld consult w 8 . On its f a
s not manda t e-setting pr o
r t rate settin g

a nding fees w h at the final d understands th t ermine the a m t tee assumed t the landing f e f ormer revenu e n g fees would b t ead, Sound
e reading o f
n cinnati , FA A

Findin g of N

r ance 24 a n h allenges to t
u ld be dismi

o f proposed T his theory
r ocedures o n l icy only “ e
w ith aerona u
a ce, that lan g
a tory. Inde e
o cedures by g .” Id. at 3 2

w as double the d ecision was a h e two analys e m ount of debt th

that then-exis t e es. Supra a t e streams wer e b e necessar y. S Aircraft re s f the record. A Docket N o

N onn d the Rate s t he fee incr e
sse d
.
fee increas is fatally f l
n general av i
e ncourages d
u tical users” g uage, also r
e d, the Rate s y recognizin g 2 019, ¶ 2.1.

5% annual i n adeparture fr o e s. The Preli m h en-existing r e t ing revenue s t t 13, n. 3. B e insufficient t o S upra at 15-1 7 s ts its This
o . 16-

s and
e ases.

s es as l awed i ation d irect prior
r elied
s and g that

n crease o m the minary e venue t reams B ut the o meet 7
.32 Second, of more importance here, the FAA ha s explained that the Rates and Charges Policy applies in a much more limited manner to general aviation airports than it does to air carrier airports. Id. at 31997. The FAA explicitly recognizes that “airport propri etors, especially proprietors of general aviation airports, may us e different methods for setting fees than those commonly used for setting fees paid by airlines. The Department reiterates its commitment to apply the policy flexibly in eva luating general aviation fees
. ” Id. (emphasis added). For example, the Department “understands that many airport proprietors appl y a single charge, e.g., a fuel flowage fee, to general aviation users fo r the use of all aeronautical facilities. The Department does not intend to di sturb this practice [by requiri ng sophisticated cost allocation systems].” Id. The FAA expressly recognizes and preser ves the ability of airport operators to “set fees for aeronautical use of airport facilities by or dinance, statute, or resolution, regulation, or agreement.” Id. Under the Rates and Charges Policy, therefore, there is no dispute that the Town can set fees for its general aviation airport directly by ordinance without firs t engaging in lengthy negotiations and that the Rates and Charges Po licy does not change th at. In fact, Sound Aircraft’s lease expressly acknowledges that: The Operator [Sound Aircraft] shall pay to the Town a fuel flow fee for each gallon of aviation fuel delivered to the Operator from the Town’s fuel farm. The fuel flow fee shall be established by resolution of the Town Board a nd, from time to time, the Town Board by resolution may amend the fuel flow fee. Malman Dec. Exhibit 3 (Sound Aircraft Lease) and Exhibit 4 (Myers Lease). 9 The Town set the new landing fees and fuel flowage fees by reso lution under the procedur es for adopting Town resolutions. Having agr eed to that approach, and agreed to it after the Rates and Charges Policy

9 The Lease does not contain a similar provision regarding landing fees because Sound Aircraft does not pay landing fees; aircraft operators do.33 had been issued, Sound Aircraft cannot now allege that its Lease violates a grant obligation. See 41 North 73 West, Inc., DBA Avitat West chester v. County of Westchester, NY , FAA Docket 16- 07-13 at 26-27 (June 12, 2008) (Director’s Determination), aff’d , Final Agency Decision at 28 (Sept. 19, 2009). Accordingly, the Town’s actions here are entirely c onsistent with Sponsor Assurance 24, the Policy, and its lease with Sound Aircraft. In any event, Sound Aircraft had abundant notice of the fee increases. Cindy Herbst participated in many of the Subc ommittee’s formal meetings where the prospect of raising both fees was openly discussed and she was regularly contacted as the Subcommittee conducted its work. Supra at 11-17. Once the Subcommittee made its recommendations, the Town followed its procedures, including conveni ng public hearings. Sound Airc raft was able to, and did, participate in those hearings. The Town appr oved the landing fee increa se at its June 5, 2014, meeting without objection from Sound Aircraft. 10 The Town also tabled its initial consideration of the fuel flowage fee incr ease, allowing Sound Aircraft additional time to prepare and present its arguments. Sound Aircraft took full advant age of that opportunity and ultimately Sound Aircraft testified at four separate Town Counc il meetings or work sessions between June 3 and June 19 at which the fuel flowage fee was disc ussed and debated. In addition, Sound Aircraft had opportunities to meet informally with To wn Council members before and throughout that period. Complaint at ¶ 16. Evenif the Town had a federal oblig ation to provide Sound Aircraft notice of the possibility that th e fees would increase, it provided more than adequate notice.

10 Sound Aircraft infers that there was something impr oper about the fact that th e landing fee increase was adopted at a single Town Council meeting. Complaint at ¶ 28. Sound Aircraft cites no law to support that suggestion, however, and there is no re quirement that a resolution be considered at more than one Town Council meetings. Moreover, the recommendation had been the subject of public discussion at the Sub-Committee for many weeks before that and at the Town Counc il Work Session on June 3, and the pros pect of increased fees was raised at the May 20 Town Council meeting, so there is no argument that the Town or the Town Council did not adequately consider the increase.34 Ultimately, Sound Aircraft’s “lack of notice” cl aim is legally without merit and factually baseless. b. Failing to “Consider” the Rates and Charges Policy Sound Aircraft argues that the new fees violat e Assurance 24 because there is no record that the Town affirmatively considered the Rates and Charges Policy as part of its deliberations. Complaint at ¶ 28. This argument is utterly lacking in merit. The Town is not aware of any authority for the notion that an airport sponsor vi olates a federal obligation by failing to formally document its analysis of whether a proposed ac tion would be in compliance with the Sponsor Assurances. Certainly, there is no such require ment in Assurance 24 or the Rates and Charges Policy, and Sound Aircraft does not c ite to any supporting authority. The notion that an airport sponsor violates its federal obligations unless it affirmatively determines, in writing, that its actions are not violations would have the absurd result of rendering an otherwise compliant action non-complia nt solely for lack of documentation. This theory would also effectively re verse the burden of proof in a Part 16 proceeding by requiring an airport sponsor to prove compliance, even in th e absence of an allegation of any violation. Moreover, requiring such an analysis makes no sense because the airport sponsor’s analysis would not be decisive; only the FAA’s determin ation, following an appropriate investigation, can conclusively determine a question of complian ce. The current system, in which the FAA presumes compliance until proven otherwise and in which the FAA encourages airport sponsors to seek FAA guidance when there are compliance concerns, is more than sufficient to address compliance, as history has shown. See Compliance Handbook at ¶ 2.4 . Sound Aircraft’s rule would be a boon for airport attorn eys and compliance experts, but it would not serve the interests of airport sponsors, aeronau tical users, or the FAA.35 In any event, as demonstrated above, the fee increases comply with Assurance 24. That compliance would not have been enhanced by a prior, formal analysis of compliance, and it makes little sense to make the failure to form ally document compliance a violation of federal obligations, particularly when ther e is no reason to think there is a violation in the first place.
c. Failing to Provide Airport Users with Information Required by Appendix 1 of the Rates and Charges Policy Sound Aircraft also argues that the Town did not provide it with the information required by Appendix 1 of the Rates and Charges Policy. Complaint at ¶ 29. Appendix 1 of the Policy lists the type of data that FAA “ordinarily expects to be available to aeronautical users,” such as historic financial information, economic justif ication, and planning and forecast data. 61 Fed. Reg. at 32022. As that language makes clear, the FAA’s “expectation” is not mandatory, particularly with respect to a general aviation airport setting landing and fuel flowage fees. Supra at 24-25. Moreover, all of the informati on relied upon by the Town and the Subcommittee was available to Sound Aircraft an d the public, and the key points we re presented in a series of public presentations. Supra at 14-18. Sound Aircraft did have the information it needed to evaluate the proposals. The fact that it disagreed with the conclusions the Town reached from that information does not, however, show that the process was flawed in any way. d. Failing to Employ a Reasonable, Transparent, and Consistent Method of Establishing Rate Base and Adjusting Rate Base on a Timely and Predictable Schedule Finally, Sound Aircraft asserts that the Town violated Assu rance 24 by failing to employ a reasonable, transparent, consiste nt method of establishing rate ba se and adjusting rate base on a timely and predictable schedule. Complaint at ¶ 30. Again, Sound Aircraft misreads the Rates and Charges Policy to impose mandatory procedur es on general aviation airports adopting new landing and fuel flowage fees. As explained above, that reading of the Ra tes and Charges Policyis incorr e fuel flo w T b ase.” compens
commer c formulas many ai r for the u [by requ i A fee by r e Sound A was tran s the Tow n Policy a n should b e C

A Aircraft Aircraft d spent, or e ct, and the
w age fees by T his is parti c

A rate bas atory, or s i
c ial service between a e
rport propri e se of all aer i ring sophis t A s detailed a

e solution as ircraft. The
s parent and
n has compl i
n d Sound A
e dismissed. C . The N Polic y S o 1. S p A ssurance 2 5

fails to stat e d oes not all e
even earm a Policy does resolution o
c ularly true w

e forms th e i milar leasi n

airports. T
e ronautical u
e to r s apply a

onautical fa c t icated cost a b ove, the T o

it has hist o Town follo w fair, and S o i ed fully wi t A ircraft’s ch a

N ew Landi n y or Spons o o und Aircr a p ent for an I 5 prohibits th
e a claim fo
e ge that an y
arked, for n o not alter th e
o r ordinance
w ith respec t
e basis for
n g model, t T he “rate b a
u sers. The F
asingle char g

c ilities. Th e
a llocation s y
o wn adopte d
o rically don e
w ed the To w
o und Aircra f t h its obliga t
a llenges to t

ng Fee and F

r Assuranc
a ft Makes N I mpermiss i h e actual ex p r a violatio n y portion of t
o n-airport p u 36 e historic pr a without ad d t to FAA re c

determinin ypically in
a se” is the F AA made g e, e.g., a f u
e Departme n y stems].” 61 dand amen d
e , and as it
w n’s proced u f t actively p t ions under A t he land an d

F uel Flowa g e 25 N o Alle g atio i ble Purpos e p enditure o f
n of Assura n t he new fue l
u rposes. So u a ctice of ge n d itional proc e
c ommendat i
n g rates an d

leases with foundation clear, howe v
u el flowage
n t does not i 1 Fed. Reg. a d ed the land i

is permitte d
u res for am e articipated i A ssurance 2 dfuel flow a

g e Fee Do N n that An y e f money for n
n ce 25 for th l flowage f e
u nd Aircraf t n eral aviati o
e ss. Supra a i ons regardi n dcharges u h commerci a

for detaile d
v er, that it “ fee, to gene i ntend to di s
a t 31997. i ng fees an d d to do un d
e nding the f e i n the proce 2 4 and the R
a ge fees un d

N ot Violate t

Airport Re

n on-airport p he simple r e
e es or landi n talleges ins t o n airports s e
a t 25.
n g setting a
u nder a res i
a l air carri e dcost allo c

“ understand s ral aviation
s turb this pr a

dthe fuel fl o d er its lease
e es. That pr ss. Accord i R ates and C h d er Assuran c

t he Revenu e venue Was
p urposes. S
e ason that S
n g fees have t ead that: ( 1 e tting

“rate i dual,
e rs at
c ation
s that
users
a ctice

o wage

with
ocess i ngly, h arges

c e 24

e Use

S ound S ound

been 1 ) the37 fee increases will result in a large surplus, and (2) the Town will spend that surplus for nonairport purposes. Complaint at ¶¶ 44-51. That is inadequate to state a vi olation of Assurance 25. First, as detailed above, Sound Aircraft has ne ither alleged nor proved that the Town has spent any of the proceeds from the new landing f ees or fuel flowage fees for a non-airport purpose. Accordingly, Sound Aircraft has failed to state a claim under Sponsor Assurance 25. Second, Sound Aircraft’s theory that the To wn will accumulate a surplus of airport revenue is similarly flawed because Sponsor A ssurance 25 does not prohibit the accumulation of a surplus. Indeed, Sponsor Assurance 24 allows a modest surplus, subject to the limitation that the surplus be spent for permissible purposes. Compliance Handbook at ¶ 19.9. Implicit in that construction of Sponsor Assurance 24 is the rule that the mere accumulation of a surplus is not a violation of Sponsor Assurance 25. Third, Sound Aircraft has presented no eviden ce of any future re venue diversion. As detailed above, the Town’s analysis shows that the increased fees will not even meet projected financial needs, and will theref ore not generate a su rplus. Sound Aircrafthas not presented a shred of evidence to the contrary. Nor can Sound Aircraft conj ure any proof that the Town would spend any surplus for non-airport purposes. The Subcommittee’s analysis addresses only airport expenses and Airport needs. No Town ac tion gives even the slight est suggestion that it would spend Airport revenue for any non-Airport purpose. Sound Aircraft’s argument is entirely speculative, and baseless, and shou ld be rejectedout of hand. See Scott Meyer v. City of Cincinnati , FAA Docket No. 16-12-14 at 25 (Director’s Determination Sept. 12, 2014) Finally, Sound Aircraft’s argument that the Town violated Sponsor Assurance 25 because there was no documentation that the Town form ally evaluated its compliance with Sponsor Assurance 25 should be dismissed as baseless. As discussed above, there is no requirement that the Town conduct a formal compliance analysis before adopting the new fees, supra 34-35, and38 nothing in Assurance 25 or the Revenue Use Policy imposes such an obligation. Failing to analyze compliance before taking ac tion is not itself a violation of any Sponsor Assurance. D. Lack of Invoices Supporting $228,022 in Airport Expenditures for Outside Professionals from 2011-2013 Pursuing a separate claim, unrelated to the landing and fuel flowage fee increases, Sound Aircraft alleges that that Town may have spent $228,022 of airport funds for non-airport purposes. Complaint at ¶¶ 51-52. Sound Aircraft’s apparent theory is that because the Town did not produce supporting invoices in response to a public records request under New York Law, these resources must have been spent on “services contrary to those permitted under the FAA Revenue Use Policy.” Id . On its face, this argument lacks merit. First, to be clear, it is true that at the tim e the Complaint was filed, the Town had not yet responded to Sound Aircraft’s reque st for invoices related to am ounts expended for the Airport’s Outside Professional costs. 11 However, Sound Aircraft never presented its concern about revenue diversion to the Town for resolution purs uant to 14 C.F.R. § 16.21. If it had done so, this issue could have been quickly resolved be cause Town can easily demonstrate that the money
was spent for professionals to advise the Town on Airport matters, as expressly permitted under the Revenue Use Policy and the Town has the in voices to substantiate those expenditures. Second, Sound Aircraft’s theory is based only on a negative inference based on the apparent lack of documentation. There is no dispute that an airp ort operator can spend airport revenue for outside professional help. An ai rport may generally spend airport revenue for “capital or operating costs of the airport . . . .” Compliance Handbook at ¶ 15.9(a). It is permissible for an airport sponsor to “use airpor t revenue to pay lobbying a nd attorney fees to the

11 The Town recently discovered that while a response had been timely prepared, it was never actually transmitted. The relevant documents were transmitted to Sound Aircraft this month.39 extent these fees are for services in support of airport capital or operating co sts that are otherwise allowable.” Id. at ¶ 15.9(d). See also Revenue Use Policy at § V(A)(5) (same). Clearly it is permissible for at airport operato r to hire and pay appropriate out side professionals to provide advice and other services to assist the airport sponsor on airport proj ects and legal matters. Sound Aircraft does not contest that principle. Sound Aircraft is also careful not to allege that the money was not actually spent on outside pr ofessionals. Rather, Sound Aircraft raises a “concern” that the lack of apparent documenta tion of the payments to outside professionals suggests a violation of Sponsor Assurance 25. That kind of sp eculative insinuation is patently inadequate to allege a violation or to warrant investigation. The FAA has recognized that such unsubstantiated inferences do not meet the burden of proof required of a Part 16 complainant. Scott Meyer v. City of Cincinnati , FAA Docket No. 16-12-14 at 25 (D irector’s Determination Sept. 12, 2014) (“First-person accounts of conversations and an abundance of argumentative opinion and criticism do not equate to substantial and credible evidence. In a formal Part 16 complaint, the complainant has the burden of proof to establish the complaint’s allegations by a preponderance of substantial and reliable evidence.”). In the absence of any evidence of revenue diversion, Sound Aircraft’s claim fails at the threshold. Third, had Sound Aircraft followed up with the To wn instead of rushing to add this claim to its Complaint in an apparent effort to add weight to a meritless challenge to the new airport fees, the Town would have demonstrated thatit had spent the mo ney properly on outside professionals to provide advice on Airport matters. At the outset, it is importan t to clarify that the total amount the Town spent on outside professionals for the Airport in 20 11-2013 is $403,453, not $228,022 as alleged by Sound Aircraft. The difference reflects the fact that Sound Aircraft totaled the year-to-date numbers presented in the approved Town budgets instead of using the final, year-end numbers. Because40 budgets are approved each Novemb er, year-end numbers cannot ye t be recorded for the prior budget year. For example, Sound Aircraft conc luded that the Town spent $77,207 for outside professionals in 2011 based on its review of the 2011 year-to-date numbers provided the 2012 Adopted Budget. Complaint at ¶ 51. But the subsequently adopted budget reflect the actual year end numbers for 2011, showing that $218,619 was spen t on outside professionals for the Airport in 2011. E.g. , Kagel Dec. Exhibit 3 (Approved 2014 Budget at 231). Again, had Sound Aircraft raised its concerns with the Town, the matter could have been quickly resolved. Despite the lack of merit to Sound Aircraft’s “concerns,” the Town has reviewed the invoices and can substantiate th at the money was spent on outside professionals in connection with Airport matters. Exhibit 5 to the Declaratio n from the Chief Auditor in the Town’s Finance Department shows the total amount of invoices paid in 2011, 2012 and 2013, and shows that the totals match the amounts reported by the Town. See Kagel Dec. Exhibit 5. The table provides a brief explanation of the services provided clearly showing that the expenditures were appropriate under Sponsor Assurance 25. Clearl y, the Town spent airport reve nue for a permissible airport purpose and Sound Aircraft’s claim of re venue diversion should be dismissed. V. CONCLUSION For the foregoing reasons, the Town respect fully requests that the FAA dismiss the Complaint and find that the Town’s decision to in crease the landing fees and fuel flowage fees is complied with its obligations under Sponsor Assurances 24 and 25, and that the Town’s payments to outside professionals for services to the Airport also complied with its obligations under Sponsor Assurance 25.