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 for 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) 955-5616 

 
2

I. INTRODUCTION 

East Hampton Airport (“Airport” or “HTO”), which is owned 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 existing Airport revenues, primarily lease payments, 

landing fees, and fuel flowage fees, would be insufficient to pay for those projects and provide 

an adequate reserve for contingencies. In order to assure adequate revenues, the Town Board 

voted to increase Airport landing 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 projects, 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 operations at the Airport and in the peak summer months of July and 

August, overall traffic volume and fuel sales volume increased compared to prior years. 

The controlling Federal Aviation Administration (“FAA”) compliance rule states 

explicitly that “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.” 

Despite this rule, Sound Aircraft Services, Inc. (“Sound Aircraft”), the largest fixed-base 

operator (“FBO”) at the Airport, asserts that the newly adopted landing and fuel flowage fees 

violate Sponsor Assurances 24 and 25 without proffering any evidence either that the Town has 

progressively accumulated surplus revenues at the 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 substantial capital needs and other financial obligations that cannot be 
3

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 Sound 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 procedures set forth in the FAA’s Rates and Charges 

Policy. But, the Rates and Charges Policy does not set forth any mandatory procedures for 

general aviation airports. Rather, the Policy recognizes that general 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 general aviation airports set fees. The “procedures” 

to which Sound Aircraft refers are actually suggestions for commercial service airports to follow 

in setting rates and charges; they are not mandatory procedures that general aviation airports 

must follow when amending long-standing landing and fuel flowage fees. 

Fundamentally, Sound Aircraft’s Complaint 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 sufficient revenue under the old fees to meet its foreseeable capital 

and other needs; and (2) the new fees are necessary to pay for projects the 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 accumulation of an “inappropriate surplus,” and will be dedicated 
4

to meeting Airport financial obligations. The new fees are, therefore, consistent with the Town’s 

obligations under Assurances 24 and 25 and the Complaint fails to state a claim of any violation 

of the Town’s federal obligations. 

II. STATEMENT OF FACTS 

A. Overview of Airport 

East Hampton Airport is a public-use General Aviation airport located in the Town of 

East Hampton in Suffolk County, New York. The Town owns the Airport and maintains and 

operates it for the benefit of the Town and its residents 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 offer general aviation services including aircraft 

fueling and tie-down locations for based and transient aircraft. Declaration of J. Charlton 

(“Charlton Dec.”) at ¶¶ 5, 8. 

The Airport serves a wide-variety of helicopters and fixed-wing aircraft. There are 

approximately 161 based aircraft at HTO. While there is no service from commercial airlines at 

the Airport, there are flight services that provide non-scheduled, on-demand flight services. 

Charlton Dec. at ¶ 5. 

The Airport has two distinct seasonal demand characteristics. During the summer season 

(roughly Memorial Day to Labor Day), itinerant aircraft are the largest user group. During this 

season, HTO serves as a destination airport for summer residents and visitors to the Hamptons, 

including individuals that use privately-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 operations 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.” Charlton Dec. Exhibit 6 at II-74 (2007 Master Plan Update). Revenue 

to support the Airport is derived from a variety of sources, including rentals and leases, landing 

fees, advertising income, vending machines, interest on investments, and fuel flowage fees. E.g., 

Declaration of C. Kagel (“Kagel Dec.”) Exhibit 3 (Approved 2015 Airport Budget at p. 236). 

The Town also maintains an Airport Fund with reserves for use toward Airport 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 provided 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 and 2015 Airport Budgets); Kagel Dec. 

Exhibit 2 (Table of year-end Airport Fund totals). 

The Town sets a budget each November for the forthcoming year. The Airport is 

accounted for in a special revenue fund. Airport funds are not commingled with the Town’s 

general operations fund. The annual 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 the 
6

approved budget as soon as possible. For example, the Town may move funds from one Airport 

line item to another to account for an unexpected increase in expenses in a particular area (e.g., 

snow removal). Because the Town purchases all aviation fuel for the Airport and then sells the 

fuel to the FBOs, the Town often needs to pass 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 expense 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 sells to the FBOs. Both FBO leases include the 

obligation to pay the fuel flowage fee. Charlton Dec. ¶ 11. The FBO leases state clearly that 

“from time to time, the Town Board by resolution may amend the fuel flow fee ...” Charlton 

Dec. Exhibit 3 at 6 (Sound Aircraft 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 early 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 significant source of revenue at the Airport. The amount of the 

landing fee varies for different classes of aircraft (e.g., single-engine, twin-engine, etc.). The 

Town has historically raised landing fees at the Airport at regular intervals. In recent history, 

landing fees were increased in 2006, then again in 2008, 2013 and most recently in 2014. For 

example, the landing fee for a single-engine prop aircraft was raised to $5 in 2006, $7 in 2008, 

$10 in 2013, and $11 in 2014. Currently, the highest 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 only 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 that 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 future environmental issues. Charlton Dec. at ¶¶ 9, 17. The Town 

has already secured environmental approval for upgrades to the existing fuel farm and also for 

construction of a second fuel farm near Taxiway G, to provide additional fuel storage. Charlton 

Dec. Exhibit 7 at 2 (2010 Final Generic Environmental 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 ensure 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 fuel to the two FBOs at the actual price it paid 
8

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 from 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 Director Brundige). 

Sound Aircraft’s fuel sales account for approximately 80% of the total fuel sales at the 

Airport; Myers sells the remaining 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 gallons 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 safety, noise, and airport 

operations. In 2007, the Town completed a Master Plan Update and began consideration of a 

range of costly airport improvements. Charlton Dec. Exhibit 6 at III-201 (2007 Master Plan 

Update). In 2010, the Town completed an environmental review on 14 specific projects, 

including runway rehabilitation, fuel farm upgrades 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”) in September 2011. Charlton Dec. Exhibit 8 (2011 

ALP Conditional Approval Letter). Immediately thereafter, the Town commissioned its 

consultants to develop an “effective, comprehensive, 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 Burke-Gonzalez). 
9

the key underlying assumptions was that the Airport 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. Exhibit 9 at 10-18 (December 

2011 PowerPoint presentation). 

In 2012 and 2013, the Town completed several critical items on this list, including 

installing a temporary seasonal Air Traffic Control Tower and securing 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 Budget). One month later the Town approved 

the 2014-2018 Airport Capital Improvement Plan (“ACIP”), which identifies capital projects that 

had secured FAA conditional approval and that had also completed environmental review 

pursuant to the New York State Environmental Quality 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 but were 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 identified on the 2014-2018 

ACIP. For example, the Town has hired consultants 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 Analyses). 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 analysis. 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 addition, the Town has also hired an engineer to 

evaluate the condition of existing infrastructure, and has hired consultants to examine airspace 

obstructions. Malman Dec. Exhibit 8 (Town Resolutions re: noise analysis), Exhibit 9 (Town 

Resolutions re: Taxiway “A” lighting), and Exhibit 10 (Town Resolutions re: Runway 4-22 

repair). Knowing that the Airport was facing a long list of costly maintenance and capital 

expenses, and other contingencies, the Town commenced 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 review and recommendations it desires the Committee to undertake.” 

Malman Dec. Exhibit 3 (Resolution 2014-147). At the February 4, 2014, Work Session, the 

Town directed the BFAC to conduct a financial analysis of the Airport. Malman Dec. Exhibit 1 

(February 4, 2014 Town Meeting Minutes) and Exhibit 2 (February 4, 2014, statement of 

Councilwoman Burke-Gonzalez). Two days later, on February 6, the Town passed Resolution 

2014-147 (attached as Malman Dec. Exhibit 3) directing the BFAC to “undertak[e] a financial 

analysis of the East Hampton Town Airport including airport income and expenses as well as 
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12

bondable expenses such as Outside Professionals and Subcontracts (i.e., non-recurring 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 attended many of the Subcommittee meetings and 

participated in informal discussions with Subcommittee members about Airport 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 understand future revenue needs. Subcommittee members 

prepared a preliminary analysis showing the ability of the Airport to carry additional debt for 

capital improvements. At its March 29 meeting, which was attended by Ms. Herbst, the 

Subcommittee agreed to formalize that analysis, taking into account potential 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 extensive fact-finding, 

including outreach to Town officials, Airport personnel, and both FBOs. Malman Dec. Exhibit 

13 (May 5, 2014, letter from Subcommittee transmitting analysis to Town Board). 

That analysis was set forth in the Subcommittee’s Progress Report No. 1, a Preliminary 

Debt Capacity Analysis, and an accompanying Resolution. 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 fuel 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 levels 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; Malman 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 revenues and debt coverage to the approved 

2014 Airport Budget, as well as the ACIP and AMP, which, collectively, presented a total of 

over $10 million in needed expenditures at the Airport. 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 allegation 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 discussing that assumption, the Sub-Committee explained that “And 

landing fees, this is the only mildly aggressive assumption. 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 conservative 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 use 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 expenditures such as litigation and 

consultant’s fees in the event the Town Board adopts an aggressive noise 

abatement policy. 

... 

Accordingly, the SubCommittee has begun to explore revenue enhancement 

opportunities, such as paid parking, increased fuel flowage fees and increase 

lease revenues. Revenue enhancements, which would help (i) increase 

available debt service coverage to support increased capital improvement 

programs and/or (ii) build reserves to guard against contingencies 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 Progress 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 Debt Capacity Analysis was simply a starting 

point for discussion and that it did not satisfactorily address known contingencies and nonbondable expenditures, such as litigation 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 fuel 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 testimony 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. Exhibit 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 Sound 
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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 information. 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); Malman Dec. Exhibit 22 at 25-30 (Transcript 

of June 17, 2014 Town Work Session) (testimony 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 fee. “If the ... formula were really too high, the FBO would 

volunteer proprietary data. If the financial data were not 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, Subcommittee Minutes at 2). The Subcommittee 

researched fuel flowage fees at comparable facilities and concluded that an 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). Therefore, at its June 2, 2014, meeting, the 

Subcommittee agreed to immediately recommend raising the fuel flowage fee from 15 cents to 

30 cents. The Subcommittee deferred further consideration 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% before the busy season had passed. Malman Dec. Exhibit 16 (June 
17

2, 2014, Subcommittee Minutes at 3). This recommendation was the result of extensive review 

of historic landing fees at HTO, the recognition that 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 landing fees by 10% was reasonable. Malman Dec. at ¶¶ 39-40; 

Malman Dec. at Exhibit 26 (table comparing landing fees at comparable airports) and Exhibit 27 

(Town consultant’s comparison of future landing fee options). 

At the June 3 Town Board Work Session, then-Airport Director Brundige discussed two 

proposed resolutions: Resolution 2014-672 (raising the landing fees by 10%) and Resolution 

2014-673 (raising the fuel flowage fee to $0.30 per gallon). Malman Dec. Exhibit 19 at 3 (June 

3, 2014, Town Work Session Minutes). 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 testified again at that meeting. As she had at the June 3 meeting, Ms. 

Herbst argued that the fuel flowage fee increase 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 Resolution 2014-672, increasing the landing fees, but 

tabled Resolution 2014-673, increasing the fuel flowage 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 requirement that the budget be 
18

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 the fuel flowage fee issue to explain the bases 

for its recommendation to increase fuel flowage fees. The goal of the 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 airports 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 the June 17 meeting. 

Malman Dec. Exhibit 22 at 3-8 (Transcript of June 17, 2014 Town Work Session). 

Two days later, at the June 19 Town Board 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 June 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 direct response to the concerns of the FBOs, the 

effective date of the increase was deferred to July 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 budget document every 

time fees are increased. 
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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 fee 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 the increase in landing fees but also a 

corresponding increase in the costs for billing services 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 (Resolution 2014-1186). Similarly, in November, the Town Board 

passed Resolution 2014-1295, transferring excess Airport Landing Fee Revenues to cover 

expenses for the proposed Obstruction Study. Charlton Dec. Exhibit 13 (Resolution 2014-1295). 

G. Airport Operations and Fuel Sales Following Implementation of New Fees 

In the several months following implementation 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-sold larger than expected volumes of aviation 

fuel in 2014. As depicted in the table below, Sound Aircraft’s fuel sales were actually higher in 

July, August and September 2014 – after the fuel flowage 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 26,731.6 
21

See generally, Charlton Dec. ¶ 13; Charlton Dec. Exhibit 5 (fuel data from 2013 and 2014); see 

also Kagel Dec. Exhibit 1 (Resolution 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 impacts 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 – thereby 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, and limited, by 14 C.F.R. 

§ 16.1(a), which authorizes FAA to adjudicate disputes arising under certain 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 Complainants (who are bringing the action), 

not the Respondent. It is the Complainants’ responsibility to provide a concise 

but complete statement of the facts relied 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 burden of proof falls upon the Complainant to establish and 
22

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 complainant 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 structure for the facilities and 

services at the airport which will make the airport as selfsustaining as possible under the circumstances existing at the 

particular airport, taking into account such factors as the volume of 

traffic and economy of collection. 

As the FAA has recognized in its Airport Compliance 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, given 

differences in conditions at each airport. The purpose of the selfsustaining rule is to maintain the utility of the federal investment in 

the airport. 

Compliance Manual ¶ 17.5. Under this principle, airport sponsors have wide latitude to set rates 

and charges. Airport rates and charges are also subject to the general requirement to be 

reasonable and non-discriminatory. 

Charges for aeronautical uses of the 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 generally 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 level 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 discretion 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 how it will apply these requirements in the 

Policy Regarding Airport Rates and Charges (Rates and Charges Policy, Compliance Manual 

Appendix D). The Rates and Charges Policy sets forth five principles that establish the 

substantive standards for assessing the reasonableness of airport rates and charges for domestic 

users: 

1. In general, the Department relies upon airport proprietors, 

aeronautical users, and the market and institutional 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 fees, 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 unjustly 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 Federal statutory provisions governing 

the use of airport revenue, airport 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 sponsors and aeronautical users regarding fees 

are likely, the FAA has provided recommendations for consultation 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 expressly recognizes that: “Federal law does not 

require a single approach to airport rate setting.” Id. at ¶ 2.1. “Airport proprietors may set fees 

for aeronautical use of airport facilities by ordinance, statute, or resolution, 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 obligations relating to airport fees.” Id. at p. 48. However, the 

“FAA proceeding is not intended to provide a mechanism 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 procedures by which a fee was adopted. 
25

The FAA has explained that the Rates and Charges 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 proprietors, especially proprietors of general aviation 

airports, may use 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 

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 sophisticated cost allocation systems].” Id. 

Accordingly, the FAA approaches the reasonableness 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 fees absent evidence of a progressive accumulation 

of aeronautical revenues.” Compliance Manual at ¶ 17.9 Second, 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 operating costs of the airport; the 

local airport system; or other local facilities which are owned or 
26

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 the operating and capital costs of the airport: 

Sponsors may use their airport revenue for the capital or operating 

costs of the airport, the local airport system, or other local facilities 

owned or operated by the airport owner or operator and directly 

and substantially related to the air transportation of passengers or 

property. 

[]Operating costs for an airport may be both direct and indirect and 

may include all of the expenses and costs that are recognized under 

the generally accepted accounting principles and practices that 

apply to the airport enterprise funds 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 these fees are for services in support of airport 

capital or operating costs that are 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 reserve or providing for contingencies, provided 

that such reserves are ultimately used for allowable 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. See
27

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. City of Cincinnati, FAA Docket No. 

16-12-14 at 25 (Director’s Determination Sept. 12, 2014) (noting that the Part 16 process is 

concerned only with current compliance. This principle is also reflected in 14 C.F.R. 

§ 16.23(b)(4), requiring complainants to allege how it has been substantially 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 that Sound Aircraft has been harmed or directly 

affected by the new fees. Nor could it. The experience to date shows that overall operations in 

the months following the new fees were higher than last year, and fuel sales have also increased. 

See generally, Charlton Dec. ¶ 13; Charlton Dec. 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 accumulation of aeronautical 

revenues.” Compliance Manual at ¶ 17.9. “Reasonable reserves and other funds to facilitate 

financing and to cover contingencies are not considered revenue surpluses.” Id. Sound Aircraft 

does not offer any proof that there has been a progressive 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 surplus 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 that 
28

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 immediately after adoption 

based only on Sound Aircraft’s baseless fears that the fees are too high. Accordingly, Sound 

Aircraft’s challenge to the new landing and fuel flowage fees under Sponsor Assurance 24 must 

be dismissed as unripe. 

Similarly, a violation of Sponsor Assurance 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 revenue will be spent for non-airport 

purposes. Complaint at ¶¶ 44-51. But Sound Aircraft does not offer 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. Under 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 Assurance 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 allegation here, its challenge to the new landing and 

fuel flowage fees under Sponsor Assurance 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 new landing fee and its new fuel flowage fee 

under Assurance 24. Although Sound Aircraft asserts the same theories and arguments against 
both fees

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30

Second, the Subcommittee reviewed comparable 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 landing 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 are non-discriminatory because they apply to all 

aeronautical users, and not even Sound Aircraft alleges they are discriminatory. The fee 

structure was adopted through a public process that simply compared future financial needs to 

existing revenues and concluded that additional revenues were necessary to meet those 

obligations. That process was both transparent and reasonable, and easily satisfies Assurance 24. 

Third, Sound Aircraft has failed to meet it burden of proof that the Town has violated 

Assurance 24. Sound Aircraft does not present any financial analysis of the Airport revenues 

and future expenses and capital needs demonstrating (1) that the new fees are not necessary, (2) 

that the new fees have led to an unreasonable surplus, or (3) that the new fees will lead to an 

unreasonable surplus. Sound Aircraft does not offer any evidence tending to show that the prior 

revenues were sufficient to meet future operating, 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 Subcommittee, are not appropriate Airport expenses.7 In short, 

Sound Aircraft has failed to offer any affirmative 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

argument

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31

ith Assuranc

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cott Meyer v

2, 2014).

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7. 
32

Second, of more importance here, the FAA has 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 proprietors, especially 

proprietors of general aviation airports, may use 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 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 sophisticated cost allocation 

systems].” Id. The FAA expressly recognizes and preserves the ability of airport operators to 

“set fees for aeronautical use of airport facilities by ordinance, 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 first engaging in lengthy 

negotiations and that the Rates and Charges Policy does not change that. 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 and, 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 resolution under the procedures for adopting Town 

resolutions. Having agreed 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 Westchester 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 consistent 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 Subcommittee’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 convening public hearings. Sound Aircraft was able to, and did, 

participate in those hearings. The Town approved the landing fee increase at its June 5, 2014, 

meeting without objection from Sound Aircraft.10 The Town also tabled its initial consideration 

of the fuel flowage fee increase, allowing Sound Aircraft additional time to prepare and present 

its arguments. Sound Aircraft took full advantage of that opportunity and ultimately Sound 

Aircraft testified at four separate Town Council meetings or work sessions between June 3 and 

June 19 at which the fuel flowage fee was discussed and debated. In addition, Sound Aircraft 

had opportunities to meet informally with Town Council members before and throughout that 

period. Complaint at ¶ 16. Even if the Town had a federal obligation to provide Sound Aircraft 

notice of the possibility that the fees would increase, it provided more than adequate notice. 

 

10 Sound Aircraft infers that there was something improper about the fact that the 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 requirement 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 Council Work Session on June 3, and the prospect 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” claim is legally without merit and factually 

baseless. 

b. Failing to “Consider” the Rates and Charges Policy 

Sound Aircraft argues that the new fees violate 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 violates a federal obligation by failing to formally 

document its analysis of whether a proposed action would be in compliance with the Sponsor 

Assurances. Certainly, there is no such requirement in Assurance 24 or the Rates and Charges 

Policy, and Sound Aircraft does not cite 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-compliant solely for lack of documentation. This 

theory would also effectively reverse the burden of proof in a Part 16 proceeding by requiring an 

airport sponsor to prove compliance, even in the 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 determination, following an appropriate investigation, can 

conclusively determine a question of compliance. 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 attorneys and compliance experts, but it would not serve the interests 

of airport sponsors, aeronautical 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 formally document compliance a violation of federal 

obligations, particularly when there 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 justification, 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 information relied upon by the Town and the Subcommittee 

was available to Sound Aircraft and the public, and the key points were 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 Assurance 24 by failing to employ 

a reasonable, transparent, consistent method of establishing rate base 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 procedures on general aviation airports adopting new 

landing and fuel flowage fees. As explained above, that reading of the Rates and Charges Policy 
is incorre

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37

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 violation of Assurance 25. 

First, as detailed above, Sound Aircraft has neither alleged nor proved that the Town has 

spent any of the proceeds from the new landing fees 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 Town will accumulate a surplus of airport 

revenue is similarly flawed because Sponsor Assurance 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 evidence of any future revenue diversion. As 

detailed above, the Town’s analysis shows that the increased fees will not even meet projected 

financial needs, and will therefore not generate a surplus. Sound Aircraft has not presented a 

shred of evidence to the contrary. Nor can Sound Aircraft conjure 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 action gives even the slightest suggestion that it 

would spend Airport revenue for any non-Airport purpose. Sound Aircraft’s argument is entirely 

speculative, and baseless, and should be rejected out 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 formally 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, and 
38

nothing in Assurance 25 or the Revenue Use Policy imposes such an obligation. Failing to 

analyze compliance before taking action 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 time the Complaint was filed, the Town had not yet 

responded to Sound Aircraft’s request for invoices related to amounts expended for the Airport’s 

Outside Professional costs.11 However, Sound Aircraft never presented its concern about 

revenue diversion to the Town for resolution pursuant to 14 C.F.R. § 16.21. If it had done so, 

this issue could have been quickly resolved because 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 invoices 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 airport operator can spend airport 

revenue for outside professional help. An airport 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 airport revenue to pay lobbying and 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 costs 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 operator to hire and pay appropriate outside professionals to provide 

advice and other services to assist the airport sponsor on airport projects 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 professionals. Rather, Sound Aircraft raises a 

“concern” that the lack of apparent documentation of the payments to outside professionals 

suggests a violation of Sponsor Assurance 25. That kind of speculative 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 (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 

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 Town 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 that it had spent the money properly on outside 

professionals to provide advice on Airport matters. 

At the outset, it is important to clarify that the total amount the Town spent on outside 

professionals for the Airport in 2011-2013 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. Because 
40

budgets are approved each November, year-end numbers cannot yet be recorded for the prior 

budget year. For example, Sound Aircraft concluded 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 spent 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 that the money was spent on outside professionals in connection 

with Airport matters. Exhibit 5 to the Declaration 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. Clearly, the Town spent airport revenue for a permissible airport 

purpose and Sound Aircraft’s claim of revenue diversion should be dismissed. 

V. CONCLUSION 

For the foregoing reasons, the Town respectfully requests that the FAA dismiss the 

Complaint and find that the Town’s decision to increase 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.