**UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION** 

**WASHINGTON, D.C.**

CHANDLER AIR SERVICE

Complainant,
v. CITY OF CHANDLER, ARIZONA

Respondent. FAA Docket No. 16

- 13
- 05

**ANSWER OF THE CITY OF CHANDLER, ARIZONA Designation of persons to receive service for the City Of Chandler, Arizona:** 
Kay Bigelow, Acting City

Attorney Chandler City

Attorney's Office P.O. Box 4008, Chandler, AZ 85244

-4008 Kay.Bigelow@chandleraz.gov Telephone: 480

- 782
-4645 Facsimile: 480

- 782
-4652 W. Eric Pilsk Daniel S. Reimer Kaplan Kirsch & Rockwell LLP 1001 Connecticut Ave., NW, Suite 800 Washington, D.C. 20036 epilsk@kaplankirsch.com dreimer@kaplankirsch.com Telephone: (202) 955

- 5600 Facsimile: (202) 955

- 56161 **UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION** 

**WASHINGTON, D.C.**

CHANDLER AIR SERVICE

Complainant,
v. CITY OF CHANDLER, ARIZONA

Respondent. FAA Docket No. 16
- 13
- 05

**ANSWER OF THE CITY OF CHANDLER, ARIZONA** The City of Chandler, Arizona (“The City” or “City”), by its undersigned counsel, hereby
answers and responds, upon its best information and belief, to the Complaint filed by Chandler Air Service (“ CAS”) as set forth below. The City denies all allegations contained in the Complaint except to the extent such allegations are specifically admitted in this Answer. CAS failed to provide numbered paragraphs or otherwise differentiate the allegations in the Complaint. F or the Director’s benefit, the City has provided an annotated version of the Complaint that adds numbers to each paragraph as Attachment A hereto, and drafted the Answer to correspond to the numbered paragraphs provided in the annotated Complaint. 1. The City DENIES the allegations contained in Paragraph 1 of the Complaint, and specifically DENIES that CAS has stated a valid claim for relief
. 2. The City DENIES the allegations contained in Paragraph 2 of the Complaint
. The City specifically

DENIES that it has violated any of its grant obligations, that it has mismanaged2

the Airport, or that is has violated state law. Furthermore, the City DENIES that review of the City ’s compliance with state law is within the FAA’s Part 16 jurisdiction. **C HANDLER AIR SERVICE**  3. Inresponse to the allegations in Paragraph 3 of the Complaint, the City ADMIT S that CAS is a fixed based operator at the Airport; that CAS provides maintenance services, fueling and ground handling services, flight training, and pilot supplies; and that CAS has leased space at the airport since 1983 , but otherwise DENIES the allegations contained in Paragraph 3. **SUBJECT OF THE COMPLAINT** 4. The City DENIES the allegations contained in Paragraph 4 of the Complaint
. The City specifically DENIES that the FAA has the authority to order the City to revise Ordinance 8

- 10. 5. The City DENIES the allegations contained in Paragraph 5 of the Complaint
. The City specifically DENIES that fuel taxes paid into the Chandler City General Fund should be returned to the Airport Enterprise Fund. The fuel taxes collected are permitted to be paid into the City ’s General Fund pursuant to Grant Assurance No. 25 and 49 U.S.C. § 47133(a) because the tax on aviation fuels was in effect pri or to December 30, 1987 and because the aviation fuel tax
revenues are returned to the Airport by way o f annual pay

ments made by

the City to the Airport
. The City specifically

DENIES that airport revenues can only b e used to fund airport improvements. 6. The City DENIES the allegations contained in Paragraph 6 of the Complaint
. The City specifically

DENIES that its commercial self

- service fuel operation operates at a loss or that the City subsidizes its commercial self

- service fuel operation with airport enterprise or other3

funds , or that the FAA has the authority to restrain the City ’s discretion in the spending of state and local monies. **FACTUAL BACKGROUND Runway Length Inhibition**  7. In response to the allegations contained in the first three sentences of Paragraph 7 of the Complaint, the City ADMITS only that it prepared the 1982 Airport Master Plan (AMP) , that the 1982 AMP addressed an ultimate recommended runway length, and that the terms of the 1982 AMP speak for themselves but otherwise DENIES all allegations of Paragraph 7 inconsistent with the express terms of the 1982 AMP
. Inresponse to the last three sentences of Paragraph 7, the City ADMITS only that it received federal funding for specified projects pursuant to AIP Grant No. 03
- 04
- 008
- 03, AIP Grant No. 3
- 04
- 008
- 04, AIP Grant No. 03
- 04
- 008
- 05, AIP Grant No. 03
- 04
- 008
- 06, and AIP Grant No. 03
- 04
- 008
- 07 , the terms of which speak for themselves , but DENIES all allegations of Paragraph 7 inconsistent with the express terms of those grant agreements
. The City specifically

DENIES that any

of those grants were for the purpose of extending the Airport’s runways beyond their current lengths, and otherwise DENIES the allegations contained in Paragraph 7. The City states that all AIP grants have been used for their intended purpose. 8. In response to the allegations contained in Paragraph 8 of the Complaint, the City ADMITS only that it has entered into grant agreements with the FAA to receive federal funding , including grants relating to the construction of Runway 4R
-22L
. The City specifically DENIES that any o f those grants were for the purpose of extending the Airport’s runways beyond their current lengths, and otherwise DENIES all allegations contained in Paragraph 8.4

9. In response to the allegations c ontained in Paragraph 9 of the Complaint, the City ADMITS only that a ballot measure purporting to ban jet aircraft from the Airport was passed in 1989 , that the ballot measure was not enforced, and that the Mayor and City C ouncil passed Municipal Ordinanc e 2122 regarding runway l ength, the terms of which speak for themselves, and that jets are able to use the Airport in its current configuration, but otherwise DENIES the allegations contained in Paragraph 9. The City specifically DENIES that Municipal Ordinance 2122 “ effectively banned certain jets ” and further states that Ordinance 2122 has been superseded b y subsequent City laws. 10. In response to the allegations contained in Paragraph 10 of the Complaint, the City admits only that it prepared the 1998 AMP , the terms of which speak for themselves , and that the 1998 AMP included a runway l ength analys is. The City DENIES all allegations inconsistent with the express terms of the 1998 AMP , and otherwise DENIES the allegations contained in Paragraph 10. 11. In response to the allegations contained in Paragraph 11 of the Complaint, the City admits only

that the 1998 AMP addressed issues relating to a potential 6,800 foot runway, that the terms of the 1998 AMP speak for themselves, and that the City has not acquired any

land for the purpose of further extending the runways, but otherwise DENIES all allegations inconsistent with the express terms of that document. The City otherwise DENIES the allegations contained in Paragraph 11. The City also states that the 1998 AMP has been superseded and replaced by the 2007 AMP
. 12. In response to the allegations contained in Paragraph 12 of the Complaint, the City ADMITS that Ordinance No. 2978 added a chapter to the Chandler Municipal Code , Chapter 8, Section 10 of the Municipal Code , the terms of which speak for themselves , but5

DENIES all allegations of Paragraph 12 that are inconsistent with the express terms of Ordinance 2978
. The City ADMITS that a bond election was held on September 12, 2000, that the citizens rejected the measure to fund extension of the R unway, and that the R

unway was not extended, but otherwis e DENIES the allegations contained in Paragraph 12. The City specifically DENIES that there were “ample funds in the Airport Enterprise Fund to pay the City’s share of the Runway cost.” 13. In response to the allegations contained in Paragraph 13 of the Complaint, the City ADMITS that Resolution 3669 , the terms of which speak for themselves, was passed in August 2003, but DENIES all allegations of Paragraph 13 that are inconsistent with the express terms of Resolution 3669
. 14. In response to the allegations contained in the Paragraph 14 of the Complaint, the City ADMITS only that it rezoned certain land from an agricultural district (AG

- 1) to a planned
area development (PAD) pursuant to an application from Vestar Arizona XXXVII, LLC (“Vestar”) pursuant to Ordinance No. 3470 , the proceedings of which are reflected in the Minutes of the Regular Chandler Meeting (Aug. 14, 2003) , the terms of which Ordinance and Minutes speak for themselves , and that the Airport Manager indicated that approval of Ordinance 3470 would require amending the ALP and 1998 AMP, but otherwise DENIES all allegations of Paragraph 14 that are inconsistent with the express terms of those documents . The City specifically DENIES that it recognized its actions regarding the Vestar development would breach its grant obligations or that its land use planning process imposes restrictions on the use of the Airport. 15. In response to the allegations contained in Paragraph 15 of the Complaint, the City ADMITS that it amended the 1998 AMP and Airport Layout Plan in 2006
-2007 but6

otherwise DENIES all allegations contained in Paragraph 15. The City specifically DENIES that it was required to seek FAA approval to grant land use approvals or enter into a development agreement in connection with the Crossroads Towne Center
. 16. Inresponse to the allegations contained in Paragraph 16 of the Complaint, the City ADMITS that Vestar began developing its property in 2004, that the northwest section of the site is located northeast of the Airport and in line with the Airport runways , and that the current AMP and ALP recognize a maximum runway length of 5 , 700 feet. The City otherwise DENIES all allegations contained in Paragraph 16. 17. In response to the allegations contained in Paragraph 17 of the Complaint, the City ADMITS only that it received funding from the FAA in 2006 to update the AMP, that it developed and approved an amended AMP in 2007, that it has submitted the 2007 AMP to the FAA for approval, that the FAA has not yet approved or disapproved the 2007 AMP , and that the 2007 AMP reflects City

p olicy regarding runway

development, and that the terms of the 2007 AMP and the 201 3
- 17 National Plan of Integrated Airport Systems speak for themselves , but the City DENIES all allegations of Paragraph 17 that are inconsistent with the express terms of the 2007 AMP and the 2013
- 17 National Plan of Integrated Airport Systems
. The City specifically DENIES that the AMP included any restriction on runway length, that the 2007 AMP sought approval of “unilateral deviations , ” and that the City violated any of its grant obligations
. 18. In response to the allegations contained in Paragraph 18 of the Complaint, the City ADMITS only

that it adopted Ordinance No. 3888 on February 2 2, 2007, which was subsequently

amended by

Ordinance 4419 on December 12, 2012, the terms of which Ordinances speak for themselves, but DENIES all allegations of Paragraph 18 inconsistent with the express terms of Ordinances 3888 and 4419.7

19. In response to the allegations contained in Paragraph 19 of the Complaint, the City ADMITS only that Paragraph 19 accurately quotes Ordinance 8

- 10. 20. In response to the allegations contained in Paragraph 20 of the Complaint, the City ADMITS only that a bond measure to fund extension of the Runway was one of ten bond
measures included on a bond measure ballot in May 2 007 , the terms of which speak for themselves; that the Runway extens ion bond was in the amount of $65,000 , and that the voters rejected the bond measure by a margin of 897 votes (7.8 %). The CITY otherwise DENIES all allegations contained in Paragraph 20. 21. The City DENIES the allegations contained in Paragraph 21 of the Complaint
. The City specifically

D ENIES that Ordinance 8
- 10 limits the length of the runway purely for noise reasons or that Ordinance 8
- 10 in any way violates the City ’s grant obligations. 22. The City DENIES the allegations contained in Paragraph 22 of the Complaint
. The City specifically

DENIES that Ordinance 8
- 10 is a “noise based restriction” that is preempted by

the Airport Noise and Capacity Act of 1990 (“ANCA”) , that the Director has jurisdiction over alleged violations of ANCA under Part 16 , and that the City has failed to comply with FAA regulations. 23. The City DENIES the allegations contained in Paragraph 23 of the Complaint
. **Revenue Diversion** 24. In response to the allegations contained in Paragraph 24 of the Complaint, the City ADMITS only the first, second, third, fourth, fifth and seventh sentences of Paragraph 24 but otherwise DENIES the allegations contained in Paragraph 24
. 25. In response to the allegations contained in Paragraph 25 of the Complaint, the City ADMITS only that CAS and the Airport entered into a Fuel License governing CAS ’s fuel8

sales at the Airport, and that the Fuel Li cense imposed a fuel flow fee against CAS , but otherwise DENIES the allegations contained in Paragraph 25. The City specifically DENIES
any assumption or agreement that the fuel flowage fee was in lieu of otherwise applicable taxes. 26. In response to the allegations contained in Paragraph 26 of the Complaint, the City ADMITS only that CAS complained about paying taxes on aviation fuel sales and that the City c onsidered his complaint and that the tax on aviation fuels sales was (and is) paid into the City ’s General Fund, but otherwise DENIES the allegations contained in Paragraph 26. 27. In response to the allegations contained in the first two sentences of Paragraph 27 of the Complaint, the City ADMITS only that the City

informed Airport management in 2006 that the Airport was required to pay the City ’s tax on the sale of aviation fuels, but otherwise DENIES the allegations contained in the first two sentences of Paragraph 27. In response to the last three sentences of Paragraph 27 of the Complaint, the City ADMITS only

that it notified CAS of its obligation to collect and pay the City ’s tax on fuel sales in a letter dated October 31, 2006 , which obligation was not excused by CAS’s Fuel Li cense with the City
. The City DENIES all allegations in the last three sentences of Paragraph 27 that are inconsistent with the express terms of the October 31, 2006 letter
. 28. In response to the allegations contained in Paragraph 28 of the Complaint, the City ADMITS only that the City c onducted a fuel sales tax audit of CAS and the Airport beginning in February

2 007 , and that CAS began paying taxes on the sale and use of aviation fuels on a regular basis in 2007 , but otherwise DENIES the allegations contained in Paragraph 28. 29. In response to the allegations contained in Paragraph 29 of the Complaint, the City ADMITS only

that, following completion of audits, the City assessed the Airport9

$52,757.42 in back taxes and $10,811.77 in interest ($13,189.42 in penalties were waived) for the period for the period January 1, 2003

– December 31, 2007, that the Airport paid that amount to the City, that CAS was assessed $44,230.93 in taxe s and $5,696.58 in interest. ($4,423.13 in penalties were waived) for the period June 1, 2004
- February 2 8, 2009, and that the City agreed to abate that assessment following an appeal, but otherwise DENIES the allegations contained in Paragraph 29. The City specifically DENIES that the fuel tax revenues collected at the Airport have not been transferred back from the General Fund to the Airport Fund. 30. In response to the allegations contained in Paragraph 30 of the Complaint, the City ADMITS that it is currently collecting fuel taxes from both CAS and the Airport, and that these taxes are deposited initially in the City General Fund. The City otherwise DENIES the allegations contained in Paragraph 30. The City states that its tax on aviation fuels was in effect prior to Decemb er 30, 1987, and is therefore not required to be treated as airport revenue. 31. The City DENIES the allegations contained in Paragraph 3 1 of the Complaint
. The City states that its tax on aviation fuels has been in effect since 1960 , that it applied to the sale of aviation fuel before Dec ember 31, 1987 , and that the tax was collected before 2006. 32. In response to the allegations contained in Paragraph 32 of the Complaint, the City ADM ITS only

that the partial quotes from Grant Assurance No. 25 and 49 U.S.C
. § 47133(a) are accurate, but otherwise DENIES the allegations of Paragraph 32. The City specifically DENIES that Grant Assurance No. 25 or 49 U.S.C. § 47133(a) prohibit it from depositing the tax on aviation fuel collected from CAS and the Airport in the City ’s General Fund because the tax was in effect before December 30, 1987 and because aviation fuel tax
revenues are returned to the Airport as part of the City ’s annual pay ment to the Airport.10 **Economic Discrimination** 33. The City DENIES the allegations contained in Paragraph 33 of the Complaint
. The City specifically

D ENIES that it economically discriminates against CAS , that it use s federal grant monies and airport enterprise funds to subsidize its commercial self

- service fueling operation, and that its commercial self

- fueling services do not break even
. 34. In response to the allegations contained in Paragraph 34, the City ADM IT S only that the partial quote of Grant Assurance No. 22 (g) is accurate, but otherwise DENIES the allegations contained in Paragra ph 34. The City specifically DENIES that it is violating Grant Assurance No. 22. 35. In response to the allegations contained in Paragraph 35 of the Complaint, the City ADM ITS only

that it used state grant funds to help fund a drainage improvement project that included replacing the pavement around the City ’s commercial self

- service fueling dispenser, but otherwise DENIES the allegations contained in Paragraph 35. 36. The City DENIES the allegations contained in Paragraph 36 of the Complaint
. The City specifically DENIES that its commercial self

- service fueling facility

f alls short of the formal minimum standards it requires of CAS
. The City also specifically

DENIES that it requires CAS to carry

branded fuel. 37. The City DENIES the allegations contained in Paragraph 37 of the Complaint
. The City specifically DENIES that it tracks CAS’s prices in an effort to keep its price slightly below that of CAS. The City states that its fuel prices are determined by a f ormula, which includes and accounts for the costs of acquiring fuel and delivering it to customers.11 **Pre -**  **Complaint Resolution** 38. In response to the allegations contained in Paragraph 38 of the Complaint, the City ADM ITS that CAS ’ s attorney s ent a letter to the Chandler City Attorney ’s Office on October 11, 2010, the terms of which speak for themselves, and that a true and correct copy of that letter is attached to the Complaint, but DENIES all allegations of paragraph 38 that are inconsistent with the express terms of the October 11, 2010 letter and denies the substance of that letter
. 39. In response to the allegations contained in Paragraph 39 of the Complaint, the City ADMITS that on November 4, 2010, it sent a letter in response to the above

-referenced October 11, 2010 letter, the terms of which speak for themselves, and that the copy attached to CAS ’s complaint is a true and correct copy of that letter but DENIES all allegations of Paragraph 39 that are inconsistent with the expres s terms of the November 4, 2010 letter
. 40. In response to the allegations contained in the first two sentences of Paragraph 40 of the Complaint, the City ADMITS only that CAS ’s attorney s ent a letter to the Chandler City Attorney ’s Office on May 24, 2013, the terms of which speak for themselves, and the copy attached to CAS ’s complaint is a true and correct copy o f that letter but DENIES all allegations of Paragraph 40 that are inconsistent with the express terms of the May 24, 2013 letter and denies the substance of that letter
. Inresponse to the last two sentences of Paragraph 40 of the Complaint, the City

ADMITS only that, on June 11, 2013, it sent a letter in response to the May 24, 2013 letter, the terms of which speak for themselves , and that the copy attached to CAS ’s Complaint is a true and correct copy of the June 11, 2013 letter, but DENIES all allegations of Paragraph 40 that are inconsistent with the express terms of the June 11, 2013 letter
.12 **Conclusion** 41. The City DENIES the allegations contained in Paragraph 41 of the Complaint
. The City specifically

D ENIES that the FAA has the authority to require the City to remove Ordinance 8

- 10. **AFFIRMATIVE DEFENSES** 1. The Complaint should be dismissed for failure to state a claim upon which relief may be granted. 2. The Complaint should be dismissed for failure to comply with the pleading requirements of 14 C.F.R. § 16.23. 3. The Complaint should be dismissed to the extent it asserts claims under laws over which the Director does not have jurisdiction pursuant to 14 C.F.R. 1 6 .1
. 4. The Complaint should be dismissed because CAS lacks standing under 14 C.F.R. Part 16. WHEREFORE, the City respectfully requests that the Director dismiss the Complaint and find that the City has not violated Grant Assurance 5, Grant Assurance 22, Grant Assurance 25 , ANCA, or 49 U.S.C. § 47133, and that no corrective action plan is warranted
.Respectfully submitted this 30th day of September, 2013

Kay Bigelow, Acting City Attorney Chandler City Attorney's Office P.O. Box 4008 Chandler, AZ 85244-4008 Kay. B i gelow@chandle n az. gov Telephone: 480-7 82-4645 Facsimile: 480-7 82-4652 Daniel S. Reimer Kaplan Kirsch & Rockwell LLP 1001 Connecticut Ave., N'W, Suite 800 Washington, D.C. 20036 epilsk@kaplankirs ch. com dreimer@kaplankirsch. com Telephone: (202) 9 55 -5 600 Facsimile: (202) 955 -5616

13CERTIFICATE OF SERVICE I hereby certif,i that I have this day served the foregoing Respondent the City 

### Of Chandler, Arizona's Answer on the following parties by email at the following addresses:

Office of the Chief Counsel Attn: FAA Part 16 Airport Proceedings Docket, AGC-610 Federal Aviation Administration 800 lndependence Avenue, S.W. V/ashington,DC 20591 

### I copy via Email 9 -AWA-AG C -P art- I 6 @faa. gov 

### Timotþ I. McCulloch Gordon & Rees LLP 11 1 V/. Monroe St., Suite 1600 Phoenix, 

### AZ 85003 1 copy via Email tmcullouch@gordonrees.com

Dated this 30th day of September, 2013:

S

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