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) 955-5616
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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. For 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 mismanaged 
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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.

CHANDLER AIR SERVICE

3. In response to the allegations in Paragraph 3 of the Complaint, the City ADMITS

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 prior to December 30, 1987 and because the aviation fuel tax 

revenues are returned to the Airport by way of annual payments made by the City to the Airport. 

The City specifically DENIES that airport revenues can only be 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 other 
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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. In response 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 of 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. 
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9. In response to the allegations contained 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 Council passed

Municipal Ordinance 2122 regarding runway length, 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 by 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 length analysis. 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, but 
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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 Runway, and that the Runway was not extended, 

but otherwise 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 but 
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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. In response 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 policy regarding runway development, and that the terms of the 2007 

AMP and the 2013-17 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 22, 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.
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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 2007, the terms of which speak for 

themselves; that the Runway extension 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 DENIES 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 fuel 
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sales at the Airport, and that the Fuel License 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 considered 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 License 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 conducted a fuel sales tax audit of CAS and the Airport 

beginning in February 2007, 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 Airport 
9

$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 taxes and $5,696.58 in interest. ($4,423.13 in 

penalties were waived) for the period June 1, 2004 - February 28, 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 December 30, 1987, and is therefore not required to be treated as airport revenue.

31. The City DENIES the allegations contained in Paragraph 31 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 December 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 ADMITS 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 payment to the Airport. 
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Economic Discrimination

33. The City DENIES the allegations contained in Paragraph 33 of the Complaint. 

The City specifically DENIES that it economically discriminates against CAS, that it uses

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 ADMITS only

that the partial quote of Grant Assurance No. 22(g) is accurate, but otherwise DENIES the 

allegations contained in Paragraph 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 ADMITS 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 falls 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 formula, 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 ADMITS that CAS’s attorney sent 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 express 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 sent 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 of 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. In response 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. 
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Conclusion

41. The City DENIES the allegations contained in Paragraph 41 of the Complaint.

The City specifically DENIES 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. 16.1.

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

13
CERTIFICATE 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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