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1 I 

### KAEl\IPFER CRO\VELL ATrORNEYS AT LAw

CARSON CITY OFFICE STEVEN E. TACKES stackes@kcnvlaw.com 775.884.8300

Mike Williams FAA Airports February 19,2016

Western-Pacific Region Phoenix Airports District Office 3800 N. Central Ave., Suite 1025 Phoenix, AZ 85012 

### Re: Fuel tax revenue status andcomplianceplan Carson CityAirport (KCXP) Dear Mr. Williams: LAS VEGAS OFFICE 1980 Festival Plaza Dr Suite 650 Las Vegas, NV 89135 Tel: 702.792.7000 Fax: 702.796.7181

RENO OFFICE 50 West Liberty Street Suite 700 Reno, NV 89501 Tel: 775.852.3900 Fax: 775.327.2011 CARSON CITY OFFICE 510 West Fourth Street Carson City, NV 89703

Tel: 775.884.8300 Fax: 775.882.0257

This letter is sent to both explain the fuel tax revenue process as it exists today, and, as our compliance plan regarding avgas fuel tax revenues for the Carson City Airport (KCXP). In Nevada, there are separate taxes onjet fuel and on avgas. Per NRS 365.170, those taxes are 1 cent per gallon, and 2 cents per gallon1
, respectively. 2 1. 

### Jet fuel tax. The Carson City Airport Authority has confirmed that the current tax of 1 cent per gallon is being collected by the State Department ofTaxation and remitted to the Carson City Airport monthly. Thus, we are in compliance with 49 U.S.C. 47107 (b) and 47133, as well as NRS 365.545, which expressly requires that thejet fuel tax come back to the governmental entity (in our case, the Carson City Airport Authority):NRS 365.545 Proceeds oftaxes on fuel forjetorturbine-powered aircraft. 1. The proceeds of all taxes on fuel for jet or turbine-powered aircraft imposed pursuant to the provisions of NRS 365.170 or 365.203 must be deposited in the Account for Taxes on Fuel for Jet or Turbine1 NRS 365.170 Rates oftaxes on aviation fuel and fuel for jet or turbine-powered aircraft; duties ofdealers. Every dealer shall: 1. Not later than the last day of each calendar month, submit to the Department a statement of all aviation fuel and fuel for jet or turbine-powered aircraft sold, distributed or used by the dealer in this State, as well as all such fuel sold, distributed or used in this State by a purchaser thereof upon which sale, distribution or use the dealer has assumed liability for the tax thereon pursuant to NRS 365.020, during the preceding calendar month; and 2. In accordance with the provisions of NRS 365.330, pay an excise tax on: (a) All fuel forjet orturbine-powered aircraft in the amount of 1 cent per gallon, plus any applicable amount imposed pursuant to NRS 365.203; and (b) Aviation fuel in the amount of2 cents per gallon, plus any applicable amount imposed pursuant to NRS 365.203, so sold, distributed or used. 2 There are also provisions for additional optional taxes, but none have been adopted in Carson City.

### KAEMPFER Compliance Letterto Mike Williams, FAA February 19, 2016 Page2 

### CROWELL
Powered Aircraft in the State General Fund and must be allocated monthly by the Department to the: (a) Governmental entity which operates the airport at which the tax was collected, ifthe airport is operated by a governmental entity;
... Procedurally, the Airport manager receives the monthly checks for the jet fuel tax, and such funds are deposited into Airport Authority accounts and used for airport operating costs (per 47 USC 47133). 3 These funds are also confirmed by our annual audits performed by an outside CPA. As such, we are in compliance on the jet fuel tax. Ifadditional information is needed on this, we canprovide it. 2. Avgas 

### tax. As noted above, the current tax is 2 cents per gallon. There is also an optional avgas tax, but that has not been adopted for Carson City. The Airport Authority has confirmed that the Avgas tax revenues do NOT come back to the Carson City Airport. Rather, NRS 365.565 states that Avgas tax revenues are transferred to the Civil Air Patrol.4 In discussions with the Nevada Department of Transportation, Aviation Department, they have initiated the process that will lead to legislative change ofNRS 365.565 so that the tax revenues will instead go to each airport in the same way that thejet fuel tax is collected and distributed. Attached is a copy ofthe letter to your office. The Carson City Airport Authority will support the legislative change that corrects the direction ofavgas tax revenues backto.the airport on which it was collected.
As you know, the FAA Policy and Procedures Concerning the Use ofAirport Revenue; Proceeds from Taxes on Aviation Fuel, (79 Fed. Reg. 6628) (referred to as the "Amendment") is being applied by the FAA prospectively, and requires airports to adopt a strategic plan for

3 47 US Code 47133 states: "(a)Prohibition.-Local taxes on aviation fuel (except taxes in effect on December 30, 1987) or the revenues generated by an airport that is the subject of Federal assistance may not be expended for any purpose other than the capital or operating costs of- (1) the airport; (2) the local airport system; or (3) any other local facility that is owned or operated by the person or entity that owns or operates the airport that is directly and substantially related to the air transportation of passengers or property." 4 NRS 365.565 Proceeds oftax derived from aviation fuel. 1. The tax derived from aviation fuel must be distributed quarterly from the Account for Taxes on Aviation Fuel in the following manner: (a) The amount of any optional tax must be remitted to the: (1) Governmental entity which operates the airport at which the optional tax was collected, ifthe airport is operated by a governmental entity; (2) Governmental entity which owns the airport at which the optional tax was collected, ifthe airport is owned but not operated by a governmental entity; or (3) County in which is located the airport at which the optional tax was collected, ifthe airport is neither owned nor operated by a governmental entity. (b) After deducting the amount allocated pursuantto paragraph (a) [the optionaltax ifany], there must be transferred to the Civil Air Patrol Account, which is hereby created, forthe ensuing fiscal year, the total amount remaining in the AccountforTaxes on Aviation Fuel.

### MEMPFER CROWELL Compliance Letterto Mike Williams, FAA February 19, 2016 Page3 compliance within 3 years of December 8, 2014, i.e. by December 8 of 2017. The Nevada Constitution only allows for Legislative Sessions every 2 years and only for a 6 month period. The next Legislative Session begins on February 3, 2017 and will be completed by June ofthat year. As such, ourtiming should meet the 3 year deadline. This strategic plan has been adopted, after public notice and vote, by the Carson City AirportAuthority for the benefit ofthe Carson City Airport (KCXP) on February 17, 2016. We respectfully request that you treat this as our compliance plan. We will keep you posted on the correction to the statute when it occurs. Ifyou have any questions, do not hesitate to contactthe undersigned.

Cc: Karl Hutter, Chairman, Carson City Airport Authority Members, Carson City Airport Authority Tim Rowe, Airport Manager Kurt Haulkohl, NDOT, Aviation 

### -,BRIAN SANDOVAl Governor STATE OF NEVADA 

### DEPARTMENT OF TRANSPORTATION 1263 S. Stewart Street Carson City, Nevada 89712 , 

### January 6, 2015 RUDY MALFABON, P.E.,

**~**

Mr. 

### ByronKHuffman Acting Director Office ofAirport Compliance andManagement Analysis Federal AviationAdministration 800 Independence Avenue, SW Washington,DC 20591 RE: FAA'sPolicy andProcedures Concerning the Use ofAirportRevenue, letter dated November24, 2015 Dear Mr. Huffman; In response to your letter to the Governor of Nevada, Brian Sandoval dated November 24, 2015, and to further clarify our request for an extension of time on December Sth, 

### 2015 from Rudy Malfabon, Director of the Nevada Department of Transportation (NDOT) we offer the following response to each point the FAA identified in

### theoriginal letter. NDOTAviationAction Plan (1) 

### "theprocess to amend any non-complinnt laws, and restructure general revenues to adapt to tlze dedication ofaviationfuel tax tevenue to airports and or State aviationprograms"; NDOTwill

### initiatethelegislativeprocessto revise StateStatues within 

### the NRS and Nevada Administrative Code (NAC). Oarificationofexistingor the adoption of new legislation imposing a redirection of fuel taxes directly to the facilities where therevenue is 

### collected is feasible. 

### (2) A commitment to undertake tlze legislativeprocess; The NDOT is 

### willing to begin the legislative process at the next session (Bill DraftRequests duein

### May 2016).January 

### 6, 2016 Federal Aviation Administration Fuel 

### Taxes

Our need to redraft existing NRS and NAC coupled with the redirection of revenue streams to remit those funds directly back to the facilities is accepted. 

### (3) The time frameforaction within the threeyeartransition period for completion by December8, 2017. The time needed to amend NRS and NAC as required to meet federal requirements is feasible to comply with our existing legislative process. As previously mentioned the 2017 Legislative Sessionbegins in 

### February o£2017. BackgroundofNevada'sAviationFuelTax System There are currently 31 airports in 

### the State of Nevada in 

### the National Plan of Integrated Airport Systems (NPIAS) that are obligated under Federal Aviation Administration (FAA) Airport Improvement Program (AlP) Grant Assurances, in particular FAA Grant Assurance #25. The State ofNevada does not directly assess any Aviation Gas (AvGas) orJetFuel Taxes byitself, however Nevada does enable a uniformimposition ofthe assessments and collections offuel taxes at a local level throughNevada Revised Statues (NRS). Specific State Statues primarily NRS 365.170 and NRS 365.203 may be used to impose a 2c/gallon onAvGas and lc/gallon onJet Fuel. Alternatively the option to impose fuel taxes under NRS 365.203 at any airport may be selected to use as a means to impose a fuel tax at a maximum rate of 4c/gallon on Jet Fuel, and Be/gallon on AvGas. Tax revenues are rendered from fuel dealers 

### I distributors directly back to the State and are credited to the county or airport sponsor where the fuel was delivered. As suchThe State ofNevada participates inthe obligations under FAA GrantAssurance 1125 

### by transferring the revenue, becomes responsible under Federal Amendment (79 Fed. Reg. 6628) revised FAA Policy noted above based on those Dealer fuel collections at airports. Most of the 31 obligated airport sponsors actingunderlocal governingbodies such as cities and/orcountyboardsof commissioners in Nevada are imposing AvGas orJet Fuel taxes and other related airportfees thattheexistingNRS enable. Local governments ofindividualcounties and/ortheircities' ordinances are usedto select, assess, and receive those tax 

### revenues back from the State. Again, the
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January 6, 2016 

### Federal Aviation AdministrationFuel Taxes



### enabling legislation is provided for within the State's NRS. One noted deviation from this revenue flow is that the State renders revenue directly to the Civil Air 

### Patrol from those taxes collected at each facility that was imposed under NRS 365.565. 

### The following table lists each known obligated civil airport sponsors and governance entities in 

### Nevada to focus further on each of the 31 FAA obligated NPIAS airports:

·HND CLARK LAS VEGAS HENDERSONEXECUTIVE CLARI<COUNn' LAS CLARK
. LAS VEGAS MC CARRANINTL CLARKCOUNTY U08

.. : CLARK OVERTON PERKINS FIElD CLARKCOUNTY

.. yc:;r "-CLARK LASVEGAS NORTHLASVEGAS CLARKCOUNTY 06U ELKO JACKPOT JACKPOT/HAYDENFIElD EtXOCOUNTY EI<O ELKO ELKO EU<O RGNL CllYOF ELKO LWL ELKO WELlS WELts MUNJJHAR1UBT FIELD errOFWELLS

**;r~,r;** LANDBR"- ·AUSTIN'::::···;··

**~-.:~AUSTIN:'<:** '• '
.. ·;•{<t, .··•· LANDERCOUNTY
____ :) -·- ";; 

## .:.v

lLl<' liNCOLN PANACA UNCOlNCOUNTY .;';···· LINCOLNCOUNTY .··· .•••...·,· ·,·· :;1.92 -,LINCOLN ·... ALAMO ::: . ALAMO LANDING FIELD. :•:-, LINCOLNCOUNTY.,.·. •'•
. 043 i LYON>' •. ;:;: YERINGTON ' · :-;; YERINGTON MUNL--.: ·•·;:·; >:) CllY,OF.'YERINGTON > /'':''' ;•:.::> · .., 

### > ::·•• _,:spz:;. LYON ••

**~<'.·** +t. SD.VER.SPRINGSJ' ''. sn.VERSPRINGS' .·•· ··: .•.' LYON COUNTY
.. , ';,: , : < BTY-: NYE;<•-:- ' i/ BEA'ITY.''i-''E '•. BRATl'Y
.. :: .... '-- ·,; N'iECOUNlY};

-- ·• •; '/:.:> •- ;.;: .··/,"':·. GAB: Nni 'Y/1' GABBS'1

- _:_;;-j:j; • GABBS::·;;
. - ·

**NYECOUN1i:--.~··** · Y/ ' >

,. __TPH: NYE : ·:->•- TONOPAH' ---·- TONOPAH:•·::··-c · ; .• NYECOUNlY' _:•_ • •;:; · - ;:< RNO: WASHOE RENO RENQffAHOE.INTL RENO-TAHOE.AIRPORTAU'IHORITY RTS WASHOE RENO RENO/STEAD RENOTAHOEARPTAtrrH CXP CARSONCITY CARSON CITY CARSON CARSON CITYAIRPORT AUTHORITY FLX CHURCHILL FALLON FALLONMUNI CITYOFFALLON OL9 CLARK OVERTON EGIOBAY lAKE MEAD NATLRECAREA 67L CLARK MESQUITE MESQUITE CITYOFMESQUITE BVU CLARK BOULDEROTY BOULDERCITYMUNI BOULDERCITYMUNICIPALITY MEV DOUGLAS MINDEN MINDEN-TAHOE DOUGLAS COUNTY IOU ELKO OWYHEE OWYHEE SHOSHONEPAIUTETRIBES 

### osu EUREKA EUREKA EUREKA COUNTYOFEUREKA WMC HUMBOLDT WINNEMUCCA WINNEMUCCA MUNI CITY/COUNTYOFWINNEMUCCA HTH MINERAL HAWTHORNE HAlVTHORNEINDUSTRIAL MINERALCOUNTY LOL PERSHING LOVELOCK DERBYFIELD PERSHINGCOUNTY ELY WHITEPINE ELY ELYARPT/YELLAND FLO/ WHITEPINECOUNTY 

## r I

### January 6, 2016 

### Federal Aviation Administration Fuel Taxes



### Airport Sponsor Summaries: A. The preceding table illustrates, 5 facilities are owned and operatedby Oark County, 3 facilities each by Elko & 

### Nye Connties, and 2 facilities are sponsoredbyLander, Lincoln, Lyon, andWashoe Connties respectively. B. Oark County has elected to impose AvGas & 

### Jet Fuel taxes at all of their owned and operatedfacilities. Elko County does assess and collect Avgas & 

### JetFuel taxes atall 

### oftheirfacilities dispensingfuel, as doesNyeCounty. 

### C. Individually, Lander, Lincoln, Lyon and Washoe Counties also assess and collectAvGas &

### JetFuelTaxes attheir2 sponsoredfacilities each. D. Washoe Connty has assessed an aircraft registration fee to aircraft owners whobaseaircraft attheirsponsored airports. E. The City and County of Carson Oty has elected to impose an AvGas & 

### Jet Fuel taxes atthe CarsonCityAirport. F. The City ofFallon does assess and collect AvGas & 

### Jet Fuel taxes at Fallon Municipal Airport. G. Boulder City Airport does assess and collect AvGas & 

### Jet Fuel Taxes and uses those revenues as income directed to the Boulder Oty Municipal Airport. As the airport also resides in Oark County additional investigation is needed to verify the direction of any possible revenue or assessment of those funds. H. Douglas County does assess and collect AvGas & 

### Jet Fuel Taxes at the Minden-Tahoe Airport and those revenues are directed to theMinden-Tahoe Airport asincome. I. The City ofMesquite does assess and collect AvGas & 

### Jet Fuel taxes at the Mesquite Airport, as they are also in Clark County and additional investigationisneededtoverify thepossible collection ofcountyfunds also.

4

### January 6,2016 

### Federal Aviation Administration Fuel Taxes



## J. Echo Bay Airport in Oark County has never sold fuel to 

### the best of our knowledge. Listed in the NPIAS, the facility is owned and operatedby the LakeMeadRecreationalArea. K. 

### Owyhee Airport, owned and operated by the Shoshone Paiute Tribes and has never sold fuel to our knowledge. The Owyhee Airport is in 

### Elko County. L. The County ofEureka does assess and collect AvGas &

### JetFuel Taxes at the Eureka Airport. M. Humboldt County does assess and collect AvGas & 

### Jet Fuel Taxes at Winnemucca MunicipalAirport. N. Mineral County does assess and collect AvGas & 

### Jet Fuel taxes at the HawthomeIndustrialAirport. 0. Pershing County does assess and collect AvGas & 

### Jet Fuel taxes at the Lovelock/DerbyFieldAirport. P. White Pine County does assess and collect AvGas & 

### Jet Fuel taxes at the Ely Airport

### I YellandField.
Thankyoufor yourkind considerationofthis actionplan. Sincerely,

Rudy Malfabon, P.E. Director


### Cc: JoeReynolds, GovernorSandoval's Office

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