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

**WASHINGTON, D.C.** CHANDLER AIR SERVICE

Complainant, v. CITY OF C HANDLER, ARIZONA

Respondent. FAA Docket No. 16 - 1 3 - 05

**RESPONDENT CITY OF CHANDLER, ARIZONA**  **’ S**  **MEMORANDUM OF POINTS**  **AND AUTHORITIES IN SUPPORT OF ITS**  **MOTION TO**  **DISMISS AND ANSWER 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 - 5616i **TABLE OF CONTENTS** I. IN TRODUCTION ................................ ................................ ................................ ............ 1 II. STATEMENT OF FACTS ................................ ................................ ............................... 3 A. The Chandler Municipal Airport ................................ ................................ .......... 3 B. The City

Has Engaged In Responsible Planning and Development of the Airport ................................ ................................ ................................ ......... 4 C. Both the City

and Chandler Air Service Sell Fuel at the Airport ......................... 8 D. A City

Tax on the Sale of Aviation Fuel s Has Been in Effect Since 1960 ................................ ................................ ................................ ..................... 10 E. The Dispute with Chandler Air Service ................................ .............................. 12 III. SUMMARY OF APPLICABLE LEGAL STANDARDS ................................ ............. 13 A. Part 16 Jurisdiction ................................ ................................ ............................. 13 B. Standing ................................ ................................ ................................ .............. 13 C. Burden of Proof

................................ ................................ ................................ ... 14 D. Grant Assurance 5, Preserving Rights and Powers ................................ ............ 14 E. Grant Assurance 22, Economic Nondiscrimination ................................ ............ 15 F. Grant Assurance 25, Airport Revenue ................................ ................................ 16 G. Grant Assurance 29, Airport Layout Plan ................................ .......................... 17 IV . ARGUMENT ................................ ................................ ................................ .................. 19 A. CAS Lacks Standing to Challenge the City ’s Decisions Regarding Future Airport Development ................................ ................................ ............... 19 B. CAS Failed to Produce Any Documentary

Evidence ................................ ......... 19 C. Claims for Violations of ANCA Are Outside the FAA’s Jurisdiction Under Part 16. ................................ ................................ ................. 21 D. Assuming Arguendo that the Director Has Jurisdiction Over CAS’ ANCA Claim, Ordinance 3888 Does Not Violate ANCA ................................ . 22 E. Ordinance 3888 Does Not Violate Grant Assurance 5 ................................ ....... 24ii

F. The City

Has Not Diverted Airport Revenue ................................ ..................... 26 G. The City

Has Not Unjustly

Discriminated Against CAS ................................ .... 29 1. The City

Does Not Improperly

“Subsidize” It Self

- Fueling Operation With Federal Grant Funds and Airport Enterprise Funds ................................ ................................ ................................ ....... 29 2. The City

Does Not Sell Fuel At a Loss to Undercut CAS’s Fuel Prices ................................ ................................ ............................... 32 3. The Airport Holds Itself and CAS to the Same Minimum Standards ................................ ................................ ................................ . 34 V. CONCLUSION ................................ ................................ ................................ ............... 36iii **TABLE OF AUTHORITIES FAA DECISIONS**  41 North 73 W

est, Inc, dba Avitat Westchester v. Westchester Cnty. , N . Y . , FAA Docket No. 16 - 07 - 13, Director’s Determination (June 12, 2008), ) ................................ .. 28 Aero Ways, Inc . v. Del. River &Bay Auth., FAA Docket No. 16 - 09 - 12, Director’s Determination (Aug. 30, 2010) ................................ ................................ .......................... 13 ALCA, the Cylinder Shop/W ayman Aviation, Suncoast Aviation, and National Aviation v. Miami-Dade County , FAA Docket No. 16 - 08 - 05, Director’s Determination (Aug . 31, 2010) ................................ ................................ .......................... 17 AOPA v. City ofPompano Beach, Fla. , FAA Docket No. 16 - 04 - 01, Director’s Determination (Dec. 15, 2005) ................................ ................................ .......................... 20 In the Matter of City of Santa Monica , FAA Docket No. 16 - 02 - 08 , Final Agency Decision and Order (July 8, 2009) ................................ ................................ ..................... 20 Jeff B odin and Garlic City Skydiving v. Cnty. of Santa Clara, Cal. , FAA Docket No. 16 - 11 - 06, Final Agency Decision (Aug. 12, 2013) ................................ ............... 14, 24 JetAway Aviation, Inc. v. Montrose Cnty. , FAA Docket No. 16 - 08 - 01, Director’s Determination (July

2, 2009) ................................ ................................ ............................. 17 Delbert Johnson dba Two Dogs Aviation v. Goldsboro - Wayne Airport Auth., FAA Docket No. 16 - 08 - 11, Director’s Determination (Oct. 9, 2009) ................................ ........ 15 M. Daniel Carey and Cliff Davenport v. Afton - Lincoln Cnty. Mun. Airport Joint Powers Bd. , FAA Docket No. 16 - 06 - 06, Director’s Determination (Jan. 19, 2007) ................................ ................................ ................................ ............................ 13 Northern Air, Inc. v Cnty. of Kent , Mich. , FAA Docket No. 16 - 11 - 10, Director’s Deter mination (March 28, 2013 ................................ ................................ ......................... 17 Pacific Coast Flyers, Inc., Donnya Daubney d/b/a Carlsbad Aircraft Pilot Supply & Roger Baker v. Cnty. of San Diego, Cal. , FAA Docket No. 16 - 04 - 08, Director’s Determination (July 25, 2005) ................................ .............................. 17, 18, 23 Rick Aviation, Inc. v. Peninsula Airport Comm’n , FAA Docket No. 16 - 05 - 18, Final Decision and Order (Nov. 6, 2007) ................................ ................................ .......... 28 Santa Monica Airport Ass’n v. City of Santa Mo nica, Cal. , FAA Docket No. 16 - 99 - 21, Final Agency

Decision (Feb. 4, 2003) ................................ ................................ .... 17iv

SeaSands Air Transp., Inc. v. Huntsville- Madison Cnty. Airport Auth., FAA Docket No. 16 - 05 - 17, Director’s Determination (Aug. 28, 2006) ................................ ..... 14 Sun Valley Aviation, Inc. v. Valley Int’l Airport, City of Harlingen, T ex. , FAA Docket No. 16 - 10 - 02 , Director’s Determination (Dec. 11, 2012) ............................... 17, 23 Thermco Aviation, Inc. v. City of Los Angeles, Cal. , FAA Docket No. 16 - 06 - 07, Final Agency

Decision (Dec. 17, 2007) ................................ ................................ ............. 17 Town of Fairview , FAA Docket No. 16 - 99 - 04, Director’s Determination on Remand (issued July

26, 2000) ................................ ................................ .......................... 18 **STATUTES AND PUBLIC LAWS**  49 U.S.C. § 47107 ................................ ................................ ................................ .......................... 26 49 U.S.C. § 47133 ................................ ................................ ................................ .......................... 16 Airport and Airway

Improvement Act of 1982, Pub. L . No. 97 - 248, 96 Stat. 671 (1982) ............ 15 Airport and Air

way Safety and Capacity Expansion Act of 1987, Pub. L . No. 100 - 223, 101 Stat. 1486 (1987) ................................ ................................ ................................ ................................ .... 16 FAA Reauthorization Act of 1996, Pub. L . No. 104 - 264, 110 Stat. 3213 (1996) ......................... 16 Ariz . Rev . Stat . Ann. § 28 - 101 ................................ ................................ ................................ ....... 10 Ariz. Rev. Stat. Ann. § 28 - 8411 ................................ ................................ ................................ ..... 21 **REGULATIONS , ORDERS, AND AGENCY GUIDANCE**  14 C.F.R. § 16.1 ................................ ................................ ................................ ............................. 20 14 C.F.R. § 16.23 ................................ ................................ ................................ ............................. 1 14 C.F.R. § 16.29 ................................ ................................ ................................ ........................... 13 14 C.F.R. § 161.5 ................................ ................................ ................................ ........................... 21 FAA, Policy and Procedures Concerning the Use of Airport Revenue , 64 Fed. Reg. 7696 (Feb. 16, 1999) ................................ ................................ .......................... 16 FAA, Order 5190.6B, Air port Compliance Manual (Sept. 30, 2009) ............ 14, 15, 16, 17, 21, 231 **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

**RESPONDENT CITY OF CHANDLER, ARIZONA ’**  **S MEMORANDUM OF POINTS**  **AND AUTHORITIES IN SUPPORT OF ITS MOTION**  **TO DISMISS AND ANSWER** Respondent , City

o f Chandler, Arizona (the “City”) , respectfully submits this Memorandum of Points and Authorities in Support of its Motion to Dismiss and Answer, in accordance with 14 C.F.R. § 16.23 and the FAA’s Letter Order dated August 28, 2013 , in response to the Complaint filed by Chandler Air Servic e (“CAS ”). **I. INTRODUCTION**  The City i s the owner, operator, and sponsor of the Chandler Municipal Airport (“Airport” or “CHD”). Chandler Air Service is a fixed base operator (“FBO”) at the Airport . CAS devotes the majority of its Complaint to the allegation that the City s omehow has violated federal law and Grant Assurance 5 by engaging in traditional airport planning and making decisions about the future growth and development of the Airport that re flect the best interests of the Airport and the community . A fter recounting a long history that demonstrates only that the City

has been diligent and proactive in planning for the future of the Airport, CAS argues that a City

ordinance reflecting City p lans for possible future improvement of the Airport2

runways violates the Airport Noise and Capacity A ct of 1990 , and that a requirement to use voter- approved bond funds for any runway extension violates Grant Assurance 5. These claims are unavailing for many reasons, including that CAS lacks standing to challenge the City ’s planning decisions, ANCA -based claims are not reviewable in a Part 16 proceeding , and Grant Assurance 5 is not implicated by the commitment to use voter- approved bond funds. M ore fundamentally, CAS misapprehends the relationship among the City, the FAA , and CAS. The City i s responsible for the management, operation, planning , and development of the Airport, and it has performed each of these functions admirably . The FAA provides funding for eligible pl anning and development projects but does not dictate to airport sponsors whether to lengthen a runway . CAS is a long - standing tenant at the Airport and provides aeronautical products and services to Airport tenants and users. B ut, CAS is not responsible for the management of the Airport, and cannot , under the guise of Grant Assurance compliance, substitute its judgment for the City ’s on the advisability or appropriateness of capital projects and the management of the Airport. In an apparent effort to give some heft to its Complaint and voice to other long -held gripes, CAS also argues in its Complaint that the City h as engaged in revenue diversion by depositing into the City ’s G eneral Fund tax revenues from the sale of aviation fuels , and that the City h as engaged in economic discrimination in connection with the City ’s operation of a commercial self

- service fuel facility . These claims are factually and legally

infirm because the City ’s fuel tax has been in effect since 1960 and , there fore , does not constitute airport revenue, and because the City has not discriminated, in any manner, against CAS in connection with the City ’s operation and improvement of its commercial self - service fuel facility .3

Although CAS ’s Complaint presents a woef ull y incomplete and inaccurate description of past events and lacks a single document in support of CAS’s allegations, the City has thoroughl y demonstrated herein the failings in CAS’s arguments with reference to attached Declarations and documentary

evidence. The accurate recitation of the facts, application of FAA precedent on Grant Assurance compliance, and documentary evidence demonstrate that the City has been and remains in full compliance with its obligations to the FAA under the Grant Assurances. Accordingl y, the Complaint should be dismissed. **II. STATEMENT OF FACTS**  **A. The Chandler Municipal Airport**  The Chandler Municipal Airport is located in the C ity o f Chandler, approximately three miles southeast of the city c enter. Declaration of Lori Quan at ¶ 2 , attached hereto as Exhibit A (“ Quan Dec.”). The City began operating the Airport in 1948, and has owned and operated the Airport since that time . Id. FAA has classified the Airport as a “regional” and “reliever” airport. U. S . Dep’t of Transp., FAA, General Aviation Airports: A National Asset at B10 (May 2 012). The Airport does not have an Airport Operating Certificate to accommodate commercial passenger operations . The Airport served over 197,000 general aviation, rotary, and military operations in 2012 . Quan Dec. at ¶ 2 . The Airport currently is home to approximately 437 based aircraft. Id. Over the ye ars, the City has accepted a number of AIP grants for the acquisition of property, airport planning, and the construction of a variety o f improvements and is currently grant- obligated. Id. The airfield consists of two parallel runways: Runway 4L - 22R and Runway 4R- 22L . Id. at ¶ 3. The current Airport Layout Plan is attached as Exhibit 1 to the Declaration of Lori Quan , and the current Airport Master Plan is attached as Exhibit 2 to the Declaration of Lori Quan .4

Notwithstanding the City ’s efforts to make the Airport financiall y self - sustaining , the City provides annual payments to the Airport to assure the Airport does not incur a loss. Id. at ¶ 11 . InFY 201 2/1 3 , the City provided a pay

ment of approximately $ 208,103, and made s imilar pay ments in previous years. 1 Id. **B. The City has Engaged i** **n Responsible P lanning**  **and Development of the Airport** Runway 4L - 22R was built in 1960, at a length of 2,610 feet. Id. at ¶ 3 . It was extended in several phases in the 1970s and early 1980s to reach its current 4,401 - foot length. The 1982 Airport Master Plan (“AMP”) update recommended constructing a parallel runway, Runway 4 R22L , in phases, starting with a runway l ength of 3 , 100 feet, expanding to 5 , 200 feet, and ultimately

expanding to a length of 6 , 900 feet. 1982 AMP Update, attached as Exhibit 5 to the Declaration of Lori Quan. Beginning in the late 1980s, Chandler residents began voicing concerns about increased operations at the Airport and the potential for an expanded airport to attract large, commercial service operations. In 1989 , Chandler residents approved a ballot initiative calling for a total ban on fixed-winged jet aircraft at the Airpo rt. Ordinance 2122, attached as Exhibit 6 to the Declaration of Lori Quan . Recognizing that an outright ban on jet aircraft could raise compliance issues, the City C ouncil, on February

8 , 1990, passed Ordinance 2212, which repealed the ban on jet aircraft and provided instead that the City would not construct runways longer than 4,850 feet at the Airport. Id. ; Minutes of the Regular Meeting of the Chandler City

1 Over the past several years, the City has provided annual subsidy payments to the Airport as follows: FY2006 - 07 $176,103 FY2007 - 08 $316,903 FY2008 - 09 $187,019 FY2009 - 10 $219,193 FY2010 - 11 $305,126 FY 2011/12 $151,602 Quan Dec. at ¶ 11 .5

Council (Nov. 5, 1998) at 27, attached as Exhibit 7 to the Declaration of Lori Quan. R unway 4R- 22Lbecame operational in 1994 and is now 4,870 feet long . Following a Master Plan Update completed in 1998, which recognized that extending the runway could provide many

benefits without opening the Airport to large commercial jet aircraft, 1998 AMP Update at 3 - 10

– 3 - 11, Exhibit 3C, attached as Exhibit 8 to the Declaration of Lo ri Quan, the City

enacted Ordinance 2912 on Nov ember 19, 1998 , which allowed for the construction of runways up to 6,800 feet. Ordinance 2912, attached as Exhibit 9 to the Declaration of Lori Quan. Inorder to assure public input on any f uture runway

extension, Ordinance 2912 also required that the City ’s portion of the cost for any r unway extension be funded through a bond issue and that the bond issue be subject to voter approval. Id. See generally Minutes of the Regular Meeting of the Chandler City Council (Nov. 5, 1998) at 25 - 30, attached as Exhibit 7 to the Declaration of Lori Quan; Minutes of the Regular Meeting of the Chandler City

C ouncil (Nov. 19, 1998) at 20 - 23 , attached as Exhibit 1 0 to the Declaration of Lori Quan . In2 000, pursuant to Ordinance 2912, the City submitted to the voters a bond measure to fund the expansion of Runway 4R- 22L to 6 , 800 feet. Resolution 3253, attached as Exhibit 1 1 to the Declarati on of Lori Quan . In an effort to address concerns that a runway extension c ould allow large commercial operations, the City also passed a resolution clarifying that expansion of the runway

would not allow the Airport to accommodate large commercial planes . Resolution 3268, attached as Exhibit 1 2 to the Declaration of Lori Quan . In a close vote , the bond measure failed. Resolution 3329, attached as Exhibit 1 3 to the Declaration of Lori Quan . In 200 2 , a developer, Vestar, submitted an application to rezone 82 acres of land located northeast of the Airport from AG - 1 (agricultural) to a Planned Area Development, which would6

allow for commercial development of the property . Memorandum from the Planning Commission to the Mayor and City C ouncil at 1 - 2 , attache d as Exhibit 1 4 to the Declaration of Lori Quan . The land was not part of the Airport. Approximately half of the project was to be located in the neighboring town of Gilbert, but approximately 8 2 acres were to be located in the City . Id. at 2. Inthe course of considering that proposal, the Airport manager informed the City that approving the development could affect future extension of Runway 4 R- 22L to the ultimate buil d- out length of 6,800 feet identified in the 1998 Airport Master Plan , becau se portions of the development would be located on what would become the northeasterly p ortion of the RPZ associated with the full extension of Runway 4 R- 22L . Id. at 3 - 4. The City C ouncil recognized this consequence , but also recognized the potential benefits of the proposed rezoning, particularl y noting that the requested rezoning presented “the last opportunity f or another regional commercial center in Chandler anchoring the east side of the City .” Minutes of the Regular Meeting of the Chandler City C ouncil (July

2 4, 2003) at 4, attached as Exhibit 1 5 to the Declaration of Lo ri Quan. The City b alanced these competing interests and determined that, even if it allowed the proposed development to proceed, it could still expand Runway 4 R- 22Lto “provide additional safety f or all aircraft ty

pes currentl y using the airport.” Minutes of the Regular Meeting of the Chandler City Council (Aug. 14, 2003) at 6, attached as Exhibit 1 6 to the Declaration of Lori Quan . Accordingl y, the City approved the requeste d re zoning. Id. Recognizing the effect of the Vestar development on future Airport development, the City u pdated its Airport Master Plan . On January 1 1, 2007, the City

adopted a Master Plan Update , which recommended a maximum extension of Runway 4 R- 22L to 5, 700 feet, reflecting the amount of land available for the runway and associated runway

s afety areas and runway protection zones. 2007 AMP Update at 4 - 17, attached as Exhibit 2 to the Declaration of Lori7

Quan . The 2007 Master Plan noted that extending Runway 4 R- 22L to 5,700 feet would “accommodate[] a wide range of aircraft while enhancing the level of operational safety at the Airport.” Id. The Master Plan also noted that the City h ad committed to conducting a bond election to fund any

extension of Runway

4R- 22L. Id. at 4 - 18 . Two weeks later, on January 25, 2007, the City

C ouncil authorized another bond measure to fund the propose d expansion of Runway 4 R- 22L. Resolution 4034, attached as Exhibit 17 to the Declaration of Lo ri Quan . Proponents of the measure, including Mr. Walkup, were confident that voters would approve the measure. Minutes of the Regular Meeting of the Chandler City C ouncil (Jan. 25, 2007) at 16, attached as Exhibit 18 to the Declaration of Lo ri Quan. The measure failed. Minutes of the Special Meeting of the Chandler City C ouncil (May

2 4, 2007), attached as Exhibit 1 9 to the Declaration of Lori Quan. On March 5, 2007, the City adopted Ordinance 3888, reducing the maximum anticipated runway l ength from 6,800 feet to 5,700 feet , to reflect the full build- out length identified in the 2007 Master Plan . Ordinance 3888, attached as Exhibit 2 0 to the Declaration of Lori Quan . Later in 2007, the City

amended the ALP to reflect the change in proposed maximum runway length and submitted the updated ALP and the 2007 Master Plan to the FAA. Quan Dec. at ¶ 3. The FAA has not formally approved or disapproved either document. Ordinance 3888 is currently c odified at Chandler Municipal Code § 8 - 10 , and it provide s as follows: 8 - 10. - Extension of runway; physical limitations. To guarantee to the citizens of the City of Chandler the continued quiet enjoy ment in and to the homes, schools, churches and work places, the Chandler Municipal Airport shall not be permitted to accommodate, in any f ashion, aircraft which require for takeoff a runway longer than five thousand seven hundred (5,700) feet. Extension of the runway shall require voter approved bonds, which specify that the bond monies are for the purpose of extending the runway . In addition, the Chandler Municipal Airport shall not be designed to accommodate aircraft that8

weigh in excess of seventy- five thousand (75,000) pounds maximum gross weight, and/or have a wingspan of seventy-nine (79) feet or more. The City intended Ordinance 3888 to c odify C ity policy

regarding anticipated improvements to the airfield based on the latest Airport Master Plan . Quan Dec. at ¶ 9 . It is not intended, and has not been applied, to restrict aircraft operations . Id. The City does not today restrict aircraft operations and would not do so i f the runway i s ultimately

extended; the City

intends to allow any aircraft that can operate on the runway i f its certification and performance c apabilities allow it to do so. Id. The City h as not attempted to publish any aircraft operating restriction in the Airport/Facility

Directory, any

other airmen publication, or Airport Rules and Regulations. **C. Both the**  **City and Chandler Air Service Sell F uel at the Airport**  CAS is the sole FBO at the Airport , providing attended fuel sales of both Avgas and Jet A fuel (what CAS refers to as “off - the - truck” fuel sales in its Complaint) , commercial self - service Avgas sales, and a range of aircraft repair, maintenance, and storage services. Id. at ¶ ¶ 19 - 20 . CAS leases app roximately five acres from the City . Id. at ¶ 4. A cop y of the Lease is attached as Exhibit 3 to the Declaration of Lori Quan. Aerial photographs of CAS’s leasehold showing the location of CAS at the Airport and the location of CAS’s facilities are attached as Exhibit 4 to the Declaration of Lori Quan. The City has endeavored to work cooperativel y with CAS to assure that Airport users are able to obtain necessary and appropriate aeronautical services from CAS . Quan Dec. at ¶ 31 . Those efforts include the construction and maintenance of many facilities that directly b enefit CAS. For example :

 The City

built a paved perimeter service road that allows CAS’s fueling trucks to get to the heliport located on the Airport without crossing the runways and taxiways.  The City

has improve d Airport Boulevard in a way that provide s improved groundside access to CAS’s facilities.9  The City is in the process of constructing a new parking lot for tenants on the north side of the Airport that CAS will have almost sole use of until more tenants arrive.  The City

i s in the middle of a bidding process to rep air the cracks in the ramp immediately

adjacent to CAS’s self - fueling dispenser and had already made temporary

repairs to the ramp . Id. at ¶ ¶ 15 - 17 . Although those projects will benefit all Airport users and tenants, they primarily benefit CAS at this time because CAS is the only F BO operating at the Airport , and it is the primary tenant on the north side of the airfield. For many years , the City was the only

s eller of fuel at the Airport, providing a commercial self

- service fueling facility for Avgas and occasionally providing attended Avgas service. Id. at ¶ 19 . Starting in 1994 , CAS began selling Avgas, providing attended fueling ser vices . S ince that time , CAS has been the only f ull - service fuel provider at the Airport. Id. at ¶ 20 . In 1995, CAS began selling Jet A fuel , in addition to Avgas, also providing full - service fueling. Id. In 2005 , CAS requested, and received, permission to offer a commercial self - service fueling option for its customers and began providing that service in late 2005. Id. CAS is the dominant fuel seller at the Airport. It is the only s eller of Jet A fuel, having sold approximately 206,793 gallons in FY2012/13. C AS also sold 354,905.40 gallons of Avgas in FY2012/13. Id. at ¶ 21 . In contrast, the City s old 53,594.10 gallons of Avgas at its commercial self

- service fueling facility

in FY2012/13. Id. The City h as adopted a formal process to set its Avgas price , which is incorporated into the Airport’s Fee Schedule . Id. at ¶ 22 . City of Chandler Aviation Fuel Pricing Process, attached as Exhibit 22 to the Declaration of Lori Quan. Pursuant to that process, the City sets a minimum base price by

c alculating what its total costs are, including the price of fuel, a $0.10 fuel flowage fee, applicable overhead, capital costs, and other allocable costs. Id. Next , the City surveys Avgas prices offered at other airports in the region , as well as CAS. Id. That survey10

helps establish a maximum price based on the regional market. Id. The City then sets a fair, competitive price that is above the minimum base price and below the maximum price for comparable airports . Id. A review of self - service Avgas prices offered by the City and CAS over the past year shows that the City ’s price is sometimes higher and sometimes lower than the price charged b y CAS. Id. at ¶ 23 . **D. A City Tax on the Sale o**  **f Aviation Fuels has been in e ffect s**  **ince 1960** The City first imposed a privilege and use tax on the sale of aviation fuels on January 1 , 1960 , pursuant to Chandler City O rdinance No. 273. Declaration of Lee Grafstrom at ¶ 3, attached hereto as Exhibit B (“Grafstrom Dec.”). Ordinance 273 imposed a transaction privilege (sales) tax on sale of all tangible personal property, except as expressl y excluded, at a rate of 0.5 % of the gross sales price. Id. Aviation fuels are tangible personal property, not excepted from the tax, and have b een subject to the City's tax since 1960. 2 Over the 53 years since the tax was first adopted, the City ’s tax code has been amended and recodified a number of times, but none of those amendments or recodifications suspended or affected the applicability of the tax to the sale of aviation fuels. Id. at ¶ 4 In1 991, Arizona amended its tax laws to require that any tax applicable to the sale of jet fuel be based on the number of gallons sold instead of gross sales price. Id. at ¶ 5 . The impetus for the law was the concern of airlines (particularly America West) that rapidly f luctuating jet fuel prices made it difficult to calculate the applicable tax. Id. The intent was to keep the effective tax rate the same as before, but change the method of measuring the tax to avoid the accounting complexities caused by f luctuating prices. Id. Local governments agreed to make 2 CAS has suggested in the past that aviation fuels are excepted from the City tax because the City C ode exempts from the tax sales of

“ [m]otor vehicle fuel and use fuel which are used upon the highways of this State and upon which a tax has been imposed under the provisions of Article I or II, Chapter 16, Title 28, Arizona Revised Statutes.” C handler City Code § 62 - 660(j). H owever, that exclusion applies only to gasoline subject to Arizona’s Motor Fuel taxes, which apply o nly to certain road vehicles, including cars, trucks, and mo torcycles. Arizona Revised Statutes 28 - 101(33). Aviation fuels are not subject to that exemption.11

similar changes in their transaction privilege and use taxes in order to avoid being expressly included in the state legislation. Id. at ¶ 6. The Arizona Department of Revenue provided local governments with a detailed formula to use in order to assure that the change in methodology did not result in an increase in the actual amount of taxes paid on the sale of jet fuel. Id. On January

2 3, 19 92, the City

adopted Ordinance 2258, which amended the City ’s Tax Code to remove jet fuel from the general retail classification subject to a 1% tax rate on gross sales, to a new jet fuel classification subject to a $0.018/gallon tax rate. Id. at ¶ 7. This new tax rate did not increase the effective tax rate or impose a new tax; it simply changed the way

the tax on jet fuel sales was measured. S ince 1992, the City h as made a number of amendments to the Tax Code without changing the applicability o f the tax to the sale of aviation fuels. Id. at ¶ 8 . 3 In 1999 , the City

recodified the T ax C ode by m oving the then- existing code language out of Appendix C and into Chapter 62. Id. The recodification did not make any substantive changes regarding the applicab ility of the City’s tax to the use and sale of aviation fuels. Id. The City has always treated the sale of aviation fuels, both Avgas and jet fuel, as subject to the City ’s tax. Id. at ¶ 9 . Due to changes in the computer systems used to track tax pay m ents and receipts , it is not possible to retrieve information prior to 19 89 without undue expense. Id. Up until approximately

e arl y 1994, the City ’s management services department took direct responsibility

f or assessing and collecting the tax from the sale of Avgas at the Airport, after which time Airport staff took those functions over directly . Id. at ¶ 10 . City records show that from 1989 (the earliest time for which records are available) through February, 1996, the Airport paid tax es to the City

f or the sale of Avgas. Id. For reasons that are not clear, but which appear

3 Although not addressed in the Com plaint, the City notes that on February 24, 1994, the City adopted Ordinance 2449, which included an across -the -board increase in the use and privilege tax rates in the amount of 1⁄2%. Accordingly, Avgas sales are currently subject to a rate of 1.5% of gross sales , and jet fuel sales are subject to a rate of $0.023/gallon.12

to be due to administrative oversight, the Airport did not pay taxes on the sale of Avgas from M arch , 1996 , through October, 2006. 4 Id. Beginning in approximately F ebruary, 2003, CAS reported its aviation fuel sales as taxable, but claimed an off - setting deduction based on the flowage fee assessed by the Airport. Id. at ¶ 11 . Starting in July, 2 005, CAS paid tax on its sale of jet fuel for several months, but again stopped in February, 200 6 . Id. The City ’s revenue department later audited both CAS and the Airport and determined that both owed back taxes on the sale of aviation fuels. Id. at ¶ 12. Pursuant to an audit report dated November 30, 2009, the City a ssessed the Airport $52,757.42 in back taxes and $10,811.77 in interest ($13,189.42 in penalties were waived) for the period January

1 , 2003

– December 31, 2007. Id. at ¶ 13 . The Airport paid that amount to the City on March 29, 2010 . Id. Pursuant to an audit report dated July 3 1, 2010, CAS was assessed $44,230.93 in tax and $5,696.58 in interest ($4,423.13 in penalties were waived) for the period June 1, 2004 - February

2 8, 2009. Id. at ¶ 14 . CAS appealed the assessment, and following the appeal , the City

and CAS agreed to waive the back taxes and interest. Id. Since 2007, both the City and CAS have paid the tax on the sale of aviation fuels to the City . Id. at ¶ 15 . A table summarizing the total amount of aviation fuels tax collected since FY 2007 is attached. See Table Summarizing Collection of Fuel Tax Since FY 2007, attached as Exhibit 8 to the Declaration of Lee Grafstrom. **E. The Dispute with Chandler Air Service**  The City ’s rel ationship with CAS has, at times, included disagreements on matters of policy . Beginning in 2010, CAS began making more pointed complaints and alleged a variety of Grant Assurance compliance issues , including issues relating to fuel sales, revenue diversi on

4 Throughout this time, the City collected taxes from the sale of aviation fuels from an FBO at a private airport located in the City. Grafstrom Dec. at ¶ 10.13

relating to fuel taxes, and economic discrimination . Quan Dec. at ¶ 6 . Primarily, CAS expressed frustration with the failure of the bond measures to provide funding to extend the runway and urged the City

to repeal Ordinance 3888 and construct the runway extension without voter bond approval. Id. At times , CAS suggested that it would not pursue its claims of compliance violations if the City

w ould repeal or modify Ordinance 3888 to allow the runway extension without a vote. Id. H owever, the City Council declined to take that action. Id. In late 2010 , CAS raised its concerns more formally . By l etter dated October 11, 2010, CAS, through its legal counsel, raised many of the same issues raised in the Complaint. By letter dated November 4, 2010, the City, through the City Attorney ’s office , provided detailed responses and explained why CAS’ s arguments lacked merit. The City did not receive any response to that letter until May 2 4, 2013, when CAS’s legal counsel sent a revised, and somewhat shortene d, version of its October 2010 letter. Again, the focus of CAS’s letter was on the runway

extension. And , again , the City responded in detail, explaining why CAS’s allegations were without merit. The Complaint followed. **III. SUMMARY OF APPLICABLE LEGAL STAND**  **ARDS 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 D ecision 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. Standing**  In order to establish standing to file a complaint under 14 C . F . R . Part 16, the complainant must describe , and support with evidence, how it is “directly and substantially

affected” by

the14

airport sponsor ’s alleged noncompli ance. 1 4 CFR §§ 16.23(a), (b)(4). Failure to make such a showing warrant s dismissal of the complaint for lack of standing. **C. Burden of Proof**  14 C.F.R. § 16.2 9 (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 Complainant s ’ 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 c omplainant must also provide “all documents then available in the exercise of reasonable di ligence, offered in support of the complaint . . .” 14 C.F.R. § 16.23(b)(2). See also Director’s Determination, Aero Wa ys, 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 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.”). As demonstrated below, CAS ha s failed to meet its basic burden of proof and production . **D. Grant Assurance 5**  **, Preserving Rights and Powers**  Grant Assurance 5 requires airport sponsors to retain sufficient control over the airport to enable the sponsor to carry out its federal obligations: [An airport sponsor] will not take or permit any action which would operate to deprive it of any

of the rights and powers necessary to perform any or all of the terms, conditions, and assurances in the grant agreement without the written approval of the Secretary, and will act promptly to acquire, extinguish or modify any outstanding rights or claims of right of others which would interfere with such performance by the sponsor. This shall be done in a manner acceptable to the Secretary.15

See generally Order 5190.6B, FAA Airport Compliance Manual , App. A at 5 (Sept. 30, 2009) . The FAA recentl y explained that an airport sponsor may violate Assurance 5(a) in two circumstances : ( i) when it cedes a portion of its authority to a third party, such as a contractor, thereb y depriving the sponsor of some essential aspect of its authority over the airport ; and (ii) when an action lacks transparency, or was s o misleading or confusing as to indicate a lack of understanding of federal obligations. Final Agency D ecision, Jeff Bodin and Garlic City Skydiving v. Cnty. of Santa Clara, Ca l. , FAA Docket No. 16 - 11 - 06, at 41 (Aug . 12, 2013). The FAA made clear that an airport sponsor does not violate Assurance 5 simply b y acting in a manner that is contrary

to its federal obligations, even when the action is a knowing violation of another federal obligation. Id. at 42. **E. Grant Assurance 22**  **, Economic Nondiscrimination**  Grant Assurance 22(a) establishes the general prohibition on unjust economic discrimination : [The airport sponsor] will make the airport available as an airport for public use on reasonable terms and without unjust discrimination to all ty pes, kinds and classes of aeronautical activities, including commercial aeronautical activities offering services to the public at the airport. FAA Airport Compliance Manual , App . A at 10. The prohibition against unjust economic discrimination also requires sponsors to provide aeronautical services on the same conditions as airport tenants: In the event the sponsor itself exercises any of the rights and privileges referred to in this assurance, the services involved will be provided on the same conditions as would apply

to the furnishing of such services by commercial aeronautical service providers authorized by the sponsor under the se provisions. Id. at 11. Assurance 22 does not, however, require absolute equality o r prohibit all discrimination; it prohibits unjust discrimination. A ssurance 22’s fundamental requirement is that disparate treatment be justified by disparate circumstances. See Director’s Determination,16

Delbert Johnson dba Two Dogs Aviation v. Goldsboro - Wa yne Airport Auth., FAA Docket No. 16 - 08 - 11, at 36 (Oct. 9, 2009). **F. Grant Assurance 25**  **, Airport Revenue**  The prohibition against revenue diversion initially was set fo rth in the Airport and Airway Improvement Act of 1982 , as follows : (a) G eneral Written Assurances.

—The Secretary of Transportation may approve a project grant application under this subchapter for an airport development project only

i f the Secretary

receives written assurances, satisfactory to the Secretary, that

— (b ) (1) ... revenues generated by a public airport will be expended for the capital or operating costs of (A) the airport; (B ) the local airport system; or ( C ) any other local facilities owned or operated by the owner or operations and directl y and substantially related to the air transportation of passengers or property. Airport and Airway

Improvement Act of 1982 , Pub. L. No. 97 - 248 , 96 Stat. 671 (1982) , codified at 49 U.S.C. § 47107 . In1 987, Congress amended this requirement on the use of airport revenue to apply to “all revenues generated by the airport, if it is a public airport, and any local taxes on aviation fuel (other than taxes in effect on the date of the enactment of the Airport and Airway S afety and Capacity Expansion Act of 1987).” Airport and Airway Safety and Capacity Expansion Act of 1987, Pub. L . 100 - 223, § 109(d), 101 Stat. 1486, 1499 (1987). In 1996, Congress imposed the revenue use obligation as a statutory obligation that would continue in perpetuity, and , in doing so, captured both the inclusion of certain local taxes on aviation fuel and the exclusion of local taxes on aviation fuel in effect on December 30, 1987 . 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 of property.17

FAA Reauthorization Act of 1996, Pub. L . No. 104 - 264, 110 Stat. 3213 (1996) , codified at 49 U.S.C. § 47133. See also FAA, Policy and Procedures Concerning the Use ofAirport Revenue , 64 Fed. Reg. 7696 (Feb. 16, 1999) ( “Revenue Use Policy”) at 7697 ; FAA Airport Compliance Manual ¶ 15.2(b). Grant Assurance 25, Airport Revenue , implements the statutory requirement s on the use of airport revenue and includes a slightly different formulation of its scope by providing that the obligations apply

to “[a]ll revenues generated by the airport and any local taxes on aviation fuel established after December 30, 1987.” Under Section 47107(b), Section 47133(a) , and Grant Assurance 25, local taxes on aviation fuel that were “ in effect” or “established” before December 30, 1987 are not considered airport revenue subject to the strict requirements on use . **G. Grant**  **Assurance 29, Airport Layout Plan**  Although not cited in the Complaint, CAS’s allegations also implicate Grant Assurance 29, which requires an airport sponsor to maintain a current airport layout plan that accuratel y reflects airport development and proposed airport development. FAA Airport Compliance Manual , Appendix A at 14. The fundamental obligation under Assurance 29 is to develop the airport in a manner consistent with the ALP and not to constr uct facilities not shown on the ALP. There is no requirement , however, to build everything shown on an ALP. See generally FAA Airport Compliance Manual at ¶ 7.18 ( summarizing obligations under Assurance 29) ; Director’s Determination, JetAway Aviation, In c. v. Montrose Cnty., Colo. , FAA Docket No. 16 - 08 - 01, at 23 - 25 (July

2 , 2009) (discussing the role of the ALP and an airport sponsor’s obligations under Grant Assurance 29, with reference to prior Part 16 precedent). More generally, the Director has made clear that airport sponsors have no obligation to construct new facilities, or to expand or improve existing facilities , to comply with the Grant Assurances :18

the FAA will not dictate to an airport sponsor the manner in which it should expand or improve its infrastructure. In Pacific Coast Flyers , the FAA found it must rely on the sponsor's judgment and its proprietary right as the airport sponsor to achieve planne d development at the airport. Director’s Determination , Sun Valley Aviation, Inc. v. Valley In t’l Airport, City of Harlingen, T ex. , FAA Docket No. 16 - 10 - 02 , at 67 (Dec. 11, 2012) (citing Director’s Determination , Pacific Coast Flyers, Inc., Donnya Daubney d/b/a Carlsbad Aircraft Pilot Supply, & Roger Baker v. Cnty. of San Diego, Cal. , FAA Docket No . 16 - 04 - 08 (July 2 5, 2005)). S imilarly, the FAA has held that “ [ a] sponsor is not required to develop any and all parcels of land in a manner consistent with the wishes of any one party, but rather may exercise [its] proprietary rights and powers to devel op and administer the Airport’s land in a manner consistent with the public’s interest.” Final Decision and Order, Santa Monica Airport Ass’n v. City of Santa Monica, Cal. , FAA Docket No. 16 - 99 - 21, at 19 (Feb. 4, 2003). 5 Consistent with the limited nature of an airport sponsor’s obligations under Assurance 29, the FAA recognizes that airport sponsors are not required to build facilities recommended in an airport master plan. A master plan is a : ‘vision’ for the future of the airport, [which] plays a role in [the sponsor’s] decision-making process, and for development of the airport. H aving said that, the Director also notes that deviating from the MP, to accommodate changing airport conditions or new requirements, is not only p ermissible, but may

b e neces sary and expected.” Pacific Coast Flyers at 35.

5 See also Final Agency Decision, Thermco Aviation, Inc. v. City of Los Angeles, Cal. , FAA Docket No. 16 - 06 - 07, at 19 (Dec. 17, 2007) (“the federal obligations [do not] require sponsors to adhere to the location preferences of current tenants and subtenants when planning for the future development of the airport.”); Pacific Coast Flyers at 28; Director's Determination , ALCA , the Cylinder Shop/Wayman Aviation, Suncoast Aviation, and National Aviation v Miami-Dade County , FAA Docket No. 16 - 08 - 05, at 31 (Aug . 31, 2010); Director’s Determination, Northern Air, Inc. v County of Kent

, Mich. , FAA Docket No. 16 - 11 - 10, at 23 (March 28, 2013).19 **IV. ARGUMENT**  **A. CAS Lacks Standing to Challenge the City’s Decisions Regarding Future**  **Airport Development** Part 16 requires a complainant to affirmativel y demonstrate standing by proving that it has been “ directl y and substantially affected by

the things done or omitted to be done .” 14 C.F.R. § 16.23(b)(4). When an alleged injury i s based on the loss of benefits a complainant anticipates would accrue in the future, a complainant must demonstrate a realistic probability that it would realize those benefits . Cf. Director’s Determination on Remand , Town of Fairview , FAA Docket No. 16 - 99 - 04 , at 17 (July 2 6, 2000) aff’d Final Decision and Order (Jan. 23, 2001) (“When a litigant alleges only f uture injury, as the basis for standing, he must demonstrate a realistic danger of su staining direct injury”). CAS fails to make such a showing . The onl y allegation CAS makes regarding future runway development is that it “believes the expansion of the Runway will yi eld economic, safety and noise abatement benefits.” Complaint at ¶ 4. But, CAS does not explain how a longer runway would benefit CAS and how CAS would be injured in the absence of an expanded runway . Nor does CAS demonstrate that the City would necessarily

exercise its discretion to extend the runway even if Ordinance 3888 were found to be noncompliant. H aving failed to prove that it has been “directly and substantially

a ffected by

the things done or omitted to be done” by the City, or that there is any “realistic danger” that CAS will be injured as a result of the City ’s continued adherence to Ordinance 3888 , CAS has failed to establish standing to challenge Ordinance 3888 . **B. CAS**  **Fail ed**  **to Produce a**  **ny Documentary Evidence**  In order to prevail, CAS not only bears the burden of proof, but has the obligation to produce all documentary and other evidence “necessary f or the FAA to determine whether the sponsor is in compliance.” 14 C.F.R. § 16.29(b)(1). See also 14 C.F.R. § 16.23(b); discussion20

supra at 14 . Further, a complaint must “ [p ] rovide a concise but complete statement of the facts relied upon to substantiate each allegation.” 14 C.F.R. § 16.23(b)(3). CAS has clearly

f ailed to satisfy

these basic standards of pleading . There are **no** documents attached to the Complaint to substantiate **any** assertion of fact . 6 There are **no** affidavits or other testimonial evidence attached to the Complaint. What CAS offers as a c omplaint is nothing more than an argumentative letter from legal counsel, little changed from a letter CAS’s counsel sent to the City in 2010 , setting forth vague assertions of fact and opinion . It does not constitute evidence, is not supported by evidence, fails to set forth a “concise but complete statement of the facts relied up to substantiate each allegation,” and falls well short of the clear requirements for a complaint under Part 16. The need to require a complainant to present evidence in support of its complaint is selfevident: it prevents complainants from making baseless allegations that require airport sponsors to undertake the substantial expense of disproving negatives and responding to unsupportable allegations. The importance of enforcing this rule is underscored by th e Complaint here, which rests ultimately

on unsupportable allegations that are readil y refuted as factuall y and legall y incorrect. For example,

 CAS alleges that the City did not adopt a tax on aviation fuels until 19 9 9 or 2006, but cursory research into City

l aw and practice demonstrates that the City tax on aviation fuels has been in effect since 1960 and has been collected since at least the late 1980s.  CAS asserts that the City requires CAS to carry “branded” aviation fuel without citing where that requirement is set forth. In fact, there is no such requirement in the Lease, CAS’s Fuel License, Airport Minimum Standards, or elsewhere.  CAS asserts that the City deliberatel y prices Avgas below the City ’s costs in order to undercut CAS’s price. B ut publi cl y available City p olicy requires the City

to set its

6 The only exhibits to the Com plaint are copies of correspondence between legal counsel, apparently offered to demonstrate reasonable pre - filing efforts to resolve the dispute. N one of those letters include any supporting evidence.21 Avgas price above the City ’s total cost of fuel, and the City o ften prices fuel above the price charged b y CAS. Although the Complaint should be dismissed outright, the City will respond in detail to C omplainant ’ s unsupported allegations in order to demonstrate that the Complaint lacks merit. **C. Claims f** 

**or Violations of ANCA a re**  **Outside t** **he FAA’s Jurisdiction Under Part 16**  CAS claims that Ordinance 3888 is a “local noise -based restriction[ ] upon aeronautical activity” that is “preempted under the Airport Noise and Capacity Act of 1990.” C omplaint at ¶ 22 . A s a threshold matter, this claim must be dismissed because claims for violations of ANCA do not fall under the FAA’s Part 16 jurisdiction. This is readily a pparent from the plain terms of 14 C.F.R. § 16.1, which does not include ANCA or Part 161 as among laws or regulations that may

b e adjudicated under Part 16. 7 As the Director’s Determination in AOPA v. City ofPompano Beach, Fla. , u pon which CAS itself relies, makes clear: The disposition of complaints involving alleged FAA violations of ANCA are not governed by

1 4 CFR Part 16. [ See 14 CFR § 16.1.] Under its 14 CFR Part 16 jurisdiction, the FAA may investigate an alleged violation of an authority expressly l isted under 14 CFR § 16.1, . . . . ANCA is not one of the enumerated authorities subject to Part 16 jurisdiction and thus Part 16 is not the appropriate venue for addressing issues regarding ANCA. FAA Docket 16 - 04 - 01, at 29 (Dec . 15, 2005). Accordingl y, the portion of the Complaint alleging a violation of ANCA should be dismissed for lack of jurisdiction. 8

7 This analysis does not change simply because CAS styles its claim in terms of preemption rather than a violation. First, 14 C.F.R . § 16.1 does not confer jurisdiction over preemption claims. Second, the FAA has recognized that FAA may consider preemption claims in a Part 16 proceeding if the claim arises from conflicts between local action and one of the laws set forth in Section 1 6.1. 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 ). Because CAS’s preemption claim arises only from alleged conflicts with ANCA, its preemption claim is beyond FAA’s jurisdiction under Part 16. 8 CAS makes the bald accusation in its Com plaint that Ordinance 3888 is “a specific violation of state law” ( Com plaint at ¶ 2 ) but fails entirely to develop or substantiate this argument. C AS alleged in prior correspondence that Ordinance 3888 was drafted to evade the requirements of Arizona law limiting a local government’s authority to “restrict or limit the length or width of an airstrip or runway used for the landing and takeoff of an aircraft.” Ariz . Rev . S tat . Ann. § 28 - 8411(B)(1). F irst, allegations about violations of state law p lainly are outside the FAA’s jurisdiction under Part 16. S econd, Section 28

–4811(B)(1) does not purport to diminish the City’s authority to22

**D. Assuming**  **A rguendo**  **that the Director h**  **a s**  **Jurisdiction Over CAS’ ANCA Claim,**  **Ordinance 3888 does n**  **ot Violate ANCA** CAS claims that Ordinance 3888 violates ANCA because it is a “noise or access restriction . ” Complaint at ¶¶ 21 - 22. CAS is incorrect as to the scope and intent of Ordinance 3888 and the scope of ANCA. First, CAS appears to argue that Ordinance 3888 must be a noise -based restriction because it uses the language “to guarantee to the citizens of the City o f Chandler the continued quiet enjoy

ment in and to [their] homes . . . .” See Complaint at ¶ ¶ 19, 21 . CAS p laces inappropriate emphasis on the words “quiet enjoy ment . ” S ection 3888 uses the phrase “quiet enjoy ment” in the common law sense of the word to refer to the ability to use one’s property

free from a wide range of external interference and environmental impact. Although noise is one factor, it is by

no means the only, or even dominant, factor. Second, Ordinance 3888 is not a “noise or access restriction” within the meaning of ANCA. Pursuant to ANCA, a “noise or access restriction” is a local restriction on the number o r kinds of aircraft operations, such as a curfew, noise budget, noise cap, or noise -based fees. 14 C.F.R. § 161.5. See generally FAA Airport Compliance Manual , Chaps. 13 & 14 ( future runway extension projects or other infrastructure development projects are **not** on in the list of airport sponsor actions that are subject to ANCA and other grant obligations relating to airport access). But, Ordinance 3888 does not prevent any aircraft capable of operating at the Airport from doing so, now or in the future. Quan Dec. at ¶ 9. The onl y limits on operations are , and would be, the limits inherent in an aircraft’s performance capabilities in light of runway l ength .

define planning goals for the future growth and development of the Airport . Ordinance 3888 is entirely permissible as a matter of state law.23

Id. Every aircraft operating at every airport is subject to those performance limitations in light of runway length . Such design capabilities are not “noise and access restrictions . 9 More fundamentall y, the decision by an airport proprietor regarding whether or when to expand a runway, or any other airport facility, is not a “noise or access restriction” as defined by ANCA because such a decision do es not limit access to an airport; it is a decision on the nature of the facility

the airport sponsor wishes to operate and the degree of investment it is willing to make . The City is not aware of any authority for the proposition that an airport sponsor’s decision to denote by

ordinance the intended full build- out of the airfield somehow constitutes a noise and access restriction under ANCA . The only a uthority CAS cites, Pompano Beach , is inapposite because that case involved restriction s on existing operations. Moreover, CAS ’s theory would vastly expand the scope of ANCA while dramaticall y limiting proprietary

a uthority over facility

p lanning and construction. Under CAS ’s theory, an airport operator would be required to complete a study under FAR Part 161 in conjunction with virtually every airport master plan, at least for most general aviation airports, since most decisions to expand an airport to a particular size and configuration necessaril y leave some aircraft unable to use the facility . Indeed, every p lan to expand at airport to a certain extent necessarily

includes a decision not to expand it any f arther. CAS’s theory

would treat that planning decision as a “noise or access restriction” subject to ANCA. That theory has no support in ANCA, Part 161, or FAA guidance and fails even a “straight- face test . ”

9 CAS may also attempt to argue that the language in Ordinance 3888 that the Airport “shall not be permitted to accommodate, in any fashion, aircraft which require for takeoff a runway longer than [5,700 feet]” is intended to restrict aircraft operations. That is not the case, however. The City intended Ordinance 3888 to set forth City policy on the size and capability of f uture runway im

provements by stating the City’s planning goal for ultimate runway length. The City does not construe Ordinance 3888 to restrict in any manner aircraft that may operate on the runway at any time. Quan Dec. at ¶ 9 . The City has applied Ordinance 3888, and wi ll continue to apply Ordinance 3888, such that any aircraft that can operate on the runway, now or at any future length, based on the aircraft’s certification and manufacturer’s performance standards, is permitted to do so.24

**E. Ordinance 3888**  **does n ot Violate Grant Assurance 5**  CAS asserts that Ordinance 3888 violates Grant Assurance 5 because Ordinance 3888 “deprives the City

o f its discretion to utilize airport funds generate d on the Airport for the development of the Airport as provided in the various ALP’s created with federal funds.” Complaint at ¶ 23 . The central obligation under Grant Assurance 5 is that an airport sponsor may not “take or permit any

action which would operate to deprive it of the rights and powers necessary to perform any

or all of the terms, conditions, and assurances in the grant agreement . . .” FAA Airport Compliance Manual , Appendix A at 5. CAS’s complaint rests on a false premise that the City has an obligation to extend the runway and that any

limitation on its ability

to do so must violate that obligation. CAS does not, and cannot, cite any such obligation because none exists. As discussed above, supra at 17 - 18 , the City is not required to build all improvements depicted on the ALP, nor is it required to build all improvements contemplated in its Master Plan . More fundamentally, the City ’s exercise of proprietary

a uthority regarding what facilities it intends to construct, when it intends to construct them, and how it intends to finance them are not subject directly to grant obligations. See Director’s Determination, Sun Valley Aviation, Inc. v. Int’l Airport, City of Harlingen, T ex. , FAA Docket No. 16 - 10 - 02 , at 67 (Dec. 11, 2012) (citing Pacific Coast Flyer s ). The City ’s obligations are simply

to assure that Airport development is not inconsistent with the ALP. That is exactly

what the City

has done here. The City has regularl y updated the Airport Master Plan and updated its ALP to refle ct the results of that planning. The City has not developed the Airport in a manner inconsistent with the ALP. B oth the 2007 Airport Master Plan and ALP reflect City policy regarding future runway exten sions and Airport development. None of the terms of Ordinance 3888 regarding future runway c onstruction or financing restrict the ability

of the City

to meet Grant Assurance 29 or any other Assurance .25

The FAA recentl y recognized two circumstances in which an airport sponsor might violate Assurance 5: by ceding power to a third party and by acting in a manner that makes clear the sponsor does not understand its federal obligations and is thus incapable of meeting its obligations. See J

effBodin at 41. Ordinance 3888 does neither of those things. Ordinance 3888 does not cede power to a third party. In Bodin , the Associate Administrator recognized that an action by the sponsor’s legislative body, even when in express violation of a grant obligation, does not violate Assurance 5 for the simple reason that the sponsor retains the authority and power to act in accordance with its grant obligations. In Bodin , the airport sponsor had violated its grant obligations by refusing to allow an on- airport parachute drop zone despite an FAA finding that a drop - zone would be safe. The Director found that the County B oard of Supervisors decision violated Assurance 5 because it deprived the County o f the ability

to meets its federal obligations. The Associate Administrator reversed that determination explaining: [The] Board of Supervisors, as representative government of the County, was a proper body

to vote on this proposal. Though the vote by the Board of Supervisors on the Complainant’ s proposal appears to have been in contradiction to the written Airport Rules and Regulations, the County i s the sponsor of the airport. Elevation of the decision-making process to a level above that of the Airport Director does not alone make the County's decision-making process incoherent or improperl y cede rights and powers. Jeff Bodin at 41. S imilarly here, the City

C ouncil is the appropriate body to approve the c onstruction and financing of capital improvement projects at the Airport . The City Council’s adoption of Ordinance 3888 does not violate Assurance 5 , even if Ordinance 3888 somehow is understood to be inconsistent with some other unidentified grant obligation . The fact that Ordinance 3888 require s voter approval of a bond issue for a runway extension does not change that anal ys is . The City C ouncil retains the legal authority to amend26

Ordinance 3888 , if necessary, to comply with federal obligations . The C ity has not “ceded” any thing and is in compliance with Assurance 5 . See Jeff Bodin at 42. Finally, the City ’s decision-making process did not lack transparency, nor was it so misleading or confusing as to indicate a lack of understanding of federal obligations. Id. at 41. To the contrary, the City ’s adoption of Ordinance 3888 , and the amendments thereto, were conducted in public in accordance with City p rocedures and law for adopting ordinances. The terms of the Ordinance are clear and readily understood. More fundamentally, the City has , at all times , demonstrated an understanding of its federal obligations by, for example, updating the Airport Master Plan and amending the Airport Layout Plan to reflect changes in City p olicy and planning goals with respect to the Airport and the potential runway extension. CAS has not provided any evidence that could support an Assurance 5 violation, nor has CAS described any conduct b y the City that could indicate an Assurance 5 violation. **F. The City**  **h as**  **n ot Dive**  **rted Airport Revenue** CAS asserts that the City h as illegall y diverted airport revenue because the City c ollects and retains a local tax on Avgas and jet fuel. C omplaint at ¶¶ 24 - 32. CAS acknowledges that taxes on aviation fuel in effect on December 30, 1 987 , are not airport revenue but argues that the City tax was not “in effect” on December 30, 1987. Id. at ¶ 32. In fact, the City ’s tax on aviation fuels has been in effect since 1960 , and CAS ’s argument is wrong in almost every particular. A s explained above, supra at 10 - 13 , the City collects a tax on the sale of aviation fuel s pursuant to a specific tax that was first adopted in 1959 and placed in effect in 1960. Although that tax ha s been recodified and changed in several ways (not material here) over the ye ars, the tax has been in effect and applicable since 1960. Grafstrom Dec. at ¶ 3 - 4. As a result , the tax revenue is no t airport revenue under 49 U.S.C. § 47107(b) and § 47133(a).27

CAS ’s attempts to change that basic fact are unavailing. F irst, CAS argues that a lack of enforcement of the tax prior to 2006 shows that the tax was not “in effect.” A s a factual matter, this is not true. The City had, at different times over the ye ars , collected taxes on aviation fuel sales from the City ’s fuel sales at the Airport, from CAS , and from aviation fuel sellers at Stellar Airp ark, also located in the City . Grafstrom Dec. at ¶ ¶ 10 - 11 . Although the City c oncedes it did not always enforce the tax, the tax was in effect and was not first applied to aviation fuel sales in 2006. Id. Second, Section 47133(a) applies to taxes “in effect” on December 30, 1987, not to taxes “enforced or collected” as of that date. A s detailed above, the City ’s tax was in effect prior to December 30, 1987 , and had been “established” prior to December 30, 1987. The City ’s tax is therefore , not subject to the prohibition against revenue diversion regardless of the City ’s inconsistent enforcement. Third, CAS argue s , based on its seemingl y cursory review of the City T ax Code, that the tax applicable to jet fuel sales tax was not implemented until 1999. C omplaint at ¶ 31. This is simply incorrect. A s detailed above, the City ’s tax became effective in 1960, and it has applied to the sale of all non- excepted goods, including Avgas and jet fuel sales , since then . Grafstrom Dec. at ¶ 4 . In1 999 , the City recodified its Tax Code without making any substantive changes regarding the tax at issue here. Id. at ¶ 8 . But , the tax itself has existed since 1960 and is , therefore , grandfathered pursuant to Section 47133(a). Fourth, CAS suggests that because “the City f ailed to implement a specific Avgas sales tax and is instead relying upon its general sales taxing power, ” the tax on Avgas somehow falls outside Section 47133(a)’s grandfather provision. Complaint at ¶ 31. But the grandfather provision is limited only

b y the effective date of the tax, not the source of power for the tax, and28

covers “ any local taxes on aviation fuel ” in effect before December 30, 1987 (emphasis adde d). The grandfather provision is not limited to taxes specific to aviation fuel. The City ’s tax is clearl y a tax on aviation fuel that was established b efore December 30, 1987, and , therefore , is not airport revenue . Moreover, CAS’s argument proves too much. I f the application of a generall y applicable tax to aviation fuel sales is not subject to grandfathering because it is not a “local tax on aviation fuel,” then it follows that such taxes are not airport revenue for the same reason. Just as local sales taxes on the sale of other goods in an airport are not air port revenue, so would local taxes that happen to apply to the sale of aviation fuels not be airport revenue. The plain terms of Section 47133(a) do not support such a reading, and the FAA should reject CAS’ s argument on that basis. 10 Finally, CAS argues that allowing public entities to apply general sales taxes to aviation fuel sales would allow them to “evade” Assurance 25 , presumabl y by enforcing a tax for the first time after December 30, 198 7 . C omplaint at ¶ 32. The factual premise is false here because the City h as always applied its tax to aviation fuel sales. Supra at 10 - 13 . Moreover, Congress carefully made the revenue diversion rules applicable only to local taxes not “in effect” pri or to December 30, 1987. B y its plain terms, Section 47133(a) allows a local government to collect tax es on aviation fuel sales provided that the tax was in effect prior to December 30, 1987. If the tax was in effect, it is not airport revenue . That does not “evade” the law, but complies with the law. T o be sure, if a new tax were created, or if an old tax were amended to apply f or the first

10 The City also notes that all taxes on aviation fuel sales are in effect paid to the Airport because the City makes an annual payment to the Airport that exceeds the total amount of fuel taxes collected. T he City makes an annual payment to the Airport pursuant to a formula to cover any shortfall between Airport revenues and Airport expenses. Quan Dec. at 11 . O ver the past six years, the amount of the City’s subsidy payment has far exceeded the total amount of fuel taxes collected. F or example, in FY 2011/12, the City collected $28, 982.16 in taxes on the sale of aviation fuels (Avgas and Jet A) at the Airport. Grafstrom Dec. at ¶ 16 . T he City’s subsidy payment in that same year wa s $151,602 . Quan Dec. at ¶ 11 . I f all or some of the aviation tax had been paid into the Airport Enterprise Fund, the subsidy payment wo uld have decreased by ac orresponding amount. Accordingly, the Airport does receive the full financial benefit of the taxes on aviation fuel sales.29

time to aviation fuel sales, the analysis might be different. B ut that is not the case here , where the tax has been “in effect” and applicable to the sales of aviation fuel sinc e 1960. The tax is clearl y permitted as a grandfathered local tax on aviation fuel and is not subject to the prohibition against revenue diversion pursuant to 49 U.S.C. § 47133(a) and Assurance 25. 11 **G. The City has n**  **ot Unjustly Discriminated Against CAS**  CAS claims that the City “ economicall y discriminates” against CAS by providing a commercial self

- service fueling facility that is “subsidized” by “ federal grant monies and airport enterprise funds” and by

s elling fuel at a loss. C omplaint at ¶ 33 . CAS also claims that the City improperly

holds CAS ’s fueling operations to a higher standard than the City ’s self - fueling operation. Complaint at ¶ 36 . None of CAS’s allegations has merit. 1. The City

does not Improperly

“Subsidize” it s Self

- Fueling Operation with Federal Grant Funds and Airport Enterprise Funds CAS argues that the City improperly

u ses public monies to “improve and maintain” its self - service fueling facility, while CAS must use its own money, thus placing CAS at a competitive disadvantage due to different cost structures. Complaint at ¶¶ 33, 35 . Specificall y, CAS asserts that the City unjustl y discriminated against CAS because the City replaced the pavement at the City ’s self - fueling facility

but did not replace the pavement at CAS’s fueling facility . Complaint at ¶ 3 5 . CAS’s theory a ppears to be Assurance 22’s obligation that an airport sponsor provide services on the same terms and conditions as competing airport tenants 11 CAS suggests that it is subject to double taxation by having to pay

af uel flowage fee and the tax . C om plaint at ¶26 . CAS also suggests that the City treats CAS unfairly by not assessing the flowage fee on City sales of f uel. Id. B oth assertions are false. F irst, the CAS Lease makes clear that CAS must pay all applicable taxes and all applicable fees relating to the services it provides. Lease ¶ 14 p. 16, Exhibit 3 to the Declaration of Lori Quan. CAS cannot argue that lease terms to which it agre ed are discriminatory. See 41 North 73 West, Inc, dba Avitat Westchester v. Westchester Cnty. , N . Y . , FAA Docket 16 - 07 - 13 at 26 - 27 (June 12, 2008) (Director’s Determination), aff’d, Final Agency Decision (Sept. 19, 2009); Final Decision and Order, Rick Aviation, Inc. v. Peninsula Airport Comm’n , FAA Docket No. 16 - 05 - 18 , at 15 (Nov. 6, 2007) (refusing to overturn an agreed-upon lease term just because tenant discovered that lease term is not favorable). Second, the City does pay a flowage fee to itself. When it sets the minimum price of Avgas, it includes the cost of the $0.10 flowage fee. Quan Dec. at ¶ 22. All proceed s from the sale of fuel are treated as airport revenue and kept on the Airport. Accordingly, the City does assess and collect the flowage fee for its own fuel sales.30

requires an airport sponsor to match improvements to its own commercial facilities by paying for and providing equivalent improvements to similar commercial facilities of airport tenants on land leased by the tenant . CAS cites no legal authority f or that understanding of Assurance 22 , and the City i s not aware of any

such authority. The requirement that an airport sponsor conduct its own commercial operations on the same terms and conditions it applies to similar operations by tenants does not require a sponsor to assure that the physical facilities of tenants are identical to its own. CAS’s view also ignore s the central pur pose of Assurance 22 to prohibit unjust discrimination . B ut that rule does not require identical treatment in all circumstances. Reasonable conduct can justifiably affect different entities in different ways without running afoul of Assurance 22. See su pra, 15 . A review of the facts here make clear that the City ’s actions were reasonable and justified and did not result in any unjust discrimination. First, the pavement project CAS describes was not a pavement maintenance project, nor was it a project to improve the competitiveness of the City ’s self - service fuel facility . The project was part of a larger project to improve storm water drainage by, among other things, replacing an open water storm water ditch with an underground culvert and catch basin system s as well as a stilling basin and dry w ell west of Airport B oulevard. Quan Dec. at ¶ 14 . The purpose of the project was to make land west of the control tower developable. Id. As part of that project, the pavement around the City ’s self - service fuel facility

w as contoured to direct any accidental fuel releases into a lined retention basin to keep it isolated from storm water discharge. Id. The project was completed in 2010. Id. It was certainly

reasonable for the City to construct necessary

storm water drainage improvements that also required replacing the pavement at the City ’s fuel facility in order to protect the environment. CAS has not i dentified any c omparable need for the City to make any31

comparable changes to the pavement surrounding CAS’s fuel facilities. Accordingl y, the City did not unjustly

discriminate against CAS and did not violate Assurance 22. Further, CAS does not present any evidence that the improved pavement at the City ’s self - fueling dispenser has altered CAS’ s competitive position or harmed it in any way . As noted above, CAS outsells the City b y a wide margin, undercutting any claim of competitive advantage. Further, the only way CAS could be harmed by the City p aving its fuel farm is if CAS was “forced” to p ay f or a similar improvement in order to remain competitive. In fact, however, CAS has not done so. In the past eight ye ars, the City i s not aware that CAS has undertaken any capital improvement projects relating to its fuel facility . Id. at ¶ 18 . Thus , CAS has not been “forced” to increase its cost basis as a result of publicly- funded projects by the City . Moreover, the City

h as not hesitated to repair Airport pavement at CAS’s request when there is a need to do so. F or example , in late 2012, CAS complained of extensive cracking on the “San Tan Apron,” which is immediately adjacent to CAS’s fuel pumps, and expressed its concern that the cracks limited access to its pumps. Id. at ¶ ¶ 16 - 18 . The City

responded promptly and explained that the cause of the cracking was the nature of the soils beneath the pavement (the San Tan Ramp sits on an environmental cap) and that the City w as in the process of implementing a $300,000 rehabilitation of the entire San Tan Ramp to address that problem. That project i s largely

funded with AIP and state grants. Id. In late 2012, the City

worked with CAS to effect a temporary s olution by

f illing the cracks immediatel y adjacent to the pumps with hot mix. Id. The City has put the entire San Tan Ramp project out for bid and expects to award the bid in October, 2013 , with work to be completed earl y in 2014 (barring any unforeseen circumstances). Id. The City treats CAS fairl y and without discrimination.32

Similarly, CAS fails to account for the substantial benefits it re ceives from other improvements provided by the City and funded with public funds. The City i s in the process of building a new parking lot next to CAS to serve CAS and other tenants in that portion of the Airport. Id. at ¶ 15 . At present, CAS is the only tenant in the area and has virtually s ole use of the parking lot, which it uses as its primary parking lot. Id. As part of the same project, the City reconfigured Airport Boulevard so that it runs almost directl y to CAS’s facility, providing CAS’s customers better access. The City also brought water and sewer hookups to CAS, although CAS has chosen to remain on a septic system. Id. In2 0 10 , the City c onstructed a paved perimeter road to the south side of the airfield, which allows CAS’s fuel trucks ( and Airport maintenance and emergency

vehicles) to reach the heliport without crossing active runways or taxiways. Id. Those projects were also funded, in part, with grants and public funds, and CAS has benefitted directly from those projects. Id. Finally, the City

p rovides a substantial annual paym ent to the Airport, which allows the Airport to maintain its current schedule of rents and other charges. Id. at ¶ 11 . Accordingl y, CAS does benefit, directly and substantiall y, from projects funded in sub stantial part with public funds. There can be little dispute that CAS’s competitive position has been enhanced by the overall pattern of expenditures for capital projects at the Airport, and its complaint of unjust discrimination with respect to one proje ct is overwhelmed by the weight of the benefits CAS does receive. 2. The City

does not Sell Fuel at a Loss to Undercut CAS’s Fuel Prices CAS asserts the City

e conomically

discriminates against CAS by sell ing fuel at a loss or at a price deliberatel y set below CAS’s price. C omplaint at ¶¶ 33, 37 . These allegations are simply f alse, and CAS does not provide any evidence to support its contentions. As a general matter, it is clear that the City does not impair CAS’s ability to compete with the City . F irst,33

CAS is the sole provider of Jet A fuel at the airport, so the City does not compete in that market . Second, in Fiscal Year 20 1 2/13, the City s old 53,594.10 gallons of Avgas at its commercial selfservice f ueling facility . In contrast, CAS sold 354,904.40 gallons of Avgas , almost seven times more than the City . Quan Dec. at ¶ 21. Whatever competition there may be, CAS seems to be winning. Moreover, CAS is simply incorrect that the City ’s Avgas prices are set in an inappropriate manner. F irst, a review of Avgas fuel prices over the past ye ar shows that the City ’s price for Avgas is very s imilar to, and often higher than, CAS’s prices. Id. at ¶ 23. CAS is simply incorrect to assert otherwise. S econd, CAS is also incorrect when it alleges that the City sets its fuel prices to “break even, or allow a slight loss.” The City sets its fuel price using a sophisticated, multi - factor anal ys is that requires the City to set a price above its costs, specificall y including capital costs, fuel flowage fees, taxes, cost of fuel , and other overhead. Id. at ¶¶ 22 - 23. The final price is set based on the Airport’s judgment of a fair and competitive price above the City ’s costs. Id. The City does not understand what “monthly and quarterly

reports” CAS believes show that the City

“ allows a s light loss” on its fuel sales. C omplaint at ¶ 33 . Although the City reports all revenue and expenditures associated with the Airport, it does not individually report the profits on fuel sales. Quan Dec. at ¶ 26. The fuel pricing policy is designed to insure the City has consistently

m ade money

f rom its fuel sales. Id. The City also makes available Airport Quarterl y Reports, which provide a “Snap Shot” of whether projected fuel sales volumes are above or below projections, but those reports do not show profits or losses on fuel sales. Id. In fact, the City

has consistently made money on its fuel sales. Id.34

3. The Airport Holds Itself and CAS to the Same Minimum Standards CAS alleges that the City ’s fuel facilities “fall [] far short of the formal minimum standards it requires of [CAS].” C omplaint at ¶ 36 . Once again, CAS do es not support its assertions with any evidence or any citation to the minimum standards it claims were violated. Nor could it, because the City does not operate as an FBO and so its commercial self - fueling service is subject to different standards than CAS’s FBO operation. In any event, the evidence demonstrate s that CAS’s specific allegations are not true. CAS asserts that the City requires CAS to “carry branded fuel while the City does not.” Id. The City

has carefully

reviewed its Lease with CAS , CAS’s Fuel License, and the Airport ’s Minimum Standards and cannot find any reference to a branded fuel requirement. Quan Dec. at ¶ 25 . The current and former Airport Managers are also not aware of any such requirement and are not aware of any attempt to require or compel CAS to carry branded fuel. Id. From the Airport’s perspective, CAS is not required to sell branded fuel. CAS appears to believe it is “required to carry b randed fuel in order to meet the City ’s mandated insurance requirements.” Complaint at ¶ 3 6 . Although the City agrees that CAS’s lease does require it to carry a certain level of insurance, that insurance requirement does not include a branded fuel requirement. Quan Dec. at ¶ 25 . Itmay b e the case that CAS has chosen to acquire branded fuel to take advantage of insurance coverage that fuel sellers often provide, rather than pay

s eparately

f or its own insurance coverage. B ut , that is a business decision by CAS, not a requirement imposed by the City. 12 Finally, CAS asserts that the City ’s filtering and sump mechanisms fail to meet the standards the City

requires CAS’s filtering and sump mechanisms to meet. Complaint at ¶ 3 6 . 12 The City

s elects its Avgas vendor through a request for quotes on the spot market. In recent mo nths, Epic Fuels has won many of those bids. CAS also sells Epic Fuels. Quan Dec. at ¶ 2435

Again, however, CAS provides no specific details about how the City ’s filtering and sump mechanisms are subs tandard, what the applicable standards are , or how the City allegedl y holds CAS to a different standard . In fact, the City holds itself and CAS to generally a pplicable standards of state law; the C ity does not impose additional requirements on CAS. Quan Dec. at ¶ 30 . Under those laws, the City i s subject to more rigorous requirements because it uses underground fuel storage tanks while CAS uses above - ground tanks . Id. The City ’s sump and filtering mechanisms for its self - fueling facility, as well as the underground fuel tanks, are regularl y inspected by

state authorities and have passed those inspections . Id. at 29 . Based on a review of the available record s , the City i s not aware of any instance in which its filtering or sump facilities have failed an element of inspection. Id. CAS also asserts that the City ’s filtering and sump mechanisms are “obsolete and outdated,” which CAS claims is clear from a “cursory glance.” Complaint at ¶ 36 . But CAS provides no details of what such a “cursory g lance” would reveal, or what specifically i s “obsolete and outdated” about the mechanisms. The City has inspected the filtering and sump mechanisms . Although they are not in mint condition, they are functional and operating within their design limits and projecte d useful life. Quan Dec. at ¶ 29 . Moreover, CAS fails to describe how it has been harmed by the alleged condition of the City ’s facilities. In fact, the City has not required CAS to make any changes to its facilities, Id. at ¶ 30 , so it is difficult to see how CAS has been harmed. Although CAS’s assertions are vague and unsupported, CAS has asserted in the past that the City u ses a filter on the fuel pumps that includes a warning label that says “not for use with aviation fuel . ” Id. at ¶

¶ 27 - 28 . Based on this, CAS has argued that the City i s somehow in violation of Assurance 22.36

CAS’s argument ignores the facts, which the City has explained to CAS more than once. Id. The City ’s fuel tank is located approximately 225 feet from the dispenser. As the fuel leaves the tank, the fuel passes through a primary f ilter that is rated for use with Avgas and carries no warning to the contrary . Id. Because of the distance to the dispenser, the City has for many ye ars used a secondary

f ilter at the dispenser. This secondary f ilter is not required, but is used a precautionary

measure. Id. Fundamentall y, CAS cannot be the victim of unjust discrimination because the City

has held itself to a higher standard than it does CAS. Moreover, the City

has used the same filter for many years without issue, and it has pass ed every

inspection. Id. at ¶ 29. Recentl y, the manufacturer added the Avgas warning, but did not change the specifications of the filters. Id. Airport staff contacted the manuf acturer and confirmed that using the filter as a secondary f ilter for Avgas is appropriate and within the filter’s specifications . Furthermore, the filters are replaced regularl y and are neither obsolete nor outdated. Id. The City

notes that it is consi dering changing the secondary f ilters it uses to a ty

pe that does not contain the warning regarding aviation fuel . Id. Because the City has not required CAS to install a secondary f ilter, or make any changes to its filtering system, CAS has failed to state a claim on unjust discrimination under Assurance 22. **V. CONCLUSION**  For the foregoing reasons, and for the reasons set forth in the Answer of the City o f Chandler, the City

respectfully

a sks FAA to dismiss the Complaint and find the City to be in compliance with its federal obligations .