Finance Management 

Federal Aviation Administration 

80000 Independence Avenue SW 

Washington DC 20591 

Subject: Compliance with FAA Requirement for a Submitted "Action Plan" Due by 

December 8, 2015: FAA Policy and Procedures Concerning the Use of Airport 

Revenue; Proceeds from Taxes on Aviation Fuel (79, Fed. Reg. 66282, 

November 7, 2014. ("Policy Amendment") Revenue Implications, Concerns with 

Implementation Requirements and Other Issues. Suggested Action Consideration 

Dear Mr. Brown: 

The San Bernardino County Transportation Authority (the Authority) was notified of the 

above-referenced policy amendment after its final adoption, via a private party. Neither 

the Authority, its advocates nor its industry representatives were aware of the 

rulemaking process surrounding this policy change. Authority is a non-sponsor 

jurisdiction and has not been notified by any airport sponsors of Federal requirements for 

use of aviation fuel tax revenues. 

The Authority is concerned and impacted by this policy amendment because Authority 

imposes a special purpose (transportation) transaction and use sales tax within San 

Bernardino County, California pursuant to a voter-approved ordinance enacted under 

California law. The use of such sales tax proceeds is limited by California law and 

by voter-approved ordinance to only transportation purposes. Authority interprets 

49 U.S.C. Sec. 47107(b) and 49 U.S.C. Sec. 47133 and the Policy Amendment as 

applicable to local "general" taxes on aviation fuel, and not to local "special" taxes. 

This is supported by 79 F.R. 66282 which references "general" taxes several times. 

State and local governments provide many services to the airports that are funded from 

general sales taxes, including infrastructure, transportation, fire and public safety. Other 

services include lighting, security, roadways, buildings and terminals, and noise controls, 

etc., and these far exceed aviation fuel revenues. The funding makes sure that airports 

remain viable and meet the needs of local businesses and communities. In some cases, 

state and local governments or airport authorities use tax-exempt bonds to fund major 

capital improvements. The redirecting of these revenues creates an unfair burden for 

jurisdictions that must pay for the services for the entities benefiting from the policy shift. 

Executive Order 13132 (Federalism) establishes the principles and criteria that 

apply to regulations, legislative comments, and other policy statements that have a 

substantial effect on States. We are concerned with the FAA's position /'belief that 

JB151208-DAB 

Cities of: Adelanto, Barstow, Big Bear Lake, Chino, Chino Hills, Colton, Fontana, Grand Terrace, Hesperia, Highland, Loma Linda, Montclair, 

Needles, Ontario, Rancho Cucamonga, Redlands, Rialto, San Bernardino, Twentynine Palms, Upland, Victorville, Yucaipa 

Towns of: Apple Valley, Yucca Valley County of San Bernardino 
79 FR 66292 as having commented on the proposed Policy Amendment. The FAA 

adoption of the ruling has caught our own local community off guard. The cost, loss of 

revenues, and current and future workload involved as a result of this unforeseen 

ruling is substantial. 

Notwithstanding the foregoing objections, Authority submits the following that serves 

as Authority's intent to comply with the Policy Amendment based on Authority's 

understanding of what is required of any "action plan" submitted: 

Action Plan Requirement: Applicable Law 

• Local: An ordinance imposing a one-half percent transactions and use tax 

(Measure I) dedicated to transportation purposes only was adopted by the 

voters on November 2, 2004 for a 30 year renewal through March 2040. Measure I 

was adopted pursuant to California Public Utilities Code Section 180000 et seq. 

(Local Transportation Authority and Improvement Act "Act"). The Act and 

Measure I limit the expenditure of such special sales taxes to meeting local 

transportation maintenance and improvement needs. 

• State: California's Department of Finance (DOF) will provide guidance on any 

laws, regulations and procedures that may need amending. The Authority at the 

time of this communication has not seen a State prepared action plan. 

Action Plan Requirement: Tracking System 

• The Authority in conjunction with its sales tax consultant has commenced trying 

to identify sales and use tax revenue to comply with the requirement. 

For implementation purposes, there is going to be an issue with some of the 

taxpayers that comingle sales tax reporting of their retail gas station locations not 

at an airport and/or non-fuel related sales and their jet fuel sales. The internal 

process to undertake this effort - which is to identify, track and segregate the 

revenue, is extensive; a process is being develop for the reporting requirements and 

tracking systems for discrete information on aviation fuel tax revenues. 

We would appreciate the FAA provided a descriptive definition of the 

requirements for the mandated "tracking system." 

Acton Plan Requirement: Transition Period 

• To the extent required by law, it is the Authority's intent to comp1y with the 

requirements set forth and will notify the FAA if a reasonable transition period, 

not to exceed three years, is needed to become compliant with the rule. 
Deputy Executive Director 

cc: Jay Chamberlain, Department of Finance 

RESOURCES 

• FAA Policy and Procedures Concerning the Use of Airport Revenue; Proceeds from 

Taxes on Aviation Fuel 79, Fed. Reg. 66282, November 7, 2014). This ruling was 

effective December 8, 2014. https://www.federalregister.gov/articles/2014/11107/2014-

26408/policy-and-procedures-conceming-the-use-of-airport-revenue-proceeds-fromtaxes-on-aviation-fuel#h-8 

• State Board of Equalization- District Sales and Use Tax Rates 

http://www .boe.ca.gov/pdflboe l 05.pdf 

• California City Finance - FAA Rule Requires Use of State and Local 

Tax Revenues for Airport Purposes 

http://califomiacityfmance.com/F AA 150701. pdf 

• Department of Finance, FAA Policy Change on the Use of Sales Tax Revenues 

(August 11, 20 15)