UNITED STATESDEPARTMENT OFTRANSPORTATION FEDERAL AVIATION ADMINISTRATION WASHINGTON, D.C. AIRTRANSPORTASSOCIATION OF AMERICA,INC. d/b/a AIRLINES FOR AMERICA,ALASKAAIRLINES, INC., AMERICANAIRLINES, INC., ATLAS AIR, INC., FEDERALEXPRESS CORPORATION, HAW AllANAIRLINES, INC., JETBLUE AIRWAYS INC., SOUTHWESTAIRLINES CO., UNITED AIRLINES,INC.,UNITED PARCEL SERVICE CO., andAIRCANADA, Complainants,


### v. PORT OFPORTLAND, OREGON, Respondent. 

## RECEIVED FEB 

## t() 2016 PART 16 DOCKETS

FAADocketNo. 16-16-

# CJJ

COMPLAINT PURSUANT TO 14 C.F.RPART 16 AGAINST PORT OF PORTLAND, OREGON Communications withrespectto this document shouldbe addressed to: DavidBerg Vice President & General Counsel DougMullen Assistant General Counsel Air TransportAssociation ofAmerica, Inc. d/b/a Airlines for America 1275 PennsylvaniaAvenue, N.W. Suite 1300 Washington, D.C. 20004 (202) 626-4234 Email: dberg@airlines.org dmullen@airlines.org Counsel for Complainants Dated: February 10, 2016 Roy Goldberg Steptoe & JohnsonLLP 1330 ConnecticutAvenue, N.W. Washington, D.C 20036 (202) 429-8028 Email:rgoldberg@steptoe.comTABLE OF CONTENTS Page I. INTRODUCTIONAND OVERVIEW
...............................................................................1 II. PARTIES AND STANDING
..............................................................................................4 III. CERTIFICATIONPURSUANT TO 14 C.P.R.§ 16.21
.....................................................6 IV. JURISDICTION
..................................................................................................................6 V. STATEMENT OF FACTS
..................................................................................................7 VI. FEDERALPROHIBITIONAGAINST DIVERSION OF AIRPORT REVENUE
..........14 VII. CLAIMS FORRELIEF
.....................................................................................................19 A. THE PORTIS IMPROPERLYDIVERTINGAIRPORTREVENUE BY COLLECTINGAND REMITTING THE OFFSITE STORMW ATER MANAGEMENTAND SUPERFUND REMEDIATION FEES TO THE CITY.
...........19 B. THE ANTI-HEAD TAXACT LIMITS AIRPORTFEES TO THE GOVERNMENTAL AGENCYWHICH OWNS OROPERATES THE AIRPORT
......24 VIII. COMPLAINANTS' UNSUCCESSFUL ATTEMPTS TO RESOLVE THIS DISPUTE
...........................................................................................................................25 IX. THE FAAJULY 2015 [NON-FINAL] LETTERFAILS TO ADDRESS COMPLAINANTS' ARGUMENTS AND IS NOTBASED ON THE FACTS, THE LAW OR SOUND REASONING
.....................................................................................37 X. PRAYERFORRELIEF
....................................................................................................40

1UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION WASHINGTON, D.C. AIRTRANSPORTASSOCIATION OF AMERICA, INC. d/b/aAIRLINES FORAMERICA, ALASKA AIRLINES, INC., AMERICAN AIRLINES, INC., FEDEXEXPRESS AIRLINES, HAWAllAN f.-IRLINES, INC., JETBLUE AIRWAYS INC., SOUTHWESTAIRLINES CO., UNITED AIRLINES, INC., UNITED PARCEL SERVICE CO., and AIR CANADA, Complainants,


### v. PORT OF PORTLAND. OREGON, Respondent. FAADocketNo.l6-l6-

COMPLAINT PURSUANT TO 14 C.F.RPART 16 AGAINST PORT OF PORTLAND, OREGON

I. INTRODUCTION AND OVERVIEW l. Complainants Air Transport Association of America, Inc., d/b/a "Airlines for America" ("A4A"), and Alaska Airlines, Inc., American Airlines, Inc., Atlas Air, Inc., Fedex Express Airlines, Hawaiian Airlines, Inc., JetBlue Airways, Inc., Southwest Airlines Co., United Airlines, Inc., United Parcel Service Co. and Air Canada (the "Airline Complainants") (collectively "Complainants") file this Complaint pursuant to 14 C.F.R. Part 16 to challenge the past, continuing m1d future violations of federal statutory law (49 U.S.C. § 47133 and § 47107(b)(l)) and "grant assurance" obligations by the Respondent Port ofPortland, Oregon (the "Port"), the owner and operator of Portland International Airport ("PDX" or "Airport"). The Port is improperly and unlawfully allowing millions of dollars of revenues generated at the Airport to be diverted from the Airport to satisfy financial obligations imposed by thegovernment of the City of Portland, Oregon (the "City") (which neither owns nor operated PDX), having nothing to do with the Airport. The Airport is requiring airlines to pay money to the Port for the use ofthe Airport which the Port, in turn, diverts to the City for stormwater maintenance and environmental remediation projects entirely unrelated to Airport operations. This is diversion ofairport-generatedrevenue, whichviolates federal statutory law. 2. In this Complaint under Part 16 of the Federal Aviation Regulations made pursuant to 14 C.F.R. 16.1 et seq., Complainants request that the FAA institute an investigation tmder 14 C.F.R. 16.29 into the failure ofthe Portto comply with its federal grant assurances and other statutory obligations relatingto diversion ofrevenue generatedby or at the Airport. 1 3. The investigation sought by Complainants is necessary because the Port, as the
owner m1d operator of the Airport, diverts revenue generated by or at the Airport

- namely airline rates and charges

- into the coffers ofthe City ofPortlandthrough forced paymentby the airlines servingPDXofmillions ofdollars in ammal fees for offsite stormwatermanagement (the "Offsite Stormwater Management Fee") and Superfund cleanup (the "Superfund Remediation Fee") (collectively, the "Fees"). 4. Once the Offsite Stormwater Management Fee is fully implemented in 2017, it will require the Airline Complainants to pay approximately $4 millionperyear to the Airport for remission to the City. The amounts dedicated to the Superfund Remediation Fee is lower per year as ofnow compared to the Offsite Stormwater Management Fee, but threatens to dwmfthe four million dollars-per year Offsite Stormwater Management Fee once the Willmnette River Superfund cleanup is fully underway.
1 See Sponsor Assurances (requiring airport sponsors to comply with a system of sponsor assurances contained in grant-in-aid agreements issued under the Airport and Airway DevelopmentAct of 1970, as amended, 49 U.S.C. §417101 et seq.); see also 14 C.F.R. Pmt 152, app. D (requiring grant applicantsto certify that they will comply withprescribed assurances). 25. The revenues generated by the Fees are not expended for the capital or operating costs ofthe Airport. Rather, the Fees are one-hundred-percent allocated to projects having no relationship whatsoever to the Airport, therefore the Port's conduct violates the Airport and Airway Improvement Act (49 U.S.C. § 47107, et seq.) ("AAIA"); 49 U.S.C. § 47133; the AntiHead Tax Act (49 U.S.C. § 40116) ("AHTA"); the Grant Assurances; and the FAA Policy and Procedures ConcerningtheUse ofAirport Revenue ("RevenueUse Policy") (Feb. 16, 1999). 6. The effect ofthe Port's revenue diversion is to burden the Airline Complainants and airline passengers with the costs ofthe Fees. In passing the AHTA, Congress intended to prevent the undue burden on interstate commerce and the economic harm to airlines and passengers that would result if state and local govermnents were allowed to raise general
revenues by imposing fees or taxes on commercial aviation2 As FAA has recognized, "[t]he purposes ofthe revenue use requirements are to prevent a 'hiddentax' on air transportation, and to ensure that Federal airport grants are used to supplement funding for airport projects and are not simplyused to substitute funds divertedto supportlocal non-airportprograms."3 Inviolation of this statement, the Port is allowing airport-generated revenues to be used for non-airport purposes. 7. The Complainants request that the FAA investigate the Port's diversion of Airport-generated revenues by its collection and remittance of the Offsite Stormwater

2See, e.g, Nw. Airlines, inc. v. Cty. of Kent, Michigan, 510 U.S. 355,363 (1994). 3FAA Policy and Procedures Concerning the Use ofAirport Revenue: Proceeds from Taxes on AviationFuel, 78 Fed. Reg. 69789, 69790 (Nov. 21, 2013). 3Management and Superfund Remediation Fees, and undertake a comprehensive audit of the Port's activities in this matter.4 IL PARTIES AND STANDING 8. Complainant Air Transport Association of America, Inc. d/b/a "Airlines for America" ("A4A") is America's oldest and largest airline trade association. A4A is headquartered inWashington, D.C. 9. A4A has representational standing and is able to file a part 16 complaint as a representative ofits members who are "directly and substantially affected" by an act or omission ofRespondent.5 I0. Complainant Alaska Airlines, Inc. conducts aircraft operations at PDX and is a member ofA4A. Itis headquarteredin Seattle, Washington. 11. ComplainantAmerican Airlines, Inc. conducts aircraft operations at PDX and is a member ofA4A. Itis headquarteredin Dallas, Texas. 12. Complainant Atlas Air, Inc. conducts aircraft operations at PDX and is a member ofA4A. Itis headquarteredinPurchase, New York.

4Because the FAA's Part 16jurisdiction does not extend to a non-airport/operator/sponsor such as the City ofPortland, which is imposing the Fees but does not own or operate PDX, A4A has filed a sepmate legal action in the United States District Court for the District ofOregon against the City and its concerned officials, seeking a declaratoryjudgment and injunctive reliefagainst the City and its officials continuing to impose Fees that violate the prohibition against diversion ofairport revenue. Air TransportAss'n of America, Inc. v. Jordan, etal., 3: 16-cv-00230-SB (D. Or.) (the "Portland Case"). 5 See 61 Fed. Reg. 53,998 (Oct. 16, 1996); Santa Monica AirportAss 'n, et al. v. City of Santa Monica, DocketNo. 16-99-21,2000 WL 1824463, *13-14 (Nov. 22, 2000) ("the preamble to 14 CFRPart 16, 61 Fed. Reg. 53998
... contemplates that associations may file Part 16 complaints as a 'representative' on behalf of its members who are 'directly and substantially affected'") ("SMAAmay serve as arepresentative ofits members
... inthis proceeding"). 

### 413. Complainant Fedex Express Airlines conducts aircraft operations at PDX and is a member ofA4A. Itis headquartered inMemphis, Tennessee. 14. Complainant Hawaiian Airlines, Inc. conducts aircraft operations at PDX and is a member ofA4A. It is headquarteredinHonolulu, Hawaii. 15. Complainant JetB!ue Airways, Inc. conducts aircraft operations at PDX and is a member ofA4A. Itis headquartered inNewYork City, NewYork. 16. Complainant Southwest Airlines Co. conducts aircraft operations at PDX and is a memberofA4A. Itis headquartered inDallas, Texas. 17. Complainant United Airlines, Inc. conducts aircraft operations at PDX and is a member ofA4A. Itis headquarteredinChicago, Illinois. 18. ComplainantUnitedParcel Service Co. conducts aircraft operations at PDX and is
a member ofA4A. Itis headquarteredinLouisville, Kentucky. 19. Complainant Air Canada conducts aircraft operations at PDX and is an associate airline memberofA4A. It is headquarteredinToronto, Canada. 20. RespondentPort ofPortland owns and operates PortlandInternational Airport and is the "sponsor" with regard to various "grant assurances" provided to FAA in exchange for funds the Port has received in the past for Airport projects. This includes, without limitation, GrantAssurance 25. 21. The Airline Complainants have standing ur1der 14 C.F.R. 

### § 16.23(a) because they
are directly and substantially affected bythe Port's violations of49 U.S.C. § 47107 and§ 47133 and Grant Assurance 25. "Persons alleging revenue diversion by an airport, as defined in 49 U.S.C. 

### §47107(b), that do business with, andpay fees orrents to, the airport, are considered
... to be directly and substantially affected by the alleged revenue diversion for the sole purpose of

5having
... standing to file a revenue diversion complaint under part 16. 61 Fed. Reg. 53,998 (Oct. 16, 1996); Rudy.! Clarke v. City of Alamogordo, NM, Docket No. 16-05-19, 2006 WL 2791038, *10 (Sept. 20, 2006) ("A person doing business with an airport and paying fees or rentals to the airport shall be considered directly and substantially affected by alleged revenue diversion"). "This special applicability provision operates for cases where revenue diversion is alleged. It is necessary because revenue diversion principally affects the United States as the grantor ofthe federal airport funds allegedly diverted. That said, entities that do business onthe airport and pay also have some interest in alleging revenue diversion because their payments

. . ,6 constitute mrportrevenue. 

### III. CERTIFICATION PURSUANT TO 14 C.F.R. § 

### 16.21 22. Pursuant to 14 C.P.R. § 16.2l(b), Complainants certify that they have made substantial and reasonable good faith efforts over multiple years to resolve the disputed matter informally with the Port prior to filing this Complaint and there is no reasonable prospect for timely resolution ofthe dispute7 A4A has met with officials from the Port, the City, FAA and DOT to try to resolve the issues raised herein, but these efforts have not resulted in the relief soughtbyComplainants. 

### IV. JURISDICTION 23. The Federal Aviation Act of 1958, 49 U.S.C. § 40101, et seq. (the "Aviation Act"), confers broad authority on the FAA to regulate air commerce. Under the AAIA, an airport receiving federal assistance in the fom1 ofan Airport Improvement Progrmn grant, such
6 Jd. at* 12 (citing61 Fed. Reg. 53,998 (October 16, 1996)). 7 These good faith efforts are described in Section VIII below and in the Declaration ofDavid Berg, Exhibit 20 hereto. The Declarations attached to this Complaint as Exhibits 16-20 were filed inthePortland Case in suppmi ofthepending Motion for Preliminary Injunction. 6as PDX, must comply with its sponsor assurances, including Grant Assurance 25. The FAA has
a statutory mandate to ensure that airport owners comply withthe sponsor assurances. 24. Although the City (a non-airport owner, operator or sponsor) is imposing the OffSite Storm-Water and Superfund Remediation Charges on the Port, the Port is unlawfully requiring the ComplainantAirlines to pay to the Port the amounts imposed hy the City as part of the rates and charges that the Port imposes on airlines for their utilization ofPDX. Ifthe airlines refuse to paytheirportion ofthe Fees, they will be denied access to PDX or will be sued by the Port for non-payment ofrates and charges. V. STATEMENT OFFACTS PortlandInternationalAirport 25. PDX is located withinthe Portland city limitsjust south ofthe ColumbiaRiver in Multnomah County, Oregon. 26. The Port is the "sponsor" for PDX within the meaning of 14 C.F.R. § 16.3. The Port has received millions of dollars in FAA Airport Improvement Program grants for the development ofPDX. 27. PDX has its own stormwater treatment facility located within the airfield perimeter fence. The PDX system collects airfield stormwater (including deicing materials during the deicing season) as well as run-off stormwater from Marine Drive (on the Columbia River Levee borderingthe Airport onthe north side) whichis ownedby the City. 28. PDX lies within the Multnomah County, Oregon Drainage District (the "Drainage District"). Landside drainage at PDX is all contained within the Drainage District's catchment
area (roughly defined by the levee which encircles the airport, separating it from the Columbia River). PDX pays the Drainage District fees for this "on-site" service. No Airport storrnwater
runs into City-controlled stormwater infrastructure. All water from PDX goes to the Columbia 

### 7Slough, controlled by the Drainage District or is discharged through the Port's own stormwater treatment system to the ColumbiaRiver. ThePortland Fee Ordinance 29. On September 12, 2012, the City adopted Ordinance 185610 (the "Ordinance"), which imposes a new methodology for charging for storm water management services.8 Under the methodology, the Port- as the owner and operator ofPDX- mustpay a portion ofthe costs incurred by the City to manage "off-site" storm water drainage from non-airport rights ofway (the "Offsite Stormwater Management Fee"), and for the clean-up of a Willarnette River Superfund site having no relationship to PDX (the "SuperfundRemediation Fee"). The Offsite Stormwater Management Fee 30. The Offsite Stormwater Management Fee is intended for the City to recover the costs to treat stormwater on or adjacent to roadways not owned by a private party. PDXhas its
own stormwater treatment facility located within the airfield perimeter fence. The PDX system collects airfield storm water (including deicing materials during the deicing season) as well as run-offstormwater from Marine Drive (on the Columbia River Levee bordering the Airport on thenorth side) whichis ownedbythe City. 31. Landside drainage at PDX 1s all contained within the Drainage District's catchment area (roughly defined by the levee which encircles the airport, separating it from the Columbia River). PDX pays the Drainage District fees for this "on-site" service. No Airport storm water runs into City-controlled storm water infrastructure. All water from PDX goes to the Columbia Slough, controlledbythe Drainage District or is dischargedthroughthe Port's own storm watertreatment systemto the ColumbiaRiver.

80rdinance, Exhibit I hereto. 832. In sum, no portion ofthe offsite stormwater management service is used by the Airport. 33. During a meeting at the Portland City Hall on September 16, 2014, representatives from the City's Bureau of Environmental Services ("BES") stated that the methodology for charging the Offsite Stormwater Management Fee was based on the study ofa consultant Black & Veatch dated August 23, 2000,9 but they acknowledged that the formula reflected an effort to fairly and equitably recoup the costs ofthe citywide water drainage and cleanup. 34. The BES officials at the September 16 meeting stated that stormwater charges are divided into onsite and offsite fees, and nnder the formula that is used, 35% of the City's stormwatermanagement costs are allocatedto On-Site Fees, withthe remaining 65% allocatedto offsite charges. PDX (and therefore its airline tenants)paythe offsite charges onlybecause PDX manages its own stormwater directly or throughthe District. 35. During the September 16, 2014 meeting, BES officials fully admitted that the Offsite Stormwater Management Fee is not for any services provided at PDX. They also acknowledged that they had no concept ofwhat federal laws against airport revenue diversion require. However, they maintained that it is equitable and fair to require the Airport and its airlines to pay for the offsite stormwater maintenance because the airport "benefits" when roads throughout Portland are not "underwater" from lack ofstormwatermanagement. 36. During the September 16, 2014 meeting, connsel for A4A and Alaska Airlines specifically told the City officials in attendance at the meeting that imposition ofthe "Offsite

9Biack & Veatch Study, Exhibit 2 hereto; see also Exhibits 3, 4 and 5 hereto. 9Stormwater Management Fee" violated the prohibition against diversion ofairport revenue in 49 U.S.C. 

### §47133. The Superfund Remediation Fee 37. The Superfund Remediation Fee relates to the City's involvement in the Portland Harbor Superfund Site. This involves the Willamette River, which has no connection to the Airport. (PDX is nearthe ColumbiaRiver.) 38. The Portland Harbor Superfund Site is located along a 1 0-mile stretch of the LowerWillamette River ("LWR"). Water and sediments along PortlandHarbor are contaminated
as a result of more than a century of industrial use along the Willamette River. Industrial operations have contaminated water and sediments and impacted fish along Portland Harbor with hazardous substances, including heavy metals, polychlorinated biphenyls ("PCB"s), polynuclear aromatic hydrocarbons ("PAH"s), dioxin and pesticides. "Site investigations and long-term cleanup planning are ongoing." 10 According to the U.S. Environmental Protection Agency ("EPA"), "[t]he site's long-term remedy will not be selected until all appropriate studies have been completed." 11

10EPA Superfund Program: PortlandHarbor, Portland OR, http://cumulis.epa.gov/supercpadlcursites/csitinfo.cfm?id=1002155 (last accessed Feb. 9, 2016). 11Site Informationfor PortlandHarbor, http:/ /cumulis.epa.gov/supercpad/cursites/dsp ssppSiteDatal.cfm?id=1002155#Status (last accessed onFeb. 9, 2016); the Portland Harbor section ofthe Lower Willamette River in Portland, Oregonhas served as a major industrial water corridor for more than a century. A long history ofcommercial shipping activities, industrial and commercial operations, wastes from private and public outfalls, and agricultural runoffhave released substances into the Portland Harbor. ArkemaInc. v. AndersonRoofing Co., Case No. 3:09-cv-00453 (D. Or.), Fourth Amended Complaint, DocketNo. 442 (Jan. 15, 2015), 134. 1039. On December 1, 2000, the EPA listed the Portland Harbor Superfund Site onthe National Priorities List12 The Portland Harbor Superfund Site is located along the Willamette River inPortland, and encompasses the areal extent ofhazardous substance contaminationwithin the waters, bed and banks ofthe Willamette River from River Mile ("RM") 1.9 to RM 11.8, and all suitable areas in proximity to the contamination necessary for implementation ofresponse action, including uplands portions of the Site that contact sources of contamination to the sediments at or within the Willamette River. 13 On September 28, 200l, EPA issued an Administrative Order on Consent, EPA Docket No. CERCLA-10-2001-0240, requiring the preparation ofa Remedial Investigation and Feasibility Study ("RI/FS") for the Portland Harbor Superfund Site and to reimburse certain costs with respect to the Site incurred by EPA and the Oregon Department ofEnviromnental Quality ("DEQ"). On April 27, 2006, EPA amended the Administrative order on Consent, including re-titling it "Administrative Settlement Agreement and Order on Consent for Remedial Investigation/Feasibility Study." 14 EPA is the lead agency for overseeing the in-water work on contaminated sediments. This is an unusually complicated Superfund site, one offue most complex inthe entire EPA Superfundprogram. 15 40. The Port is a potentially responsible party ("PRP") in the Portland Harbor Superfund Site cost recovery efforts due to operations at current and former facilities, mainly marine terminals and associatedproperties adjacent to the Willamette River. However, as stated above, PDX lies within a watershed that is isolated fi·om the Superfund site, and PDX storm
1265 Fed. Reg. 75179-01. 13ArkemaInc. FourthAmended Complaint, '1/35. 14Id. '1/36. 15See CassandraProfita, A Guide to the PortlandHarbor Superfund Site, OBP (updated Nov. 17, 2015, 3:12PM), http://www.opb.org/news/blog/ecotrope/a-guide-to-the-portland-harborsuperfund-site (last accessed Feb. 9, 2016). 11water discharges either to the Columbia Slough (which enters the Willarnette River downstream of the Superfund study area) or to the Columbia River. PDX activities do not impact the Superfundinvestigation and remediation effort for the cleanup ofthe PortlandHarbor Superfund Site. 41. The Willarnette River/Portland Harbor Superfund site is an unusually complicated Superfund site, one ofthe most complex inthe entire EPA Superfundprograrn. 16 42. In 2009, a lawsuit was filed infederal court in Portlandregarding participation on the costs ofthe Superfund cleanup. ArkemaInc., etal. v. AndersonRoofing Co., etal., No. 3:09- cv-453-PK (D. Or.). 43. "The Lower Willamette Group (LWG) submitted a draft final Remediation Investigation (RI) report to the [EPA] on August 29, 2011.
... The plaintiffs understand that EPA nowexpects to issue aRecord ofDecisionin 2016." 17 44. BES officials in attendance at the September 16, 2014 meeting stated that the EPA investigation relates to a six mile stretch ofthe Willamette River. The investigation does not involve PDX, which is onthe ColumbiaRiver. The EPA investigation has been proceeding for many years, but it is still only in the planning stages. Substantial remediation activities have not yet occurred. 45. BES officials stated thatBES believesthat all Portland citizens and entities should pay a portion ofthe Superfund cleanup costs because they are not focused on allocating blame for the pollution

-- which first occurred decades ago ifnot longer. The allocationused to impose
16

See CassandraProfita, A Guide to the PortlandHarbor Superfund Site, OBP (updated Nov. 17, 2015, 3:12 PM), http://www.opb.org/newslblog/ecotrope/a-guide-to-the-portland-harborsuperfund-site (last accessed Feb. 9, 2016). 17/d. at 2-3. Plaintiffs' Eleventh Status Report, Arkema Inc., et al. v. Anderson Roofing Co., et a/., No. 3:09-cv-453-PK, Doc. 457 (D. Or. November 11, 2015) (Exhibit 6hereto), at 2-3. 12the Superfund Fee is a "postage stamp" formula, meaningthat the rate is uniform for users across the City. BES officials stated that the City's position is that everyone benefits from a river in whichPortlandresidents and visitors can swim.

TheFour-Year CompletePhase-In ofthe Fee Ordinance 46. The Ordinance directed BES to phase in stonnwater management charges over four years starting with 25% of the approved charge beginning July I, 2013. The rate has increased 25% every year on July 1 until with the final increase July 1, 2016, when drainage district customers (including the Port) will be paying 100% ofthe costs for offsite stormwater management. 47. Thus, the Airline Complainants will feel the full financial impact ofthe Offsite Stmmwater Management and Superfund Remediation Fees by July 1, 2017. Currently, the City is imposing the charges on PDX, which is passing them to the Airline Complainants inthe rates and charges for use ofPDX, and overthe objection ofthe Airline Complainants. 48. The impact ofthe Offsite Stormwater Management Fee on airlines operating at PDX was approximately $2,070,000 for FY 2015 and is expected to be $3,105,000 for FY 2016 and $4,140,000 for FY 2017. By FY 2025, the annual impact of this Fee on the airlines is expected to exceed $6,500,000. The cumulative impact on air carriers will be significant. As demonstrated by the spreadsheet from PDX, the cost ofthe Offsite Stormwater ManagementFee to airlines serving PDX through 2025 is expected to be $53,784,048. 18 This figure does not even reflect the costs borne by the air carriers for the Superfund Remediation Fee, which, as stated below, will notbe fully inplace until environmentalremediation commences.

18Exhibit Bto the MarkBergDeclaration, Exhibit 16 hereto. 1349. Becausethe Airport accounts for a large amount ofthe square footage ofthe City, it beaTs a proportionately high share ofthe costs. In addition, the Superfund clean-up is still in preliminary stages. As the soil remediation process fully commences, the costs will increase significantly. There will be multiple millions ofdollars that the airlines at PDX will be forced to pay solelybecausethe airportis withinthe City ofPortland, and takes up so muchphysical space within the city. This is a fiscal liabilitythatis likely to increase exponentiallyoverthe years. VI. FEDERAL PROHIBITION AGAINST DIVERSION OF AIRPORT REVENUE 50. The federal role in civil aviation has been augmented by various legislative actions that authorize programs for providing Federal funds and other assistance to local communities for the development ofairport facilities. In each suchprogram, the airport sponsor

. bl'
. 19 assumes certam o Igations. 51. Title 49 U.S.C. § 47101 et seq. provides for Federal financial assistance for the development ofpublic-use airports underthe Airport Improvement Prot,rram ("AlP") established by the Airport and Airway Improvement Act, Pub!. L. 97-248 ("AAIA"). The AAIA set forth
assmances to which an airport sponsor agrees as a condition of receiving Federal financial assistance. Upon acceptance of an AlP grant, the assurances become a binding contractual obligation between the airport sponsor and the Federal government. The assurances made by airport sponsors in AlP grant agreements are important factors in maintaining a viable national airport system. 52. In the years following the 1982 enactment of the AAIA, there were several instances ofnew state taxes being imposed on the sale ofaviationfuel at AlP-funded airports. In response, Congress amended the AAlA in 1987 to bring state and local taxes on aviation fuel
19Rudy.! Clarke v. City of Alamagordo, NM, DocketNo. 16-05-19, 2006 WL 2791038 (Sept. 20, 2006). 14within the scope ofthe airport revenue use requirements ofthe AAIA. The amendment also providedthat revenues from a state fuel tax couldbe usedfor state aviationprograms, in addition to theuses permittedfor revenue receivedby an airport sponsor. 53. In 1996, Congress strengthened the prohibition against revenue diversion in the AAIA by enacting 49 U.S.C. §47133, which divorced the revenue diversionprohibition from its previous connection with AIP grant assurances and applied it instead to any airport that "is the subjectofFederal assistance," 49 U.S.C. 

### §47133(a). 54. The federal statntory prohibitions against diversion ofairport-generated revenue
are clear and specific. Pursuantto 49 U.S.C. §47133(a),titled "Restriction onuse ofrevenues": Local taxes on aviation fuel
... or the revenues generatedby an airport thatis the subject ofFederal 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 thatis owned or operatedbythe person or entitythat owns or operates the airport that is directly and substantially related to the air transportation ofpassengers orproperty. (Emphasis added). 55. In addition, 49 U.S.C. 

### § 47107(b)(l) states that DOT "may approve a project grant application
... for an airport development project only ifthe Secretary receives written
assurances ...that local taxes on aviationfuel
... and therevenues generatedby apublic airport will be expended for the capital or operating costs of- (A) the airport; (B) the local airport system; or (C) other local facilities owned or operated by the airport owner or operator and directly and substantially related to the air transportation of passengers or property." Section 47107(b) applies to airport sponsors (as a conditionofreceiving federal airport grants). 56. The federal statutoryprohibition could notbe clearer: airport revenue "maynot be expended" for non-airport pnrposes. And this ban applies to state governments as well as local governmental entities. 57. Grant Assnrance 25(a) states: 15All revenues generated by the airport
... will be expended by it for the capital or operating costs of the airport; the local airport system; or other local facilities which are owned or operated by the owner or operator ofthe airport and which are directly and substantially related to the actual air transportation ofpassengers orproperty .... 58. The principal motivation for the strengthening the prohibition against revenue diversion in 1996 was Congress' understanding that local governments often sought to ignore or evade existing laws. Congress was specifically concerned about the City of Los Angeles' longstanding and well-publicized plan to divert hundreds ofmillions ofdollars generatedby Los Angeles International Airport ("LAX") to pay city expenses20 59. In 1996, Congress enacted section 47133 to fmiher attempt to protect airlines, air travelers and shippers from the "hidden taxation" that inevitably results from revenue diversion. In connection with that legislation, the House of Representatives Transportation and Infrastructure Committee stated: Th[e] prohibition against revenue diversion is designed to prevent airports from using their monopoly power to gouge airlines and other airport users in order to build huge surpluses that could thenbe diverted to other local programs that have nothing to do with aviation. Given that most airport users do not vote inthe area ofthe airport but are merely visiting or making connections, it was feared that local officials would be tempted to raise airport fees rather than local taxes [if] those fees could be used for non-airport projects. The revenues diversion prohibition ensures that any money raised at the airport will be spent on the airpmi. In light ofthe important safety, security, capacity and noise mitigation needs at most airports, it is vital thatthe money is spentinthis way.21

20See, e.g., H.R. Rep. No. 104-714, at 37 (1996); 142 Cong. Reg. S12232 (Oct. 3, 1996) (statement ofSen. Ford); Reauthorization of theAirportImprovementProgram: HearingsBefore the Subcomm. on Aviation of the House Comm. on Transp. andInfrastructure, 104th Cong., 2d Sess. 116, 139, 154 (1996). 21H.R. Rep. 1 04-714(I), 37-38, Federal AviationAuthorization Act (1996). 1660. The House Committee further stated that the "[t]he revenue diversion prohibition
ensures that all airport and AlP money is used for airportpurposes."22 The report added: However, it is not merely the integrity ofAlP grants that causes the Committee's concern about revenue diversion. Ultimately, it is the passenger who must pay when airport revenue is diverted. When an airline's rates and charges are increased to make up for the revenue lost by the diversion, the higher cost is ultimately passed on to the passenger. Therefore, revenue diversion burdens interstate commerce even ifthe airport is no longerreceiving grants.23 The House Committee further stated: In previous reauthorization legislation, provisions have been included to enforce the revenue diversionprohibition. Nevertheless, there still appearto be some who are seeking avenues around the law. Partly, this may be due to the fact that, at worst, connnunity caught diverting revenue will have to give itback. To increase the stakes, and once again demonstrate the seriousness with which Congress views this issue, the reported bill would authorize the imposition of treble damages on apaTty found to be inviolation ofthe revenue diversionprohibition24 61. In 1999, FAA issued its "Revenue Use Policy" at the request ofCongress. Policy and Procedures Concerning the Use of Airport Revenues, 64 Fed. Reg. 7696 (1999). The Revenue Use Policy defines revenue diversion as "the use ofairport revenue for purposes other than the capital or operating costs ofthe airport, the local airport system, or other local facilities owned or operated by the airport owner or operator and directly and substantially related to air transportation ofpassengers or property ...." Hence, unlawful revenue diversion constitutes a violation ofGrant Assurance 25. 62. FAA's Revenue Use Policy also describes particular prohibited uses of airport
revenue. These include:

22Jd. at 38 (emphasis added). 23ld. (emphasis added). 24Id. 171. Direct or indirect payments that exceed the fair and reasonable value of those services and facilities provided to the airport. 2. Direct or indirect payments that are based on a cost allocation formula that is not consistent with this policy statement or that is not calculated consistently for the airport and other comparableunits or cost centers ofgovernment. 3. Use ofairportrevenues for general economic development. 4. Marketing andpromotional activities unrelated to airports or airport systems. 5. Payments in lieu oftaxes, or other assessments, that exceed the value ofservices provided or are not based on a reasonable, transparent cost allocation formula calculated consistentlyfor other comparable units or costcenters ofgovernment. 6. Payments to compensate non-sponsoring goverll111ental bodies for lost tax revenues to the extent the payments exceed the stated tax rates applicable to the airport. 7. Loans to or investment ofairport funds in a state or local agency at less than the prevailing rate ofinterest. 8. Landrental to, oruse ofland by, the sponsorfor aeronautical purposes atless than fair rental market value, except to the extent permitted by Section VII.D ofthe policy. 9. Use of land by the sponsor for aeronautical purposes rent-free or for nominal rental rates exceptto the extentpermittedby SectionVILE ofthispolicy. l0. Impact fees assessed by any goverll111ental body that exceed the value ofservices orfacilities providedto the airport. 11. Expenditure ofairport funds for support ofcommunity activities and participation in community events, or for sponsor of community-purpose uses of airport property exceptto the extentpermittedbythe policy. 12. Direct subsidy ofcarrier operations. 63. FAA Order 5190.6B, Airport Compliance Manual (September 30, 2009), sets forth policies and procedures for the FAA Airport Compliance Program. The Order is not regulatory and is not controlling with regard to airport sponsor conduct; rather, it establishes the policies and procedures for FAA personnel to follow in carrying out the FAA's responsibilities for ensuring airport compliance. The Order provides basic guidance for FAA personnel in
18interpreting and administering the various continuing commitments airport owners make to the United States as a condition for the grant ofFederal funds or the conveyance ofFederal property for airport purposes. The Order, inter alia, analyzes the various obligations set forth in the standard airport sponsor assurances, addressed the application ofthe assurances in the operation ofpublic-use airports, and facilities interpretation ofthe assurances by FAA personnel25 VII. CLAIMS FORRELIEF A. THEPORT IS IMPROPERLY DIVERTING AIRPORT REVENUE BY COLLECTINGAND REMITTING THE OFFSITE STORMWATER MANAGEMENTAND SUPERFUND REMEDIATION FEES TO THE CITY. 64. The Porthas violated and continues to violate 49 U.S.C. §47107(b) and§ 47133, and Grant Assurance 25, by requiring the Airline Complainants to pay millions ofdollars to the Portwhichthe Portinturnremits to the City for Offsite Stormwater Management and Superfund RemediationFees, which are not used for Airport operations. 65. The millions of dollars in revenues taken from the Airline Complainants and forwaTded by the Port to the City constitute airport revenue but are not being used for (I) the Airport, (2) the local Airport system, or (3) other local facilities owned or operated by PDX and directly and substantially related to the air transportation ofpassengers or property. Thus, the plainmeaning of49 U.S.C.§ 47133 and§ 47107(b)(l) prohibits use or airline rates and charges generated at PDX for stormwater management and toxic site cleanup umelated to the Airport property or operations. 66. In addition, PDX receives no services from the City in exchange for the Offsite Stormwater Management and Superfund Remediation Fees. The City has contended that requiring PDX and the airlines to pay a portion of the costs for offsite drainage services is
25Scott Meyer v. City ofCincinnati, Docket No. 16-12-14, 2014 WL 6907498, *10 (Sept. 12, 2014). 19necessary to establish equity between City ratepayers inside and outside the drainage districts. But the City's self-serving perception of what is "equitable" is irrelevant to federal law. The City's costs for offsite stormwater maintenance and the Willamette River/Portland Harbor Superfund site bear no relationship to the Airport. The City does not own or operate PDX and, in any event, the charges at issue are not "directly and substantially related to the air transportation ofpassengers or property." 49 U.S.C. §47133, §47107(b)(l). Furthermore, the City neither owns nor operates the Airport, and therefore cannot allocate administrative and overhead costs to PDX. 67. The FAA Revenue Use Policy defines "Airport Revenue" to include "All fees, charges, rents or otherpayments received by or accruing to the sponsor" inthe form of"Revenue from air carriers
... [f]or the right to conduct an activity on the airport or to use or occupy

. rt rt ,26 mrpo prope y .... 68. In addition, the Policy defines "Unlawful Revenue Diversion" as the "use of airport revenue for purposes other than the capital or operating costs of the airport, the local airport system, or other local facilities owned or operated by the airport owner or operator and directly and substantiallyrelatedto the air transportation ofpassengers orproperty ...." 27 69. The Revenue Use Policy also prohibits imposition of "Impact fees assessed by any govermnental body that exceed the value ofservices or facilities provided to the airport."28 Impact fees "assessed by any governmental body that exceed the value ofservices or facilities

2664 Fed. Reg. at 7716. 27

Jd.; see LosAngeles v. FAA, 239 F.3d 1033, 1034 (9th Cir. 2001) (the "Policy states that§ 804 ofthe ReauthorizationAct, 49 U.S.C. 47133, changedthe restrictions onrevenue use"). 2864 Fed. Reg. at 7720. 20provided to the airport are prohibited uses of airport revenue."29 An "airport may pay for environmental mitigation measures contained in an FAA record ofdecision approving funding for an airport development project or for constructing a ground access facility that would otherwise be eligible for the use of airport revenue."30 The imposition of Superfund Remediation Fee onthe PDXairlines is an improper attempt to circumventFAA'sprohibition on impact fees becausethe Airport's stormwater environmental impact is already managed andpaid for. 70. In the revenue diversion case involving Dade County Florida, FAA determined that payment of construction permitting fees for airside airport projects violated 49 U.S.C. § 47107 and Grant Assurance 25 because the services added little or no value to the construction projects. See Diversion of AirportRevenue Dade CountyAviation Department, Report No. R4- FA-7-035 (June 25, 1997) (improperrevenue diversion from using airport money to pay for nonairport-related roadway, fire and police impact fees); id. at 11 (permitting fees for public works projects that are inappropriate use ofairport-generated revenues as the related services add little
or no value to the project). Similarly here, the offsite storm water management and Superfund remediation charges add zero valueto the Airport or its operations. 71. Use of airport revenues for such non-airport purposes also sets a terrible precedent, paving the way for local governments that neither own nor operate an airport to require airlines, through airport rates and charges, to pay for local community projects unrelated to the airport (such as a sports arena, a new convention center or general municipal facilities and equipment maintenance).

290rder5190.6B**~** 15.13(k). 30Jd. 2172. The FAA Airport Compliance Manual (Order 5190.6B), at 15.6a, states that "Revenue generated by the tenant in the course ofthat tenant's business is the tenant's revenue and not airport revenue under the Revenue Use Policy." See Order 5190.6B, at 15.6a ("Airport
revenue generally includes those revenues paid to or due to the airport sponsor for use ofairport property by the aeronautical and nonaeronautical users ofthe airport.
... Revenue generated by the airport for the aeronautical and nonaeronautical use ofthe airport includes, but is not limited to, the fees, charges, rents, or other payments received by or accruing to the sponsor from air carriers, tenants, concessionaires, lessees, purchasers ofairportproperties, airport permit holders making use ofthe airport property and services, etc."). 73. There can be no exemption from the prohibition against unlawful revenue diversion for municipal utility charges where, as here, the Fees are not related to actual services provided to the Airport. The document "Legal Research Digest 2, Theory and Law ofAirport Revenue Diversion" from the "Airport Cooperative Research Program" (May 2008) ("ACRP Document") (Exhibit 7 hereto) states: The fiscal problems facing local governments more generally (including, for example, theneeds of urban roads, water, sewage,parks, schools, hospitals, and otherinfrastructure, and fire andpoliceprotection) coupled with a decliningtax base have forced manyto search for new sources ofrevenue. Redirecting revenue from airports to fund non-airport municipal needs appears attractiveto some local political leaders. Yet Congress has stepped in to promulgate laws to circumscribe the ability of federallyfunded airports to divert airport revenue "downtown." Conflicts over locally owned and operated airports and federal funding and regulation are by rto means unique to revenue-diversion issues, but they manifestthemselveshere as well. !d. at 3 (Emphasis added). 74. The ACRP Document also states that "the purchase or operation of road maintenance equipment and services or police and fire services not directly in support ofthe airport are deemed impermissible." !d. at 25.

2275. The fact that the community as a whole may benefit from offsite stormwater treatment and environmental remediation cannot justify inclusion of such expenses in costs
;?.'' allocated to the Airport and its airline tenants, as illustrated by the approach taken by FAA and DOT to law enforcement costs. FAA and DOT undertake significant efforts to ensure that the general costs oflaw enforcement are not allocated to airports. Anexample is the "Audit Report

- FAA Oversight is Inadequate To Ensure Proper Use of Los Angeles International Airport Revenue for Police Services and Maximization ofResources," AV-2014-035, Office ofInspector General, U.S. Department ofTransportation (April 8, 2014) ("2014 LAXAudit Report")? 1 The Report states that the Inspector General "identified about $7.87 million in unsupported charges without adequate documentation for services provided by the Los Angeles Police Department (LAPD)
...."32 The LAX 2014 Audit Report adds: "Without adequate documentation or support, it is unclear ifthese charges were used for the capital or operating costs of" LAX33 The Report further states: "In 2012, LAWA and FAA stated [that] a record-keeping system to track LAPD non-airport work time would be implemented to address allegations ofunlawful
revenue diversion
.... However, because the City [ofLos Angeles] has yet to fully implement such a record-keeping system, LAWA may be incorrectly spending additional revenue on LAPD . k .,]4 non-arrport wor : · 76. The same concerns apply equally to the Portland Fees. It would make no sense for federal authorities to ensure, on the one hand, that an airport pays only for law enforcement

31Exhibit 11. 32Id. at 

### 2.

23services it receives but then, on the other hand, allow an airport to be allocated a portion ofand pay the costs ofutility-type services it does not receive and have no actual relationship to the airport.77. Finally, the City's fees, collected and remittedby the Port, cannotbejustified as a "tax" because Oregon state law prohibits the City from imposing atax at the Airport. See O.R.S. § 307.090(1); AvisRentA Car Sys., Inc. v. Dep'tof Revenue, 330 Or. 35, 995 P.2d 1163 (2002) ("In general, state and local government property is exempt from property taxation"). The Airport does notpay apropertytaxto the City. B. THE ANTI-HEAD TAXACT LIMITS AIRPORTFEES TO THE GOVERNMENTAL AGENCYWHICH OWNS OR OPERATES THE AIRPORT. 78. The Anti-Head Tax Act ("AHTA") provides that a "State," and "a political subdivision ofa State" "may not levy or collect atax, fee, head charge, or other charge on - (1)
an individual traveling in air commerce; (2) the transportation of an individual traveling in air commerce; (3) the sale or air transportation; or ( 4) the gross receipts from that air commerce or transportation." 49 U.S.C. §40116(b). 79. The AHTA provides a limited exception for "a State or political subdivision ofa State" to "levy or collect- (I) taxes (except those enumerated in subsection (b)
...), including property taxes, net income taxes, franchise taxes, and sales or use taxes on the sale ofgoods or services; and (2) reasonable rental charges, landing fees, and other service charges from aircraft operators for using airport facilities ofanairport ownedor operatedby that State or subdivision." 49 U.S.C. §40116(d). 80. The Offsite Stmmwater Management and Superfund Remediation Fees do not qualify under any provision ofthe AHTA. The Fees are not property taxes, net income taxes, franchise taxes or sale or use taxes onthe sale ofgoods or services. They also are notreasonable 24rental charges, landing fees or other service charges "for using airport facilities of an airport owned or operated" by the City35 VIII.COMPLAINANTS' UNSUCCESSFUL ATTEMPTS TO RESOLVE THIS DISPUTE 81. After the proposed new Fees were announced, on or about September 4, 2012, A4A sent a letter to Portland Mayor Sam Adams which expressed "concern with the plan to apply the proposed new storrnwater management fee to PDX."36 The letter stated that "the new fee would violate federal law and policy, which restricts the use ofairport revenues."37 The letter further stated that "PDX has its own stonnwater treatment facility; the City does not manage storrnwater from PDX. Consequently, the proposed 'off-site' charge is for servicesPDX does not receive and is not permitted revenue use under the Revenue Use Policy."38 The letter added: It is no different, for example, than if the City established a special fee for resurfacing City streets or to revitalize an historic neighborhood. In these examples, just as with off-site storrnwater management, PDX would not receive City services and the fees would constitute unlawful revenue diversion. Forthese reasons, weurge youto not apply the newfee to PDX.39 82. In 2013, A4A informally requested that DOT take action to advise the City that the Offsite Stormwater Management and Superfund Remediation Fees should not be applied to
35See City and Cty. of Denver v. ContinentalAir Lines, Inc., 712 F. Supp. 834, 840 (D. Colo. 1989) ("This Court is convinced after examining the legislative history and purpose ofthe AntiHead Tax Act that in order to avoid the double taxation of air passengers in air commerce through local and federal use taxes, Congress prohibited the imposition ofsuch local taxes, fees, and charges that would be passed on to the flying public except where those taxes, fees, and charges are to be used to operate and maintainthe presently existing airport facilities"). 36Letterfrom DavidBerg, Exhibit 8hereto, at I. 37/d. 38/d. at 2.

25the Airport because: (a) the Airport operates its own storm water management facility, and (b) PDXis not on the WillametteRiver and did not contribute to the pollutionthat is the focus ofthe Superfund cleanup. Thus, such payments by the Airport on account ofthese charges are not permittedby the Revenue Use Policy and constituteunlawfulrevenue diversion. 83. On May 7, 2013, A4A met with FAA officials at FAA headquarters 111 Washington, D.C. to seekFAA assistance withregard to theunlawful revenue diversion at PDX. 84. On July l, 2013, A4A and Alaska Airlines met with DOT and FAA officials at DOTheadquarters in Washington, D.C., and thePortattendedthatmeeting. 85. A4A followed up the May 7, 2013 and July l, 2013 meetings with a position paper to DOT dated January 14, 2014. A4A stated that "the inclusion ofcertain storm-water management and toxic site cleanup charges inthe airline rates and charges constitutes a clear and unmistakable violation ofthe express language of [the] federal revenue diversion statutes as well
as the Revenue Use Policy
...." 40 A4A also stated: What the City is doing
... sets a terrible precedent, paving the way for local governments that neither own nor operate an airport to require airlines, through airport rates and charges, to pay for local community projects tmrelated to the airport such as a sports arena, a new convention center or general municipal facilities and equipment maintenance. Airlines are already subject to heavy airport fees plus an array of federal, state and local taxes. The PDX charges should not be permitted to stand as a model for local goverrunents to obtain revenues from the airlines. (!d.) 86. On June 24, 2014, A4A and airline representatives met with DOT and FAA officials at DOTheadquarters in Washington, D.C. to discuss the airlines' position that the Fees violate theprohibition against diversion ofairportrevenue.

40Memorandum to Susan L. Kurland and Kathryn 

### B. Thomson ("Airline Position Paper"), Exhibit 9 hereto, at 1. 2687. On or about July l, 2014, A4A sent DOT a letter as a follow-up to the June 24, 2014 meeting41 The letter stated that, as highlighted during the meeting, the City improperly "imposes [the Fees

### Jdespite the undisputed fact that the City provides neither offsite stormwater
nor Superfundremediation servicesto PDXor its airline tenants."42 The letterfurther statedthat,
as reflected in the spreadsheet attached as Exhibit l to the letter, the impact ofthe offsite storm water fee onairlines operating at PDX is expected to be $2,070,000 for FY2015, $3,105,000 for FY 2016 and $4,140,000 for FY [2017]." Id. The letter added that "[i]mposition of these financial obligations is like forcing the airlines to finance arunwaythatis not actuallyused."43 88. The July 1 letter also told DOT that the City is not like a utility company that provides electricityto the Airport because the City is notproviding a service to the Airport44 In addition, there canbe no exemption from the prohibition against unlawful revenue diversion for municipal utility charges where, as here, the fees are notrelated to actual servicesprovidedto the airport."45 Exhibit 2 to the letter was titled "Legal Research Digest 2, Theory and Law of Airport Revenue Diversion" from the "Airport Cooperative Research Program" (May 2008) ("ACRP Document"). The ACRP Document states: The fiscal problems facing local governments more generally (including, for example, the needs of urban roads, water, sewage,parks, schools, hospitals, and otherinfrastructure, and fire andpoliceprotection) coupledwith a declining tax base have forced manyto search for new sources ofrevenue. Redirecting revenue from airports to fund non-airportmunicipal needs appears attractive to some local political leaders. Yet Congress has stepped in to promulgate laws to
41Exhibit 10 hereto. See also Declaration ofDavid Berg, Exhibit 20. 42Exhibit 1 0, at 1. 43Id.
44!d. at 2.

27circumscribe the ability of federallyfunded airports to divert ailport revenue "downtown." Conflicts over locally owned and operated airports and federal funding and regulation are by no means unique to revenue-diversion issues, but they manifestthemselves here as well46 89. The ACRP Document also states that "the purchase or operation of road maintenance equipment and services or police and fire services not directly in support ofthe airport are deemedimpermissible."47 90. The July I, 2014 letter from A4A to DOT also pointed out that the fact that the community as a whole may benefit from offsite stormwater treatment and environmental remediation cannotjustify inclusion of such expenses in costs allocated to the Airport and its airline tenants, as illustrated by the approach talcen by FAA and DOT to law enforcement costs. FAA and DOT undertake significant efforts to ensure that the general costs oflaw enforcement
are not allocated to airports. An exampleis the "AuditReport-FAA Oversight is Inadequate To Ensure Proper Use of Los Angeles International Airport Revenue for Police Services and Maximization ofResources," AV-2014-035, Office of Inspector General, U.S. Department of Trm1sportation (April 8, 2014) ("2014 LAXAuditReport"). 91. The 2014 LAX Audit Repmi states that the Inspector General "identified about $7.87 million in unsupported charges without adequate documentation for services provided by the Los Angeles Police Department (LAPD)
...."48 The Report adds: "Without adequate documentation or support, it is unclear ifthese charges were used for the capital or operating costs of' LAX. !d. The Report further states: "In 2012, LAWA and FAA stated [that] a recordkeeping system to track LAPD non-airport work time would be implemented to address
46Jd at 3 (emphasis added). 47ACRP Document, at 25. 48Jd. at 2. 28allegations ofunlawful revenue diversion
.... However, because the City [ofLos Angeles] has yet to fully implement such a record-keeping system, LAWA may be incorrectly spending additional revenue onLAPD non-airportwork."49 92. A4A's July 1, 2014 letter to DOT stated that the same concerns identified by the DOT Inspector Generalregarding LAX apply equallyto the PortlandFees: Itwould make no sense for federal authorities to ensure, on the one hand, that an airport pays only for law enforcement services it receives but then, on the other hand, allow an airport to be allocated a portion ofand pay the costs ofutility-type services it does notreceive and have no actual relationship to the airport50 93. Following the June 24, 2014 meeting with DOT/FAA and A4A's July 1, 2014 letter, DOT and FAA convened ameeting in Portland on September 16, 2014 to discuss the Fees and the airlines' position that the Fees violate the prohibition against diversion of airport
revenue. Representatives from the City, the Port, the drainage district whichhandles the Airport, DOT, FAA and Alaska Airlines, and A4A, were in attendance at the meeting, which lasted nearly three hours. The governmentalrepresentatives consisted of: Three from DOT Office ofthe Secretary (OST) (Paul Geier, Assistant General Counsel, Litigation; Ron Jackson, Assistant General Counsel, Operations; and Nancy Kessler, SeniorAttorney, Operations). Five from FAA (Randy Fiertz, Director ofAirport Compliance; David Duchow, Revenue Use Specialist, Airport Compliance; Scott Mitchell, Attorney; Joelle Briggs, Regional Compliance Specialist, Seattle; and Patricia Deem, Attorney, Seattle. Two from PDX, including in-house attorney IanWhitlock. Two from the Multnomah CountyDrainageDistrict (District). Four from the City of Portland, including officials from the Bureau of Environmental Services (BES).

50July 1Letter, Exhibit 10, at 3. 2994. The statedpurpose ofthe September 16 meeting in Portland was "fact finding" by DOT and FAA with regard to the two contested charges. DOT attorneys Ron Jackson and Paul Geier commencedthe meeting by statingthat DOT and FAAtake very seriouslythe prohibitions against illegal diversion ofairport revenue, andthat the calling ofthe meeting and attendance of
so many DOT/FAA officials (including from 3,000 miles away) demonstrates how seriously the agencies take the concerns raised by the airlines. However, they also emphasized that DOThad not drawn any conclusion regarding the legality ofthe Fees. DOT officials were attending the meeting to hear from the state and local agencies involved in the factnal circumstances relating to the Fees. The Offsite StormwaterManagement Fee 95. During the September 16, 2014 meeting in Portland, theBES officials provided explanations regarding the Offsite Stormwater Management Fee, including the fact that the Fee is for managing stormwater in "rights-of-way"

- meaning property in Portlandthat is not owned by commercial or residential users. Stormwater in the "rights-of-way"

- e.g., roadways and surrounding areas -tends to be more expensive to managethan private propertybecause homes and buildings tend to manage or collect some oftheir stormwater, whereas the public areas tend to havemore liquidto manage. 96. The BES officials at the September 16 meeting stated that the methodology for charging the Offsite Stormwater Management Fee was based on the study ofa consnltant Black & Veatch from several years ago, but they acknowledged that the formula reflected only a general effort at trying to getto somethingthe City thought was fair and equitable. 97. The BES officials stated that storn1water charges are divided into onsite and offsite fees, and under the formula that is used, 35% ofthe City's storm water management costs
are allocated to On-Site Fees, with the remaining 65% allocated to offsite charges. PDX (and 30therefore its airline tenants) pay the offsite charges only because PDX manages its own stormwaterdirectly ortluoughthe District. 98. The BES officials fully admitted that the Offsite Stormwater Management Fee is not for any servicesprovided at PDX. They also acknowledged that theyhad no concept ofwhat federal laws against airport revenue diversion require. However, they maintained that it is equitable and fair to require the airport to payfor the offsite stormwatermaintenance because the airport "benefits" when roads throughout Portland are not "under water" from lack of stormwatermanagement. 99. The BES officials at the September 16 meeting stated that City Council had decided that all persons and entities must pay to ensure that the roads are passable. This is the
case regardless ofwhether the roadway in question is 10 feet or 10 miles from the airport. But the BES officials also maintained that the Airport imposes a significant impact on the transportation infrastructure ofthe greater Portland community, and that it must pay a portion of the costs for making sure roads are usable. The officials offered the example of the Fedex delivery truckthatneeds to use Portland arearoads to getto the Airport. 100. FAA attorney Scott Mitchell asked several questions during the September 16 meeting in Portland. Mr. Mitchell inquired whether the Airport and the Airlines were perhaps being treated unfairly because the Offsite Charge is based onthe amount ofgeographical space of the property owner, and PDX is a huge property compared to other properties in Portland. BES representatives would not say whether or not there is another entity within Portlandthat pays as much in Offsite Charges thanPDX.

31101. DOT lawyerNancy Kessler asked BES officials during the September 16 meeting whether the alleged "benefit" to the airport is "direct" or "indirect." BES' in-house lawyer responded that the Cityhad not definedthe nature ofthe benefit as either "direct" or "indirect." 102. BES representatives stated during the September 16 meetingthat once the Offsite Stormwater Management Fee is fully implemented in 2017 and imposes approximately $4 million on the airlines serving PDX, the total costto the City ofall stormwater management will be approximately $120 million (it is currently about $100 million). The largest portion ofthe City costs is for offsite stormwater management. 103. During the September 16 meeting, the District representatives stated that the charges they assess on PDX for water treatment are relatively low compared to BES charges because all the District does is "drainage." The Airport lies at a low sea-level and when water accumulates it needs to be drained. The District does not "treat" the water. The de-icing liquids
are handled separatelyby PDX (but notthe City). The Superfund Remediation Charge 104. Withregardto the SuperfundRemediation Charge, BES officials statedduringthe September 16 meeting that the EPA investigation relates to a six mile stretch ofthe Willamette River. It does not involve PDX, which is on the Columbia River. The EPA investigation has been proceeding for many years, but it is still only in the planning stages. No real remediation has yet occurred, and BES representatives statedthatthey were precluded from offering anytime projection as to whenremediationmaybegin. 105. BES officials stated during the meeting that the agency's position is that all Portland citizens and entities should pay a portion ofthe Superfund cleanup costs because they
are not focused on allocating blame for the pollution

-- which first occurred decades ago ifnot longer. Essentially, all must pay for the "sins of others." The allocation used to impose the 32SuperfundFee is a "postage stamp" formula, meaningthat the rate is m1iform for users across the City. The City believesthat everyonebenefits from a riverthat is healthy to swimin. 106. Atthe end ofthe meeting the airline representatives were invitedto ask questions
or provide comments on the proceedings. The airline representatives used that opportunity to point out that the "general benefit" excuse for the contested Fees has no merit. The airline representatives pointed out that following such logic the airlines and government officials could be meeting in Detroit to discuss a plan for that city to bill DTW for increased police presence in downtownDetroit because the airport and airlines standto benefit ifDetroit is perceived to have less crime downtown. Ofcourse, DOT/FAAcould and would not agree to that type ofcharge. I07. FAA and DOT have been very specific in asserting that airports cannot include general police andfire services in the airline rate base. The situation inPortland (involving OffSite Storm-Water rather than police services) is no different. Public "benefit" is not a justificationin andofitselffor an airport fee. 108. In addition, the revenue diversion policy clearly deals with so-called "impact fees" and requires that the impact fees charged to airports be linked to the project or expense at issue. It is not snfficient for a government to have a "gut feeling" that there is a benefit to the airport and therefore the airport must pay for the expenses not on airport property. Ifthere is a roadwayto access the airport then expenses associated withthat roadway may be allocated to the airport-- but only ifthe accOtmting is provided, reviewed and is substantiated. I09. During the September 16 meeting, the airline representatives asked a BES attorney ifhe agreed that there was "no direct service" beingprovidedto PDX. The BES lawyer would not agree, instead stating that the Airport and airlines "benefit" ifthe rest ofPortland is not under water. But the attorney reiterated that the only reason PDX and the airlines are
33charged the Offsite Stormwater Management Fee is because the Airport is within Portland. The Fee is not calculatedbased on actual output orintake ofwater. 110. Following the September 16, 2004 meeting, A4A repeatedly contacted FAA and DOT officials for information regarding how the agencies planned to respond to the airlines' challenges to the contested charges. The FAAJuly 2015 Letter 111. In a letter emailedto A4A on July 30, 2015 ("FAA July 2015 Letter") (Exhibit 12 hereto), Randy Fiertz, Director of the FAA Office of Airport Compliance and Management Analysis, stated: Based on our review of available information, and reference to Generally Accepted Accounting Principles and Office ofManagement and Budget Circular A-87, we believethatthe City ofPortland's storm water management charge is an operating cost ofthe airport, because it arises as alegal obligation incident to the airport's possessory interest in land necessary for the provision of aeronautical services. It further appears that the stormwatermanagement charge is allocated to all ratepayers within thejurisdiction, includingthe Port ofPortland, based upon a transparent, uniform, and non-discriminatory rate-setting methodology. In the absence of any indication that the airport has been disproportionately targeted by the city, a non-sponsor ofthe airport, or that the airport has otherwise been overcharged for these services (e.g., double billed), we are not prepared to find that the charge exceeds the value ofservices provided to the airport51 FAA also stated it was "not prepared to say ...that the airport's payment ofthe Superfund fee violatesthe grant assurances or the Revenue Use Policy."52 112. FAA further statedthat it encourages A4A and its members "to continue to work with the Port ofPortland, the City ofPortland, and the Multnomah County Drainage District to resolve this matter locally," and that "the Port, as the ratepayer, may have a forum with the city

51Exhibit 12, at 1 (emphasis added). 52/d. at 2 n. 1. 34to challenge the charges."53 FAA also recognized that A4A believes that the stormwater charges constitute unlawful revenue diversion, but stated that: "giventhe complexities ofthis matter and the availability oflocal avenues for resolution, we are not prepared to find- certainly absent a
more robust factual record developed in the context ofa formal proceeding

- that the airport's payment ofthose charges violates any grant assurance or FAA Revenue Use Policy." Yet the FAA addedthat "this letter does notconstitute final actionbythe DOTonthis matter."54 113. On January 8, 2016, A4A sent a letter to the Port (Exhibit l3 hereto) in a final effortto resolve the dispute. A4A once again requestedthat the Portagree to ceasethe collection and remission ofthe Fees to the City. A4A explained that it and its member had hoped that the Port would find a solution through its communications with the City to avoid further collection and remittance to the City ofthe unlawful Fees, butthis has not occurred and the airlines remain deeply concernedthat they will have to continue to fund these Fees and otherunlawful levies, in Portland and elsewhere, for years to come, and that the amount ofthe Fees will continue to increase each year. A4A explained that, having exhausted all other alternatives, A4A needed to file the instant Part 16 complaintto seekreliefagainstfurther revenue diversion at the Airport. ll4. In response, the Port did not retreat from its position that it would continue to collect the Fees from the airlines at PDX absent a court or administrative order compelling it to do so. Rather, in a letter dated January 14, 2016, the Port stated that was "declin[ing" A4A's request to stop collectingthe Fees from the PDX airlines.55

53Id., at2.
54Id. 55January 14, 2016 Letter, Exhibit 14 hereto. 35115. On January 19, 2016, A4Arespondedto the Port's letter, stating: Itis disappointing that the Porthas decided to "continue collecting and remitting" the Fees given the unmistakable fact that the Fees constitute Airport-generated "revenue" that is being diverted away from the Airport for non-Airport related municipal projects and expenses, in clear violation of49 U.S.C. Sections 47133 and 47107(b)(1), the Port's grant assurances, and the [FAA Revenue Use P I. ] 56

o 1ey. 116. A4A's letter added that "FAAhas provided nothing more than informal, tentative and non-binding advice. FAA has not issued a final order or other form ofbinding decision relating to the lawfulness ofthe Fees. Indeed,the July 30,2015 letter from FAA's Randy Fiertz confirms that it "does not constitute final action by DOT on this matter."57 Moreover, Mr. Fiertz's58 letter invited A4A to "file a complaint with FAA, where an actual factual record may be developed in any agency proceeding," and acknowledged that "a more robust factual record developed in the context ofa formal proceeding" might lead to a different result. Additionally, the Port may not avoid its legal obligations under federal Grant Assurance 25 (no revenue diversion) and federal laws and regulations against revenue diversionbyrelying on undeveloped, informal and non-binding statementsbyFAA.59 117. A4A's letter further stated that "Unfortunately, the fact that neither the Port nor the City will take the appropriate action to cease the collection and remission ofthe unlawful Fees, means that the airlines serving PDX have no choice but to accept the 'invitation' in the FAA'sJuly 30,2015 Letter and pursue their legal rights under 14 C.F.R. Part 16 to seek a formal determination from FAA that the Fees constitute unlawful revenue diversion. A4A very much

56January 19,2016Letter, Exhibit 15 hereto. 57FAAJuly 2015 Letter, Exhibit 12, at 2. 58ld.

36regrets that its diligent efforts over the course ofmultiple years to resolve this matter absent litigationhave notbeen successful."60 IX. THE FAAJULY2015 [NON-FINAL] LETTERFAILS TOADDRESS COMPLAINANTS' ARGUMENTS AND IS NOTBASED ONTHE FACTS, THE LAW ORSOUND REASONING 118. In addition to not being a final order, the position in the FAA July 2015 Letter thatthe offsite stormwater and Superfund charges do not constituteunlawful revenue diversion is contraryto the express language of49 U.S.C. §47133 and§ 47107(b). Pursuant to these federal statutes, "the revenues generated by an airport that is the subject ofFederal assistance may not be expended for any purpose other than the capital or operating costs of- (1) the airport . .

" (Emphasis added). 119. The fact that a fee payable to a non-airport sponsor "arises as a legal obligation incident to the airport's possessory interest in land necessary for the provision ofaeronautical services" (FAALetter, at I) does notrender the fee tied to any airport-relatedpurpose oruse. 120. The FAA Letter does not offer a valid legal or factual justification for denying that imposition of fees for offsite storm water treatment and Superfund cleanup constitutes unlawful diversion ofairport-generated revenues, in violation of49 U.S.C.§ 47133(a)(l) and§ 47107(b)(l)(A). 121. Both 49 U.S.C. 

### § 47133(a)(l) and § 47107(b)(l)(A) prohibit expending of
revenues generated by an airport for any purpose other than "the capital or operating costs of' the airport. FAA does not try to argue thatthe fees are for the "capital" costs ofPDX. Instead, it asserts that the "storm water management charge is an operating cost ofthe airport, because it arises as a legal obligation incident to the airport's possessory interest in land necessary for the

37provision ofaeronautical services."61 In other words, because the City demands that the airport pay the fee, it is therefore an "operating cost" ofthe airport. FAA applies the same reasoning (such as it is oris not) to the Superfund charge. 62 122. This argument is illogical. Based on this reasoning, the City could demand as a "legal obligation" thatthe airport pay a fee to construct a newfootball stadium or to hire military commandos to keep the streets ofthe city crime free. Butneither would relate to an "operating cost" of the airport. Yet under the FAA Letter, the fee would be an "operating cost" of the airport and therefore can be charged to airlines and paid to the City without running afoul ofthe
revenue diversion laws. 123. The Airport operates independently of offsite storm water management and Superfund cleanup. The City is demanding that the Airport pay for things other than what is needed to operate the Airport and the City is claiming that it has the legal right to do so and thereforethe Airport must agree. 124. The FAA Letter also erroneously states the government is "not prepared to find thatthe charge exceedsthe value ofservices providedto the airport."63 FAA fails to identify any "value ofservicesprovidedto the airport." Merely statingthe stormwaterfees are an "operating cost" because the City has made them a "legal obligation" does not somehow create a "value" thatthe City is providingto the Airport. The FAA Letter is indeed circular.

61FAAJuly 2015 Letter, Exhibit 12, at 1 (emphasis added). 62Jd. at 2 n. 1. 63FAAJuly 30,2015 Letter, Exhibit 12, at 1. 

### 38125. FAA's letter invited A4A to "file a complaint with FAA, where an actual factual record may be developed in any agency proceeding," and acknowledged that "a more robust factual record developed inthe context ofa formal proceeding" might lead to a different result." 126. It is vital that FAA enforce the prohibitions against revenue diversion. The
revenue diversion at PDX is typical of efforts by local governments to look to airports and airlines to fund municipal financial requirements. For example, in October 2015, a Chicago city alderman proposedto impose a surcharge on air transportation to "leverage the value" ofO'Hare and Midway Airports to bankroll the hiring ofat least 100 additional police officers to combat crime in the City ofChicago64 The resolution introduced to the Chicago City Council called on airlines at O'Hare and Midway to "voluntarily" impose a $1 surcharge on the 100 million passengers who flow through O'Hare and Midway each year65 127. Withregard to the laws against revenue diversion from U.S airports, the alderman argued that ifthe U.S. Senate can make an exceptionby directing $9.2 billion in airport revenue to the federal highway trust fund as the DRIVE Act requires, then Chicago shouldbe free to use airport revenue to "save lives."66 The alderman also seeks to levy a "security fee" on airpmi concession contracts67 These sorts ofefforts to have airports and airlines pay for general city services, in violation offederal law, will continue unless the FAA is vigilant in enforcing the laws against airportrevenue diversion.

64See Fran Spielman,Aldermanseeks $1 surcharge on air travelers to.fund police hiring, Chicago SunTimes (Oct. 14,2015, I0:52AM), http://chicago.suntimes.com/chicagopolitics/7/71/1023944/alderman-proposes-1-surcharge-airline-passengers-bankroll-police-hiring (last accessedFeb. 10, 2016). 6sId.

39X. PRAYERFORRELIEF For the reasons set forth above, Complainants ask FAA to investigate the unlawful diversion of airport revenue that is occuning by reason ofthe collection and remission ofthe Off-Site Storm-Water and Superfund Remediation Charges in violation ofGrant Assurance 25, AirportRevenues, and 49 U.S.C. §47107(b) and§ 47133. Inaddition, FAAshould: A. Make a finding that unlawful diversion of airport revenue that is occurring by
reason ofthe collection and remission ofthe Off-Site Stmm-Water and Superfund Remediation Charges in violation ofGrant Assurance 25, Airport Revenues, and 49 U.S.C. § 47107(b) and § 47133; B. Orderthe Port to returnto the Airport fund all amounts remitted to the City; C. Order the Port to take corrective action by ceasing to engage in further airport
revenue diversion; and D. Order the Port to pay interest on the amount collected from the Airline Complainants and remitted to the City pursuant to 49 U.S.C. § 47107(o)(l) and 64 Fed. Reg. 7697.



### Is/DavidBerg DavidBerg Vice President & General Counsel DougMullen Assistant General Counsel Air TransportAssociation ofAmerica, Inc. d/b/aAirlines for America 1275 PennsylvaniaAvenue, N.W. Suite 1300 Respectfully submitted,

/s/ Roy Goldberg Roy Goldberg Steptoe & JohnsonLLP 1330 ConnecticutAvenue, N.W. Washington, D.C 20036 (202) 429-8028 Email: rgoldberg@steptoe.com

40Washington, D.C. 20004 (202) 626-4234 Email: dberg@airlines.org dmullen@airlines.org Dated: February 10,2016

41CERTIFICATE OF SERVICE I certify that this lOth day ofFebruary, 2016, I caused a copy ofthis Complaint and all Exhibits thereto to be served onthe following individuals: VIAHAND DELIVERY: Office ofthe ChiefCounsel Attention: FAAPart 16 AirportProceedings AGC-610 Federal AviationAdministration 800 IndependenceAvenue, S.W. Washington, D.C. 20591 VIAELECTRONIC DELIVERY: Randall Fiertz Randall.Fiertz@faa.gov Reggie Govan Reggie.govan@faa.gov ByronHuffman Byron.K.Huffman@faa.gov ScottMitchell Scott.E.Mitchell@faa.gov Daphne Fuller Daphne.fuller@faa.gov IanWhitlock Ian.Whitlock@portofportland.com


### Is/Roy Goldberg Roy Goldberg



### 42UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL AVIATIONADMINISTRATION WASHINGTON, D.C.
AIRTRANSPORTASSOCIATION OF AMERICA, INC. d/b/a AIRLINES FOR AMERICA, ALASKAAIRLINES, INC., AMERICANAIRLINES, INC., ATLAS AIR, INC., FEDERALEXPRESS CORPORATION, HAWAIIANAIRLINES, INC., JETBLUE AIRWAYS INC., SOUTHWESTAIRLINES CO., UNITED AIRLINES, INC., UNITED PARCEL SERVICE CO., and AIR CANADA, Complainants,


### v. PORT OF PORTLAND, OREGON, Respondent. FAADocketNo. 16-16-

INDEX OF EXHIBITS TO PART 16 COMPLAINT 1 Ordinance 185610 (September 9, 2012) 2 "Stormwater CostAllocation Study," Black & Veatch Corp. (August 23, 2000) 3 Letter from Vince Granato, Port ofPortland Chief Operating Officer to PortlandCommissioner Saltzman (May 4, 2012) 4 "Dear Ratepayer/Owner" Letter from City of Portland Bureau of Environmental Services (June 19, 2012) 5 "DearRATEPAYER" Letterfrom City ofPortlandBureau of Environmental Services (August 6. 2012)6 Plaintiffs' Eleventh Status Report,ArkemaInc., etal. v. Anderson Roofing Co., etal., No. 3:09-cv-453-PK, Doc. 457 (D. Or. November II, 2015) 7 Airport CooperativeResearchProgram" (May 2008) ("ACRP Document") (Exhibit to July I, 2014 Letter) 8 Letterfrom DavidBergto Sam Adams (September4, 2012) 9 Memorandum from David A. Berg, et a!. to Susan L. Kurland, et a!. (January 14, 2014) 10 Letterfrom DavidBerg to Kathryn B. Thomson, DOTGeneral Counsel (July I, 2014) 11 AuditReport, Office oflnspectorGeneral, DOT, ReportNo. AV-2014- 035 (AprilS, 2014) 12 Letterfrom Randy Fiertzto David Berg (July 30, 2015) 13 Letterto Bill Wyatt et a!. from Counsel for A4A (January 8, 2016) 14 Letterfrom DanBlaufus, General Counsel ofPort ofPortlandto Counsel for A4A (January 14, 2016) 15 Letterto DanBlaufus from Counsel for A4A (January 19, 2014) 16 DeclarationofMarkBerg (AlaskaAirlines) 17 DeclarationofMonicaW. DelRio (SouthwestAirlines) 18 DeclarationofKevin Hoffmann (UPS Airlines) 19 Declaration ofJeremyRoss (AlaskaAirlines) 20 Declaration ofDavidBerg (Airlines for America)