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The Honorable Slade Gorton united states Senate Washington, DC 20510
Dear SenatorGorton: 

### JAN II 18SO 

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Thank you for your letter of October 31, 1989, seeking clarification regarding the ability of (1) a locality, and (2) a State, to impose a sales tax on aviation fuel with the tax proceeds being applied to fund human services, a non-airport or non-aviation purpose.

1. Local Aviation Fuel Tax: Any actionby_

## ~ localgovernment to impose a sales tax on \\ aviation fuel sold on an airport of which it is a sponsor, so itcan use the monies derived from the tax to support non-aviation activities such as human services, would be 'j inconsistentwith Federal g-rant obliga-tionsundertaken by the public sponsor of evel:"y Federally funded air]?Ortupon which the tax is collected. Monies 9enerated from such a ta)!: would have4fl tq.l:!e expendedby the sponsor**Jo~.**the ".•• capital .or operatin<f' ¢().sts of the airport, t.helocal lirport system, or other local facilities which are owned or operatedby the owner or operator ofthe airport and directly and substantially related to the actual air transportation of passengers or property •••", within the meaning of Section 511(a)(12) of theAirport and Airway Improvement Act of 1982 (111982 AirportAct"), codified at 49 u.s.c. App. Section 2210. This section sets forth requirements whichmust be met by sponsors before airport projects contained in project grant applications may be approved by the secretary of Transportation. Failure tomeet the enumerated requirements canjeopardize continued Federal funding of airport and noise abatement projects at these airports. Following the adoption of section 5ll(a)(12) in 1982, some controversy arose concerning whether certaintaxes on aviation fuel would becovered by the restrictive language. Therefore, in order to avoid future confusion over local taxes on aviation fuel, Congress amended section 511(a)(12) of the 1982 Airport Act on December 30, 1987. In theAirport and Airway Safety and capacity_ExpansionAct of 1987 (Pub. L. No. 100-223),2 Congress added the phrase, "•••..**An~** C!.nY lOCC!.l taxes on<!.ViatioQ fuel (otherthan taxes in effect**~~.DeceJIIber** 30, 19!!.7,,)" to · section 511(a)(12). Prior to the f987 amendment, this section read:

•••·an revenues generated by the airport, if it is a public airport, will be expended for the capital or operating costs of the airport •••• · Subsequent to December 30, 1987,however, this section read:
all revenues generatedby the airport, if it is a 

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public airport,·and <!.ny local·taxes.on aviation

..fuel&' (other thantaxes .in·effect.on.December 30, 1987!1! will be expended for the capital or operating costs of the airport •.••• (emphasis supplied).
In summary, sincehuman services are not airport-related, or related to other local facilities owned or operatedby the owner or operator of the airportwhich are directly and substantially related to the actual airtransportation of passengers or property, local governments may not utilize monies generated from such a tax for this purpose without· placing in jeopardy its present and future Federal funding of airport projects.
2. State Aviation Fuel Tax:
The S.:tate of Washington may not impose a State sales tax on ·\· aviation fuel sold on an airport, when the monies derived from the tax would be used to fund non-aviation activities such as human services, withoutjeopardizingthe grant compliance ·status of Federally funded airports in the State of Washington. Monies from such a taxwould have to be spent to support either (1) the"··· capital or operating costs of the airport, t.he local airport system, or other local facilities which are owned t>r operatedby the owner or operator of the airport and directly and substantially related to the actual air transportation of passengers or property •••" within."the meaning of section Sll(a)(12); or (2) a 11Statli!.avi<!.tion, program"4Pr "noise mitigation" measures on or off the alrport, within the meaning of Section 511(d), 49 u.s.c. App. Section 2210(d).
Section 1113 of the Federal AviationAct of 1958 ("FAAct") expressly permits states to impose such taxes. 49 u.s.c. App. Section 1513(b). [See, wardair Canada, Inc. v. Florida Department of Revenue, 477 u.s. 1, 106 s.ct. 2369, 2372 ·(1986), Rocky Mountain Airways, In.c. v. Pitkin county, 674 F. Supp. 312 (D. Colo. 1987), and In Re Menier, 59 B.R. 588 (Bankr. N.D. Ohio 1986).section 1113, entitled, "State taxation of air commerce," states in subsection (b): Except as provided for in subsection (d) of this section, nothing in this section shall prohibit a State (or political subdivision thereof •••) from the levy or collection oftaxes other than those enumerated in subsection (a) of this section, including ••• sales oruse taxes on the sale of goods
or services

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. Even though 49 u.s.c•.App. Section 1513(b) expressly permits states to enact a state aviation fuel tax, we find, however, that Section Sll(a)(12) applies to State taxes on aviation fuel. If itwere otherwise, Section Sll(d) of the 1982 Airport Act.would be renderedmeaningless.
Amended Section Sll(d) of the AirportAct, codified at 49
u.s.c. App. Section 2210(d), states: Nothing in subsecti.on (a)(12)'of this section shall preclude the use of statetaxes on aviation fuel to support a State aviation program orpreclude use of airport revenue on or off the airport for noise mitigation purposes. Section Sll(d) expands the types of uses to which state tax monies derived from aviation fuel taxes may be put as set forth in Section Sll(a)(12), to include "aviation program[s]" and "noise mitigation [measures]" on or off the airport. In other words, the limitations of Section 5ll(a)(l2) are expanded by Section Sll(d) to include additional legitimateuses for monies derived from a State aviation fuel tax. It follows that Congress, having expressly permit;ted two**spe!:;!J'+!?-1.l!fl~!O"Of** avf.ation fuel tax monies, necef.lsarily excluCled"o'tlie£._;· non-airport-related**purpos~s.** Thank you again for your letter. If you have any further questions, please letus know.
An identical letterhas been sentto Senator Slade Gorton. Sincerely,

C:.

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## ·< Gregory s. Walden Chief Counsel
Enclosure Transmitted Correspondence 

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