Date: 201603
Local time of day: 1201-1800
Location: PAO.Airport, CA
Flight conditions: Mixed
Weather elements / visibility: Rain; 3
Light: Daylight
Aircraft: Small Aircraft
Operator: FBO
Operating under: Part 91
Flight plan: IFR
Mission: Training
Flight phase: Final Approach
Airspace: Class D PAO
ATC / advisory: TRACON NCT; Tower PAO
Second aircraft: Small Aircraft; Low Wing; 1 Eng; Fixed Gear
Reporter organization: FBO
Reporter function: Instructor
Reporter qualification: Flight Crew Multiengine; Flight Crew Flight Instructor; Flight Crew Commercial; Flight Crew Instrument
Second reporter function: Local
Anomaly: ATC Issue All Types; Deviation - Track / Heading All Types; Deviation / Discrepancy - Procedural Clearance; Deviation / Discrepancy - Procedural Published Material / Policy
Detector: Person Flight Crew; Person Air Traffic Control
When detected: In-flight
Result: Air Traffic Control Provided Assistance; Flight Crew Requested ATC Assistance / Clarification
Contributing factors: Airport; Airspace Structure; Procedure; Human Factors
Primary problem: Procedure

Narrative: I was with a student on an IFR training flight. We were doing the GPS Runway 31 approach with the intent to circle-to-land on runway 13. NORCAL vectored us to DOCAL and we were cleared for the approach. Everything was going fine. Our track and altitude were all per the approach. Sometime during the approach (possibly around PUDBY) NORCAL told us to 'circle WEST of the runway for traffic.' We read back the instructions and had NORCAL confirm that we were to circle WEST to land Runway 13. NORCAL confirmed these instructions.When we got close to PAO; NORCAL handed us off and instructed us to 'contact Palo Alto tower.' We switched frequencies and contacted PAO tower. We were cleared to land runway 13 and in the same transmission (I believe) asked for base; tops; and visibility reports. We read back landing clearance and then I proceeded to give the requested reports while my student started the circle-to-land WEST of the runway.Around mid-field the tower controller tells us that 'circle-to-land should be to the north'; or something to that affect. I responded that ATC had explicitly told us to circle-to-land WEST of the runway; so that is what we did. We had a short back-and-forth about the whole event while circling. Landing was uneventful. But then; while on rollout; we were requested to 'call the tower'. But the tower explicitly told us that we were 'not in trouble or anything; but to please call the tower after we get to parking.' So after parking I called the tower.During the phone conversation the tower asked me again why we circled WEST of the runway. We again explained that NORCAL had explicitly told us to circle WEST of the runway for traffic so that is what we did. The tower controller then told me that he had told us to circle-north. As I told him; I do not recall him instructing us to circle north. I believe that it is a 50-50 chance that he told us but we didn't catch the instruction; or that he didn't actually tell us but thought that he did. Had he told us we clearly would have circled-north as instructed. I am well aware that circle north is the common and authorized side for a circling approach.Clearly there was a critical failure of communication between NORCAL and PAO tower when NORCAL did not inform the tower of the circle-WEST instructions that they had issued to us.


Second narrative: The following event started while I was working Local Control at Palo Alto Tower. The weather was marginal VFR with a 3;000 feet broken ceiling and South East winds. [Aircraft X] was inbound on the GPS approach to Runway 31; circle to land Runway 13. Circling to the southwest is not authorized per the approach plate. The pilot checked on and I gave instructions to report circling North for Runway 13 and asked if they had any base or tops reports. They gave their best info about clouds and continued inbound. At the point of circling; he circled southwest of the field. I asked if he was circling North and they replied approach (NCT LICKE Sector 1L) gave instructions to circle West. I cleared the aircraft to land Runway 13.Another aircraft; Aircraft Y; checked on a minute or two later and said their were on the approach circle West for Runway 13. I told them to continue the approach. I observed an airliner being vectored to San Jose Runway 12 Right. An aircraft on the Palo Alto GPS runway 31 approach circling North to Runway 13 could conflict with the San Jose arrival.I asked the second aircraft to report the field in sight for a Visual Approach so they could circle West to Palo Alto and remain clear of the San Jose arrival. I tried to coordinate the change with LICKE; but the sector did not answer the shout line. The second aircraft reported the field in sight before they started a circle West; accepted a visual approach to Runway 13 and landed without incident.


Synopsis: General aviation pilot reported being directed to fly counter to an approach with a published restriction to circling west of the airport. Coordination between TRACON and Tower was an issue. Controller working the aircraft also reported and stated he advised aircraft to circle 'north' of Runway.