Federal Aviation Administration Clarification to Policy and Procedures Concerning Use of Airport Revenues; Proceeds from Taxes on Aviation Fuel Presented By: Kevin Willis Elizabeth Newman Federal Aviation Administration October 16, 2015

2 Federal Aviation Administration What is the Issue? A clarification that all taxes that are applied to aviation fuel are considered as “aviation fuel taxes” for purposes of complying with Federal law for revenue use requirements. Taxes on aviation fuel (except taxes in effect on December 30, 1987) are considered airport revenue and must meet the requirements set in the Policies and Procedures Concerning the Use of Airport Revenues (Revenue Use Policy). 2 Proceeds from Taxes on Aviation Fuel October 2015

3 Federal Aviation Administration Issue Overview Federal law requires that revenues from state and local government taxes on aviation fuel must be used for airport purposes which include: –Airport capital and operating costs; A state tax on aviation fuel may be used to support a state aviation program. Airport revenue may be used for airport noise mitigation programs. –State taxes can be used for State aviation programs and noise mitigation program on or off the airport. 3 Proceeds from Taxes on Aviation Fuel October 2015

4 Federal Aviation Administration Who Does the Amendment Apply to? Any State or local government (whether an airport sponsor or non-sponsor) that levies a tax on aviation fuel. –States, Counties, and Municipalities Owners and operators of airports who have accepted Federal assistance from the FAA. 4 Proceeds from Taxes on Aviation Fuel October 2015

5 Federal Aviation Administration Next Steps The final policy was published on November 7, Action Plans should be submitted by December 8, Implementation of Action Plans to be completed by December 8, Proceeds from Taxes on Aviation Fuel October 2015

6 Federal Aviation Administration What Must Be Done? State and local officials should prepare an action plan to initiate the process to amend any non-compliant State laws and local ordinances to conform to Federal law. The Action Plan should detail the process necessary to develop reporting requirements and tracking systems for discrete information on aviation fuel tax revenues. 1)A commitment to undertake the legislative process. 2)The timeframe for implementation should not to exceed 3 years. The action plan should be submitted to the FAA within a year of the effective date. Initiate the action plan within a reasonable transition period not to exceed three years of the effective date to conform to Federal law. 6 Proceeds from Taxes on Aviation Fuel October 2015

7 Federal Aviation Administration Are there taxes that are exempted from the requirement? Taxes in effect on December 30, 1987 could be considered “grandfathered” Grandfather status would require: –Sponsor will need to submit documentation filed with the action plans to determine the grandfather status of aviation fuel taxes. –FAA will need to review the documentation, legislation, or amendments to aviation fuel taxes in order to confirm compliance with the Federal requirements. 7 Proceeds from Taxes on Aviation Fuel October 2015

8 Federal Aviation Administration What if a state or locality does not comply? Federal law takes airport revenue diversion very seriously. Allows for penalties not available for other Federal airport grant violations. 8 Proceeds from Taxes on Aviation Fuel October 2015

9 Federal Aviation Administration Questions and Postings Questions with FAA responses and guidance are posted at Docket FAA Proceeds from Taxes on Aviation Fuel October 2015

10 Federal Aviation Administration QUESTIONS? 10