ATLANTA (CN) – If eight Georgia municipalities and one school district want their right to tax aviation fuel memorialized in court, they must wait until the government tries to stop them, the 11th Circuit ruled Tuesday.
The 19-page decision explains that aviation fuel sold at Hartsfield-Jackson Airport has been subject to a sales tax by Clayton County and Clayton County Public Schools for decades. While the county imposed its tax in 1994, the school district followed suit in 1997.
Against this backdrop, however, Congress passed a law in 1996 that generally prohibits local aviation fuel tax revenues from being spent on anything other than aviation. In the case of Clayton County, the tax revenue is spent on local municipal projects and education matters unrelated to aviation.
The conflict came to a head in 2014 when the Federal Aviation Administration issued an order clarifying that the rule on fuel taxes applies to all state and local governments, regardless of whether they own or operate an airport.
Writing for a three-judge panel Tuesday, U.S. Circuit Judge Julie Carnes noted that what initially began as conciliatory negotiations for Clayton County to come into compliance later turned adversarial.
In 2016, the county, the school district and seven cities that share in the fuel-tax revenue amended their compliance plan from a year earlier to challenge the 2014 interpretation as unlawful.
These entities filed suit in 2017 when the FAA confirmed in writing that its position on the taxes had not changed.
As is the case when a party seeks relief from a federal agency decision, Clayton County brought its case with a U.S. Court of Appeals.
The 11th Circuit nevertheless threw out the suit Tuesday because it concluded that “the FAA’s letter does not constitute final agency action.”
A suit would be more appropriate down the line, Carnes noted, if the FAA brings an enforcement action.
“In the end, Petitioners’ lawsuit is both too late and too early,” the 19-page decision states. “It comes too late to challenge the FAA’s policy clarification issued in 2014, and it comes too early to challenge an FAA enforcement action that may never happen. Because the letter is not final agency action, we dismiss the petition for lack of jurisdiction.”
Jack Hancock, an attorney for the municipalities with the firm Freeman Mathis & Gary, voiced disappointment that the court did not reach the merits of their case.
“We continue to believe Congress did not intend to prevent cities and counties that do not own airports from spending their tax revenue,” Hancock said in an email. “We are exploring options to prevent this unfair result which places our clients in a situation where their action or inaction may put them in violation of FAA policy Georgia law or the Georgia Constitution.”
Representatives for the FAA have not returned a request for comment.