Appendix — Wardair Canada Inc. v. Florida Dept. of Revenue

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IN THE

Supreme Court of the Gnited States

OcTOBER TERM, 1984

WARDAIR CANADA INC.,

Appellant,

V.

STATE OF FLORIDA,

DEPARTMENT OF REVENUE,

Appellee.

ON APPEAL FROM THE

SUPREME COURT OF FLORIDA

APPENDIX

WALTER D. HANSEN

Burwell, Hansen, Manley & Peters

1706 New Hampshire Ave., N.W.

Washington, D.C. 20009

(202) 745-0441

Attorney for Appellant

A-1

Appendix A

Supreme Court of Florida

No. 64,036

DEPARTMENT OF REVENUE,

Appe llant,

We

WARDAIR CANADA, LTD.,

Appellee.

[June 14, 1984]

ADKINS J.

This case is before us on an order from the First District

Court of Appeal certifying the issue in the case to be of

great public importance. We have jurisdiction. Art. V, §

3(b)(5), Fla. Const.

This case arose with the filing of a complaint in the

circuit court in Leon County by Wardair Canada, Ltd.

(hereinafter Wardair) challenging the constitutionality of

chapter 83-3, Laws of Florida. The court consolidated this

case with an action filed by Air Jamaica for the purpose of

trial. The parties stipulated to a procedure whereby the

airline was allowed to self-accrue the sales tax imposed

under chapter 83-3 during the pendency of the proceed-

ings subject to certain conditions. The circuit court en-

tered an order of final judgment on July 19, 1983, separate

from its order in the Air Jamaica case. The court upheld

A-2

the constitutionality of the law dismissing three of War-

dair’s counts in its complaint but ruled in favor of the

airline in recognizing an exemption to the airlines to the

motor fuel and special fuel tax imposed by the law by

virtue of certain executive agreements with the United

States. The trial judge had previously upheld chapter 83-3

in Delta Airlines, Inc. v. Department of Revenue, No.

83-761 (Leon County Cir. Ct.—Civ. Div. May 23, 1985).

The Department of Revenue filed its notice of appeal from

the trial court’s final judgment on July 21, 1983. Shortly

thereafter, Wardair filed its notice of cross-appeal. The

First District Court of Appeal then certified the case to

this Court.

This Court has ruled on three of the four issues raised

by Wardair in its original complaint and on cross-appeal in

its decision in Delta Airlines, Inc. v. Department of Reve-

nue, No. 63,915, (Fla. June 14, 1984). The department has

appealed the circuit court’s ruling recognizing an exemp-

tion to the excise tax for the foreign airlines. The circuit

court found that chapter 83-3 was inconsistent with a

Non-scheduled Air Service Agreement between the

United States and Canada, May 8, 1974, T.I.A.S. 7826.

The circuit court’s order noted that article XII(1) of the

Air Services Agreement exempts both the United States

and Canada from national duties and charges on fuels and

article XIV provides that neither party will discriminate

against the other. The court then relied on its holding in

Lineas Aereas Costarricenses, S.A. v. Department of

Revenue, No. 83-761 (Fla. 2d Cir. June 21, 1983). In that

case the court held that when the federal policy is to

exampt foreign airlines from fuel taxes and prevent dis-

crimination, the individual states are precluded from act-

ing in that area.

A-3

The department argues that the agreement is inap-

plicable to estop the enforcement of chapter 83-3 for two

reasons: 1) the agreement is not self-executing; and 2) the

agreement specifically addresses only national customs,

duties, excise taxes and charges with no application to or

restriction on state taxation schemes. The circuit court

did not expressly recognize a distinction between ex-

ecutory and non-executory agreement provisions in its

order.

The department asserts that the following provisions in

the agreement are executory and thus require an addi-

tional legislative enactment to effect implementation:

Each Contracting Party shall exempt the carriers

of the other Contracting Party to the fullest extent

possible under its national law from import restric-

tions, customs duties, excise taxes, inspection fees,

and other national duties and charges on fuel, lubri-

cants, consumable technical supplies . . . and other

items intended for use solely in connection with the

operation, maintenance or servicing of aircraft of the

carriers of the other Contracting Party. The exemp-

tions granted by this paragraph shall apply to items:

(a) introduced into the territory of one Contracting

Party by or on behalf of the carriers of the other

Contracting Party;

(b) retained on board aircraft of the carriers of one

Contracting Party upon arriving in or leaving the

territory of the other Contracting Party;

(c) taken on board aircraft of the carriers of one

Contracting Party in the territory of the other

Contracting Party and intended solely for use in

international air services; whether or not such

items are consumed wholly within the territory of

the Contracting Party granting the exemption.

Because we agree with the department’s conclusion

that the agreement is inapplicable because it specifically

A-d

addresses only national customs, duties, and excise taxes

and charges, we find it unnecessary to determine whether

these provisions are executory or not. The Air Services

Agreement is not a treaty ratified by the United States

Senate. However, it is a formally executed international

agreement and, as such, is valid and binding as if ap-

proved by act of Congress. United States v. Pink, 315

U.S. 203 (1941). The purpose of the agreement is obvious-

ly to preserve, protect and promote the continued devel-

opment of a system of air transport free from discrimi-

natory practices and to support equal commercial

opportunity between the nations.

The doctrine of preemption which is given effect

through the supremacy clause mandates that federal law

overrides any state regulation where there is an actual

conflict between the two sets of legislation such that both

cannot validly stand. The United States Supreme Court

has formulated analytical standards for preemption. In

Hines v. Davidowitz, 312 U.S. 52 (1941), the Court con-

strued the Federal Alien Registration Act of 1940 to over-

ride Pennsylvania’s Alien Registration Act of 1939. The

Court noted that if state law “stands as an obstacle to the

accomplishment and execution of the full purposes and

objectives of Congress,” federal regulation must preempt

state regulation to give effect to the desired national

policy. /d. at 67.

Fifteen years later the validity of a Pennsylvania state

regulation was again before the Court in Pennsylvania v.

Nelson, 350 U.S. 497 (1956). The Court held that federal

anticommunist legislation superseded the state’s sedition

act and enunciated a three-prong test to determine the

supremacy of a federal regulatory scheme over state reg-

ulation in the same or similar area. The test involves an

analysis of: 1) the pervasiveness of the federal regulatory

A-5

scheme; 2) federal occupation of the field as necessitated

by the need for national uniformity; and 3) danger of

conflict between state laws and the administration of the

federal program.

The previsions in the agreement between the United

States and Canada clearly express an intent to apply to

only national taxes and duties. We do not believe that the

scheme of this agreement is so pervasive so as to permit

the reasonable inference that Congress intended to pre-

clude the state’s power to tax. Also, the competitive

equality between the two nations would be destroyed if

the United States air carriers had to pay state excise

taxes on fuel purchases and the Canadian carrier did not.

We determined in our decision in Delta Air Lines, Inc.

v. Department of Revenue, No. 63,915 (Fla. June 14,

1984), that the tax imposed by chapter 83-3 met the four-

prong test of Complete Auto Transit v. Brady, 430 U.S.

274 (1977), and thus did not violate the commerce clause.

In 1979, the United States Supreme Court decided the

case of Japan Line, Ltd. v. County of Los Angeles, 441

U.S. 434 (1979), setting forth two additional require-

ments to be met when foreign commerce is involved. The

Court stated:

[AJn inquiry more elaborate than that mandated

by Complete Auto is necessary when a State seeks to

tax the instrumentalities of foreign, rather than

interstate commerce. In addition to answering the

nexus, apportionment, and nondiscrimination ques-

tions posed in Complete Auto, a court must also

inquire, first, whether the tax, notwithstanding ap-

portionment, creates a substantial risk of interna-

tional multiple taxation, and, second whether the tax

prevents the Federal Government from “speaking

with one voice when regulating commercial relations

with foreign governments.” Ifa state tax contravenes

A-6

either of these precepts, it is unconstitutional under

the Commerce Clause.

Id. at 451.

The trial court correctly found that the first require-

ment of Japan Line was not a concern because there had

been no de facto showing of multiple taxation or substan-

tial risk of the same. Moorman Manufacturing Co. v.

Blair, 437 U.S. 267; Shell Oil Co. v. State Board of Equal-

ization, 414 P.2d 820 (Cal. 1966).

For the reasons previously discussed, we also hold that

the tax meets the second requirement of Japan Line. The

agreement provides for efforts at exemption from nation-

al excise taxes, inspection fees and other national charges

but does not provide for exemptions from state excise

taxes. We must presume this has been done intentionally.

We do not believe this legislation pr. vents our federal

government from speaking with one voice.

Accordingly, we affirm the order of the circuit court as

to the constitutionality of chapter 83-3 except that portion

of the law pertaining to a tax credit for Florida corpora-

tions. In Delta we determined that portion to be uncon-

stitutional and it was stricken from the law. We reverse

the circuit court to the extent that it recognized an ex-

emption for foreign airlines.

It is so ordered.

ALDERMAN, C.J., BOYD and SHAW, JJ., Concur

OVERTON, J., Dissents with an opinion in which McDon-

ald, J., Concurs

NOT FINAL UNTIL TIME EXPIRES TO FILE RE-

HEARING MOTION AND, IF FILED, DETER-

MINED.

OVERTON, J., dissenting.

A-7

I dissent. I find that the State of Florida has no authori-

ty to ignore valid air service agreements between the

United States Government and the governments of other

countries which exempt airlines based in participating

nations from duties and charges on fuels. 'n my view, the

individual states of this country are precluded by those

agreements from taxing fuel used by foreign airlines. To

accept the majority's view means that all United States

airlines could, in turn, be subject to local government

taxation on fuel in foreign countries. We are one country

and our constitution requires us to speak with one voice

when the federal government enters into agreements and

treaties with foreign governments. See U.S. Const. art. I,

§ 8; art. VI. This state is precluded from enforcing this tax

against this airline.

McDONALD, J., Coneurs

Appendix B

Supreme Court of Florida

No. 63,915

DELTA AIR LINEs INC.,

et al., Appellants,

V.

DEPARTMENT OF REVENUE,

Appellee.

[June 14, 1984]

ADKINS J.

This case is before us on an order from the First District

Court of Appeal certifying the issue in the case to be of

great public importance. We have jurisdiction. Art. V, §

3(B) (3), Fla. Const.

This case arose with the filing of a complaint by Delta

Air Lines in the circuit court of Leon County seeking

declaratory and injunctive relief from the enforcement of

provisions of chapter 83-3, Laws of Florida, on the ground

that the law was unconstitutioffal. Capitol Air, Inc.,

Northwest Airlines, Inc., Ozark Air Lines, Inc., Pied-

mont Aviation, Inc., Republic Airlines, Inc., The Flying

Tiger Lines, inc., United Airlines and USAir, Inc., were

granted leave to intervene as party plaintiffs. On May 27,

1983, the circuit court entered its final judgment in favor

of the Department of Revenue ruling the law constitu-

A-9

tional. Delta appealed to the First District Court of Ap-

peal which certified the case for immediate resolution by

this Court.

We described the structure of chapter 83-3 and resolved

some of the issues raised by Delta in our decision in

Eastern Air Lines v. Department of Revenue, No. 63,949

(Fla. June 14, 1984). There are two issues which Delta

raises which we were not faced with in that decision.

First, Delta raises the issue of whether chapter &3-3

violates the commerce clause of the United States Con-

stitution by providing a corporate income tax credit for

Florida-based airlines. Chapter 220, Florida Statutes

(1981), imposes an income tax on domestic corporations

and foreign corporations qualified to do business in Flor-

ida or actually doing business in Florida. Section 61 of

chapter 83-3 creates section 220.189, Florida Statutes

(1983), and provides a credit against the corporate income

tax for air common carriers who have a corporate or

business home office in Florida and also maintain a work

force of more than 1200 employees in the state. This credit

offsets up to one-half of the air carriers’ fuel tax liabilities

with a maximum credit of $5 million.

A state tax is not per se invalid because it burdens

interstate commerce since interstate commerce may con-

stitutionally be made to pay its own way. Complete Auto

Transit, Inc. v. Brady, 480 U.S. 274 (1977); Western Live

Stock v. Bureau of Revenue, 303 U.S. 250 (1938). Taxes

have been sustained against commerce clause challenges

when the tax: 1) is applied to an activity with a substantial

nexus with the taxing state; 2) is fairly apportioned; 3)

does not discriminate against interstate commerce; and 4)

is fairly related to the services provided by the state.

Complete Auto, 430 U.S. at 279. No state may, consistent

A-10

with the commerce clause, “impose a tax which discrimi-

nates against interstate commerce ... by providing a

direct commercial advantage to local business.” Boston

Stock Exchange v. State Tax Commission, 429 U.S. 318,

329 (1977); Northwestern States Portland Cement Co. v.

Minnesota, 358 U.S. 450, 457 (1959). This principle fol-

lows from the basic purpose of the commerce clause which

is to prohibit preferential trade areas destructive of the

free commerce anticipated by the United States Constitu-

tion. Boston Stock Exchange, 429 U.S. at 329; Dean Milk

Co. v. Madison, 340 U.S. 349, 356 (1951).

In Boston Stock Exchange the United States Supreme

Court found unconstitutional a state stock transfer tax

containing credit provisions which had the effect of dis-

criminating against interstate commerce to the direct

commercial advantage of local business. The transfer tax

was imposed if any one of five events (sale, transfer,

delivery, etc.) occurred within the state. The rate of tax

was based upon the price of the security. The total tax was

determined by the number of shares involved in the tax-

able event. The imposition of the tax itself was found to be

constitutional. However, the credit structure of the tax

was found to be unconstitutional. The credit amendments

to the tax resulted in a scheme in which intrastate sales

received a preferential fifty percent reduction in the rate

of tax imposed and were given a maximum tax ceiling of

$350. Out-of-state sales, however, were subject to the full

tax rate without any ceiling. Because it imposed a greater

tax liability on out-of-state sales than on in-state sales, the

New York transfer tax fell “short of the substantially

evenhanded treatment demanded by the [c]lommerce

(cjlause.” 429 U.S. at 382.

Another tax statute whose discriminatory credits and

exemptions provided the basis for a finding of unconstitu-

—__- + - — -_ - a oe - - Sse ss -sssessheeessesn

A-11

tionality was the Louisiana statute reviewed in Maryland

v. Louisiana, 451 U.S. 725 (1981). There, a tax was im-

posed on certain uses of natural gas coming into the state

The tax was imposed to equalize competition between

locally produced gas subject to the state’s severance tax

and gas coming into the state from the outer continental

shelf which was free of the severance tax. The use tax

provided an exemption for gas consumed within the state.

It also provided a tax credit against severance taxes for all

use taxes paid, thereby encouraging investment in local

mineral exploration and development and discouraging

investment and development of the outer continental

shelf and other states. The Court found the statute uncon-

stitutional in light of the descriminatory effect produced

by the pattern of credits and exemptions which violated

the principle of equality. 451 U.S. at 759.

The circuit court here found that “the tax is on fuel

purchased in the state and all consumers are taxed equal-

ly” and thus concluded that there is no burden on inter-

state commerce similar to that found in Maryland v.

Louisiana. The court misconstrued the nature of the

discrimination worked against interstate commerce by

the corporate tax credit. The question is not one of

whether Florida may impose this tax on fuel purchased in

Florida for use in interstate commerce. Rather the issue

is whether the tax with its attendant credit provision

produces a discriminatory effect on interstate commerce.

The credit provision of chapter 83-3 clearly discriminates

against interstate commerce because the corporate tax

credit provides a direct commercial advantage to Florida-

based air common carriers over non-Florida-based car-

riers.

The circuit court also found Boston Stock Exchange

inapplicable stating that, in the present case, “the legisla-

A-12

ture is not trying to tax any out-of-state transactions.”

The circuit court misconstrued the holding in Boston

Stock Exchange. The United States Supreme Court in

Boston Stock Exchange was not concerned with whether

the transaction occurred in New York or outside the

state, but whether the credit structure of the tax favored

in-state business and discriminated against interstate

commerce.

The circuit court also relied on Archer Daniels Mid-

lund Co. v. State, 315 N.W.2d 597 (Minn. 1982). In Archer

Daniels the Supreme Court of Minnesota struck down a

tax credit statute similar to the Florida-based tax credit

provided in chapter 83-3. Minnesota imposed an excise

tax of thirteen cents per gallon on all gasoline sold in the

state including gasohol. The taxing statute was amended

in 1980 to provide a four cents per gallon partial exemp-

tion for gasohol made from Minnesota farm products and

blended with alcohol distilled in Minnesota. A non-resi-

dent alcohol producer challenged the constitutionality of

this statute alleging that the higher taxes imposed on non-

resident producers discriminated against interstate com-

merce. The court four.! that the exemption violated the

commerce clause noting that the act attempted to unfairly

preserve local markets for local interests by conferring an

artificial economic advantage to local interests under the

state’s taxing power. /d. at 599. The circuit court ruled

that Archer Daniels dealt with out-of-state production or

consumption and that chapter 83-3 in no way affects out-

of-state production or consumption. This approach again

overlooks the real issue in this case. Just as the Minnesota

statute favored in-state gasohol producers, chapter 83-3

confers an artificia! economic advantage on those inter-

state air carriers who maintain corporate or business

home offices in Florida over those competing air carriers

who base their corporate headquarters outside the state.

A-13

The circuit court continued its erroneous analysis un-

der the commerce clause by referring to Faircloth v. Mr.

Boston Distiller Corpor ation, 245 So.2d 240 (Fla. 1970),

as supporting the proposition that this Court has upheld

special tax exemptions to encourage Florida industry.

The court’s reliance on Faircloth is misplaced because that

case involved a challenge to a state excise tax based upon

equal protection and due process arguments. The com-

merce clause was not an issue in that case.

The circuit court has misconstrued the analysis neces-

sary to determine whether a statute discriminates

against interstate commerce. The test under the com-

merce clause is, as we have noted, whether the statute

discriminates against interstate commerce by providing a

direct commercial advantage to local commerce. The cor-

porate income tax credit provides a direct commercial

advantage to select Florida-based air carriers and there-

by violates the commerce clause.

In Eastern, No. 63,949 (Fla. June 14, 1984), we dis-

cussed the proper analysis to determine whether a stat-

utory provision was severable from the remainder of the

statute. We find that the corporate tax credit provision,

now section 220,189 (Florida Statutes 1983), can be log-

ically separated from the remaining valid provisions of

chapter 83-3 without hampering the legislature's intent to

provide a transportation fund for the state. Thus, we

strike that provision which extends a corporate income

tax credit to Florida-based air carriers. We believe this

will still accomplish the legislature’s primary purpose—to

tax corporations qualified to do business in Florida or

actually doing business in Florida.

Delta also challenges section 6 of the law as being a

road-user tax totally unrelated to the services provided

A-l4

by the state and thus violative of the commerce clause.

Delta states in its brief that the first gas tax and the

corresponding first four cents of the special fuel tax for-

merly imposed under chapter 206, Florida Statutes

(1981), levied an excise tax specifically on road-users.

Delta also refers to the new provision as “the new sales

tax.” However, the thrust of Delta’s agrument is that this

tax is a wser tax and, as such, fails the fourth prong of the

text enunciated in Complete Auto. Delta argues that it

and other interstate air common carriers do not use the

roads in Florida and, therefore, the measure of the tax

bears no relationship to Delta’s presence or activities in

the state.

We must disagree with Delta’s argument. First, the tax

is not a road-user tax. It is an excise tax imposed under

part II of chapter 212, which is commonly referred to as

the sales tax law of the state of Florida. The tax is imposed

on the privilege of engaging in certain businesses, includ-

ing the selling of motor fuels and special fuels in the state.

All purchasers of motor fuel or special fuel are taxed on

the incident of first withdrawal. The funds generated are

to be deposited in a state transportation fund and are not,

as Delta has asserted, to be restricted to only road use.

Our interpretation of this statute as an excise tax is

consistent with prior United States Supreme Court deci-

sions which reviewed similar statutes dealing with taxes

on fuel used by airlines.

In 1933 the United States Supreme Court was faced

with a challenge to a Tennessee statute which imposed an

excise tax on the privilege of selling, storing, or distribut-

ing gasoline within the state. Nashville, Chattanooga, &

St. Louis Railway v. Wallace, 288 U.S. 249 (1933). The

proceeds of the tax were to be used solely in the construc-

A-15

tion and maintenance of a highway system in the state.

The appellant rail carrier contended that the tax was in

effect a tax upon the use of the gasoline in appellant’

business as an interstate carrier and, thus, an unconstitu-

tional burden on interstate commerte. Jd. at 737. The

court noted that gasoline having come to rest in storage is

taxable by the state, notwithstanding its prospective use

as an instrument of interstate commerce, much the same

as a right of way, rolling stock, or other instruments of

interstate commerce are subject to local property taxes.

Accordingly, the Court stated:

[T]here can be no valid objection to the taxation of

the exercise of any right or power incident to ap-

pellant’s ownership of the gasoline, which falls short

of a tax directly imposed on its use in interstate

commerce, deemed forbidden in Helson v. Kentucky,

supra. Here the tax is imposed on the successive

exercise of two of those powers, the storage and

withdraw4l from storage of the gasoline. Both

powers are completely exercised before use of the

gasoline in interstate commerce begins. The tax im-

posed upon their exercise is therefore not one im-

posed on the use of the gasoline as an instrument of

commerce and the burden of it is too indirect and

remote from the function of interstate commerce it-

self to transgress constitutional limitations. . .

.. . {TJhe levy is a tax, not atoll or charge for use of

the highways... .

Id. at 268.

In Eastern Air Transport, Inc. v. South Carolina Tax

Commission, 285 U.S. 147 (1931), the Supreme Court

upheld a state tax on the sale of gasoline within the state.

The suit was brought by an interstate air carrier which

argued that the tax placed a direct burden on interstate

commerce. The Court found that the tax, which was de-

scribed in the statute as a license tax, was for the privilege

A-16

of carrying on the business of selling gasoline. The Court

emphasized that under the circumstances the validity of

the tax would not be affected by whether the tax was

construed to be an excise tax or a property tax. The Court

stated:

There is no substantial distinction between the

sale of gasoline that is used in an airplane in inter-

state transportation and the sale of coal for the loco-

motives of an interstate carrier, or of the locomotives

and cars themselves bought as equipment for inter-

state transportation. A non-discriminatory tax upon

local sales :n such cases has never been regar ‘ded as

imposing a direct burden upon interstate commerce

and has no greater or different effect upon that com-

merce than a general property tax to which all those

enjoying the protection of the State may be sub-

jected.

Id. at 153.

Similarly, the Court upheld a Wyoming law which

taxed all gasoline “used or sold” in the state and applied to

all gasoline imported for use upon its withdrawal from

storage tanks in Edelman v. Boeing Air Transport, Inc.,

289 U.S. 249 (1932). The Court described the tax in the

following manner:

The tax is applied to the stored gasoline as it is

withdrawn from the storage tanks at the airport and

placed in the planes. No tax is collected for gasoline

consumed in respondent’s planes either on coming

into the State or on going out. It is at the time of

withdrawal alone that “use” is measured for the pur-

poses of the tax. The stored gasoline is deemed to be

“used” within the State and therefore subject to the

tax, when it is withdrawn from the tanks... .

A State may validly tax the “use” to which gasoline

is put in withdrawing it from storage within the

State, and placing it in the tanks of the planes, not-

A-17

withstanding that its ultimate function is to generate

motive power for carrying on interstate commerce.

Such a tax cannot be distinguished from that consid-

ered and upheld in Nashville, Chattanooga & St.

Louis Ry. Co. v. Wallace, supra. There it was pointed

out that “there can be no valid objection to the taxa-

tion of the exercise of any right or power incident to

. . ownership of the gasoline which falls short of a

tax directly imposed on its use in interstate com-

merce, deemed forbidden in Helson v. Kentucky, 279

U.S. 245, 73 L. ed. 683, 49 S. Ct. 279.” As the

exercise of the powers taxed, the storage and with-

drawal from storage of the gasoline, was complete

before interstate commerce began, it was held that

the burden of the tax was too indirect and remote

from the function of interstate commerce, to trans-

gress constitutional limitations.

Id. at 252 (emphasis supplied).

The Supreme Court of the United States has stated that

the constitutional power of a state to tax does not depend

upon the enjoyment of the taxpayer of any special benefit

from the use of the funds raised by taxation. Nashville,

Chattanooga & St. Louis Railway v. Wallace, 288 U.S.

249, 269 (1933). A state is free to pursue its own fiscal

policies, “if by the practical operation of a tax the state has

exerted power in relation to opportunities which it has

given, to protection which it has afforded, to benefits

which it has conferred by the fact of being an orderly,

civilized society.” Wisconsin v. J.C. Penney Co., 311 U.S.

435, 444 (1940). See also Commonwealth Edison Co. v.

Montana, 453 U.S. 609, 625 (1981); General Motors Corp.

v. Washington, 377 U.S. 436, 440-41 (1964). The relevant

inquiry under the fourth prong of the Complete Auto test

is not, as Delta seems to suggest, the amount of the tax or

the value of the benefits allegedly bestowed as measured

by the costs the state incurs on account of the taxpayer's

activities. Commonwealth Edison, 453 U.S. at 625. The

A-18

first prong of Complete Auto clearly requires that the

interstate business (here the airlines) have a substantial

nexus with the state before any tax may be levied on it.

The fourth prong of the test is intended to impose the

additional limitation that the measure of the tax be rea-

sonably related to the extent of the contact. Jd. at 626;

Western Live Stock v. Bureau of Revenue, 303 U.S. 250,

254 (1938).

This tax is unlike a true “user fee” or user tax. Perhaps

the best illustration of a true user tax is found in Evans-

ville-Vanderburgh Airport Authority v. Delta Air Lines,

Inc., 405 U.S. 707 (1972). In Evansville-Vanderburgh the

United States Supreme Court reviewed a use tax imposed

on airlines by an Indiana municipality. All interstate air

carriers were charged a user service charge for each

enplaning passenger. The monies collected were to defray

the cost of airport construction and maintenance. The tax

was upheld and found to be fairly related to the use of the

facilities by the airlines.

The present tax is more analogous to that found in

Commonwealth Edison where the United States Su-

preme Court upheld a Montana severance tax on coal.

Coal producers challenged the tax contending that the

severance tax had a discriminatory effect on interstate

commerce since ninety percent of Montana’ coal was

shipped out-of-state and, therefore, the tax burden was

borne primarily by out-of-state consumers. The Court

found that the coal producers’ claim hinged on an inquiry

into the fourth prong of Complete Auto. First, the Court

concluded that, contrary to appeilant’s contention, the

severance tax was a general revenue tax. 453 U.S. at 621.

The Court also concluded that the fourth prong of Com-

plete Auto was satisfied by the Montana tax. The Court

stated:

A-19

Because it is measured as a percentage of the value of

the coal taken, the Montana tax is in “proper propor-

tion” to appellants’ activities within the State and,

therefore, to their “consequent enjoyment of the op-

ortunities and protections which the State has af-

orded” in connection with those activities.

Id. at 626 (citing General Motors Corp. v. Washington,

377 U.S. at 440-41).

We believe the imposition of this excise tax on the

purchase of motor fuel and special fuel in the state of

Florida is fairly related to those purchasers enjoyment of

the protections and benefits afforded by the state and the

privilege of doing business in an organized society. Delta

operates in at least nine of the major airports throughout

the state of Florida transporting persons and property

and engaging in the business of operating a commercial

airline for profit. The persons and property which are

transported through the air by airlines such as Delta do

not come to rest at the airports. Those persons and any

property generally must then use the public roads and

highways of the state in automobiles or trucks or some

other means of public transportation. We must disagree

with Delta’s contention that the tax is invalid because it is

not fairly related to the services provided by the state.

Accordingly, we affirm that portion of the circuit court's

order which upheld section 6 of the law as not being

violative of the commerce clause. But, we reverse the

circuit court’s order insofar as it upheld the corporate tax

credit to Florida-based airlines and strike that section of

chapter 83-3.

It is so ordered.

ALDERMAN, C.J., BOYD, OVERTON, McDONALD

and SHAW, JJ., Concur

A-20

NOT FINAL UNTIL TIME EXPIRES TO FILE RE-

HEARING MOTION AND, IF FILED, DETER-

MINED.

A-21

Appendix C

IN }HE CIRCUiT COURT OF THE

SECU YD JUDICIAL CIRCUIT IN AND

FOR LEON COUNTY, FLORIDA

CASE NO. 83-1106

WARDAIR CANADA (1975), Lrp.

A Corporation organized and existing under the Laws

of Canada,

Plaintiff,

vs.

STATE OF FLORIDA, DEPARTMENT OF REVENUE,

Defendant.

FINAL JUDGMENT

This cause is before the Court on final hearing on the

pleadings, evidence and arguments of counsel for the

respective parties and on the briefs of counsel for the

parties, and the Court having considered all of same and

being otherwise advised in the premises, it is

ORDERED AND ADJUDGED:

1. The Plaintiff asserts that Senate Bill No. SA, Chap-

ter 83-3, Laws of Florida, titled “an act relating to trans-

portation finance and administration”:

COUNT I: violates the Commerce Clause of the United

States Constitution,

A-22

COUNT II: violates the Equal Protection clauses of the

United States Constitution and the Constitution of the

State of Florida,

COUNT III: violates Article II], Sections 10 and 11 of

the Constitution of the State of Florida and is a special

law,

COUNT IV: is inconsistent with Non-scheduled Air

Services Agreement between the United States and Can-

ada, May 8, 1974, T.I.A.S. 7826.

2. Wardair is certified by the United States Civil Aero-

nautics Board Order 80-8-97, July 18, 1980, Docket 27817,

effective August 18, 1980.

3. The preamble to the Air Services Agreement,

T.I.A.S. 7826, states that in recognition of the geographic

situation of Canada and the United States the relationship

between the two peoples creates a unique international

civil aviation situation. To ensure “the continued develop-

ment of a system of air transport free from discriminatory

practices, based on an equitable exchange of economic

benefits to the two countries: this agreement was reached

between the two countries “to accommodate the needs of

the people of the two countries with a minimum of ar-

tificial restraint”. Article XII(1) exempts the parties

from national duties and charges on fuel. Article XIV

provides that neither party will discriminate against the

other. These provisions read together illustrate a federal

policy designed to encourage free and unencumbered air

transportation between the United States and Canada.

As this Court held in Lineas Aereas Costarricenses, S.A.

v. Department of Revenue, Case No. 83-761 (2d Cir. Fla.

June 1, 1983) when the federal policy is to exempt foreign

airlines from fuel taxes and prevent any discrimination so

as to further the free flow of international aviation, the

A-25

individual states are precluded from acting in this area

and from preventing the United States from “speaking

with one voice”, which is an inquiry which must be made

pursuant to Japan Line, Ltd. v. County of Los Angeles,

441 U.S. 434 (1979), when dealing with foreign commerce

restrictions. For the reasons stated in the Lineas Aereas

Costarricenses, supra, decision and because the language

of this Air Transport Services Agreement is basically the

same as the Agreements in that decision, this Court finds

Senate Bill 8A inconsistent with the undertakings of the

United States government in international bilateral

agreements designed to establish federal uniformity and

prevent retaliatory taxes on U.S. carriers.

4. The allegations in Courts I, II, and III were disposed

of in this Court’s decision in Delta Air Lines, Inc. v. State

of Florida, Department of Revenue, Case No. 83-761 (2d

Cir. Fla. May 23, 1983) and these allegations are likewise

disposed in this case, finding them without merit.

ACCORDINGLY, IT IS FURTHER ORDERED

AND ADJUDGED:

A. This Court finds and determines that Chapter 83-3,

Laws of Florida, also referred to as Senate Bill 8A, is a

valid enactment and is not in conflict with the Equal

Protection clauses of the United States Constitution (14th

Amendment) nor the Florida Constitution (Article I, Sec-

tion 2) nor with the Commerce Clause of the United

States Constitution (Article I, Section 8, Clause 3) for the

reasons stated in Delta Airlines, supra.

B. It is further found that Senate Bill 8A is inconsistent

with the undertakings of the United States government in

international bilateral agreement with Canada, T.I.A.S.

7826.

A-24

C. Plaintiffs Counts I, Ii, and III are hereby finally

dismissed.

D. Plaintiffs Count IV is found to be meritorious and

Plaintiff is here granted a permanent injunction against

Defendant Department of Revenue from assessing and

collecting fuel taxes pursuant to Senate Bill SA.

EK. This Court upholds the constitutionality of Senate

Bill 8A, but recognizes an exemption from the fuel tax for

Plaintiff foreign airlines who entered an executive agree-

ment with the United States prior to the enactment of this

Bill.

DONE AND ORDERED, at Tallahassee, Leon

County, Florida, this 19th day of .July, 1983.

BEN C. WILLIs, Circuit Judge

Appendix D

IN THE SECOND CIRCUIT COURT IN

| 8

AND FOR LEON COUNTY, FLORIDA

CASE NO: 83-964

LINEAS AEREAS COSTARRICENSES, S.A..,

a Costa Rican Corporation,

Plaintitt

VS.

STATE OF FLORIDA,

DEPARTMENT OF REVENUE

Defendant.

FINAL JUDGMENT

This cause is before the Court on final hearing on the

pleadings, evidence and arguments of counsel for the

respective parties and the intervenors, and on the

of counsel for the parties, and the Court having

ered all of same and being otherwise advised in the p

ises, it is

ORDERED AND ADJUDGED:

1. The Plaintiff asserts that Senate Bill No. 8-A, Chap-

ter 53-3, Laws of Florida, title “an act relating to trans-

portation finance and administration”:

COUNT I: discriminates against foreign airlines in vio-

lation of Cungress’ exclusive power over foreign com-

A-26

merce, pursuant to Article I, Section 8, Clause 3 of the

United States Constitution,

COUNT II: is inconsistent with the Air Transport Ser-

vices Agreements lawfully entered into by the President

of the United States.

COUNT III: denies foreign airlines equal protection of

the laws under the United States Constitution.

COUNT IY: violates Article I, Section 9, of the Florida

Constitution because there is no reasonable relationship

between the taxes imposed and the services provided to

foreign airlines, and

COUNT V: is a special law in violation of Sections 10

and 11 of Article III of the Constitution of the State of

Florida.

Plaintiff prays for a permanent injunction to prevent

Defendant Department of Revenue (DOR) from assessing

and collecting fuel taxes pursuant to Senate Bill 8-A.

2. In light of this Court’s recent decision in Delta Air

Lines, Inc. v. State of Florida, Department of Revenue,

Case No. 83-761, (Leon County Circuit Court—Civil Di-

vision, May 23, 1983), the assertion in Counts I, III, IV,

and IV are without merit. However, the Court finds merit

in the assertion in Count II and hereby grants a perma-

nent injunction for the reasons subsequently discussed.

This Court upholds the constitutionality of Senate Bill 8-

A but recognizes an exemption for foreign airlines based

on the bilateral agreements entered into between the

federal government and Plaintiffs and intervenors in this

case. !

‘Commercial Air Transport Agreement, January 8, 1947, United

Ecuador, T.1.A.S. 1606; Aviation Transport Services Agree-

States

A-27

DISCUSSION

The Commerce Clause of the United States Constitu-

tion, Article I, Section 8, Clause 3, vests with Congres: ai

the exclusive power to regulate foreign commerce. The

Supremacy Clause, Article 4, Section 2, states that the

Constitution and the laws made pursuant thereto are the

supreme law of the land. Therefore, when Congress tradi-

tionally regulates in a certain area such as in the present

case by extending reciprocal agreements to foreign air-

lines to “strengthen even more the cultural welfare and

economic bonds. . . and ensure continued development in

the common welfare on bases of equality and reciprocity”,

Air Transport Services Agreement with Mexico, p. 1, the

states are preempted or superseded from acting in this

area. Further, Congress has extended federal tax exemp-

tion from custom duties, inspection fees, excise taxes, and

other national duties or charges to foreign airlines “in

order to prevent discriminatory practices and to assure

equality of treatment.” Air Transport Services Agree-

ment, October 24, 1956, United States-—Colombia, T.1.A.S. 5338;

Air Transport Services Agreement, Apri] 13, 1953, United States—

Venezuela, T.1.A.S. 2813; Air Transport Services Agreement, Au-

gust 15, 1960, United States—Mexico, T.].A.S. 4675; Air Transport

Services Agreement, May 10, 1947, Unsted States—Chile, T.I.A.S.

1905; Air Transport Services Agreement, September 22, 1977

United States—Argentina, T.I.A.S. 978; Air Transport Services

Agreement, February 11, 1946, United States—United Kingdom,

r.1.4.S8. 1507; Aviation Agreement, November 22, 1961, United

States—United Kingdom, T.1.A.S. 4955; Memorandum of Consulta-

tions, April 25, 1982, United States—Brazil: Memorandum of U nder-

standing, August 17, 1979.

A-28

- .)

ment with Mexico, Article 7,2 and that the respective

authorities will attempt to facilitate maximum efficiency

“with a fair and equal opportunity” for the airlines to

operate on the designated routes. Mexico Agreement,

Aritcle 8.*

Defendant contends that the “fair and equal opportuni-

ty” refers only to routes and does not affect excise tax

imposition. Fuel is an essential factor in an airlines’ opera-

tion, and if its price is increased, the cost to fly to a specific

destination in likewise increased. This will adversely af-

fect the economic feasibility of flying to that destination.

The foreign airlines involved in this suit fly only between

their country and specified cities in the United States. In

Florida that city is M.ami. They engage in no intrastate or

interstate flights, but are confined to flights between

their country and the specific city. If a particular state

imposes a substantial increase in the cost of flying to a

certain city, it is only logical that this disadvantage would

inhibit the airlines’ desire to continue flying to that city.

Therefore, tax imposition does substantially affect the

2Similar or equa! provisions appear in the Air Transport Services

Agreements listed in footnote 1 as follows: Venezuela Agreement—-

Article 4; Chile Agreement—Article 3; Ecuador Agreement—Arti-

cle 3; United Kingdom Agreement—Article 3; Costa Rica Memoran-

dum—Article 9; Brazil Agreement—Article 9; Colombia Agree-

ment—Article 7; Argentina Agreement—Section 2(F).

3 Similar or equal provisions appear in the Air Transport Services

Agreements listed in footnote 1 as follows: Venezuela Agreement—

Annex I V(b); Chile Agreement—Annex A. A; Ecuador Agreement—

Annex Section 1.A; Costa Rica Memorandum—aArticle 95), Brazil

Memorandum—Section IX. Colombia Agreement—Article &; Ar-

gentina Agreement—Section 2(F).

A-29

established route and denies the airlines a fair and equal

opportunity to serve that route.

It is noteworthy that in the Argentina Agreement,

Section 2(F)(3), the wording is that the civil aeronautics

authorities will endeavor to ensure “exemption from

taxes”, without specifying exemption only from national

taxes. Most of the agreements specify the referral is to

national taxes and Defendant emphasizes this point in its

brief as indicating Congress intentionally did not exempt

state or local taxes. Consistent with this reasoning, how-

ever, Argentina could submit that the failure to specify

would imply the federal government would make efforts

to ensure exemption from all taxes—state, local, etc. In

fact, the memorandum agreement with Costa Rica, Arti-

cle 9(5) does in fact state that “each party shall use its best

efforts to secure for the designated airlines of the other

Party, on the basis of reciprocity, an exemption from

taxes, duties, charges and fees imposed by State, regional

and local authorities”.

In arguing that Congress’ failure to specifically exempt

state taxes in the majority of the agreements, Defendant

cites Finland v. Town of Pelham, 290 N.Y.S.2d (1966), to

demonstrate an express statement of C ongress inatreaty

as compared to the non-express statements in the present

agreements. However, it cannot be concluded that when-

ever Congress does not speak to an issue that the intent is

to affirm state regulation in that area by negative implica-

tion. Congress cannot be expected to speak to all aspects

of a given situation. The United States Supreme Court

spoke directly on this situation in Japan Line, Ltd.

County of Los Angeles, 441 U.S. 434, 451 (1979):

“The premise of Appellees’ argument is that a

State is free to impose demonstrable burdens on

commerce, so long as Congress has not preempted

A-30

the field by affirmative regulation. But it long has

been ‘accepted constitutional doctrine that the com-

merce clause, without the aid of Congressional legis-

lation. . . affords some protection from state legisla-

tion inimical to the national commerce, and that in

such cases, where Congress has not acted, this

Court, and not the state legislature, is under the

commerce clause the final arbiter of the competing

demands of state and national interests.’ " Southern

Pacific Company v. Arizona ex rel. Sullivan, 325

U.S. 761, 769 (1945).

Similarly, Defendant argues that the agreements be-

tween the United States and Costa Rica, Brazil, Trinidad

and Tobago, and Honduras are executory and require

affirmative legislative action to validate them. L’nited

States v. Postal, 589 F.2d 862 (Sth Cir. 1979). The court in

Postal states at page 875:

“it was early decided that treaties affect the munici-

pal law of the United States only when those treaties

are given effect by congressional legislation or are,

by their nature, self-executing.”

but goes on to say at page 876:

“The question whether a treaty is self-executing is a

matter of interpretation for courts when the issue

presents itself in litigation . . . and, as in the case of

all matters of interpretation, the court's attempt to

discern the intent of the parties to the agreement so

as to carry out their manifest purpose.”

The agreements involved here have no express language

that further legislation is necessary, and because, as will

be discussed, the federal government recognizes these

agreements as effective, this court discredits any argu-

ment that these agreements are ineffective because fur-

ther legislative action is needed. As Plaintiff informs the

Court, the challenged agreements are in effect pending

exchange of ratification, and the Civil Aeronautics Board

A-31

recognizes these agreements as effective by having

granted Foreign Air Carrier Permits to Costa Rica and by

recognizing the validity of the Brazil agreement in deci-

sions. The T.I.A.S. agreements 1507, 4955, and 5209

govern air transportation with Trinidad and Tobago, such

agreements made between the United Kingdon and

United States. Although no T.I.A.S. agreement exists for

Honduras, TAN, the national carrier, has been authorized

by the Civil Aeronautics Board C.A.B. Order &2-6-98

(June, 1982). Even if there were a valid distinction be-

tween the effectiveness of an executory agreement as

opposed to an executed agreement, the Court here is

examining the federal policy considerations behind the

agreements and these considerations strongly indicate

lenient tax burdens on foreign carriers. The agreements,

executory or executed, are evidence of this policy as the

Supreme Court stated in United States v. Pink, 315 U.S.

203, 231 (1941) as “superior Federal policy evidenced by a

treaty or international compact or agreement.”

Defendant argues in its brief that Plaintiff is trying to

elevate the agreements to the status of treaties and ap-

pears to discredit this eievation; yet Defendant's cites

involve treaties which implies Defendant's recognition of

that status. Pink appears *o treat international agree-

ments with the same to status of treaties, so the distinc-

tion is irrelevant.

Regarding the non-express language in the agree-

ments, Defendant cites Guarantee Trust Co. v. United

States, 304 U.S. 126, 143 (1938):

“Even the language of a treaty wherever reasonably

»0ssible will be construed so as not to override state

aws or to impair rights arising under them.”

In the present case, it seems to be the state who is trying

to override the privileges extended to foreign carriers by

A-32

the federal government, not vice versa. All the bilateral

agreements were in effect before Senate Bill 8-A, dating

back to 1947 (Ecuador), 1948 (Chile), 1953 (Venezuela)

etc. This would seem to indicate that the federal govern-

ment had established their policy of reciprocal tax exemp-

tions before the State acted. It is, therefore, the state who

is impairing a federal right, not vice versa. Defendant also

cites United States v. Pink at 230:

“It is of course true that even treaties with foreign

nations will be carefully construed so as not to dero-

gate from the authority and jurisdiction of the States

of this nation unless clearly necessary to effectuate

the national policy.”

However, Pink goes on to say at p. 231

“But state law must yield when it is inconsistent with

or impairs the policy or pr ovisions of ¥f reacy or of an

international agreement.

Using the Pink analysis, derogation from)the State's au-

thority in this case is in fact necessary because the appar-

ent policy expressed in the bilateral agreements is for

reciprocal tax advantages. This prec!udes the state from

acting in a manner to “frustrate the achievements of fed-

eral uniformity.” Japan Line, p. 450. The federal concern

for equal commercial opportunity between nations sup-

ports the policy of Congress to exempt foreign airlines

from excise taxes.

The Supreme Court of the Union States in United

States v. Belmont, 301 U.S. 324,331 (1947), has rather

clearly stated the applicable imeloie as follows:

“in the case of all international compacts and agree-

ments ... that complete power over international!

affairs is in the national government and is not and

cannot be subject to any curtailment or interference

on the part of the several states.”

\ *}*)

si *)e)

The test to be used when a state attempts to regulate

foreign commerce was articulated in Japan Line, page

451:

“an inquiry more elaborate than that mandated by

Complete Auto is necessary when a State seeks to

tax the instrumentalities of foreign, rather than of

interstate, commerce. In addition to answering the

nexus, apportionment, and nondiscrimination ques-

tions posed in Complete Auto, a court must also

inquire, first, whether the tax, notwithstanding ap-

portionment, creates a substantial risk of interna-

tional multiple taxation, and second, whether 'the tax

prevents the Federal Government from ‘speaking

with one voice’ when regulating commercial relations

with foreign governments.”

The first requirement is not a concern in the present case

because there has been no de facto showing of multiple

taxation, and, as the court stated in Moorman Manufac-

turing v. Bair, 437 U.S. 267 (1978), the court will not

invalidate a statute where the risk of multiple taxation is

merely “speculative.” It is the second requirement which

concerns the court in the present case. It is not over-

looked that in Japan Line the tax was an ad valorem levy

on certain containers used in seagoing vessels of Japan,

whereas in this case the tax is upon the withdrawing of

expendable fuel from storage. However, the principle of

both see:. applicable. The levy on the fuel, which is a sine

qua non to movement of the aircraft, seems to be within

the class of burdens which the international agreements

seek to prevent.

The United States, consisting of fifty individual state

governments united under one flag, must present a united

front when dealing in economic affairs with other nations.

Over the years the federal government has negotiated

these bilateral agreements to prevent price discrimina-

A-34

tion toward U. S. carriers in other nations, these being

reciprocal agreements. There have been continuing ef-

forts of the Civil Aeronautics Board to eliminate fuel

taxes imposed by other nations.4 Also, in 1974 Congress

enacted the International Air Transportation Fair Com-

petitive Practices Act, 88 Stat. 2102, to protect U.S.

carriers from discrimination. By allowing the fifty states

to impose individual state taxes, it would thwart the

purpose of these federal efforts and infringe on the federal

power to regulate foreign commerce.

Concern for Florida’s fuel tax was expressed by the

United States Department of State in a letter to the

Florida Department of Revenue on September 29, 1982

from Matthew V. Scocozza, Deputy Assistant Secretary

of State for Transportation and Telecommunication. This

letter stated that the United States afforded an exemp-

tion from federal taxes and this if individual states im-

posed taxes it would “frustrate the international system

of reciprocal tax exemptions and thereby significantly

increase the cost of international air transportation. After

reassurances from the Florida DOR in their letter of

October 25, 1982, that airlines continued to enjoy “gener-

ous tax advantages”, Senate Bill 8-A was enacted. The

Department of State reacted by sending their letter of

March 17, 1982 (date is a typographical error and should

read “1983”) that the Department was “surprised and

distressed” to hear of the changes in the Florida fuel tax

‘Civil Aeronautics Board (“CAB”). Fiscal Year (“FY”) 1982) 198]

Report to Congress at 94-96; CAB, FY 1980 Report to Congress at

84: CAB, FY 1979 Report to Congress at 103: CAB, FY 1978 Report

to Congress at 96; CAB, FY 1977 and Transition Quarter Report to

Congress at 106-109, 114-115; CAB, FY 1976 Report to Congress at

103-104.

as applied to airlines. Mr. Scocozza’s first letter spoke of a

“generally-accepted and long-standing international

practice of reciprocally exempting such items from taxes”.

In Japan Line at page 448 the Court talks of state taxes

in reference to the sevond “national-uniformity” require-

ment:

“a state tax on the instrumentalities of foreign com-

merce may impair federal uniformity in an area

where federal uniformity is essential. Foreign com-

merce is pre-eminently a matter of national concern.”

At page 449 of Japan Line the Court cites Michelin Tire

Corp. v. Wages, 423 U.S. 276, 285 (1976) as follows:

“the Federal Government must speak with one voice

when regulating commercial relations with foreign

governments.”

The Japan Line court then discusses several ways a state

tax may “frustrate the achievements of federal unifor-

mity”, page 450. Among these concerns are asymmetry in

international tax structure and retaliatory taxes against

American-owned instrumentalities present in other na-

tions:

“Such retaliation of necessity would be directed at

American Transportation equipment in general, not

just that of the taxing State, so that the Nation as a

whole wouid suffer.” Page 430.

ACCORDINGLY, IT IS FURTHER ORDERED AND

ADJUDGED:

A. This Court finds and determines that Chapter 83-3,

Laws of Florida, also referred to as Senate Bill 8-A, is a

valid enactment and is not in conflict with the Equal

Protection clauses of the United States Const? ution (14th

Amendment) nor the Florida Constitution (Article I, Sec-

A-36

tion 2); nor with the Commerce Clause of the United

States Constitution (Article I, Section 8, Clause 3) for the

Reasons stated in Delta Air Lines, Inc. v. State of Flor-

ida, Department of Revenue, Case No. 83-761 (Leon

County Circuit Court—Civil Division, May 23, 1983).

B. It is further found that Senate Bill 8-A is inconsis-

tent with the undertakings of the United States govern-

ment in international bilateral agreements with Plaintiff

and intervenor foreign airlines.

C. Plaintiffs Counts I, I], IV, and V are hereby dis-

missed finally.

D. Plaintiff and Intervenors are granted a permanent

injunction against Defendant DOR assessing and collect-

ing fuel taxes pursuant to Senate Bill 8-A. Count II of

Plaintiffs Complaint is meritorious.

E. This court upholds the constitutionality of Senate

Bill 8-A, but recognizes an exemption from the fuel tax for

Plaintiff and Intervenor foreign airlines who have entered

executive agreements with the United States prior to the

enactment of this Bill.

DONE AND ORDERED, at Tallahassee, Leon

County, Florida, this Ist day of June, 1983.

BEN C. WILLIs,

Circuit Judge

Appendix E

Mandate

Supreme Court of Florida

To the Honorable. the Judges of the Cireuit Court in and

for Leon County, Florida

WHEREAS. in that certain cause filed in this Court

styled.

DEPARTMENT OF REVENUE V. WARDAIR CANAD.

Lrp.

Case No. 64,036

Your Case No 35-1106

The attached Opinion Was Vr ydered on June | 1, 19s,

YOU ARE HEREBY COMMANDED that further pro-

ceedings he had aL accorda ice with said op wion, thr rile

of this ( ourt and the ~ornaeng of art State of I onda

WITNESS thre Honorable Joseph A. Boyd, Jr.

(Chiet Justice of thre S) prerne (ourt of Florida and the

Seal of said Court at Tallahassee. thre Capital, On this

12th day of September, 1984.

( /erk Of The Supreme € ont of le Onda

IN THE SUPREME COURT OF FLORIDA

WEDNESDAY, SEPTEMBER 12, 1984

DEPARTMENT O!

REVENUE,

Appellant, CASE NO. 64,036

Vs. Circuit Court Case No

83-1106 (Leon)

WARDAIR CANADA, LIp..

Appellee

On consideration of the motion for rehearing filed by

attorneys for appellee, and response thereto,

[T ISORDERED by the Court that said motion be and

the same is hereby denied.

BOYD, C.J., ADKINS, OVERTCN, ALDERMAN,

McDONALD and SHAW, J.J., Concur

By /s

DUBLIN CAUSSEAUX

Deputy Clerk

Appendix F

IN THE

Supreme Court of Florida

Case No. 64.036

NOTICE OF APPEAL TO THE SUPREME COURT OF THE

UNITED STATES

Notice is hereby given that Wardair Canada Inc.! the

appellee in this Case No. 64,036, hereby appeals to the

Supreme Court of the United States from the entire final

judgment of the Supreme Court of Florida entered in this

‘ Appellee in the above styled proceeding Wardair Canada (1975),

Ltd... changed its corporated name to its present one, Wardair Can:

da Ine., and that

corporate name C!

Civil Aeronautics Board,

lange Nas Deen approved |

AB Order 83-12-54

A-4d0

action on June 14, 1984 (motion for rehearing denied by

the Supreme Court of the State of Florida on September

12, 1984), except that part reversing the order of the

Circuit Court of the Second Judicial Circuit in and for

Leon County, Florida, which upheld the corporate tax

credit to Florida based airlines and striking that section of

Chapter 83-3, Law of Florida.

This appeal is taken pursuant to 28 U.S.C. section

1257(2).

Respectfully submitted.

WALTER D. HANSEN

BURWELL, HANSEN, MANLEY & PETEPS

1706 New Hampshire Avenue, N.W

Washington, D. C. 20009

(202) 745-0441

Attorney for Appr Iles

Dated: November 13, 1984

CERTIFICATE OF SERVICE

[ hereby certify that on this 13th day of November,

1984, copies of this Notice of Appeal were served on all

parties required to be served by first class mail, postage

prepaid, and properly addressed as follows:

Larry Levy

General Counsel

Department of Revenue

State of Florida

Room 203

Carlton Building

Tallahassee, Florida 32301

[ further certify that on this 15th day of November,

1984, copies of this Notice of Appeal were served on the

court possessed of the record, the Circuit Court of the

Second Judicial Circuit in and for Leon County, Florida,

by first class mail, postage prepaid and properly ad-

dressed as follows:

Clerk of Circuit Court

Circuit Court of the Second Judicial Circuit

In and For Leon County

P.O. Box 726

301 S. Monroe Street

Tallahassee. Florida 32302

A-42

Appendix G

Senate Bill No. 8-A

A bill to be entitled An act relating to transportation

finance and administration; adding subsections (21) and

(22) to s. 212.02, Florida Statutes, 1982 Supplement:

amending s. 212.05(1), Florida Statutes, 1982 Supple-

ment, and adding subsection (4); amending s. 212.055(1),

Florida Statutes, as amended; amending ss. 125.0165(1)

and 212.08(4), Florida Statutes, 1982 Supplement; creat-

ing part IT of chapter 212, Florida Statutes; providing for

the imposition of the tax on sales, use, and other transac-

tions on the sale of motor and special fuels; providing that

provisions which provide for the taxation of fuels used by

certain vehicles licensed as common carriers, and vessels,

engaged in interstate or foreign commerce on the basis of

the ratio of intrastate to interstate mileage do not apply to

aircraft. . .

3e It Enacted by the Legislature of the State of Flor-

ida:

Section 1. Subsections (21) and (22) are added to section

212.02, Florida Statutes, 1982 Supplement, to read:

212.02 [FLA. Stat. ANN. $212.02 (West Supp. 1984)]

Definitions.—The following terms and phrases when

used in this chapter shall have the meaning ascribed to

them in this section, except where the context clearly

indicates a different meaning:

(21) “Motor fuel” means and includes what is commonly

known and sold as gasoline and fuels containing a mixture

of gasoline and other products.

A-45

(22) “Special fuel” means any liquid product, gas prod

uct, or combination thereof used in an inter nal combus-

tion engine or motor to propel any form of vehicle, ma-

chine, or mechanical contrivance. This term shall include,

but not be limited to, all forms of fuel commonly or com-

mercially known or sold as diesel fuel, kerosene, butane

gas, or propane gas, and all other forms of liquefied petro-

leum gases.

Section 5. Subsection (4) of section 212.08, Florida Stat

utes, 1982 Supplement, is amended to read:

212.08 [FLA. Stat. ANN. §212.08 (West Suppl. 1984

Sales, rental, storage, use tax; specified exemptions.

(4) EXEMPTIONS, ITEMS BEARING OTHER EX

CISE TAXES, ETC.—Also exempt are water (not ex-

empting mineral water or carbonated water), and; all

fuels used by a public or private utility, including any

municipal corporation or rural electric cooperative asso-

ciation, in the generation of electric power or energy

for sale. Fuel other than motor fuel and special fuel is

taxable as provided in this part, except that fuel expressly

exempt herein.; and Motor fuels and special fuels on

whieh-ataxisimpesed-by-ehapter 296-and 297 are tax-

able as provided in part II. AH-etherteels-aretaxebte,

except that those used by vehicles, other than aircraft,

which are licensed as common carriers by the Interstate

Commerce Commission orby+he-Civt Aeronarties

Beard to transport persons or property in interstate or

foreign commerce and vessels used to transport persons

or property in interstate or foreign commerce are taxable

under this part only to the extent provided herein. The

basis of the tax shall be the ratio of intrastate mileage to

interstate or foreign mileage traveled by the carrier dur-

A-44

ing the previous fiscal year of the carrier, such ratio to be

determined at the close of the carrier’s fiscal year. This

ratio shall be applied each month to the total purchases

made in this state of gasoline and other fuels to establish

that portion of the total used and consumed in intrastate

movement and subject to tax under this chapter. . . .

Section 6. Part II of chapter 212, Florida Statutes,

consisting of sections 212.60, 212.65, 212.70, 212.80,

212.90, 212.91, 212.92, 212.94, and 212.95, is created to

read:

212.70 [FLA. Stat. ANN. §212.70 (West Suppl. 1984)]

Tax imposed on sale of motor fuel and special fuel; tax

upon ultimate consumer; determination by department;

notification. —

(1) A tax shall be imposed for the privilege of the sale at

retail in this state of motor fuel and special fuel.

(2a) This levy of tax is upon the ultimate retail con-

sumer. It is hereby provided as a matter of administrative

convenience and necessity that the tax shall be paid upon

the first sale or transfer of title within this state, whether

by a distributor, dealer, or retail dealer, who shall act as

agent for the state in the collection of said tax whether

such distributor, dealer, or retail deaier is the ultimate

seller or not.

(3) Prior to June 1 of each year, the department shall

determine the appropriate sales tax applicable to the

retail price per gallon of motor fuel and special fuel as

follows:

(a) The department shall determine the appropriate

total motor fuel and special fuel retail price, including an)

federal, state and local excise taxes on such fuel, for the

forthcoming 12-month period beginning June 1, by ad-

justing the initially established price by the percentage

change in the average monthly gasoline price component

of the Consumer Price Index, issued by the United States

Department of Labor, for the most recent 12-month perl-

od ending March 31, compared to said average for the 12-

month period ending March 31, 1984. However, the ad

justment provided herein shall first be made for the forth

coming 12-month period beginning June 1, 1985.

(b) The tax per gallon shall be computed as 5 percent of

said total retail price, rounded to the nearest one-tenth ol

one cent.

(c) The initially established price is $1.148 per gallon.

(4) The department shall notify each distributor, deal-

er, and retail dealer of the amount of sales tax to be

imposed and collected pursuant to this part on each gallon

of motor fuel and special fuel for the 12-month period

beginning June

Section 13. Section 206.42, Florida Statutes, Is

amended to read:

206.42 [FLa. Stat. ANN. §206.42 (West Supp. 1934)

Aviation motor fuel exempt from excise tax.—Each and

every dealer in aviation motor fuel in the state by what-

ever name designated who sells aviation motor fuel test-

ing 78 octane number (A.S.T.M. method D-357-33T) or

higher, of such quality not adapted for use in ordinary

motor vehicles, being designed for and sold and ex

clusively used for aircraft motors, is exempted from the

payment of any and all excise taxes levied by the state

A-46

upon such motor fuel, except the tax levied under part I]

of chapter 212.

Section 38. Section 339.08, Florida Statutes, 1982 Sup-

plement, is amended to read:

339.08 [FLa. Stat. ANN. §339.08 (West Supp. 1984)|

Use of gas tax revenue by department.—

(1) The department shall by regulation provide for the

expenditure of the moneys in the State Transportation

Trust Fund preeeeds-of the-fiest-easteax accruing to the

Division of Road Operations, in accordance with its an-

nual budget.

(2) Such regulations shal! provide that the use of

said moneys the-first-¢as+tax be restricted to the follow-

ing purposes:

(a) To pay administrative expenses of the department,

including administrative expenses incurred by the several

state road districts.

(b) To pay the cost of construction of the State Highway

System and State Park Road System, including amounts

necessary to match federal aid funds for such purposes.

The department shall also match federal aid highway

funds allocated to the county road and city road systems.

(c) To pay the cost of maintaining the State Highway

System and State Park Road System.

(d) To make such other lawful expenditures of the de-

partment for the payment of which no other funds may be

specified, including the payment of compensation to em-

ployees of the Division of Road Operations except those

employees whose jobs are designated as “J” in the official

Florida merit system pay plan for overtime work In excess

of 40 hours per week or other accepted standard work

week, in cash or by way of compensatory time as may be

prescribed by regulation of the department. Any other

laws in conflict herewith are hereby repealed:

(a) To pay the cost of maintaining state roads which

were classified or maintained as primary roads on January

1, 1956, and not included by the road board in the state

primary highway system when said system was re

classified by the road board in June 1956, pursuant to the

provisions of this code.

Section 64. (1) This section, sections 1 through 6. and

sections 54. 55. 56. and 62 of this act shall take effect

March 14, 1983, provided that:

(a) The tax imposed pursuant to part II of chapter 212,

Florida Statutes, as created by this ac hall

\é

ayable commencing April 1, 1985.

y

?

i

A-4s

Appendix H

RELEVANT PROVISIONS OF THE NONSCHEDULED AIR

SERVICE AGREEMENT BETWEEN THE GOVERNMENT

OF THE UNITED STATES OF AMERICA AND THE

GOVERNMENT OF CANADA, TIAS 7826, 25UST 787 (Signed

& entered into force May 8, 1974)

The Government of the United States of America and

the Government of Canada,

3eing Parties to the Convention on International Civil

Aviation opened for signature at Chicago on the seventh

day of December 1944, '

Desiring to conclude an Agreement for the purpose of

promoting nonscheduled air services,

Recognizing that the geographic situation of the two

countries, including the location of their main centers of

population, and the close relationship between their two

peoples create a situation unique in international civil

aviation,

Desiring to ensure the continued development of a sys-

tem of air transport free from discriminatory practices,

based on an equitable exchange of economic benefits to

the two countries, and able to accommodate the needs of

the people of the two countries with a minimum of ar-

tificial restraint arising from the existence of their com-

mon border,

Desiring to ensure equitable opportunity for the air

carriers of the two countries to participate in the develop-

ITITAS 1591. 3756. 5170. 6605, 6681, 7616; 61 Stat. 1180; 8 UST 179:

13 UST 2105: 19 UST 7693; 20 UST 718; 24 UST 1019. | Footnote

added by the Department of State. |

ment of this svstem and to Make optimum use of mocern

equipment,

Recognizing the existence, continuing importance, and

contribution to international aviation of the Air Transport

Agreement for vital scheduled services,? and of the

Agreement on Air Transport Preclearance of air trav-

ellers,?

Believing furthermore that the Air Transport Agree-

ment for scheduled air services between their territories

and the Agreement on Air Transport Preclearance of air

travellers should be complemented by an agreement co\

ering nonscheduled air services between their territo

ries, and

}

Desiring to ensure the orderly development of such

nonscheduled air services consistent with their interests

in maintaining a sound system of scheduled air services

between their respective territories,

Have agreed as follows:

ARTICLE I

For the purpose of this Agreement:

(a) “Agreement” shall mean this Agreement, the An-

nexes attached thereto, and any amendments thereto.

(b) “Aeronautical authorities” shall mean, in the case

of the United States of America, the Federal Aviation

Administration with respect to the technical permission

and safety standards and requirements referred to in

‘TIAS 5972, 7824; 17 UST 201 Footnote added by the Depart

ment of State. |

‘TIAS 7825 Footnote added by the Department of State. |

A-50)

Articles III and VI (2) respectively, otherwise the Civil

Aeronautics Board, and in the case of Canada, the Cana-

dian Air Transportation Administration with respect to

the technical permission and safety standards and re-

quirements referred to in Articles III and VI (2) respec-

tively, otherwise the Canadian Transport Commission, or

in both cases, any person or agency authorized to perform

the functions exercised at present by those authorities.

”

.

(c) “Carrier” or “carriers” shall mean an air carrier or

carriers designated by one Contracting Party in writing

to the other Contracting-Party to bé a carrie® which will

operate any of the nonscheduled air services provided for

in this Agreement.

(d) “Territory” in relation to a Contracting Party shall

mean the land areas under the sovereignty, jurisdiction or

trusteeship of the Contracting Party, and territorial wa-

ters adjacent thereto.

(e) “Traffic” shall mean such traffic as is specifically

provided for in the Annexes attached hereto.

(f) “Nonscheduled air service” shall mean such air ser-

vice as is specifically provided for in the Annexes attached

hereto.

(g) “Enplane” shall mean the first taking on board of

nonscheduled air service traffic on an aircraft of a carrier.

(h) “Deplane” shall mean any deboarding of non-

scheduled air service traffic from an aircraft of a carrier

but shall not include deboarding for nontraffic purposes.

(i) “Re-enplane” shall mean any taking on beard on an

aircraft of a carrier of nonscheduled air service traffic

which has enplaned and deplaned.

| |

j) “Air Transport Agreement” shall mean the Alr

Transport Agreement between the Government of the

United States of America and the Government of Canada

signed on January 17, 1966, as amended, or any agree-

ment which may supersede it.

(k) “Rates” shall be deemed to include all tariffs, tolls,

fares, and charges for transportation, and the conditions

of carriage, classifications, rules, regulations, practices,

and services related thereto.

ARTICLE II

1. Each Contracting Party grants to the other |

tracting Party the rights specified in the Annexes

tached hereto for the carriers of the other Contracting

Party to enplane, deplane, and re-enplane nonscheduled

air service traffic.

2. Nothing herein is intended to affect services not

covered by this Agreement.

ARTICLE III

1. Each Contracting Party shall have the right to des

ignate, by diplomatic note to the other Contracting Party,

a carrier or carriers to operate any of the nonschedulecd

air services provided in this Agreement.

2. Upon receipt of a designation made by one Contract-

ing Party, and upon receipt from the carrier of an applica-

tion or applications in the form and manner prescribed for

such applications, the aeronautical authorities of the

other Contracting Party shall grant to the carrier, subject

to the provisions of Articles IV and VI, and with a mini-

mum of procedural delay, appropriate licensing and tech-

A-52

nical authorization to operate the nonscheduled air ser

vices provided for in this Agreement.

3. The aeronautical authorities of one Contracting Par-

ty may require a carrier of the other Contracting Party to

satisfy them that it is qualified to fulfill the conditions

prescribed under the laws and regulations normally and

reasonably applied by them to the operation of interna-

tional commercial air services.

ARTICLE IV

1. Each Contracting Party reserves the right to with-

hold, revoke or impose conditions on the authorization

referred to in Article III with respect to a carrier of the

other Contracting Party in the event that:

(a) Such carrier fails or ceases to qualify before

the aeronautical authorities of the first Con-

tracting Party under the laws and regulations

normally applied by those authorities;

(b) Such carrier fails to comply with the laws and

regulations referred to in Article V; or

(c) The first Contracting Party is not satisfied that

substantial ownership and effective control of

such carrier are vested in the Contracting Par-

ty designating the airline or in nationals of that

Contracting Party.

2. Unless immediate action is essential to prevent fur-

ther infringement of the laws and regulations referred to

in Article V, the right to revoke the authorization pro-

vided for in paragraph 1 above shall be exercised only

after consultation with the other Contracting Party.

ARTICLE V

1. The laws and regulations of one Contracting Party

relating to the admission to or departure from its territo-

ry of aircraft engaged in international air navigation, or to

the operation and navigation of such aircraft while within

its territory, shall be applied to the aircraft of the carrier

or carriers of the other Contracting Party, and shall be

complied with by such aircraft upon entrance into, depar-

ture from, and while within the territory of the first

Contracting Party.

2. The laws, regulations, and procedures of one Con-

tracting Party relating to the admission to or departure

from its territory of passengers, baggage, cargo or crew

of aircraft, including regulations and procedures relating

to prevention of unlawful interference with aircraft, en-

try, clearance, immigration, passports, customs, and

quarantine shall be complied with by or on behalf of such

passengers, baggage, cargo or crew of the carrier or

carriers of the other Contracting Party upon entrance

into, departure from, and while within the territory of the

first Contracting Party.

ARTICLE VI

1. Certificates of airworthiness, certificates of compe-

tency, and licenses issued or rendered valid by one Con-

racting Party, and still in force, shall be recognized as

valid by the other Contracting Party for the purpese of

operating the services provided for in this Agreement,

provided that the requirements under which such certifi-

cates or licenses were issued or rendered valid are equal

to or above the minimum standards which may be estab-

lished pursuant to the Convention on International Civil

Aviation. Each Contracting Party reserves the right,

A-54

however, to refuse to recognize, for the purpose of flights

above its own territory, certificates of competency and

licenses granted to its own nationals by the other Con-

tracting Party.

2. The competent aeronautical authorities of each Con-

tracting Party may request consultations concerning the

safety standards and requirements relating to aero-

nautical facilities, operations, airmen, and aircraft, which

are maintained and administered by the other Contract-

ing Party. If, following such consultations, the competent

aeronautical authorities of either Contracting Party find

that the other Contracting Party does not effectively

maintain and administer safety standards and require-

ments in these areas that are equal to or above the mini-

mum standards which may be established pursuant to the

Convention on International Civil Aviation, they will noti-

~ fy the other Contracting Party of such findings and the

steps considered necessary to bring the safety standards

and requirements of the other Contracting Party up to

standards at least equal to the minimum standards which

may be established pursuant to said Convention, and the

other Contracting Party will take appropriate corrective

action. Each Contracting Party reserves the right to

withhold or revoke the technical authorization referred to

in Article III of this Agreement with respect to a carrier

of the other Contracting Party, or to impose conditions on

such authorization, in the event the other Contracting

Party does not take such appropriate action within a

reasonable time.

ARTICLE VII

1. Each Contracting Party shall have the right to

promulgate and enforce laws and regulations governing

nonscheduled air service. Such regulations shall be ap-

A-59

plied consistently with this Agreement and without dis-

crimination against or among carriers of the other Con-

tracting Party.

2. Where both Contracting Parties have promulgated

regulations governing the same specific type of service

covered in an Annex, the regulations of the Contracting

Party in whose territory the enplanement occurs shall

govern, unless otherwise agreed.

3. Where one Contracting Party has promulgated reg-

ulations governing a specific type of service covered in an

Annex, and the other Contracting Party has not, that

other Contracting Party shall accept the applicability of

such regulations with respect to traffic enplaned in the

territory of the first Contracting Party, unless otherwise

agreed.

4. Each Contracting Party shall have the right, if the

other Contracting Party promulgates regulations which

alter the basic character of a specific type of service cov-

ered in an Annex, to refuse to accept the applicability of

such regulations with respect to traffic enplaned in the

territory of that other Contracting Party, notwithstand-

ing the provisions of paragraphs 2 and 3 above. Such

action shall normally be taken only after consultation with

the other Contracting Party.

5. Either Contracting Party may submit to the other

Contracting Party proposed new specific types of service

for inclusion in an Annex to this Agreement. Such pro-

posals shall normally be accompanied by explanatory

statements. The other Contracting Party shall either ac-

cept the new specific types of service within sixty days of

receipt, in which case they shall be incorporated into an

Annex. to the Agreement by an exchange of diplomatic

A 56

notes, or it shall indicate a willingness to consult promptly

with the first Contracting Party.

6. Each Contracting Party may adopt and apply re

quirements relating to licensing procedures, administra-

tive matters, or the collection of information, such as

requirements concerning tariffs, traffic data, manifests,

and similar matters.

ARTICLE VIII

The volume of nonscheduicd air service traffic between

the territories of the two Contracting Parties enplaned by

the carriers of one Contracting Party in the territory of

the other Contracting Party shall be reasonably related to

the volume of such traffic enplaned by carriers of the first

Contracting Party in its own territory and deplaned or re-

enplaned in the territory of the other Contracting Party,

taking into account the nature of the respective markets.

Provisions to implement this Article shall be established

in the Annexes to this Agreement

ARTICLE IX

1. Nonscheduled air service traffic between the ter-

ritories of the two Contracting Parties transported by the

carriers of one Contracting Party shall not cause substan-

tial impairment of the scheduled air services of the sched-

uled airlines of the other Contracting Party or of the

nonscheduled air services of the carriers of the other

Contracting Party.

2. Unless otherwise agreed, neither Contracting Par-

ty may impose: (a) any requirement that prior approval be

obtained for any individual flight or series of flights by a

carrier or carriers of the other Contracting Party which

A-97

has qualified before the competent aeronautical au-

thorities of the first Contracting Party; or (b) any restric-

tions on such carrier or carriers with respect to capacity,

frequency or type of aircraft employed on nonscheduled

air services provided for by this Agreement.

ARTICLE X

If, after review over a period of time, the laws or regua-

tions of either Contracting Party or the operations by the

carrier or carriers of one Contracting Party performed

pursuant to this Agreement appear to the other Contract-

ing Party to constitute substantial impairment of the

scheduled or nonscheduled air services of the scheduled

airlines or the carriers of the other Contracting Party,

that other Contracting Party may request consultations

in accordance with Article XV.

ARTICLE XI

1. The rates to be charged by the carriers of either

Contracting Party for carriage to or from the territory of

the other Contracting Party shall be reasonable, consid-

ering all relevant factors bearing upon the economic char-

acteristics of prescribed nonscheduled air services pro-

vided for in this Agreement.

2. If the aeronautical authorities of one Contracting

Party are dissatisfied with a proposed or existing rate of a

carrier or carriers of the other Contracting Party, that

other Contracting Party shall be so informed and the

Contracting Parties shall exercise their best efforts to

resolve the matter through prior consultations. Each

Contracting Party shall retain the right to apply its laws

and regulations with respect to such rates.

A-58

)

3. The aeronautical authorities of each Contracting

Party shall exercise their best efforts to ensure that the

rates charged and collected conform to the rates filed and

in effect with each Contracting Party, and that no carrier

rebates any portion of such rates by any means, directly

or indirectly, including the payment of excessive sales

commissions to agents.

ARTICLE XII

1. Each Contracting Party shall exempt the carriers of

the other Contracting Party to the fullest extent possible

under its national law from import restrictions, customs

duties, excise taxes, inspection fees, and other national

duties and charges on fuel, lubricants, consumable tech-

nical supplies, spare parts including engines, regular

equipment, ground equipment, stores, and other items

intended for use solely in connection with the operation,

maintenance or servicing of aircraft of the carriers of the

other Contracting Party. The exemptions granted by this

paragraph shall apply to items:

(a) introduced into the territory of one Contract-

ing Party by or on behalf of the carriers of the other

Contracting Party:

(b) retained on board aircraft of the carriers of one

Contracting Party upon arriving in or leaving the

territory of the other Contracting Party;

(c) taken on board aircraft of the carriers of one

Contracting Party in the territory of the other Con-

tracting Party and intended solely for use in interna-

tional air services;

whether or not such items are consumed wholly within

the territory of the Contracting Party granting the ex-

emption.

A-59

2. The exemptions provided by this Article shall also

be available in situations where a carrier or carriers of one

Contracting Party have entered into arrangements with

one or more carriers or airlines to receive and use on loan

or on transfer in the territory of the other Contracting

Party the items specified in paragaph 1 above, provided

that each such other carrier or airline is similarly entitled

to such exemptions from the other Contracting Party.

ARTICLE NXIlIl

1. Each Contracting Party may impose or permit to be

imposed just and reasonable charges for the use of public

airports and other facilities under its control, provided

that such charges shall not be higher than the charges

imposed for the use of such airports and facilities by its

national aircraft engaged in similar international ser-

vices.

2. Neither Contracting Party shall give a preference to

its own carriers over the carriers of the other Contracting

Party in the application of its customs, immigration,

quarantine, and similar regulations or in the use of air-

ports, airways, and other facilities under its control.

ARTICLE XIV

Neither Contracting Party shall discriminate against a

carrier or among carriers of the other Contracting Party

providing the services covered by this Agreement.

ARTICLE XV

Either Contracting Party may at any time request con-

sultations on the interpretation, application or amend-

ment of this Agreement. Such consultations should

A-60

commence as soon as practicable but not later than sixty

days from the date of receipt of the request for consulta-

tions, unless otherwise agreed by the Contracting Par-

ties.

ARTICLE XVI

1. Any dispute with respect to matters covered by this

Agreement not satisfactorily resolved through consulta-

tion shall, upon request of either Contracting Party, be

submitted to arbitration in accordance with the proce-

dures set forth herein.

2. Arbitration shall be by a tribunal of three ar-

bitrators constituted as follows:

(a) One arbitrator shall be named by each Con-

tracting Party within two months of the date of

delivery by either Contracting Party to the

other of a request for arbitration. Within one

month after such period of two months, the two

arbitrators so designated shall by agreement

designate a third arbitrator, provided that such

arbitrator shall not be a national of either Con-

tracting Party.

(b) If either Contracting Party fails to designate

an arbitrator, or if the third arbitrator is not

agreed upon in accordance with subparagraph

(a) above, either Contracting Party may re-

quest the President of the Council of the Inter-

national Civil Aviation Organization to desig-

nate the necessary arbitrator or arbitrators.

3. The Contracting Parties shall use their best efforts

consistent with national law to put into effect any decision

or award of the arbitral tribunal.

A-61

1. The expenses of the arbitral tribunal, including the

fees and expenses of the arbitrators, shal | be shared

equally by the Contracting Parties.

ARTICLE XVII

Either Contracting Party may at any time notify the

other Contracting Party by diplomatic note of its inten-

tion to terminate this Agreement. Such notice shall be

sent simultaneously to the International Civil Aviation

Organization. The Agreement shall terminate one year

after the date of receipt of the notice of intention to termi-

nate, unless by agreement between the Contracting Par-

ties such notice is withdrawn before the expiration of that

time.

ARTICLE XVIII

This Agreement shall come into force on the day it is

signed.

SPECIFIED RIGHTS

I. Definitions

For the purpose of providing the services covered by

this Agreement and its Annexes:

A. “Large aircraft” shall mean an aircraft having both:

(1) amaximum passenger capacity of more than 30

seats or a maximum payload capacity of more

than 7,500 pounds; and

(2) a maximum authorized take-off weight on

wheels greater than 35,000 pounds.

A-62

B. “Small aircraft” shall mean an aircraft which is not a

“large aircraft” as defined above.

C. “Maximum passenger capacity” and “maximum

payload capacity” shall have the meanings assigned to

them in regulations of the Civil Aeronautics Board.

D. “Maximum authorized take-off weight on wheels”

shall have the meaning assigned to it in regulations of the

Canadian Transport Commission.

Il. United States of America

Subject to the requirements of this and other Annexes

to the Agreement, a carrier or carriers of the United

States of America, when providing the services pre-

scribed in Annex B to this Agreement for the movement

of nonscheduled air service traffic between a point or

points in the territory of one Contracting Party and a

point or points in the territory of the other Contracting

Party (including transportation by other modes on either

an outgoing or return leg of a round-trip journey), shall be

entitled to:

A. Enplane (and subsequently deplane on return trips)

at any point or points in the territory of Canada non-

scheduled air service traffic which is to be deplaned or re-

enplaned at any point or points in the territory of the

United States.

B. Deplane or re-enplane at any point or points in the

territory of Canada nonscheduled air service traffic which

has been enplaned at any point or points in the territory of

the United States.

A-63

Ill. Canada

Subject to the requirements of this and other Annexes

to the Agreement, a carrier or carriers of Canada, when

providing the services prescribed in Annex B to this

Agreement for the movement of nonscheduled air service

traffic between a point or points in the territory of one

Contracting Party and a point or points in the territory of

the other Contracting Party (including transportation by

other modes on either an outgoing or return leg of a

round-trip journey), shall be entitled to:

A. Enplane (and subsequently deplane on return trips)

at any point or points in the territory of the United States

nonscheduled air service traffic which is to be deplaned or

re-enplaned at any point or points in the territory of

Canada.

B. Deplane or re-enplane at any point or points in the

territory of the United States nonscheduled air service

traffic which has been enplaned at any point or points in

the territory of Canada.

V. Conditions and Interpretations

A. Transportation under this Agreement of traffic hav-

ing a prior, subsequent or intervening movement by any

mode of air transportation to or from territories other

than those of the United States and Canada is prohibited,

except for passengers moving independently of any

group.

B. The performance of any otherwise authorized non-

scheduled air service by a carrier as an aircraft lessee

shall be considered as an operation under this Agree-

ment, subject to conditions which either Contracting Par-

A-64

ty may establish governing “dry” or “wet” leases. How-

ever, operations conducted by a carrier as a lessor of an

aircraft shall not be deemed to be within the scope of this

Agreement insofar as the lessor is concerned.

* * *

F. A carrier of one Contracting Party may not take on

board at one point in the territory of the other Contract-

ing Party nonscheduled air service traffic destined fer

another point or points in the territory of such other

Contracting Party. However, a carrier of one Contracting

Party may provide a stopover at any such points to:

(1) Nonscheduled air service traffic in passenger's

carried on large aircraft which has been en-

planed in the territory of the Contracting Par-

ty of which such carrier is a national and which

is moving under a contract providing for non-

scheduled air service transportation on the

same carrier to or from a point or points in the

territory of the Contracting Party of which

such carrier is a national, even if a different

aircraft is used; and... .

PRESCRIBED SERVICES

I. Definitions

For the purpose of providing the services pre-

scribed in this Annex:

A. “Nonscheduled air service” shall be limited to

“charter air service” permitted hereunder.

B. “Traffic” shall mean passengers, including

their accompanied baggage, and property, but shall

not include passengers and property moved under

contract to the military authorities of either Con-

tracting Party.

ia ntti ane eel iia

A-65

C. “Charter air service” shall mean commercial air

transportation of traffic on a time, mileage or trip basis by

a carrier or carriers, where the entire planeload capacity

of one or more aircraft has been engaged.

D. “Single Entity” shall, with respect to enplanements

in the Territory of Canada, have the meaning assigned to

“entity” in the regulations of the Canadian Transport

Commission.

EK. “Property” shall, with respect to enplanements in

the Territory of Canada, have the meaning assigned to

“goods” in the regulations of the Canadian Transport

Commission.

II. Prescribed Service Types—Large Aircraft

The following types of charter air service may be per-

formed with large aircraft for enplanements by carriers in

the territories indicated:

Types erritot

A. As set forth in Civil Aeronautics

Board Regulations

Single Entity Passenger

Single Entity Property

Pro Rata Affinity

Mixed (Entity/Pro Rata) United States of Ame

Inclusive Tour

Study Group

Overseas Military Personne!

Travel Group

NOTE: The same aircraft may be

chartered to more than one char

terer and/or for Cransportation of

more than one group solely pur

suant to conditions set fortn in tne

regulations referred to above

A-66

Types Territory

B. As set forth in Canadian Transport

Commission Air Carrier

Regulations

Single Entity Passenger

Single Entity Property

Pro Rata Common Purpose ) Canada

Advance Booking

Inclusive Tour

NOTE: The same aircraft may be

chartered to more than one char-

terer and/or for transportation of

more than one group solely pur

suant to conditions set forth in the

regulations referred to above

IV. Conditions and Requirements

A. The aeronautical authorities of the Contracting Par-

ty in which the traffic is to be enplaned may withhold

approval with respect to charterworthiness of a flight,

series of flights or part of a series of flights proposed to be

operated by a carrier of the other Contracting Party if the

charterworthiness criteria, conditions and requirements

established by the first Contracting Party are not met,

provided, however, that:

(1) Notification of any withholding of such ap-

proval is given to the carrier within (a) 30 days

of the initial filing in the case of other than

single entity charters, or (b) 10 days of the

initial filing in the case of single entity char-

ters;

(2) Any such withholding of approval shall be

withdrawn if the charterworthiness criteria,

conditions, and requirements are subse-

quently met; and

A-67

(3) Approval may be revoked at any time if the

charterworthiness criteria, conditions. and re-

quirements are not met.

B. Charterworthiness criteria, conditions, and re-

quirements shall be applied by the aeronautical au-

thorities of the Contracting Party in which the traffic is to

be enplaned on an objective and non-discriminatory basis

to the carriers of both Contracting Parties.

A-68

Appendix I

UNITED STATES OF AMERICA

CIVIL AERONAUTICS BOARD

WASHINGTON, D.C.

Order 89-8-97

Adopted by the Civil Aeronautics Board at its office

in Washington, D.C. on the 18th day of July, 1980

Docket 27817

Application of

WARDAIR CANADA (1975), LTD.

for renewal and amendment of foreign air carrier per-

mits pursuant to section 402 of the Federal Aviation Act of

1958, as amended

ORDER

By Order 80-6-150, adopted June 24, 1980, the Board

directed all interested persons to show cause why the

Board should not, subject to the disapproval of the Presi-

dent, renew and amend two foreign air carrier permits

held by Wardair Canada (1975), Ltd. The first permit

authorizes, for an indefinite period, charter flights of

persons and their accompanied baggage, and property

between any point or points in Canada and any point or

points in the United States, subject to conditions. The

second permit authorizes, for a period of five years: (a)

circle tour charter flights originating and terminating in

Canada and serving a point or points in the United States

and a point or points in a third country; (b) charter flights

originating at a point or points in 20 named European

countries and serving any point or points in the United

States; (c) circle tour charter flights originating and ter-

minating at the same point or points in 20 named Europe-

A-69

an countries and serving a point or points in the United

States and a point or points in any country other than the

named European countries and the United States; and (d)

charter flights, other than those described above, subject

to prior Board approval. The charter authority described

in (a), (b), and (c) above is iimited to the carriage of

persons and their accompanying baggage, subject to con-

ditions.

The order directed persons objecting to the Board's

tentative findings and conclusions set forth in that order,

or to the issuance of the proposed foreign air carrier

permits, to file their objections within 21 days. In addi-

tion, the order provided that in the event no objections

were filed, all further procedural steps would be consid-

ered waive@ and the Secretary would enter an order

which (1) would make final the Board’s tentative findings

and conclusions, and (2) subject to the disapproval of the

President pursuant to section 801(a) of the Act, would

issue the foreign air carrier permits to Wardair Canada

(1975), Ltd. in the forms attached to the order.

No objections to Order 80-6-150 have been filed.

ACCORDINGLY,

1. We make final our tentative findings and conclusions

set forth in Order 80-6-150;

2. We are issuing foreign air carrier permits in the

forms attached to Wardair Canada (1975), Ltd.;

3. The authority granted in the attached permits to

operate property charters shall be limited to planeload

property charter until such time as the Board may amend

Part 214 of its Economic Regulations to include the reg-

ulation of property charters;

A-70

4. Wardair Canada (1975), Ltd. will apply to the Direc-

tor, Bureau of International Aviation for authorization to

operate each flight or series of flights under the authority

contained in paragraph D of the attached permit which

grants, among others, circle tour and Fifth Freedom

charter authority for a period of five years. The applica-

tions shall contain the information required on CAB Form

433, which may be used for this purpose. The requests for

such authority must be received five business days before

flight departure. Telephone applications may be permit-

ted on less than five days notice and approvals granted

verbally when special circumstances require this proce-

dure;

5. The public interest requires that the exercise of the

privileges granted by the attached permit which autho-

rizes charter foreign air transportation between the

United States and Canada for an indefinite period, should

be subject to the terms, conditions, and limitations con-

tained in the permit, to such other reasonable terms,

conditions, and limitations required by the public interest

as may be prescribed by the Board, and to the following

condition:

The holder shall not engage in the carriage of persons

in foreign air transportation between the United

States and Canada to or from a point in Ontario, west

of a line drawn due north from Blind River, Ontario

(46°11' North Latitude, 82°58’ West Longitude) and

extending to the border between Ontario and Man-

itoba, which is not a resort, camp, or outpost op-

erated by a person duly licensed for such purpose by

the Government of the Province of Ontario, nor the

licensed base of a Canadian charter air carrier, nor a

Canadian Customs port of entry; and is required on

each flight out of the restricted area to make a stop at

a Canadian Customs port of entry or at the licensed

A-71

base of a Canadian charter air carrier where officers

of the Ontario Ministry of Natural Resources may be

available to make such inspection as they consider

desirable; and shall have available on its aircraft for

inspection by the U.S. authorities satisfactory evi-

dence that it has complied with these conditions:

Provided, however, that the above prohibition shall

not apply to flights performed for purposes of medi-

cal evacuation, or other similar emergency situa-

tions; provided further that, when the circumstances

warrant, the Board may, upon application by the

holder, waive all or any part of these restrictions; and

provided further that the holder shall clearly notify

in writing all persons who contract for the holder's

services of the limitations imposed on its operations;!

6. The Secretary of the Board shall sign the permits on

our behalf and shall affix the seal of the Board;

7. Unless disapproved by the President of the United

States under section 801(a) of the Act, this order and the

permits attached shall become effective on the 61st day

after their submission to the President,? or upon the date

of receipt of advice from the President that he does not

intend to disapprove the Board’s order under this section,

whichever is earlier; and

8. Wardair Canada (1975), Ltd. shall be a party to the

rulemaking proceeding regarding insurance require-

ments in EDR-395, Docket 37531 and to the accompany-

ing Show Cause Order 80-1-75, Docket 37532, 45 FR 7566

(February 4, 1980).

'\See Order 79-6-83, effective June 12, 1979.

“This order was submitted to the President on July 22, 1980. We

received notification that the President did not intend to disap-

prove the board’s Order on August 18, 1930.

A-72

By the Civil Aeronautics Board:

PHYLLIS T. KAYLOR

Secretary

(SEAL)

All Members concurred.

Issued by

Order S80-8-97

A-73

UNITED STATES OF AMERICA

CIVIL AERONAUTICS BOARD

WASHINGTON, D.C.

PERMIT TO FOREIGN AIR CARRIER

(as amended)

WARDAIR CANADA (1975), LTD.

is authorized, subject to the following provisions, the

provisions of the Federal Aviation Act of 1958, as

amended, and the Board's orders, rules, and regulations,

to engage in charter foreign air transportation, as follows:

Charter flights with respect to persons and their

accompanying baggage, and property, between any

point or points in Canada and any point or points in

the United Statess.

The holder shall be authorized to perform those types of

charters originating in Canada and in the United States,

as are now, or may be, prescribed in Annex B of the

Nonscheduled Air Services Agreement between the

United States and Canada, signed May 8, 1974, including

any amendments, supplements, reservations, or super-

sessions to that Agreement.

This permit shall be subject to the following terms,

conditions and limitations:!

(1) The authority of the holder to perform United

States-originating large aircraft charter flights shall be

subject to the provisions of the Board’s Regulations gov-

erning charters. The authority of the holder to perform

'The exercise of the privileges granted by this permit is also

subject to the conditions set forth in paragraph 5 of the order

issuing this permit, which shall remain in effect until further order

of the Board.

A-74

United States-originating small aircraft charter flights

shall be limited to commercial air transportation of pas-

sengers and their accompanied baggage, and property, on

a time, mileage or trip basis, where the entire planeload

capacity of one or more aircraft has been engaged by a

person for his own use or by a person for the transporta-

tion of a group of persons and/or their property, as agent

or representative of such group.2 The authority of the

holder to perform Canadian-originating charter flights

shall be subject to the Air Carrier Regulations of the

Canadian Transport Commission. The holder shall, nev-

ertheless, not be authorized to provide charters of a type

other than as authorized by Annex B of the Nonscheduled

Air Services Agreement between the United States and

Canada, signed May 8, 1974, including any amendments,

supplements, reservations or supersessions to that

Agreement.

(2) The holder shall not engage in foreign air transpor-

tation between the United States and any point or points,

other than a point or points in Canada, or transport any

property or persons whose journey includes a prior, sub-

sequent, or intervening movement by air (except for the

movement of passengers independently of any group) to

or from a point not in the United States or Canada:

“Annex A(I)(A) of the Nonscheduled Air Service Agreement

between the United States and Canada, signed May 8, 1974,

defines a “large aircraft” as an aircraft having both: (1) a max-

imum passenger capacity (as determined by Board Regulations)

of more than 30 seats or a maximum payload capacity (as deter-

mined by Board Regulations) of more than 7,500 pounds; and (2)

a maximuin authorized takeoff weight on wheels (as determined

by Canadian Transport Commission Regulations) greater than

35,000 pounds. A “small aircraft” is defined as an aircraft which is

not a “large aircraft.”

A-75

Provided, That the Board may, upon application by the

holder, or by regulation, authorize the performance of

charters where such movements are involved.

(3) The holder shall not perform United States-originat-

ing charter flights which at the end of any calendar

quarter would result in the aggregate number of all

United States-originating charter flights performed by

the holder on or after May 8, 1974, exceeding by more

than one-third the aggregate number of all Canadian-

originating charter flights performed by the holder on or

after May 8, 1974: Provided, That the Board may author-

ize the performance of charter flights not meeting the

requirements set forth. For the purpose of making such

computation the provisions of Annex A of the Non-

scheduled Air Services Agreement between the United

States and Canada, signed May 8, 1974, including any

amendments, supplements, reservations or superses-

sions to that Agreement, shall apply.*

(4) The holder may grant stopover privileges at any

point or points in the United States only to passengers

(and their accompanied baggage) moving (a) on a Canadi-

an-originating large aircraft flight operating under a con-

tract for charter transportation to be provided solely by

the holder (even if a different aircraft is used), or (b) on a

Canadian-originating small aircraft flight operating un-

der a contract for round-trip charter transportation to be

provided solely by the holder and as to which the same

‘A charter shall be considered to originate in the United States

(or Canada) if the passengers or property are first taken on board

in that country, and shall be considered as one flight whether the

charter be one-way, round-trip, circle tour, or open jaw, even if a

separate contract is entered into for a return portion of the char-

ter trip from Canada (or the United States).

A-76

aircraft stays with the passengers throughout the jour-

ney: Provided, That the Board ma_ authorize the perfor-

mance of charters not meeting the requirements set

forth.

(5) The Board, by order or regulation and without

hearing, may require advance approval of individual char-

ter trips conducted by the holder pursuant to the authori-

ty granted by this permit, if it finds such action to be

required in the public interest.

(6) The holder shall conform to the airworthiness and

airman competency requirements prescribed by the Gov-

ernment of Canada for Canadian international air service.

(7) This permit shall be subject to all applicable provi-

sions of any treaty, convention, or agreement affecting

international air transportation now in effect, or that may

become effective during the period this permit remains in

effect, to which the United States and Canada shall be

parties. |

(8) The holder shall keep on deposit with the Board a

signed counterpart of CAB Agreement 18900, an agree-

ment relating to liability limitations of the Warsaw Con-

vention and the Hague Protocol approved by Board Order

F-23680, May 13, 1966, and a signed counterpart of any

amendment or amendments to such agreement which

may be approved by the Board and to which the holder

becomes a party.

(9) The holder (a) shall not provide foreign air transpor-

tation under this permit unless there is in effect third-

party liability insurance in the amount of $1,000,000 or

more to meet potential liability claims which may arise in

connection with its operations under this permit, and

unless there is on file with the Docket Section of the Board

A-77

a statement showing the name and address of the insur-

ance carrier and the amounts and liability limits of the

third-party liability insurance provided, and (b) shall not

provide foreign air transportation with respect to persons

unless there is in effect liability insurance sufficient to

cover the obligations assumed in CAB Agreement 18900,

and unless there is on file with the Docket Section of the

Board a statement showing the name and address of the

insurance carrier and the amounts and liability limits of

the passenger liability insurance provided. Upon request,

the Board may authorize the holder to supply the name

and address of an insurance syndicate in lieu of the names

and addresses of the member insurers. *

(10) By accepting this permit, the holder waives any

right it may possess to assert any defense of sovereign

immunity from suit in any action or proceeding instituted

against the holder in any court or other tribunal in the

United States (or its territories or possessions) based

upon any claim arising out of operations by the holder

under this permit.

(11) The exercise of the privileges granted by this per-

mit shall be subject to such other reasonable terms, condi-

tions, and limitations required by the public interest as

may be prescribed by the Board.

‘By EDR-395, January 28, 1980, Docket 37531 and 37532, 45 FR

7566, February 4, 1980, and accompanying Show Cause Order

80-1-176, the Board proposed to adopt a new Part 205 of its

Regulations to require $20,000,000 in third party liability insur-

ance, with $300,000 per person passenger and third-party liability

coverage, and to amend foreign air carrier permits to make them

subject to the new regulations. The holder will be subject to the

insurance requirements provided for in those regulations as they

may be finally adopted.

A-78

This permit shall become effective on August 18, 1980.

Unless otherwise terminated at an earlier date under the

terms of any applicable treaty, convention, or agreement,

this permit shall terminate (1) upon the effective date of

any treaty, convention, or agreement, or amendment,

which shall have the effect of eliminating the charter

foreign air transportation authorized by this permit from

the transportation which may be operated by carriers

designated by the Government of Canada (or in the event

of the elimination of any part of the charter foreign air

transportation authorized, the authority granted shall

terminate to the extent of such elimination); or (2) upon

the effect date of any permit granted by the Board to any

other carrier designated by the Government of Canada in

lieu of the holder; or (3) upon the termination or expiration

of the Nonscheduled Air Services Agreement between

the United States and Canada, signed May 8, 1974; How-

ever, clause (3) of this paragraph shall not apply if, prior to

the occurrence of the event specified in clause (3), the

operation of the foreign air transportation authorized be-

comes the subject of any treaty, convention, or agreement

to which the United States and Canada are or shall be-

come parties.

The Civil Aeronautics Board, through its Secretary,

has executed this permit and affixed its seal on July 18,

1980.

PHYLLIS T. KAYLOR

Secretary

(SEAL)

Issued by

Order 80-8-97

A-79

UNITED STATES OF AMERICA

CIVIL AERONAUTICS BOARD

WASHINGTON, D.C.

PERMIT TO FOREIGN AIR CARRIER

(as amended)

WARDAIR CANADA (1975), LTD.

is authorized, subject to the following provisions, the

provisions of the Federal Aviation Act of 1958, as

amended, and the Board's orders, rules, and regulations,

to engage in charter foreign air transportation, as follows:

A. Circle tour charter flights of persons and their

accompanying baggage which originate and

terminate at a point or points in Canada and

serve a point or points in the United States and

a point or points in any country other than

Canada and the United States.

B. Charter flights of persons and their accom-

panying baggage between a point or points in

Austria, Belgium, Cyprus, Denmark, Finland,

Federal Republic of Germany, France, Greece,

Ireland, Italy, Luxembourg, Malta, Nether-

lands, Norway, Portugal, Spain, Sweden,

Switzerland, United Kingdom of Great Britain

and Northern Ireland, and Yugoslavia, and

any point or points in the United States, lim-

ited to charter flights which originate in a

named European country.

C. Circle tour charter flights of persons and their

accompanying baggage which originate and

terminate at the same point or points in Aus-

tria, Belgium, Cyprus, Denmark, Finland,

Federal Republic of Germany, France, Greece,

Ireland, Italy, Luxembourg, Malta, Nether-

A-80

lands, Norway, Portugal, Spain, Sweden,

Switzerland, United Kingdom of Great Britain

and Northern Ireland, and Yugoslavia, and

serve a point or points in the United States and

a point or points in any country other than a

named European country and the United

States.

D. Charter flights, other than those described in

paragraphs, A, B, and C above, subject to pri-

or Board approval.

This permit shall be subject to the following terms,

cou.ditions, and limitations:

(1) With respect to the authorization contained in para-

graph A, the holder shall not engage in foreign air trans-

portation between the United States and any point or

points, other than a point or points in Canada, or trans-

port any person whose journey, by any means of transpor-

tation, includes a prior, subsequent, or intervening move-

ment to or from a point not in the United States or

Canada: Provided, That this condition shall not prevent

the holder, under the authorization contained in para-

graph A, from serving a point or points in any foreign

country between the point of origin and point of termina-

tion of the charter flight in Canada, or prevent the holder

from carrying between a point or points in Canada and a

point or points in the United States charter passengers

originating in one of the European points named in para-

graph C.

2) With respect to the authorization contained in para-

graph D, such flights must be individually approved by

the Board unless this requirement is waived by Board

order. Application shall be made as provided in the order

issuing this permit or as required by subsequent Board

order or regulation.

A-3]

(3) The authority of the holder to pertorm circle tour

charters originating in Canada shall be subject to the

terms, conditions, and limitations contained in licenses

issued by the Air Transport Committee of the Canadian

Transport Commission authorizing the performance of

such charters.

(4) The Board, by order or regulation and without

hearing, may require advance approval of individual char-

ter trips conducted by the holder pursuant to the authori-

ty granted by this permit, if it finds such action to be

required in the public interest.

(5) The authority of the holder to exercise the privileges

granted by this permit shall be subject to the provisions of

Part 214 of the Board’s Economic Regulations, other reg-

ulations of the Board governing tours or charters, and all

amendments and revisions adopted by the Board.

(6) The holder shall conform to the airworthiness and

airman competency requirements prescribed by the Gov-

ernment of Canada for Canadian international air service.

(7) The holder shall not operate any aircraft under the

authority granted by this permit unless the holder com-

plies with operational safety requirements at least equiv-

alent to Annex 6 of the Chicago Convention.

The Civil Aeronautics Board, through its Secretary,

has executed this permit and affixed its seal on July 18,

L9SO.

PHYLLIS T. KAYLOR

Secretary

(SEAL)

A-X2

Appendix J

United States Department of State Taxes

Washington, D.C. 20520

September 29, 1982

Mr. Randy Miller

Director

Department of Revenue

102 Carlton Building

Calhoun Street

Talahassee, Florida 32301

Dear Mr. Miller:

The Department of State is seeking your cooperation in

an important matter affecting U.S. international aviation

relations.

The U.S. Government exempts foreign airlines from

customs duties, taxes, fees and other national charges on

their aircraft, fuel, and aviation related materials. These

exemptions include such items as lubricants, consumable

technical supplies, spare parts (including engines) and

aircraft stores (including food, beverages and tobacco).

The United States obligation to accord these exemptions

stems from our adherence to Article 24 of the Interna-

tional Convention on Civil Aviation (Chicago, 1944) and to

the air transport agreements which the United States has

with over 70 foreign countries. In some cases, such as the

absence of a bilateral aviation agreement, exemptions are

accorded foreign airlines pursuant to a finding of reciproc-

ity.

Governments of a number of countries have recently

brought to our attention that their airlines are required to

pay state and local taxes on items for which the U.S.

Government grants an exemption from federal taxes.

A-83

Some foreign governments have questioned the appropri-

ateness of imposing these state and local taxes on foreign

air carriers in view of the generally-accepted and long-

standing international practice of reciprocally exempting

such items from taxes. A few such governments have

raised the possibility that state and local authorities in

their jurisdictions could impose similar taxes on U.S.

airlines. A proliferation of state and local taxes would

frustrate the international system of reciprocal tax ex-

emptions and thereby significantly increase the cost of

international air transportation.

We urge, therefore, that you exempt foreign air car-

riers from taxes levied in your jurisciction on items for

which the U.S. Government provides an exe! a. To

ensure that U.S. airlines enjoy reciprocal treatment

abroad, we recommend that you grant such exemptions

only to foreign airlines which demonstrate that state and

local authorities in their country exempt U.S. airlines

from taxes.

In order to respond to foreign government inquiries, we

would appreciate knowing precisely what state and local

charges you currently levy on foreign airlines. Such infor-

mation would be particularly helpful if you would indicate

whether the charges are indeed taxes or whether they are

fees for services rendered. Information concerning actual

and proposed exemptions for foreign airlines would also

be useful.

We appreciate your assistance and cooperation in this

matter.

Sincerely,

MATTHEW V. SCOCOZZA

Deputy Assistant Secretary

for Transportation and

A-S4

Telecommunication

ec: Mr. Grover C. Jones

Chief, Bureau of Aviation

Florida Dept. of Transportation

605 Suwannee St.

Mail Station 46

Talahassee, Florida 32301

Mr. Richard Judy

Director

Miami International Airport

Box 59-2075, AMF

Miami, Florida

A-&85

Appendix K

STATE OF FLORIDA

DEPARTMENT OF REVENUE

TALLAHASSEE, 32301

October 25, 1982

Mr. Matthew V. Scocozza

Deputy Assistant Secretary

for Transportation and Telecommunication

United States Department of State

Washington, D. C. 20520

Dear Mr. Scocozza:

This will answer your letter of September 29 regarding

taxation of foreign airlines.

The State of Florida recognized the importance of for-

eign airlines (and steamships) many years ago, and in

spite of increased tax rates and bases over the years, the

generous tax advantages allowed them have not changed.

Examples of these tax advantages are:

They are totally exempt from the state 8¢ motor

fuel tax (the same as domestic commercial air-

lines) on all fuel placed aboard the aircraft.

bo

The state’s sales and use tax applies only to the

ratio of miles flown in Florida to total system

miles. The very short distance out of Miami, Ft.

: Lauderdale, Tampa and Jacksonville is so mi-

nute, and since we must recognize any tax prop-

erly imposed by another state or taxing juris-

diction, the result is that practically no Florida

sales and use tax is realized from foreign car-

riers on their purchases of aircraft, parts, fuel,

certain ground and loading equipment, etc.

A-&6

This letter relates to state imposed taxes only. Any

taxes and/or fees imposed by local taxing authorities are

something we have very little knowledge of and no control

over.

We are taking the liberty of forwarding a copy of your

letter to Governor Bob Graham for review by his policy

issue staff, and if there is some particular issue not cov-

ered in this response, please let us hear from you again.

Sincerely,

RANDY MILLER

Executive Director

RM/vam

ec: Honorable Bob Graham

Mr. Grover C. Jones

Mr. Richard Judy

A-87

Appendix L

DEPARTMENT OF STATE

WASHINGTON, D.C. 20520

March 17, 1983

Mr. Randy Miller

Executive Director

Department of Revenue

State of Florida

Tallahassee, Fla. 23201

Dear Mr. Miller:

[ am writing to you to express the Department of

State's concern regarding the recent enactment of a state

tax on aviation fuel. In your letter to me of October 25,

1982, you indicated that the State of Florida“. . . recog-

nized the importance of foreign airlines many years ago

. . and that the generous tax advantages allowed them

have not changed.”

Therefore, we were surprised and distressed to hear

that the State of Florida plans to impose a 5% tax on

aviation fuel, effective April 1, 1983. I understand the tax

is to be applied to all aviation fuel sold and not only to fuel

consumed in Florida, as had previously been the case. If

imposed, this tax will cause serious foreign relations prob-

lems unless provision is made to exclude foreign airlines.

It may be possible, for example, to provide for an exemp-

tion based on reciprocity whereby foreign airlines would

be exempted from the tax if U.S. airlines operating to the

foreign airline’s home country are also exempted from

similar taxes.

We would appreciate any further information you can

give us concerning this new tax and for your comments on

my suggestion to avoid the foreign relations difficulties.

A-88

Sincerely,

MATTHEW V. Scocozza

Deputy Assistant Secretary for

Transportation and Telecommunication