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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1986
- **Citation:** 477 U.S. 1

## Text

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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-

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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
cha

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0154%3A03. Public record. Not legal advice.