Legal News

Dozens of airline executives can breathe a collective sigh of relief now that the 3rd U.S. Circuit Court of Appeals has struck down a proposed tax on every Philadelphia-bound flight that landed on a runway partially within the borders of Delaware County's Tinicum Township.

All but one of Philadelphia International Airport's four runways are at least partially located in Tinicum, and taxing agreements were in place for more than five decades that called for the city of Philadelphia to pay up to $1.1 million per year to Tinicum, the Interboro school district and Delaware County.

But when the most recent negotiations failed to lead to a new agreement in May 2007, Tinicum enacted an ordinance to begin taxing incoming flights.

The airlines cried foul and the dispute landed before the U.S. Department of Transportation, which held that the tax was prohibited under the Anti-Head Tax Act.

That ruling was appealed directly to the 3rd Circuit, which has now agreed and declared that Tinicum's proposed tax is prohibited under AHTA.

Tinicum's lawyer, Francis G.X. Pileggi of Fox Rothschild, argued that AHTA includes a savings clause that clearly authorized the township to impose a tax on aircraft "that takes off or lands in the State or political subdivision as part of the flight."

U.S. Circuit Judge Michael A. Chagares disagreed, saying "AHTA?s text unambiguously demonstrates that subsection (c) is not a savings clause for flight-related taxes."

Pileggi, in an interview, said he was disappointed in the ruling and is considering filing a petition before all 12 of the 3rd Circuit's active judges.

Tinicum cannot afford to provide police and fire services for the portion of the airport within its borders unless it has a stream of revenue to fund those services, Pileggi said.

"This is a classic David and Goliath," Pileggi said. "They're being unreasonable because they can be ... . In addition to negotiation, we've tried every legal argument that is available to us."

Attorney Mary F. Withum of the U.S. Department of Transportation's Office of General Counsel argued the case for the government. Attorney M. Roy Goldberg of Sheppard Mullin Richter & Hampton in Washington, D.C., argued the appeal for the Air Transport Association of America, an intervenor in the appeal and was joined on the brief by attorneys Vincent A. LaMonaca and J. Denny Shupe of Schnader Harrison Segal & Lewis in Philadelphia.