CALEB SALMON, Plaintiff - Appellant, v. NUTRA PHARMA CORP., Defendant - Appellee.
Before TYMKOVICH, Chief Judge, McKAY, and LUCERO, Circuit Judges.
Caleb Salmon appeals the district court's order imposing sanctions under Fed. R. Civ. P. 11. Exercising jurisdiction under 28 U.S.C. § 1291, and finding no abuse of discretion, we affirm the district court's order.
mak[ing] any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice ․ to any telephone number assigned to a ․ cellular telephone service ․ unless such call is made solely to collect a debt owed to or guaranteed by the United States.
The district court permitted Mr. Salmon to serve subpoenas in an attempt to identify the Doe defendants. Several months later, he moved to amend his complaint to dismiss the Doe defendants and name other parties as defendants. These new defendants included Steve Gewecke, MyNyloxin Group, and Nutra Pharma Corp. (NPC). Mr. Salmon alleged that NPC sells a product called Nyloxin; Mr. Gewecke is an officer of MyNyloxin Group, which is an organization of professional marketers who sell Nyloxin; and Mr. Gewecke, MyNyloxin Group, and other named defendants are part of a multi-level marketing scheme (MLM) that uses autodialing software to market NPC's products. He also alleged that Mr. Gewecke, MyNyloxin Group, and NPC were engaged in the sale of unregistered securities.
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[T]he amended complaint fails to allege that plaintiff received a call concerning the sale of any product distributed by NPC and it is not possible to infer that the alleged MLM could have been acting on behalf of NPC․ Plaintiff may have had a TCPA claim against NPC if he had received an autodialed solicitation concerning Nyloxin. However, plaintiff received calls about money-making schemes and marketing programs, and neither Nyloxin nor NPC was mentioned in the messages received by plaintiff. Plaintiff also argues that NPC and MyNyloxin sold unregistered securities called “media units” and the media units were used to fund infomercials. However, the messages received by plaintiff do not concern the sale or purchase of media units. ․ Plaintiff's allegations concerning the existence of an MLM are irrelevant to the calls he allegedly received on his cell phone, and it is not necessary to reach plaintiff's strained theory of agency liability against NPC. The amended complaint does not include any allegations that would reasonably support an inference that the calls placed by unidentified persons to plaintiff's cell phone had anything to do with NPC or its products, and plaintiff's TCPA claim against NPC should be dismissed.
Aplt. App. at 143-44 (citation omitted).
[n]o reasonable attorney would have brought a claim against NPC based on the information in plaintiff's possession, and plaintiff's claims against NPC are nothing more than an unsupported conspiracy theory based upon many layers of conjecture. The messages left on plaintiff's cell phone have no apparent connection to NPC, and there is no mention of any product sold by NPC in the messages. Even if plaintiff is correct that MyNyloxin operates an MLM, plaintiff has made no credible allegation that the MLM was responsible for the calls placed to his cell phone. The evidence provided by plaintiff does not establish any connection between the persons who allegedly called him and the MLM, and it is unclear that the alleged existence of an MLM has any relevance to plaintiff's claims against NPC.
On appeal, Mr. Salmon challenges only the district court's holding that he violated Rule 11. He argues that the district court erred in finding that his factual contentions in his claims against NPC lacked evidentiary support. He does not appeal the district court's dismissal of his claims against NPC, nor does he argue error in the amount or the nature of the sanction imposed.
NPC argues that we lack jurisdiction over Mr. Salmon's appeal because the district court's opinion and order imposing the Rule 11 sanction was not a final order under 28 U.S.C. § 1291. NPC notes that Mr. Salmon filed a notice appealing that ruling, but the district court did not enter a final order in this case until a month later. Once the district court adjudicated all remaining claims, however, Mr. Salmon's premature notice of appeal ripened. See Dodd Ins. Serv., Inc. v. Royal Ins. Co. of Am., 935 F.2d 1152, 1154 n.1 (10th Cir. 1991) (holding that premature notice appealing Rule 11 sanctions ripened after district court entered final judgment on all issues); see also Lewis v. B.F. Goodrich Co., 850 F.2d 641, 645 (10th Cir. 1988); Fed. R. App. P. 4(a)(2) (“A notice of appeal filed after the court announces a decision or order--but before the entry of the judgment or order--is treated as filed on the date of and after the entry.”). Nor was Mr. Salmon required to file a supplemental notice of appeal, as NPC contends. His appeal does not challenge an order entered subsequent to his notice of appeal. Thus, the case cited by NPC is inapposite. See E.E.O.C. v. Wal-Mart Stores, Inc., 187 F.3d 1241, 1249-50 (10th Cir. 1999) (holding that the reasoning in Lewis does not extend to “the distinct situation of a district court's decision entering a subsequent separate and collateral order regarding attorneys' fees,” id. at 1250).
Moreover, we agree with the parties that the sanctions imposed are sufficiently definite to confer appellate jurisdiction on this court. “It is well settled that a final order is one which ends the litigation and leaves nothing for the court to do but execute on the judgment.” Phelps v. Washburn Univ. of Topeka, 807 F.2d 153, 154 (10th Cir. 1986) (holding an attorney fees award is final only after the amount has been determined) (internal quotation marks omitted). Here, the district court has stayed its sanction order pending this appeal. Although the specifics of the non-monetary portion of the sanction are not yet finalized, the sanction imposed, including the monetary amount, is otherwise fully determined and is awaiting execution by the district court.
We have jurisdiction over Mr. Salmon's appeal.
“On appeal, we apply an abuse-of-discretion standard in reviewing all aspects of a district court's Rule 11 determination. A district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence.” Predator Int'l, Inc. v. Gamo Outdoor USA, Inc., 793 F.3d 1177, 1182-83 (10th Cir. 2015) (internal quotation marks omitted). This deferential standard of review “free [s] appellate courts from the duty of reweighing evidence and reconsidering facts already weighed and considered by the district court.” Dodd Ins. Serv., 935 F.2d at 1155. Thus, “[i]t is not the role of the circuit court to second-guess the district court's Rule 11 determinations,” and “we cannot reverse that court simply because, had we been the triers of fact, we might have decided the case differently.” Hughes v. City of Fort Collins, 926 F.2d 986, 989 (10th Cir. 1991).
Rule 11 provides that, by signing a pleading, an “unrepresented party certifies that to the best of [his] knowledge, information, and belief, formed after an inquiry reasonable under the circumstances ․ [that] the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery.” Fed. R. Civ. P. 11(b)(3). After finding a Rule 11 violation, the district court “may impose an appropriate sanction.” Fed. R. Civ. P. 11(c)(1). “In deciding whether to impose Rule 11 sanctions, a district court must apply an objective standard; it must determine whether a reasonable and competent attorney would believe in the merit of an argument.” Dodd Ins. Serv., 935 F.2d at 1155.
The district court found that Mr. Salmon's claims against NPC violated Rule 11. Mr. Salmon contends that his pre-filing investigation showed that: Mr. Gewecke is the owner of the domain name “totalcashcontrol.com,” which was mentioned in some of the prerecorded messages on Mr. Salmon's cell phone; Mr. Gewecke is also President of MyNyloxin Group; MyNyloxin Group is a distributor of NPC's products; and MyNyloxin Group was engaged in a massive telemarketing operation on behalf of NPC. He argues that the district court failed to consider some of his exhibits, which he says established “the crucial connection between NPC and MyNyloxin, revealed the existence of the MyNyloxin Telemarketing Division, and documented NPC's express approval and consent to the telemarketing campaign through its CEO.” Aplt. Opening Br. at 9.
Mr. Salmon's contention misconstrues the district court's decision. The court did not hold that he lacked evidence of a connection between MyNyloxin and NPC, or that his allegations regarding the existence of a MyNyloxin Group telemarketing campaign were not well-grounded in fact. It held that there was no objective evidentiary basis to conclude that a MyNyloxin Group MLM was the source of the voice messages that Mr. Salmon received. That is the “crucial connection” the court found was missing, and the documents Mr. Salmon relies on do not establish it. Rather, his exhibits indicate that Mr. Gewecke's business dealings were not limited to MyNyloxin Group. See Aplt. App. at 58 (noting Mr. Gewecke's 20-year career in “direct sales/network marketing”). Thus, although Mr. Salmon may have had an objective evidentiary basis for his claims against Mr. Gewecke based on his ownership of totalcashcontrol.com, the district court found that his claims against NPC had no basis in fact.
Mr. Salmon's other arguments likewise misunderstand the district court's order. In particular, he contends that self-identification by the caller in a prerecorded message—in this case, some indication in the message that it pertained to NPC, Nyloxin, or MyNyloxin Group—is only one way to prove the caller's identity. He maintains that “any reliable method of tracing the call to its source should suffice.” Aplt. Opening Br. at 12. But here Mr. Salmon did not use a reliable method to identify NPC as the source of the calls he received. Nor was he sanctioned because he did not have a factual basis to plead a principle/agent relationship between NPC and Mr. Gewecke or NPC and MyNyloxin. He was sanctioned because he lacked evidentiary support to allege a connection between NPC and the voice messages that he received.
The district court found that Mr. Salmon “had no objective basis to believe that NPC was responsible in any way for the calls placed to his cell phone,” and that “[n]o reasonable attorney would have brought a claim against NPC based on the information in [his] possession.” Aplt. App. at 149. We cannot say that the court abused its discretion in reaching this conclusion.
1. At the time Mr. Salmon filed his complaint he was a law student. He is now a practicing attorney in Oklahoma.
2. Mr. Salmon's amended complaint explicitly connected only one of these voice messages to a named defendant. See Aplt. App. at 72 (stating upon information and belief that a particular number mentioned in one of the messages “is used by Darick Patterson marketing a calling system to multi-level marketers”).
3. Mr. Salmon did not include in the appellants' appendix the district court's separate order imposing the sanction under Rule 11.


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Michael Kabat is a founding partner of KCO and leads the Firm’s labor and employment practice. Mike has practiced labor and employment law on behalf of management exclusively for over 25 years, representing employers on a nationwide basis in all phases of employment law and labor relations. This includes representing clients before state and federal courts, as well as before the Department of Labor, the National Labor Relations Board, the Equal Employment Opportunity Commission, and numerous other state and federal agencies.
Mike and his team have successfully handled over 100 federal and state law employment class and collective actions over the past few years, including numerous wage and hour actions. The team has obtained exceptional results in those matters, having had only one case survive class certification. This record of success has resulted in the group serving as national employment litigation counsel to one of the nation’s largest telecommunications companies, as well as southeastern employment counsel to one of the country’s largest hotel chains. Mike has been recognized as one of Georgia Trend’s “Legal Elite,” a Georgia Super Lawyer®, a “Top Rated Lawyer in Labor & Employment” and AV Preeminent® by Martindale Hubbell, and one of Georgia’s Top-Rated Lawyers by Legal Leaders.
Mike attended law school at Duke University School of Law, where he graduated in 1990. Prior to law school, Mike attended The State University of New York at Binghamton, graduating with a bachelor’s degree in political science. Mike also played on SUNY Binghamton’s lacrosse team.
In a putative nationwide wage and hour class action based on allegation that client’s rounding policy was unlawful, defeated class certification and obtained summary judgment on all claims. In a published opinion that contained favorable rulings on multiple issues of first impression, the Ninth Circuit affirmed the district court’s order in its entirety. Corbin v. Time Warner Entm’t-Advance/Newhouse P’ship, 821 F.3d 1069 (9th Cir. 2016).
Obtained summary judgment in nationwide wage and hour class action on complex issues of first impression involving proper computation of the employees’ “regular rate of pay” for purposes of calculating overtime compensation.
Obtained summary judgment for national telecommunications company on class action wage and hour and meal/rest breaks claims in federal court in California, and prevailed on appeal in matters of first impression before Ninth Circuit. Deleon v. Time Warner NY Cable LLC, No.11–56699, 510 F. App’x 545 (9th Cir. 2013).
Represented international consulting company in class action Americans with Disabilities Act and ERISA lawsuit brought by former employee. Obtained dismissal of all claims on first motion (motion to dismiss).
Craig v. BearingPoint, Inc., No.1 08-CV-2476 (N.D. Ga. Dec. 10, 2008).
Obtained summary judgment prior to class certification in matter of first impression in Sixth Circuit on behalf of Fortune 50 telecommunications provider in Fair Labor Standards Act collective action. Fields v. AOL Time Warner, Inc., 261 F. Supp. 2d 971 (W.D. Tenn. 2003).
In matter of first impression in Eleventh Circuit Court of Appeals, obtained dismissal with prejudice of class claims on behalf of international web hosting company in FLSA collective action. Prior to dismissal, obtained emergency injunction prohibiting plaintiff from contact with putative class. Thomas v. Interland, Inc., No. 1:02-CV-3175-CC, 2003 WL 24065651 (N.D. Ga. Aug. 25, 2003).
Defended national telecommunications company in FLSA “off-the-clock” work collective action in Western District of Oklahoma. Obtained nominal settlement of named plaintiff’s individual claims with dismissal of all class claims following named plaintiff’s deposition.
In defense of discrimination/retaliation lawsuit, won summary judgment on after-acquired evidence defense and on counterclaims for breach of fiduciary duty and breach of contract against former in-house attorney of northeastern power company.
Represented national insurance company in a race discrimination/retaliation claim in the Northern District of Georgia. Obtained dismissal of the race claim on a Motion for Judgment on the Pleadings and settled the retaliation claim for nuisance value.
Retained by national computer company after conditional certification of FLSA collective action. Defeated plaintiffs’ motion for final certification and obtained decertification of class in matter of first impression in District of Idaho. Smith v. Micron Electronics, Inc., Case No. CV-01-244-S-BLW (D. Idaho Feb. 4, 2005).
Represented international consulting company in FLSA class action in District of Massachusetts. Bifurcated discovery and moved for summary judgment against named plaintiff on grounds that she was exempt from overtime under FLSA administrative exemption. While motion was pending, negotiated favorable settlement of plaintiff’s individual claims and dismissal of all class claims.
Represented international office equipment company in Lanham Act false advertising and restrictive covenant case in federal court in West Virginia. Case settled with defendant agreeing to pay attorneys’ fees and abide by terms of restrictive covenant.
Defended distribution company and individual defendants against multi-state civil RICO, computer theft, non-compete and trade secret claims. Negotiated de minimis settlement resolving all claims.
Represented data storage company in trade secret/non-competition litigation in Georgia federal court. Defeated effort to obtain injunctive relief against client and negotiated favorable settlement.
Routinely defends clients in wage and hour matters before the United States Department of Labor.
Assists clients with affirmative action compliance obligations including defending clients against Office of Federal Contract Compliance Programs affirmative action audits.
Routinely represents clients before the Equal Employment Opportunity Commission and state Fair Employment Practices agencies.
Worked with clients to defeat union organizing campaigns mounted by various unions including the Communications Workers of America, the International Association of Machinists and Aerospace Workers, the International Brotherhood of Teamsters, the United Steelworkers (“Steelworkers”), the United Food and Commercial Workers (“UFCW”), the International Brotherhood of Electrical Workers, and the United Paperworkers International Union.
Led collective bargaining negotiations on behalf of numerous clients. Negotiated contracts with numerous unions including the United Autoworkers, the UFCW, the Graphic Communications International Union and the Steelworkers.
Represented clients before the National Labor Relations Board.
Defended clients in numerous labor arbitrations involving contract interpretation and employment termination issues.
Work with national hotel clients in responding to union picketing at multiple hotel properties.
Drafts and reviews employee handbooks, supervisor manuals and employment policies.
Reviews workplace employment practices and conducts workplace audits including audits of wage and hour compliance and hiring, discipline and discharge practices.
Provides training on all workplace issues including such topics as proper hiring, discipline and discharge, harassment and discrimination and FMLA and ADA compliance.
Assists companies with due diligence and other issues related to the acquisition of facilities.

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A.M. OCA I.P.I. No. 10-3492-RTJ, December 04, 2013 - NARCISO G. DULALIA Complainant, v. JUDGE AFABLE E. CAJIGAL, REGIONAL TRIAL COURT, BRANCH 96, QUEZON CITY, Respondent.
NARCISO G. DULALIA Complainant, v. JUDGE AFABLE E. CAJIGAL, REGIONAL TRIAL COURT, BRANCH 96, QUEZON CITY, Respondent.
For resolution is the administrative complaint filed by Narciso G. Dulalia (complainant) charging Judge Afable E. Cajigal (respondent judge), Regional Trial Court (RTC), Branch 96, Quezon City with gross ignorance of the law and gross inefficiency.
The complaint stemmed from Special Proceedings (SP) No. Q-01-45101, entitled In the Matter of the Joint Settlement of the Intestate Estate of Sps. Emilio Z. Dulalia and Leonarda G. Dulalia and for Issuance of Letters of Administration; SP No. Q-01-45814, entitled In the Matter of the Testate Estate of the Deceased Leonarda Garcia Dulalia; and SP No. Q-02-46327, entitled In the Matter of the Testate Estate of the Deceased Emilio Zuniga Dulalia.
Complainant is one of the petitioners in the aforecited special proceeding cases pertaining to the joint settlement of the testate and intestate estates of his parents wherein he and his sister, Gilda Dulalia-Figueroa, vied for appointment as special and regular administrator.
Complainant claimed that since respondent judge’s appointment as presiding judge of RTC, Branch 96, Quezon City, the latter has displayed gross inefficiency by failing to resolve within the prescribed period the following incidents:1 (1) Manifestation and Motion dated 18 July 2005; (2) Urgent Ex-Parte Motion to Resolve dated 29 May 2006; (3) Urgent Motion to Resolve Pending Incident (to appoint Narciso G. Dulalia as special administrator pending litigation) dated 25 April 2002; (4) Omnibus Motion dated 4 June 2007; (5) Comment/Opposition with Application for Appointment as Special Administrator dated 22 June 2007; (6) Reply to Comment/Opposition with Application for Appointment as Special Administrator dated 10 July 2007; (7) Urgent Motion to Resolve the Application of Narciso G. Dulalia as Special Administrator dated 3 April 2008; and (8) Urgent Motion for the Appointment of Narciso G. Dulalia as Interim Administrator dated 8 September 2009.
On 12 January 2010, respondent judge issued an Order2 appointing Gilda Dulalia-Figueroa as special administratrix of the estate.
Aggrieved, complainant filed on 18 February 2010 a Motion for Reconsideration. The motion was set for hearing on 25 February 2010. Complainant averred that from the filing of the motion until the filing of the instant complaint, respondent judge has yet to resolve the motion.
Complainant alleged that respondent judge is liable for gross inefficiency for his failure to resolve the pending incident within the required period. According to complainant, respondent judge not only failed to resolve the subject motion on time, he likewise ignored the basic rules and jurisprudence in the appointment of special administrators in accordance with the Supreme Court’s ruling in Co v. Rosario.3 Thus, he maintained that respondent judge should also be held liable for gross ignorance of the law.
On 27 August 2010, respondent judge was required by the Office of the Court Administrator (OCA) to comment on the verified complaint.
In his comment,4 respondent judge vehemently denied the allegations in the complaint. He averred that the complaint, which was filed by a disgruntled party who did not get a favorable action in his court, is purely personal and meant only to harass him. It has no basis in law and in fact, he claims.
Respondent judge maintained that he is not liable for gross ignorance of the law. He insisted that when he issues an order in a case, he sees to it that it is rendered within the mantle of the law and within the bounds of the rules. He alleged that he never incurred bad faith or abuse of authority in resolving legal issues filed before his sala.
He submitted that he is also not liable for gross inefficiency considering that the matter submitted before him cannot be resolved outright in view of the conflicting claims of the complainant and his siblings. The matter regarding the appointment of special administrator cannot be issued on a silver platter by the court without any hearing being conducted. He reiterated that the several motions filed by the complainant praying for his appointment as special administrator can be acted upon only after hearing the side of the other petitioners and after assessment of the fitness and qualifications of the applicants for appointment as regular administrator.
Respondent judge noted that on 12 January 2010, he issued an order appointing complainant’s sister, Gilda Dulalia-Figueroa, as special administratrix in order to preserve the estate in the meantime until a regular administrator is appointed. In view of the order issued, complainant filed a motion for reconsideration.
Earlier or on 28 January 2008, complainant filed a petition for indirect contempt against his sister Gilda Dulalia-Figueroa, allegedly for the latter’s violation of several orders of the court.
Respondent judge claimed that in the hearing of the petition for indirect contempt, he considered as incorporated the motion for reconsideration filed by complainant. But since the hearing was focused mainly on the petition for indirect contempt, the motion for reconsideration was left unresolved. He alleged that such omission was neither deliberate nor done with malice. It was only due to inadvertence that the motion was not specifically resolved. He honestly believed that preferential attention should be given to the petition for indirect contempt before the court can focus itself on the estate proceeding, particularly the appointment of a regular administrator. Due to the supervening event, the estate proceeding remained untouched.
As regards the other motions assailed in the complaint, respondent judge reported that these were already resolved in view of the appointment of the special administratrix of the estate. Hence, there is no gross inefficiency to speak of.
In its Report5 dated 18 March 2013, the OCA concluded that the charge of gross ignorance of the law should be given scant consideration considering that as complainant himself has admitted, the propriety of respondent judge’s decision was already raised in the motion for reconsideration. The OCA, however, found respondent judge liable for undue delay in resolving the motion for reconsideration filed by complainant and recommended that he be fined in the amount of Ten Thousand Pesos (P10,000.00).
Moreover, we have explained that administrative complaints against judges cannot be pursued simultaneously with the judicial remedies accorded to parties aggrieved by the erroneous orders or judgments of the former. Administrative remedies are neither alternative to judicial review nor do they cumulate thereto, where such review is still available to the aggrieved parties and the cases have not yet been resolved with finality.8 In the instant case, complainant had in fact availed of the remedy of a motion for reconsideration prior to his filing of the administrative complaint.
On the charge of undue delay in resolving the motion for reconsideration, we find merit in the explanation of respondent judge. The Court is aware of the complexity of estate proceedings and the numerous motions filed in those cases. In the absence of any evidence to show any improper motive or reason that could have compelled respondent judge to delay the resolution of the motion, the delay could only be attributed to inadvertence, especially considering the overlapping motions filed by complainant. It is significant to note the report of respondent judge that he has already resolved the other motions assailed by complainant.
Be that as it may, respondent judge admitted that he may have inadvertently failed to categorically address the motion for reconsideration. Thus, the inescapable fact is that there was delay in the resolution of the pending incident.
The rules and jurisprudence are clear on the matter of delay. Failure to decide cases and other matters within the reglementary period constitutes gross inefficiency and warrants the imposition of administrative sanction against the erring magistrate.9 The penalty to be imposed on the judge varies depending on the attending circumstances of the case. In deciding the penalty to be imposed, the Court takes into consideration, among others, the period of delay, damage suffered by the parties as a result of the delay; complexity of the case; number of years the judge has been in the service; the health and age of the judge; and the caseload of the court presided over by the judge.
In the instant case, we find it proper to mitigate the penalty to be imposed on respondent judge taking into consideration that this is his first infraction in his more than 15 years in the service; his age; the caseload of his court; and his candid admission of his infraction.
3 G.R. No. 160671, 30 April 2008, 553 SCRA 225.
6Ceniza-Layese v. Asis, A.M. No. RTJ-07-2034, 15 October 2008, 569 SCRA 51, 54-55.
7Crisologo v. Daray, A.M. No. RTJ-07-2036, 20 August 2008, 562 SCRA 382, 389.
8Rodriguez v. Judge Gatdula, 442 Phil. 307, 312 (2002).
9OCA v. Santos, A.M. No. MTJ-11-1787, 11 October 2012, 684 SCRA 1, 9; Re: Cases Submitted for Decision before Hon. Meliton G. Emuslan, Former Judge, Regional Trial Court, Branch 47, Urdaneta City, Pangasinan, A.M. No. RTJ-10-2226, 22 March 2010, 616 SCRA 280, 283; Report on the Judicial Audit Conducted in the RTC, Branch 22, Kabacan, North Cotabato, 468 Phil. 338, 345 (2004).

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Airports are eagerly anticipating new FAA reauthorization legislation to replace the FAA Modernization and Reform Act of 2012, which is due to expire on September 30, 2015. Approval of a new reauthorization bill is necessary to keep the FAA operating and funded. It is almost certain that Congress will not act by that deadline and a short-term extension of authority is most likely. (Last time, Congress enacted 23 short-term extensions before reauthorizing the FAA in 2012.) Short term extensions create funding uncertainties, especially for AIP-funded airport projects.
Increasing current PFC levels from $4.50 to $8.50 per enplaned passenger to reflect the effect of inflation and changed economic conditions since 2000 when the PFC level was last modified.
Assuring continued full funding for the Airport Improvement Program (AIP) and not allowing AIP funds to be used for FAA operations or other programs.
Reforming FAA regulation of airport economic and property development activities to allow airports to be more competitive and financially self-sustaining.
Preserving the tax-exempt status of municipal bonds and eliminating the Alternative Minimum Tax (AMT) burden on Private Activity Bonds.
In addition to those airport-specific issues, the debate on reauthorization is expected to raise broader issues of FAA reform. House Transportation and Infrastructure Committee Chair Bill Shuster (R-Pa) has announced his intent to consider wholesale reforms to the air traffic control line-of-business, including possible privatization or transfer out of the FAA, in order to expedite completion of NextGen and otherwise encourage the modernization of the air traffic control system. No date has been announced for the release of a full draft of the committee proposal.
In the months since the FAA announced the start of a rulemaking process to address the commercial use of small unmanned aircraft systems under 55 pounds (sUAS), demand for exemptions under Section 333 of the FAA Modernization and Reform Act of 2012 allowing the immediate use of sUAS has grown by leaps and bounds. In response, the FAA has streamlined the process for obtaining an exemption for commercial operations and granted hundreds of exemptions. The interim process still requires a case-by-case review of proposed operations, but relaxes previously-applicable restrictions. Until a final sUAS rule is adopted, the interim streamlined review provides the means by which persons seeking to use sUAS for commercial purposes can obtain authorization to legally operate their devices.
Stay certain distances away from airports or heliports.
One important operational change is the elimination of most geographical restrictions on COAs for sUAS. COAs issued under the interim process allow authorized operators to fly sUAS at or below 200’ above ground level anywhere in the country except in restricted airspace and other areas where the FAA prohibits sUAS operations, such as over major cities. This revised approach provides a great deal of flexibility to users such as real estate agents, property managers, surveyors, public utilities, still and video photographers, and agricultural producers to use sUAS where they wish outside of restricted areas.
Of particular interest to airport operators, exemptions granted since the spring of 2015 typically include a requirement that, if within the exclusion radii surrounding the airports, the sUAS operator must enter into an agreement with the airport for operations. As the use of sUAS proliferates, airport operators and local governments will likely face increasing pressure to regulate sUAS to address privacy, noise, land use, and other local concerns. Firm partner Allison Fultz recently published an article discussing the particular issues sUAS pose for airport operators and local governments. More information about the streamlined interim process can be found on FAA's website.
On May 7, 2015, the FAA announced that it was beginning work on a multi-year study to update the scientific evidence on the relationship between aircraft noise exposure and its effects on communities. The FAA intends to conduct surveys of residents near 20 airports across the country in order to survey public perception of aircraft noise. The FAA states that this will be the most comprehensive single aircraft noise survey conducted in the United States. The FAA did not identify the communities to be surveyed in order to preserve the scientific integrity of the surveys. The FAA expects the surveys to be completed by the end of 2016. After that, the FAA will analyze the data to assess whether to update the FAA’s guidelines and methodology for determining exposure to aircraft noise.
Since 1981, the FAA has relied on the DNL 65 decibel noise exposure level for its environmental review process and to make funding decisions for most noise projects near airports and for federal approval of noise abatement and mitigation measures pursuant to Part 150 and Part 161. The DNL metric is based on an average of all community noise over a 24-hour period, with nighttime noise weighted by a factor of 10 to account for the disruptive effects of nighttime noise. Use of the DNL 65 decibel guideline has not been without controversy, however, and a number of communities and stakeholders have urged the use of a methodology other than DNL and/or the use of a lower DNL decibel level.
A change in the current 65 DNL decibel guideline could have significant impacts on airport operators. The use of a different noise metric or DNL threshold could increase or decrease the number of homes eligible for federally funded acoustic treatment, home-buyouts, or other noise mitigation measures; could change mitigation obligations; and could change the scope of environmental reviews. In addition to federal issues, a new federal guideline, and publication of the survey results supporting the new guideline could affect airport operators under state lawsuits for inverse condemnation, trespass, and nuisance.
In November 2014, the FAA released an amendment to its Policy and Procedures Concerning the Use of Airport Revenue making explicit that the revenue use laws and policies apply to all taxes on aviation fuels, even if not imposed or collected by an airport sponsor. This amended policy is of great interest to airport sponsors because it potentially provides an important stream of additional state and local revenue to fund capital and operating needs.
The FAA has emphasized that the Policy amendment does not reflect new policy or law but is intended to remind local and state governments of their obligations under long-standing federal law. Under federal law, all taxes on aviation fuels must be used for airport purposes or state aviation programs. The clarification set forth in the amended Policy makes non-sponsors subject to revenue use obligations, and potentially subject to severe penalties for impermissible use of fuel taxes. Although the amended Policy makes clear that airport sponsors are not responsible for assuring compliance by non-sponsors—their obligations are discharged by informing non-sponsors of their obligations—the amended Policy is designed to remind many states and local governments of their accounting obligations because taxes on aviation fuels are often included in general sales or excise tax collections and are often dedicated to specific non-aeronautical uses under state law.
In response to a request for clarification from the National Association of State Aviation Officials (NASAO), the FAA provided additional guidance on the Policy. The FAA explained how it was going to interpret issues such as grandfathered taxes (those in effect before December 1987); how non-sponsors need to come into compliance with federal law; and how states can use offsets against other aviation expenses rather than directly dedicate fuel taxes to aviation.
On May 29, 2015, the FAA announced that it was replacing the separate modeling software packages used to analyze aircraft noise, fuel burn, and emissions with a single modeling software package called the Aviation Environmental Design Tool (AEDT), version 2b. AEDT replaces the separate modeling tools for aircraft noise (the Integrated Noise Model) and air emissions (the Emissions and Dispersion Modeling System). The FAA will require the use of AEDT ver. 2b to analyze aircraft noise, fuel burn, and emissions for purposes of environmental analysis under NEPA for analyses begun after May 29, 2015. Projects for which environmental analysis began before May 29 may continue to use the older modeling tools.
AEDT is not expected to result in material changes in the environmental analysis of airport projects. Additional information is available on the FAA’s AEDT Support web page.
Optimization of Airspace and Procedures in the Metroplex (NorCal OAPM). Lyons, et al. v. FAA, Case No. 14-72991 (9th Cir. Filed Sept. 26, 2014). The City of Phoenix recently challenged PBN procedures in the Phoenix airspace. City of Phoenix v. Huerta, Case No. 15-1158 (D.C. Cir. Filed June 1, 2015). Both cases are pending.
Revising the FAA Community Involvement Manual to include current requirements, best practices, lessons learned, and technological aids to improve community outreach.
Developing a community involvement plan to determine the appropriate level of community notification and involvement for each airspace matter identified in FAA Order 7400.2, Procedures for Handling Airspace Matters, Chapter 32, Appendix 10.
Developing improved procedures under FAA Order 7100.41, PBN Implementation Process, to assure that key airport staff are involved in the development of PBN procedures and community outreach strategies.
Involving airports in the Air Traffic Initial Environmental Review as part of the Order 7100.41 and Order 7400.2 process to identify potential environmental issues, potentially affected individuals, officials, community groups, or others who may be affected by, or have an interest in, the new procedures.
Forming a Noise Complaint Initiative to identify ways the FAA can address noise complaints in a clear, consistent, and repeatable manner.
The FAA did not set a schedule or specific process for implementing these changes. A copy of the FAA’s Responses to the NextGen Advisory Committee is available on RTCA's website, under General, 2015 Meetings.
On August 3, 2015 President Obama and the Environmental Protection Agency announced the Clean Power Plan Final Rule with its aim on the problem of climate change. Broadly, it aims to cut carbon emissions from power plants across the U.S. by 32% of 2005 levels by 2030. It directly targets carbon emissions from power plants, which are the largest carbon emitters. It places mandatory carbon reduction targets for each state to meet, but allows states flexibility in achieving the targets. Among various tools to meet these reduction requirements, the Clean Power Plan encourages expanded use of renewable energy and energy efficiency, and to a lesser extent efficient gas-fired energy. States can elect to address their reduction targets using an individual or a multi-state regional approach.
electricity generated by on-airport solar, co-generation and other projects more cost competitive. It is also possible that the number of proposed wind and concentrated solar energy projects near airports may increase to meet increased demand for larger-scale renewable energy.
On June 3, 2015, the FAA announced the start of a 10-15 year Runway Incursion Management (RIM) Program to develop methods to reduce the risk of runway incursions based on risk-based decision-making. The FAA is rolling out the program at a number of airports across the country with a past history of runway incursions. The program will focus on specific locations where incursions have occurred in order to identify specific risk factors that might contribute to a runway incursion and develop strategies to help airport sponsors mitigate those risks. The FAA states that the RIM Program is the next step in its long-term program to reduce airfield safety risks. Additional information is available on the FAA's website.
Organization’s (ICAO) process for setting international standards for CO2 emissions from aircraft. This announcement is the first step in the process that would allow EPA to adopt the ICAO standard when it is promulgated. The EPA will be taking comments on these proposals for 60 days. Additional information is available on EPA's website.
On August 4, 2015, the FAA announced proposed guidance on the procedures for communities affected by a new airport, a new or relocated runway, or a major runway extension to petition the FAA directly concerning the project. The proposed procedures implement 49 U.S.C. § 47106(c)(1)(A)(ii), which allows communities affected by those projects to petition the Secretary if the community does not have voting representation on the airport’s managing board. Although the petition procedure has been used only infrequently, the FAA determined that it would be helpful to provide the public with guidance on the procedures for filing a petition. In addition to setting out the procedural requirements for submitting a petition, the FAA’s proposal provides that the right of petition only applies to the community in which the project will be physically located or where there are significant impacts. The FAA is accepting comments on the proposed procedures for 60 days.
On March 9, 2015, the Supreme Court announced its decision in Perez v. Mortgage Banker’s Assn., holding that an administrative agency does not have to go through notice-and-comment rulemaking procedures to promulgate an interpretive rule that differs significantly from previous interpretations. The decision reversed nearly 20 years of precedent from the Court of Appeals for the District of Columbia under the so-called Paralyzed Veterans doctrine which held that new interpretive rules that changed the substance of prior rules were required to follow notice and comment procedures on the theory that a new interpretive rule was the same as a new substantive rule. See Paralyzed Veterans of America v. D.C. Arena L.P., 117 F. 3d 579 (D.C. Cir. 1997).
A unanimous Supreme Court overturned the Paralyzed Veterans doctrine, finding that Section 4 of the Administrative Procedures Act "specifically exempts interpretive rules from the notice-and-comment requirements that apply to legislative rules." The Court stated that the Paralyzed Veterans doctrine was a "judge-made procedural right" that was contrary to a plain reading of Section 4.
It is important to note that Mortgage Bankers declined to address the definition of "interpretive rule," leaving untouched the broad discretion of an agency to determine whether a rule is interpretive or legislative under current law.
The impact of this case on airports could be significant, and has been widely interpreted to expand executive administrative authority and reduce transparency in the rulemaking process. The FAA subjects relatively few of its actions to formal notice-and-comment rulemaking and instead prefers to issue policy documents, opinions, guidance letters, advisory circulars and internal orders which may or may not be released in draft form before becoming final. As a result of this ruling, the FAA may now significantly change its interpretation of its own regulations without a notice-and-comment period, allowing new interpretations to take effect immediately and without prior notice or vetting by stakeholders. Mortgage Bankers could allow the FAA to implement significant new policies with little or no opportunity for comment.
On July 24, 2015, the FAA released a revised version of its Order regarding Environmental Impact: Policies and Procedures, FAA Order 1050.1F, which replaces Order 1050.1E. Order 1050.1F provides direction to FAA personnel on how to prepare environmental documents in order to comply with NEPA. The FAA is also in the process of updating FAA Order 5050.4B, NEPA Implementing Instructions for Airport Actions, and the Environmental Desk Reference for Airport Actions, to reflect the changes to Order 1050.1F.
Includes sections on the environmental review appropriate for NextGen-related actions.
Clarifies the FAA’s responsibilities and the role of applicants and contractors and the role of states in the State Block Grant Program.
Clarifies which projects warrant environmental monitoring for purposes of mitigation and the type and extent of monitoring.
Adds a discussion of Environmental Management System and its application to all FAA programs, including NextGen.
Identifies actions that normally require an EA, including new actions such as the establishment or modification of an Instrument Flight Rules Military Training Route and the approval of formal and informal runway use programs that may significantly increase noise over noise sensitive areas.
Identifies actions that normally require an EIS.
Adds national marine sanctuaries and wilderness areas to the list of resources that must be considered in evaluating actions for extraordinary circumstances that would preclude the use of a CATEX for a proposed action.
Changes the CATEX process by updating the CATEX documentation requirements and adding to and amending the list of actions that ordinarily qualify for a CATEX.
Requires language in notices soliciting public comment on draft EAs and draft EISs stating that personal information provided by commentators may be made publicly available.
Explains under what conditions the FAA may terminate the preparation of an EIS.
Clarifies and expands on requirements relating to FAA adoption of other agencies’ NEPA documents.
Updates and clarifies emergency actions.
The Environmental Protection Agency (EPA) and the Army Corps of Engineers (CORPs) recently issued a new rule defining "waters of the United States" (WOTUS) under the Clean Water Act (CWA). The Rule will become effective on August 28, 2015. The purpose of the Rule is to codify historical and current agency practices in determining which waters and wetlands are regulated under the CWA by virtue of being "waters of the United States." After years of uncertainty and extensive litigation over the meaning and scope of WOTUS, the Rule is intended to establish definitive categories of WOTUS and provide clarity and predictability in determining jurisdictional waters.
The EPA and Corps state that Rule narrows the scope of the existing definition of WOTUS—and therefore limits the scope of waters regulated under the CWA—due to new explicit limitations on certain waters. The Rule establishes jurisdiction for two types of waters: 1) waters that are always jurisdictional, such as interstate waters, and 2) a narrower category of waters that require a case-specific analysis to determine whether they have a significant nexus to other WOTUS. The Rule also includes bright line, geographic boundaries for certain waters that are intended to simplify a WOTUS determination.
The Rule newly codifies multiple exclusions to CWA jurisdiction. The former rule only expressly excluded waste treatment systems and prior converted cropland from WOTUS. The new Rule adds, among others, exclusions for stormwater control features constructed in dry land, ditches that are not a relocated tributary or excavated in a tributary, and artificial lakes and ponds constructed in dry lands. Also, for the first time, groundwater is expressly excluded from the definition of WOTUS.
Whether the Rule results in significant changes in the scope of CWA jurisdiction will be played out through its practical application in the field and through litigation in the courts. 27 states filed legal challenges to the Rule within two days of the Rule’s June 29, 2015 publication in the Federal Register, and a coalition of industry and trade groups filed an additional challenge shortly thereafter.
If upheld by the courts, the new regulations should ease permitting requirements for airport projects that require construction or modification of storm water control features, retention ponds, and similar facilities that are excluded from permitting requirements under the new regulations.
Pofolk Aviation Haw., Inc. v. DOT for the State, No. 13-0003857 (Haw. June 29, 2015) (affirming state DOT’s authority to impose reasonable landing fees at federal airfields, insofar as they do not interfere with federal operations and are not considered a "rule" for the purpose of the statute).
Friends of the E. Hampton Airport, Inc. v. Town of E. Hampton, No. 15-CV-2246 (E.D.N.Y. June 26, 2015) (denying preliminary injunctions for two flight curfew ordinances, issuing preliminary injunction for once a week flight ordinance).
Citizens for Quiet Skies v. Mile-Hi Skydiving Center, Inc., No. 13-CV-31563 (Boulder Cnty, CO Dist Ct. May 21, 2015) (denying nuisance and negligence claims arising from over flights by skydiving operator).
BRRAM, Inc. v. FAA, No. 14-02686 (D.N.J. May 18, 2015) (dismissing claims that failure to conduct noise analysis for new flight routes violated NEPA).
Bakers Constr. Servs. v. Greeneville-Greene Cnty. Airport Auth., No. E2014-01395 (Tenn. Ct. App. May 14, 2015) (affirming breach of contract when airport failed to secure rights-of-way for runway expansions yet demanded work to proceed subject to Federal American Recovery and Reinvestment Act deadline).
Rogers v. Louisville-Winston County Airport Auth., 2015 U.S. Dist. LEXIS 41692 (N.D. Miss. Mar. 31, 2015) (finding qualified immunity for airport officials who were sued for violating due process and equal protection rights when denying hangar space to individual).
Airlines for America v. TSA, No. 14-1143 (D.C. Cir. March 10, 2015) (affirming TSA regulation assessing security fee on the domestic leg of a one-way, multi-leg flight that originated overseas).
National Federation of the Blind v. FAA, No. 14-00085 (D.D.C. Jan. 28, 2015) (transferring case to D.C. Circuit, which has asserted jurisdiction to review final rule as a final "order" under 49 U.S.C. §46110).
Boch v. Tomassian, No. 13 MISC 475253 (Mass. Land Ct. 2015) (affirming zoning board’s authority to regulate helicopter landings on private land even when ordinance is not approved by the state aeronautics board; furthermore helipads are not a customary accessory use to residential property).
Matter of Committee to Stop Airport Expansion v. Wilkinson, 126 A.D.3d 788 (N.Y. App. Div. 2d Dep’t 2015) (affirming Town of East Hampton’s fulfilling of state NEPA requirements for its Master Plan and Airport Layout Plan updates).
In re: Changes in Physical Structures & Use at Burlington Int’l Airport for F-35A, 2015 VT 41, (Vt. 2015) (affirming Vermont Environmental Division decision that state land-use permitting statute does not apply to the construction of a U.S. Air National Guard installation at Burlington International Airport because it is not for "state purposes").
Tulsa Airports Improvement Trust v. United States, 120 Fed. Cl. 254 (Fed. Cl. 2015) (finding no subject matter jurisdiction for dispute over FAA noise abatement grants under the Tucker Act, and transferring matter to the 10th Circuit).
Dep’t of Homeland Sec. v. MacLean, 135 S. Ct. 913 (U.S. 2015) (establishing that TSA agents may only be dismissed for disclosures prohibited by statute but not those barred in regulations).
City of Phoenix v. Huerta, No. 15-1158 (D.C. Cir. Filed June 1, 2015) (challenging RNAV procedures in Phoenix).
City of Mukilteo v. Snohomish County, No. 15-2-06802-4SEA (Wa. Super. Ct. filed March 22, 2015) (claiming county violated State Environmental Protection Act by not conducting environmental review prior to entering into lease option with developer).
Lyons, et al. v. FAA, No. 14-72991 (9th Cir. Filed Sept. 26, 2014) (challenging FAA’s approval of RNAV procedures in Northern California).
Corr v. Metropolitan Washington Airports Authority, Petition for Writ of Certiorari, No. 13-1559 (U.S. filed Jun. 11, 2014) (court has taken additional briefing on question of whether the MWAA compact violates separation of powers as an inappropriate delegation of Executive authority).
City of Santa Monica v. United States, No. 14-55583 (9th Cir. filed Apr. 11, 2014) (appeal from ruling that City’s quiet title action for property underlying airport was barred by statute of limitations).
Director’s Determination, Tropical Aviation Ground Services, Inc. v. Broward County, FL, FAA Docket No. 16-12-15 (April 27, 2015) (airport operator not in violation of Assurances 22, 23, 24, 30, 37, or 39 for refusing to renew lease with air carrier and actions to enforce local ordinances related to derelict aircraft).
Director’s Determination, Virginia One Dev., Inc. v. City of Atlanta, GA, FAA Docket No. 16-12-09 (Jan. 26, 2015) (airport operator did not violate Assurances 5, 16, 21, or 35 by not acquiring property identified on the airport Noise Exposure Map as being impacted by aircraft noise).
Final Agency Decision and Order, McDonough Properties, L.L.C. v. City of Wetumpka, AL, FAA Docket No. 16-12-11 (Jan. 15, 2015) (affirming Director’s Determination dismissing claims under Assurances 22, 23, and 24 challenging airport operator’s decision to renew leases for a one-year tier only pending possible closure of the airport).
Final Rule, Nondiscrimination on the Basis of Disability in Programs or Activities Receiving Federal Financial Assistance (U.S. Airports), 80 Fed. Reg. 46508 (Aug. 5, 2015) (amending 49 CFR Part 27 to add provisions requiring obligated airports with more than 10,000 annual enplanements to provide service animal relief areas, captioning of televisions and audio-visual displays, and passenger lifts for international flights).
Addendum to AC 150/5345-53D Airport Lighting Equipment Certification Program (July 17, 2015).
Notice, Stage 3 Compliance for Jets Weighing 75,000 Pounds or Less After December 31, 2015, 80 Fed. Reg. 42,021 (July 16, 2015).
Notice of Petition; request for comments, Petitions for Rulemaking: Aircraft Owner and Pilots Association to Amend FAA Policy Concerning Flying Club Operations at Federally-Obligated Airports, 80 Fed. Reg. 41,447 (July 15, 2015).
Errata Sheet for Advisory Circular 150/5370-10G, Standards for Specifying Construction of Airports (July 13, 2015).
Change 1, AC 150/5100-14E - Architectural, Engineering, and Planning Consultant Services for Airport Grant Projects (proposed update to procedures by which airport operators may procure professional services).
Draft AC 150/5300-19, Airport Data and Information Program (June 12, 2015).
Advisory Circular No. 150/5210-17C+, Programs for Training of Aircraft Rescue and Fireighting Personnel (June 12, 2015).
Notice of Proposed Rulemaking, Changes to the Application Requirements for Authorization to Operate in Reduced Vertical Separation Minimum Airspace, 80 Fed. Reg. 30,394 (May 28, 2015).
Direct Final Rule; Prohibition of Fixed-Wing Special Visual Flight Rules Operations at Washington-Dulles International Airport; Withdrawal, 80 Fed. Reg. 28,538 (May 19, 2015).
Notice of Proposed Rulemaking, Operation and Certification of Small Unmanned Aircraft Systems, 80 Fed. Reg. 9,544 (Feb. 23, 2015).
Final Rule, New York North Shore Helicopter Route, 80 Fed. Reg. 8,242 (Feb. 17, 2015).
Advisory Circular No. 150/5070-6B, Change 2 to Airport Master Plans (Jan. 27, 2015).
Policy, U.S. State Safety Program, National Transportation Safety Board & Federal Aviation Administration (Jan. 27, 2015).
Notice of Proposed Rulemaking, Slot Management and Transparency: LaGuardia John F. Kennedy International and Newark Liberty International Airports, 80 Fed. Reg. 1,274 (Jan. 8, 2015).
Proposed Rule, Endangered and Threatened Wildlife and Plants; Revisions to the Regulations for Petitions (May 21, 2015).
Draft Guidance: Social Cost of Carbon in NEPA (Dec. 2014).
Federal Aviation Administration, The Economic Impact of Civil Aviation on the U.S. Economy (Jan. 2015).
Aviation Security: TSA Has Taken Steps to Improve Vetting of Airport Workers, GAO-15-704T (Jun. 2015).
Airport Finance: Information on Funding Sources and Planned Capital Development, GAO-15-306 (Apr. 2015).
Airport Funding: Changes in Aviation Activity Are Reflected in Reduced Capacity Concerns, GAO-15-498T (Apr. 2015).
Commercial Aviation: Raising Passenger Facility Charges Would Increase Airport Funding, but Other Effects Less Certain, GAO-15-107 (Dec. 2014).
Synthesis 67: Airside Snow Removal Practices for Small Airports with Limited Budgets (Jul. 2015).
Synthesis 66: Lessons Learned from Airport Sustainability Plans (Jul. 2015).
Synthesis 65: Practices to Develop Effective Stakeholder Relationships at Smaller Airports (Jul. 2015).
Report 140: Guidebook on Best Practices for Airport Cybersecurity (Jul. 2015).
Report 138, Volume 1: Preventive Maintenance at General Aviation Airports Volume 1: Primer (Jul. 2015).
Report 138, Volume 2: Preventive Maintenance at General Aviation Airports Volume 2: Guidebook (Jul. 2015).
Report 136: Implementing Integrated Self-Service at Airports (Jul. 2015).
Synthesis 64: Issues Related to Accommodating Animals Traveling Through Airports (Jun. 2015).
Synthesis 62: Cell Phone Lots at Airports (Jun. 2015).
Report 139: Optimizing Airport Building Operations and Maintenance Through Retrocommissioning: A Whole-Systems Approach (Jun. 2015).
Report 137: Guidebook for Advancing Collaborative Decision Making (CDM) at Airports (Jun. 2015).
Report 135: Understanding Airport Air Quality and Public Health Studies Related to Airports (Jun. 2015).
Report 134: Applying Whole Effluent Toxicity Testing to Aircraft Deicing Runoff (Jun. 2015).
Synthesis 63: Overview of Airport Fueling Operations (May 2015).
Synthesis 61: Practices in Preserving and Developing Public-Use Seaplane Bases (May 2015).
Synthesis 60: Airport Emergency Post-Event Recovery Practices (May 2015).
Report 132: The Role of U.S. Airports in the National Economy (May 2015).
Report 131: A Guidebook for Safety Risk Management for Airports (May 2015).
Report 130: Guidebook for Airport Terminal Restroom Planning and Design (May 2015).
Legal Research Digest 24: Sovereign Immunity for Public Airport Operations (Apr. 2015).
Report 118: Integrating Aviation and Passenger Rail Planning (Apr. 2015).
Report 133: Best Practices Guidebook for Preparing Lead Emission Inventories from Piston-Powered Aircraft with the Emission Inventory Analysis Tool (Mar. 2015).
Report 129: Evaluating Methods for Counting Aircraft Operations at Non-Towered Airports (Mar. 2015).
Report 128: Alternative IT Delivery Methods and Best Practices for Small Airports (Mar. 2015).
Report 127: A Guidebook for Mitigating Disruptive WiFi Interference at Airports (Mar. 2015).
Report 124: Airport Parking Garage Lighting Solutions (Mar. 2015).
Legal Research Digest 23: A Guide for Compliance with Grant Agreement Obligations to Provide Reasonable Access to an AIP-Funded Public Use General Aviation Airport (Feb. 2015).
Report 126: A Guidebook for Increasing Diverse and Small Business Participation in Airport Business Opportunities (Jan. 2015).
Report 125: Balancing Airport Stormwater and Bird Hazard Management (Jan. 2015).
Report 123: A Guidebook for Airport Winter Operations (Jan. 2015).
Report 122: Innovative Airport Responses to Threatened and Endangered Species (Jan. 2015).


1. "Obsolescence" may arise from changes in the art, shifting of business centers, loss of trade, inadequacy, supersession, prohibitory laws and other things which, apart from physical deterioration, operate to cause plant elements, or the plant as a whole, to suffer diminution in value. P. 284 U. S. 516.
been borne by the taxpayer, but not again including any amount otherwise allowed by that or previous Acts as a deduction in computing net income.
(1) Subsection (8) does not exclude allowance for obsolescence of buildings erected before April 6, 1917, which were used to produce munitions for the war. P. 284 U. S. 516.
(2) "Obsolescence" and "amortization," as used in the Act, are not synonymous. Id.
(3) The context and legislative history show that subsection (7) was intended to establish a general rule allowing for obsolescence, etc., and subsection (8) was to authorize, in a limited class of cases and, under special circumstances, the amortization of certain costs by deductions not duplicating any other allowed by that or previous Acts. P. 284 U. S. 517.
3. Buildings erected by an ammunition company in 1914 as an extension of its plant on leased land, for the purpose of making ammunition for the World War, and which were so used until the Armistice, thereupon lost their use in the company's business, so that their remaining value to the company was in the nature of salvage. Held that the depreciated cost, less the value of the right to use the buildings after 1918 until the expiration of the lease, should be taken into account in determining the company's 1918 income and profits taxes. P. 284 U. S. 517.
4. Provisions in contracts for production of war munitions for the United States, whereby the Government might stop further production upon the termination of the war and must then reimburse the manufacturer for the cost of materials purchased by it for the performance of the contracts and then on hand, held to have been superseded by another arrangement for suspension of operations and for settlements through further negotiations. P. 284 U. S. 518.
5. An ammunition company, at the close of 1918, had on hand materials purchased for performance of government contracts, but for which the Government was not bound to pay and which were inventoried at market value, below cost. Held that, in determining the company's 1918 income and profits taxes, this inventory value should be used, and not a higher value which the company received from the government under settlements in later years. P. 520.
6. Amounts in excess of the inventory value of one year which are realized from sales in subsequent years are attributable to the years in which they were realized, since gains and losses must be accounted for in the years in which they are realized and the purpose of inventories is to assign to each period its profits and losses. P. 284 U. S. 520.
Certiorari to review a judgment rejecting parts of a claim made on account of an overpayment of income and profits taxes.
of peace. It carried on at Lowell, Massachusetts, principally in buildings rented from a power company. During the years 1911 to 1914, inclusive, its business was relatively small, and not profitable. In 1914, it commenced making ammunition for use in the war and, for the purpose of continuing that business while the war should last, it constructed new buildings upon the power company's land at a cost of $802,499.49 pursuant to an agreement that it should have the right to use them rent free until December 31, 1924, and then hand them over to the power company. Until the armistice, at first for foreign governments and later for our own, it had orders, and used all the buildings up to their capacity in the manufacture of war ammunition. There was no way of knowing when this demand would cease.
Petitioner did not expect to make military ammunition after conflict ended, and in fact received no orders after the armistice. It continued the commercial ammunition business, but made no profit in any year from 1918 to the end of the lease. The buildings could not be rented. Those belonging to the power company had been incorporated into the new ones. The space so made was much greater than required for its commercial ammunition business. Petitioner, for the purpose of utilizing the excess, undertook the manufacture of some other things, but that business was small, and resulted in loss each year. There was a garage used during the war production, but not needed afterwards. Petitioner attempted to operate the building as a public garage, but, realizing no net return, rented it to others from October, 1923, until the end of the lease.
of the end of that year, the value of its right to use the new buildings during the remainder of the term was $190,969.86, and the Court of Claims found it not in excess of that amount. Petitioner claimed a deduction of the difference between the depreciated cost and such residual value. The Commissioner disallowed the claim on the ground that it had not abandoned the use of the buildings or permanently devoted them to a radically different use. He allowed $86,484.54, arrived at by distributing the cost of each building ratably over the period ending with the term of the lease. The difference between the deduction claimed and that allowed is $327,937.35. In its tax returns for the remaining years of the lease, petitioner claimed deductions on account of the buildings amounting in all to $190,969.86, but the Commissioner added to such deductions $327,937.35.
government maintains that subsection (8) excludes the allowance claimed. The contention is without merit. The argument is that, by authorizing amortization in respect of buildings erected for war production after April 6, 1917, Congress denied allowances for obsolescence as to like buildings constructed before the war. But obsolescence and amortization are not synonymous. While in some connections like meaning may be attributed to them, they do not necessarily or generally refer to the same thing. "Obsolescence" may arise from changes in the art, shifting of business centers, loss of trade, inadequacy, supersession, prohibitory laws, and other things which, apart from physical deterioration, operate to cause plant elements or the plant as a whole to suffer diminution in value. Burnet v. Niagara Brewing Co., 282 U. S. 648, 282 U. S. 654; Gambrinus Brewery Co. v. Anderson, 282 U. S. 638. "Amortization," as used in the Act, is not so broad; it refers to deductions on account of such part of the costs of certain facilities as has been borne by the taxpayer, "but not again including any amount otherwise allowed." This safeguard against duplication of allowances on account of the same diminution in value shows that deductions for amortization were not intended to exclude obsolescence, but rather were to be made in addition or having regard to allowances deducted on account of obsolescence and the like.
war purposes would be of little value after termination of the conflict; that, under the law then existing, it was impossible to allow deductions other than for the "ordinary exhaustion, wear and tear, and depletion of such property" and that the purpose was "to allow special amounts for amortization, according to the peculiar condition in each case. . . ." [Footnote 3] When that report was made, and as the draft of the Act was originally passed by the House and amended and passed in the Senate, it contained no provision expressly authorizing allowances for obsolescence. Subsection (7), in the form in which it was finally adopted, was formulated in conference much later than the committee report, and after the provision for amortization as finally enacted had been agreed to. See Gambrinus Brewery Co. v. Anderson, supra, p. 282 U. S. 643. Manifestly Congress intended by subsection (7) to establish a general rule, and by subsection (8) to authorize, in a limited class of cases and under special circumstances, the amortization of certain costs by deductions not duplicating any other allowed by that or previous acts of Congress.
to be regarded as in the nature of salvage. The depreciated cost less the value of petitioner's right to use the buildings after 1918 must be taken into account for the proper determination of petitioner's 1918 income and profits taxes. Gambrinus Brewery Co. v. Anderson, supra; Burnet v. Niagara Brewing Co., supra.
"In the event of such complete or partial termination [of performance of the contract], the United States shall inspect all completed articles then on hand and such as may be completed within thirty (30) days after such notice and shall pay to the Contractor the price herein fixed for all articles accepted. . . . The United States shall also pay to the contractor the cost of materials and component parts purchased by the contractor for the performance of this contract and then on hand . . . ,"
adjustment of your existing contract, in a manner which will permit of a more prompt settlement and payment than will be practicable under the terms of said existing contract. Please acknowledge receipt of this notice immediately, and indicate your decision as to compliance with or rejection of this request. Upon notice of your compliance, a representative of the Ordnance Department will forthwith take up with you the proposed negotiation. [Footnote 5]"
Before the end of the year, petitioner complied with these requests and ceased production under the contracts.
At the end of that year there was no market for the materials in the inventories; they were not saleable at any price approaching cost; it was wholly uncertain what amounts might be obtained in settlement, and no negotiations for adjustments or settlement had been made.
After negotiations involving much time and expense, partial settlements were reached in 1920 under which the government took over and paid petitioner's cost for most of the raw material and work in process, except labor and overhead items chargeable to the latter. In final settlements in 1921 and 1922, there were compromises under which the government paid a portion of the cost of some items and made no allowance for others.
Petitioner kept its books on the accrual basis and elected to price its inventories at cost or market, whichever was lower. The difference between petitioner and the Commissioner as to 1918 taxes was whether inventories of material on hand at that date should be taken at $231,615.43, the then market value, or at $732,088.62, which was made up of amounts eventually realized by petitioner under the contracts of settlement. The latter was used by the Commissioner.
Mere inspection of the suspension requests disclose that they were not intended to be the notices provided for in the clauses authorizing the government to terminate manufacture or deliveries. College Point Boat Co. v. United States, 267 U. S. 12, 267 U. S. 15. And, upon petitioner's compliance with such requests, the contract provisions as to payments by the government to petitioner of cost were superseded. At the end of 1918, the government was not bound to take or to pay petitioner for any property covered by the inventories. Petitioner had no assurance as to what settlements finally would be made, or that it ever would receive more than the then market value of the inventories. Up to the time of the partial settlements in 1920, petitioner had no agreement that it would be paid the cost of any part of the property. Cf. Lucas v. American Code Co., 280 U. S. 445, 280 U. S. 449.
they are allowed, or their value is otherwise definitely determined. Regulations 65, Article 50. And see Regulations 45, Articles 1582-1584, as amended by T.D. 3296. On the facts found, there was no warrant for including in petitioner's 1918 taxable income on account of such inventories any amount in excess of market value at the end of that year.
The lower court's dismissal of petitioner's claims for deduction of $327,937.35 on account of buildings and $500,473.19 on account of inventories cannot be sustained.
"Sec. 234.(a). That, in computing the net income of a corporation subject to the tax imposed by § 230 there shall be allowed as deductions:"
"(7) A reasonable allowance for the exhaustion, wear and tear of property used in the trade or business, including a reasonable allowance for obsolescence;"
"(8) In the case of buildings . . . or other facilities, constructed . . . or acquired, on or after April 6, 1917, for the production of articles contributing to the prosecution of the present war, and in the case of vessels constructed or acquired on or after such date for the transportation of articles or men . . . there shall be allowed a reasonable deduction for the amortization of such part of the cost of such facilities or vessels as has been borne by the taxpayer, but not again including any amount otherwise allowed under this title or previous Acts of Congress as a deduction in computing net income. At any time within three years after the termination of the present war, the Commissioner may, and at the request of the taxpayer shall, reexamine the return, and if he then finds as a result of an appraisal or from other evidence that the deduction originally allowed was incorrect, the taxes imposed by this title and by Title III (war-profits and excess profits tax) for the year or years affected shall be redetermined and the amount of tax due upon such redetermination, if any, shall be paid upon notice and demand by the collector, or the amount of tax overpaid, if any, shall be credited or refunded to the taxpayer in accordance with the provisions of section 252."
House Report 767, 65th Congress,2d Session, p. 10; Senate Report 617, 65th Congress, 3d Session, p. 7.
Each of the contracts contained a provision substantially the same as that quoted. One of them, GA-126, did not give petitioner a right to continue production for 30 days after termination.
The suspension requests were not in identical words, but in substance all were the same.


text:
Jacob, Jones & Brown, Morris J. Galen, Portland, Or., for L. H. and Lena L. Pierce.
Charles K. Rice, Asst. Atty. Gen., Grant W. Wiprud, John N. Stull, I. Henry Kutz, Arthur I. Gould, Attys., Dept. of Justice, Washington, D. C., C. E. Luckey, U. S. Atty., Edward J. Georgeff, Asst. U. S. Atty., Portland, Or., for United States.
Before STEPHENS, Chief Judge, and POPE and CHAMBERS, Circuit Judges.
The Pierces of Portland, Oregon, are husband and wife who filed separate federal income tax returns for the years 1946 and 1948. Their net incomes as reported for 1946 were over $65,000 each. In 1948 after deductions they had no net income and were required to pay no tax. Naturally out of their misfortunes in 1948 they are looking for "loss carry-backs" to 1946 as a basis for refunds on their taxes that year. Claiming the loss carry-backs to 1946, the taxpayers in June, 1949, filed claims for refunds which the commissioner never allowed. Consequently the taxpayers filed separate suits for refund against the United States in December, 1954, in the United States District Court for the District of Oregon. In those suits the wife prevailed and the husband was denied relief. The losing party in each case has appealed and the appeals have been consolidated.
Some detail of the financial operations of the Pierces is required. They formed a partnership in 1935 known as the L. H. Pierce Auto Service. The partnership was in continuous existence through 1948, and may still exist. In 1946 and perhaps for some years prior thereto this partnership engaged principally in the manufacture of automobile trailers. About the time the Pierces in 1947 made out their returns for 1946 they decided to form and did form an Oregon corporation known as the Pierce Trailer & Equipment Co. This company took over the trailer manufacturing end of the partnership, husband and wife each owning one half of the corporate stock. The partnership thenceforward conducted a more limited business, leasing its property to the corporation and doing some other unrelated business, principally farming.
In 1948, although the partnership received $12,000 in rents, there was a net loss for the year of $4,193.12. This was reflected on the returns of the taxpayers as a business loss from the partnership of $2,096.56 each. The Pierces also suffered a personal casualty loss of $6,782.93 from a 1948 flood. This was entered as a non-business loss in the amount of $3,391.47 for each taxpayer on his return. The next major item on the 1949 individual returns of the Pierces is the sum of $6,000 paid L. H. Pierce, the husband by the Pierce Trailer and Equipment Co. for his management services. In 1948 the state of Oregon was trying out the community property system.1 The taxpayers properly divided this salary between their returns, showing receipt of $3,000 each.
1. Business or non-business income as to one half for the husband.
2. Business or non-business income as to one half for the wife.
Then the Pierces have a secondary point. If the salary should be ruled business income, still they say that business income or losses from each business taxpayer should be compartmentalized. That is to say, if the taxpayer sustained a loss in business venture "A" and made a gain in business venture "B," he need not match one against the other but may carry back the loss in venture "A" to a highly profitable year on venture "A" reflected in the return for the better earlier year, thus get a refund. Practically, the taxpayers' necessity is to disengage the salary (gain) from his or her partnership loss, so that the partnership loss need not be deducted from the salary, but may be carried back to the former year where it is really of some value, the taxes in the former year being substantial.
"(a) Definition of net operating loss. As used in this section, the term `net operating loss' means the excess of the deductions allowed by this chapter over the gross income, with the exceptions, additions, and limitations provided in subsection (d).
"(b) Amount of carry-back and carry-over.
"(1) Net operating loss carry-back.
"(A) Loss for taxable year beginning before 1950.
"(ii) by determining the net operating loss deduction for such second preceding taxable year without regard to such net operating loss and without regard to any reduction specified in subsection (c).
"(B) Loss for taxable year beginning after 1949. If for any taxable year beginning after December 31, 1949, the taxpayer has a net operating loss, such net operating loss shall be a net operating loss carryback for the preceding taxable year.
"(d) Exceptions, additions, and limitations.
"(5) Deductions otherwise allowed by law not attributable to the operation of a trade or business regularly carried on by the taxpayer shall (in the case of a taxpayer other than a corporation) be allowed only to the extent of the amount of the gross income not derived from such trade or business. For the purposes of this paragraph deductions and gross income shall be computed with the exceptions, additions, and limitations specified in paragraphs (1) to (4) of this subsection."
Insofar as the husband's one half of the salary is concerned this court is satisfied with the holdings in Folker v. Johnson, 2 Cir., 230 F.2d 906, and Overly v. Commissioner, 3 Cir., 243 F.2d 576, wherein it is held that working for a salary puts one in the business of selling one's own service; that such salary is not non-business income.
The taxpayer's second contention that he can separate his businesses and carry back a loss in 1948 from business "A" to the same business "A" profit in 1946, ignoring the profit in business "B" (that is, not matching A against B, before carrying back) has some merit as an argument when Section 122(d) (5) uses the words: "such trade or business" (emphasis supplied). Of course, every business is a business and a taxpayer may have many businesses. Thus, he ought to be able to compartmentalize according to the statute, it is argued. But our best judgment is that the draftsman at the moment was thinking of all business of the taxpayer as being his business, as "such business." Imagine the complications that would arise if a taxpayer operated a dozen separate grocery stores and each were to be considered a separate business for the purpose of the loss carry-back provisions. If that pattern were denied to his separate businesses, then what of him with 40 different resident partners? It is just too hard to believe that the Congress intended to open up any such complications. In Section 29.122-3, Treasury Regulations 111, under the Internal Revenue Code of 1939, the commissioner seems to classify (and rightly) for loss carry-back all businesses of a taxpayer as one business.
"(7) Ordinary nonbusiness deductions (i. e., exclusive of capital losses) shall be allowed only to the extent of the amount of ordinary nonbusiness gross income (i. e., exclusive of capital gains), plus (A) for any taxable year beginning after December 31, 1938, and before January 1, 1942, the excess, if any, of nonbusiness long-term and short-term capital gains over nonbusiness long-term and short-term capital losses, respectively, and (B) for any taxable year beginning after December 31, 1941, the excess, if any, of nonbusiness capital gains over nonbusiness capital losses."
The commissioner's regulation is sensible and one would think in accord with the probable congressional intent. So this court rejects the right to segregate the businesses for the purposes of this carry-back.
Therefore, the district court is affirmed as to the husband's case.
Next is the holding that the wife's half of the salary is non-business income — because she didn't earn it. This court disagrees. Of course, community property was an evanescent thing in Oregon, born under federal tax weight and expiring when the weight was shifted. So Oregon has no wealth of community property law. Section 122(d) (5), supra, does use the term "business regularly carried on by the taxpayer." But the warp and woof of community property law in the old community property states is that when the husband or the wife is at work, the community is at work; at least, in working the worker is carrying on the business of the community. Thus, it was business income. See Poe v. Seaborn, 282 U.S. 101, 51 S. Ct. 58, 75 L. Ed. 239 (Washington community property income); Goodell v. Koch, 282 U.S. 118, 51 S. Ct. 62, 75 L. Ed. 247 (Arizona community property income); Bender v. Pfaff, 282 U.S. 127, 51 S. Ct. 64, 75 L. Ed. 252 (Louisiana community property); and Hopkins v. Bacon, 282 U.S. 122, 51 S. Ct. 62, 75 L. Ed. 249 (Texas community property income).
This court's decision in Graham v. Commissioner, 9 Cir., 95 F.2d 174, holding that the salary paid the husband for services was "earned income" of both the husband and wife may not be an identical case; therefore, not controlling, but it certainly does not call for a different result.
Really, the explanation of the decisions of Graham and of this case on the nature of the husband's labor lies in the fundamental community property concept. Of course, the Congress could ignore the state concept and reclassify. It could say the wife's one half of the wages paid the husband was not business income. See United States v. Kintner, 9 Cir., 216 F.2d 418. Here it has not issued either command or the suggestion that such be done.
Therefore, the judgment in favor of the wife is reversed.

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§ 27-1-3 Prevention of scattering.
§ 27-1-4 Receptacles — upsetting or tampering with.
§ 27-1-5 Sidewalks and alleys free from litter.
§ 27-1-6 Owner to maintain private premises.
§ 27-1-7 Littering from vehicles.
§ 27-1-8 Littering from aircraft.
§ 27-1-9 Litter in parks.
§ 27-1-11 Posting notices prohibited.
§ 27-1-13 Loading and unloading docks.
§ 27-1-15 Clearing of litter from open private property.
§ 27-2-3 Restrictions on burning of landscape waste.
§ 27-3-4 Public nuisance — penalty and abatement.
§ 27-4-2 Destruction of public property.
§ 27-4-4 Abandoned refrigerators or iceboxes.
§ 27-4-5 Criminal housing management.
§ 27-4-6 Unlawful conduct on a public way.
§ 27-4-7 Renting premises for unlawful purposes.
§ 27-4-8 Discharge of firearms or bow and arrow.
§ 27-4-9 Criminal damage to fire-fighting apparatus, hydrants or equipment.
§ 27-4-10 Injury to utility wires and poles.
§ 27-4-11 Street signs; molesting of prohibited.
§ 27-4-12 Games in street.
§ 27-4-13 Intoxication in public.
§ 27-4-15 Barbed wire and electric fences.
§ 27-4-16 Theft of recyclables unlawful.
§ 27-4-17 Sale of cigarettes or tobacco to minors.
§ 27-4-18 Painting and marking.
§ 27-5-2 School days curfew restrictions.
§ 27-5-5 Violations and penalties.
§ 27-6-2 Possession of cannabis prohibited; exceptions.
§ 27-6-3 Possession of drug paraphernalia prohibited.
§ 27-6-4 Seizure and forfeiture.
§ 27-6-6 Violations and penalties.
§ 27-6-8 Effect on other laws.
General Code provisions — See Ch.1, Art. I.