The Third U.S. Circuit Court of Appeals denied a township's petition for review of the U.S. Department of Transportation's (DOT) order declaring its ordinance imposing a tax on airlines every time one of their flights landed within the township's borders invalid. Contrary to the township's argument, the tax fell within the Anti-Head Tax Act's (AHTA) categorical ban.

The city of Philadelphia owned and operated the Philadelphia International Airport. Some of the airport's runways, however, were located within Tinicum Township's borders. About 50 years ago, a dispute arose over whether Tinicum could charge the city property tax for the airport's use of that land. Rather than litigate the matter to completion, Tinicum and the city settled.

Under the settlement, the city agreed to make periodic payments to Tinicum in exchange for continued runway access. However, that agreement expired and the payments stopped. Unable to reach a new agreement with the city, Tinicum enacted an ordinance that imposed upon all aircraft users a privilege fee for use of property located within the township.

After the ordinance became effective, passenger airlines (including United, Southwest and Delta) and parcel shippers (including Federal Express and United Parcel Service) landed flights at the airport on runways located within Tinicum, but refused to pay the tax. The Air Transport Association and the Air Carrier Association of America, industry groups whose membership included many of those carriers, complained to the DOT arguing that the tax violated the AHTA. The DOT agreed with the industry groups and issued a declaratory order invalidating the ordinance. Tinicum petitioned for review.

The Third Circuit denied Tinicum's petition. Determining whether a tax passes AHTA muster begins with §40116(b) of the AHTA. That provision bans four categories of local taxes: taxes on "(1) an individual traveling in air commerce; (2) the transportation of an individual traveling in air commerce; (3) the sale of air transportation; [and] (4) the gross receipts from that air commerce or transportation." The ban, however, operates "[e]xcept as provided in subsection (c)," which states that a municipality "may levy or collect a tax on or related to a flight of a commercial aircraft or an activity or service on the aircraft only if the aircraft takes off or lands in the [taxing locale]."

Tinicum argued that subsection (c) saved the tax from the categorical ban. The Third Circuit disagreed, finding the AHTA's text unambiguously demonstrates that subsection (c) is not a savings clause for flight-related taxes.