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DOT and FAA Airport Legal Determination and Opinion Letter Abstracts of 2023 (2025) / Chapter Skim
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Jason Theuma and Paragon Skydive LLC v. State of Arizona No. 16-19-16
Pages 30-34

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From page 30...
... of Grant Assurance 22, Economic Nondiscrimination, and Grant Assurance 23, Exclusive Rights, and the Anti-Head Tax in a lease by its imposition of various fees, conditions, and requirements such as requiring skydiving liability insurance that was not commercially available, or available at reasonable terms; restricting operations to only tandem skydives; refusing to lease additional space when the space sought was unoccupied; imposing a 10% gross receipts fee when similarly situated operators were charged 1.5% of their gross receipts; and imposing arbitrary and capricious parking fees. (Director's Determination, p.
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From page 31...
... More specifically, Complainant argued that numerous terms of its lease imposed by Respondent, the state transportation authority, violated Grant Assurance 22, as follows:  Complainant was required to obtain skydiving liability insurance that was not commercially available, or available at reasonable terms.  Respondent required Complainant to obtain a high level of coverage of aviation general liability insurance on the order of $5 million when limits were more appropriately within the $1 million to $2 million aggregate range.
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From page 32...
... According to the Director, the Respondent was not in violation of Grant Assurance 23, Exclusive Rights. However, the Director found the Respondent was in violation of Grant Assurance 22, Economic Discrimination:  Respondent unjustly discriminated against Complainant by imposing unreasonable skydiving liability insurance.
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From page 33...
... 16.) But the gross receipts fee for "air tour flights" was 1.5% and the Director found that Complainant should have been taxed at that rate: "The 10% fee imposed on Paragon greatly exceeds the 1.5% fee charged air tour operators by over 600% … it is beyond the scope of this order to define exactly what comparable must be in every context, but here the Director holds that an otherwise unjustified difference of over 600% does not constitute a comparable rate." (Director's Determination, p.
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From page 34...
... 23.) Index Terms: Air Tour Flights; Anti-Head Tax; Contract; FAA Order 5190.B, Airport Compliance Manual; Grant Assurance 22, Economic Nondiscrimination; Grant Assurance 23, Exclusive Rights; Gross Receipts Fee; Insurance (Products -- Completed Operations)
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Key Terms

  • air tour
  • gross receipts
  • liability insurance
  • similarly situated
  • exclusive rights

  • skydiving liability
  • associate administrator
  • tour operators
  • economic nondiscrimination
  • director erred

  • receipts fee
  • skydiving insurance
  • skydiving sales
  • situated tenants
  • insurance requirement

  • retail sales
  • violated grant
  • obtain skydiving
  • offering similarly
  • operation insurance

  • director found
  • administrator found
  • situated operators
  • tour sales
  • restricting operations

  • products completed
  • completed operation
  • additional space
  • commercial aeronautical
  • tandem skydives


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