### BEFORE THE FEDERAL AVIATION ADMINISTRATION WASHINGTON , D.C.

UNITED AIRLINES , I NC
. , Complainant, v . 

### THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, Respondent. 

## RECEIVED JUN - 5 2015 PART 16 DOCKETS


### Docket No. FAA-16-14-1 3

REPLY OF UNITED AIRLINES , INC. TO THE PORT AUTHORITY OF NE W YORK AND NEW JERSEY'S ANSWER TO THE COMPLAINT Communications with re s pect to thi s docu ment should**~** 

### addressed to :

Marc L. Warre n Keith J. H arrison Gerald F. Murphy Steve n J. Seiden CROWELL & 

### M ORING LLP 1001 Penn sylva ni a Ave nue, NW Washington , D C 2 0004 (202) 624-2500 mw arre n @crowell.com Robert S. Span Alan K. Steinbrecher Sophy Chen STEINBREC HER 

### & SPAN LLP 1155 F Street , NW, Suite 1050 Washington, DC 20004 (202) 559

-8680 rspan@s teinbrecherspan.com

Counsel for United Airlines, Inc.I. 

### INTRODUCTION. The Answer of the P ort Authority of New York and New Jersey ("Port Authority") offers no substantive refutation of the Complaint of United Airlines , Inc. ("United"). It consists of routine admi ssions and conclusory denial s and asserts but
one affu·mative defense , which ha s already bee n addressed by the Fe deral Aviation Administration ("FAA") in its April27 , 2015 Order denying the Port Authority's Motion for Summary Judgment ("April27 , 20 1 5 Order"). The Complaint and Uni ted's Answer to the Motion for Summary Judgment ( re s pectively , " Complaint" and "MSJ Answer ") detail volu minous , specific, and credible evidence of the Port Authority's violations of its grant assurances and of federal law at Newark Liberty International Airport ("EWR" ). De spite the requirements of Part 16, the Port Authority has offered almost no evidence in
re spo nse. The me ager evidence offered by the Port Authority does not even address , let alone refute, most of United's evidence. Therefore, the current state of the pleadings supports a Director's Determination in favor of United on all issues raised by the Complaint. At the very least , the evidence overwhelmingly s upports an investigation by th e FAA. If this is not t h e case for the FAA to take decisive action regarding rates and charges, surpluses , and revenue divers ion , there will never be one. The scope and magnitude of Unite d's evidence in the record raise significant i ssu es of compliance with federal law and sound public policy. Without FAA action , there will be no
means to fully as sess the Port Authority 's violations and no r emedy to force the P ort

1Au t h ority to comply with federal law. Unite d re s pec tfully reque sts entry of a Director 's Dete rmination in its favor. Should th e FAA determine that there i s any issue as to which furth er inf ormation is requil:ed, the FAA can initiate an invest i gation with r espect to t hat issue. 

### II. UNITED HAS PRODUCED UNREBUTTED EVIDENCE OF THE PORT AUTHORITY'S VIOLATIONS OF ITS GRANT ASSURANCES AND FEDERAL LAW. In denying the Port Authority's Mot ion for Summary Judgme nt, the FAA reaffirme d that its "role i s to determine whether the a irp ort proprietor i s in comp li ance with its grant o blig ation s and statutory obligations relating to airport fees. [ 78 Fed. Reg. 55332]. " April 27 , 2015 Orde r at 2. The FAA note d : "The Dir ector h as r eviewe d all the s ubmi ssions and h as co nclude d th at th e re are genuine i ssues of material fac t. The i ssu es include but are not limited to t h e Respondent's compliance with Grant Ass m·ance 22 , 

### Economic Nondiscrimination; Grant Assm·ance 24, 

### Fee and Rental Structure; and Grant Assurance 25, 

### Airport Revenues. " Id. at 3. After identifying the key i ss u es, th e FAA ordered the Port Authority to fil e a n
an s we r to the Co mp l aint. According to th e P art 1 6 ru les, t h e answer "shall , lik e t h e
co mplain t, be accomp anied by s upporting do cume n tation up on which the [party
relies ]. " 14 C.F.R. § 16.23(g). Further , th e answer s h a ll co ntain " a concise but
co mplete stateme n t of the fac ts relied up on to s ub stanti ate the answers , admissions , deni al s, or averments made. " 14 C.F.R. § 16.2 3(i). The Port Authority
se rve d its Answer on May 20 , 20 1 5. The An swer contains admissions and denia l s

2relating to the allegations of Unite d's Complaint, but the Port Authority chose to offer almost no evidence, additional facts, or argument beyond that which had been previously s ubmitted by the Port Authority, and found to be insufficient, as part of its Motion for Summary Judgment. United s ummarizes below the facts produced by both parties as to each viol ation of federal l aw. These facts demonstrate that United has more than met its burden of proof "to show noncompliance with an Act or any regulation, order, agreement or document of conveyance issued under the authority of an Act." 14 C.F.R. § 16.23(k). Accordingly, a Director's Determination in favor of United on all i ss ues i s appropriate. At a minimum, however, the Complaint, the Answer , and the pleadings regarding the Motion for Summary Judgment demonstrate "a reasonable basis for further investigation, [upon which] the FAA will investigate the subject matter of the complaint. " 14 C.F.R. § 16.29(a). A. Evidence of Violations of Grant Assurance 22 (Reasonableness of Rates). The FAA noted that its review "will include an examinatio n of the flight fee
and whether the fee was set consistent with Grant Assurance 22 , and t h e Rates and Charges Policy. " April27 , 2015 Order at 2-3. Grant Assurance 22 provides in part that an airport sponsor must give assurance that it will " make the airport available
as an airport for public use on reasonable terms. " See also 49 U.S.C. § 47101(a)(12); 49 U.S. C. 

### § 47 107 (requiring airport sponsors to give assurance that "the airport will be available for public u se on reasonable conditions"). The Rates and Charges Policy requires that aeronautical rates be reasonable, and that ·airfield charges be

3cost-based
. See, e.g., Rates and Charges Policy, 78 Fed. Reg. 55330 , 55335, 

### §§ 4.2.1, 5.2. Additionally, as the FAA has recognized, the Rates and Charges Policy cautions that the "progressive accumulation of substantial amounts of surplus aeronautical revenue may warrant an FAA inquiry into whether aeronautical fees
are consistent with the airport proprietor's obligations to make the airport available
on fair and reasonable terms." April27, 2015 Order at 3. 1. United's Evidence. United has produced substantial evidence showing that the Flight Fee at EWR is unreasonable , in violation of Grant Assurance 22 and the Rates and Charges Policy. The evidence is detailed in the Complaint and in United' s MSJ Answer and will not be repeated here. In sum , United has shown that:
• The airfield fees at EWR are by far the highest in the nation- 59% higher than at the next most expensive non-Port Authority airport (Chicago O' Hare) and even 75% higher than at John F. Kennedy International Airport ("JFK" ) , which the Port Authority also operates. • The EWR Flight Fee is set through a complex and non-transparent formula , the real result of which is that the Port Authority makes a substantial profit on the costs included in the Flight Fee rate base.
• Costs included in the Public Aircraft Facilities Charge Factor component of the EWR Flight Fee , including charges for Aircraft Rescue and Fire Fighting ("ARFF'') , are marked up by at least 38%. Costs in the Airport Services Charge Factor are m. arked up by at least 1 4%.

4• EWR' s operating margins for 2009 through 2013 were 29%, 29%, 32% , 31%, a nd 31%, respectively. 1 In contrast, the operating margins at JFK a nd LGA, while high , were s ignificantly lower than at EWR.
• EWR typically generates an annual surplus in excess of $160 million. 2
• In the five

- year period 2007-201 1 , EWR provided t he Port Authority with $1.6 billion in operating cash flow.
• The average salary in the Port Authority's Aviation Department was highest among its pe er group of major airports in the country.
• Unconstrained overtime and bloated benefit packages result in average pay leve l s for Port Authority e mployees that greatly excee d market rates , eve n in the expensive New York metrop olitan area. • Excessive overtime pay has been a defining char acteristic of Port Authority mismanagement for years. • The revised ARFF force will increase United' s costs at EWR by more than $25 million annually and almost 510% more than in 2012.
• The Port Authority staffs ARFF with airport police, trained as firefighters, each of whom will cost the Port Authority an average of $242 , 000 annually in compensation, overtime , and benefits , a sum conside r ably in excess of the market compensation for firefighters. The P ort Auth ority included t h e enti re cost of the ARFF in the EWR rate base , along with a $9 million mark-up.
• Non-ARFF security costs included in the landing fee total more than $37 million. The Port Authority a l so charges the airlines a 14% markup on these costs. Security costs have risen 40% sinc e 2010. High sa larie s and benefits , as well as excessive overtime , contribute to unreasonably high security costs at EWR.

1 The Port Authority's financial state ments for 20 1 4, now available, show that EWR had an operating margin of 31% in 2014. The operating margin at JFK was bel ow 21%. The Port Authority of NY 

### & NJ , Financial Statements and Appended Notes for the Year Ended December 31, 2014 (Mar. 1 3 , 2015) , at 9 1 , h ttp://www.panynj.gov/corporate-information/pdf/financial- statement-2014.pdf. 2 In 2014 , EWR generated a surplus of $219 million. 

### Id.

5• The Port Authority's compensation and benefit package for ARFF staffers, other security personnel , and administrative employees in the Aviation D epartment i s s ignificantly higher than market.
• The Port Authority has monopoly power with respect to the airports in th e New York City metropolitan area, the most important market in the United States both for domestic and international travel.
• To be competitive, United must serve the New York City metropolitan market. United is committed to its EWR hub. United cannot simply move its hub operation; its enormous investments at EWR make impossible a move of these operations to JFK or LGA.
• The Port Auth ority uses its monopoly power to impose aeronautical fees well above those of other l arge airport operators. In addition to the factual evidence , United has submitted exte n sive legal authorities (unrebutted by the Port Authority) demonstrating that airfield rates and charges must be reasonable , transparent , and cost -b ased. See, e.g. , Complaint**~~~ 26-** **35,** 159-165; MSJ Answer at 41 , 46, 48. The excessive charges for l abor included in t h e Flight Fee , the mark-up on a ll char ges, and the excessive surp lu ses generated at EWR establish that the EWR Flight Fee i s not cost
- based and is unreasonable a s a matter of law. 

### Id. 2. The Port Authority's Evidence. With respect to the allegations that th e EWR Flight Fee is unreasonable , the Port Authority's Answer contains no new evidence. Instead, the Port Authority relies exclusively on evidence it produced in support of its Motion for Summary Judgment. But that evidence focuses on the existence of lease agreements between

6United or Continental, on the one hand , and the Port Authority, on the other hand. 3 The FAA ha s ah'eady rejected the Port Auth ority's argument that the existe n ce of those ag1·eements deprives the FAA ofju risdiction in this case. The Declaration of Cheryl Yetka, submitted in s upport of the P ort Authority's Answer, admits that the Port Au t h orit y h as diverted a total of almost $2 billion since 2005, including an estimate d $22 1 million in 20 1 4. Exhibit A to Yetka Dec., Attac hm en t 2. While the Port Authority argues th at this diversion is legally grandfathered (m ore on t h at below) , the Port Authority ignores legal a u thorities th at s how that it i s unreasonable to charge rates t hat will generate the s urplu s
revenue that allows such diversion. See

**Complaint~~** 1 26- 1 35; MSJ Answer at 41, 47-50. Whether or not the P ort Authority is allowed to divert the surplus is not the issue in assessing the r easo nableness of EWR fees. The issue i s whether United i s being require d to pay for the costs of facilitie s, whether those facilities are th e World Trade Center, t h e Pula ski Skyway , or any other non-aeronautical facility , t h at United do es n ot u se . As United h as s hown , under the Rates a nd Charges P olicy a nd we ll- settled case l aw, it i s improper and unreasonable to charge fees th at
s ub s idize these other facilities. Id.

3 Exhibits to the Declaration of Joseph R. Garcia , offered by the Port Authority in support of its Motion for Summary Judgment, s ub stantiate the markup of costs in the Flight Fee. In 20 1 4 , the PAF an d ASF components of the EWR Flight Fee included a total of $55 million in surpl u s revenue over costs. Garcia Dec. , Exhibit 2.

7The Port Authority offers no evidence to refute United' s evidence that the Flight Fee i s not cost-based, that the EWR Flight F ee generates huge s urplu ses, and t hat specific expense items in t he Flight F ee are excessive and unreasonable. Accordingly , United has more than met its burden on this i ssue and a Dil:ector 's Determination that the EWR Flight Fee violates Grant Assurance 22 and federal l aw i s warranted and appropriate. B. Evidence of Violations of Grant Assurance 22 (Unjust Discrimination). Grant Assurance 22 also provides that airport rates and charges must be non-discriminatory. 1. United's Evidence. United h as produced evidence showing that the Port Authority's rates at EWR unjustly discriminate against United , including:
• In 2014 , the Port Authority ch arged higher Flight Fees at EWR than it did at JFK and LGA. The 2014 EWR Flight Fee was 75% higher than the 2014 JFK Flight Fee.
• In 2014 , the difference between t h e Flight Fee at**~WR** and the Flight F ee at JFK meant that United paid more than $80 million more in flight fees than it would have paid if it flew its EWR schedule at JFK.
• There is no economic justification for these higher charges at EWR ; in fact , the Port Authority ' s cost per enplanement is actually higher at JFK than at EWR.
• If t h e Flight Fee methodology currently used at JFK we re to be used at EWR, the airlines operating at EWR would pay a total of $52 million less annually than they cunently pay.
• The Port Authority' s imposition of a higher Flight Fee at EWR t han at JFK and LGA puts United at a significant competitive disadvantage.

8• In its operations at EWR, United competes with airlines serving JFK andLGA.
• Air carriers operating out of JFK and LGA , on the one hand, are making similar use of the New York area airport &ystem as those air carriers operating out of EWR, on the other h and.
• The Port Authority itself has acknowledged that "air service at one of the Port Authority airports competes with the air service of one or more other airports."
• The Port Authority is required by the interstate compact from which it was created, and other related state laws, to operate the three major airports in t h e New York metropolitan area as a unified system. 2. The Port Authority's Evidence. With respect to the issue of discriminatory rates, in its Answer the Port Authority submits copies of the flight fee agreements for JFK and LGA and admits that the flight fee methodology at those airports "differs in certain respects from the flight fee formula for airlines serving EWR." Statement of Respondent The Port Authority of New York and New Jersey Pursuant to 14 C.F.R § 16.23(i)(2) In Support Of Its Answer at 4
. The Port Authority also argues that (1) United "is not at a competit ive disadvantage with ail·lines that serve LGA and/or JFK because EWR's passenger market is discrete from that of LGA and EWR (sic)" and (2) that "United has the option of moving its East Cost hub operations at EWR" to Washington Dulles International Airport ("lAD"). 

### Id. That is all the Port Authority has to say on the i ssue of economic discrimination. The Port Authority offers no evidence explaining or justifying the significant difference in flight fees between EWR, on the one hand, and JF:K or LGA, on th e

9other hand. Nor does the Port Authority respo n d to the legal auth orities cited by United demonstrating that such differences constitute u n just di scrimination
. 

### See, e.g., Complaint**,1~** 150

- 152 , 166

- 169; MSJ Answer at 50-55
. Th e stateme n t th at the E WR market is discrete from that of LGA or JFK is incorrect and inconsistent with positions taken by the Port Authority in comments to the U.S. Department of Transportation (" D OT'') and the FAA. 

### See, e.g. , In the Matter of Petition for Waiver ofthe Terms ofthe Order Limiting Scheduled Operations at LaGuardia Airport, Docket No. FAA

- 20 1 0

-0109, Comment of the Port Authority of New York and New Jersey (Mar. 22 , 2010), at 3 (the NYC "metropolitan area is served by a single airport system operated by the Port Authority to serve one trave l region.
... The market area of one airport overlaps the market areas of others so that 

### air service at
one ofthe Port Authority airports competes with the air service ofone or more other airports.') (emphasis added); Newark I nternational Airport Airline Competition P lan (Dec. 11 , 2000) , 

### available at h ttp://www.panyni. gov/airports/pdf/ewrcompetition-p l an -december

-2000.pdf, at 1, 5 ("The Port Authority' s 1947 bi-State air termi nal legislation
... provides that: 'The States of New York and New Jersey declare and agree that each air terminal within the Port of New York District
serves the entire district, and that the problem of furnishing proper and adequ ate air terminal facilities within the district is a regional and interstate problem, and that it is and shall be the policy of the two states to encourage the integration of such air termina l s so far as practicable in a unified system.'
... 

### Because ofthe proximity [of} the Port Authority airports [the Port Authority} considers them to a

10

### certain extent interchangeable as airlines and passengers can [choose] among the facilities based upon their needs.'} (emphasis added). The Port Authority's cavalier assertion that United can simply move out of EWR and go to lAD if it doesn 't like the rates charged at EWR ignores all the evidence of the importance of the New York City metropolitan ru·ea market, and is outrageous , particularly since the Port Authority has argued that United has longterm lease agreements at EWR and has invested a billion dollars in its EWR facilities. Indeed, the Port Authority' s argument that " if United doesn't like being discriminated against, it can leave town" demonstrates exactly why the FAA must take action to ensure compliance with federal law. Accordingly , United has more than met its burden on this issue and a Director' s Determination that the EWR Flight Fee is unjustly discriminatory is warranted and appropriate. 

### C. Evidence of Violations of Grant Assurance 25. Grant Assurance 25 and other provisions of federal law make clear that an airport may not unlawfully divert revenues to non-airport facilities or functions. 

### 1. United's Evidence. United has produced substantial evidence showing that the Port Authority' s
use of airport revenues violates Grant Assurance 25 and federal law , including:
• Since 2004 , the Port Authority has diverted more than $2 billion from the New York area airports to non-airport uses. • The Port Authority uses airport revenues to pay for highways , bridges , parks , hospitals , and other facilities that it does not own or operate.

11• The Port Authority currently plans to spend $1.8 billion over a tenyear period to improve roads and bridges it does not own or operate. In 2014 alone, the Port Authority spent $181 million to repair the Pulaski Skyway and $60 million on the Wittpenn Bridge, structures owned and operated by the State of New Jersey.
• According to a report by the FAA , in the six year period 2005-2010 , the Port Authority diverted a total of more than $1.7 billion in airport revenues to non-airport uses , an average of almost $300 million annually. This total was almost 

### ten times higher than the amounts diverted by SFO and ORD , the grandfathered airports with the next highest totals
. • The Port Authority also spends millions of dollars annually on other non-Port Authority facilities. In 2014 alone, the Port Authority spent $48 million on non-Port Authority facilities in the region. 4 Of course , the Port Authority is ab le to divert these sums because, as shown above, EWR generates huge surpluses every year . As the FAA stated in the April 27 , 2015 Order, "the issue of accumulated s urplu ses i s one which t he FAA and the U.S. Department ofTransportation (DOT) will examine in the context of reviewing complaints concerning revenue diversion. " April 27, 2015 Order at 1. 2. The Port Authority's Evidence. In the April27, 2015 Order , the FAA al so stated that t h e Complaint contains "a sufficient allegation regarding revenue diversion warranting review under the Part 16 enforcement process. " April27, 2015 Order at 3. Despite this , the only evidence s ubmitted by t he Port Authority in its Answer relating to revenue diversion i s the Declaration of Cheryl Yetka, which admits that the Port Authority has diverted almost $2 billion s ince 2005 , and that the revenue diversion for 2014 is

4 See, e.g., Complaint**~~** 32, 1 76; MSJ Answer at 47-48.

12estimated to be $22 1 million
.s E xhibit A to Yetka Dec., Attach ment 2. The Port Authority contends that the total divers ion i s within the limits of its grandfather exception and i s thus proper. The Port Authority's Answer offers no new fact s or legal support for the notion that the Port Authority can use airport reve nues to fund facilities and projects it does not own or operate. The clear language of the grandfath er clause requires t h at a irport revenu es can only be used " to support ... other fac ilities of the
owner or operator." 49 U.S.C. § 47 1 07(b)(2). In its Motion for Summary J u dgment, the Port Authority argued that despite the p l ain language of the statute , it is allowed to spend airport revenues on non-owne d fac il itie s that "suppo r t" or are

"related to " its owned facilities. Port Authority Memorandum I n Support of Motion for Summary Judgment at 34-36. The Port Authority claimed that the use of airport revenues to fund regional non-Port Authority projects is lawful.G Id. at 35- 36. It also ins isted that the use of airport revenue s to fund State Routes 1 and 9 , the Pulaski Skyway , and the Wittpenn Bridge i s appropriate because "of the ongoing needs of the Port Authority's facilities for efficient t r ansportation and egress of goods and supplies." Id. In short, according to the Port Authority ,

5 United do es not concede that the Port Authority 's calculations capture all of its diverte d reve nue, but for the purpo ses of t hi s proceeding, the admission that $2 billion has been diverted in the last decade, including $221 million in 20 1 4 , and including spe nding on non-Port Authority facilities , provide s a mple s upport for FAA r eVIew. 6 The i ss ue i s not whether the Port Authority 's expe nditures are legal under its own governing documents. The is s ue here i s whether the expenditures comply with 49 U.S. C. § 47107(b)(2). Clearly , they do not.



### 13spending airport revenues on anything to do with transporting goods or servicing people is permissible because its employees or operations are among t hos e that benefit , making such expenditures "related to" Port Authority "operations . " As United pointed out in response to the Motion for Summary Judgment,
s u ch an interpretation of the statute would allow limitless diversion. See MSJ Answer at 48-50. Such a tortured construction of the grandfather clause would create exceptions that would swallow the clause. An argument could be made that
a ny spending, no matter how far afield , somehow benefits or supports some Port Authority facility. This i s not the law , and the Port Authority provides nothing further to s upport its contention. 

### Id. Accordingly, United's evidence warrants a Dir· ector's Determination that the Port Authority's diversion of airport revenue to non-Port Authority facilities is unlawful. Further, in light of the accumulated s urplu ses at EWR, the history of the Port Authority's non-compliance with revenue diversion regulations, the Port Authority's excessive spending of airport revenues on non-aeronautical facilities such as the World Trade Center, and the other facts detailed in United's Complaint, the FAA should initiate a thorough audit and inve stigation of revenue diversion by the Port Authority. 

### III. THE FAA MUST ACT IN LIGHT OF THE EVIDENCE. Since United assuredly has met its burden of proof under 14 C.F.R. 

### §§ 16.23 and 16 .29, the FAA must now do its duty. The FAA should exercise its authority under P art 16 to enter a Director's Determination finding the Port Authority in

14violation of the grant ass u ra n ces a nd federal l aws ci ted in United's Comp l aint. If th ere is any issue as to which t h e FAA deems further information is required , the FAA can initiate an investigation of the Port Auth ority's u nlawful practices with respect to that issue. By its express terms, P a r t 1 6 states that a n investigation may, "at the sole discretion of t h e FAA," include one or more of the following: ( 1 ) a review of th e written submissions or pleadings of the parties, as supplemente d by any informal investigation the FAA considers necessary and by additional information furnished by the parties at FAA request; (2) obtaining additional oral and documentar y evidence by use of t h e agency's authority to compel production of
s uch evidence under 49 U.S.C. 

### §§ 40 11 3, 46104 and 47122; and (3) conducting or requiring t h at a sponsor conduct a n audit of airport financial records and transactions as provided in 49 U.S.C. 

### §§ 47107 and 47121. 14 C.F.R. 

### §§ 16.29(b)(1)- (3)

. A s the FAA h as recognized, the term " investi gation" in Part 1 6 "is used to
mean the thorough review of the facts provided in the p leadings within the context of applicab le law and policy" and "[w]hile the FAA may obtain additional oral and documentary evidence, it i s not required to do so . " Town of Fairview, Texas u. City of McKinney, Texas , FAA Docket No. 16-04-07 , Final Decision and Order (Nov. 30, 2005) at 20 (emphasis in original). In other words, " [i]f the Director has determined th e administrative record is sufficient to render a decision
... the Director is not required to request additional information beyond the pleadings pre sented by Complainant and Respondent. " Id.

1 5In addition, consistent with its broad investigative authority under Part 16, the FAA routinely requires parties to provide supplemental information and evidence to complete the administrative record. 

### See, e.g., Pensacola Aviation Center, LLC v. Pensacola International Airport, FAA Docket No. 16-12-12, Request for Additional Information (Mar
. 13, 2015) (requesting additional information and clarification from the Respondent regarding certain le ase amendment provisions and the extent to which the Re
. spondent honored them); 

### Frank Hinshaw, Skydiving School, Inc. d/b/a Skydive Hawaii and Island Skydiving, L.L.C. v. The State of Hawaii, FAA Docket No. 16-12-04, Request for Additional Information (Feb. 20 , 2015) (after issuing a preliminary determination finding Respondent to be in violation of Grant Assurance 22 , requesting additional information from t h e Complainant and Respondent regarding their respective positions taken during negotiations concerning the development of temporary operational procedures to be followed by skydiving and transient users of the airport); 

### Drake Aerial Enterprises, LLC dl bI a Air AmericaAerial Ads and James Miller v. City ofCleveland, FAA Docket No. 16 -09-02, Request for Additional Information (Aug. 27 , 2009) (requesting additional information and documentation from Respondent regarding its process for reviewing and approving new aeronautica l businesses at the airport). Likewise, should the FAA determine here that additional information and/or documentation is necessary to comp lete the adm ini strative record prior to its issuance of a Director' s Determination , the agency should do so via a request for additional information and

16evidence and/or initiation of an audit of the Port Authority' s financial records and transactions. See 14 C
.F.R. § 16.29(b). United believes the agency has a sufficient basis right now- based on the pleadings submitted in the record to date- to render its Director's Determination. Part 16 states unequivocally that in rendering its initial determination, "FAA may rely entirely on the complaint and the responsive pleadings provided " and, further, that "[e]ach party shall file documents it considers sufficient to present all relevant facts and argument necessary for the FAA to determine whether the sponsor is in compliance." 14 C.F.R. § 16.29(b)(1)
. United's Complaint and MSJ Answer describe in great detail the facts and arguments giving rise to the various federal law and grant assurance violations committed by the Port Authority. Among other practices, the Port Authority charges aeronautical users, including United, exorbitant and unreasonable rates; uses a fee methodology that is not cost-based and lacks transparency; fails to make EWR available on reasonable terms; generates excessive surplus revenues amounting to hundreds of millions of dollars in order to subsidize non- aeronautical functions; improperly diverts airport revenue; and unjustly discriminates among aeronautical users. The Port Authority' s only and ultimately futile defense of these allegations depended entirely on a procedural tactic- namely , that United's Complaint should be summarily dismissed because the existence of written agreements between United and the Port Authority precluded the FAA from investigating the complaint. Now that this theory has been decisively rejected (see April 27, 2015 Order) , all that

17remains for the FAA to consider at this stage are the hollow admissions and denials set forth in the Port Au thority's Answer. Distilled to its core , the P ort Authority' s Answer merely regul'gitates the information and positions the Port Authority presented in previous pleadings and circularly denies , without further explanation
or clarification, the substantive a lleg ations presented in the Complaint. Because the Port Authority has failed to refute (much less address) the substantive merits of United's Complaint in any meaningful way despite having over six months and
numerous procedural opportunities to do so , the FAA would be upholding its duty and well within its discretion to issue a Director' s Determination finding the Port Authority to be in violation of the grant assurances and federal laws cited in the Compl aint and imposing any remedies it deems appropriate and in the public interest. Simply put , if the Port Authority hasn' t been ab le to , or has chosen not to , muster any credib le countervailing evidence by now , despite the clear admonitions of Part 16 and the FAA's April27, 20 1 5 Order, the FAA should act accordingly and issue its Director's Determination in favor of United.7 

### IV. CONCLUSION. In light of the foregoing, United respectfully requests entry of a Dir ector's Determination in its favor on all issues. The pleadings and evidence offered by

7 Should the Port Authority decide to file a rebutta l to this Reply, it would be inappropriate for the Port Authority to submit new evidence in any such document, as the pu1·pose of a rebuttal is to respond to evidence or ru·guments contained in the Reply

- not to introduce new evidence that United may not have an opportunity to address.

18United afford a robust basis to conclude that the Port Authority has viol ated federal airport grant assurances and federal law. The Port Authority's Answer adds nothing. The evidence supports FAA action in this case and the public interest demands it.

June 4, 2015 Respectfully submitted,

# ~-~~ WRobert S. Span

19 Alan K. Steinbrecher Sophy Chen STEINBRECHER 

### & SPAN LLP 1155 F Street, NW , Suite 1050 Washington , DC 20004 (202) 559-8680

# ~::re:S::c**:m** Marc L. Warren Keith J. H arrison Gerald F. Murphy Steven J. Seiden CROWELL & MORI NG LLP 1001 Pennsylvania Avenue NW Washington, DC 20004 (202) 624-2500 mwarren @croweJ..1.com Counsel for United Airlines, Inc.CERTIFICATE OF SERVICE I certify that I have this date served the foregoing Reply of United Airlines , Inc. on the following persons by overnight express mail , in accordance with the Department' s Rules of Practice: Chief Counsel Attn: FAA Part 16 Docket Clerk AGC-600 Federal Aviation Administration 800 Independence Ave. , SW Was hington , DC 20591

June 4 , 2015 Carlene V. Mcintyre , Esq. A ssistant General Counse l Port Authority of New York and New Jersey Law Department 25 t h Floor 4 World Trade Center 150 Greenwich Street New York , NY 10006