BEFORE THE

FEDERAL AVIATION ADMINISTRATION

WASHINGTON, D.C.

------------------------------------------------------------------------

:

UNITED AIRLINES, INC., :

:

Complainant, :

v. : Docket No. FAA-16-14-13

:

THE PORT AUTHORITY OF NEW YORK :

AND NEW JERSEY, :

:

Respondent. :

:

------------------------------------------------------------------------

ANSWER OF UNITED AIRLINES, INC. TO

THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY’S

MOTION FOR SUMMARY JUDGMENT

Communications with respect to this document should be addressed to:

Marc L. Warren

Keith J. Harrison 

Gerald F. Murphy

Steven J. Seiden

CROWELL & MORING LLP

1001 Pennsylvania Avenue, NW 

Washington, DC 20004

(202) 624-2500

mwarren@crowell.com

Robert S. Span

Alan K. Steinbrecher

Sophy Chen

STEINBRECHER & SPAN LLP

1155 F Street, NW, Suite 1050

Washington, DC 20004

(202) 559-8680

rspan@steinbrecherspan.com

Counsel for United Airlines, Inc.
i

TABLE OF CONTENTS

Page(s)

I. INTRODUCTION.............................................................................................. 1

II. STATEMENT OF FACTS................................................................................ 3

A. There Was No Negotiation over the EWR Flight Fee................................. 3

B. The Port Authority’s Contention that United Never Sought to Change the 

EWR Flight Fee Formula Is Not True......................................................... 6

C. United’s Complaint Contains Numerous Material Facts that Have Not 

Been Disputed by the Port Authority. ....................................................... 12

III. ARGUMENT .................................................................................................... 14

A. The Legal Standards Governing the Complaint and This Motion ........... 14

1. United Has Met Its Burden to Plead Facts Sufficient to Warrant 

Investigation. ....................................................................................... 14

2. On a Motion for Summary Judgment, the Port Authority Has Failed 

to Meet Its Burden to Prove the Absence of Genuine Issues of 

Material Fact on All Claims................................................................ 15

B. The FAA Has Jurisdiction to Investigate the Violations of Federal Law 

Identified in United’s Complaint. .............................................................. 18

1. The FAA Has Jurisdiction to Investigate Whether Rates Set by 

Written Agreement Violate Federal Law, and It Has Done So. ........ 19

a. There Is No Statutory Basis for the Port Authority’s Argument. 19

b. The Rates and Charges Policy Explicitly Confirms FAA 

Jurisdiction Here............................................................................ 22

c. The Case Law Also Supports FAA Jurisdiction............................ 26

i. The DOT and the FAA Have Recognized the FAA’s 

Jurisdiction to Review Claims Concerning Rates Set by 

Agreement. ............................................................................. 26

ii. The Cases Cited by the Port Authority Are Inapposite........ 31
ii

d. The Rationale for Barring Claims by Parties Who Agreed to a 

Disputed Lease Term Does Not Apply Here. ................................ 36

e. The Complaint Identifies Violations of Federal Law Apart from 

the EWR Flight Fee Formula. ....................................................... 40

C. The Port Authority Has Failed to Meet Its Burden to Show the Absence of 

Any Genuine Issues of Material Fact. ....................................................... 41

1. The Port Authority Has Not Shown the Absence of Genuine Issues 

Regarding Unreasonable and Transparent EWR Flight Fees........... 41

2. The Port Authority Has Not Shown the Absence of Genuine Issues 

Regarding Revenue Diversion............................................................. 47

3. The Port Authority Has Not Shown the Absence of Genuine Issues 

Regarding Unlawful Discrimination Against EWR Users................. 50

4. The Port Authority Has Not Shown the Absence of Genuine Issues 

Regarding Its Monopoly Power. .......................................................... 55

IV. CONCLUSION ................................................................................................ 56
iii

TABLE OF AUTHORITIES

Page(s)

Cases

41 North 73 West Inc. v. Westchester County,

FAA Docket No. 16-07-13, Director’s Determination (Jun. 12, 2008)............. 33-34

Adventure Aviation v. City of Las Cruces,

FAA Docket No. 16-01-14, Final Decision and Order (Sept. 9, 2003) ....... 33-34, 37

Adventure Aviation v. City of Las Cruces,

FAA Docket No. 16-01-14, Director’s Determination (Aug. 7, 2002), 

at 13 ........................................................................................................................ 34

Aero Ways, Inc. v. Delaware River & Bay Authority,

FAA Docket No. 16-09-12, Director’s Determination (Aug. 30, 2010), 

at 14 ........................................................................................................................ 16

Aerodynamics of Reading, Inc. v. Reading Regional Airport Authority,

FAA Docket No. 16-00-03, Final Decision and Order (Jul. 23, 2001), 

at 2-3, 16 ................................................................................................................. 37

Alaska Airlines v. Los Angeles World Airports,

DOT Order 2007-6-8, Docket DOT-OST-2007-27331 (Jun. 15, 2007).................. 52

Brendan Airways, LLC et al. v. Port Authority of New York and New Jersey,

Order Directing Responses to Motion, DOT Order 2005-3-8, Docket DOTOST-2005-20407 (Mar. 4, 2005)............................................................................. 21

Cinicola v. Scharffenberger,

248 F.3d 110 (3d Cir. 2001).................................................................................... 39

Continental Micronesia, Inc. v. Commonwealth of the Northern Mariana 

Islands and Commonwealth Ports Authority,

DOT Order 95-4-14, Docket No. 50191 (Apr. 10, 1995) ................................... 26-27

Delta Air Lines v. Lehigh-Northampton Airport Authority,

DOT Order 95-5-8, Dockets DOT-OST-1995-80 and 50264 (May 4, 

1995), at 2 .................................................................................................... 20, 26-28

In re Lavigne,

114 F.3d 379, 386 (2d Cir. 1997)............................................................................ 39
iv

Miami Int’l Airport Rates Proceeding, DOT Order 97-3-26, Docket DOT 

OST-1996-1965 (Mar. 19, 1997).................................................................. 29-30, 41

NLRB v. Bildisco & Bildisco,

465 U.S. 513, 521 (1984) ........................................................................................ 39

Northwest Airlines, Inc. v. Indianapolis Airport Authority, 

FAA Docket No. 16-07-04, Director’s Determination (Aug. 18, 2008), at 44 ......... 31

Northwest Airlines, Inc. v. Indianapolis Airport Authority,

FAA Docket No. 16-07-04, Final Decision and Order (Oct. 27, 2009),

at 1 ..................................................................................................................... 30-31

Ortiz v. Jordan,

562 U.S. 180 (2011) ................................................................................................ 16

Penobscot Air Services, Ltd. v. FAA, 

164 F.3d 713 (1st Cir. 1999)............................................................................. 32, 37

Roadhouse Aviations, LLC v. City of Tulsa,

FAA Docket No. 16-05-08, Final Decision and Order (Jun. 26, 2007) 

at 1, 18-19 ......................................................................................................... 32, 37

Trans World Airlines, Inc. v. City and County of Denver, Colorado,

DOT Order 95-7-27, Dockets DOT-OST-1995-221 and 50414 (Jul. 

21, 1995).................................................................................................................. 21

Union Flights, Inc. v. City and County of San Francisco,

FAA Docket No. 16-99-11, Director’s Determination (Feb. 15, 2000), 

at 18 .................................................................................................................. 26, 30

Valley Aviation Services, LLP v. City of Glendale,

FAA Docket No. 16-09-06, Director’s Determination (May 24, 2011)............ 33, 35

Statutes

11 U.S.C. § 365(a) ........................................................................................................ 39

49 U.S.C. § 47101......................................................................................................... 19

49 U.S.C. § 47107(a)(1)................................................................................................ 50

49 U.S.C. § 47107(b)(2)................................................................................................ 48

49 U.S.C. § 47129..................................................................................................passim

49 U.S.C. §§ 46101, 46105........................................................................................... 30

N.J. Stat. Ann 32:1-35.1 .............................................................................................. 53

N.Y. Unconsol. Law §§ 6631-6647............................................................................... 53
v

Other Authorities

140 CONG. REC. S4398 (daily ed. Apr. 19, 1994)...................................................... 20

14 C.F.R. Part 13 ..................................................................................................passim

14 C.F.R. § 16.1............................................................................................................ 19

14 C.F.R. § 16.23.......................................................................................................... 14

14 C.F.R. § 16.29(a)................................................................................................ 14, 16

14 C.F.R. § 302.1.......................................................................................................... 19

59 Fed. Reg. 53380, 53386 (Oct. 24, 1994).................................................................. 29

60 Fed. Reg. 6919, 6927 (Feb. 3, 1995) ....................................................................... 29

61 Fed. Reg. 31994, 31998 (Jun. 21, 1996) ................................................................. 25

77 Fed. Reg. 13027, 13030 (Mar. 5, 2012).............................................................. 16-17

78 Fed. Reg. 55330, 55331-32 (Sept. 10, 2013)........................................................... 23

78 Fed. Reg. at 55334 .................................................................................................. 46

78 Fed. Reg. at 55335 ....................................................................................... 41, 49-50

78 Fed. Reg. 56135, 56136 (Sept. 12, 2013)................................................................ 15

78 Fed. Reg. at 56135 .................................................................................................. 17

Fed. R. Civ. P. 56(a)..................................................................................................... 16
1

I. INTRODUCTION

In its Motion for Summary Judgment (“Motion”), the Port Authority of New 

York and New Jersey (“Port Authority”) does not deny the facts underlying United

Airlines, Inc.’s (“United”) claims of significant violations of federal law:

• The Flight Fee at Newark Liberty International Airport (“EWR”) is by 

far the highest in the country, and even exceeds by 75 percent the 

Flight Fee at John F. Kennedy International Airport (“JFK”).

• EWR regularly generates huge operating surpluses, which are then 

diverted by the Port Authority to non-airport uses, including spending 

on facilities neither owned nor operated by the Port Authority.

• The EWR rate structure requires United to pay $80 million more 

annually than an airline operating the same schedule at JFK, a 

significant and discriminatory cost disparity among similar 

aeronautical users of the Port Authority airports.

• The EWR Flight Fee contains a hidden mark-up on costs.

• The 2014 EWR Flight Fee rate base includes excessive and 

unreasonable costs.

Instead, the Port Authority argues that United’s Complaint should be 

dismissed in toto because United is a signatory carrier at EWR, thereby depriving 

the Federal Aviation Administration (“FAA”) of jurisdiction to investigate the 

claimed violations of federal law.
2

The Port Authority’s Motion should be denied for the following reasons:

• The existence of a written agreement does not affect the FAA’s 

jurisdiction. The Port Authority’s argument is based on a misreading 

of applicable law. The FAA has considered complaints from parties to 

an agreement in the past and should continue to do so. There is no 

statutory basis for the FAA to refuse to hear United’s Complaint. 

• To fit its theory, the Port Authority mischaracterizes United’s 

Complaint. United is not seeking resolution of a contract dispute. 

United seeks an investigation into significant violations of federal law 

governing airport rates and charges and use of airport revenue.

• The facts demonstrate that United never “negotiated” the EWR Flight 

Fee formula or agreed to the Port Authority’s violations of federal law. 

To the contrary, the Port Authority rebuffed all requests by United to 

change the EWR Flight Fee methodology. 

• The Complaint and the Motion demonstrate that there are numerous 

genuine issues of material fact. This is not a case for summary 

judgment. 

At every major airport in the country, the vast majority of airlines are 

signatories to some form of agreement setting rates and charges. Acceptance of the 

Port Authority’s argument that signatory carriers may not complain about any 

violations of federal law or the grant assurances would effectively immunize 
3

airports against any federal oversight. That would be bad policy and is simply not 

the law.

The summary judgment process was added to Part 16 in 2013 primarily to 

assist airports and the FAA to deal efficiently and quickly with frivolous 

complaints. United’s Complaint is anything but frivolous. It raises serious and

significant questions about the Port Authority’s operation of EWR and compliance 

with federal law. The Motion should be denied. 

II. STATEMENT OF FACTS

A. There Was No Negotiation over the EWR Flight Fee. 

In its Motion, the Port Authority repeatedly refers to the admonition in the 

September 10, 2013 Policy Regarding Airport Rates and Charges (“Rates and 

Charges Policy”) that local negotiation and agreement are the preferred avenues to 

rate-setting. Port Authority Memorandum In Support of Motion For Summary 

Judgment (“Mem.”) at 13-20. But the Port Authority submits no evidence to 

support its repeated assertion that the EWR Flight Fee is the result of a negotiation 

between the airlines and the Port Authority. In fact, all of the evidence points to a 

complete lack of negotiation. 

First, the Port Authority affirms that the EWR Flight Fee formula has 

remained unchanged (with one minor exception) since at least 1969, the date of 

Lease AN-535 with United. Mem. at 10. Second, the same formula is used for 

calculating the Flight Fee for all airlines operating at EWR. Garcia Decl. at 3, n. 4. 

Third, the formula was in Lease ANA-170, the lease that Continental Airlines, Inc. 
4

(“Continental”) assumed when it began operating at EWR in 1987.1 Mem. at 9-10. 

Finally, as discussed in detail below, United’s attempts to negotiate changes to the 

formula to comply with federal law were repeatedly rebuffed by the Port Authority. 

See pp. 6-12, below. 

These facts admit to only two possible conclusions: (1) the original formula 

was so good that every airline operating at EWR since 1969 negotiated the exact 

same deal, or (2) there never were any negotiations and the EWR Flight Fee 

formula was a “take it or leave it” proposition. Not surprisingly, the Port Authority 

offers no evidence to support the first conclusion, which is highly improbable for 

many reasons, not the least of which is that the formula results in the highest 

landing fee in the country by a large margin. For the purposes of the pending 

Motion, however, it can safely be said that the issue of whether the EWR Flight Fee 

is the result of negotiations or voluntary agreement by United is in dispute and 

cannot be resolved on summary judgment.

Contrary to the Port Authority’s argument, the fact that the term of the EWR 

Flight Fee formula was extended does not change this result. Rather, it proves only 

that United wanted to continue to operate at EWR. More importantly, these term 

extensions all occurred in 1999 or earlier. As shown below, it was not until 2003, 

when new landing fees were being negotiated for JFK and LaGuardia Airport 

 

1 The corporate merger that resulted in Continental Airlines, Inc. and United Air

Lines, Inc. being owned by the then newly-formed United Continental Holdings, 

Inc. took place on October 1, 2010. On March 31, 2013, the merger and integration 

process was completed with the formation of a single legal entity that is now known 

as United Airlines, Inc. References herein to “United” will include Continental 

Airlines, Inc.
5

(“LGA”), that the unreasonable and discriminatory effect of the EWR formula began 

to become apparent. See pp. 7-12, below.2 So, the fact that lease terms had been 

extended before 2000 does not indicate negotiation of, or willing acquiescence to, the 

formula, much less prove the absence of a genuine issue of material fact.

Additionally, first Continental and then United had no choice but to invest in 

the EWR hub. The New York metropolitan area is the most important airline 

market in the country, generating in 2013 approximately 58 million “local” 

passengers (i.e., excluding passengers making connections at New York 

metropolitan area airports), 43% more than second place Los Angeles and far more 

than any other U.S. city. Rebuttal Report of Daniel M. Kasper (“Kasper Rebuttal 

Rep.”), ¶¶ 7-8. Due to the area’s size and economic importance, all large (and most 

smaller) U.S. airlines provide service to one or more of its three airports, and all 

three U.S. large network carriers plus JetBlue operate hubs in the New York 

metropolitan area: United at EWR, American at JFK, Delta at both JFK and LGA, 

and JetBlue at JFK. Id. at ¶ 9. With respect to United, in 2013, 18.4% of its 

passenger revenues were generated by local passenger traffic. Id. at ¶ 8. With the 

inclusion of passengers making connections at its EWR hub, 27% of United’s 

passenger revenues were generated from the servicing of these three airports, and

over 87% of United’s New York metropolitan area departures were at EWR. Id. 

EWR is not an interchangeable commodity to United; due to slot constraints and 

 

2 Indeed, it was in 2003 that Continental began to learn that the EWR formula 

might result in revenues in excess of costs; notwithstanding that, despite repeated 

requests, the Port Authority repeatedly refused to provide information that would 

confirm the existence of a mark-up until 2013. See pp. 7-12, below.
6

high demand, it would be impossible for United to relocate its EWR hub to JFK or 

LGA. Id. at ¶¶ 15-16.

In the context of these indisputable facts, the Port Authority’s claim that 

United’s EWR investments somehow prove agreement to the EWR Flight Fee 

formula (Mem. at 4) makes no sense. First, the Port Authority does not and cannot 

present any evidence to support such a causal link. There is none. Second, there is 

nothing to suggest that the investments at EWR were made for any other reason 

than to keep United competitive with other airlines servicing this important, 

strategic area. Finally, if anything, the EWR investments show the opposite of 

what the Port Authority claims: that United was forced to accept the EWR Flight 

Fee formula on a take-it-or-leave-it basis because its EWR hub was crucial to 

United’s operations. Again, for the purposes of the Port Authority’s Motion, there is 

a genuine issue of material fact as to whether United voluntarily and knowingly 

agreed to or negotiated the Flight Fee methodology at EWR. 

B. The Port Authority’s Contention that United Never Sought to 

Change the EWR Flight Fee Formula Is Not True.

The Port Authority devotes many pages in its Motion to recounting the 

history of the leases at EWR, concluding that “Not once during the forty years of 

operating at EWR . . . did Continental or United ever seek to modify the flight fee 

formula . . .” Mem. at 11. That assertion is simply wrong. In fact, the history of 

United’s communications with the Port Authority demonstrates conclusively that 

United attempted over and over again to engage in such dialogue and to reach 

agreement with the Port Authority. That same history also reveals that the Port 
7

Authority had no intention of engaging in such a collaborative effort, instead 

stonewalling (and ultimately ignoring) United’s questions about how the EWR 

Flight Fee was calculated.

In 2003, negotiations were underway for new operating agreements at JFK 

and LGA. The so-called “Dewey Lease,” which had been in effect since 1953, was 

due to expire at the end of 2003. Thus, from 2003, and continuing until almost the 

end of 2004, a committee representing the airlines operating at JFK and LGA met 

with the Port Authority to negotiate what became known as the “Freedom 

Agreement” (in honor of those who lost their lives on September 11, 2001). Among 

other things, the Freedom Agreement established a new methodology for the flight 

fees at JFK and LGA. These times were also financially difficult for the airline 

industry, as the period following the tragic events of September 11 and the war in 

Iraq had depressed passenger demand for air travel. Declaration of Robert S. Span 

(“Span Decl.”), ¶ 2. 

Against this backdrop, in 2003, Continental expressed concern to the Port 

Authority about the EWR Flight Fee and asked that it be changed. Larry Kellner, 

Continental’s President and Chief Operating Officer, met with William DeCota, 

Director of Aviation at the Port Authority in April 2003. Exhibit OO. A meeting 

was also held with the Chairman of the Port Authority Board of Commissioners. 

Exhibit PP. At these meetings, Continental presented specific proposals, including 

proposed changes to the EWR Flight Fee formula. Id. 
8

Throughout 2003 and into 2004, Continental continued to press the Port 

Authority for EWR rate relief. In March 2004, Nene Foxhall, then Vice President 

for State and Civic Affairs for Continental, wrote to Robert Lurie, Senior Policy 

Advisor to the Port Authority’s Chairman, following up on yet another meeting. Ms. 

Foxhall expressed concern about the “substantial advantage” the New York carriers 

would enjoy as a result of the expected changes to the Dewey Lease and about an 

apparent “coverage” factor in the EWR rate formula that allowed the Port Authority 

to generate 60% revenue in excess of costs. Exhibit QQ. She asked for further 

explanation as to this “cover factor,”

3 but no details were ever provided by the Port 

Authority and no opportunity to negotiate the EWR Flight Fee formula was ever 

offered.

On October 11, 2005, Continental’s counsel wrote to the Port Authority to ask 

for detailed information about the EWR Flight Fee methodology. Exhibit RR. The 

letter referred to the fact that “on numerous occasions in recent years,” Continental 

had expressed serious concerns that the EWR Flight Fee was not justified by its 

actual costs and was unfair and unreasonably high compared to fees at other U.S. 

airports, including JFK and LGA. Continental also requested information 

regarding revenues and costs associated with the EWR airfield, net revenues from 

the airfield and from EWR as a whole, details of how airport revenues were spent, 

and whether a cover factor was applied to airfield costs, explaining that this

 

3 A “cover factor” is sometimes included in an airport charge to cover indirect costs 

or to comply with debt service coverage requirements.
9

information was essential to evaluate whether the Port Authority was complying 

with federal law regarding rates and charges. Id.

The Port Authority responded by letter dated October 17, 2005, essentially 

stating that because Continental had an agreement setting the EWR Flight Fee 

methodology, Continental was not entitled to any information other than that 

necessary to determine that the EWR Flight Fee was being calculated in accordance 

with the agreement. Exhibit SS. 

By letter dated November 11, 2005, Continental wrote that, as a matter of 

both contract and federal law, it was entitled to the information it had repeatedly 

requested so it could determine whether actual costs were being used in the 

formula, whether there was a “cover factor” added, and whether an unreasonable 

revenue surplus was generated at EWR. Exhibit TT. A month later, having had no 

response from the Port Authority, Continental reminded the Port Authority of its 

request for information and inquired when it would be provided. Exhibit UU.

The Port Authority responded by letter dated December 23, 2005, this time 

denying that there was a 60 percent cover factor in the EWR Flight Fee calculation 

but again refusing to provide the requested information. Exhibit VV. Not 

surprisingly, it repeated the basic themes that now pervade its pending Motion –

i.e., that Continental had “negotiated” the EWR Flight Fee formula, that federal law 

did not apply to a fee set by agreement, and that Continental was stuck with the 

bargain it had made: “Therefore, the Port Authority believes that under federal law 

(as well as state law), Continental is now bound by the agreement it struck with the 
10

Port Authority and its recent protestations about the level of the formula do not 

change that fact.” Id.

Continental continued with its efforts to discover the truth regarding the 

rate-making at EWR. On January 11, 2006, it again repeated its request for 

information sufficient to determine whether the Port Authority was acting in 

conformity with its grant assurances and federal law and stated that “the flight fee 

formula and methodology at EWR was established long before Continental began 

service there. Continental did not negotiate this formula.” Exhibit WW. The Port 

Authority did not provide the requested information. 

Instead, the Port Authority’s next strategy to stonewall was to refer 

Continental’s request to the Port Authority Freedom of Information (“FOI”) 

Administrator. Exhibit XX. Continental dutifully waited until March for the FOI 

responses, which turned out to be little more than standard information that had 

been supplied previously to the airlines at EWR. At that point, on April 21, 2006, 

Continental renewed its original requests to the Port Authority. Exhibit YY.

On May 3, 2006, the Port Authority suggested a meeting at which the Port 

Authority would purportedly review and explain the EWR Flight Fee calculation. 

Exhibit ZZ. Continental responded, agreeing to a meeting, but also making clear 

that it still needed the information originally requested in October 2005. Exhibit 

AAA. On June 5, 2006, the Port Authority confirmed that the meeting would take 

place on June 8. Exhibit BBB. On June 8, 2006, nine months after counsel’s first 

letter to the Port Authority, a meeting was held between representatives of 
11

Continental and the Port Authority. At that meeting, Continental again asked for 

details about the calculation of the EWR Flight Fee and the amount and sources of 

airfield and airport revenue surpluses. The Port Authority again reiterated its 

position that the terms of a written lease agreement trump federal requirements 

and that Continental was not entitled to the requested information. The Port 

Authority also said, however, that it would consider the requests further and 

respond shortly.

On July 10, 2006, having heard nothing from the Port Authority, counsel for 

Continental emailed his counterpart at the Port Authority, asking when 

Continental would hear back from the Port Authority. Exhibit CCC. The Port 

Authority responded that same day, saying “You should hear from us shortly.” Id.

More than two months later, on September 22, 2006, having heard nothing 

since the July 10 email, and almost one year after the original letter requesting 

information, counsel for Continental again wrote to his counterpart, asking, “Does 

the Port Authority intend to respond? If so, when?” Exhibit DDD. 

The Port Authority never responded to that letter. Span Decl., ¶ 21.

This history demonstrates several facts that are inconsistent with the Port 

Authority’s argument in the pending Motion. First, on numerous occasions, 

Continental attempted to penetrate and understand the opaque EWR Flight Fee 

formula. On each occasion, the Port Authority either gave contradictory responses 

or no responses at all. Never did the Port Authority supply the information needed 
12

for Continental to confirm and understand the mark-up embedded within the 

formula.

Second, Continental clearly attempted on several occasions to change the 

EWR Flight Fee. The Port Authority’s assertion that “Not once during the forty 

years of operating at EWR . . . did Continental or United ever seek to modify the 

flight fee formula” (Mem. at 11) is just plain false. 

Third, the Port Authority’s implication that Continental could have 

renegotiated the EWR Flight Fee formula is belied by the position the Port 

Authority took in 2006, 2013, 2014,4 and which it takes today: “Continental is now 

bound by the agreement it struck with the Port Authority and its recent 

protestations about the level of the formula do not change that fact.”

C. United’s Complaint Contains Numerous Material Facts that 

Have Not Been Disputed by the Port Authority.

The Complaint asserts many facts, the great bulk of which are not addressed, 

much less refuted, by the Port Authority. These facts, and the additional facts 

contained in this Answer, are listed in United’s Statement of Material Facts, filed 

with this Answer. These facts establish that summary judgment is not appropriate. 

To highlight just a few:

• The airfield fees at EWR are the highest in the nation and 75% higher 

than at JFK, which the Port Authority also operates. Complaint, ¶¶ 

21-22. 

 

4 Exhibits LL and MM, submitted with United’s Complaint, reflect the Port 

Authority’s continued intransigence in 2013 and 2014.
13

• The EWR rate structure requires United to pay $80 million more 

annually than an airline operating the same schedule at JFK, a 

significant and discriminatory cost disparity among similar 

aeronautical users of the Port Authority airports. Complaint, ¶ 23.

• EWR typically generates an annual surplus in excess of $160 million 

and in the five-year period 2007-2011 gave the Port Authority $1.6 

billion in operating cash flow. Complaint, ¶ 59. 

• In 2014, the Port Authority spent approximately $181 million to repair 

the Pulaski Skyway and $60 million on the Wittpenn Bridge, and 

currently plans to spend $1.8 billion over a ten-year period to improve 

these and other roads and bridges it neither owns nor operates. 

Complaint, ¶ 30.

• The Port Authority staffs its Aircraft Rescue and Fire Fighting 

(“ARFF”) force 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; the revised ARFF force will 

increase United’s costs at EWR by more than $25 million annually and 

almost 510% more than in 2012. Complaint, ¶ 86.

• The Port Authority’s excessive overtime costs, which are included in 

the EWR Flight Fee (and then marked up) add millions of dollars 

annually to the unreasonable fees paid by United. Complaint, ¶ 55.
14

• The Port Authority-controlled airports account for over 96% of all air 

travel to and from the New York metropolitan area. Carriers wishing 

to serve the New York metropolitan area have no choice but to use a 

Port Authority airport. Complaint, ¶ 65. 

• United could not move its operations to JFK or LGA. Complaint, ¶ 71.

These uncontested facts are illustrative, not exhaustive, but create multiple 

genuine issues of material fact regarding each of the statutory violations alleged in 

the Complaint. The Motion for Summary Judgment should be denied.

III. ARGUMENT

A. The Legal Standards Governing the Complaint and This 

Motion

1. United Has Met Its Burden to Plead Facts Sufficient to 

Warrant Investigation.

With respect to the burden of proof at the pleading stage in a Part 16 

proceeding, the FAA applies the standards set forth in 14 C.F.R. §§ 16.23 and 16.29. 

The burden of proof “is on the complainant 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). Then, “if, based on the pleadings, there 

appears to be a reasonable basis for further investigation, the FAA will investigate 

the subject matter of the complaint.” 14 C.F.R. § 16.29(a). 

While the FAA has not specifically delineated what would constitute a 

“reasonable basis” to warrant investigation under § 16.29, the agency has said that 

it will docket complaints that have any basis for filing, and will investigate 

complaints that seem legitimate and do not contain frivolous or extraneous issues. 
15

In the preamble to the 2013 Final Rule that updated the Rules of Practice for 

Federally-Assisted Airport Enforcement Proceedings, the FAA addressed concerns 

from Airports Council International-North America (“ACI-NA”) regarding the 

agency’s assessment of complaints at the docketing stage. Specifically, ACI-NA 

urged the FAA to be “more vigilant” in assessing such complaints. 78 Fed. Reg. 

56135, 56136 (Sept. 12, 2013). The FAA countered that it continues to “closely 

scrutinize” incoming Part 16 complaints to ensure they are in compliance with the 

rule and that the agency “routinely” returns such complaints prior to the official 

docketing when one or more requirements are not met. Id. at 56137. But the 

agency maintained that it will docket complaints “that have any basis for filing 

under the rule” and that if a respondent feels that a complaint contains frivolous or 

extraneous issues, it can avail itself of the motions described in § 16.26. Id. 

There can be no serious dispute that United’s Complaint sufficiently states a 

reasonable basis for investigation by the FAA.5 

2. On a Motion for Summary Judgment, the Port Authority 

Has Failed to Meet Its Burden to Prove the Absence of 

Genuine Issues of Material Fact on All Claims.

A motion for summary judgment is governed by Rule 16.26(c), which provides 

in pertinent part:

 

5 The Port Authority makes much of the assertion that United did not include the 

lease documents as exhibits to the Complaint. This is a red herring. As 

demonstrated by the exhibits to the Motion, the lease documents are extremely 

voluminous, 99% of which are irrelevant to the issues in the Complaint. By no 

means did United hide from the lease; rather, the Complaint clearly alleges the 

existence of the lease and describes the formula for calculating the EWR Flight Fee. 

Nothing else is necessary, either for United’s burden of proof, or for an accurate 

narrative of the facts relevant to the Complaint.
16

A motion for summary judgment may be based upon the ground 

that there is no genuine issue of material fact for adjudication 

and that the complaint, when viewed in the light most favorable 

to the complainant, should be summarily adjudicated in favor of 

the respondent as a matter of law.

This rule was modeled after Rule 56 of the Federal Rules of Civil Procedure. 

See 77 Fed. Reg. 13027, 13030 (Mar. 5, 2012). It also tracks the language of Rule 

56. See Fed. R. Civ. P. 56(a) (“The court shall grant summary judgment if the 

movant shows that there is no genuine dispute as to any material fact and the 

movant is entitled to judgment as a matter of law.”) In federal courts, “[s]ummary 

judgment must be denied when the court of first instance determines that a 

‘genuine dispute as to [a] material fact’ precludes immediate entry of judgment as a 

matter of law.” Ortiz v. Jordan, 562 U.S. 180, 183 (2011).

Although the complainant ultimately bears the burden of proof to establish 

the non-compliance of the respondent (see 14 C.F.R. § 16.29(a)), the respondent 

bears the burden of proof on a motion for summary judgment. See Aero Ways, Inc. 

v. Delaware River & Bay Authority, FAA Docket No. 16-09-12, Director’s 

Determination (Aug. 30, 2010), at 14 (noting that the “proponent of a motion, 

request, or order has the burden of proof.”) This means that in order for the instant 

Motion to be granted, the Port Authority must persuade the FAA that, even when

all the evidence is “viewed in the light most favorable to” United, there are no facts 
17

that would support the claims that: (1) the EWR Flight Fee violates federal law; (2) 

the ARFF and other expenditures violate federal law; (3) the Port Authority’s 

nondisclosure of significant facts concerning rates and charges at EWR violates 

federal law; (4) the Port Authority’s practice of charging substantially higher fees 

for users at EWR than at its other airports violates federal law; and (5) the Port 

Authority’s diversion of EWR revenue violates federal law.

The summary judgment mechanism was incorporated into Part 16 in 2013 as 

part of a broad rulemaking effort to simplify and streamline the process for 

investigating and adjudicating Part 16 complaints, including reducing the 

paperwork burden on the agency and airport sponsors. A responsive motion such 

as one for summary judgment, the Port Authority and other airport groups argued, 

could be used to dispose of “frivolous” complaints filed merely to harass, intimidate, 

or cause financial hardship to a respondent. 77 Fed. Reg. 13027, 13030 (Mar. 5, 

2012). The FAA agreed, and decided to institutionalize the summary judgment 

provisions in Part 16 to provide the agency and the parties an opportunity to 

narrow the issues and allow the FAA to “conserve resources by investigating only 

legitimate, non-frivolous grant compliance issues.” Id.; see also 78 Fed. Reg. at 

56135.

Of course, United’s Complaint is far from frivolous or extraneous. It presents 

credible, substantiated evidence and arguments that merit a thorough examination 

of whether the Port Authority has violated federal laws and grant assurances. 
18

United has more than met its burden of proof and the Port Authority’s Motion 

should be denied.

B. The FAA Has Jurisdiction to Investigate the Violations of 

Federal Law Identified in United’s Complaint.

The Port Authority’s principal contention is that the FAA lacks jurisdiction to 

investigate whether the EWR Flight Fee is unreasonably high because the fee is set 

by a formula in the leases at EWR. Essentially, the Port Authority asserts that it 

can do whatever it wants because the airlines signed an agreement more than 40 

years ago. That is not the law.

As explained below, the FAA has not only the power, but the responsibility, 

to investigate whether a fee set by a written agreement is reasonable. The 

legislative history of Section 47129, the Rates and Charges Policy and the case law 

all make clear that the FAA can and should investigate whether an airport operator 

is in compliance with federal law regardless if there is a written agreement in place. 

And in any event, United’s Complaint challenges more than the EWR Flight 

Fee formula. Specifically, United presents evidence establishing that: (1) the Port 

Authority’s dramatic increases in ARFF expenditures and other security costs – to 

which United did not agree – are unjustified and unreasonable; (2) the Port 

Authority’s refusal to provide significant information about the EWR Flight Fee 

calculation violates the requirement that fees imposed by the airport be 

“transparent”; (3) the Port Authority’s practice of charging higher fees for air 

carriers at EWR than at its other airports constitutes unjust economic 

discrimination between the EWR air carriers on the one hand, and the JFK and 
19

LGA air carriers on the other hand; and (4) the Port Authority’s use of airport 

revenue to fund non-airport projects that are not owned or operated by the Port 

Authority amounts to illegal revenue diversion. The Port Authority offers no 

authority — because none exists — for the proposition that the existence of a 

written lease agreement precludes an FAA investigation into matters that are 

independent of the reasonableness of a fee set by a written agreement.

1. The FAA Has Jurisdiction to Investigate Whether Rates 

Set by Written Agreement Violate Federal Law, and It 

Has Done So.

a. There Is No Statutory Basis for the Port Authority’s 

Argument.

The federal statutory scheme provides two fora for disputes between airport 

operators and airlines regarding airport fees. The FAA hears all claims involving 

an airport owner’s non-compliance with federal grant assurances, including claims 

that the airport is charging an unreasonable flight fee. See 49 U.S.C. § 47101 

(mandating that the FAA ensure compliance with all federal grant assurances); 14 

C.F.R. § 16.1, et seq. (prescribing the procedures for all Part 16 cases). The DOT, in 

contrast, adjudicates a more narrow category of airport fee disputes on an expedited 

basis. See 49 U.S.C. § 47129 (establishing the expedited review mechanism); 14 

C.F.R. §302.1, et seq. (prescribing the DOT’s procedures). This case falls under the 

FAA’s general Part 16 jurisdiction.

The legislative history of Section 47129 – the statute establishing the 

expedited fee dispute program – explains this distinction. Congress enacted the 

expedited DOT review process in 1994. 49 U.S.C. § 47129, Pub. L. 103-305, Title I, 
20

§ 113(a)(2). Prior to that, an airline could seek an investigation into the lawfulness 

of any airport fee under the enforcement procedures implemented by the FAA in 14 

C.F.R. Part 13 (now Part 16); however, those procedures did not impose any 

deadline for the FAA to issue a final decision. See, e.g., Delta Air Lines v. LehighNorthampton Airport Authority, DOT Order 95-5-8, Dockets DOT-OST-1995-80 and 

50264 (May 4, 1995), at 2 (“Lehigh-Northampton”).

Section 47129 was introduced to address the increase in the number of 

airport fee disputes. 140 CONG. REC. S4398 (daily ed. Apr. 19, 1994). Congress 

was particularly alarmed at the “rapid increase in airport rates and charges” 

resulting from airports’ implementation of certain profit-generating ratemaking 

methods without attempting to share the profits generated with the airlines or the 

traveling public. Id. Tensions between airports and airlines over airport fees 

reached a boiling point in 1993, when the City of Los Angeles threatened to lock out 

carriers from serving its airports. Id. 

Such was the climate heading into the 1993 and 1994 FAA Authorization Act 

debates. Fearing that airport “lockouts” would cause major interference in the 

national air transportation system and disrupt the free flow of commerce, the 

Chairman of the Senate Aviation Subcommittee, Wendell H. Ford, introduced 

legislation to facilitate expedited resolution of airport fee disputes. In doing so, he 

expressed concern that the FAA’s existing Part 13 procedures were ill-suited to offer 

speedy dispute resolution. Id. at S4399. 
21

Under the expedited procedures established by Section 47129, the DOT is 

required to determine the reasonableness of a challenged airport fee or fee increase 

within 120 days after a complaint is filed. 49 U.S.C. § 47129(b). Not all fee 

disputes are eligible for the streamlined adjudication, however. The DOT may 

consider only complaints that present a “significant dispute of sufficient magnitude 

and complexity.” Trans World Airlines, Inc. v. City and County of Denver, Colorado, 

DOT Order 95-7-27, Dockets DOT-OST-1995-221 and 50414 (Jul. 21, 1995), at 18 

(“TWA”) (interpreting Section 47129(b)(2)). Significantly, the DOT may not consider 

disputes regarding “a fee imposed pursuant to a written agreement” in a Part 302 

proceeding. 49 U.S.C. §47129(e).6

Thus, the legislative history of Section 47129 makes clear that Congress 

intended for Section 47129 to serve as an extraordinary measure to accelerate 

resolution of significant disputes that threatened to disrupt air travel on a 

potentially national scale. Section 47129 was not, as the Port Authority suggests, a 

replacement for Part 16, or an attempt to usurp the FAA’s authority to enforce 

applicable federal law, including the grant assurances. 

 

6 Section 47129 also directed the Secretary of Transportation to publish final 

regulations, policy statements or guidelines establishing the procedures and 

standards for the DOT to use when “determining under this section [referring to 

Section 47129] whether an airport fee is reasonable.” 49 U.S.C. § 47129(b)(2) 

(emphasis added). This directive set the stage for Part 302, Subpart F, which 

established special procedural rules to enable the DOT to meet the expedited 

statutory deadlines provided for in the statute. See, e.g., DOT Order 2005-3-8 

(Brendan Airways, LLC et al. v. Port Authority of New York and New Jersey, Order 

Directing Responses to Motion, DOT Order 2005-3-8, Docket DOT-OST-2005-20407

(Mar. 4, 2005) (“Because the statute requires expedited proceedings, we have 

adopted special procedural rules for complaints filed under 49 U.S.C. 47129 – 14 

C.F.R. Part 302, subpart F – to enable us to meet the statutory deadlines”).
22

While Section 47129 specifically excludes use of the expedited procedure in 

the case of a fee set pursuant to a written agreement, there is no statute that 

prohibits the application of Part 16 to such disputes. The Port Authority’s 

argument is without statutory basis and would prevent the FAA from exercising its 

jurisdiction to monitor and correct airport violations of federal law. 

b. The Rates and Charges Policy Explicitly Confirms 

FAA Jurisdiction Here.

Likewise, the Rates and Charges Policy explains that Section 47129 does not 

foreclose review of those fee disputes excluded from Part 302 review. In the 

Introduction section, under the heading “Applicability of § 113 of the FAA 

Authorization Act of 1994” (i.e., Section 47129), the DOT provides the following 

guidance:

The Department does not interpret § 47129 to repeal or narrow 

the scope of the basic requirement that fees imposed on all 

aeronautical users be reasonable....Moreover, the Department 

does not interpret Sections 47129(e) [barring the DOT from 

deciding disputes regarding rates set by written agreement 

under Part 302] and (f) to preclude the Department from 

adopting policy guidance to carry out the Department’s 

statutory obligation to assure that aeronautical fees are being 

imposed at AIP-funded airports in a manner that is consistent 

with the obligation to provide airport access on reasonable 

terms.
23

Therefore, the Department will apply the policy in all cases in 

which we are called upon to determine if an airport sponsor is 

carrying out its obligation to make the airport available on 

reasonable terms. However, a dispute that is not subject to 

processing under the expedited procedures mandated by § 

47129, including a dispute over matters described by § 47129(e) 

[disputes regarding fees set by written agreement] and (f), will 

be processed by FAA under procedures applicable to airport 

compliance matters in general [Part 16].

78 Fed. Reg. 55330, 55331-32 (Sept. 10, 2013) (emphasis added). In other words, 

the Rates and Charges Policy clarifies that the subject matter limitations imposed 

by Section 47129 for Part 302 proceedings – barring disputes arising out of rates set 

by written agreements – do not apply to Part 16 proceedings.

The Rates and Charges Policy then elaborates that in disputes regarding fees 

set by written agreement, the FAA will inquire about whether the airport has met 

its grant obligations:

In considering such a dispute, FAA’s role is to determine 

whether the airport proprietor is in compliance with its grant 

obligations and statutory obligations relating to airport fees. 

The FAA proceeding is not intended to provide a mechanism for 

adjudicating the respective rights of the parties to a fee dispute.
24

Id. at 55332.

The Port Authority seizes on the language that follows, “...the Department 

will not entertain a complaint about the reasonableness of a fee set by agreement 

filed by a party to the agreement setting the disputed fee,” and argues that it 

negates the preceding paragraphs. That makes no sense.

The Port Authority has confused the restrictions placed on the DOT with the 

jurisdiction of the FAA. Read in context with the rest of this section, this sentence 

affirms that the DOT “will not entertain a complaint about the reasonableness of a 

fee set by agreement filed by a party.” Throughout, the Rates and Charges Policy 

distinguishes between the roles of “the Department” (i.e., the DOT) and the FAA. 

The FAA will process “matters described by Section 47129(e)” — disputes regarding 

fees set by a written agreement — under Part 16, but must only consider whether 

the airport has violated its grant obligations and not whether the airport has 

breached the subject agreement. Id. 

The Rates and Charges Policy also notes that the FAA will not ordinarily take 

action on a fee dispute unless there is “evidence of a progressive accumulation of 

surplus aeronautical revenues.” The DOT, by contrast, will not consider disputes 

regarding fees set by a written agreement at all, and for complaints raised by 

airlines that are not a party to a written agreement, “the Department” may take into 

account the terms of any agreement that govern the fees paid by the signatory 

airlines. Id.
25

United’s view is further bolstered by Section 1.3 of the Rates and Charges 

Policy:

An airport proprietor is encouraged to achieve consensus and 

agreement with aeronautical users before implementing a 

practice that would represent a major departure from his 

guidance. However, the requirements of any law, including the

requirements for the use of airport revenue, may not be waived, 

even by agreement with the aeronautical users.

Id. at 55333, §1.3. In other words, an airport operator may not violate federal law –

including the prohibition against unreasonable rates and charges – even if a written 

agreement purports to allow the airport to do so.

This interpretation of the current Rates and Charges Policy is also consistent 

with the policy’s rulemaking history. When the DOT published its 1996 policy 

statement, it stated succinctly that “[t]he Final Policy applies to fees set by 

agreement.” 61 Fed. Reg. 31994, 31998 (Jun. 21, 1996). The DOT reached this 

conclusion over the strenuous objection of airport industry commentators who 

argued during the rulemaking’s comment period that the DOT was legally barred 

from applying the reasonableness policy to fees set by agreements with airlines, 

citing Sections 47129(e) and (f). In rejecting this argument, the DOT stressed, 

unequivocally, that “[w]e do not interpret section 47129 to preclude an investigation 

of fees set by agreement or the application of the policy in such an investigation.” 

Id. 
26

Simply stated, the Rates and Charges Policy contemplates that the FAA will 

adjudicate disputes regarding fees set by a written agreement. Were it otherwise, 

there would have been no need for Section 47129 to explicitly exclude disputes set 

by written agreement from Part 302 proceedings.

c. The Case Law Also Supports FAA Jurisdiction.

i. The DOT and the FAA Have Recognized the 

FAA’s Jurisdiction to Review Claims 

Concerning Rates Set by Agreement.

The administrative case law also affirms FAA jurisdiction over disputes 

related to rates set by written agreements. See, e.g., Union Flights, Inc. v. City and 

County of San Francisco, FAA Docket No. 16-99-11, Director’s Determination (Feb. 

15, 2000), at 18 (“Union Flights”) (explaining that the FAA has plenary power to 

adjudicate disputes regarding rates and charges); Continental Micronesia, Inc. v. 

Commonwealth of the Northern Mariana Islands and Commonwealth Ports 

Authority, DOT Order 95-4-14, Docket No. 50191 (Apr. 10, 1995) at 10 (“Continental 

Micronesia”) (noting that the airline could challenge at the FAA a fee imposed by 

written agreement); Lehigh-Northampton at 16, 18 (noting that the dispute 

concerned a fee set by a written agreement and transferring the matter to the FAA 

for a Part 16 proceeding).

For example, in Continental Micronesia, the airline Continental Micronesia, 

Inc. (“CMI”) brought a Part 302 challenge of airport fees imposed under a written 

agreement. Continental Micronesia at 1. The DOT dismissed the complaint, but 

noted that CMI could have brought its challenge under Part 16 (then Part 13). Id. 

at 10. “CMI itself conceded that it could have challenged the fees under Part 13 of 
27

the Federal Aviation Regulations, 14 CFR Part 13....There were alternative courses 

of action and opportunities to pursue legal remedies available to the airline at the 

time it initiated service at the Commonwealth.” Id.

The Port Authority claims in its Motion that the DOT was merely remarking 

that the airline could have challenged “the fee in question prior to becoming a party 

to the agreement.” Mem. at 19 (emphasis in original). Not so. In listing the options 

available to the airline, the DOT observed that CMI could have “signed the 

agreement and brought the matter before DOT/FAA in an administrative 

proceeding.” Continental Micronesia at 10 (emphasis added).

Similarly, in Lehigh-Northampton, the DOT found that the challenged 

airport fees were governed by a written agreement within the meaning of 49 U.S.C. 

§ 47129(e)(1) and that it therefore lacked jurisdiction to adjudicate the dispute 

under Part 302. Lehigh-Northampton at 13. Rather than simply dismissing the 

matter, however, the DOT transferred the case to the FAA for consideration: “[W]e 

consider the amended complaint to be a Part 13 challenge to the legality of the air 

carrier operating subsidies paid by the Authority and will refer this matter to the 

[FAA].” Id. at 2; see also id. at 18 (finding that the case was “appropriate for 

consideration in Part 13 proceedings at the FAA.”).

The Port Authority again claims that the DOT did not hold that the FAA had 

jurisdiction over a dispute regarding a fee set by a written agreement, arguing that 

“the issue referred to the FAA was a different one, namely, the legality of air carrier 

subsidies paid by the airport authority to airlines other than Delta.” Mem. at 20. 
28

But in Lehigh-Northampton, the fee dispute and the issue of the air carrier 

subsidies were one and the same. See Lehigh-Northampton at 9, 15-16. The Part 

302 complaint alleged that the “subsidy arrangements contravene federal law,” 

including that “the inclusion of the subsidy costs in an airport rate base...results in 

the per se imposition of an unreasonable fee increase.” Id. at 9. In response, the 

airport argued that “the landing fees at issue were ‘imposed pursuant to a written 

agreement’” and should therefore be dismissed. Id. at 10.

The DOT agreed with the airport, finding that the fees at issue in the 

complaint “were ‘imposed pursuant to a written agreement’ within the meaning of 

section 47129.” Id. at 13. The DOT then referred all of the matters “raised in this 

docket” to the FAA. Id. at 19. The DOT emphasized that the procedures in Section 

47129 are “extraordinary” insofar as they “require an accelerated procedure with 

very strict deadlines” and were reserved for “significant” disputes. Id. at 13 

(citations omitted). In dismissing the complaint, the DOT insisted that “we in no 

way endorse or condemn the subsidy at issue here. We simply conclude that the 

parties have failed to demonstrate that this issue is appropriate for expedited 

resolution under section 47129.” Id. at 19. Accordingly, even though the subsidies 

at issue were governed by the written memorandum of understanding, the DOT 

deemed the FAA to be the proper forum for this dispute.

In TWA, the DOT dismissed the airline’s complaint because the “complaint 

does not present a significant dispute within the meaning of Section 47129.” TWA

at 1. The DOT also noted, however, that when “the Department dismisses a 
29

complaint under 49 U.S.C. 47129, that ordinarily would not preclude the airline 

from filing a request for an FAA investigation under Part 13 of the FAA’s rules of 

practice and procedure.” Id. at 3.

The DOT explained that the enactment of the expedited Part 302 procedures 

in no way diminished the rights of the airlines under federal law to challenge the 

reasonableness of flight fees:

Although the statute [the 1994 Authorization Act] created new 

procedures for examining the reasonableness of new or 

increased airport fees, it did not change the substantive rights 

and duties of the airports and airlines. As we said in adopting 

the procedural regulations under this statute, “The new 

procedures replace existing procedures under 14 CFR Part 13, 

and impose no new substantive requirements on either carriers 

or airports.” 60 Fed. Reg. 6919, 6927 (February 3, 1995). See 

also 59 Fed. Reg. 53380, 53386 (October 24, 1994).

Id. at 2.

The DOT repeated these principles in Miami International Airport Rates 

Proceeding: 

Although the 1994 Authorization Act created new procedures for 

examining the reasonableness of new or increased airport fees, it 

did not change the airports’ obligation to charge only reasonable 

fees. The statute also did not eliminate our preexisting 
30

authority to investigate whether airport fees were unreasonable 

or otherwise unlawful under federal law. 

Miami Int’l Airport Rates Proceeding, DOT Order 97-3-26, Docket DOT OST-1996-

1965 (Mar. 19, 1997) at 3 (“Miami Airport”).

So, too, in Union Flights: 

As we explained in the preamble to the FAA Policy on Airport 

Rates and Charges policy...the expedited procedures under the 

DOT Procedural Rules and our review under the FAA Rules of 

Practice serve two distinct purposes. The purpose of the former 

is to resolve fee disputes between air carriers and airport owners 

on an expedited basis. The purpose of the latter is to protect the 

public interest by assuring that airports are operated in a 

manner consistent with the airport owner’s Federal obligations. 

Union Flights at 19.

7 The FAA also explicitly held that it “clearly has authority, 

under 49 U.S.C. §§ 46101 and 46105, to investigate a complaint with respect to 

allegedly unreasonable airport rates and charges.” Id. at 18. In rejecting the 

Respondent’s argument that fee disputes between air carriers and airport 

proprietors must be adjudicated by the DOT under Part 302, the FAA explained 

that it “has the authority, and moreover, the responsibility to determine the 

reasonableness of the subject airport fee.” Id.

 

7 Although the complainant was not a signatory to a written lease agreement, the 

FAA’s guidance is still instructive here.
31

ii. The Cases Cited by the Port Authority Are 

Inapposite.

The authority cited by the Port Authority does not aid its cause. In 

Northwest Airlines, Inc. v. Indianapolis Airport Authority,

8 the FAA did not, as the 

Port Authority argues, state that it would not entertain disputes over fees set by a 

written agreement. To begin with, the complaint was dismissed on ripeness 

grounds. Northwest Airlines, Inc. v. Indianapolis Airport Authority, FAA Docket 

No. 16-07-04, Final Decision and Order (Oct. 27, 2009) at 1. In any event, the 

dispute revolved around whether the airport was permitted to provide rent credits 

to Federal Express under the terms of the controlling written agreement. As the 

FAA explained: “[T]he primary dispute underlying this Complaint is whether IAA 

was required under the Airport Use Agreement to obtain the approval of the other 

signatory airlines before...provid[ing] FedEx a landing fee rent credit.” Id. at 3. 

The inchoate dispute – which would have become ripe if the airport had lifted its 

freeze on the landing fees – revolved around whether the airport’s granting of rent 

credits was a breach of the agreement. The language quoted by the Port Authority9

from the Director’s Decision notes that the airlines “may have recourse in other 

venues to adjudicate” issues of contractual interpretation. Northwest Airlines, Inc. 

v. Indianapolis Airport Authority, FAA Docket No. 16-07-04, Director’s 

Determination (Aug. 18, 2008), at 44.

 

8 The Port Authority cites the Director’s Decision. This order was superseded by 

the decision of the Associate Administrator, which is the opinion discussed by 

United herein.

9 See Mem. at 14.
32

Here, by contrast, United is not asking the FAA to adjudicate a dispute 

arising out of the interpretation of the subject lease. Rather, United is asking the 

FAA to investigate, among other things, whether the EWR Flight Fee formula 

violates federal law.

Roadhouse Aviations, LLC v. City of Tulsa is similarly inapposite. In that 

case, a fixed-base operator (“FBO”) complained that the airport had granted its 

competitor more favorable terms; specifically, the complainant objected that it was 

required to allow its competitor access through its facility to a taxi lane while the 

competitor maintained exclusive use of its facility. Roadhouse Aviations, LLC v. 

City of Tulsa, FAA Docket No. 16-05-08, Final Decision and Order (Jun. 26, 2007) at 

1, 18-19. Again, that case boiled down to a simple contract dispute — the 

Complainant argued that it interpreted the access provision in its lease to “mean 

access to the ramp, not access through it.” Id. at 20. As the FAA explained, “the 

Complainant’s alleged misunderstanding of the lease terms does not rise to the level 

of a grant assurance violation, but may as the Director advised, be a state contract 

law issue.” Id. 

Again, this case does not involve a contract dispute. This challenge asserts 

that the EWR Flight Fee formula violates federal law.

Penobscot Air Services, Ltd. v. FAA has no application to this case, either. 

The FBO in that case complained that the airport charged it higher rent than its 

competitor. Penobscot Air Services, Ltd. v. FAA, 164 F.3d 713 (1st Cir. 1999). The 

First Circuit affirmed the FAA’s finding that the disparate rates were justified by 
33

the different circumstances in which the respective leases were negotiated. Id. at 

726. The court also noted that the complainant had itself negotiated the lease “just 

ten months before it filed its formal complaint.” Id. As discussed more fully below, 

there is a world of difference between a complainant that negotiated a lease 10

months before filing a complaint and this case, where the lease provision in 

question was not negotiated and has been in existence for decades. 

Finally, although the FAA has indicated in dicta on several occasions that it 

was not going to entertain a complaint regarding the reasonableness of a fee set by 

written agreement, even in those cases, the agency exercised its authority to 

investigate such complaints. See, e.g., Adventure Aviation v. City of Las Cruces, 

FAA Docket No. 16-01-14, Final Decision and Order (Sept. 9, 2003) (“Adventure”); 

41 North 73 West Inc. v. Westchester County, FAA Docket No. 16-07-13, Director’s 

Determination (Jun. 12, 2008); Valley Aviation Services, LLP v. City of Glendale, 

FAA Docket No. 16-09-06, Director’s Determination (May 24, 2011). 

In Adventure, an FBO alleged that the City, as sponsor of Las Cruces 

International Airport, violated federal law by allowing disparate lease rates and 

other arrangements. The FAA noted that “as a general policy, [it] need not consider 

a complaint about the reasonableness of a fee set by agreement when filed by a 

party to the agreement.” Adventure at 24. Nevertheless, the Associate 

Administrator held that the Director had correctly “examined all information in the 

record, including that submitted in the complaint, answer, response and rebuttal to 

determine the relevant facts in this case.” Id. 
34

While the FAA ultimately found no unjust discrimination in Adventure, the 

Director indicated that had the complainant furnished “evidence to demonstrate 

that [it] objected to the terms of the lease or was denied access to pertinent 

information during negotiations,” a finding of unjust discrimination could have been 

established. Adventure Aviation v. City of Las Cruces, FAA Docket No. 16-01-14, 

Director’s Determination (Aug. 7, 2002), at 13. 

Likewise, in 41 North 73 West Inc. v. Westchester County, a case brought by 

an FBO that alleged the airport unjustly discriminated against it by providing a 

certain class of FBOs with preferential financial treatment, the FAA reiterated its 

discretion to not entertain a complaint about the reasonableness of a fee set by 

agreement. Yet, in doing so, the Director suggested that a finding of unjust 

discrimination could have been made had the complainant presented “evidence to 

demonstrate that the Complainant objected to the terms of the lease or was denied 

access to pertinent information during negotiations.” 41 North 73 West Inc. v. 

Westchester County, FAA Docket No. 16-07-13, Director’s Determination (Jun. 12, 

2008), at 25. 

In particular, the FAA noted that the complainant “does not provide any 

evidence or argument regarding active deception by the County to induce 

[complainant] to agree to the terms of the [lease]” and “the record shows that 

[complainant] had investigated purchasing one of the [LGA FBOs], presumably 

exercising due diligence in determining the LGA FBO’s lease terms.” Id. at 27. 

Again, notwithstanding the “will not entertain” rhetoric, the FAA examined the 
35

record to determine whether a grant assurance violation occurred. Moreover, the 

FAA confirmed that in determining whether a respondent violated its grant 

assurance obligations, the agency may probe the circumstances under which the 

underlying agreement was reached, including evidence that the complainant had 

objected to the lease terms or was denied access to certain information. 

In Valley Aviation Services, LLP v. City of Glendale, the complainant alleged 

that the City violated various grant assurances by engaging in a long-term attempt 

to discriminate against the complainant so that it would abandon its leasehold and 

return the property to the City. Valley Aviation Services, LLP v. City of Glendale, 

FAA Docket No. 16-09-06, Director’s Determination (May 24, 2011).10 The 

complainant alleged, in part, that the City violated Grant Assurance 22 (Economic 

Nondiscrimination) by imposing a rental rate on the complainant that was required 

to be charged to the complainant’s subtenants or customers. The Director agreed, 

finding that the respondent violated Grant Assurance 22 by requiring the 

complainant to reduce its rental rates based on a flawed appraisal and without 

considering other tenant rental rates on the airport. Id. at 56. In so concluding, the 

Director drew a distinction between the alleged “contractual breaches” of the lease 

terms, on the one hand – which “are not within the purview of FAA’s Part 16 

proceedings” – and the “process followed by the Respondent in arriving at the 

 

10 The decision notes that an informal complaint brought years earlier by the 

former leaseholder for complainant’s hangar was found to be without merit, partly 

on the basis that the “FAA will not entertain a complaint about the reasonableness 

of a fee set by agreement when filed by a party to the agreement.” Valley Aviation 

Services, at 10.
36

recommended rate structure and to the applicability of the grant assurances,” on 

the other hand, which the FAA indicated was within its jurisdiction and, in fact, 

formed the basis of its finding of unjust discrimination. Id. at 56 & n. 53.

The case law demonstrates that the Rates and Charges Policy means what it 

says: “[A] dispute that is not subject to processing under the expedited procedures 

mandated by § 47129, including a dispute over matters described by § 47129(e) 

[disputes regarding fees set by written agreement]...will be processed by FAA under 

procedures applicable to airport compliance matters in general.” 78 Fed. Reg. at 

55331.

d. The Rationale for Barring Claims by Parties Who 

Agreed to a Disputed Lease Term Does Not Apply 

Here. 

The FAA should exercise its jurisdiction to investigate whether the EWR 

Flight Fee is reasonable. 

The Port Authority argues that the FAA should refrain from exercising its 

authority where the disputed rate is set by a written agreement because it is bad 

policy for a regulator to intervene when two sophisticated parties have negotiated

and reached an agreement. That logic does not apply to this case for several 

reasons.

First, there is no evidence that United, or indeed, any airline actually 

negotiated the EWR Flight Fee formula. See Section II.A., above. In fact, as the 

chronology set forth above clearly shows, United tried on multiple occasions to get 

the Port Authority to agree to change the methodology, but the Port Authority 

refused. See Section II.B., above.
37

Nor is this a case in which the complainant is attempting to use a Part 16 

proceeding to re-negotiate the terms of an airport lease to which the complainant 

had recently agreed. Compare Penobscot Air Services, Ltd., 164 F.3d at 726 

(dismissing the claim that rent charged to an FBO violated federal aviation law and 

noting that complainant had negotiated the lease 10 months before filing the 

complaint); Roadhouse Aviations, LLC at 3-5 (complainant had negotiated disputed 

terms of lease three years earlier).11 

Second, the EWR leases do not actually disclose the true nature of how the 

EWR Flight Fee is calculated and the Port Authority has refused to do so. The 

EWR Flight Fee is set through a complex and non-transparent formula, the real 

result of which is that the Port Authority marks up every dollar of costs included in 

the EWR Flight Fee rate base. 

As shown above, Continental and United repeatedly asked the Port Authority 

for detailed information relating to the EWR Flight Fee calculation to be able to 

determine whether such mark-up is built into the EWR Flight Fee calculation. 

Despite the requirements of federal law that rate setting be transparent and that 

airports provide sufficient documentation to airlines, time after time the Port 

 

11 Compare also Adventure at 24 (dismissing the complaint where the FBO tenant 

had agreed to all of the terms only four years earlier and noting that “the FAA 

compliance process should not be used by a commercial aeronautical tenant to 

circumvent negotiation or commercial litigation available under applicable state 

and local laws to resolve a dispute with its landlord.”); Aerodynamics of Reading, 

Inc. v. Reading Regional Airport Authority, FAA Docket No. 16-00-03, Final 

Decision and Order (Jul. 23, 2001), at 2-3, 16 (dismissing the complaint and finding 

that “the Complainant’s lease was negotiated at arm’s length, and its terms and 

conditions were substantially similar to those the Complainant sought from the 

outset of the negotiations).
38

Authority steadfastly refused to provide any meaningful data, or to acknowledge the 

mark-up. It was not until 2013 that a document created by the Port Authority 

showing the increased ARFF costs plainly disclosed, for the first time, that the 

mark-up exists. The document revealed that the ARFF charges at EWR would be 

“recoverable at 130 percent” from the airlines.12 This fact was hidden from United 

and is not disclosed in the EWR leases or any amendments.

Third, the Port Authority’s contention that Continental could have opted out 

of the EWR lease ignores reality. The New York metropolitan area is the largest 

market in the United States, both for domestic and international travel. 

Continental could not simply abandon its operations at EWR. Nor could 

Continental have moved its operations from EWR to JFK or LGA. See pp. 5-6, 

above. 

Finally, the Port Authority’s reliance on the assumption of unexpired leases 

in Continental’s and United’s bankruptcy cases (filed 22 and 10 years ago, 

respectively), is misplaced. The Port Authority argues that: (1) Continental’s 

assumption (in 1993) of Lease ANA-170, which included modification as to “the 

lease term among other items” but not to the EWR Flight Fee formula, and (2) 

United’s assumption (in 2005) of Lease ANA-535, which included modification for “a 

surrender of space and changes to fees and rentals” but not to the EWR Flight Fee 

formula, thereafter precluded Continental and United from ever challenging the 

EWR Flight Fee formula, even where the Port Authority is charging illegal fees. 

 

12 See Complaint, Exhibit B. As noted, the actual recovery is 138% of costs.
39

Such an argument misconstrues the lease assumption process under the 

Bankruptcy Code and must be rejected.

Section 365 of the Bankruptcy Code governs the treatment of an executory 

contract or unexpired lease to which the bankrupt debtor is a party.13 In this 

regard, a debtor has broad discretion to decide whether to assume or reject an 

unexpired lease. Section 365(a) provides, in relevant part, that a debtor-inpossession (such as Continental and United in their respective bankruptcy cases) 

“subject to the court’s approval, may assume or reject any ... unexpired lease of the 

debtor.” 11 U.S.C. § 365(a); see also NLRB v. Bildisco & Bildisco, 465 U.S. 513, 521 

(1984); In re Lavigne, 114 F.3d 379, 386 (2d Cir. 1997).

The standard rule is that, without the other party’s consent, a debtor can 

assume an unexpired lease only in its entirety – in other words, a debtor cannot 

unilaterally assume an unexpired lease in part or with rewritten terms. See 

Bildisco, 465 U.S. at 531 (stating that the debtor must assume the executory 

contract “cum onere”); Cinicola v. Scharffenberger, 248 F.3d 110, 119 (3d Cir. 2001) 

(“If the trustee meets the assumption requirements under § 365, it must assume the 

executory contract entirely.”). However, in this matter, the parties negotiated a few 

new or modified terms in the leases based on their knowledge of the facts at that 

 

13 The Port Authority’s statement pursuant to 14 C.F.R. § 16.26(c)(2) and the 

Longernecker Declaration wrongly state that Continental’s Lease ANA-170 was 

assumed under Section 362 of the Bankruptcy Code. See Statement of Material 

Facts, ¶ 35; Longernecker Decl., ¶¶ 34, 35. Rather, the assumption of an unexpired 

lease could only have been approved by the bankruptcy court under Section 365.
40

time, which allowed the bankruptcy court to approve the assumption of 

Continental’s Lease ANA-170 and United’s Lease ANA-535, as modified.

Section 365 does not provide that if a debtor moves to assume an unexpired 

lease with new or modified terms negotiated between the parties, thereafter neither 

party can challenge an original term left unmodified as part of the lease assumption 

process. A lease assumption under Section 365, particularly where the lessor 

consents to the assumption, as in this case, is simply a part of the debtor’s 

reorganization – a lease assumption is not an adversarial proceeding in which the 

court rules on the merits of a dispute. Consequently, there is no estoppel or 

preclusive effect with respect to a consensual assumption of an unexpired lease. 

e. The Complaint Identifies Violations of Federal Law 

Apart from the EWR Flight Fee Formula.

There should be no question that the FAA can and should investigate 

United’s claims of significant violations of federal law. In addition to United’s 

challenge to the EWR Flight Fee formula and its hidden, built-in mark-up, the 

Complaint presents evidence of other violations of federal law: (1) unilaterally 

imposed and unreasonable ARFF and security costs; (2) the lack of transparency in 

the Port Authority’s methodology for calculating the EWR Flight Fee; (3) the unjust 

discrimination against EWR users in favor of JFK and LGA users; and (4) the Port 

Authority’s illegal diversion of airport revenue.

United never agreed – in writing or otherwise – to the ARFF and security 

charges. It is well settled that a charge imposed unilaterally by an airport, but 

which is calculated under a formula that exists in a master lease, is not a “charge 
41

imposed by written agreement.” Miami Airport at 15 (noting that “...we are 

reluctant to hold that an airline’s acceptance of a standard agreement requiring the 

payment of fees set by the airport must be deemed to constitute the kind of 

agreement barring an airline from obtaining relief under 49 U.S.C. § 47129 ...”).

Further, the Port Authority’s defense that United agreed to the EWR Flight 

Fee formula (which should be rejected for the reasons described above) has no 

application to the other violations identified in the complaint. The EWR leases do 

not provide the Port Authority with blanket immunity to violate its airport sponsor 

federal grant assurances.

The Port Authority’s position would deprive the FAA of jurisdiction over the 

vast majority of airport violations of federal law. At almost every major airport, 

rates and charges are governed by an agreement, and most airlines are signatories. 

Part 16 requires that a complainant be directly and substantially affected by an 

alleged violation. If signatory carriers – those most likely to be affected by rates 

and charges or revenue diversion violations – could not complain under Part 16, 

then such violations would go unchallenged. This is not, and cannot be, the law.

C. The Port Authority Has Failed to Meet Its Burden to Show the 

Absence of Any Genuine Issues of Material Fact.

1. The Port Authority Has Not Shown the Absence of 

Genuine Issues Regarding Unreasonable and 

Transparent EWR Flight Fees.

As the Port Authority concedes, the accumulation of surplus revenues alone 

may warrant an investigation into the reasonableness of rates and expenditures. 

Mem. at 26; Rates and Charges Policy, 78 Fed. Reg. at 55335, § 4.2.1 (“[T]he 
42

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”). The Complaint alleges in detail that the enormous EWR surpluses derive, 

in part, from a 38% mark-up on costs included in the EWR Flight Fee rate base. 

Complaint, ¶¶ 36, 59, 123, 132. 

The Port Authority claims that it does not know how United calculated the 

38% mark-up. Mem. at 25. The calculation is based on the Port Authority’s own 

documents, and can be done using the numbers contained in the 2014 EWR Flight 

Fee calculation (Ex. 2 to the Declaration of Joseph Garcia, submitted in support of 

the Motion). The PAF Factor charge was $4.59. Multiplying that charge by the 

total maximum take-off weight yields a sum of $147,418,549. That amount is the 

total revenue received by the Port Authority from the airlines for this portion of the 

EWR Flight Fee. Total airfield costs included in the PAF factor were $106,776,578. 

Revenues were thus $40,641,971, or 38% greater, than costs. The same calculation 

can be applied to the components of the 2013 PAF Factor (Ex. 1 to Garcia Decl.) 

with the same result – a 38% mark-up. Span Decl., ¶¶ 22-23. 

Mr. Garcia admits he calculated a 28.14% mark-up (although he avoids the 

term “mark-up,” referring instead to a “ratio,” and does not show his calculation). 

But he arrives at that figure after including a credit for aircraft parking revenues. 

That credit is unrelated and irrelevant to the mark-up on airfield costs. Remove 

that credit from the calculation and the 38% mark-up is revealed.
43

The Port Authority also asserts that the mark-up is not profit because there 

are other costs that are not included in the formula. Mem. at 25-26. The Port 

Authority offers no numbers to support this assertion or to enable the FAA or 

United to calculate the amount of any profit. Such information, of course, is 

precisely what Continental asked for in 2004, 2005, and 2006. See pp. 8-12, above. 

The Port Authority’s response at that time was that Continental was not entitled to 

the information. Id. In any event, the Port Authority cannot now argue that there 

is no issue of material fact when it has raised the apparent defense of whether there 

is a profit on the airfield.

Next, the Port Authority argues that United cannot challenge any costs –

such as the ARFF or security costs – that are included in the computation of the 

EWR Flight Fee because such costs are not subject to “any caps or other limits.” 

Mem. at 27. In other words, at the same time the Port Authority argues that the 

EWR Flight Fee is immune to regulatory examination because of the leases, it also 

argues that the leases entitle it to charge whatever it wants through limitless 

spending on costs that are incorporated into the EWR Flight Fee. Such a circular 

argument, in addition to making no sense, does not demonstrate the absence of a 

genuine issue of material fact.

To the contrary, the Port Authority’s circular theory only highlights the 

numerous material issues of fact regarding the unreasonableness of the components 

that comprise the EWR Flight Fee. For example, as alleged in the Complaint, there 

are several ways in which the new ARFF program includes unreasonable costs, 
44

even before the 38% mark-up is applied. Instead of hiring new employees at lower 

compensation rates, the Port Authority is training Port Authority Police 

Department (“PAPD”) officers to perform the ARFF functions. Consequently, the 

compensation and benefits package for the Port Authority’s ARFF cadre is far above 

market. The ARFF staffers are paid significantly more than New York 

metropolitan area firefighters. They are paid 40% more than FDNY firefighters 

and up to 70% more than other New York metropolitan area firefighters. 

Complaint, Exhibit GG (Expert Report of Professor David Lewin), ¶¶ 19-22. Total 

ARFF costs to the Port Authority average $242,000 per firefighter. Complaint, 

Exhibit L (Chart Showing Impact of Increased ARFF Costs). 

Incredibly, after re-assigning the very highly-compensated PAPD officers to 

fill the ranks of the new 280-officer ARFF cadre, the Port Authority plans to 

maintain the same number of police officers who were providing both police and 

firefighting services. That means there are 280 more Port Authority police officers 

and firefighters on the payroll than there were before the 2013 settlement 

agreement with the FAA regarding ARFF (the “FAA Settlement”). Moreover, 

despite the FAA’s clear intent to separate the two forces, the Port Authority will 

continue to cross-train officers for both firefighting and police duties, paying 

mandatory overtime for this additional training, regardless of the duty to which the 

officer is assigned, resulting in additional training and overtime costs. 

Finally, the Port Authority allocates the increased ARFF costs among its 

airports in a fashion that disproportionately burdens the airlines operating at EWR. 
45

Specifically, EWR is saddled with 41% of the new ARFF cost, compared to 33% at 

JFK, even though EWR had the fewest claimed instances of training violations, and 

JFK the most, among the Port Authority airports. 

There are similar issues of material fact concerning non-ARFF security costs 

that United is similarly forced to pay. Since 2010, this cost item has increased by 

more than 40%, from approximately $27 million to approximately $38 million. 

Further, due to the hidden mark-up contained in the EWR Flight Fee formula, 

these police costs generated an additional $3.8 million in revenue for the Port 

Authority at EWR in 2013. Complaint, ¶ 94. Port Authority police officers and 

supervisors earned more than $200,000 in wages, often doubling their base salaries 

through overtime and other compensation. Id. at 95. Including overtime, mean 

annual total compensation for Port Authority officers in 2013 was $124,000 vs. 

$83,000 for NYPD – 49% higher. Exhibit GG to Complaint, ¶ 18. Because of this 

overtime, Port Authority police are also paid significantly more than police in the 

New York metropolitan area (including northern New Jersey). Id. In 2013, Port 

Authority officers received 65% more pay, while sergeants were paid 76% more. Id. 

While United respects and appreciates the work of the Port Authority police, United 

should not bear the brunt of unreasonable overtime and compensation policies of 

the Port Authority. 

The Port Authority’s Motion does not refute any of these facts. Instead, the 

Port Authority offers two arguments (on a single page) defending the 272% increase 

in ARFF costs. Mem. at 27. Each lacks merit.
46

First, the Port Authority claims that the FAA has no authority to examine 

whether the ARFF and security charges are reasonable because the EWR leases 

include “emergency services” among the categories of costs that can be included in 

the EWR Flight Fee. Id. The Port Authority argues that any cost that may be 

included in the formula cannot be challenged by a signatory airline. Applying this 

logic, the Port Authority could charge any amount it wishes for the ARFF cadre, or 

any other category of cost identified in the EWR Flight Fee formula, and the EWR 

users would be powerless to challenge the airport’s practices. That is clearly 

incorrect under the law. The Rates and Charges Policy does not allow limitless 

spending: “Airport proprietors are encouraged to establish fees with due regard for 

economy and efficiency.” 78 Fed. Reg. at 55334, § 2.4.3. In other words, the 

guidelines prohibit the practice of “gold plating” – an airport cannot make 

extravagant and unnecessary expenditures and then pass the costs on to the users.

The evidence here shows that the challenged ARFF and security 

expenditures are gold plating and unreasonable. At the very least, there is a 

dispute about the reasonableness of the expenditures that cannot be resolved on 

summary judgment.

The Port Authority also refers to the FAA Settlement but does not (and 

cannot) assert that it requires the excessive and unreasonable expenditures for the 

new ARFF cadre. Mem. at 27.

Because there are genuine issues of material fact going to the reasonableness 

of the EWR Flight Fee, the Motion for Summary Judgment should be denied.
47

2. The Port Authority Has Not Shown the Absence of 

Genuine Issues Regarding Revenue Diversion.

Unlawful revenue diversion is another distinct violation of federal aviation 

law independent of the other statutory violations alleged against the Port 

Authority. The Complaint alleges in detail the Port Authority’s diversion of airport 

revenue to subsidize facilities in New Jersey that it neither owns nor operates. See

Complaint, ¶¶ 29-32; 170-178. The Port Authority spends hundreds of millions of 

dollars on New Jersey projects it neither owns nor operates, in plain violation of the 

words of Section 47107(b)(2). Complaint, ¶¶ 175-76. Its 2014 budget allocates 

$181 million for improvements to the Pulaski Skyway and $60 million for repairs to 

the Wittpenn Bridge, neither of which is owned or operated by the Port Authority. 

See Exhibit A to Complaint [2014 Budget] at p. 74. It has similarly expended tens 

of millions of dollars in recent years on the New Brunswick Civic Center, the 

Stevens Institute of Technology (a private college in Hoboken), the Jersey City 

Medical Center and Independence Park, a Newark space run by Essex County, New 

Jersey. See Exhibit K to Complaint. 

United also alleges, without refutation, that these expenditures are made 

while the Port Authority accumulates enormous amounts of surplus revenues at 

EWR. The Port Authority concedes that “the issue of accumulated surpluses is one, 

which the FAA and DOT will examine in the context of reviewing complaints 

concerning revenue diversion.” Mem. at 26. 
48

Because such diversion is a prima facie violation of 49 U.S.C. § 47107(b)(2) 

(the “grandfather clause”), investigation into its scope and impact on airport fees is 

warranted. Complaint, ¶¶ 29-32; 170-178.

In its Motion, the Port Authority concedes, as it must, that Section 

47107(b)(2) governs the uses for which it can and cannot divert airport revenues. 

But the Port Authority also argues that the language of the grandfather clause, 

which requires that revenues be used “to support . . . other facilities of the owner or 

operator,” actually allows expenditures on non-owned facilities that “support” or are 

“related to” its owned facilities. Mem. at 34-36. In other words, despite the plain 

language of the grandfather clause requiring that airport revenues be spent on 

facilities “of the owner or operator,” the Port Authority seeks to stretch that 

language beyond all limits by arguing that it includes money spent on facilities 

owned by others that “support” the Port Authority facilities.

The examples given in support of the Port Authority’s novel theory only 

confirm that it cannot stand. The Port Authority claims that the use of airport 

revenues to fund the Jersey City Medical Center is lawful because that center 

“serves Port Authority facilities in the region.” Mem. at 35-36. It similarly justifies 

the funding of the New Brunswick Civic Center, Stevens Institute of Technology, 

the Jersey City Medical Center and Independence Park with airport revenue 

because these expenditures were made “at the request of the respective Governors 

consistent with existing legislation.” Id. It insists that the use of airport revenues 

to fund Routes 1 & 9, Pulaski Skyway and the Wittpenn Bridge is appropriate 
49

because “of the ongoing needs of the Port Authority’s facilities for efficient 

transportation and egress of goods and supplies.” Id. In short, according to the Port 

Authority, spending airport revenues on anything to do with transporting goods or 

servicing people anywhere in New Jersey is permissible because its employees or 

operations are among those that benefit, making such expenditures “related to” Port 

Authority “operations.” Alternatively, the Port Authority’s novel theory suggests 

that expenditures at the request of “Governors” somehow shield it from FAA 

jurisdiction. Nothing could be further from the truth. 

Thus, according to the Port Authority, it may spend airport revenue on: (1) 

any hospital it does not own or operate because the hospital may treat Port 

Authority employees; (2) any State-owned roads and bridges that carry traffic that 

eventually uses Port Authority tunnels; (3) any local parks, because Port Authority 

employees may use them for recreation; and (4) any colleges, because they may 

educate future Port Authority employees. Such a tortured construction of the 

grandfather clause would create exceptions that would swallow the clause. An 

argument could be made that any spending, no matter how far afield, somehow 

benefits or supports some Port Authority facility. This argument is neither credible 

nor supported by the law, and should be rejected out of hand. 

Even as to revenues diverted by the Port Authority that arguably are within 

the scope of the grandfather clause, the FAA should investigate the reasonableness 

of the fees that generate the surplus allowing for such diversion. As United has 

shown, EWR generates hundreds of millions of dollars for the Port Authority every 
50

year. The grandfather clause is not a license to charge unreasonable fees. As the 

Rates and Charges Policy states: 

The Department assumes that the limitation on the use of 

airport revenue and effective market discipline for aeronautical 

services and facilities other than the airfield will be effective in 

holding aeronautical revenues, over time, to the airport 

proprietor's costs of providing aeronautical services and 

facilities, including reasonable capital costs. However, 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. 

78 Fed. Reg. at 55335, § 4.2.1.

Because the Port Authority has failed to show the absence of a genuine issue 

on the revenue diversion claim, the Motion for Summary Judgment should be 

denied.

3. The Port Authority Has Not Shown the Absence of 

Genuine Issues Regarding Unlawful Discrimination 

Against EWR Users.

Federal law provides that “[a]eronautical fees may not unjustly discriminate 

against aeronautical users or user groups.” 78 Fed. Reg. at 55335, § 3; see also id. 

at § 3.1 (“[t]he airport proprietor must apply a consistent methodology in 

establishing fees for comparable aeronautical users of the airport”); 49 U.S.C. § 
51

47107(a)(1) (airports must “be available for public use on reasonable conditions and 

without unjust discrimination.”). United has submitted evidence, undisputed by the 

Port Authority, that establishes a discriminatory fee structure at EWR: 

• The air carriers operating out of EWR, JFK and LGA are all similarly 

situated, “making the same or similar use” of the airports. Complaint, 

¶ 168. 

• The EWR Flight Fee is 75% higher than the JFK Flight Fee and 27% 

higher than the LGA Flight Fee, notwithstanding that all three 

airports are operated by the Port Authority. Complaint, ¶ 22. 

• The cost per enplanement is actually higher at JFK than at EWR. 

Complaint, ¶ 168. There, is, therefore, no economic justification for the 

disparity in Flight Fees. 

Without any evidence to refute these facts, the Port Authority instead argues 

once again that United cannot be heard to complain about – and the FAA cannot 

investigate – the EWR Flight Fee because that rate is set by a written lease 

agreement. As discussed at length above, the EWR leases do not absolve the Port 

Authority’s violations of federal law in setting rates, including the Grant Assurance

prohibiting unjust economic discrimination.

The Port Authority also argues that the disparate rates are permissible as a 

matter of law because the leases at EWR, on the one hand, and the leases at JFK 

and LGA, on the other hand, were negotiated at different times. The Port Authority 

again misstates the law.
52

Alaska Airlines v. Los Angeles World Airports, DOT Order 2007-6-8, Docket 

DOT-OST-2007-27331 (Jun. 15, 2007) (“LAX III”) is instructive. In LAX III, the 

airlines operating out of certain terminals at LAX (the “T1/3 Airlines”) initiated an 

action against the airport, asserting a claim (among others) for unjust 

discrimination because LAX had imposed a new rental rate that was significantly 

higher than the rent rate applied to the airlines operating from other terminals. 

LAX III at 13. The administrative law judge (“ALJ”) found that LAX’s imposition of 

a new rental rate on the T1/3 Airlines was unjustly discriminatory because these 

airlines paid significantly more than the airlines at other terminals that were 

comparable facilities in all material respects. “The fact that the T2/T4-8 earners 

have long term leases and the T1/T3 carriers have expired or short-term leases is, in 

the view of the ALJ, an artificial classification and a ‘distinction without a 

difference.’” Id. at 59.

The DOT upheld the ALJ’s decision on the unjust discrimination issue. The 

DOT found that with respect to similarly situated aeronautical users, although 

“charges need not be identical...[they] must be substantially comparable.” Id. at 63 

(internal quotation marks omitted). In rejecting the airport’s contention that it is 

permissible to distinguish between short-term lessors whose lease agreements 

expired in 2007 and long-term lessors who signed agreements in the mid-1980’s, the 

DOT concluded that the airport “has not shown that rentable space methodology is 

reasonably related to the carriers operating under a Tariff or short-term lease and 
53

therefore has not shown how it is justified in treating the T1/T3 Carriers differently 

than those in T2/T4-8.” Id.

The DOT also distinguished the FAA FBO decisions that held that airports 

may charge different rates to different FBOs, depending on when and under what 

circumstances the leases are negotiated. The DOT held that in those cases the 

differences between the rents was relatively small, that the complainant FBOs had 

actually negotiated and agreed to the challenged rents, and that there were 

differences in the premises at issue in those cases. Id. The DOT concluded: “An 

airport may lawfully impose reasonable classifications on air carriers and negotiate 

different terms of use and charges for such use with them....However, an airport 

may not impose a more burdensome fee structure on a new classification of airline 

user without demonstrating at least a reasonable correlation between the new fees 

and the airline classification.” Id. at 57.

While the D.C. Circuit reversed that decision, it did so only because it found 

that the DOT had incorrectly imposed the burden of proof on the airport. LAX III, 

575 F.3d 750, 760 (D.C. Cir. 2009). The court held that because the airport had 

established prima facie evidence that there was a reasonable basis for the different 

rent rates, the burden of persuasion had shifted to the airlines. Id. 

Here, the Port Authority has no reasonable basis to charge a higher Flight

Fee at EWR than at JFK and LGA. Specifically, EWR’s fee is 75% higher than the 

Flight Fee at JFK and 27% higher than at LGA, even though all three airports are 

located in the New York metropolitan area and JFK has substantially similar 
54

operations to EWR. The Port Authority has proffered no evidence to support the 

substantial disparity of fees between EWR, on the one hand, and JFK or LGA on 

the other.

Finally, the Port Authority contends that United has not established that the 

“tenants at the New York airports and at Newark are similarly situated.” Mem. at 

33. That is simply not so. First, it is self-evident that the air carriers at EWR, JFK 

and LGA are all providing commercial air services. See Complaint, ¶ 168.

Second, the Expert Report of Daniel M. Kasper (“Kasper Report”), Exhibit EE 

to United’s Complaint, describes in detail how the EWR Flight Fee puts United at a 

competitive disadvantage vis-à-vis the airlines serving JFK and LGA. Mr. Kasper 

further notes that 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.” Kasper Report at 22. Mr. Kasper also concludes that “from an airline 

perspective United’s EWR services compete with other airlines whose services 

operate from JFK and/or LGA.” Id. at 22-23. 

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 the New 

York metropolitan area as a unified system. See N.Y. Unconsol. Law §§ 6631-6647; 

N.J. Stat. Ann 32:1-35.1. The Port Authority should therefore be held accountable 

when it creates a rate structure that discriminates against one group of airport 

users. 
55

For these reasons, United believes the evidence militates in favor of a finding 

of unjust economic discrimination. But at a minimum, there exists a genuine issue 

of material fact with respect to this alleged violation of the grant assurances.

4. The Port Authority Has Not Shown the Absence of 

Genuine Issues Regarding Its Monopoly Power.

The Complaint alleges that the Port Authority, as the operator of the three 

major New York metropolitan area airports, enjoys monopoly power over United, 

and uses this power to extract unreasonably high fees. See, e.g., Complaint, ¶¶ 61-

78. Those allegations are supported by facts set forth in the Complaint, as well as 

the Kasper Report.

In the Motion, the Port Authority does not refute any of the facts proffered by 

United. Instead, the Port Authority offers an opposing expert report by Matthew H. 

Lee, who argues that airports are no longer “natural monopolies.”14 The attached 

Rebuttal Report of Daniel M. Kasper demonstrates that:

• Mr. Lee fails to challenge United’s central point that, regardless of 

whether the source is natural or unnatural, the Port Authority clearly 

has monopoly power over airline access to the New York metropolitan 

area.

 

14 In an apparent diversionary tactic, the Port Authority and Mr. Lee also refer to 

United’s market share at EWR and its use of slots. Mem. at 8. That argument is 

irrelevant to the issue of the Port Authority’s monopoly power, and to the other 

issues raised in the Complaint. Accordingly, without conceding anything about the 

validity of the argument or the factual assertions the Port Authority purports to 

make in support of that argument, United will not address it here, other than to 

note that Mr. Lee’s speculation about United’s ability to affect EWR rates and 

charges is belied by the history set forth at pp. 6-12, above.
56

• Airlines that want access to the large volume of passengers traveling 

to and from the New York metropolitan area – the nation’s largest 

source of passenger traffic – have no realistic alternative but to use 

airports controlled by the Port Authority.

• Mr. Lee does not contest the fact that the need to protect airport users 

from the potential abuse of monopoly power by airports has been 

widely recognized.

• United could not move its operations to JFK or LGA. 

Once again, the Port Authority’s Motion does not demonstrate the absence of 

genuine issues of material fact regarding its monopoly power and the effect of that 

power on users of EWR. The Motion should be denied. 

IV. CONCLUSION

United has more than met its burden of proof to demonstrate facts 

warranting an FAA investigation under Part 16. Many of those facts are not denied 

by the Port Authority. Others are disputed by the Port Authority, demonstrating a 

priori that summary judgment is not appropriate in this case.

Part 16 was conceived as a means to empower and enable the FAA to 

investigate complaints against airport sponsors; the mere existence of a written 

agreement between the complainant and airport sponsor cannot effectively afford 

the airport sponsor immunity from investigation. That result would be perverse 

and against public policy, particularly in cases such as this where the effect of the 

written agreement was not transparent, access to pertinent information about the 
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agreement was denied by the airport sponsor, and the agreement was effectively a 

“contract of adhesion” concerning which many significant aspects were never 

subject to negotiation between the parties.

Far from appropriate for dismissal by summary judgment, United’s 

Complaint reports serious and significant violations of federal law that the FAA is 

compelled to investigate. The Port Authority’s Motion should be denied.