### UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION WASHINGTON, D.C.

United Airlines, Inc. Complainant,



### v. The Port Authority ofNew York

and New Jersey Respondent. ) ) ) ) ) ) ) )



### ORDER FAA Docket No. 16-14-13

On February 10,2015, the Respondent, The Port Authority ofNew York and New Jersey filed a Motion for Summary Judgment Dismissing the Complaint filed by Complainant, Uni ted Airlines, Inc. The Complainant requested an extension oftime to respond to the Respondent's Motion which was granted by the Director. On March 27, 2015, the Complainant filed its response to the Respondent's Motion.
The Respondent asserts that the Federal Aviation Administration (FAA) should not entertainjurisdiction ofthe Complainant's Part 16 Complaint. The Respondent asserts that the FAA will not takejurisdiction under Part 16 to adjudicate a complaint regarding a fee established by agreement brought by a party to the agreement. The Respondent also asserts that the Complainant cannot susta in its burden because it did not include the lease agreement language containing the flight fee in its complaint or exhibits. Respondent claims there is no revenue diversion, and that the Complainant does not deny that the Respondent is grandfathered. The Respondent does acknowledge that the issue of accumulated surpluses is one which the FAA and the U.S. Department ofTransportation (DOT) will examine in the context ofreviewing complaints concerning revenue diversion.
The Complainant contends that the Respondent failed to meet its burden to prove the absence ofgenuine issues ofmaterial fact on all claims. The Complainant acknowledges that it did n ot submit th e lease agreements, but that "the Complaint clearly alleges the existence ofthe lease and describes the formula for calculating the EWR Flight Fee." The Complainant cites to the Rates and Charges Policy in sta ting, "FAA's role is to determine whether the airport proprietor is in compliance with its obligations and statutory obligations relating to airport fees." The Complainant claims that the FAA should exercise itsjurisdiction to investigate whether the Newark Liberty InternationalAirport (EWE) Flight Fee is reasonable. The Complainant contends the Respondent's Motion should be denied. Analysis 

### 2

The Respondent is correct that as stated in the Policy Regarding the Establishment of AirportRates and Charges (Rates and Charges Policy), "It is the fundamental position of the [DOT] that the issue ofrates and charges is best addressed at the local level by agreement between users and airports

. [See Rates and Charges Policy, 78 Fed. Reg. 55331 (September 10, 2013)]
The Rates and Charges Policy recognizes that DOT will not entertain a complaint about the reasonableness ofa fee set by agreement filed by a party to the agreement setting the disputed fee. The Policy does not stop here, but goes on to state that "a dispute that is not subject to processing under the expedited procedures mandated by§ 47129, including a dispute over matters described by§ 47129 (e) and (f), will beprocessed by FAA under procedures applicable to airport compliance matters in general." (emphasis added) [78 Fed.Reg.55331,55332]
As recognized by the Complainant, the FAA's role is to determine whether the airport proprietor is in compliance with its grant obligations and statutory obligations relating to airport fees. [78 Fed.Reg. 55332] The Respondent is also correct in that the "FAA proceeding is not intended to provide a mechanism for ad judicating the respective rights ofthe parties to a fee dispute." [Id., 55332]
The FAA has entertained numerous cases in which the airport sponsor and a Part 16 complainant have a formal agreement. FAA's role is not to enforce the lease terms between the parties to an agreement, but to enforce the Federal obligations in the grant agreements between an airport sponsor and the Federal Government. [See AmAv v. Maryland Aviation Administration, FAA Docket No. 16

-05

- 12, (March 20, 2006) (Director's Determination), p. 23]
The FAA has explained in Part 16 decisions that any action that is contrary to the sponsor's grant assurances is within the scope ofthe FAA to review and address. When information contained in the administrative record to a Part 16 complaint leads the Agency to review areas ofnoncompliance

- whether or not they are alleged by the complainant- the Agency will, nonetheless, make a finding on those areas. [Seefor example, M. Daniel Carey and CliffDavenport v. Afton-Lincoln County Municipal Airport Joint Powers Board. FAA Docket No. 16-06

-06, (January 19, 2007) (Director's Determination), Issue 7]
Under this standard, the FAA does not view the Complainant's failure to include the lease agreements with its original Complaint filing as a fatal flaw under the Part 16 requirements requiring dismissal ofthe Complaint. The lease agreements were filed by the Respondent and are now part ofthe administrative record, and are subject to review. Such a review will include an examination ofthe flight fee and whether the fee was set

### 3

consistent with Grant Assurance 22, and the Rates and Charges Policy. The Rates and Charges Policy cautions that the "progressive accumulation ofsubstantial 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. 55335] Additionally, the Respondent failed to support its claim that there is no genuine issue material fact as to the Respondent's use ofairport revenue and its grandfathering status. The FAA's Policy andProcedures Concerning the Use of Airport Revenue (Revenue Use Policy), 64 Fed. Reg. 7696, 7722 (Feb. 16, 1999) provides that " to detect whether airport revenue has been diverted from an airport, the FAA will depend primarily upon four sources ofinformation: 1. Annual report on revenue use submitted by the sponsor under the provisions of49 U.S.C. § 47107(a)(19), as amended. 2. Single audit reports submitted, pursuant to 49 U.S.C. 

### § 47107(m), with annual single audits conducted under 31 U.S.C. §§ 7501-7505. 3. Investigation following a third party complaint filed under 14 CFR Part 16, FAA Rules of Practice for Federally AssistedAirport Enforcement Proceedings, and 4. DOT Office ofInspector General audits. [See Meyer v. City of Cincirmati, Ohio, FAA Docket No. 16

- 12-14, Director's Determination, September 12, 2014, at page 14] There is a sufficient allegation regarding revenue diversion warranting review under the Part 16 enforcement process. The Director has reviewed all the submissions and has concluded that there are genuine issues ofmaterial fact. The issues include but are not limited to the Respondent's compliance with Grant Assurance 22, Economic Nondiscrimination; Grant Assurance 24, Fee andRental Structure; and Grant Assurance 25,Airport Revenues. ACCORDINGLY, it is ordered that: Respondent's Motion for Summary Judgment Dismissing the Complaint is denied. The Respondent shall, within 20 days ofwhen this Order is served, file its Answer to the Complaint.

Randall S. Fiertz Director, Office ofAirport Compliance

and Management Analysis

### CERTIFICATE OF SERVICE

HEREBY CERTIFY that on April

# j[]__, 2015, I caused to be placed in the United States mail (first class, postage paid) or personally delivered a true copy ofthe foregoing Order addressed to: ·

Counsel for Respondent
Car lene V. Mcintyre, Assistant General Counsel Arnold D. Kolikoff , Attorney Faith Tabafunda, Attorney LawDepartment THE PORT AUTHORITY OFNEW YORK AND NEW JERSEY 150 Greenwich Street, 25th Floor New York, NY 10006 Counsel for Complainant
Marc 

### L. Warren, Esq. Keith 

### J. Harrison, Esq. Gerald F. Murphy, Esq. Steven J. Seiden, Esq. CROWELL 

### & MORING LLP 1001 Pennsylvania Avenue, NW Washington, DC 20004 Robert S. Span, Esq. Alan K. Steinbrecher, Esq. Sophy Chen, Esq

. STEINBRECHER 

### & SPAN LLP 1155 F Street, N.W., Suite 1050 Washington, DC 20004 Hand-Delivered to: FAA Part 16 Airport Proceedings Dock et (AGC

-600) FAA Office ofAirport Compliance and Management Analysis, AC0-100 

### 4



# t1Pwiv

**~~~** 4-t-l- IS Claudia Roberts 0 Office ofAirport Compliance and Management Analysis