# U.S

. Department

of Transpo rta1ion



# Federal Av iatio n

A d ministration



# September 3, 2015

Carlene V. Mcintyre, Esq.

Assistant General Counsel Office of A i rport Compliance

and Management Analys i s



# Port Authority of New York and New Jersey

225 Park Avenue South, 15th Floor

New York, NY 10003

Dear Ms. Mcintyre: 800 Independence Ave

. , SW

. Washington

, DC 20591



# On December 10,2014, United Airlines (United) filed a 14 CFR Part 16 Complaint

, FAA

Docket No. 16

- 14-13

, against the Port Authority ofNew York and New Jersey (PANYNJ),

operator of Newark Liberty International Airport (EWR), New Jersey. Subsequently, both

parties submitted pleadings as prov i ded for i n 1 4 CFR 

# § 16

. 23 in support of their respective positions.

The Director has reviewed all the submissions and has concluded that there appears to be a reasonable basis for further investigation. As a result, pursuant to 14 CFR 

# § 16.29 (b )(3) and

14 CFR 

# § 16.11 (a), the Director is conducting a review of certain airport financial records

and transactions concerning PANYNJ's aviation activities

, including records specifically

related to EWR.

As part of the investigation, the Director has contracted Ernst & 

# Young LLP (EY) to provide

support services for the above-mentioned financial review. The Director has requested EY to perform the following services to include: (1) examining PANYNJ 's "grandfa thered"

expenditures; (2) examining the extent ofPANYNJ's "grandfathered" status and

methodology; and (3) examining PANYNJ's revenue use

. As part of this effort, EY i s required by their contract to vis i t P ANYNJ and EWR offices for the purpose of collect i ng required information, i dentifying comp l iance issues

, and reporting to the Director.

The Di r ector proposes to beg i n this phase of the investigation on September 15, 20 1 5. It 

# will

be necessary for EY staff members to visit the PANYNJ and EWR offices to review

documents related to PANYNJ " grandfathering" and EWR revenue use. We would

appreciate it if you would facilitate our efforts by notifying the appropriate officials ofEY's

visit. Additionally, p l ease make arrangements to ensure EY's access to the requested

financial records and to key staff members

.

# 2

Enclosed is FAA's data reque st, which li sts documents EY will be reviewing. As they analyze the information provided, EY may request additional documents for clarification as required. Please have these documents available at the beginning ofEY's review, September

15

, 2015. Early electronic submission is encouraged.

Please have your liaison contact Mr. Burton Marshall, at (202) 267-4393 or via email

Burton.Marshall @ faa.gov, to coordinate the time and location of our entrance conference

, proposed attendees

, an d data request. Mr. Marshall will be attending the entrance conference

and is also available to answer questions about this process.

Sincerely,

Direc or of Airport Compliance

anagement Analysis

cc: Robert S. Span

Steinbrecher 

# & Span LLP

Marc 

# L. Warren

Crowell & 

# Moring LLP

EnclosureFAAAirportCompliancePortAuthorityofNY/NJDataRequestforallPortAuthorityofNewYorkandNewJersey(PANYNJ)airports4567uarterlyreportsongrandfatheredcostcalculationsforyearsquarterlyreportswererequiredaspartofPANYNJ"payback"nforFY2011andFY2012.Directandindirectcostallocationplansdetailingcostallocationmethodologyandcalculationsfrompolice,fire,legal,fleet,andanyadministrativeservicedepartmentsforFY2009throughFY2014.Duringtheon-sitephaseoftheanalysis,wewillalsorequireaccesstopersonnelfromthesedepartmentstoexplaintheallocationofcoststotheairports.Listofprojects,businesslines,oradministrativeunitsthatbenefitedfromgrandfatheredfundsfromFY2009toFY2014.Note:Ifdocumentationcanbeprovidedaheadoftime,wekindlyaskthatyoupleaseprovideitatyourearliestconvenience.Ifanyofthedocumentationisnotavailablepleaseindicatesuchwithanexplanationastowhy.Thislistissubjecttochangebasedonourinquirieswithprocessownersandanalysisofdocumentation.Additionaldatarequestsmaybemadethroughouttheanalysis.1/1FAAAirportComplianceNewarkLibertyInternationalAirportDataRequestforNewarkLibertyInternationalAirportCEWRlAnnualTrialBalancesforFY2009-FY2014,andanyamendmentstotheFY2014FinancialStatementbalances.WewillberequestingassistancewithreconcilingFAAForm5100-127:OperatingandFinancialSummaryfortheairportandForm5100-126:FinancialGovernmentPaymentReporttotheTrialBalanceandthentothePortAuthorityofNewYorkandNewJersey(PANYNJ)FinancialStatements.Inaddition,theTrialBalanceswillbeusedasabasisforouraccountanalyses.3lAschedulewithsupportingdocumentationofStateandlocalgovernment/(PANYNJ)reimbursementstotheairport.SchedulesofRatesandChargesbetweentheStateandlocalgovernments/PANYNJandtheairport.ThesetransactionsshouldincludebothdirectandindirectbillingsfromStateandlocalgovernmentaldepartments.Pleaseincludebillingsand4IsupportingdocumentationbetweentheairportandtheStateandanylocalgovernments/PANYNJ.Documentationshouldincludeascheduleofinter-fundtransfersforFY2009throughFY2014betweentheairportproprietaryfundandallotherfunds.1/2FAAAirportComplianceNewarkLibertyInternationalAirportDataRequestforNewarkLibertyInternationalAirport(EWRlNote:Ifdocumentationcanbeprovidedaheadoftime,wekindlyaskthatyoupleaseprovideitatyourearliestconvenience.Ifanyofthedocumentationisnotavailablepleaseindicatesuchwithanexplanationastowhy.Thislistissubjecttochangebasedonourinquirieswithprocessownersandanalysisofdocumentation.Additionaldatarequestsmaybemadethroughouttheanalysis.2/2