FEDERAL AVIATION ADMINISTRATION 

RECEIVED 

APR 2 8 2015 

UNITED STATES DEPARTMENT OF TRANSPORTATION 

----------------------------------------------------------------------------------:X: PART 16 DOCKETS 

Docket No. 

FAA-16-14-13 

UNITED AIRLINES, INC., 

Complainant, 

v. 

THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, 

Respondent. 

----------------------------------------------------------------------------------:X: 

MOTION FOR LEAVE TO FILE A REPLY TO ANSWER OF UNITED AIRLINES, 

INC. TO THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY'S MOTION 

FORSUMMARYJUDGMENT 

Respondent The Port Authority ofNew York and New Jersey ("the Port Authority"), 

hereby moves for leave to file a Reply Memorandum Of Points And Authorities to the Answer 

Of United Airlines, Inc. To The Port Authority Of New York and New Jersey's Motion For 

Summary Judgment ("Reply Memorandum") herein pursuant to 14 C.P.R.§ 16.19 (a) and the 

Reply Declaration of David A. Kagan and the Exhibits annexed thereto, based upon the annexed 

Declaration of Carlene V. Mcintyre. 

Dated: April27, 2015 

Respectfully submitted, 

tf±li!!r;;;;.___-

Arnold D. Kolikoff 

Faith Tabafunda 

The Port Authority of New York and New Jersey 

4 World Trade Center 

150 Greenwich Street, 25th Floor 

New York, N.Y. 10007 

Telephone: (212) 435-3503 

Attorneys for Respondent 

The Port Authority of New York and New Jersey 
TO: 

Office of the Chief Counsel 

Attention: FAA Part 16 Airport Proceedings Docket, AGC-600 

Federal Aviation Administration 

800 Independence Avenue, SW 

Washington D.C. 20591 

Keith J. Harrison 

Gerald F. Murphy 

Steven J. Seiden 

Crowell & Moring LLP 

1 001 Pennsylvania A venue, NW 

Washington, DC 20004 

(202) 624-2500 

Robert S. Span 

Alan K. Steinbrecher 

Sophy Chen 

Steinbrecher & Span LLP 

1155 F Street, N.W., Suite 1050 

Washington, DC 20004 

(202) 559-8680 

rspan@steinbrecherspan.com 

Attorneys for Complainant 

2 
. FEDERAL AVIATION ADMINISTRATION 

UNITED STATES DEPARTMENT OF TRANSPORTATION 

----------------------------------------------------------------------------------;>[ 

UNITED AIRLINES, INC., 

Complainant, 

v. 

THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, 

Respondent. 

----------------------------------------------------------------------------------;>[ 

DECLARATION OF CARLENE V. MciNTYRE 

I, Carlene V. Mcintyre, declare as follows: 

Docket No. 

FAA-16-14-13 

1. I am an Assistant General Counsel in the Law Department of the Respondent The 

Port Authority of New York and New Jersey ("the Port Authority") assigned to represent the 

Port Authority in this matter. In that capacity, I am fully familiar with the facts set forth herein. 

2. This Declaration is submitted in support of the motion of the Port Authority 

pursuant to 14 C.F.R. § 16.19 (a) forleave to file a Reply Memorandum to the Answer Of United 

Airlines, Inc. To The Port Authority Of New York and New Jersey's Motion For Summary 

Judgment ("Reply Memorandum") and a Reply Declaration of David A. Kagan ("Kagan 

Declaration"}(collectively "Reply Documents"). 

3. The principal ground for granting leave to the Port Authority to file the Reply 

Documents is the filing by United Airlines, Inc. ("United'') of numerous exhibits in support of its 

Answer Of Omted Airlmes, Ihc. To The l'mt Authority OfNe" Yerk ana l>k'N Jers~y's l\!IGtion 

For Summary Judgment ("Answer") which United could have attached as exhibits to its 

Complaint, but which United presented only after the submission by the Port Authority of its 

Motion For Summary Judgment Dismissing The Complaint herein. 
· 4. Specifically, United for the first time submits as Exhibits 00 through DDD to its 

Answer correspondence between Continental Airlines, United's predecessor, and Continental's 

counsel, on the one hand, and the Port Authority and its counsel, on the other hand, between the 

years 2003 and 2006 in support of United's Complaint. United clearly had these documents 

available to it to be included as exhibits to its Complaint when it filed that document, but chose 

not to do so. 

5. In addition, United rnischaracterizes the Port Authority's references to the actions 

of United and Continental during bankruptcy proceedings as an argument that such actions 

preclude United from bringing this Part 16 proceeding. But, the Port Authority made no such 

argument. 

6. Finally, for the first time, United attempts to explain its failure to include among 

the exhibits to its Complaint the lease documents between the Port Authority and United 

establishing the EWR flight fee. 

7. I have sought Consent from counsel for United to the granting of leave to file the 

Documents. Counsel for United has stated that United could not take a position on the issue of 

granting leave without having seen the ReplyDocuments. 

8. The Port Authority respectfully submits that it should be given leave to file the 

Reply Documents to respond to United's Answer to address the documents which United filed 

with its Answer, and the new issues raised in United's Answer. 

2 
I declare under the penalty of perjury under the laws of the United States of America that 

that the foregoing is true and correct. 

Executed at New York, New York, on April27, 2015. 

3 
FEDERAL AVIATION ADMINISTRATION 

UNITED STATES DEPARTMENT OF TRANSPORTATION 

---c------------------------------------------------------------------------------)( 

UNITED AIRLINES, INC., 

v. 

Complainant, 

Docket No. 

FAA-16-14-13 

THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, 

Respondent. 

----------------------------------------------------------------------------------)( 

REPLY MEMORANDUM OF POINTS AND AUTHORITIES TO THE ANSWER OF 

UNIT~D AIRLINES, INC. TO THE PORT AUTHORITY OF NEW YORK AND NEW 

JERSEY'S MOTION FOR SUMMARY JUDGMENT 

DISMISSING THE COMPLAINT 

Carlene V. Mcintyre 

Arnold D. Kolikoff 

Faith Tabafunda 

THE PORT AUTHORITY OF NEW 

YORK AND NEW JERSEY 

4 World Trade Center 

150 Greenwich Street 

New York, New York 10007 

Telephone: (212) 435-3503 
FEDERAL AVIATION ADMINISTRATION 

UNITED STATES DEPARTMENT OF TRANSPORTATION 

----------------------------------------------------------------------------------)( 

UNITED AIRLINES, INC., 

Complainant, 

v. 

THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, 

Respondent. 

----------------------------------------------------------------------------------)( 

Docket No. 

FAA-16-14-13 

REPLY MEMORANDUM OF POINTS AND AUTHORITIES TO THE ANSWER OF 

UNITED AIRLINES, INC. TO THE PORT AUTHORITY OF NEW YORK AND NEW 

JERSEY'S MOTION FOR SUMMARY JUDGMENT 

DISMISSING THE COMPLAINT 

Respondent, The Port Authority of New York and New Jersey ("the Port 

Authority"), hereby submits this reply memorandum ("Reply'') to the answer submitted 

by United Airlines, Inc. ("United") to the Port Authority's motion for summary judgment 

("United's Answer"). 

The Port Authority and United are both bound by enforceable contracts 

concerning United's operations at Newark Liberty International Airport ("EWR"). Those 

contracts set forth the formula pursuant to which the EWR flight fees charged to United 

(as well as to all other EWR signatory carriers) are calculated. The flight fees charged 

to United have been faithful to the formula laid out in the contracts and agreed to by 

United. Those are the material facts, they are undisputed, and they are sufficient to 

grant summary judgment to the Port Authority. 

United seeks to undermine this straightforward reasoning by claiming, rather 

shockingly, that the contracts pursuant to which it has operated and profited immensely 
at EWR, were somehow not voluntarily entered into. To support \his claim, United's 

Answer points to correspondence between it (and its predecessor in interest, 

Continental Airlines) and the Port Authority in which the airlines requested information 

about EWR flight fees and airport revenues and complained about the level of fees. 

(United's Answer at 6-12, see Exhibit TT at pg. 3). This correspondence was prompted 

by the negotiation of a new flight fee agreement for airlines using John F. Kennedy 

International Airport ("JFK") and LaGuardia Airport ("LGA") in 2003-04 after the prior 

flight fee agreement for JFK and LGA expired at the end of 2003, and Continental's 

concern that such renegotiation would result in a substantial advantage for New York 

carriers (United's Answer at 7; Exhibit QQ). What the correspondence does not 

establish is any support for United's contention that its, and its predecessor's, prior 

agreement to, and extensions of, the EWR flight fee agreement was other than 

voluntary. 

As the record shows, Lease Nos. ANA-170 and AN-535 contain the EWR flight 

fee formula. When the EWR flight fee formula expired, or was about to expire, in the 

1990s, both United and Continental extended that formula through December 31, 2018, 

agreed to the addition of the Phase 1A Factor Charge as an additional cost component 

to the flight fee formula, and modified other provisions, such as rentals. 1 In later years, 

to Lease> No. ANA-170 and Supplement 24 (effective as of January 1, 1995) to ease o. 

535 extended application of the flight fee formula until December 31, 2018. Supplement No. 15 

to Lease No. ANA-170 and Supplement 24 to Lease No. AN-535 also added the Phase. 1A 

Factor Charge as an additional cost component to the flight fee formula, and modified other 

provisions, such as rentals. (See Respondent Port Authority's Memorandum Of Points And 

Authorities In Support Of Its Motion For Summary Judgment Dismissing The Complaint ("Port 

Authority Memorandum") at 10-11. 

2 
the airlines made substantial financial investment in EWR (See Port Authority 

Memorandum at 15-16). 

Correspondence between 2003 and 2006 does not establish what occurred when 

the EWR flight fee was set to expire in 1996 with respect to Lease No. AN-535, and was 

set to expire in 1998 with respect to Lease No. ANA-170. United and Continental 

entered into Supplements 15 (effective as of January 1, 1995) and 17 (effective as of 

September 1, 1999) to Lease No. ANA-170 and Supplement No. 24 (effective as of 

January 1, 1995) to Lease No. AN-535 that extended and modified the EWR flight fee 

formula. 

United's general statement that the Port Authority has failed to share financial 

information with airlines or its statement that the flight fee is not cost-based does not 

rise to the level of a factual dispute which would warrant a re-opening of these 

agreements or denial of the Port Authority's motion. Indeed, it is significant that United 

now relies on correspondence sent a decade before it lodged its Complaint, and since 

that correspondence nevertheless has continued to invest in its hub at EWR and extend 

its agreements governing its EWR operations (See Port Authority Memorandum at 10-

11). 

United fails to set forth facts to support its allegations that it was unable to 

determine how the flight fee functioned. United relies only on bare assertions and 

speculalions 1n an attempt to establish: (I) that 1ts predecess01s ag1eed to tile fiigllt fee 

and extensions and modifications of the flight fee without knowing how the flight fee 

formula functioned,( 2) that any request for information was denied, and (3) that 

challenging the flight fee would require them to leave EWR when the flight fee expired. 

3 
II 

United's charge that the Port Authority was not responsive to Continental's 

request for some relief from fees owed by Continental to the Port Authority pursuant to 

various agreements, even if relevant and material, is inconsistent with the facts. As set 

forth in the accompanying Reply Declaration of David A. Kagan ("Kagan Reply 

Declaration"), the Port Authority considered Continental's request and identified bases 

for granting it in part. 

First, the Port Authority determined that use of Passenger Facility Charges 

("PFCs")2 to fund elements of the financing for the construction of the extension of the 

EWR AirTrain to the Northeast Corridor rail line used by New Jersey Transit Corporation 

and Amtrak would be consistent with the applicable law, regulations and policy 

regarding use of PFCs. Accordingly, the Port Authority submitted a request to the FAA 

for permission to apply $37.5 million in PFCs ($5 million per year for 7.5 years) to 

interest payments on the portion of Port Authority Consolidated Bonds that funded the 

EWR AirTrain. As a result of the original application and subsequent clarifying 

communications between the FAA and the Port Authority, the Port Authority's request 

with respect to use of PFCs was approved by the FAA. The effect of the application of 

$37.5 million in PFCs ($5 million per year for 7.5 years) to interest payments on the 

portion of the Port Authority Consolidated Bonds that funded the EWR Air Train was to 

2 A PFC is not a fee charged to airlines. A PFC is an FAA-approved fee collected by airlines 

from each boarded passenger at a commercial airport controlled by a public agency. PFCs are 

remitted to the airport agency to fund FAA-approved projects that enhance safety, security, or 

capacity, that reduce noise, or that increase air carrier competition. PFC collection and 

expenditure is governed by 49 U.S.C. § 40117 and 14 C.F.R. Part 158. See 

http://www.faa.gov/airports/pfc/. 

4 
reduce the EWR Monorail Fee by $5 million per year for 7.5 years. This reduction of the 

EWR Monorail Fee benefited all airlines at EWR. As the air carrier with the largest 

presence at EWR, Continental was the principal beneficiary of this reduction of the 

EWR Monorail Fee (Kagan Reply Declaration at~~ 6-10). 

Second, the Port Authority agreed not to take an action which would have 

increased the EWR Flight Fee when the Port Authority decommissioned the old 

Administration Building at EWR in 2003. Under accounting principles generally 

accepted in the United States ("GAAP"), the Port Authority would have been allowed to 

accelerate the depreciation of that building in the year in which it was decommissioned, 

which would have resulted in a sharp increase (a "spike") in the EWR flight fee in that 

year, totaling approximately $10 million. Instead, by Supplement No. 24 to Lease No. 

ANA-170, dated as of January 1, 2003, the Port Authority agreed to extend the recovery 

of the unamortized capital costs of the decommissioned building through the expiration 

of the EWR flight fee agreement in 2018. Again, this action benefited all airlines at 

EWR, and Continental, as the air carrier with the largest presence at EWR, was the 

principal beneficiary (Kagan Reply Declaration at~ 11 and Exhibit 23

). 

Third, between 2004 and 2006, various capital improvements were completed at 

EWR for which the Port Authority was potentially seeking permission from the FAA to 

use PFCs as reimbursement. Under Lease ANA-170, the Port Authority is allowed to 

include depreciation for a capital improvement 1n the EVVR Fliglll Fee vvl 1e1 1 tliat eapital 

project is ready for its intended use, regardless of whether PFCs would be potentially 

3 Exhibit 2 to the K<=tgan Reply Declaration was previously submitted on compact disc as part of 

Exhibit A to the Declaration of Frederick Longernecker, dated February 9, 2015, at 747-50. 

5 
available to fund a portion of the project. In anticipation of receiving approval from the 

FAA to collect and use PFCs for those completed 2004-2006 capital improvements, 

the Port Authority elected not to commence including depreciation on those capital 

improvements in the flight fee pending FAA determination of the relevant PFC 

applications, resulting in a lower EWR flight fee for those years in which no depreciation 

was included. Again, this action benefited all airlines at EWR, and Continental, as the 

air carrier with the largest presence at EWR, was the principal beneficiary (Kagan Reply 

Declaration at~ 12). 

The foregoing contradicts United's allegations of Port Authority intransigent 

behavior. 

Ill 

United attempts to rely on the 2003-2006 correspondence to avoid application of 

the language in the Rates and Charges Policy, as reaffirmed in the case law, indicating 

the preference for agreement between the parties as to rates and charges. United also 

relies heavily on language in the Rates and Charges Policy indicating that 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." (United's Answer at 23-

24). United argues that the FAA has retained the authority to investigate alleged 

breaches of grant assurances even when the parties have agreed to the fees in 

question. The Port Authority refers to the arguments m 1ts Memorandum ill suppm t of 

its Motion for Summary Judgment to rebut United's arguments about the FAA's 

authority to investigate fee disputes governed by agreements (Port Authority 

6 
Memorandum at 13-18)4 However, the Port Authority's fundamental position is that 

United has not demonstrated any violation of grant assurances because its complaint 

about the level of fees and its argument about the difference between fees at the Port 

Authority's New York airports and fees at EWR, do not, as a matter of law, establish a 

violation of grant assurances. 

Here the jurisdictional issues and the issues on the merits merge, and point in 

only one direction- United's Complaint should be dismissed because all its factual 

complaints about the unreasonableness of the flight fee have their genesis in a formula 

to which it agreed. By voluntarily merging, United and Continental also voluntarily 

agreed to be bound by the EWR leases and the flight fee formula contained therein. 

Additionally, it is significant to note that while the crux of United's claim is that the fees 

contain an unwarranted surplus, what United does not come to grips with in its Answer 

is the language in the Rates and Charges Policy stating that airfield fees cannot exceed 

airfield costs, unless the users agree (Rates and Charges Policy at §2.2 (a), quoted in 

Port Authority Memorandum at 22-23). And by assuming its predecessors' EWR 

leases, United has agreed. They cannot now seek to have the FAA rewrite the leases 

for them. 

4 United is correct that dictum in Continental Micronesia v. Commonwealth of the Northern 

Marianas Islands, Docket 50181, Order 95-4-14, 1995 WL 156451 (D.O.T. 1995), stated that a 

complainant in a proceeding brought pursuant to 49 U.S.C. 47129 had the option of signing an 

agreement to which it objected and bringing an administrative proceeding challenging the terms of 

the agreement. This dictum is inconsistent with the language of the Rates and Charges Policy 

and the weight of later authority as set forth in the Port Authority Memorandum at 13-14 and 17-

18. 

7 
United's Complaint falls squarely within the scope of the FAA's determination in 

the Rates and Charges Policy that the FAA will not review the reasonableness of a fee 

set by agreement to relieve an airline from a deal it no longer deems beneficial to it (see 

Port Authority Memorandum at 14). 

IV 

Relying on provisions of the Bankruptcy Code, United claims that the Port 

Authority Memorandum erred by contending that United is precluded from challenging 

the terms of its agreements setting forth the flight fee formula because United and 

Continental assumed the agreements, with modifications, in bankruptcy proceedings 

(United's Answer at 40). In so arguing, Complainant attacks a straw man of its own 

creation because the Port Authority made no such argument. The description of 

United's and Continental's assumption of the subject agreements with modifications in 

bankruptcy was part of a recitation of Continental's and United's unbroken history of 

continuing to extend the agreements, including the flight fee formula, despite 

opportunities to be relieved of their obligations under that formula because of the 

imminent expiration of those agreements with respect to the flight fee, or the opportunity 

to reject those agreements in bankruptcy. Port Authority Memorandum at 10-12, 15-16. 

v 

United never adequately explains its failure to include among the exhibits to its 

Complaint the lease documents between the Port Authority and Ur lited establislli11g the 

EWR flight fee which are at the heart of this disagreement between the parties. The 

Rules of Practice at 14 C.F.R. § 16.23 (b) (2) require complaints filed under Part 16 to 

"[i]nclude all documents then available in the exercise of reasonable diligence, to be 

8 
offered in support of the complaint .... " In a footnote, United claims that it did not fail to 

satisfy this requirement because the Complaint alleged "the existence of the lease" and 

"describes the formula for calculating the EWR Flight Fee." United's Answer at 15 n.5. 

United is wrong for two reasons. 

First, alleging "the existence of the lease" does not constitute its inclusion in the 

record as required by 14 C.F.R. § 16.23 (b) (2). Second, United's statement that it 

described the formula for calculating the EWR fight fee in its Complaint is simply 

incorrect The Complaint made general statements about the components of the flight 

fee and the cost bases of those components. Complaint at mJ 34-35. 5 But United failed 

to set forth in the Complaint the actual formula used to calculate the EWR flight fee. 

United may no longer desire to be bound by these contracts, but its notable 

failure to include the most important documents to this dispute in its Complaint should 

not be excused. 

5 This description is incorrect insofar as it described the EWR Air Train Fee as a component of 

the EWR flight fee. See Declaration of Joseph Garcia dated February 10, 2015, at 3 n.2. 

9 
CONCLUSION 

For the reasons set forth in the Port Authority's Memorandum of Points and 

Authorities In Support of its Motion For Summary Judgment Dismissing the Complaint, 

and for the foregoing reasons, the Complaint herein against The Port Authority of New 

York and New Jersey should be dismissed in its entirety with prejudice. 

Dated: April27, 2015. 

10 

Respectfully submitted, 

t2Avt//~ Carlene V. Mcintyre~ 

Arnold D. Kolikoff 

Faith Tabafunda 

THE PORT AUTHORITY OF NEW 

YORK AND NEW JERSEY 

4 World Trade Center 

25th Floor 

150 Greenwich Street 

New York, New York 10007 

Telephone: (212) 435-3503 
FEDERAL AVIATION ADMINISTRATION 

UNITED STATES DEPARTMENT OF TRANSPORTATION 

----------------------------------------------------------------------------------)( 

UNITED AIRLINES, INC., 

Complainant, 

v. 

THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, 

Respondent. 

----------------------------------------------------------------------------------)( 

REPLY DECLARATION OF DAVID A. KAGAN 

I, David A Kagan, declare as follows: 

Docket No. 

F AA-16-14-13 

1. I submit this declaration in support of Respondent The Port Authority of New 

York and New Jersey's ("the Port Authority") Motion For Summary Judgment Dismissing The 

Complaint herein. 

2. I am employed by the Port Authority. I hold the position of Assistant Director for 

Business and Properties of the Aviation Department of the Port Authority, and have held that 

position since January 2006. My job responsibilities include managing the commercial 

arrangements at the Port Authority's airports such as leases, privilege permits and flight fee 

agreements. 

3. The statements in this declaration are based upon my personal knowledge and 

upon review of information contained in business records of the Port Authority. 

4. In or around 2003, Continental Airlines, predecessor to the Complainant herein, 

sought relief from the Port Authority to reduce fees owed by Continental to the Port Authority 

pursuant to various agreements. 

5. The Port Authority considered Continental's request and identified bases for 

granting Continental's request in part. 
6. First, the Port Authority identified a basis for reduction of the AirTrain Fee at 

Newark Liberty International Airport ("EWR"). The Port Authority determined that use of 

Passenger Facility Charges ("PFCs")1 to fund elements of the fmancing for the construction of the 

extension of the EWR AirTrain to the northeast corridor rail line used by New Jersey Transit 

Corporation and Amtrak would be consistent with the applicable law, regulations and policy 

regarding use ofPFCs. 

7. Accordingly, the Port Authority submitted a request to the FAA for permission to 

apply $37.5 million in PFCs ($5 million per year for 7.5 years) to interest payments on the 

portion of Port Authority Consolidated Bonds that funded the EWR AirTrain. Attached hereto 

as Exhibit 1 is the Port Authority's formal request for such permission, a letter dated February 

18, 2005 to Mr. Barry Molar from Mr. A. Paul Blanco (without enclosures). 

8. As a result ofthe original application and subsequent clarifying communications 

between the FAA and the Port Authority, the Port Authority's request with respect to use of 

PFCs was approved by the FAA. 

9. The effect of the application of $37.5 million in PFCs ($5 million per year for 7.5 

years) to interest payments on the portion of the Port Authority Consolidated Bonds that funded 

the EWR AirTrain was to reduce the EWR AirTrain Fee charged to EWR airlines by $5 million 

per year for 7.5 years. 

1 A PFC is not a fee charged to airlines. A PFC is an FAA -approved fee collected by 

airlines from each boarded passenger at a commercial airport controlled by a public agency. 

PFCs are remitted to the airport agency to fund FAA-approved projects that enhance safety, 

security, or capacity, that reduce noise, or that increase air carrier competition. PFC collection 

and expenditure is governed by 49 U.S.C. § 40117 and 14 C.P.R. Part 158. See 

http://www.faa.gov/airports/pfc/. 

2 
10. This reduction of the EWR Air Train Fee benefitted all airlines at EWR. As the 

air carrier with the largest presence at EWR, Continental was the principal beneficiary of this 

reduction of the EWR AirTrain Fee. 

11. Second, the Port Authority decommissioned its old Administration Building at 

EWR in 2003. Under accounting principles generally accepted in the United States ("GAAP"), 

the Port Authority would have been allowed to accelerate the depreciation of that building in the 

year in which it was decommissioned, which would have resulted in a sharp increase (a "spike") 

in the EWR Flight Fee in that year totaling approximately $10 million. Instead, by Supplement 

No. 24 to Lease No. ANA-170, dated as of January 1, 2003, the Port Authority agreed to extend 

the recovery of the unamortized capital costs of the decommissioned building through the 

expiration of the EWR Flight Fee agreement in 2018. (A copy of Supplement No. 24 to Lease 

No. ANA -170 is attached hereto as Exhibit 2. Section 2 of Supplement 24 addresses 

depreciation of the old Administration Building.) Again, this action benefitted all airlines at 

EWR, and Continental, as the air carrier with the largest presence at EWR, was the principal 

beneficiary. 

12. Third, between 2004 and 2006, various capital improvements were completed at 

EWR for which the Port Authority was potentially seeking permission from the FAA to use 

PFCs as reimbursement. Under Lease No. ANA-170, the Port Authority is allowed to include in 

the EWR Flight Fee depreciation for a capital improvement when that capital improvement is 

reafiy fer its intended ttse, regmdless ef 01hcther PFCs ~maid be potentially available to fand a 

portion of the improvement. In anticipation of receiving FAA approval to collect and use PFCs 

for the completed 2004- 2006 capital improvements, the Port Authority elected not to include 

depreciation for those 2004- 2006 capital improvements in the EWR Flight Fee pending an 

3 
FAA determination, resulting in a lower EWR Flight Fee for those years in which no 

depreciation was included. Again, this action benefitted all airlines at EWR, and Continental, as 

the air carrier with the largest presence at EWR, was the principal beneficiary. 

I declare under the penalty ofperjnry under the laws of the United States of America that 

that the foregoing is true and correct. 

Executed at New York, New York, on April27, 2015. 

4 
Exhibit 1 
February 18, 2005 

Mr. Barry Molar 

Manager, APP-500 

Federal Aviation Adnrinistration 

800 Independence Avenue, S.W., Room 620 

Washington D.C. 20591 

~PORTAunmRmOFNY& NJ 

A Paul Blanco 

Chief Anandaf Officer 

Subject: The Port Authority of New York and New Jersey 

Northeast Corridor Extension 

Type A Amendment 

. Dear Mr. Molar: 

Pursuant to 14 C.P.R. §158.37(a), The Port Authority of New York and New Jersey ("Port 

Authority") is seeking authorization to collect additional PassengerFacility Charge (''PFC") charges 

in the amount of approximately $5 . million per year for each of the next 7.5 years, totaling 

approximately $37;5 million, which would be used to pay a portion of the annual interest due on 

certain Port Authority Consolidated Bonds. As more fully discussed below, the proceeds of these · 

Bonds were used, in part, to pay for the construction of the extension of the monorail at Newark 

Liberty International Airport to the northeast corridor rail line used by New Jersey Transit 

Corporation and Amtrak (the "Project"). The Project became operational on October 21, 2001. 

As you may be aware, the Port Authority's offices were located at the World Trade Center, and 

most of our paper and electronic records were destroyed on September 11, 2001. Therefore, except 

in certain cases referred to below where records have been recovered, it is difficult to provide exact 

and detailed information as to the sources that were used to pay the capital costs for the Project. 

However, we can provide a description of the Port Authority's typical practices pertaining to the use 

and allocation of bond proceeds for capital projects, which would have been applicable to. the 

Project, as well as some general information pertaining to the intended sources of funds for the 

Project. 

Generally, since 1982, the Port Authority has used the proceeds of its commercial paper obligations 

to pay for capital projects at its airport facilities, including Newark Liberty International Airport. 

These obligations have a maturity of 270 days or less, and have proven, over time, to present a 

enerall low-cost alternative for short-term financin ·t 

anticipation of the issuance of Consolidated Bonds. to provide long-term project financing. 

Essentially, use of the commercial paper program in this manner permits accumulation of capital 

costs prior to the issuance of long-term financing~and greater flexibility to the Port Authority in 

accessing the long-term capital markets. 

225 Park Avenue South, 15th Floor 

New York, NY I 0003 

T: 212 435 7738 
~PORTAimiORmOFNY & NJ 

As you may recall,.in 1996 the Port Authority applied for, and received, authority from the 'Federal 

Aviation Administration ("FAA") to collect $250 million of PFC' s for the Project. Through 

December 2003, the actual cost of the Project was approximately $396 million. The Port Authority 

expended the $250 million of authorized PFC' s through May 2000. At that point the agency had no 

additional authorization to use PFC's on the approved program. However, eligible Project costs · 

continued to be incurred through 2002. In order to fund the eligible project costs in excess of $250 

million, from May2000 through April30, 2002 i:he Port Authority allocated approximately $117.2 

million of its commercial paper obligations to the payment of the remaining $146 million of project 

costs. Of the $117.2 million, $116.7 million of project costs were eligible for reimbursement with 

PFC's. As recorded in Tab 1, this $116.7 million of Project costs was expended from May 2000 

through April 30, 2002; and therefore, is not duplicative of the $250 million in expenditures under 

the PFC authorization, which occurred prior to May 2000. Tab 1 also provides detail of the major 

vendors compensated during this period and the nature of the work they performed. 

Of the $117.2 million, Port Authority has documentation demonstrating that $ i 04.2 million was 

actually paid with the proceeds of commercial paper obligations. During this period, the Port 

Authority issued several series of Consolidated Bonds, including the One Hundred Twenty-third 

and One Hundred Twenty-fifth Series, the sales of which closed on January 31, 2001 and Apri130, 

2002, respectively. These two series of Consolidated Bonds refunded, respectively, $20 million and 

$100 million of commercial paper obligations. 

Capital projects undertaken ·by the Port Authority in connection with its facilities are assigned 

specific accounting codes to enable tracking of the project's capital costs and, in certain limited 

cases, the sources of payment for project costs are also tracked on an individual project basis. 

Based on accounting records that are available, upon co=encement the Project was assigned 

accounting code "CA-49". The attached report, in Tab 1, indicates that $117.2 million of the 

Project's capital costs were to be provided from the proceeds of Port Authority commercial paper 

obligations, i:o be issued for CA-49, between May 1, 2000 and April30, 2002. The attached report 

provided at Tab 2 mdicates that $104.2 million of corr:irnercial paper for CA-49 was sold during this 

period. Also attached, at Tab 3, are copies of checks and invoices pertaining to a sample transaction 

from this amotint. 

On the date of issuance of each series of Consolidated Bonds, a proceeds allocation memorandum is 

prepared by the Port Authority's Treasury Department. The memorandnm for Consolidated Bonds, 

One Hundred·Twenty-fifth Series, attached at Tab 4, indicated that $100 million of the proceeds of 

the One Hundred Twenty-fifth Series Bonds was to be used for the refunding of a like amount of 

Port Authority commercial paper obligations issued prior to April· 30, 2002. Port Authority 

accounting records con±irm this allocatwn. Although a similar memmandmn has not been 

recoveredfor Consolidated Bonds, One Hundred Twenty-third Series (due to the destruction of Port 

Authority records on September 11, 2001), based on accounting records, $20 million of the 

proceeds of the One Hundred Twenty-third Series Bonds were to be used for the refunding of Port 

Authority commercial paper obligations issued prior to January 30, 2001. Port Authority 

accounting records also indicate that the proceeds of both series were completely expended for 

authorized purposes. 

· Page 2 of 3 
~PORTAUTHORnYOFNY& NJ 

Based upon conclusions drawn from the foregoing, we are able to state, with a reasonable degree of 

certainty, that at least $100 million of the capital costs of the Project were ultimately funded with 

the proceeds of the One Hundred Twenty-third Series Bonds and the One Hundred Twenty-fifth 

Series Bonds, in the respective amounts of$ i 0 million and $90 million. The allocation between the 

two Bonds is based on the closing dates of the Bonds (123'd Series- January 31, 2001 and 1251

h 

Series - April 30, 2002), the corresponding tjming of the PFC-eligible expenditures (May 2000 

through April 30, 2002), and the amounts of Co=ercial Paper paydown of each of the Bonds ($20 

million, 123'd Series and $100 million, 125th S.eries). Interest payments on these amounts of these 

Series amount to slightly under $5 million per year, and are eligible to be paid from l'FC charges 

under the rules and regulations currently applicable to PFC' s. 

The Port Authority is seeking to collect an additional $37.5 million ofPFC's for the Project, which 

is an increase of 15% over the $250 million allowable costs for the Project originally approved by 

the FAA. These additional PFC's would be applied on a current basis through 2012, as they are 

received, to. pay a portion of the annual interest due on $1 0 million of Consolidated Bonds, One 

Hundred Twenty-third Series and $90 million of Consolidated Bonds, One Hundred Twenty-fifth 

Series. This will perruit the Port Authority to reduce debt service costs, thereby reducing the rates 

and charges paid by the airlines operating at Newark Liberty International Airport. However, since 

the Port Authority's PFC current collection authority expires in the 1st Quarter of 2008 our initial 

Type A Amendment request will be limited to $20 million (See Tab 7). AB the agency's PFC 

collection .authority increases it is our intention to continue to submit additional amendments to 

recover up to $3 7.5 million. 

We believe that the information provided by this letter, while not as complete as typically would be 

submitted to the FAA in support of such an amendment to existing authority to collect PFC's, 

provides reasonable support for the Port Authority's abilitY, consistent with applicable statutes and · 

regulations, to collect additional PFC's of approximately $5 million per year for each of the next 7.5 

years (for a total of approximately $37.5 million, over and above the collection authority previously 

granted for 'this project of $250 million), which will be used to pay a portion of the annual interest 

due on certain Port Authority Consolidated Bonds allocated to the Project. Exact debt service 

amounts by calendar year are detailed in Tab 5. Payment of debt service from PFC's would 

commence immediately after authorization is received and continue through 2012. 

Thank you for your time and attention. If you have any further questions or co=ents, please · 

contact Ms. Patty Clark at (212) 435-3731. 

:=rF 

Chief Financial Officer · 

cc: Sheryl Scarborough-FAA 

Eleanor Schifflin- FAA Regional Office 

Page 3 of3 

r~ 

f, 

'I'·'. ::; 

1

.· .. 

.·; 

' ,, 

ll 

N 

I 

I 

i 

I 

I 
Exhibit 2 
THIS SUPPLEMENT SHALL NOT BE BINDING UPON 

THE PORT AUTHORITY UNTIL DULY EXECUTED BY 

AN EXECUTIVE OFFICER THEREOF AND DELIVERED 

TO THE LESSEE BY AN AUTHORIZED REPRESENTATIVE 

OF THE PORT AUTHORITY 

AVIATION DEPT. Port Authority Lease No. ANA-170 

Supplement No. 24 FILE COPY! Facility: Newark Liberty International Airport 

SUPPLEMENTAL AGREEMENT 

THIS SUPPLEMENTAL AGREEMENT, dated as ofJanuary l, 2003, by and between 

THE PORT AUTHORTIY OF NEW YORK AND NEW JERSEY (hereinafter called the "Port 

Authority") and CONTINENTAL AIRLINES, INC. (hereinafter called the "Lessee"); 

WITNESSETH, That 

WHEREAS, the Port Authority and People Express Airlines, Inc. (hereinafter called 

"People Express") as of January 11, 1985 entered into an agreement of lease (which agreement 

of lease as heretofore supplemented and amended is hereinafter called the "Lease"), covering 

certain premises, rights and privileges at and in respect to Newark Liberty International Airport 

(hereinafter called the "Airport") as therein set forth; and 

WHEIZEAS, the Lease was thereafter assigned by said People Express to the Lessee 

pursuant to an Assignment of Lease with Assumption and Consent Agreement entered into 

among the Port Authority, the Lessee and People Express and dated August 15, 1987; and 

WHEREAS, a certain Stipulation between the parties hereto was submitted for approval 

of the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") 

covering the Lessee's assumption of the Lease as part of the confirmation of its reorganization 

plan in its Chapter 11 bankruptcy proceedings and as debtor and debtor in possession pursuant to 

the applicable provisions of United States Bankruptcy Code as set forth in and subject to the 

terms and conditions of said Stipulation (said Stipulation being hereinafter referred to as the 

"Stipulation"); and 

WHEREAS, the Stipulation and the Lessee's assumption of the Lease was approved by 

the Bankruptcy Court by an Order thereof dated the l" day of October, 1993; and 

WHEREAS, the parties desire to amend the Lease in certain respects as hereinafter set 

forth; 

NOW, THEREFORE, the Port Authority and the Lessee hereby agree as follows: 

1. Effective as of January l, 2003, subparagraph "(d)" to section VIII of Schedule A to the 

Lease shall be deemed deleted and the following new subparagraph "(d)" shall be deemed 
subslrtuted in lieu thereof 

"(d) "Fixed charges on Port Authonty investment" shall mean amortization and. 'lf6::__ 

mterest on Port Authonty investment in items completed subsequent to December ,. ,,.,[ . 

31, 1964. Such fixed charges shall be determmed on the basrs of an equal;\M 

payment method. Port Authority investment that is taken out of service 

("retired") and has a rernaming unamortized balance shall not incur an accelerated 

fixed charge in the year in which it was retired, but shall continue to be amortized 

in accordance with Port Authonty accounting practice over the estimated useful 

life first established when the investment was placed into service. The interest 

·factor used in determining the fixed charges for all of the foregomg shall be the 

weighted average coupon rate for the twelve months ending November 30, of 

each year, rounded to the nearest hundredth percent, on all long-term bonds 

outstand\ng, the proceeds of whrch were made a vailab!e for construction at the 

Airport." 

2 Commencing on January I, 2003, in order to facilitate airfield improvements at the 

Atrport, the Port Authority demolished Building No. lO (the old Port Authority administration 

buildmg). In 2003 the Port Authority's fixed charges (un-amortized investment) associated with 

Building No. 10 totaled Nine Million Six Hundred Ninety-seven Thousand Two Hundred Ninety 

Dollars and No Cents ($9,697,290.00). The Lessee acknowledges and agrees that, effective as of 

January 1, 2003, the $9,697,290.00 un-amortized investment (plus the appropriate interest factor 

as provided in paragraph 1 above) will be included in future fixed charge calculations on Port 

Authority investment in Airport Services pursuant to Schedule A of the Lease. However, 

notwithstanding paragraph I above, such $9,697,290.00 amount will be amortized using an equal 

annual payment method over the period beginning January 1, 2003 and continuing until 

December 31,2018. 

3. The Lessee represents and warrants that no broker has been concerned in the negotiation 

of this Supplemental Agreement and that there is no broker who is or may be entitled to be paid a 

commission in connection therewith. The Lessee shall indemnify and save harmless the Port 

Authority of and from any and all claims for commission or brokerage made by any and all 

persons, firms or corporations whatsoever for services in connection with the negotiation and 

execution of this Supplemental Agreement. 

4. Neither the Commissioners of the Port Authority nor any of them, nor any officer, agent 

or employee thereof, shalL be charged personally by the Lessee with any liability, or held lrable 

to it under any term or provision of this Supplemental Agreement, or because of its execution or 

attempted execJJtjon or hecanse of any breach thereof 

5. As hereby amended, all of the terms, covenants, provisions, conditions and agreements of 

the Lease shall be and remam in full force and effect. 

6. This Supplemental Agreement and the Lease which it amends constitute the entire 

agreement between the Port Authority and the Lessee on the subject matter, and may not be 

char1ged, modified, discharged or extended except by instrument in wnting duly executed on 

2 

I 
behalf ofboth the Port Authonty and the Lessee. ·The Lessee agrees that no representanons or 

warrant1es shall be bmding upon the Port Authonty unless expressed m wntmg m the Lease or 

thJs Supplemental Agreement. · 

IN WITNESS WHEREOF, the Port Authority and the Lessee have executed these 

presents. 

ATTEST: 

'/Lb'PJ~ Secretary 

ATTEST: 

l/::,0 

JENNIFER L. VOGEL 

SENIOR VICE PRESIDENT, GENERAL COUNSEL 

AND SECRETARY 

THE PORT AUTHORITY OF NEW YORK 

OF NEW JERSEY~\ 

/ . I 

. ~~/-~----~ 

By ~~§10:.. DIMOLA 

(Title) ASSIST ANT DIRECTOR 

(SAll}ATION DEPT. 

CONTINENTAL AIRLINES, INC. 

/J ">~---

~ (Title) Holden Shannon. 

Sat\ lOr v;ee pre&ldent President " 

.} 

Glo~~.,~~~~~al) and' secuntr'"'"' 
FORt'Vl XLD- Ack., N.J. 51380 

For the Port Authority 

STATE OF NEW YORK 

) ss. 

COUNTY OF NEW YORK ) /1 / . 

. / t.-'' ·?iDS . On the ~. day of0·t'\"--•UJ\~;n\the ~ear 10_0_4, before ;ne, the undersrgned, a Notary 

Publlc m and for sard state, personally appeal-ed li!.AtJl:.P {\ ·Vi(~\..e, L-("-< , 

personally known to me or proved to me on the basis of satisfactory evidence to be the 

individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to 

me that l:;fshe/they executeinlle same in J:!i_o;Lherltheir capacity(ies), and that by ~lherlthw 

signature(s) on the instrument, the individual(s), or the psrs-6nupon behalf of wh'lch ~he 

mdrvrdual(s) acted, executed the mstrument. '. ;/ · ·:1·71 ./ ., ·•. 

STATE OF Texc.c.S ) 

) ss. 

COUNTY OF \~«rfll) 

\ I. LCf u ~~ l?l- ~'([!) [ZC C (' tc_ ~ (noti'4(_:}al and stamp) 

For tbe Lessee 

PEGGY M. SPINELLI 

Notary-Put lie, State oi New York 

. '" No. 01SF'OU57870 

Qualified in New York County ~ 

Commission Exptres April 30, 200~ 

On this 1 day of 0aobe c , 2004 before me, the subscriber, a N.otr, rf j?, lb Uc 

personally appeared (\aicLfo 6b6.nnon the Seoior Vir e President of 

9lobc.l }: ec,J F~"'" ,j h-cllri•-\1--• who I am satisfied is the person who has signed the within 

instrument; and I having first made known to him the contents thereof, be did acknowledge that 

he signed, sealed with the corporate seal and delivered the same as such officer aforesaid and 

that the within instrument is the voluntary act and deed of such corporation, made by virtue of 

lhe authority of its Board of Directors. 

(notarial seal and stamp) 
FEDERAL AVIATION ADMINISTRATION 

UNITED STATES DEPARTMENT OF TRANSPORTATION 

----------------------------------------------------------------------------------JC 

UNITED AIRLINES, INC., 

Complainant, 

v. 

THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, 

Respondent. 

----------------------------------------------------------------------------------JC 

CERTIFICATE OF SERVICE 

Docket No. 

16-14-13 

I hereby certify that by Federal Express Overnight Delivery I have this day served the 

foregoing Motion For Leave To File A Reply To Answer Of United Airlines, Inc. To The Port 

Authority Of New York And New Jersey's Motion For Summary Judgment, Reply 

Memorandum Of Points And Authorities to the Answer Of United Airlines, Inc. To The Port 

Authority Of New York and New Jersey's Motion For Summary Judgment, the Declaration of 

Carlene V. Mcintyre, and the Reply Declaration of David A. Kagan and the Exhibits annexed 

thereto on the persons set forth below at the addresses indicated. 

Dated: Apri127, 2015 

Addressees: 

Office of the Chief Counsel 

Attention: FAA Part 16 Airport Proceedings Docket, AGC-600 

Federal Aviation Administration 

800 Independence Avenue, SW 

Washington D.C. 20591 

I. 
Keith J. Harrison 

Gerald f,Murphy 

Steven J. Seiden 

Crowell & Moring LLP 

1001 Pennsylvania Avenue, NW 

Washington; DC 20004 

(202) 624-2500 

RobertS. Span 

Alan K. Steinbrecher 

Sophy Chen 

Steinbrecher & Span LLP 

1155 F Street, N.W., Suite 1050 

Washington, DC 20004 

(202) 559-8680 

rspan@steinbrecherspan.com 

Attorneys for Complainant 

2