### FEDERALAVIATION ADMINISTRATION 

# RECEIVED APR 

## 282015 UNITED STATES DEPARTMENT OF TRANSPORTATION 

### ----------------------------------------------------------------------------------:X: PART 16 DOCKETS DocketNo. FAA-16-14-13 UNITED AIRLINES, INC., Complainant,


### v. THE PORT AUTHORITY OFNEW YORKANDNEWJERSEY, Respondent. 

### ----------------------------------------------------------------------------------:X: MOTION FORLEAVE TO FILE A REPLY TO ANSWER OF UNITED AIRLINES, INC. TO THEPORT AUTHORITY OF NEW YORKAND NEWJERSEY'S MOTION FORSUMMARYJUDGMENT RespondentThe PortAuthority ofNewYork andNewJersey ("the PortAuthority"), herebymoves for leave to file a ReplyMemorandum OfPoints And Authorities to the Answer OfUnited Airlines, Inc. To The PortAuthority OfNewYork andNewJersey's MotionFor Summary Judgment ("ReplyMemorandum") hereinpursuantto 14 C.P.R.§ 16.19 (a) andthe Reply DeclarationofDavid A. Kagan and the Exhibits annexed thereto, baseduponthe annexed DeclarationofCarlene V. Mcintyre. Dated: April27, 2015 Respectfully submitted, 

# tf±li!!r;;;;.___-

ArnoldD. Kolikoff FaithTabafunda The Port Authority ofNewYork andNewJersey 4 WorldTrade Center 150 Greenwich Street, 25thFloor NewYork, N.Y. 10007 Telephone: (212) 435-3503 Attorneys for Respondent The PortAuthority ofNewYork andNewJerseyTO: Office ofthe ChiefCounsel Attention: FAAPart 16 AirportProceedings Docket, AGC-600 Federal AviationAdministration 800 Independence Avenue, SW WashingtonD.C. 20591 KeithJ. Harrison GeraldF. Murphy Steven J. Seiden Crowell & Moring LLP 1001 PennsylvaniaAvenue, 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

### .FEDERALAVIATIONADMINISTRATION UNITED STATES DEPARTMENT OF TRANSPORTATION 

### ----------------------------------------------------------------------------------;>[ UNITED AIRLINES, INC., Complainant,
v. THE PORT AUTHORITY OF NEW YORK AND NEWJERSEY, Respondent. 

### ----------------------------------------------------------------------------------;>[ DECLARATION OF CARLENE V. MciNTYRE 

### I, Carlene V. Mcintyre, declare as follows: DocketNo. FAA-16-14-13

1. I am an Assistant General Counsel inthe LawDepartment ofthe Respondent The Port Authority ofNewYork andNewJersey ("the Port Authority") assignedto representthe PortAuthority inthis matter. Inthat capacity, I amfully familiar withthe facts set forth herein. 2. This Declaration is submittedin support ofthe motion ofthe Port Authority pursuantto 14 C.F.R. 

### § 16.19 (a) forleave to file a Reply Memorandum to 

### the Answer OfUnited Airlines, Inc. To The PortAuthority OfNew York andNewJersey's MotionFor Summary Judgment ("ReplyMemorandum") and aReply Declaration ofDavid 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'') ofnumerous exhibits in supportofits Answer 

### Of Omted Airlmes, Ihc. To 

### The l'mtAuthority OfNe" Yerk

## ana l>k'N

**Jers~y's** 

### l\!IGtion For Summary Judgment ("Answer") whichUnited couldhave attached as exhibits to its Complaint, butwhich Unitedpresented only after the submissionbythe PortAuthority ofits Motion For Summary JudgmentDismissing The Complaintherein.

### · 4. Specifically, United for the first time submits as Exhibits 00 through DDD to 

### its Answer correspondence between Continental Airlines, United'spredecessor,and Continental's counsel, onthe one hand, and the PortAuthority andits counsel, onthe otherhand, between the years 2003 and 2006 in support ofUnited's Complaint. United clearly hadthese documents available to itto be included as exhibits to its Complaint when itfiled that document, but chose not to do so. 5. In

### addition, Unitedrnischaracterizes the PortAuthority's references to the actions ofUnited and Continental during bankruptcyproceedings as an argumentthat such actions preclude United from bringing this Part 16 proceeding. But, the PortAuthority made no such argument. 6. Finally, for the first time, United attempts to explainits failure to include among the exhibitsto its Complaintthe lease documents betweenthe PortAuthority and United establishingthe EWRflight fee. 7. I have soughtConsent from counsel for Unitedto the granting ofleave to file the Documents. Counsel for United has stated that United could not take aposition onthe issue of granting leave without having seenthe ReplyDocuments. 8. The Port Authorityrespectfully submits thatit shouldbe givenleave to file the Reply Documents to 

### respond to United's Answer to address the documents which United filed with its Answer, andthe new issues raised inUnited's Answer.



### 2I declare under the penalty ofperjury under the laws ofthe United States ofAmericathat thatthe foregoing is true and correct. Executed at NewYork, New York, onApril27, 2015.

3FEDERAL AVIATION ADMINISTRATION UNITED STATES DEPARTMENT OF TRANSPORTATION 

### ---c------------------------------------------------------------------------------)( UNITED AIRLINES, INC.,



### v. Complainant, Docket No. FAA-16-14-13

THE PORT AUTHORITY OF NEW YORKAND 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) 435-3503FEDERAL AVIATION ADMINISTRATION UNITED STATES DEPARTMENT OF TRANSPORTATION 

### ----------------------------------------------------------------------------------)( UNITED AIRLINES, INC., Complainant, 

### v. THE PORTAUTHORITY OF NEWYORKAND 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 NEWYORK 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 summaryjudgment ("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 setforth 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 sufficientto grant summary judgmentto the PortAuthority. United seeks to undermine this straightforward reasoning by claiming, rather shockingly, that the contracts pursuant to which it has operated and profited immenselyat EWR, were somehow notvoluntarily 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 EWRflight fees and airport revenues and complained about the level offees. (United's Answer at 6-12, 

### see Exhibit TT at pg. 3). This correspondence was prompted by the negotiation of a new flight fee agreementfor 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 of2003, 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 EWRflight fee formula expired, orwas about to expire, in the 1990s, both United and Continental extended that formula through December 31, 2018, agreed to the addition ofthe 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 ofthe 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 ofJanuary 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 ofthese agreements or denial ofthe 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 ofthe 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 ofthe financing for the construction ofthe extension ofthe EWRAirTrain to the Northeast Corridor rail line used by New JerseyTransit 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 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. The effect ofthe application of $37.5 million in PFCs ($5 million per year for 7.5 years) to interest payments on the portion ofthe PortAuthority Consolidated Bonds that funded the EWR Air Train was to

2 A PFC is not afee 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/.



### 4reduce the EWR Monorail Fee by $5 million peryear for 7.5 years. This reduction ofthe EWR Monorail Fee benefited all airlines at EWR. As the air carrier with the largest presence at EWR, Continental was the principal beneficiary ofthis reduction ofthe EWR Monorail Fee (Kagan Reply Declaration

**at~~** 6-10). Second, the PortAuthority 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 Authoritywould 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 ofJanuary 1, 2003, the Port Authority agreed to extend the recovery of the unamortized capital costs ofthe decommissioned building through the expiration ofthe EWRflight 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 FAAto
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 ofwhether PFCs would be potentially

3 Exhibit 2to the K<=tgan Reply Declaration was previously submitted on compact disc as part of Exhibit A tothe Declaration of Frederick Longernecker, dated February 9, 2015, at 747-50.



### 5available to fund a portion ofthe project. In anticipation of receiving approval from the FAAto 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 ofthe 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 PortAuthority 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



### 6Memorandum 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 offees and its argument about the difference between fees at the Port Authority's NewYork 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 ofthe 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 ofthe 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 ofthe 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 ofthe 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 oftheir obligations under that formula because ofthe imminent expiration ofthose 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 ofthis 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



### 8offered in support ofthe complaint ...." In a footnote, United claims that it did not fail to satisfy this requirement because the Complaint alleged "the existence ofthe lease" and "describes the formula for calculating the EWR Flight Fee." United's Answer at 15 n.5. United is wrong fortwo reasons. First, alleging "the existence ofthe 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 ofthe flight fee and the cost bases ofthose components. Complaint at

## mJ 34-35. 5 But United failed to setforth 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 AirTrain 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) 435-3503FEDERAL AVIATION ADMINISTRATION UNITED STATES DEPARTMENT OF TRANSPORTATION 

### ----------------------------------------------------------------------------------)( UNITED AIRLINES, INC., Complainant,
v. THE PORTAUTHORITY OF NEW YORKANDNEWJERSEY, Respondent. 

### ----------------------------------------------------------------------------------)( REPLY DECLARATION OF DAVID A. KAGAN I, DavidA Kagan, declare as follows: DocketNo. FAA-16-14-13

1. I submitthis declaration 

### in support ofRespondent The Port Authority ofNew York andNewJersey's ("the PortAuthority") Motion For Summary JudgmentDismissing The Complaintherein. 2. I am employedbythe Port Authority. I holdthe position ofAssistant Directorfor Business and Properties oftheAviation Department ofthe PortAuthority, and have held that position since January 2006. Myjobresponsibilities include managing the commercial arrangements at the Port Authority's airports such as leases, privilegepermits and flight fee agreements. 3. The statements 

### inthis declaration are based upon mypersonal knowledge and uponreview ofinformation contained inbusiness records ofthe PortAuthority. 4. In or around 2003, Continental Airlines, predecessor to the Complainantherein, soughtrelieffrom the Port Authority to reduce fees owed by Continental to the PortAuthority pursuantto various agreements. 5. The PortAuthority considered Continental's request and identified bases for granting Continental's request inpart.6. First, the PortAuthority identified a basis for reduction ofthe AirTrainFee at NewarkLiberty International Airport ("EWR"). The PortAuthority determinedthat use of Passenger Facility Charges ("PFCs") 1 to fund elements ofthe fmancing for the construction ofthe extension ofthe EWRAirTrainto the northeast corridor rail line used byNew JerseyTransit Corporation and Amtrakwould be consistentwith the applicable law, regulations and policy regarding use ofPFCs. 7. Accordingly, the PortAuthority submitted a requestto the FAAfor permissionto apply $37.5 million in PFCs ($5 millionperyear for 7.5 years) to interestpayments onthe portion ofPortAuthority Consolidated Bondsthatfunded the EWRAirTrain. Attachedhereto

as Exhibit 1 is the PortAuthority's formal requestfor suchpermission, a letter dated February 18, 2005 to Mr. BarryMolar from Mr. 

### A. Paul Blanco (without enclosures). 8. As a result ofthe original application and subsequent clarifying communications betweenthe FAA andthe PortAuthority, the PortAuthority's requestwithrespectto use of PFCs was approvedbythe FAA. 9. The effect ofthe application of$37.5 million in PFCs ($5 millionper year for 7.5 years) to interestpayments onthe portion ofthe Port Authority ConsolidatedBonds thatfunded the EWRAirTrainwas to reduce the EWRAirTrain Fee chargedto EWRairlines by $5 million peryear for 7.5 years.

1 A PFC is not a fee chargedto airlines. A PFC is anFAA-approved fee collected by airlines from eachboardedpassenger at a commercial airport controlledby a public agency. PFCs are remitted to the airport agency to fund FAA-approvedprojects that enhance safety, security, or capacity, thatreduce noise, or thatincrease air carrier competition. PFC collection and expenditure is governedby 49 U.S.C. 

### §40117 and 14 C.P.R. Part 158. See http://www.faa.gov/airports/pfc/.

210. This reduction ofthe EWRAir TrainFeebenefitted all airlines atEWR. As the air carrier withthe largestpresence atEWR, Continental was theprincipal beneficiary ofthis reduction ofthe EWRAirTrainFee. 11. Second, the PortAuthority decommissioned its oldAdministration Building at EWR in 2003. Under accounting principles generally acceptedinthe United States ("GAAP"), the PortAuthority wouldhave been allowedto accelerate the depreciation ofthat building inthe yearinwhich itwas decommissioned, whichwouldhaveresulted in a sharp increase (a "spike") inthe EWRFlightFee inthat year totaling approximately $10 million. Instead, by Supplement No. 24 to Lease No. ANA-170, dated as ofJanuary 1, 2003, the PortAuthority agreedto extend the recovery ofthe unamortized capital costs ofthe decommissioned building throughthe expiration ofthe EWRFlightFee agreementin2018. (A copy ofSupplementNo. 24 to Lease No. ANA-170 is attachedhereto as Exhibit 2. Section 2 ofSupplement24 addresses depreciation ofthe oldAdministration Building.) Again, this actionbenefitted all airlines at EWR, and Continental, as the air carrier withthe largestpresence atEWR, was theprincipal beneficiary. 12. Third, between2004 and 2006, various capital improvements were completed at EWRfor whichthe PortAuthority was potentially seeking permission from the FAAto use PFCs as reimbursement. UnderLeaseNo. ANA-170, the PortAuthority is allowed to include in the EWRFlightFee depreciation for a capital improvement whenthat capital improvement is reafiy fer its intendedttse, regmdless ef 

### 01hcther PFCs

**~maid** bepotentially available to 

### fand a portion ofthe improvement. In anticipation ofreceiving FAA approval to collect anduse PFCs for the completed 2004- 2006 capital improvements, the PortAuthority elected not to include depreciation for those 2004- 2006 capital improvements 

### in the EWRFlightFee pending an

3

### FAA determination, resulting in a lowerEWRFlight Fee for those years in which no depreciation was included. Again, this action benefitted all airlines at EWR, and Continental, as the air carrier withthe largestpresence atEWR, was the principal beneficiary. I declare under thepenalty ofperjnryunder the laws ofthe United States ofAmericathat that the foregoing is true and correct. Executed at NewYork, NewYork, onApril27, 2015.

4

# Exhibit 1February 18, 2005

Mr. BarryMolar Manager, APP-500 Federal AviationAdnrinistration 800 Independence Avenue, S.W., Room 620 WashingtonD.C. 20591 

# ~PORTAunmRmOFNY& NJ
A 

### PaulBlanco ChiefAnandafOfficer

Subject: The PortAuthorityofNewYork and NewJersey 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 

### ofthe annual interest due on certain Port Authority Consolidated Bonds. As more fully discussed below, the proceeds ofthese · Bonds were used, in part, to pay for the construction ofthe extension ofthe monorail at Newark Liberty International Airport to the northeast corridor rail line used by New Jersey Transit Corporation andAmtrak (the "Project"). The Project became operational onOctober21, 2001. 

### As you may be aware, the Port Authority's offices were located at the World Trade Center, and most ofour 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, wecan provide a description ofthe 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 theproceeds ofits 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 ParkAvenue South, 15th Floor NewYork, NY I 0003 T: 212 435 7738

# ~PORTAimiORmOFNY & 

### NJ
As you mayrecall,.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 ofthe Project was approximately $396 million. The Port Authority expended the $250 million ofauthorized PFC's throughMay 2000. At thatpoint the agencyhadno 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 ofits commercial paper obligations to the payment ofthe remaining $146 million ofproject costs. Ofthe $117.2 million, $116.7 million ofproject costs were eligible for reimbursement with PFC's. 

### As recorded in Tab 1, this $116.7 million ofProject costs was expended from May 2000 through April 30, 2002; and therefore, is not duplicative ofthe $250 million in expenditures under the PFCauthorization, which occurred prior to May 2000. Tab 1 also provides detail of

### the major vendors compensated during this period andthe nature ofthe work theyperformed. Of the $117.2 million, Port Authority has documentation demonstrating that $

### i04.2 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 ofwhich closed on January 31, 2001 and Apri130, 2002, respectively. These two series ofConsolidated Bonds refunded, respectively, $20 million and $100 million ofcommercialpaper obligations. Capital projects undertaken ·by the Port Authority in connection with its facilities are assigned specific accounting codes to enable tracking ofthe 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 ofPort Authority commercial paper obligations, i:o beissued for CA-49, between May 1, 2000 and April30, 2002. The attached report provided at Tab 2 mdicates that $104.2 million ofcorr:irnercial paper for CA-49 was sold during this period. Also attached, at Tab 3, are copies ofchecks and invoices pertainingto a sample transaction from this amotint. Onthe date ofissuance ofeach series ofConsolidated Bonds, aproceeds allocationmemorandum is preparedbythe Port Authority's Treasury Department. The memorandnm for Consolidated Bonds, One Hundred·Twenty-fifth Series, attached at Tab 4, indicated that $100 million ofthe 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 ofPort Authority records on September 11, 2001), based on accounting records, $20 million of the proceeds ofthe One Hundred Twenty-third Series Bonds were to be used for the refunding ofPort Authority commercial paper obligations issued prior to January 30, 2001. Port Authority accounting records also indicate that the proceeds ofboth series were completely expended for authorizedpurposes.

· Page 2 of3

# ~PORTAUTHORnYOFNY& NJ
Basedupon conclusions drawn from the foregoing, we are able to state, with a reasonable degree of certainty, that at least $100 million ofthe capital costs ofthe Project were ultimately funded with the proceeds of the One Hundred Twenty-third Series Bonds and the One Hundred Twenty-fifth Series Bonds, 

### inthe respective amounts of$

## i0million and $90 million. The allocation between the two Bonds is based on the closing dates ofthe Bonds (123'd Series- January 31, 2001 and 125 1 h Series

- April 30, 2002), the corresponding tjming of the PFC-eligible expenditures (May 2000 through April 30, 2002), andthe amounts ofCo=ercialPaperpaydown ofeach ofthe Bonds ($20 million, 123'd Series and $100 million, 125th S.eries). Interest payments on these amounts ofthese Series amount to slightly under $5 million per year, and are eligible to be paid from l'FC charges undertherules andregulations currently applicable to PFC's. The PortAuthority 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 bythe airlines operating at Newark LibertyInternational Airport. However, since the Port Authority's PFC current collection authority expires in the 1st Quarter of2008 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 recoverup to $37.5 million. We believe that the information provided bythis letter, while not as complete as typically wouldbe 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 ofapproximately $5 million per year for each ofthenext7.5 years (for a total ofapproximately $37.5 million, over and above the collection authoritypreviously granted for 'this project of$250 million), which will be used to pay a portion ofthe 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 authorizationis 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
ChiefFinancial Officer ·
cc: Sheryl Scarborough-FAA Eleanor Schifflin- FAARegional Office

Page 3 of3

### r~ 

### f, 'I'·'. ::;

1 .· .. .·; 

### ' 

## ,, 

# ll N I I i I I

# Exhibit 2THIS SUPPLEMENT SHALL NOT BE BINDING UPON THE PORT AUTHORITY UNTIL DULY EXECUTED BY AN EXECUTIVE OFFICER THEREOF AND DELIVERED TO THE LESSEE BY ANAUTHORIZED REPRESENTATIVE OF THE PORT AUTHORITY AVIATION DEPT. Port Authority Lease No. ANA-170 Supplement No. 24 

# FILECOPY! Facility: Newark Liberty International Airport SUPPLEMENTAL AGREEMENT THIS SUPPLEMENTAL AGREEMENT, dated as ofJanuary l, 2003, by and between THE PORTAUTHORTIY 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 ofJanuary 11, 1985 entered into 

## an agreement oflease (which agreement oflease 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 ofLease with Assumption and Consent Agreemententered 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 ofthe United States Bankruptcy Court for the District ofDelaware (the "Bankruptcy Court") covering the Lessee's assumption ofthe Lease as part ofthe confirmation ofits reorganization plan in its Chapter 11 bankruptcy proceedings and as debtor and debtor in possession pursuant to the applicable provisions ofUnited States Bankruptcy Code as set forth in and subject to the terms and conditions ofsaid Stipulation (said Stipulation being hereinafter referred to as the "Stipulation"); and WHEREAS, the Stipulation and the Lessee's assumption ofthe Lease was approved by the Bankruptcy Court by an Order thereofdated the l"day ofOctober, 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 ofJanuary l, 2003, subparagraph "(d)" to section VIII ofSchedule A to the Lease shall be deemed deleted and the following new subparagraph "(d)" shall be deemedsubslrtuted 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 availab!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 ofthe 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 ofthis 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 saveharmless the Port Authority ofand 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 ofthis Supplemental Agreement. 4. Neither the Commissioners ofthe Port Authority nor any ofthem, nor any officer, agent or employee thereof, shalLbe charged personally by the Lessee with any liability, or held lrable to it under any term or provision ofthis Supplemental Agreement, or because ofits execution or attempted execJJtjon or hecanse ofany breach thereof 5. As hereby amended, all ofthe 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 Ibehalfofboth 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 Leaseor 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) 

### ASSISTANT 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 ofsatisfactory 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 behalfofwh'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-Putlie, State oi New York

. '" No. 01SF'OU57870 Qualified in New York County**~** Commission Exptres April 30,**200~**

On this 

# 1 day of 

### 0aobec , 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 ofits Board ofDirectors.
(notarial seal and stamp)FEDERAL AVIATION ADMINISTRATION UNITED STATES DEPARTMENT OF TRANSPORTATION 

### ----------------------------------------------------------------------------------JC UNITED AIRLINES, INC., Complainant,

v. THEPORT AUTHORITY OF NEWYORK AND NEW JERSEY, Respondent. 

### ----------------------------------------------------------------------------------JC CERTIFICATE OF SERVICE DocketNo. 16-14-13

I hereby certify that by Federal Express Overnight Delivery I have this day servedthe foregoing MotionFor Leave To File A Reply To Answer OfUnited Airlines, Inc. To The Port Authority OfNew York AndNewJersey's Motion For Summary Judgment, Reply Memorandum OfPoints AndAuthorities to the Answer OfUnitedAirlines, Inc. To The Port Authority OfNewYork andNewJersey's MotionFor Summary Judgment, the Declaration of Carlene V. Mcintyre, and the Reply Declaration ofDavid A. Kagan andthe Exhibits annexed thereto onthepersons setforth below at the addresses indicated. Dated: Apri127, 2015

Addressees: Office ofthe ChiefCounsel Attention: FAAPart 16 Airport Proceedings Docket, AGC-600 Federal AviationAdministration 800 Independence Avenue, SW Washington D.C. 20591

I.Keith

### J. Harrison Gerald f,Murphy Steven

### J. Seiden Crowell & Moring LLP 1001 PennsylvaniaAvenue, NW Washington; DC 20004 (202) 624-2500 RobertS. Span Alan K. Steinbrecher Sophy Chen Steinbrecher & SpanLLP 1155 F Street, N.W., Suite 1050 Washington, DC20004 (202) 559-8680 rspan@steinbrecherspan.com Attorneys for Complainant

2