FEDERAL AVIATION ADMINISTRATION 

UNITED STATES DEPARTMENT OF TRANSPORTATION 

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

UNITED AIRLINES, INC., 

v. 

Complainant, Docket No. 

FAA-16-14-13 

THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, 

Respondent. 

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

REBUTTAL OF THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY 

Documents in this proceeding should be served upon the following individuals: 

RECEIVED 

JUN 16 2015 

PART 16 DOCKETS 

Carlene V. Mcintyre 

Arnold D. Kolikoff 

Faith Tabafunda 

David R. Kromm 

THE PORT AUTHORITY OF NEW 

YORK AND NEW JERSEY 

4 World Trade Center 

150 Greenwich Street, 25th Floor 

New York, New York, 1 0007 

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 

REBUTTAL OF THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY 

INTRODUCTION 

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

Authority"), hereby submits this Rebuttal to the Reply Of United Airlines, Inc. to The Port 

Authority Of New York And New Jersey's Answer To The Complaint, dated June 4, 

2015 ("Reply" or "United Reply") pursuant to 14 C.F.R § 16.23(f). 

By Order dated April 27, 2015, the Director denied the Port Authority's Motion for 

Summary Judgment, determining that "there are genuine issues of material fact" 

presented in the Complaint, including, but not limited to violations of certain grant 

assurances. However, in its Reply, United Airlines, Inc. ("United") leaps to the 

erroneous conclusion that United is now entitled to a Director's Determination in its 

favor. In so arguing, United would have the FAA ignore: (a) United's own burden of 

proof to establish or provide evidence supporting its claims and (b) the points asserted 

by the Port Authority in its Memorandum Of Points And Authorities In Support Of Its 

Motion For Summary Judgment Dismissing The Complaint ("Port Authority 

Memorandum") and supporting papers which are pertinent to any inquiry as to whether 
the Complaint demonstrates that the Port Authority is in violation of the grant 

assurances. The Port Authority respectfully refers the FAA to the Port Authority 

Memorandum and asserts the following in rebuttal to United's request for the entry of an 

Order in its favor. The Port Authority respectfully reserves all the arguments raised in 

its Motion for Summary Judgment, and refers the FAA to those arguments, but by way 

of rebuttal mentions only those arguments which pertain to certain points raised in 

United's Reply. 

ARGUMENT 

UNITED AIRLINES HAS FAILED TO SATISFY ITS BURDEN OF PROOF TO 

ESTABLISH THAT THE PORT AUTHORITY IS IN VIOLATION OF ANY GRANT 

ASSURANCE 

United's assertion of a right to a Director's Determination in its favor based on the 

denial of the Port Authority's motion for summary judgment ignores United's role as 

Complainant and the nature of the denial of the Port Authority's motion. As 

Complainant, United bears the burden of proof to show noncompliance by the Port 

Authority with its grant assurances and FAA policy statement 14 C.F.R § 16.23(k)(1); 

Carey v. Afton-Lincoln County Municipal Airport Joint Powers Board, Docket No. FAA16-06-06, (Jan. 16, 2007) (Director's Determination) at 21 ("The FAA makes 

conclusions of fact and law regarding the Complainant's allegations. Underlying these 

conclusions is the basic requirement of Part 16 that the Complainant show with 

evidence that the airport owner or sponsor is violating its commitments ... by failing to 

adhere to its grant assurances. The burden of proof rests with the Complainants." 

(citation omitted)); Martyn v. Port of Anacortes, Docket No. FAA-16-02-03, at 32 (Apr. 

14, 2003) (Director's Determination) ("[The] standard burden of proof in a Part 16 

2 
proceeding is consistent with the Administrative Procedure Act (APA) and Federal case 

law. The APA provision states, 'except as otherwise provided ... the proponent of a 

rule or order has the burden of proof.'" (citation omitted)); Aerodynamics of Reading, 

Inc. v. Reading Regional Airport Authority, Docket No. FAA-16-00-03, at 14 (July 23, 

2001) (Final Decision) ("As required by Part 16, the proponent of a motion, request, or 

order- in this case, the Complainant- has the burden of proof." (citation omitted)). 

The Director's prior determination that the Port Authority was not entitled to 

dismissal of the Complaint on a motion for summary judgment is not the equivalent of 

United's demonstration of noncompliance with grant assurances by the Port Authority. 

In denying the Port Authority's motion for summary judgment, the Director found only 

that "[t]he Director has reviewed all the submissions and has concluded that there are 

genuine issues of material fact. Order, April 27, 2015 ("Order"), at 3. "[T]he denial of a 

motion for a summary judgment because of unresolved issues of fact does not settle or 

even tentatively decide anything about the merits of the claim. It is strictly a pretrial 

order that decides only one thing-that the case should go to trial." Switzerland Cheese 

Association, Inc. v. E. Home's Market, Inc., 385 U.S. 23, 25, 87 S.Ct. 193, 195 (1987). 

"[T]he mere denial of a defendant's summary judgment motion does not relieve a 

claimant of the burden of introducing evidence at trial on every element essential to her 

claim, even though the factual predicate was not in genuine dispute at summary 

judgment." Rivera-Flares v. Puerto Rico Telephone Co., 64 F.3d 742, 747 (1st Cir. 

1 995). Thus, the denial of the Port Authority's motion for summary judgment does not 

relieve United of its burden to present evidence to show noncompliance on the part of 

3 
the Port Authority. Denial of the Port Authority's motion is most certainly insufficient to 

warrant a Director's Determination in United's favor. 

United has failed to carry its burden of establishing the essential elements of its 

Complaint. Accordingly, the Director should reject United's request for an Order 

determining that the Port Authority is in violation of its Grant Assurances. If the Director 

does not conclude that United's Complaint should be dismissed on the current record, 

the Director should proceed with an investigation of United's Complaint in accordance 

with 14 C.F.R. § 16.29. 

First and foremost, United has failed to present necessary evidence to support its 

claim that the flight fee at Newark Liberty International Airport ("EWR") is unjustly 

discriminatory in violation of Grant Assurance 22. 

Here, in evaluating whether the flight fee charged to United is discriminatory, it is 

highly significant that in this case, there is no claim that United is being charged a flight 

fee that is different from the flight fee charged to any other carrier that is at EWR. See 

Complaint at '1!21). Indeed, all signatory airlines at EWR have the same flight fee 

formula in their agreements. As set forth below, a failure to show that an airline is being 

treated differently from any other airline at the airport is fatal to any claim of 

discrimination. See, Grant Assurance 22(e)(comparison is between rates, fees and 

rentals charged to "[e]ach air carrier using such airport" and those making "similar use 

of such airport"). In fact, United has cited not one precedent where a carrier has been 

4 
able to make out a claim of discrimination under the grant assurances based on an 

alleged disparity in rates charged to carriers at another airport. 1 

United, however, argues that the flight fee at EWR is unjustly discriminatory in 

violation of Grant Assurance 22 just because the EWR flight fee is calculated using a 

formula different from that used to determine the flight fees at John F. Kennedy 

International Airport ("JFK") and LaGuardia Airport ("LGA"). It is indisputable that United 

cannot establish unjust discrimination merely by showing that two airlines are being 

charged landing fees pursuant to different fee structures at different airports pursuant to 

different agreements entered into in different decades. To succeed in establishing a 

claim of unjust discrimination in landing fees, an airline must establish that it _is being 

charged according to a fee structure different from another airline that is similarly 

situated to the complaining airline. Rates and Charges Policy Statement at~~ 3.1 2

, 

3.1.1 ;

3 see, Port Authority of New York and New Jersey v. Department of 

Transportation, 479 F.3d 21, 42, 43 (D.C. Cir. 2007) (upholding agency determination 

that airlines failed to carry their burden of persuasion concerning claims of 

1 Moreover, even assuming that the level of fees at JFK and LGA was pertinent, it 

is also significant that United is a party to the flight fee agreement at LGA and JFK and 

has admitted (Answer of United to Port Authority's Motion for Summary Judgment at 7) 

that it entered into that flight fee agreement after negotiations occurring years later after 

its predecessors first executed the EWR agreements. 

2 "The airport proprietor must apply a consistent methodology in establishing fees 

for comparable aeronautical users of the airport." (emphasis added). 

3 "The prohibition on unjust discrimination does not prevent an airport proprietor 

from making reasonable distinctions among aeronautical users (such as signatory and 

nonsignatory carriers) and assessing higher fees on certain categories of aeronautical 

users based on those distinctions (such as higher fees for nonsignatory carriers, as 

compared to signatory carriers)." (emphasis added). 

5 
discrimination because they presented no evidence regarding the status of the airline 

allegedly receiving beneficial treatment). 

The decades-long gap between the EWR flight fee agreement and the JFK and 

LGA agreements is by itself a sufficient reason to reject United's claims of 

discrimination. It has long been recognized that "[a]n airport sponsor is not assumed to 

have engaged in unjust discrimination simply by adjusting its rates or terms over time, 

even when that adjustment results in imposing different lease rates and terms at 

different points to otherwise similarly situated tenants." Desert Wings Jet Center LLC v. 

City of Redmond, Docket No. FAA16-09-07, 2010 WL 4723466, at *22( Nov. 10, 201 0) 

(Director's Determination) (emphasis added). 

In order to establish a claim of unjust discrimination based on the fact that the 

EWR fee formula is different from the formula that is used to determine the flight fees at 

JFK and LGA, United must demonstrate that it is similarly situated to the airlines at JFK 

and LGA. United has utterly failed to satisfy this requirement United has failed to 

make any comparison between the terms of the respective agreements other than the 

flight fee formulas, or, of key importance in this circumstance, between the commercial 

conditions under which the respective agreements were negotiated, to demonstrate that 

United is similarly situated to the airlines who are parties to the flight fee agreements at 

JFK and LGA. 

Second, a fatal flaw in United's claim that the EWR flight fee is a violation of 

Grant Assurance 22 is that the EWR flight fee is established by an agreement to which 

6 
United is a party4 United does not deny that it is a party to the agreements establishing 

the EWR flight fee agreement. Rather, United argues that it should not be treated as a 

party to the agreements establishing the EWR flight fee, but United has failed to present 

evidence to support its contention. 

United's mere objection to the EWR flight fee terms in the relevant agreements 

cannot establish a violation of Grant Assurance 22. As the FAA itself has stated: 

The FAA does not find a sponsor in noncompliance because a party to an 

agreement with that sponsor later objects to a provision in the agreement. 

Contracts and negotiations frequently contain provisions that might appear 

questionable in hindsight, but were agreed to by both parties, without 

concern or notice. This is one reason why the FAA considers the actual 

actions or inactions of a sponsor when considering questions of 

compliance, rather than the terms of an agreement freely entered into by 

the parties .... [If a sponsor insists] on an unreasonable term, over the 

objections of an aeronautical user, then that may constitute evidence of a 

possible grant assurance violation." 

AmAv, Inc. v. Maryland Aviation Administration, Docket No. FAA-16-05-12, at 21 (March 

20, 2006) (Director's Determination) (emphasis added) 5 

Thus, a contracting party's dissatisfaction with certain provisions in a binding 

agreement is an insufficient basis for determining a violation of a grant assurance in the 

4 To avoid any misunderstanding, the substantive impact of the fact that the EWR 

flight fee is established by an agreement to which United is a party is distinct from the 

claim rejected in the Order that United's status as a party to that agreement is a bar to 

the FAA's consideration of United's claims. 

5 In AmAv, Inc., the FAA concluded that the terms of the subject agreement did 

not constitute a violation of a grant assurance because there was no evidence of an 

unreasonable act by the sponsor with respect to the formation or administration of the 

agreement. In this case, United has not presented any evidence of an unreasonable 

act by the Port Authority with respect to the formation of the agreements. containing the 

EWR flight fee formula, in its original form or as modified, and has not presented any 

evidence that the Port Authority has administered those agreements in any manner 

other than enforcement of their terms or mutual agreement to modification of those 

terms. 

7 
absence of evidence establishing the context in which the provision became part of the 

agreement. Evidence of context is especially important with respect to review of one 

provision of a complex agreement between sophisticated parties, such as the EWR 

flight fee provision in the agreements between United and the Port Authority, since a 

party to such an agreement might agree to one provision that is objectionable in 

isolation, but which is acceptable in light of the presence of other provisions that are 

favorable to that party. 

In this case, United has presented no evidence at all regarding the 

circumstances under which the EWR flight fee agreements were originally established, 

were modified, or were accepted during bankruptcy proceedings, but relies solely on the 

terms of the agreement to establish its claim that the EWR flight fee is unreasonable. 

United presents no evidence to establish that the agreements were other than "freely 

negotiated" originally, when modified, or accepted during bankruptcy proceedings. 

Thus, United has failed to establish that the Port Authority is in noncompliance because 

the terms of the EWR flight fee formula are set forth in the agreements to which United 

is a party. United's contention that the Port Authority enjoys monopoly power with 

respect to EWR does not establish that the Port Authority engaged in misconduct of the 

type described in AmAv, Inc. with respect to the formation or modification of the EWR 

flight fee agreements with United. 

Third, United has failed to present evidence to support its claim that the EWR 

flight fee violates Grant Assurances 22 and 25 under the Rates and Charges Policy 

because the EWR flight fee produces revenue in excess of the cost items included in 

the flight fee formula. 

8 
The fact that the EWR flight fee may produce revenue in excess of the cost items 

included in the flight fee formula does not mean that the revenue from the EWR flight 

fee formula violates Grant Assurance 22 under the Rates and Charges Policy. The 

flight fee formula includes only certain on-airport and off-airport overhead costs incurred 

by the Port Authority in providing EWR airfield services and assets, but does not include 

other such costs. Declaration of Joseph R. Garcia, dated February 9, 2014 ("Garcia 

Decl.") at '1128 6 

Moreover, United has failed to present evidence to support its claim that the 

EWR flight fee violates Grant Assurances 22 and 25 under the Rates and Charges 

Policy since it has failed to present evidence to support its claim that it should not be 

treated as a party to the agreements establishing its flight fee at EWR. Even if United 

shows that the EWR flight fee formula results in the collection of revenues which exceed 

the costs of providing the EWR airfield services and airfield assets, United would still 

have failed to establish that collection of the EWR flight fee violated Grant Assurance 22 

under the Rates and Charges Policy because the EWR flight fee is set by agreements 

6 The on-airport overhead costs in operating EWR which are not included in the 

flight fee include rental payments made by the Port Authority to the City of Newark 

pursuant the lease for EWR, and on-airport police, maintenance and operation 

administrative and clerical costs. Garcia Decl. at '1128 (a). 

The off-airport indirect overhead costs of operating EWR that are not included in 

the flight fee include: the costs of the Aviation Department's services for all Port 

Authority airports, and the costs of operating the Executive Director's Office, the 

Secretary's Office, Comptroller Department, Law Department, Treasury Department, 

Human Resources Department, and Engineering Department, and all other Port 

Authority activities of the Port Authority located off of EWR that support EWR 

operations. GC)rcia Decl. at '1128 (b). 

9 
to which United is a party, and United has failed to support its contention that it should 

not be treated as a party to those agreements. 

According to Rates and Charges Policy Section 2.2 (a), collection of flight fee 

revenue exceeding the costs to the airport proprietor of providing airfield services and 

airfield assets is permissible when agreed to by an affected aeronautical user. Section 

2.2 (a) of the Rates and Charges Policy states: 

2.2 Revenues from fees imposed for the use of the airfield ("airfield 

revenues") may not exceed the costs to the airport proprietor of providing 

airfield services and airfield assets currently in aeronautical use unless: 

(a) Otherwise agreed to by the affected aeronautical users. 

(emphasis added); see also, FAA Airport Compliance Manual (FAA Order 5190.66 at 

18-6 ("Unless users agree otherwise, airfield fees generally may not exceed the airfield 

capital and operating costs of existing airfield facilities and services .... "(emphasis 

added)). Thus, under Section 2.2 (a) of the Rates and Charges Policy, United is not 

entitled to an Order determining that the EWR flight fee violates Grant Assurance 22 on 

the ground that the EWR flight fee formula generates fees in excess of EWR airfield 

costs because United is party to agreements setting forth that formula and United has 

not presented evidence to support a conclusion United should not be treated as a party 

to those agreements. 

Fourth, United has failed to present evidence that the diversion of revenue from 

EWR constitutes a violation of Grant Assurances 25. As an initial matter, United's 

contention that the diversion of revenue constitutes a violation of the grant assurances 

is inconsistent with both federal law and FAA policy. The Port Authority is permitted by 

statute to produce revenue to be used off the airport. 49 U.S.C. § 471 07(b); see Port 

10 
Authority Memorandum at 34-35. United's contention that "the Port Authority ignores 

legal authorities that show that it is unreasonable to charge rates that will generate the 

surplus revenue that allows such diversion," United Reply at 7, is tantamount to an 

argument, contrary to law, that the Port Authority is not "grandfathered." 

United cannot produce evidence that the Port Authority has diverted EWR 

revenue in excess of the amount the Port Authority is permitted to do so as a 

"grandfathered airport" under 49 U.S.C. § 471 07(b). Although United cites the Port 

Authority's grandfathered payments between 2005 and 2013 pursuant to reports under 

49 U.S.C. 471 07(b)(2), see Reply at 7, on a cumulative basis, the Port Authority's 

"grandfather payments" between 2005 and 2013, as reflected in those reports were 

below the permitted level of such payments. As stated in the Port Authority's report to 

the FAA addressing the amount of airport revenue used to fund non-airport activities, 

which is used to inform the decision of the United States Department of Transportation 

as to whether to grant discretionary federal aid to the Port Authority under 49 U.S.C. 

47115, "[t]he total amount of the 'grandfather payments' during 2005-2013 were 

$584,781 ,033 below the total of the base amounts, adjusted for changes in the 

Consumer Price Index for the period." Declaration of Cheryl A. Yetka, dated May 19, 

2015, at~ 9. 

Fifth, the amount of EWR revenue attributable to the EWR flight fee is far less 

than the majority of total EWR revenues. In 2013, the EWR flight fee produced only 27 

percent of total EWR revenue. Garcia Decl. at~ 32. The other 73 percent of total EWR 

revenue was from non-flight fee sources. !d. at~ 31. United does not and cannot 

demonstrate that it is entitled to a credit for such non-flight fee revenue in calculation of 

11 
the EWR flight fee. Under the Rates and Charges Policy, airlines have no right to claim 

credit for non-flight fee revenue. See, Rates and Charges Policy § 2.1.1; Brendan 

Airways, LLC, v. Port Authority, Docket OST-05-20407, 2005 WL 4747012, at *21 

(March 16, 2005) (Instituting Order). 

Sixth, United has failed to present evidence to support its claims that the EWR 

flight fee is unreasonably high based on the allegation that certain Port Authority 

salaries are excessive. United offers only general statements about Port Authority 

salaries in the Aviation Department and the Port Authority Police Department. This 

evidence is insufficient to establish that the EWR flight fee is unreasonably high. 

General statements about Port Authority salaries are irrelevant since only the Port 

Authority salaries included in costs covered by the flight fee formula are relevant to the 

level of the EWR flight fee, and United has not presented any evidence with respect to 

the salary of any particular Port Authority employee or class of employees whose 

salaries were included in calculation of the EWR flight fee in any given year. 

Seventh, United has failed to present evidence to support its claims that the 

EWR flight fee is unreasonably high because of expenditures by the Port Authority on 

non-aviation activities. The evidence is directly to the contrary. The EWR flight fee is 

based solely on certain costs incurred by the Port Authority in the operation of EWR. 

Garcia Decl. at '1m 20, 22. Thus, expenditures by the Port Authority on non-aviation 

activities, irrespective of the nature or amount of those expenditures, has no effect on 

the EWR flight fee. 

As to United's contention that the Port Authority has argued that it is allowed to 

expend revenues "on anything to do with transporting goods or servicing people" 

12 
(United Reply at 14), an examination of the Port Authority's argument demonstrates the 

fallacy of this contention. The project expenditures which United challenges as 

constituting improper diversion of revenues were related to or in support of Port 

Authority facilities and/or operations. See Port Authority Memorandum at 35, citing 

Complaint Ex. D at 11-11, 11-13, Preliminary Official Statement for 183'd Consolidated 

Bond Series. A project that is related to, or in support of, a Port Authority facility and/or 

operation is not one, which, as United would have it, simply relates to "transporting 

goods or servicing people." 

13 
CONCLUSION 

For the foregoing reasons, United has failed to carry its burden of establishing 

the essential elements .of its Complaint. The Director should reject United's request for 

an Order determining that the Port Authority is in violation of its Grant Assurances. If 

the Director does not conclude that United's Complaint should be dismissed on the 

current record, the Director should proceed with an investigation of United's Complaint 

in accordance with 14 C.F.R. § 16.29. 

Dated: June 15, 2015 

Respectfully submitted, 

t2~/[ :IL-~ Carlene v. Mcintyre 

Arnold D. Kolikoff 

Faith Tabafunda 

David R. Kromm 

THE PORT AUTHORITY OF NEW 

YORK AND NEW JERSEY 

4 World Trade Center 

150 Greenwich Street, 25th Floor 

New York, New York, 1 0007 

Telephone: (212) 435-3503 

14 
FEDERAL AVIATION ADMINISTRATION 

UNITED STATES DEPARTMENT OF TRANSPORTATION 

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

UNITED AIRLINES, INC., 

Complainant, 

v. 

THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, 

Respondent. 

-------------------------------~--------------------------------------------------)( 

CERTIFICATE OF SERVICE 

Docket No. 

FAA 16-14-13 

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

foregoing Rebuttal Of The Port Authority Of New York And New Jersey on the persons set forth 

below at the addresses indicated. 

Dated: June 15,2015 

Stephen Peabody 

Senior Paralegal Specialist 

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 

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