UNITED FILES REPLY IN CASE AGAINST PANYNJ ALLEGING IMPROPER DIVERSION OF AIRPORT REVENUE
February 14, 2022
On January 14, 2022, United Airlines (“United”) filed its reply to respondent, Port Authority of New York and New Jersey’s (“PANYNJ”) supplemental brief on remand.
United’s reply is the latest action in a case that has continued for the last few years and was initiated when United filed suit against PANYNJ in January of 2015. United alleged that PANYNJ, the airport sponsor of Newark-Liberty International Airport (EWR), charged unreasonable rates in violation of 49 U.S.C. § 47107(a), generated excessive surplus revenues in order to subsidize non-aeronautical functions, and improperly diverted airport revenue in violation of 49 U.S.C. § 47107(b)(2). PANYNJ denied all of United’s allegations and asserted that its flight fees are not unreasonable or unjustly discriminatory. PANYNJ also asserted that because it is a “grandfathered airport” (i.e. referring to several pre-1982 New York and New Jersey statutes that provide that Port Authority revenues, including revenues from air terminals, be pledged as security or applied to the repayment of debt without regard to the facility from which the revenues are derived, to fulfill any undertakings which the Port Authority may assume for the “benefit of its consolidated bondholders.”) it was not engaging in unlawful diversion of airport revenue because it could use airport revenue for non-aeronautical purposes.
In 2018, after review of evidence presented by both parties, the Director of Airport Compliance and Management Analysis (the “Director”) of the FAA determined that PANYNJ had not adequately demonstrated that it had complied with “grandfathering” exceptions and had used considerable amounts of airport revenue on non-aviation facilities that it owned, which could be considered an improper diversion of revenue. The Director therefore ordered PANYNJ to take corrective action by submitting a corrective action plan. Shortly thereafter, PANYNJ filed an order requesting an extension of time to file an appeal and suspension of the submission requirement to file its corrective action plan until after a Final Agency Decision or judicial opinion was issued, which FAA granted in December 2018. Since then, several additional replies and requests for an extension of time to file relevant documents have been made by both parties, as well as an Order issued by the Associate Administrator of the FAA, affirming the Director’s Determination and remanding the grandfathering issue to the Director to make a determination and consider whether or not to issue a civil penalty against PANYNJ. The Director has yet to make a final determination in this case.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com 202-659-6622) or Drew Derco (dderco@eckertseamans.com 202-659-6665).
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