FAA DIRECTOR ISSUES DETERMINATION IN UNITED V. PANYNJ CASE
June 15, 2022
On May 3, 2022, a Director’s Determination on Remand was issued in the case between United Airlines (“United”) and the Port Authority of New York and New Jersey (“PANYNJ”) involving a claim by United that PANYNJ allegedly 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).
In making its determination, the Director confirmed that PANYNJ’s actions satisfied the “grandfather” clause requirements of §§ 471107 and 47133 and Grant Assurance 25 – meaning that PANYNJ could use airport revenue for non-aeronautical purposes – for several reasons: (1) the laws relevant in PANYNJ’s case were both enacted before September 2, 1982; (2) both of the laws constitute “law[s] controlling financing by the airport owner or operator” and (3) based on their language the laws provide that airport revenue “be used to support not only the airport but also the general debt obligations or other facilities of the owner or operator.” The Director also looked at other applicable laws including the 1952 Consolidated Bond Resolution and various bond announcements for refundings, to determine whether the PANYNJ has grandfathered rights based on a covenant or assurance in a debt obligation issued not later than September 2, 1982. Since the Director’s Determination on Remand is an initial agency determination and does not constitute a final agency decision and order subject to judicial review, United can and likely will appeal this initial determination.
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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