Lexis Cite:
2005 DOT Av. LEXIS 370
Westlaw Cite:
2005 WL 4739674
Author:
Reynolds, Michael W., Deputy Assistant Secretary for Aviation and International Affairs
Author Title:
Deputy Assistant Secretary for Aviation and International Affairs
Complainant(s):
Brendan Airways, LLC, d/b/a USA 3000 Airlines|British Airways PLC|Scandinavian Airlines System|Societe Air France|Swiss International Airlines|Virgin Atlantic Airways Ltd.|Deutsche Lufthansa RG|TAP Air Portugal|Alitalia-Linee Aeree Italiane-S.p.A.|El Al I
Respondent(s):
Port Authority of New York and New Jersey
Intervenor(s):
Airports Council International-North America
Airport(s):
Newark (N.J.) International Airport (EWR)
Holding:
Ordering refunds.
Abstract:
Complainants, airlines operating from International Terminal B at the Newark International Airport, alleged that the new General Terminal Charge (GTC) and Federal Inspection Facilities Space Charge (FIS) imposed by the Respondent, the Port Authority of New York and New Jersey, were unreasonable and violated DOT’s Rates and Charges Policy. The Department found that some of the alleged bases of the fees were unreasonable and ordered a supplemental proceeding within 30 days to determine the appropriate amount of refunds due to Complainants.|Applicability of Rates and Charges Policy:|“Although the [Rates and Charges Policy] only addresses ‘rate base’ in the context of airfield fees . . . it provides guidance on what is reasonable for a rate base for non-airfield fees.” (p. 3 n.6).|Compensatory Charges Must be Based on Cost:|“If an airport chooses a compensatory methodology to set fees, those fees must be based on an airport’s costs. . . . [W]hen analyzing the appropriateness of a compensatory non-airfield fee methodology based on cost, . . . it is reasonable to use as guidance the [Rates and Charges Policy] provisions on airfield fees.” (p. 11, 25).|Burden of Proof:|“Under our rules, and in order to satisfy the burden of proof, airline complainants must set forth their case in their complaints and the accompanying briefs and evidence submissions.” (p. 4). “[A]irline complainants must submit evidence sufficient to show that the challenged fees are unreasonable.” (p. 14). “[I]f the complainants present a prima facie case that the fee is unreasonable, the burden shifts to the airport. The airport must then submit sufficient evidence to show that the fee is, in fact, reasonable. Absent evidence presented at the hearing that a fee may be unreasonable, the airport is under no obligation to justify its rate-setting methodology.” (p. 14).|Admissibility of Evidence:|Complainants must “file all of their testimony with their complaint or . . . say specifically what additional information they have been unable to obtain from the airport.” (p. 11). Complainants’ request to submit new testimony at the hearing was properly denied “[b]ecause Complainants did not establish that the testimony they wished to submit was based on new information from the [Respondent]. . . . [C]omplainants cannot circumvent the ALJ evidentiary rulings by submitting evidence as part of a [post-hearing] brief.” (p. 13).|“The ALJ did not have the authority to require the [Respondent] to submit information that the airlines could have but did not request previously.” (p. 12).|Where the Instituting Order limited the admission of new evidence without good cause, and new testimony at the hearing was based only on the information provided by the Respondent in response to the Instituting Order, the ALJ was correct to deny Complainants new testimony “[b]ecause complainants did not establish that the testimony they wished to submit was based on new information.” (pp. 12-13).|The granting of a motion to strike new evidence was proper where Complainants attempted to circumvent the “ALJ’s page limit by couching additional arguments in the form of charts and ‘Notes’, particularly when those charts and notes consist of materials authored by [C]omplainants that could have been included within the page limitation” of the post-hearing brief, and when the “additional pages contained information that had previously been deemed inadmissible by the ALJ.” (p. 13).|Depositions:|The taking of a deposition will not be permitted where the witness can attend the hearing and the same testimony available in deposition would be obtainable at the hearing. (p. 12).|Non-Recurring Costs:|It is unreasonable to use non-recurring, one-time costs to establish the cost basis for fee increases. (p. 16). “[T]he expense reclassification costs for signage and abandoned projects . . . was unreasonable because the two items were not shown to be ‘ordinary and recurring’ expenses.” (p. 16). “[C]ontingent costs can be recovered from reserves set aside for such contingency expenses that vary over time.” (p. 17).|Cost Allocation:|Where Complainants failed to introduce evidence that the cost allocation among the various airport terminals was unreasonable, “the [Respondent]’s alleged failure to justify the allocation is not relevant.” (p. 18). “The existence of a reasonable alternative method to allocate costs does not render the method used by the [Respondent] unreasonable.” (p. 19).|The allocation of indirect fixed costs among the different airport terminals based on revenues generated from each terminal was “inconsistent with [Rates and Charges Policy] to the extent that [the allocation] is not based on costs.” (p. 21). Annual land rent payable by the Respondent to the City of Newark could be either a fixed amount or a percentage of gross revenues, whichever was greater. “The [Respondent] cannot allocate the rental payment among terminals on the basis of each terminal’s share of revenues when the rent currently being paid by the [Respondent] is not based on the airport’s total revenues.” (p. 21).|Unjustly Discriminatory Fees:|The airport fees paid by Complainants on Terminal B, although higher than the fees paid by Continental Airlines on Terminal C, were not unjustly discriminatory because the Complainants were not similarly situated to Continental Airlines. Whereas Continental Airlines’ airport fees were incorporated in an agreement with the Respondent, Complainants operated at the Airport without an agreement. “[T]he controlling statute allows airports to treat signatory and non-signatory carriers (and carriers with leases and those without) differently. The [Rates and Charges Policy] also expressly permits differences in treatment of differently situated airlines, and makes clear that tenant/non-tenant and signatory/non-signatory airlines are not similarly situated.” (p. 23) (internal citation omitted). The statutory requirement that airport fees be reasonable, as enforced by DOT, “is consistent with the provisions of the bilateral agreements on [airport] fees.” (p. 9).|Surplus:|Uncertainty about the forecast of future airport expenses does not justify the accumulation of an unreasonable surplus that will not be credited back to the airlines. The Respondent may not impose fees calculated to “create a surplus that is not justified by known or reasonably expected airport costs.” (p. 26).|Share of Concession Revenue:|An airport is not obligated to credit concession revenues to the airlines. However, where overwhelming evidence indicates that the Respondent intended to credit a certain amount of concession revenue consistent with past practices, but failed to do so due to a mathematical error, the full amount originally intended should be credited against the rate base. (pp. 27-28).
Index Terms:
Additional evidence|Airline agreement|Burden of proof|Hearing|Rates and charges|Similarly situated|Unjust economic discrimination