Contact: Colleen Roche (212) 788-2958 or Deirdra L. Picou (212) 788-2971
Mayor Rudolph W. Giuliani announced today that a legal dispute between the City and the Federal Aviation Administration (the "FAA") has been resolved in the City's favor. In a letter issued yesterday, the FAA's Chief Counsel, Nicholas G. Garaufis, retracted earlier assertions that an opinion he had expressed in a November 20, 1996 letter was binding on the arbitrators who are deciding the airport rent dispute between the City and the Port Authority of New York and New Jersey (the "Port Authority").
In the November 20 letter, Mr. Garaufis wrote that federal law prohibited including the amount of "passenger facility charges" (PFC) collected by the Port Authority in the calculation of the City's rent. In an arbitration proceeding, the City seeks to recover more than $500 million in back rent, of which over $180 million relates to the passenger facility charge issue.
Following the release of the November 20 letter, both the Port Authority and Mr. Garaufis announced that the opinion was binding on the arbitrators and that the City's claim on this issue was over. The City sued the FAA in both the United States Court of Appeals for the Second Circuit and the United States District Court for the Eastern District of New York on Friday, January 17, 1997, challenging the assertion that the November 20 letter was binding. The City claimed that the FAA improperly attempted to influence the ongoing rent dispute and violated the strictures of the federal Administrative Procedure Act.
The City is represented by the Corporation Counsel, as well as former FAA Chief Counsel Kenneth P. Quinn, currently a partner in the Wall Street-based firm Winthrop, Stimson, Putnam & Roberts, and Ernest Gellhorn, a noted scholar on administrative law at George Mason University.
"The FAA's misguided attempt to help the Port Authority was both substantively wrong and procedurally defective", Mr. Quinn stated. "It is unfortunate that the City needed to bring suit to clarify the nonbinding nature of the opinion."
In yesterday's letter, issued one business day after the City sued the FAA, Mr. Garaufis acknowledged that the November 20 letter was "an advisory opinion," which "by its nature, is not binding."
Paul A. Crotty, Corporation Counsel, stated, "The FAA's concession that the earlier opinion is not binding has vindicated the City's position in the lawsuits, and accordingly it intends to withdraw them. The City will now move forward on all of its claims before the arbitrators, who are free to make an independent determination on the merits."