East Hampton Must Reimburse HTO for Legal Fees Improperly Funded with Airport Revenue

The town of East Hampton, NY cannot divert airport revenue to pay for legal fees stemming from its unsuccessful effort to impose access restrictions at East Hampton Airport (KHTO), the National Business Aviation Association (NBAA) stated today in an appeal to the Federal Aviation Administration (FAA).

The appeal comes in response to a preliminary FAA 14 C.F.R. Part 16 decision that declined to address the misappropriation of airport funds, a course of action that NBAA maintains is contrary to agency precedent, is bad policy and is plainly at odds with congressional instructions.

NBAA President and CEO Ed Bolen noted that airport users were essentially double-charged in the fight for their right to use the airport. The town of East Hampton hiked landing fees at HTO to generate revenue to cover the legal fees associated with defending the restrictions.

“There should be no doubt that the airport dollars spent by the town in litigation seeking to perpetuate the illegal restrictions constituted an improper use of airport revenue,” NBAA wrote in its appeal, which was joined by 11 companies that operate at the Long Island airport. “This is not a case in which an airport sponsor was called upon to mount a defense to an unanticipated agency or court challenge.

“The town explicitly adopted an anti-airport agenda, declined to utilize FAA administrative procedures and represented to its taxpayers that – even though litigation would almost inevitably result from its campaign – the consequences would be cost- and risk-free,” the appeal states. “In the meantime, the airport has been starved of needed improvements that could have been funded with those diverted funds. The town now should be required to make HTO whole.”

The NBAA appeal explains that the enforcement of the prohibition on revenue diversion, as has occurred at HTO, is not just a matter of FAA precedent and policy, or even of congressional policy, but rather a matter of congressional commands. Rather than complying with the requirement to apply airport funds only for the benefit of the airport, “the town had an explicit anti-airport and bad-faith agenda. The town openly refused to utilize the opportunities provided by, much less comply with, the Airport Noise and Capacity Act (ANCA) and 14 C.F.R. Part 161. The FAA is unlikely to ever have before it, in its own words, a clearer ‘unique’ case of the ‘abuse’ of airport accounts to fund impermissible legal expenditures. The FAA should now require their reimbursement, with statutory interest,” stated the NBAA appeal.

“While East Hampton apparently has spent millions of dollars over the past several years in its attempts to impose access restrictions that the federal courts concluded violated federal requirements, the FAA decision puts at risk far more than the dollars currently at stake at HTO,” said Bolen.

“The decision could jeopardize the integrity of the national system of airports by providing the option for sponsors across the country to utilize airport revenue in support of efforts to restrict or shutter airports, rather than to grow and improve them as intended by the statute,” Bolen said.  “It is critically important that the agency carefully consider the far-reaching implications of the preliminary ruling being appealed.”