After the Federal Aviation Administration stopped plans to auction slots at Newark, Continental Airlines and the Air Transport Association applauded the order halting the planned September 3 auction. Almost at the same time, however, the FAA launched an investigation into whether Port Authority of New York And New Jersey (PANYNJ) threats to bar the slot recipient from operating at Newark violates federal law.

Chief Counsels Ruling
FAA Chief Counsel said he found Continental and other airline protesters of the auction "demonstrated compelling reasons to maintain the status quo" not allowing slot auctions while the FAA considers the DOT auction plan and makes a final decision on the airline protests of the auction.
"We are pleased that this stay was granted by the FAA's top attorney and believe that it shows that the slot auction faces a host of serious legal difficulties," said a Continental spokesman. "With this order, at least for the time being, the FAA avoids other litigation that it could not have won."
In issuing its order, the FAA chief counsel said that Continental and the other airline protesters have a "substantial case" that "provides the basis for deliberate investigation" by the FAA of the serious concerns about the auction's illegality.
The DOT had announced a schedule for the FAA to complete an auction while Congress is away from Washington in their home districts to preclude Congressional intervention, said the industry.
"We are pleased that the FAA Office of Dispute Resolution Acquisition has granted our request for suspension of the September 3 auction of two slots at Newark airport and fully expect that the process will result in a determination that FAA lacks the legal authority to conduct the auction."

Investigation
At the same time the Federal Aviation Administration (FAA) initiated an administrative proceeding, known as a notice of investigation, to determine whether the Port Authority of New York and New Jersey will violate federal regulations if it follows through with its proposal to bar airlines from using takeoff and landing slots gained in the Newark auction or other proposed auctions at JFK and LaGuardia.
Under law, airports receiving federal grants are required to provide airlines with reasonable and nondiscriminatory access to their facilities. As part of its investigation, the FAA will evaluate whether the Port Authority’s Aug. 4 proposal is unlawfully interfering with the airlines’ ability to access takeoff and landing slots at the airports by discouraging bidders from participating in slot auctions.
If the proposal by the Port Authority is in fact discouraging open access to the airports, the Port Authority may no longer be eligible for FAA grants, or payments under existing grants, until the matter is resolved, said the FAA, which could also issue an immediate cease and desist order requiring the Port Authority to grant access to the airports. The three airports received a total of $27 million in grants from the FAA’s Airport Improvement Program during fiscal year 2008.
The FAA was scheduled to auction two slots previously allotted to now-bankrupt EOS Airlines at Newark on Sept. 3. In addition, the U.S. Department of Transportation announced two proposed rulemakings in April and May of this year that, if finalized, would auction a limited number of takeoff and landing slots at JFK, Newark and LaGuardia Airports.