CHICAGO (CN) - Since airports are obligated to shoulder the costs of snow removal, Chicago must return a $5.8 million payout of emergency relief funds, a federal judge ruled.
After several severe snowstorms had crippled O'Hare and Midway airports in 1999 and 2000, the Federal Emergency Management Agency paid Chicago for 75 percent of the cleanup costs under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.
Years later, however, FEMA ordered Chicago to return the money.
"The order was based on a provision of the Stafford Act called (in a triumph of bureaucratic obfuscation) 'deobligation,'" the 7th Circuit explained in an earlier ruling on the case.
"It provides that 'a person receiving Federal assistance for a major disaster or emergency shall be liable to the United States to the extent that such assistance duplicates benefits available to the person for the same purpose from another source.'"
FEMA claimed that, under their airport contract with Chicago, the airlines must reimburse the city for snow-removal costs.
When Chicago chose not to fight the agency's order, United, Continental, Southwest, Delta, American Airlines, and AirTran filed a motion to intervene. The airlines argued that the agreement only required them to pay ordinary airport expenses, excluding those related to a disaster.
U.S. District Judge Charles R. Nagel denied the motion to intervene, but the 7th Circuit reversed in October 2011. It had noted that "there is no doubt that the airlines' interest in the lawsuit satisfies the constitutional requirement of standing; their ability to retain almost $6 million may depend on whether the court sides which FEMA."
On remand Thursday, Judge Nagel ruled in favor of the agency.
"Indeed, while the use agreements provide that the city is responsible for the removal of snow and ice as part of its duty to maintain and operate the airport, the airlines are specifically required to pay the city fees to reimburse those net costs," he wrote.
"Accordingly, the court rejects the argument that the emergency snow removal in January 1999 and December 2000 would not be covered under the agreement."
Requiring airlines to reimburse snow-removal costs similarly does not counter the Stafford Act's larger purpose of aiding natural disaster victims, Nagel added.
"The court is not convinced that national, and in some cases international Airlines - all of which are large corporations - can be properly considered 'disaster victims' due to a snow emergency in Chicago, Illinois," he wrote.
Because FEMA's interpretation of the Stafford Act was reasonable, it deserves deference, the court said.
The ruling likely paves the way further litigation once the city attempts to collect money from the airlines.
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