Asiana Airlines v. F.A.A.

• Decision Date: 30 January 1998
• Docket Number: 97-1360,97-1358,97-1362,97-1359,97-1363,Nos. 97-1356,97-1357,s. 97-1356
• Citation: 134 F.3d 393
• Parties: ASIANA AIRLINES, et al., Petitioners, v. FEDERAL AVIATION ADMINISTRATION and Barry Valentine, Acting Administrator, Federal Aviation Administration, Respondents, Air New Zealand Limited, Intervenor. , & 97-1364.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 393

134 F.3d 393

328 U.S.App.D.C. 237

ASIANA AIRLINES, et al., Petitioners, v. FEDERAL AVIATION ADMINISTRATION and Barry Valentine, Acting

Administrator, Federal Aviation Administration, Respondents,

Air New Zealand Limited, Intervenor.

Nos. 97-1356, 97-1357, 97-1358, 97-1359, 97-1360, 97-1362,

97-1363, & 97-1364.

United States Court of Appeals, District of Columbia Circuit.

Argued Nov. 21, 1997.

Decided Jan. 30, 1998.

On Petitions for Review of an Order of the Federal Aviation Administration.

Robert W. Kneisley, Dallas, TX, argued the cause for petitioners, with whom Geoffrey P. Gitner, M. Roy Goldberg, Frederick S. Hird, Jr., Joseph E. Schmitz, Washington, DC, David W. Miller, Moffett B. Roller, Don H. Hainbach, Washington, DC, Paul V. Mifsud, Carl W. Vogt, Washington, DC, Frederick Robinson and James S. Campbell were on the briefs. Jeffrey N. Shane, Washington, DC, entered an appearance.

Peter R. Maier, Attorney, United States Department of Justice, argued the cause for respondents, with whom Frank W. Hunger, Assistant Attorney General, Mary Lou Leary, United States Attorney, Washington, DC, and Robert S. Greenspan, Attorney, United States Department of Justice, were on the brief.

Before: WALD, SENTELLE and HENDERSON, Circuit Judges.

Opinion for the court filed by Circuit Judge SENTELLE.

SENTELLE, Circuit Judge:

Petitioners challenge an FAA Interim Final Rule imposing annual fees totaling nearly $100 million on flights that neither take off from nor land in the United States. We reject their claims that the FAA acted unlawfully in employing an expedited procedure which precluded a round of notice and comment before the effective date of the Rule, and that the regulation violated the antidiscrimination provisions of various international aviation agreements. However, the FAA's allocation of fixed and common costs using a value-oriented "Ramsey pricing" methodology did violate the statutory directive that the fees for overflights be directly related to the agency's cost of providing services. We therefore vacate the Interim Final Rule and remand for further proceedings.

I

Section 273 of the Federal Aviation Reauthorization Act, 49 U.S.C. § 45301 (the "Act"), enacted October 9, 1996, directs the Federal Aviation Administration ("FAA") to establish a fee schedule and collection process to cover "[a]ir traffic control and related services provided to aircraft other than military and civilian aircraft of the United States government or of a foreign government that neither take off from, nor land in, the United States." 49 U.S.C. § 45301(a)(1). The statute directs the FAA to "ensure that each of the [required] fees ... is directly related to the Administration's costs of providing the service rendered," and states that covered services "include the costs of air traffic control, navigation, weather services, training and emergency services which are available to facilitate safe transportation over the United States, and other services provided by the Administrator or by programs financed by the Administrator to flights that neither take off nor land in the United States." 49 U.S.C. § 45301(b)(1)(B). The statute authorizes the FAA "to recover in fiscal year 1997 $100,000,000," 49 U.S.C. § 45301(b)(1)(A). Finally, the statute directs that a special procedure shall apply: the FAA "shall publish in the Federal Register an initial fee schedule and associated collection process as an interim final rule, pursuant to which public comment will be sought and a final rule issued." 49 U.S.C. § 45301(b)(2).

Acting upon this apparent message to take prompt regulatory action, the FAA issued an Interim Final Rule ("IFR") establishing a fee schedule and collection process, with an effective date of May 19, 1997. 62 Fed.Reg. 13496 (March 20, 1997). The IFR provided that the FAA would accept comments until July 18, 1997, after which the FAA would develop a final rule.

The IFR established fees structured as follows. Based upon an "Analysis of Overflights: Costs and Pricing" by private consultant GRA, Inc. (the "GRA Study"), the FAA noted that its services provided to overflights required both incremental expenditures, increasing with the quantity of services provided, and fixed and common expenditures for facilities and other expenses that could not The petitioners, including several foreign airlines and an association of Canadian airlines, ask us to vacate the IFR for a variety of reasons. First, they assert that, despite the procedures specified in 49 U.S.C. § 45301(b)(2), the FAA violated both the Administrative Procedure Act ("APA"), 5 U.S.C. § 553, and the consultation provisions of several international aviation agreements, by making the new fee structure effective before considering their comments and objections. They also contend that the IFR violated the antidiscrimination provisions of international agreements by imposing fees on overflights which had a disparate impact on foreign airlines. Finally, they argue that the IFR's allocation of fixed and common costs using Ramsey pricing violated the statutory requirement that "each of the fees ... [be] directly related to the Administration's costs of providing the service rendered." 49 U.S.C. § 45301(b)(1)(B).

                be attributed to particular flights or classes of flights.  The GRA Study allocated fixed costs among all classes of users using a methodology called "Ramsey pricing."   This methodology distributes fixed costs among classes of users based on the elasticity of their demand for services in an effort to minimize the effect of the regulation on the behavior of users.  Thus, under this method of allocating fixed costs, classes of users less sensitive to changes in price are allocated a relatively greater share of fixed and common costs.  See M. Wohl & C. Hendrickson, TRANSPORTATION INVESTMENT AND PRICING PRINCIPLES 208-09 (John Wiley & Sons 1984)
                

II

The petitioners first argue that the FAA unlawfully imposed the fees set forth in the IFR before allowing opportunity for affected parties to comment or consult. They base this claim on the notice and comment requirements of the APA, as well as the provisions of several international aviation agreements.

A

Section 553 of the APA requires agencies to publish "[g]eneral notice of proposed rule making," and "give interested persons an opportunity to participate in the rule making...." 5 U.S.C. § 553(b)-(c). Such rule-making proceedings must provide both notice and meaningful opportunity to comment. See Home Box Office, Inc. v. FCC, 567 F.2d 9, 35-36 (D.C.Cir.1977) ("[T]he opportunity to comment is meaningless unless the agency responds to significant points raised by the public."). Section 553 provides that an agency may depart from normal notice and comment procedures for "good cause." 5 U.S.C. § 553(b)(B). The APA also recognizes that Congress may modify these requirements, but provides that a "[s]ubsequent statute may not be held to supersede or modify this subchapter ... except to the extent that it does so expressly." 5 U.S.C. § 559.

In this case, the FAA acknowledged that it issued the IFR "without public notice and comment" as ordinarily required by § 553, and did not properly invoke the "good cause" exception to normal APA procedures. 62 Fed.Reg. at 13502. Instead, the IFR expressly relied on a procedural directive contained within the Act as "subsequent and specific authority" that trumped the otherwise-applicable APA § 553. Id. Within a section of the Act entitled "Limitations," Congress instructed the FAA to "publish in the Federal Register an initial fee schedule and associated collection process as an interim final rule, pursuant to which public comment will be sought and a final rule issued." 49 U.S.C. § 45301(b)(2). Keeping in mind Congress's goal to begin fee collection as soon as possible, the FAA interpreted the directive to proceed via "interim final rule" as obviating the usual first step of providing notice of a proposed rule.

We have looked askance at agencies' attempts to avoid the standard notice and comment procedures, holding that exceptions under § 553 must be "narrowly construed and only reluctantly countenanced" in order to assure that "an agency's decisions will be informed and responsive." New Jersey v. EPA, 626 F.2d 1038, 1045 (D.C.Cir.1980). For example, in New Jersey, the EPA issued an immediately effective final rule with no prior notice or solicitation of comments, believing Applying § 559, the Supreme Court has held that "[e]xemptions from the terms of the Administrative Procedure Act are not lightly to be presumed in view of the statement in [§ 559] that modifications must be express." Marcello v. Bonds, 349 U.S. 302, 310, 75 S.Ct. 757, 761-62, 99 L.Ed. 1107 (1955) (citation omitted). Marcello relied upon statutory language and legislative history to hold that the 1952 Immigration and Nationality Act displaced the hearing requirements of the APA. Id.; see also Ardestani v. INS, 502 U.S. 129, 134, 112 S.Ct. 515, 519, 116 L.Ed.2d 496 (1991) (reaffirming Marcello, holding that the APA does not "displace the INA in the event that the regulations governing immigration proceedings become functionally equivalent to the procedures mandated for adjudications governed by [APA] § 554."). And, as we have previously stated, "the import of the § 559 instruction is that Congress's intent to make a substantive change be clear." Ass'n of Data Processing Serv. Orgs., Inc. v. Board of Governors, 745 F.2d 677, 686 (D.C.Cir.1984) (emphasis in original). The question here is whether Congress has established procedures so clearly different from those required by the APA that it must have intended to displace the norm.

                that the schedule for promulgation of the rule made it impracticable to engage in the notice and comment process.  Id. at 1041.   We held that the "tight statutory schedule" set forth in the Clean Air Act for designation of "attainment" and "nonattainment" areas did not,

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