169 F.3d 1 (D.C. Cir. 1999), 98-1109, Air Transport Ass'n of America v. F.A.A.

Docket Nº:98-1109.
Citation:169 F.3d 1
Party Name:AIR TRANSPORT ASSOCIATION OF AMERICA, Petitioner, v. FEDERAL AVIATION ADMINISTRATION, United States Department of Transportation, and United States of America, Respondents. Port Authority of New York and New Jersey, Intervenor.
Case Date:March 05, 1999
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

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169 F.3d 1 (D.C. Cir. 1999)




Transportation, and United States of America, Respondents.

Port Authority of New York and New Jersey, Intervenor.

No. 98-1109.

United States Court of Appeals, District of Columbia Circuit

March 5, 1999

Argued Jan. 11, 1999.

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

Campbell Killefer argued the cause for petitioner. With him on the briefs were Robert E. Cohn and David Berg.

Jacob M. Lewis, Attorney, United States Department of Justice, argued the cause for respondents. With him on the brief were Frank W. Hunger, Assistant Attorney General, Barbara C. Biddle, and Howard S. Scher, Attorneys.

Arthur P. Berg argued the cause for intervenor. With him on the brief was Carlene V. McIntyre.

Scott P. Lewis, Kenneth W. Salinger, Thomas R. Devine, and Patricia A. Hahn were on the brief for amicus curiae Airports Council International-North America.

Before: SILBERMAN, SENTELLE, and GARLAND, Circuit Judges.

Opinion for the Court filed by Circuit Judge SILBERMAN.

SILBERMAN, Circuit Judge:

Petitioner, an association of air carriers, challenges the Federal Aviation Administration's partial approval of the Port Authority of New York and New Jersey's application to collect a passenger fee and to use the resulting revenue to construct a light rail system providing ground access to John F. Kennedy

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International Airport. We believe the FAA reasonably interpreted the statute governing this matter, except insofar as the FAA thought itself permitted to rely on material submitted ex parte by the Port Authority after the notice and comment period on the application had expired. Accordingly, we grant the petition for review.


Under a provision of the Federal Aviation Act, local public airport authorities may apply to the FAA for authority to impose a Passenger Facility Charge (PFC) of $1.00, $2.00, or $3.00 on each paying air passenger in order to finance an "eligible airport-related project," such as a project for airport development, airport planning, or terminal development. Each eligible airport-related project must serve one of three purposes: the one relevant here is to preserve or enhance capacity, safety or security of the national air transportation system. 1 After the airport authority submits its application to the FAA, the FAA must provide notice and an opportunity to air carriers and other interested persons to comment on the application. The FAA does so by publishing a notice in the Federal Register advising that it intends to rule on the application and inviting public comment, and by requiring the applicant to make available to the public, upon request, a copy of the application, notice, and other germane documents. Following review of the application and public comments, the FAA issues a final decision on the application; if the FAA finds, based on the application and public comments, that the proposed project serves one of the three enumerated purposes (such as enhancing capacity), that the amount and duration of the proposed fee will not result in revenue that is more than the amount necessary to finance the specific project, and that "adequate justification" has been shown for the project, the FAA may approve the application in whole or in part. See 49 U.S.C. § 40117 (1994); 14 C.F.R. §§ 158.27, 158.29 (1998).

The Port Authority filed an application requesting approval to collect a $3.00 PFC on passengers enplaning at LaGuardia, Newark International, and John F. Kennedy International airports and to use the $1.248 billion in resulting revenue to construct an 8.4 mile light rail system to connect the New York City Transit subway and the Long Island Railroad to JFK airport, apparently the largest single application ever submitted to the FAA. The proposed system consists of three interconnected components: a 3.3 mile railway from the Howard Beach subway station to JFK; a 3.1 mile elevated railway along the Van Wyck Expressway from the Jamaica Long Island Railroad Station and Sutphin Boulevard subway station to JFK; and a two-mile elevated rail loop in the airport's terminal area. Following the FAA's publication of notice in the Federal Register, petitioner filed comments opposing the application, contending that the project did not meet the statutory requirements described above. Petitioner argued, inter alia, that the Port Authority had not adequately justified the project's stated purpose of enhancing capacity at JFK. After the close of the 30-day comment period, and at the agency's request, the Port Authority provided additional information to the FAA on the project's forecasted effectiveness in enhancing capacity. This additional information was not disclosed to the petitioner or to any other interested party. Shortly thereafter, the FAA issued its decision, in which it partially approved the collection and use of PFC revenue to finance the light rail system.

The FAA found "adequate justification" for the project because it would enhance capacity at JFK. Although it viewed the Port Authority's original application--which claimed that the project would divert 134,000 air passengers annually from LaGuardia and Newark to JFK by the year 2003--as insufficient to justify the $1.248 billion expenditure, the FAA was persuaded by the supplemental information provided to it ex parte by the Port Authority after the close of the comment period. In that supplemental material, the Port Authority calculated that road access to JFK would reach its limiting capacity by the year 2003, at which time it

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could accommodate 36 million potential air passengers annually. The airport itself, however, would be able to handle far more passengers--not reaching its capacity of 45 million passengers until 2013. The Authority projected that this gap between landside capacity and airside capacity could be reduced by the construction of the light rail system; it estimated that the project would enable an additional 3.35 million annual air passengers to get to JFK airport in 2013 than would otherwise be able to without the rail system. The FAA found this to be an adequate justification for the project.

The FAA also explained that it was approving the project only in part because it had identified certain costs--such as maintenance and storage facilities and any equipment needed for fare collection--that would be ineligible for PFC revenue. As the precise amount of ineligible costs could not be determined from the generalized plans submitted at this preliminary stage, the FAA approved the total cost of the project under condition that the Port Authority submit adequate detailed design and cost information to the FAA after design is complete and before construction is begun to enable a determination of ineligible costs. The Port Authority was also required to amend its application immediately to decrease the amount of requested revenue to account for any ineligible costs identified by the FAA in the future.

Petitioner also had argued in its comments that the Jamaica component was not an eligible airport-related project because it would not be part of the "airport" as defined in 49 U.S.C. §§ 40117(a)(1) and 47102(2), but would instead consist of a right-of-way along the Van Wyck Expressway. The FAA explained, however, that airport-owned rights-of-way are within the boundaries of the airport, and therefore, when the Port Authority acquires the necessary rights-of-way, the Jamaica component will be an eligible airport facility. This petition followed.


Petitioner raises two substantive statutory challenges--that the FAA's decision was ultra vires because the agency lacked authority to grant a conditional approval, and that the agency's decision permitted financing of illegal off-airport improvements. It is also argued that the agency solicited and accepted from the Port Authority--ex parte--critical, even decisive information, thus illegally circumventing the statute's notice and comment requirements. And if that were not enough, petitioner also claims that the FAA's decision was arbitrary and capricious. We take up the challenges in that order.

It is undisputed that certain of the project's design elements are not eligible for PFC funding. Petitioner claims that because the FAA approved the project, without specifying at the time of the approval the exact amount of the proposed expenditures that will be disallowed, the statute is violated. The FAA explained in its decision, and reiterates before us, that at this stage it is not clear just how much of the total expenditures would be attributed to these ineligible categories. Petitioner relies on 49 U.S.C. § 40117(b)(1), which restricts PFC funds to "eligible airport-related projects," and 49 U.S.C. § 40117(d)(1), which allows the FAA to approve an airport's request "only if the [FAA] finds, based on the application, that the proposed passenger facility fee will result in revenue ... that is not more than the amount necessary to finance the specific project" (emphasis added). Petitioner accordingly argues that the FAA must definitively prune any unauthorized expenditures at the time of its approval based on information provided in the application, not in a subsequent decision based on further information.

Although the inference petitioner would draw as to the statute's meaning is not by any means unreasonable, it is also not inevitable. The language does not preclude the FAA's interpretation--that the "finding" can be a conceptual one, subject to subsequent proceedings to insure that the actual costs are consistent with the conceptual boundaries. The statute thus must be thought silent or ambiguous on the precise issue before us, and we are obliged under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.,...

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