479 F.3d 21 (D.C. Cir. 2007), 05-1222, Port Authority of New York and New Jersey v. Department of Transp.

Docket Nº:05-1222.
Citation:479 F.3d 21
Party Name:PORT AUTHORITY OF NEW YORK AND NEW JERSEY Petitioner v. DEPARTMENT OF TRANSPORTATION and Mary E. Peters, Secretary of Transportation, Respondents Brendan Airways, LLC, d/b/a USA3000 Airlines, et al., Intervenors.
Case Date:March 02, 2007
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
FREE EXCERPT

Page 21

479 F.3d 21 (D.C. Cir. 2007)

PORT AUTHORITY OF NEW YORK AND NEW JERSEY Petitioner

v.

DEPARTMENT OF TRANSPORTATION and Mary E. Peters, Secretary of Transportation, Respondents

Brendan Airways, LLC, d/b/a USA3000 Airlines, et al., Intervenors.

No. 05-1222.

United States Court of Appeals, District of Columbia Circuit.

March 2, 2007

Argued Sept. 11, 2006.

Page 22

[Copyrighted Material Omitted]

Page 23

[Copyrighted Material Omitted]

Page 24

On Petitions for Review of Orders of the United States Department of Transportation.

Jeffery A. Tomasevich argued the cause for petitioner Port Authority of New York and New Jersey. With him on the briefs were Steven S. Rosenthal, Douglas A. Tucker, and Carlene V. McIntyre.

John Longstreth argued the cause for petitioners Brendan Airways, LLC, et al. With him on the briefs were James R. Weiss and Christopher S. Huther.

Patricia A. Hahn, Thomas R. Devine, and Arthur P. Berg were on the brief for amicus curiae Airports Council International--North America in support of petitioner Port Authority of New York and New Jersey and in opposition to petitioners Brendan Airways, LLC, et al.

David J. Frantz was on the brief for amicus curiae United Kingdom of Great Britain and Northern Ireland in support of petitioners Brendan Airways, LLC, et al., urging affirmance in part and reversal in part.

Mary F. Withum, Trial Attorney, U.S. Department of Transportation, argued the cause for the respondents. With her on the brief were Thomas O. Barnett, Assistant Attorney General, U.S. Department of Justice, Robert B. Nicholson and Steven J. Mintz, Attorneys, Jeffrey A. Rosen, General Counsel, U.S. Department of Transportation, Paul M. Geier, Assistant General Counsel, and Dale C. Andrews, Deputy Assistant General Counsel. John J. Powers, III, Attorney, U.S. Department of Justice, entered an appearance.

Steven S. Rosenthal, Jeffery A. Tomasevich, Douglas A. Tucker, and Carlene V. McIntyre were on the brief for intervenor Port Authority of New York and New Jersey in support of the respondents.

James R. Weiss and John Longstreth were on the brief for intervenors Brendan Airways, LLC, et al. in support of the respondents.

Before: TATEL and BROWN, Circuit Judges, and EDWARDS, Senior Circuit Judge.

OPINION

BROWN, Circuit Judge.

The Port Authority of New York and New Jersey ("Port Authority") runs Newark Liberty International Airport ("EWR"). When the Port Authority increased the fees charged at EWR's International Terminal B ("ITB"), thirteen airlines operating out of that terminal complained to the Department of Transportation ("DOT") pursuant to 49 U.S.C. § 47129, claiming the rates were unreasonable and unjustly discriminatory. The DOT agreed with the airlines in part and ordered the Port Authority to issue revised fees and to refund excess fees already collected. Deeming the DOT's orders insufficient, the complainant airlines sought review in this court, disputing the

Page 25

DOT's evidentiary rulings and its finding that the proposed fees were nondiscriminatory. The Port Authority likewise petitioned for review, contending its rate calculations were in fact reasonable. More fundamentally, the Port Authority argued § 47129 applied only to U.S. air carriers and thus excluded twelve of the thirteen complaining airlines. For reasons discussed below, we grant the Port Authority's petitions for review, deny the airlines' petition for review, and remand to the DOT for further proceedings.

I

A 1998 report commissioned by the Port Authority indicated ITB would soon reach capacity. In response, the Port Authority negotiated a deal with Continental Airlines ("Continental") permitting Continental to expand Terminal C, which Continental leased from the Port Authority for its exclusive use pursuant to a 1985 agreement. Continental issued over $700 million in bonds to fund the construction of C-3, a new international concourse at Terminal C, and the Port Authority leased the land for C-3 to Continental. Continental then moved its international flights from ITB to C-3.

Carriers operating international flights out of ITB pay the Port Authority Federal Inspection Facility Space ("FIS") fees on all incoming international passengers who are not pre-screened, and General Terminal Charge ("GTC") fees on all passengers, whether domestic or international and whether inbound or outbound. In return, the Port Authority maintains the gates and FIS facilities at ITB. The Port Authority does not charge GTC or FIS fees at Terminal C but recovers costs from Continental through its fixed lease.

Following the attacks of September 11, 2001, traffic at EWR declined, and with it the Port Authority's FIS and GTC revenues. Continental's move to C-3 exacerbated the situation. In response, the Port Authority decided to raise FIS and GTC fees at ITB. Carriers complained, demanding a more adequate explanation and threatening to leave EWR if the Port Authority increased rates by too much. However, the Port Authority persevered and implemented the increase effective February 1, 2005, raising FIS fees from $13.50 to $22 per person and GTC fees from $5.50 to $8 per person.

Thirteen of the eighteen carriers at ITB filed a 49 U.S.C. § 47129 complaint ("the Complaint"), arguing the increase was unreasonable. Of these thirteen carriers ("the Complainants" or "the Airlines"), only Brendan Airways is a U.S. air carrier. The Complainants paid the fee increase under protest during the DOT adjudication, and the Port Authority posted bonds to cover any repayments the DOT might order.

The DOT determined the Complaint constituted a significant dispute. Instituting Order, Brendan Airways, LLC, Order 2005-3-21, Docket OST-05-20407-36, at 19 (DOT Mar. 16, 2005). The DOT denied the Port Authority's motion to exclude the foreign carriers and issued two discovery orders: (1) ordering the Port Authority to disclose specified documents related to the proposed rate increase; and (2) establishing standards for the Administrative Law Judge ("ALJ") to use in subsequent evidentiary rulings in light of the Airlines' failure to include supporting testimony with their Complaint, an oversight that exposed them to limits under 14 C.F.R. §§ 302.603-605 on their ability to introduce evidence.

The Complainants sought to have additional documents disclosed and to depose a Port Authority employee regarding the disclosures--requests the ALJ denied.

Page 26

The ALJ likewise generally denied a motion to introduce expert testimony responding to the disclosures, allowing additional testimony only to the extent it was advertised in the Airlines' original pleadings.

At the hearing, the Complainants claimed the Port Authority's "Expense Reclassification charge" from 2004 should not have been included in the cost forecast for 2005. In addition, they contended the Port Authority's lease to Continental effectively charged Continental much lower GTC and FIS fees, giving that airline an unfair advantage.

The ALJ issued a Recommended Decision, Brendan Airways, LLC, Docket OST-05-20407-116 (DOT May 9, 2005), available at http://dms.dot.gov/reports, which the DOT reviewed and substantially adopted in its own Final Decision, Brendan Airways, LLC, Order 2005-6-11, Docket OST-05-20407-129 (DOT June 14, 2005). The Final Decision determined: (1) it was unreasonable for the Port Authority to include its 2004 Expense Reclassification charge in its forecast for 2005 direct costs; (2) the Complainants failed to demonstrate unjust discrimination; and (3) the ALJ's evidentiary rulings were proper.

The DOT ordered the Port Authority to revise its proposed FIS and GTC fees and to compensate the Complainants for amounts collected beyond those revised fees. The DOT accepted the Port Authority's revised proposal, which excluded the Expense Reclassification charge. Brendan Airways, LLC, Order 2005-7-10, Docket OST-05-20407-133, at 6 (DOT July 12, 2005) ("July 12 Order"). With the DOT's permission, the Port Authority repaid the excess in the form of credits on the Complainants' accounts.

The Port Authority and the Complainants both sought judicial review of the Final Decision in timely fashion. See 49 U.S.C. § 46110. In a subsequent--but likewise timely--petition for review, the Port Authority challenged the July 12 Order, which instituted fees the Port Authority had proposed only under protest. The Port Authority asks this court to vacate the DOT's denial of its motion to dismiss the foreign carriers and to reverse the DOT's determination that it was unreasonable to include the Expense Reclassification charge in cost forecasts. The Complainants, meanwhile, challenge the ALJ's evidentiary rulings, and ask us to vacate the DOT's determination that the proposed fees were nondiscriminatory, as well as any other orders relying on those evidentiary rulings. We address the claims of each petitioner in turn.

II

We first consider the Port Authority's contention that 49 U.S.C. § 47129 adjudication procedures are available only to U.S. air carriers. As a threshold matter, the DOT claims the Port Authority forfeited this argument by failing to raise it in its brief to the Secretary before the Final Decision. Indeed, this court may not consider objections to final orders in § 47129 adjudications "unless objection was urged before an administrative law judge or the Secretary at a proceeding under this subsection [§ 47129(c)] or, if not so urged, unless there were reasonable grounds for failure to do so." 49 U.S.C. § 47129(c)(6). However, that same subsection requires the Secretary to "dismiss the complaint if no significant dispute exists or ... [to] assign the matter to an administrative law judge." § 47129(c)(2). The Port Authority challenged the participation of the foreign carriers during the DOT's determination of whether a "significant dispute" existed--a "proceeding under this subsection." Thus, we have jurisdiction to review...

To continue reading

FREE SIGN UP