Air Canada v. Department of Transp., Nos. 97-1274

CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)
Writing for the CourtROGERS
Citation148 F.3d 1142
PartiesAIR CANADA, et al., Petitioners, v. DEPARTMENT OF TRANSPORTATION and Rodney E. Slater, Secretary of Transportation, Respondents, Dade County, Florida and American Airlines, Inc., Intervenors.
Decision Date24 September 1998
Docket NumberNos. 97-1274,97-1284

Page 1142

148 F.3d 1142
331 U.S.App.D.C. 288
AIR CANADA, et al., Petitioners,
v.
DEPARTMENT OF TRANSPORTATION and Rodney E. Slater, Secretary
of Transportation, Respondents,
Dade County, Florida and American Airlines, Inc., Intervenors.
Nos. 97-1274, 97-1284.
United States Court of Appeals,
District of Columbia Circuit.
Argued March 13, 1998.
Decided July 31, 1998.
As Amended Sept. 24, 1998.

Page 1144

[331 U.S.App.D.C. 290] On Petitions for Review of an Order of the Department of Transportation.

Stephen M. Shapiro argued the cause for petitioners, with whom Kenneth S. Geller, Roy T. Englert, Jr., Timothy S. Bishop, Joel Stephen Burton, Stephen P. Sawyer, Mary McGuire Voog and Lawrence M. Nagin were on the briefs.

Thomas L. Ray, Senior Trial Attorney, U.S. Department of Transportation, argued the cause for respondents, with whom Joel I. Klein, Assistant Attorney General, U.S. Department of Justice, Robert B. Nicholson and Marion L. Jetton, Attorneys, Nancy E. McFadden, General Counsel, U.S. Department of Transportation, and Paul M. Geier, Assistant General Counsel, were on the brief.

Alvin B. Davis, William K. Hill, James H. Burnley, IV, and John R. Keys, Jr. were on the brief for intervenor American Airlines, Inc. Karen L. Grubber entered an appearance.

Thomas R. Devine, Charles A. Spitulnik, Michael M. Conway, Ross E. Kimbarovsky and Thomas P. Abbott and Gail P. Fels, Assistant County Attorneys, Dade County, Florida, were on the brief for intervenor Dade County Florida.

Scott P. Lewis and Kenneth W. Salinger were on the brief for amicus curiae Airports Council International--North America. Patricia A. Hahn entered an appearance.

Before: HENDERSON, ROGERS and GARLAND, Circuit Judges.

ROGERS, Circuit Judge:

Six airlines ("Carriers") petition for review of two Department of Transportation[331 U.S.App.D.C. 291]

Page 1145

("Department" or "DOT") orders 1 investigating and approving the fees charged by Dade County, Florida, at Miami International Airport ("MIA"). 2 The essential dispute focuses on the reasonableness of fees that the County increased to cover the cost of MIA renovations and allocated according to an established equalization methodology. The Carriers contend that the Department failed to apply the correct standard of reasonableness, relied on findings unsupported by substantial evidence, made arbitrary and capricious decisions, erroneously placed the burden of proving unreasonableness on the Carriers, and denied the Carriers due process by assigning this burden in mid-proceeding without affording the Carriers an opportunity to present additional evidence. Because the Department applied valid and ascertainable legal standards and based its decision on substantial evidence and valid reasoning, and because the agency proceeding essentially continued the Carriers' lawsuit in which they had the burden of proof and the Carriers can point to no prejudice resulting from the assignment or its timing, we deny the petitions.

I.

Section 511 of the Airport and Airway Improvement Act of 1982 requires airports that receive federal grants for development projects to charge "reasonable" fees. See 49 U.S.C. § 47107 (1994); Air Transp. Ass'n of America v. DOT, 119 F.3d 38, 39 (D.C.Cir.), amended by 129 F.3d 625 (D.C.Cir.1997). In addition, the Anti-Head Tax Act authorizes publicly owned airports to collect only "reasonable" fees from airlines. See 49 U.S.C. § 40116(e)(2) (1994); Air Transp. Ass'n, 119 F.3d at 39. Traditionally, an airline could request an investigation by the Federal Aviation Administration ("FAA") into potential violations of these reasonableness requirements, but the FAA faced no deadline for initiating an investigation or making a final determination and taking appropriate enforcement action. See 14 C.F.R. §§ 13.1, 13.3, 13.5 (1998); see, e.g., New England Legal Found. v. Massachusetts Port Auth., 883 F.2d 157, 159-60 (1st Cir.1989). Before 1994, the Department was not required to issue standards for determining the reasonableness of fees and did not do so. See Air Transp. Ass'n, 119 F.3d at 39-40; see also Northwest Airlines, Inc. v. County of Kent, Mich., 510 U.S. 355, 366-67 & n. 11, 114 S.Ct. 855, 127 L.Ed.2d 183 (1994).

To provide an expedited process and guidelines for resolving reasonableness disputes, Congress enacted Section 113 of the Federal Aviation Administration Authorization Act of 1994, directing the Secretary of Transportation ("Secretary") 3 to determine whether an airport fee is reasonable upon an airport's request or an airline's complaint. See 49 U.S.C. § 47129(a), (c) (1994). Consequently, airlines now have two administrative options for challenging the reasonableness of airport fees--traditional investigation by the FAA or expedited determination by the Secretary--while airports have only the latter option. Section 113 also directs the Secretary to publish "final regulations, policy statements, or guidelines" establishing both procedures for acting on a request or complaint and standards for determining reasonableness, id. § 47129(b), but the section neither amends the Airport and Airway Improvement Act of 1982 or the Anti-Head Tax Act nor defines "reasonable."

In June 1996, in compliance with Section 113, the Secretary published the Policy Regarding Airport Rates and Charges ("Policy

Page 1146

[331 U.S.App.D.C. 292] Statement"), 61 Fed.Reg. 31994 (1996). As relevant here, paragraph 2.6 of the Policy Statement permits an airport to "use any reasonable methodology to determine [non-airfield] fees, so long as the methodology is justified and applied on a consistent basis." Id. at 32020-21 p 2.6. Paragraphs 2.1 and 3.1 require an airport to apply its rate-setting methodology consistently to, respectively, "similarly situated" and "comparable" aeronautical users. 4 Id. at 32019 p 2.1, 32021 p 3.1. Subsequently, this court vacated certain portions of the Policy Statement, including paragraph 2.6, because the Department had not justified its decision to treat non-airfield fees (such as terminal fees) differently from airfield fees. See Air Transp. Ass'n, 119 F.3d at 41-45, amended by 129 F.3d at 625. While reserving judgment on whether paragraph 2.6 satisfies the Section 113 requirement that the Secretary publish reasonableness standards, see id. at 41, the court suggested that it does not:

The Secretary's "guideline" seems to be missing a "line." The regulation merely states that any reasonable methodology will serve as a basis for non-airfield fees. That concept does not seem to add much--if anything--to the statutory requirement that airport fees be reasonable.

Id. at 41. The court added:

[The Policy Statement] provides no real guidance as to how the Secretary will determine reasonableness.... [H]is regulation surely is inadequate under the [Administrative Procedure Act].

Id. at 43.

Against the statutory and regulatory backdrop before this court vacated portions of the Policy Statement, Dade County sought to increase MIA fees in order to finance a ten-year, $4.6 billion Capital Improvement Program ("CIP"). See Decl. of Guillermo Carreras 1. The improvements planned in the CIP include adding another runway and dual taxiways, doubling the size of the terminal building, increasing the number of gates, adding moving sidewalks, improving Concourses E, F, G, and H, building a new Concourse J, and reconfiguring Concourses A through D from a layout that resembles four spokes on a wheel to a design featuring one long, linear A/D Concourse for the use of American Airlines, Inc. ("American"). See Decl. of Gary J. Dellapa 6-11. American operates a hub at MIA and, together with its commuter affiliate, carries 51% of the airport's passengers; the next largest carrier is United Air Lines, Inc. ("United"), which handles but 6.24% of MIA's passengers. See Decl. of John Van Wezel 4. The A/D Concourse is designed to handle efficiently American's large passenger load. Furthermore, based on an agreement with Dade County, American will have exclusive use of the A/D gates so long as it averages 250 jet flights per day. 5

The County plans to include nearly all CIP costs in the terminal fees paid by all airlines, and to allocate the costs according to an equalization methodology developed by a committee that included American, Delta Airlines, Inc. ("Delta") and U.S. Airways, Inc. ("USAir"). Under this methodology, used by MIA since 1990, fees for terminal space used exclusively by a single airline, such as ticket counters, are based on square footage without regard to age or condition of the particular space, while fees for facilities and services shared by airlines, such as baggage claim and concourse areas, are based on the number of aircraft seats carried by each airline. See JOHN F. BROWN COMPANY, INC., DADE COUNTY, FL, OVERVIEW OF AIRLINE RATES AND CHARGES 7 (1994). Fees allotted by square footage account for approximately 20% of all terminal fees, while those allotted by number of seats account for 80%. See Test. of Daniel M. Kaspar, Tr. 1306. Allocated this way, the costs of CIP improvements to the terminal building will be pooled and divided proportionally among all airlines at

Page 1147

[331 U.S.App.D.C. 293] MIA, such that each airline will inevitably pay for improvements to some facilities and services that it does not use. See Decl. of Van Wezel 14-15. Dade County will except from the pooled costs, however, the costs of certain facilities used by only one airline; for instance, American will pay for an enhanced baggage sorting system dedicated to its exclusive use. Because most fees are proportional to passenger traffic, and American carries more than half of MIA's passengers, American currently pays 40.7% of MIA airline fees and would pay 46.5% under Dade County's proposed new fee schedule under the CIP. See Decl. of Kaspar 5.

In September 1995, the Carriers, minus Lufthansa German Airlines, asked the United States District Court for the Southern District...

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  • Wilkinson v. Legal Services Corp., No. Civ.A. 91-0889 (JHG).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • November 19, 1998
    ...harmless because teacher dismissed for reasons other than classroom competence); cf. Air Canada v. Department of Transportation, 148 F.3d 1142, 1156-57 (D.C.Cir.1998) (party failed to demonstrate prejudice under APA); Consolidated Gas Supply Corp. v. Federal Energy Regulatory Comm., 606 F.2......
  • City of Arlington v. Fed. Commc'ns Comm'n, No. 10–60039.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • January 23, 2012
    ...”) (alteration in original) (quoting PDK Labs., Inc. v. DEA, 362 F.3d 786, 799 (D.C.Cir.2004)). FN66. Air Can. v. Dep't of Transp., 148 F.3d 1142, 1156 (D.C.Cir.1998); see also Shinseki v. Sanders, 556 U.S. 396, 129 S.Ct. 1696, 1706, 173 L.Ed.2d 532 (2009) (“[T]he burden of showing that an ......
  • DSE, Inc. v. U.S., Nos. 98-5265
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • March 12, 1999
    ...aside agency action unless "the party asserting error [can] demonstrate prejudice from the error," Air Canada v. Department of Transp., 148 F.3d 1142, 1156 (D.C.Cir.1998), a burden that DSE has conspicuously failed to meet. In the Third Size Determination, the SBA determined that AMTEC and ......
  • Campanale & Sons, Inc. v. Evans, No. 01-2282.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • November 22, 2002
    ...be taken of the rule of prejudicial error"). The burden is on the plaintiffs to show such prejudice. See Air Canada v. Dep't of Transp., 148 F.3d 1142, 1156 (D.C.Cir.1998); see also Nieves-Villanueva v. Soto-Rivera, 133 F.3d 92, 102 (1st Cir.1997) ("In a civil case, the party asserting erro......
  • Request a trial to view additional results
26 cases
  • Wilkinson v. Legal Services Corp., No. Civ.A. 91-0889 (JHG).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • November 19, 1998
    ...harmless because teacher dismissed for reasons other than classroom competence); cf. Air Canada v. Department of Transportation, 148 F.3d 1142, 1156-57 (D.C.Cir.1998) (party failed to demonstrate prejudice under APA); Consolidated Gas Supply Corp. v. Federal Energy Regulatory Comm., 606 F.2......
  • City of Arlington v. Fed. Commc'ns Comm'n, No. 10–60039.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • January 23, 2012
    ...”) (alteration in original) (quoting PDK Labs., Inc. v. DEA, 362 F.3d 786, 799 (D.C.Cir.2004)). FN66. Air Can. v. Dep't of Transp., 148 F.3d 1142, 1156 (D.C.Cir.1998); see also Shinseki v. Sanders, 556 U.S. 396, 129 S.Ct. 1696, 1706, 173 L.Ed.2d 532 (2009) (“[T]he burden of showing that an ......
  • DSE, Inc. v. U.S., Nos. 98-5265
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • March 12, 1999
    ...aside agency action unless "the party asserting error [can] demonstrate prejudice from the error," Air Canada v. Department of Transp., 148 F.3d 1142, 1156 (D.C.Cir.1998), a burden that DSE has conspicuously failed to meet. In the Third Size Determination, the SBA determined that AMTEC and ......
  • Campanale & Sons, Inc. v. Evans, No. 01-2282.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • November 22, 2002
    ...be taken of the rule of prejudicial error"). The burden is on the plaintiffs to show such prejudice. See Air Canada v. Dep't of Transp., 148 F.3d 1142, 1156 (D.C.Cir.1998); see also Nieves-Villanueva v. Soto-Rivera, 133 F.3d 92, 102 (1st Cir.1997) ("In a civil case, the party asserting erro......
  • Request a trial to view additional results

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