Air Transp. Ass'n of Am., Inc. v. U.S. Dep't of Agric.

• Decision Date: 28 March 2018
• Docket Number: Civil Action No. 16–919 (RMC)
• Citation: 303 F.Supp.3d 28
• Parties: AIR TRANSPORT ASSOCIATION OF AMERICA, INC. d/b/a Airlines for America, et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF AGRICULTURE, et al., Defendants.
• Court: U.S. District Court — District of Columbia

303 F.Supp.3d 28

AIR TRANSPORT ASSOCIATION OF AMERICA, INC. d/b/a Airlines for America, et al., Plaintiffs,

v.UNITED STATES DEPARTMENT OF AGRICULTURE, et al., Defendants.

Civil Action No. 16–919 (RMC)

United States District Court, District of Columbia.

Signed March 28, 2018

Benjamin G. Bradshaw, James W. Crooks, Jonathan D. Hacker, O'Melveny & Myers LLP, Washington, DC, for Plaintiffs.

Julie Straus Harris, U.S. Deparment of Justice, Washington, DC, for Defendants.

ROSEMARY M. COLLYER, United States District Judged

The Agriculture Quarantine Inspection program is an essential part of the nation's efforts to secure its plants and animals from pests and diseases that are not native to the territory of the United States. The Animal and Plant Health Inspection Service (APHIS), an agency within the Department of Agriculture, works with Customs and Border Protection (CBP), an agency within the Department of Homeland Security (DHS), to inspect all persons and vessels entering the United States. In 1990, Congress ordered APHIS to charge its costs for the required inspections to the applicable classes of users; since then, APHIS has proposed various rules concerning fees for different user classes. In 2015, APHIS adopted a rule which set a new fee structure. Under that rule, international airline passengers are charged a Passenger Fee of $3.96 (reduced from $5) and international commercial aircraft are charged a Commercial Aircraft Fee of $225 (increased from $70.75). The Air Transport Association of America, Inc. and the International Air Transport Association (collectively, Plaintiffs) challenge the validity of the rule. They argue that it is inconsistent with the governing statutory provisions and violates the Administrative Procedure Act (APA), 5 U.S.C. § 500 et seq. (2012).

Having studied the parties' briefs, oral arguments, and the entire record, the Court finds that (1) Plaintiffs' claims are not time-barred; (2) APHIS's actions were consistent with the governing statute in charging both an air passenger fee and commercial aircraft fee to passenger aircraft; (3) APHIS has not unlawfully engaged in cross-subsidization; (4) APHIS and Grant Thornton, LLP reasonably relied on the fiscal year (FY) 2010 and 2011 data; and (5) Plaintiffs were not harmed by the withholding of some data during the notice and comment period. The Court also finds that after FY02, the governing statute no longer permitted APHIS to set fees in order to maintain a reasonable balance, which APHIS used to fund its reserve account. Thus, the Court will deny Defendants' motion to dismiss, grant summary judgment to Defendants on Counts I, II, and IV, and grant summary judgment in favor of Plaintiffs on Count III and remand this part of the rulemaking for further consideration and possible rulemaking by APHIS.

I. BACKGROUND

APHIS has been inspecting "persons and vessels entering the customs territory of the United States for possible infection or infestation with pests and diseases that threaten the resident flora and fauna" of the United States for over a century. Defs.' Mem. of P. & A. in Supp. of Their Mot. to Dismiss and for Summ. J. and in Opp'n to Pls.' Mot. for Summ. J. (APHIS Opp'n) [Dkt. 24–1] at 1; see also Plant Protection Act, 7 U.S.C. § 7701 et seq . (2010) ; 7 C.F.R. § 330.105. The inspections are conducted through the Agricultural Quarantine Inspection (AQI) program. Prior to the enactment of the Food, Agriculture, Conservation, and Trade (FACT) Act of 1990, Pub. L. No. 101–624, § 2509, 104 Stat. 3359, 4069–70 (1990) (current version at 21 U.S.C. § 136a (2013) ), the costs of AQI were covered by annual appropriations to the Department of Agriculture.

However, in 1990, Congress enacted the FACT Act, which "authorizes [APHIS] to collect user fees for certain agricultural quarantine and inspection (AQI) services." Final Rule at AR229.¹ Because the terms of the statute have changed over time, and are integral to the current dispute, the Court details the legislative history. As originally enacted, the FACT Act provided that

The Secretary of Agriculture ... may prescribe and collect fees to cover the cost of providing agricultural quarantine and inspection services in connection with the arrival at a port in the customs territory of the United States, or the preclearance or preinspection at a site outside the customs territory of the United States, of a commercial vessel, commercial aircraft, commercial truck, or railroad car.

§ 2509(a)(1). The FACT Act was first amended in 1990 to add "international passengers" as a class of persons responsible for paying an AQI fee. See Omnibus Budget Reconciliation Act of 1990, Pub. L. No. 101–508, § 1203, 104 Stat. 1388, 1388–11 (1990). The original FACT Act required the Secretary to set and adjust the fees:

to reflect the cost to the Secretary in administering such subsection, in carrying out the activities at ports in customs territory of the United States and preclearance and preinspection sites outside the customs territory of the United States in connection with the provision of agricultural quarantine inspection services, and in maintaining a reasonable balance in the Account.

§ 2509(a)(4).

Congress further amended the FACT Act in 1991. As relevant, the 1991 amendment specified that inspection fees may only be collected in an amount commensurate with the costs of inspection for each class of persons or entities paying the fees. See Food, Agriculture, Conservation, and Trade Act Amendments of 1991, Pub. L. No. 102–237, § 1015, 105 Stat 1818, 1902 (1991).

Fees, including fees from international airline passengers and commercial aircraft operators, may only be collected to the extent that the Secretary reasonably estimates that the amount of the fees are commensurate with the costs of agricultural quarantine and inspection services with respect to the class of persons or entities paying the fees. The costs of such services with respect to passengers as a class includes the costs of related inspections of the aircraft .

Id. § 1015(a)(1)(D) (emphasis added). The meaning of the highlighted sentence is strongly disputed here. In response, APHIS set initial fees in 1991 and 1992; for international air passengers the fee was $2.00 and for commercial aircraft the fee was $76.75. See 56 Fed. Reg. 14837, 14845 (April 12, 1991) (setting $2 international air passenger fee); 57 Fed. Reg. 755, 769 (Jan. 9, 1992) (setting $76.75 commercial aircraft fee).

A. 1996 Amendment

The FACT Act was amended again as part of the Federal Agriculture Improvement and Reform Act of 1996. SeePub. L. No. 104–127, § 917, 110 Stat. 888, 1187–88 (1996) (codified at 21 U.S.C. § 136a (2013) ). That amendment created a temporary Agricultural Quarantine Inspection User Fee Account in the Department of the Treasury where, for FY96 through FY02, "all of the fees collected under this subsection and late payment penalties and interest charges collected" as part of AQI were held. 21 U.S.C. § 136a(a)(5)(A) (1996). After FY02, the balance in the Treasury account was to be "credited to the Department of Agriculture accounts that incur the costs associated with the provision of agricultural quarantine and inspection services and the administration of this subsection." Id. § 136a(a)(6). In addition to creating a temporary account to hold AQI fees, the 1996 amendment revised the section describing the authorized fees.

(1) Fees authorized

The Secretary of Agriculture may prescribe and collect fees sufficient—

(A) to cover the cost of providing agricultural quarantine and inspection services in connection with the arrival at a port in the customs territory of the United States, or the preclearance or preinspection at a site outside the customs territory of the United States, of an international passenger, commercial vessel, commercial aircraft, commercial truck, or railroad car;

(B) to cover the cost of administering this subsection ; and

(C) through fiscal year 2002, to maintain a reasonable balance in the Agricultural Quarantine Inspection User Fee Account established under paragraph (5) .

Id. § 136a(a) (emphasis added). As before, the meaning and relevance of the emphasized sentences are hotly contested.

B. Regulatory History

From the time it set the first inspection fees in 1991, APHIS has indicated that the costs covered by the AQI fee were intended to include "the total cost of delivery costs, program support costs, and agency-level support costs, as well as funding the reserve." APHIS Opp'n at 8 (citing 56 Fed. Reg. 8148, 8151 (Feb. 27, 1991) ). Described as a "reasonable balance," the reserve was designed to cover three months' average operating costs for the AQI program, see 1992 Interim Rule at AR71769, and was necessary because fees were (and are) remitted in arrears and the agency needed to be prepared to handle emergencies or unexpected volumes. See 56 Fed. Reg. at 8151. As APHIS explained most recently:

The reserve fund ensures that AQI program operations can continue without interruption when service volumes fluctuate due to economic conditions or other circumstances and CBP and APHIS are able to adjust their activity to account for the changed economic conditions.

Proposed Rule at AR18. Until this litigation, no user has challenged funding the reserve.

Between FY92 and FY96, the overall cost of the AQI program went from $85,922,000 to a projected $127,027,001. See 62 Fed. Reg. 3823, 3823 (Jan. 27, 1997). At that point, APHIS recognized that the requirements of notice-and-comment rulemaking to reset fees was causing user fees to "lag behind the level of current costs." Id. at 3824. In response, APHIS set a schedule of increasing fees for FY97 through FY 2002. See 62 Fed. Reg. 39747, 39747–48, 39754 (July 24, 1997). This effort was not fully successful and APHIS further amended the fee schedule in 1999 to cover increasing costs.

See 64 Fed. Reg. 43103, 43103 (Aug. 9, 1999).

The attack of September 11, 2001 on the World Trade Center in New York City caused a...