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

• Decision Date: 21 June 2022
• Docket Number: 21-5118
• Citation: 37 F.4th 667
• Parties: AIR TRANSPORT ASSOCIATION OF AMERICA, INC., doing business as Airlines for America and International Air Transport Association, Appellants v. UNITED STATES DEPARTMENT OF AGRICULTURE, et al., Appellees
• Court: U.S. Court of Appeals — District of Columbia Circuit

37 F.4th 667

AIR TRANSPORT ASSOCIATION OF AMERICA, INC., doing business as Airlines for America and International Air Transport Association, Appellants

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

No. 21-5118

United States Court of Appeals, District of Columbia Circuit.

Argued February 17, 2022

Decided June 21, 2022

Anton Metlitsky argued the cause for appellants. With him on the briefs were Benjamin G. Bradshaw, Bradley N. Garcia, and Anna O. Mohan.

Leif Overvold, Attorney, U.S. Department of Justice, argued the cause for appellees. With him on the brief were Brian M. Boynton, Acting Assistant Attorney General, and Abby C. Wright, Attorney.

Before: Tatel^* and Pillard, Circuit Judges; and Sentelle, Senior Circuit Judge.

Sentelle, Senior Circuit Judge:

Appellants brought an action contesting a Department of Agriculture rulemaking in the district court. There, Appellants argued that the rule violated both the Food, Agriculture, Conservation, and Trade Act of 1990, as well as the Administrative Procedure Act. The district court granted summary judgment in favor of Appellees, and Appellants have appealed that decision to this Court. For the reasons stated herein, we affirm the district court's judgment in part, reverse it insofar as the challenged rule authorizes collecting fees to fund a reserve after 2002, and remand for proceedings consistent with this opinion.

I. Background

The Animal and Plant Health Inspection Service ("APHIS") is a federal agency, housed within the Department of Agriculture, responsible for administering the Agricultural Quarantine and Inspection Program ("Inspection Program"). Whenever an international air, rail, truck, or maritime shipment arrives at a United States port, APHIS may inspect the shipment, vessel, and any passengers for foreign animal and plant materials, pests, and diseases.

Originally, the Inspection Program was funded exclusively through congressional appropriations, but in 1990, Congress enacted the Food, Agricultural, Conservation, and Trade Act ("FACT Act") of 1990. Pub. L. No. 101-624, § 2509, 104 Stat. 3359 (1990) (current version at 21 U.S.C. § 136a (2020) ). The FACT Act provided for the Inspection Program to be, at least in part, funded by user fees rather than by appropriations.

When first enacted, the FACT Act authorized the Secretary of Agriculture to collect user fees for only one purpose: "to cover the cost of providing agricultural quarantine and inspection services ...." 21 U.S.C. § 136a(a)(1)(A) (1990). Congress modified the Secretary's authority to collect fees in 1996. Pub. L. 104-127, Title IX, § 917, Apr. 4, 1996, 110 Stat. 1187. Since then, the statute has authorized the Secretary to collect fees to cover three distinct costs. 21 U.S.C. § 136a(a)(1) (2020). First, the Secretary may collect fees "sufficient to cover the cost of providing agricultural quarantine and inspection services ...." § 136a(a)(1)(A). Second, the Secretary may collect fees "to cover the cost of administering this subsection." § 136a(a)(1)(B). Third, the Secretary, "through fiscal year 2002," is authorized to collect fees sufficient "to maintain a reasonable balance in the Agricultural Quarantine Inspection User Fee Account ...." § 136a(a)(1)(C).

In setting these fees, APHIS must "ensure that the amount of the fees is commensurate with the costs of agricultural quarantine and inspection services with respect to the class of persons or entities paying the fees." § 136a(a)(2). "The costs of the services with respect to passengers as a class includes the costs of related inspections of the aircraft or other vehicle." Id.

Between 2007 and 2012, APHIS received criticism from the Inspectors General of the Departments of Homeland Security and Agriculture as well as the Government Accountability Office that APHIS was not providing proper justification for its fees. In response to this criticism, APHIS retained Grant Thornton LLP, an audit, tax, and advisory firm, to develop a model to better align fees with costs.

In a 2012 Report, Grant Thornton proposed new fee levels for the various Inspection Program user classes. After publishing a proposed rule in 2014, APHIS adopted its final rule in 2015 increasing the Commercial Aircraft User Fee to $225 for commercial flights and reducing the Commercial Air Passenger Fee from $5 to $3.96. Notably, these fees were calculated in a way to fund not only the costs of the inspections, but also a reserve balance. In the Final Rule, eight user classes were exempted from paying any inspection fees at all.

On May 13, 2016, the Air Transport Association of America, Inc. and International Air Transport Association ("Appellants"), two air carrier trade associations, filed suit against the Department of Agriculture and its Secretary, APHIS and its administrator, the Department of Homeland Security and its Secretary, and Customs and Border Protection and its Commissioner (collectively referred to as "Appellees" or "APHIS") in the district court contesting the Final Rule under both the FACT Act and the Administrative Procedure Act. In Count I, Appellants asserted that APHIS exceeded its Authority under the Act and the APA by charging both a per-passenger and a per-aircraft fee to fund inspections of a single aircraft. In Count II, Appellants alleged that the Final Rule violated the FACT Act by imposing incommensurately high fees—the surplus from which allegedly cross-subsidized non-fee-paying exempt user class inspections—and violated the APA by failing to explain how the $225 Commercial Aircraft User Fee was "commensurate" with inspection costs, or necessary at all given the Commercial Air Passenger Fee. In Count III, Appellants alleged that the Final Rule's imposition of a reserve surcharge exceeded the authority granted to the Secretary because the Act authorized a reserve charge until only 2002. Finally, in Count IV, Appellants alleged that the Final Rule violated the APA because APHIS withheld key information during the rulemaking.

APHIS responded, asserting, among other things, that despite the time limitation in 21 U.S.C. § 136a(a)(1)(C), it retained the authority to collect fees to fund a reserve under that subparagraph past fiscal year 2002. Ultimately, the district court granted summary judgment on Counts I, II, and IV in favor of Appellees. Air Transp. Assoc. of Am., Inc. v. United States Dep't of Agric. , 303 F. Supp. 3d 28, 57 (D.D.C. 2018). As for Count III, the district court held that due to the time limitation, subparagraph (a)(1)(C) does not authorize APHIS to collect fees to fund a reserve after fiscal year 2002 and granted summary judgment on Count III in favor of Appellants. Id. at 52. The district court then remanded the reserve surcharge portion of the rulemaking for further consideration and possible rulemaking by APHIS. Id. at 57.

On remand, APHIS issued a final interpretive rule insisting that even if it no longer had the authority to collect a reserve surcharge under § 136a(a)(1)(C), it retained the authority to collect a reserve surcharge under §§ 136a(a)(1)(A), (B). Appellants then amended their original complaint, challenging APHIS's new rationalization for collecting a reserve surcharge. Ultimately, the district court granted summary judgment in favor of Appellees, holding that subparagraphs (A) and (B) support APHIS's authority to collect a reserve surcharge despite the expiration of the explicit authorization to do so in subparagraph (C). Air Transport Assoc. of Am., Inc. v. Dep't of Agric. , Case No. 1:16-cv-00919-PLF, 2021 WL 1166928, at *14 (D.D.C. March 26, 2021). Appellants timely appealed the district court's decisions to this Court.

We have jurisdiction over this appeal under 28 U.S.C. § 1291. We review the district court's grant of summary judgment de novo . AquAlliance v. United States Bureau of Reclamation , 856 F.3d 101, 104 (D.C. Cir. 2017).

II. Analysis

Appellants contest four aspects of the Final Rule: (1) that the collection of a reserve surcharge violates the FACT Act; (2) that the Final Rule violates the FACT Act's prohibition on cross-subsidization; (3) that the Final Rule violates the FACT Act and the APA by charging both a per-passenger and a per-aircraft fee on one aircraft; and (4) that APHIS violated the APA by withholding certain information during the rulemaking process.

A. The Reserve Surcharge

In its 1996 amendments to the FACT Act, Congress clarified when APHIS is permitted to collect user fees: (A) "to cover the cost of providing agricultural quarantine and inspection services"; (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 ...." §§ 136a(a)(1)(A)-(C). Appellants’ argument regarding the reserve surcharge is quite simple: the authority to collect fees sufficient to maintain a reserve in § 136a(a)(1)(C) expired after fiscal year 2002, and therefore the Final Rule violates the FACT Act by continuing to do so. APHIS would have us read § 136a(a)(1)(C) in conjunction with §§ 136a(a)(5)-(6) to mean that between 1990 and 2002, Congress explicitly authorized APHIS to collect fees to maintain a reserve in the User Fee Account and that after 2002, Congress authorized APHIS to collect fees to maintain a reserve in its own account by saying nothing at all. This blinks reality. The text's plain meaning and applicable canons of statutory construction support Appellants’ reading of the statute.

Appellants’ argument raises a question of statutory interpretation. We review an agency's interpretation of a statute using the familiar Chevron framework. Chevron, U.S.A., Inc. v. Natural Resources Def. Council, Inc. , 467 U.S. 837, 843–44, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). In Step One of the Chevron analysis, we apply ordinary tools of statutory construction to determine "whether Congress has directly spoken to the precise question at issue." Merck & Co., Inc. v. United States...