Federal Express Corp. v. Mineta, 02-1190.

• Decision Date: 02 July 2004
• Docket Number: No. 02-1284.,No. 02-1192.,No. 02-1190.,No. 02-1313.,02-1190.,02-1192.,02-1284.,02-1313.
• Citation: 373 F.3d 112
• Parties: FEDERAL EXPRESS CORPORATION, Petitioner, v. Norman Y. MINETA, Secretary of Transportation, and the Department of Transportation, Respondents. Kitty Hawk Air Cargo, Inc. and Emery Air Freight Corporation, Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 112

373 F.3d 112

FEDERAL EXPRESS CORPORATION, Petitioner, v. Norman Y. MINETA, Secretary of Transportation, and the Department of Transportation, Respondents Kitty Hawk Air Cargo, Inc. and Emery Air Freight Corporation, Intervenors.

No. 02-1190.

No. 02-1192.

No. 02-1284.

No. 02-1313.

United States Court of Appeals, District of Columbia Circuit.

Argued October 17, 2003.

Decided July 2, 2004.

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

Warren L. Dean, Jr. argued the cause for petitioners. With him on the briefs were Patricia N. Snyder, Cynthia J. Collins, Robert P. Silverberg, and Neil J. King. Dwayne S. Byrd entered an appearance.

Christine N. Kohl, Attorney, U.S. Department of Justice, argued the cause for respondents. With her on the brief were William G. Kanter, Deputy Director, Michael J. Singer, Attorney, Kirk Van Tine, General Counsel, U.S. Department of Transportation, Paul M. Geier, Assistant General Counsel, Peter J. Plocki, Senior Litigation Counsel, and Thomas L. Ray, Attorney.

Before: GINSBURG, Chief Judge, EDWARDS, Circuit Judges and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Chief Judge GINSBURG.

GINSBURG, Chief Judge:

Five air cargo carriers, Federal Express, Emery Air Freight, Kitty Hawk Aircargo, Polar Air Cargo, and United Parcel Service, petition for review of four rules promulgated by the Department of Transportation to govern the award of compensation to air carriers under the Air Transportation Safety and System Stabilization Act, §§ 101 et seq., 49 U.S.C. § 40101 note. The Carriers argue the four rules — the offset rule, two rebuttable accounting presumptions, and a procedure for the recoupment of excess payments — are inconsistent with the terms of the Stabilization Act and were promulgated without an opportunity for comment, in violation of the Administrative Procedure Act. For the reasons set forth below, we deny the petition for review with respect to the APA claims and the offset rule, and dismiss the petition as unripe with respect to statutory challenges to the two accounting rules and the recoupment procedure.

I. Background

On September 11, 2001, as terrorists hijacked four commercial passenger aircraft, the Federal Aviation Administration issued a "ground stop order" halting all civilian air traffic within the United States' airspace. That order was lifted in large part on September 14, 2001, but remained in effect at certain airports, such as Ronald Reagan National Airport, until the late fall of 2001 (a detail we may ignore for the purpose of analysis).

On September 22, 2001 the Congress enacted and the President signed into law the Air Transportation Safety and System Stabilization Act in order to compensate air carriers for the losses they incurred from the ground stop order while it was in effect, and for the losses they would incur through December 31, 2001 as a direct result of the attacks. To that end, § 101(a)(2) of the Act authorizes the President to "[c]ompensate air carriers in an aggregate amount" of $5 billion for:

(A) direct losses incurred beginning on September 11, 2001... as a result of any Federal ground stop order issued by the Secretary of Transportation or any subsequent order which continues or renews such a stoppage; and

(B) the incremental losses, incurred beginning September 11, 2001, and ending December 31, 2001 ... as a direct result of such attacks.

In the case of a cargo carrier, however, the amount of compensation is capped at the lesser of "the amount of such air carrier's direct and incremental losses described in section 101(a)(2)," § 103(b)(1), or a percentage of $500 million equal to that carrier's percentage of the "total revenue ton miles" of all cargo carriers for the last quarter for which data are available, § 103(b)(2)(B). Section 103(a) authorizes the Secretary of Transportation to "audit" the documents the air carrier submits in order to determine the carrier's entitlement to compensation.

By the end of September 2001 the DOT had compensated air carriers to the extent of approximately $2.3 billion. The petitioning Carriers, each of which received some compensation, are now pursuing before the Department administrative appeals regarding the exact amounts to which they are entitled.

Over the next year the DOT issued four cumulative and superceding "Final Rules" to govern the award of compensation to air carriers. See Procedures for Compensation of Air Carriers, 66 Fed.Reg. 54,616 (October 29, 2001) (First Final Rule), 67 Fed.Reg. 250 (January 2, 2002) (Second Final Rule), 67 Fed.Reg. 18,468 (April 16, 2002) (Third Final Rule), and 67 Fed.Reg. 54,058 (August 20, 2002) (Fourth Final Rule). The First Final Rule was promulgated, pursuant to the good cause exception of the APA, 5 U.S.C. § 553(b)(B), without prior notice or opportunity for comment, which the Department deemed "impractical, unnecessary, and contrary to the public interest" in view of "the need to move quickly to provide compensation to air carriers." 66 Fed.Reg. at 54,620/1-2. The DOT nonetheless invited public comments after the fact, see id. at 54,616/1, and it responded to them when it issued the Second Final Rule. See 67 Fed.Reg. at 250/1-2. Although the Second Final Rule was also made "immediately effective," the DOT again sought post hoc comments from the public. See id. at 255/1.

The Third Final Rule introduced the four provisions as to which the Carriers now petition for review. The "offset rule" provides

[If] a carrier experienced better-than-forecasted total results for [the period September 11 through December 31, 2001, then] the actual results for the period after the Federal ground stop order was lifted ... must be offset against direct losses incurred during the period of the Federal ground stop order.

67 Fed.Reg. at 18,474/1. Unlike passenger carriers, which suffered significant continuing losses after September 11, some cargo carriers enjoyed higher profits after the attacks because shipments of military cargo increased and the reduced number of commercial passenger flights shifted some air freight from passenger to cargo carriers. See 67 Fed.Reg. at 54,063/1. Therefore, the DOT concluded an offset "is necessary to implement the requirement of the Act that air carriers only receive compensation for losses actually incurred." 67 Fed.Reg. at 18,474/1.

The Third Final Rule also established rebuttable presumptions regarding the timing of losses and the treatment of savings. Under the timing presumption the Department "generally does not allow air carriers to include in their calculations ... losses that are not actually and fully realized in the period between September 11, 2001 and December 31, 2001." 14 C.F.R. § 330.39(a)(1). If, however, an air carrier can show that "the actual costs of a loss were the direct result of the terrorist attacks of September 11 ..., were fully borne within the September 11 to December 31 time period and are permanent, and that compensation for those costs would not be duplicative, [then] the Department will consider such claims." 67 Fed.Reg. at 18,472/1.

Under the savings presumption the Department "generally does not accept claims by air carriers that cost savings should be excluded from the calculation of incurred losses." 14 C.F.R. § 330.39(b). An air carrier can rebut this presumption only if it "can provide pre-existing documentary support" demonstrating "specific instances of cost savings that [it] believes are unrelated to the events of September 11 and believes should be excluded with the effect of increasing compensation." 67 Fed.Reg. at 18,473/2-3.

In addition, the DOT adopted the following procedural requirement for the recoupment of any excess compensation paid to an air carrier: "If at any time [the DOT] determine[s] that a past payment is greater than the amount justified by the provisions of this part and the documentation you submit, [the air carrier] must repay immediately the excess amount to the Department." Id. at 18,476/2.

Again the DOT invited comment after rather than before promulgating the rule, see id. at 18,475/3, and Federal Express, Emery Air Freight, and Kitty Hawk, among others, submitted comments to which the DOT responded when it issued the Fourth Final Rule. See 67 Fed.Reg. at 54,062-65. That Rule did not alter the substance of either the offset rule or the two accounting presumptions, but the DOT did agree with Federal Express that the recoupment procedure should be revised to "comply with [the Federal Claims] Collection Act[, 31 U.S.C. §§ 3701 et seq.,] in pursuing recovery of overpayments made under the Stabilization Act." Id. at 54,063l; see 14 C.F.R. § 330.9(b). The Carriers now petition for review of all four rules.

II. Analysis

The Carriers argue the offset rule, the two accounting presumptions, and the recoupment procedure are contrary to the Act. They also argue the DOT's failure to afford interested persons an opportunity to comment before promulgating those rules violated the APA.

A. Offset Rule

The Carriers first argue the offset rule is based upon an erroneous interpretation of the Stabilization Act. We review the DOT's interpretation of the Act under the familiar two-step analysis of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). First we must determine "whether Congress has directly spoken to the precise question at issue," id. at 842, 104 S.Ct. at 2781, which is whether an air carrier's "better-than-forecasted total results" for the last quarter of 2001 offset the air carrier's compensation for the direct losses it incurred as a result of the ground stop order. If the Congress has answered that question, then "the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Id. at 842-43, 104 S.Ct. at 2781. If, however, "the statute is silent or ambiguous with respect to the...