American Airlines, Inc. v. United States

68 Fed. Cl. 723, 2005 U.S. Claims LEXIS 351, 2005 WL 3216926
CourtUnited States Court of Federal Claims
DecidedNovember 30, 2005
DocketNo. 04-1736C
StatusPublished
Cited by8 cases

This text of 68 Fed. Cl. 723 (American Airlines, Inc. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Airlines, Inc. v. United States, 68 Fed. Cl. 723, 2005 U.S. Claims LEXIS 351, 2005 WL 3216926 (uscfc 2005).

Opinion

MEMORANDUM OPINION AND ORDER

BRADEN, Judge.

Plaintiff American Airlines, Inc. (“American Airlines” or “AA”) seeks to recover at least $2,627,974.12 that the Departments of Homeland Security and Agriculture imposed on commercial airlines, pursuant to two statutory schemes: the Immigration User Fee Statute, 8 U.S.C. §§ 1356, et. seq., and the Agricultural Quarantine Inspection User Fee Statute, 21 U.S.C. § 136(a).

RELEVANT FACTS AND BACKGROUND1

A. The Immigration User Fee.

In 1986, Congress enacted the Immigration User Fee Statute2 that requires an entity issuing tickets to passengers traveling into the United States aboard commercial vessels or commercial aircraft to collect and remit a $7.00 “user” fee (“Immigration User Fee”). This statute further requires that, if a ticket [725]*725is issued in a foreign country and the fee has not been collected by the ticket issuer, the entity providing transportation, is obligated to collect the fee from the passenger3 at the point of departure from the United States.4 See 8 U.S.C. § 1356(f)(1). The Immigration User Fee is used by the Department of Homeland Security5 to pay for inspection, detentions, and other expenses associated with the arrival of all passengers into the United States. See 8 U.S.C. §§ 1356(d), (k).6

B. The Agricultural Quarantine Inspection User Fee.

In 1990, Congress enacted Section 2509 of the Food Agriculture, Conservation and Trade Act of 1990, as amended by the Federal Agricultural Improvement and Reform Act, Pub.L. No. 104-127, § 917, 110 Stat. 888,1187 (codified at 21 U.S.C. § 136a) (“the Agriculture Statute”), authorizing the Secretary of Agriculture (“the Secretary”) to impose a fee to cover the cost of agricultural quarantine and inspection services. Pursuant thereto, the Secretary issued regulations to establish an “Agricultural Quarantine Inspection User Fee” (“AQI User Fee”),7 to be paid by passengers,8 but collection was imposed only on entities issuing international airline tickets or airline carriers similar to [726]*726the Immigration User Fee program.9 See 7 C.F.R. § 354.3(f) (2005). The AQI User Fee is used by the Department of Agriculture’s Animal and Plant Health Inspection Service (“APHIS”) to pay for quarantine and inspection activities and has ranged from $1.45 per individual, per ticket to $3.10 per individual, per ticket. See 7 C.F.R. § 354.3(f) (2003); see also 7 C.F.R. § 354.3(f) (2000); 7 C.F.R. § 354.3(f) (1998); 7 C.F.R. § 354.3(f) (1996).

C. Government Audits Of American Airlines.

Since 1998, the Government has conducted audits of American Airlines’ compliance with the Immigration User Fee and AQI User Fee collection and remittance obligations. See Gov’t Findings ¶ 2; see also 8 C.F.R. § 286.5(f) (2005) (reserving the right to conduct an independent audit “to assure the accuracy of the remittances of [Immigration User] [F]ees collected ... compliance with the applicable statutes and regulations.”); 7 C.F.R. § 354.3(f)(7) (2005) (reserving the right to “verify the accuracy of the AQI user fees collected and remitted and to otherwise determine compliance with 21 U.S.C. [§ ] 136a.”). During an audit, a sampling of tickets from American Airlines’ flights during a specified period is reviewed to ascertain whether both user fees were collected. See Gov’t Findings ¶ 6. A ticket without evidence of collection of the fee initially is designated a “potential error.” Id. Unless American Airlines is able to furnish evidence of fee collection, the ticket is designated an “error.” Id. An “error rate” is then derived from the sampling and applied to the total number of tickets on all American Airlines flights, within a relevant period, as an estimate of the number of passengers for whom American Airlines did not remit a fee to the Government. Id. In each audit period, the Government verified that American Airlines remitted user fees for at least 97.53% of the passengers obligated by statute to pay such fees. Id. ¶¶ 19, 24, 29, 38, 45, 50, 55, 59, 65. During the audit periods selected by the Government, American Airlines’ aggregate remittance rate exceeded 99%. Id.

American Airlines contends that the 1% error rate, identified by the audits, was caused by difficulties in collecting fees from some passengers, particularly those originating from Central and South American countries.10 See PI. Findings ¶¶ 11, 13-16. The Government counters that the “errors” should be attributed to American Airlines’ failure to remit user fees that were collected. See Gov’t Resp. at 18. At this juncture, the court is unable to ascertain the number of fees that American Airlines was unable to collect and remit or the reasons collection did not occur. Similarly, the court is unable to determine the number of fees that American Airlines was able to collect but failed to remit.

D. Fees Disputed By American Airlines.

After each audit, the Government demanded and American Airlines voluntarily paid all Immigration User Fees and AQI User Fees that the Government alleged were due, but [727]*727not remitted.11 See Gov’t Findings ¶¶ 7, 8.

On October 10, 2003, American Airlines requested that APHIS refund all amounts that American Airlines was compelled to pay, pursuant to the AQI User Fee audits, because the Government did not have statutory or regulatory authority to mandate that American Airlines remit uncollected fees. Id. ¶ 76. On August 11, 2004, APHIS denied American Airlines’ request. Id. ¶ 77.

On October 13, 2003, American Airlines requested that the Department of Homeland Security refund all amounts that it was compelled to pay, pursuant to the Immigration User Fee audits, because the Government did not have statutory or regulatory authority to mandate that American Airlines remit uncollected fees. Id. ¶74. On August 5, 2004, American Airlines’ request was denied. Id. ¶ 75.

PROCEDURAL BACKGROUND

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68 Fed. Cl. 723, 2005 U.S. Claims LEXIS 351, 2005 WL 3216926, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-airlines-inc-v-united-states-uscfc-2005.