Southwest Airlines Co. v. Transportation Security Administration

554 F.3d 1065, 384 U.S. App. D.C. 325, 2009 U.S. App. LEXIS 1884
CourtCourt of Appeals for the D.C. Circuit
DecidedFebruary 3, 2009
Docket07-1279, 07-1280, 07-1281, 07-1282, 07-1283, 07-1284, 07-1285, 07-1286, 07-1287, 07-1288, 07-1289, 07-1290, 07-1291, 07-1292, 07-1293, 07-1294, 07-1296, 07-1297, 07-1298, 07-1323, 07-1338, 07-1347
StatusPublished
Cited by19 cases

This text of 554 F.3d 1065 (Southwest Airlines Co. v. Transportation Security Administration) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Southwest Airlines Co. v. Transportation Security Administration, 554 F.3d 1065, 384 U.S. App. D.C. 325, 2009 U.S. App. LEXIS 1884 (D.C. Cir. 2009).

Opinion

Opinion for the Court filed by Senior Circuit Judge WILLIAMS.

WILLIAMS, Senior Circuit Judge:

Before the terrorist attacks of September 11, 2001, commercial airlines exercised responsibility for screening passengers and property at U.S. airports. Shortly after the attacks, Congress passed the Aviation and Transportation Security Act (“ATSA”), Pub.L. No. 107-71, 115 Stat. 625 (2001), establishing the Transportation Security Administration (“TSA”) and entrusting it with the primary responsibility for civil aviation security. 49 U.S.C. § 114. We deal here with several airlines’ arguments that TSA has erroneously over *1068 charged them for their statutory portion of these security costs.

The ATSA authorizes TSA to impose two types of fees to fund its security services. The first, which is not at issue here, is a fee on airline passengers. 49 U.S.C. § .44940(a)(1). The second type of fee— referred to as the Aviation and Security Infrastructure Fee (“ASIF”), 49 C.F.R. § 1511.1(b) — is imposed directly on airlines. It is meant to plug the gap between the costs of TSA’s civil aviation security services and the sums raised by the passenger fee, but it is subject to two important limits. 49 U.S.C. § 44940(a)(2)(A). Petitioners — -a group of 22 airlines. — are claiming that TSA improperly subjected them to approximately $98 million a year in increased ASIF liabilities.

ATSA’s two limits on fees are its “overall” and its “per-carrier” limits. Under the overall limit, the fees in each fiscal year “may not exceed, in the aggregate, the amounts paid in calendar year 2000 by carriers ... for screening passengers and property, as determined by the Under Secretary.” 49 U.S.C. § 44940(a)(2)(B)(i). Under the per-carrier limit, the fees collected from a carrier for fiscal years 2002, 2003 and 2004 “may not exceed the amount paid in calendar year 2000 by that carrier for screening passengers and property, as determined by the Under Secretary.” 49 U.S.C. § 44940(a)(2)(B)(ii) (emphasis added). Starting with fiscal year 2005, the act allows the Under Secretary to determine the per-carrier limit “on the basis of market share or any other appropriate measure in lieu of actual screening costs in calendar year 2000.” 49 U.S.C. § 44940(a)(2)(B)(iii).

In its implementing regulations, TSA required every covered carrier to submit a form — referred to as “Appendix A” — detailing its passenger and screening costs for the year 2000. 49 C.F.R. § 1511.5(d). It also required carriers to provide an audit of their reported costs. Id. § 1511.9. For the years 2002-2004, TSA generally set each carrier’s annual fee at the level of costs listed in the carrier’s Appendix A.

In 2004, with the Department of Homeland Security Appropriations Act, Pub.L. No. 108-334, 118 Stat. 1298 (2004) (the “2004 DHS Appropriations Act”), Congress intervened. to make sure that TSA was collecting its full entitlement under ATSA. It directed the Government Accountability Office (“GAO”) to review the airlines’ cost information for the year 2000. And it stated that, beginning with amounts due in the year 2005, if “the result of this review is that an air carrier or foreign air carrier has not paid the appropriate fee to the Transportation Security Administration ..., the Secretary of Homeland Security shall undertake all necessary actions to ensure that such amounts are collected.” Id.

The GAO’s report concluded that the airlines had collectively under-reported their security screening costs in the year 2000 by an estimated $129 million. United States Government Accountability Office, Aviation Fees: Review of Air Carriers’ Year 2000 Passenger and Property Screening Costs 7 (2005).

Relying in part on the GAO’s analysis, TSA determined that each of petitioners had under-reported its year 2000 screening costs. It began by calculating the industry’s average cost per passenger screened. It then compared that average with each airline’s reported cost per passenger screened. For those airlines whose reported costs were at or above the industry average, it assessed no additional liability. It also gave a pass to airlines whose reported costs were, below the industry average, but that had presented an adequate audit of their reporting costs. *1069 When TSA determined — as it did for all of the petitioners — that an airline reported below-average costs and did not provide an adequate audit, TSA presumed that its screening costs per passenger in the year 2000 were equal to the industry average. It then calculated the airline’s total screening costs for 2000 by multiplying the industry average by the number of passengers that airline screened in 2000. Finally it estimated each airline’s additional ASIF liability by subtracting its reported year 2000 costs from the new figure.

TSA’s director of revenue sent each petitioner a letter describing this method and advising the petitioner of its additional liability. Petitioners appealed to TSA, which upheld the initial decisions in all relevant respects.

In their joint brief, petitioners challenge TSA’s final decisions, claiming that they reflected substantive statutory violations, were arbitrary and capricious, and were flawed procedurally. We find merit in the attack on TSA’s understanding of the ATSA’s “overall” limit, but not in the other objections.

In addition, three of the petitioners advance individual claims, one of which (that of Spirit Airlines (“Spirit”)) prevails.

Before reaching the merits, we need to address the effect of two ATSA provisions for jurisdiction-stripping. The original ATSA provided that “[determinations of the Under Secretary under this subpara-graph [i.e., 49 U.S.C. § 44940(a)(2)(B), stating the limitations on air carrier fees] are not subject to judicial review.” Pub.L. No. 107-71, 115 Stat. 597, 625 (2001). In the Consolidated Appropriations Act, P.L. 110-161, § 540, 121 Stat. 1944 (December 26, 2007), Congress relaxed this restriction, creating an exception for “estimates and additional collections made pursuant to the appropriation for Aviation Security in Public Law 108-334 [i.e., collections made pursuant to the 2004 DHS Appropriations Act]: ... Provided ... That such judicial review shall be limited only to additional amounts collected by the Secretary before October 1, 2007.” 49 U.S.C. § 44940(a)(2)(B)(iv).

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554 F.3d 1065, 384 U.S. App. D.C. 325, 2009 U.S. App. LEXIS 1884, Counsel Stack Legal Research, https://law.counselstack.com/opinion/southwest-airlines-co-v-transportation-security-administration-cadc-2009.