Decisions Without Published Opinions Affirmed.
argues that (1) including the costs of future facilities and of secondary airports in the rate base and (2) charging a two-part landing fee comprising a weight-based charge and a per-operation charge are each independently both unreasonable and unjustly discriminatory.
1. The Standard of Review
The ATA brings only a facial challenge to the Amendments, presumably because, as the parties related at oral argument, no airport has implemented the system of congestion pricing allowed by the Amendments. To prevail in a facial challenge, the ATA "must establish that no set of circumstances exists under which the [Amendments] would be valid." Reno v. Flares, 507 U.S. 292, 301, 113 S.Ct. 1439, 123 L.Ed.2d 1 (1993) (quoting United States v. Salerno, 481 U.S. 739, 745, 107 S.Ct. 2095, 95 L.Ed.2d 697 (1987)). Therefore, to make its point that the DOT lacked authority to promulgate the Amendments, it is not enough to show there is a "mere possibility" an airport might apply the Amendments in such a way as to set an unlawful fee. Bldg. Constr. Trades Dep't v. Allbaugh, 295 F.3d 28, 33 (D.C. Cir. 2002).
Pursuant to 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), we give "substantial deference" to the DOT's interpretation of a statute that requires it to ensure fees are reasonable but "does not set standards for assessing reasonableness" because the Secretary of Transportation, not the court, "is charged with administering the federal aviation laws." Northwest Airlines, Inc. v. County of Kent, 510 U.S. 355, 366-67, 114 S.Ct. 855, 127 L.Ed.2d 183 (1994) (citing Chevron, 467 U.S. at 842-845, 104 S.Ct. 2778). The ATA would have us apply the specific standard used in Northwest, 510 U.S. at 369, 114 S.Ct. 855, which was based upon that in Evansville-Vanderburgh Airport Auth. Dist. v. Delta Airlines, 405 U.S. 707, 716-17, 92 S.Ct. 1349, 31 L.Ed.2d 620 (1972): A fee "is reasonable . . . if it (1) is based on some fair approximation of use of the facilities, (2) is not excessive in relation to the benefits conferred, and (3) does not discriminate against interstate commerce." As the DOT points out, however, the Court in Northwest was evaluating a particular set of fees imposed by a single airport — before passage of the statute that requires the Secretary to establish "the standards or guidelines [he will use] in determining . . . whether an airport fee is reasonable," Pub.L. No. 103-305, 108 Stat. 1569 § 113, 49 U.S.C. § 47129(b). The Court explained that because it "[l]ack[ed] guidance from the Secretary [of Transportation]" regarding how to evaluate the reasonableness of those fees, it had to "look elsewhere" for a standard. Northwest, 510 U.S. at 367, 114 S.Ct. 855. The Court expressly noted that when the Secretary creates a standard, as he has here, "for determining whether fees are `reasonable' . . . his exposition will merit judicial approbation so long as it represents `a permissible construction of the statute.'" Id. at 368 n. 14, 114 S.Ct. 855 (quoting Chevron, 467 U.S. at 842-45, 104 S.Ct. 2778). For the same reasons, we defer to the DOT's reasonable interpretation of the statutory prohibition of unjust discrimination.
2. Reasonableness
An aircraft that lands at a congested time imposes a significant cost, in the form of delay, both upon other airlines that want to land aircraft at the same time and upon the passengers aboard those aircraft. Each additional aircraft seeking to land at that time adds to the congestion and imposes additional delays upon other users of the system. Meanwhile, the airline that successfully lands an aircraft at the peak time reaps a substantial benefit because it is able to offer a valuable service to its customers. As long as the costs to the airline landing the aircraft during a peak hour are less than the benefits to that airline, it will land the aircraft even if the total social costs — including delays to other users of the system — exceed the total social benefits. See Garrett Hardin, The Tragedy of the Commons, 162 Science 1243 (1968).
The ATA argues the fees authorized by the Amendments necessarily will be unreasonable because the Amendments do not comply with the principle, common in rate regulation, "that an asset must be `used and useful' before it can be included in the rate base" of a regulated utility. Mid-Tex Elec. Coop. v. FERC, 773 F.2d 327, 332 (D.C. Cir. 1985) (citing Smyth v. Ames, 169 U.S. 466, 18 S.Ct. 418, 42 L.Ed. 819 (1898)). Neither an airport nor the DOT, however, is required to adhere to that principle. As the DOT argues, the relevant statutes require only reasonable and non-discriminatory fees, not fees based upon a particular form of cost recovery. We have explained elsewhere that the "used and useful" principle is "simply one of several permissible tools of ratemaking, one that need not be, and is not, employed in every instance." Jersey Cent. Power Light Co. v. FERC, 810 F.2d 1168, 1175 (D.C. Cir. 1987) (en banc). Accordingly, an agency may "depart from the `used and useful' standard" in order to pursue another legitimate objective. Wash. Gas Light Co. v. Baker, 188 F.2d 11, 20 (D.C. Cir. 1951); see Mid-Tex, 773 F.2d at 346 (holding it reasonable, and consistent with the principle of "used and useful," to include in the rate base certain funds for unfinished projects). We focus our inquiry not upon each asset included in the rate base, but rather upon whether the end result is reasonable. See Jersey, 810 F.2d at 1177-78; see also Fed, Power Comm'n v. Hope Nat. Gas Co., 320 U.S. 591, 603, 64 S.Ct. 281, 88 L.Ed. 333 (1944) ("end result" test for whether rates are just and reasonable).
It is entirely reasonable to expect an airline, and in turn its passengers, to pay a premium for the opportunity to arrive at a peak time. If an airport is able to reduce congestion by using the two-part scheme and including in its rate base the costs of a future facility or of a secondary airport then, without more, it is impossible to say its increased landing fee must be unreasonable. The increased fee will drive other aircraft away — whether in time or in space — and thereby will benefit the airline that pays the fee to land at a peak time. Depending upon the actual amount of the fee, therefore, it may well be reasonable.
3. Unjust Discrimination
The ATA complains in various ways the Amendments will require an airline to subsidize its competitor, as though a cross-subsidy necessarily implies "unjust discrimination." 49 U.S.C. § 47107(a)(1). The variation in the fees permitted by the Amendments need not be unjustly discriminatory, however. Each aircraft that lands at a particular airport during a particular hour will be subject to the same fee, adjusted only, as it is now, for weight. Although landing fees will vary from one airport to another and from one hour to another, the DOT has adequately justified such differences based upon variations in the degree of congestion at different airports and different times.
First, the ATA complains that to include in an airport's rate base the costs of (1) a different but commonly owned airport or (2) an unfinished project is to force that airline to subsidize its competitors. The ATA's objection is implicitly based upon the principle that the total fees collected by an airport may not exceed the total costs incurred by the airport: If a primary airport includes in its rate base the cost of a secondary airport, then it must reduce its rate base in the second airport by an equal amount; similarly, if it includes the cost of a project under construction, then it may not recover the same costs again upon completion of the project. See 73 Fed.Reg. at 40, 445/1-2. In each case the actual users of the facilities newly included in the rate base will pay lower fees than they would otherwise do. In other words, if the fees at one airport go up, then the fees at another must come down, and that is a "subsidy" for users of the secondary airport, including airlines that compete with the airlines that use the primary airport; likewise, the objection goes, present users paying for facilities to be used by future users "subsidize them."
The effect of the pricing scheme may look like a subsidy but it does not necessarily work an unjust discrimination, regardless whether all components of the rate base are actually used by the airlines that pay the landing fees, because off-peak users are not responsible for the costs of the present congestion or of any future expansion necessitated thereby. In an industry with high fixed costs it is not unreasonable or unjust for peak load users to pay more than off-peak users because the peak price is being used to allocate a scarce resource. See 1 Alfred E. Kahn, The Economics of Regulation: Principles and Institutions 89 (1970) ("The off-peak users impose no such costs on society. . . . The necessity for expansion is imposed by the customers at the peak hours.").
The ATA also argues a two-part fee will more adversely affect "airlines with a business model dependent on the use of certain size aircraft flying at certain times of day or with certain frequencies." That is true, of course. An airline that lands a small aircraft at a peak time, however, imposes nearly as much cost upon the other users of the airport as does an airline that lands a larger aircraft. A landing fee increased to reflect that fact might make it unprofitable for the former airline to leave its present schedule and fleet unchanged, but that is the point of peak-load pricing, not a defect that makes the price differential unjustly discriminatory.
We cannot, of course, rule out the possibility that an airport will implement a system of fees that complies with the Amendments but is nonetheless unreasonable or unjustly discriminatory. Because an airport can also implement the Amendments in a way that is reasonable and not unjustly discriminatory, however, the ATA's facial challenge must fail.
B. Preemption
In another facial attack the ATA argues the DOT lacked authority to promulgate the Amendments because the Airline Deregulation Act of 1978 preempts and thus prohibits any state or local airport authority's attempt to implement congestion pricing. The ADA provides a state or local authority "may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier." 49 U.S.C. § 41713(b)(1). This clause limits what most airports can do because most airports are operated by a local authority. See Tae H. Oum, Nicole Adler, Chunyan Yu, Privatization, Corporatization, Ownership Forms and their Effects on the Performance of the World's Major Airports, 12 J. Air Transp. Mgmt. 109, 109 n. 1 (2006).
The ATA argues "an airport proprietor necessarily would violate the ADA by establishing congestion landing fees" because varying fees based upon the time of day "for the purpose of influencing airline service decisions" is a measure "related to a price, [etc.], . . . of an air carrier." Surely, however, an airport may charge some fee authorized by the Amendments without violating the ADA.
Because we hold charging a reasonable landing fee is within an airport's proprietary powers and therefore is not prohibited by the ADA, we need not address the ACI's alternative argument that such a fee is not "related to a price, route, or service of an air carrier." 49 U.S.C. § 41713(b)(1).
First, as the DOT points out, a state or local authority that owns or operates an airport is expressly authorized by the Anti-Head Tax Act to charge a reasonable landing fee. See 49 U.S.C. § 40116(e) ("a State or political subdivision of a State may levy or collect . . . reasonable . . . landing fees"). Second, nothing in the ADA prohibits an airport from charging a reasonable landing fee pursuant to the just-cited authority; on the contrary, the very preemption section of the ADA upon which the ATA bases its argument contains an exception allowing an airport authority, notwithstanding other provisions of the Act, to "carry[] out its proprietary powers and 49 U.S.C. § 41713(b)(3). Because some fees authorized by the Amendments may be reasonable, it is within an airport's "proprietary powers and rights" to charge those fees. The facial challenge therefore fails because the ATA must, but cannot, "establish that no set of circumstances exists under which the [Amendments] would be valid." Reno, 507 U.S. at 301, 113 S.Ct. 1439 (quoting United States v. Salerno, 481 U.S. 739, 745, 107 S.Ct. 2095, 95 L.Ed.2d 697 (1987)).
The ATA raises three other arguments related to the ADA. First, citing Rowe v. New Hampshire Motor Transport Ass'n, 552 U.S. 364, 373, 128 S.Ct. 989, 169 L.Ed.2d 933 (2008), it argues the Amendments will create precisely the "patchwork of local regulation of air service" the Congress intended the ADA to prevent. This is a problem, it claims, because "[airlines' schedule, staffing, and equipment decisions are made based on a complicated and comprehensive view of a nationwide or even global network." The differences among the patches at issue, however, are differences in price only and take the form of state and local regulations only because state and local authorities operate most airports.
We recognize, of course, that prices alter behavior — that is the premise upon which the Amendments are based — and understand prices that vary from place to place will yield incentives that vary as well. Neither the ADA nor any other statute concerning air traffic, however, demands uniform prices or uniform incentives. The statute that allows airport authorities to collect fees expressly forbids some types of levies, e.g., a "head charge," but it allows all others so long as they are reasonable. See 49 U.S.C. §§ 40116(b), (e). Another statute compels the DOT to evaluate whether a fee imposed upon an airline is reasonable but expressly forbids the Department from "set[ting] the level of the fee." 49 U.S.C. § 47129(a)(3). That necessarily means state and local authorities will "set the level of the fee[s]" and they will not be uniform. Id.
In sum, although the ADA forbids states and local authorities from directly regulating air traffic, the structure the Congress created virtually ensures, and surely accepts, that fees will vary across airports. The resulting differences in incentives are unavoidable, not unlawful.
Indeed, the ATA does not claim the landing fees now being charged are uniform, nor could they be because the historical costs upon which they are based vary from airport to airport. Moreover, airlines already operate subject to constraints that vary among airports, including differences in fuel prices, operating hours and, of course, the degree of congestion. See John S. Stroup Richard D. Wollmer, A Fuel Management Model for the Airline Industry, 40 Operations Res. 229 (1992) (describing the practice of "tankering" fuel between airports because of cost differences); Metropolitan Washington Airports Authority Regulations § 3.11 (setting curfew for airline operations at only one of three area airports); Scott McCartney, Why a Six-Hour Flight Now Takes Seven, Wall St. J., Feb. 4, 2010, at Dl (explaining schedule padding in response to congestion). We think it obvious the Congress also anticipated non-uniform landing fees and the non-uniform incentives they produce.
Second, the ATA argues that under the ADA the incentives created by non-uniform landing fees should be permitted only if the differences are incidental rather than intentional. The ATA points to nothing in the ADA, however, that suggests the intent of an airport authority in setting rates is at all relevant to the lawfulness of those rates. So long as a state or local measure is "related to a price, route, or service of an air carrier," it is forbidden unless it comes within the exception for proprietary powers. And, as we already have said, setting landing fees that comply with all applicable statutes and regulations is within the scope of an airport authority's power as proprietor.
Finally, the ATA argues the First Circuit has already rejected the type of two-part fee structure at issue here. See New England Legal Found, v. Mass. Port Auth, 883 F.2d 157 (1989). In that case, however, the airport had adopted a fee structure without authorization from the DOT; the Secretary rejected only that particular fee structure — not the concept of a two-part tariff — because it was "not scientifically derived" and therefore not reasonable and not saved by the exception for proprietary powers. Id. at 165-66, 170. The First Circuit, deferring pursuant to Chevron, agreed. Id. at 170. The ATA's facial challenge derives no support from that ruling.
C. Guidance to Airports
The ATA next argues the Amendments do not comply with 49 U.S.C. § 47129(b)(2). That provision requires the Department to establish "standards or guidelines" for the Secretary of Transportation to use "in determining . . . whether an airport fee is reasonable," but airports understandably use that guidance to anticipate how the Secretary will evaluate the reasonableness of the fees they charge. The ATA maintains the only guidance the Amendments provide is the tautology that a fee "is not unreasonable as long as it is reasonable." The DOT responds that, because the Amendments "specif[y] the methodologies [airports] may use" to set landing fees at congested times, the Amendments provide more and sufficient guidance, and we agree.
We have not hesitated in the past to fault the DOT when it failed to provide adequate guidance to airport operators. The 1996 Policy capped airfield fees at historical cost but allowed airports to set non-airfield fees using essentially "any reasonable methodology," 61 Fed.Reg. at 32,-020/3; upon the ATA's petition for review, we noted the "`guideline' seems to be missing a `line'" because the concept of " any reasonable methodology. . . . does not seem to add much — if anything — to the statutory requirement that airport fees be reasonable." ATA I, 119 F.3d at 41. We vacated portions of the 1996 Policy because the Department failed adequately to explain the distinction it drew between airfield and non-airfield fees. See id. at 43; 129 F.3d at 625.
As we have pointed out, however, when the "Congress has `not specified the level of specificity expected of the agency, . . . the agency [is] entitled to broad deference in picking the suitable level.'" Cement Kiln Recycling Coal. v. EPA 493 F.3d 207, 217 (2007) (quoting Ethyl Corp. v. EPA, 306 F.3d 1144, 1149 (D.C. Cir. 2002)). Here, because the call for "standards or guidelines" in the Federal Aviation Authorization Act, 49 U.S.C. § 47129(b)(2), "does not mandate any particular level of specificity," Cement Kiln, 493 F.3d at 218, we will defer to any reasonable interpretation by the DOT. See Chevron, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694; Cement Kiln, 493 F.3d at 217 (citing Chevron).
Because the Amendments leave only two variables to the discretion of the airport proprietor, and thus set out a nearly complete pricing algorithm, we conclude the DOT has provided sufficient guidance. The two-part fee the Amendments permit reflects two major components of airfield costs: the cost per landing and the cost imposed in proportion to the weight of an aircraft. See 73 Fed.Reg. at 40, 443-44. Limiting the fees to those components provides specific guidance and is specific enough to constrain an airport proprietor's pricing discretion. In addition, the Amendments and the 1996 Policy limit the total fees an airport may collect. See id. at 40, 445/1-2; 61 Fed.Reg. at 32,019/2-3.
The Amendments set reasonably specific standards because the airport proprietor is free only to calculate the fixed charge per operation and to determine how the variable weight component is to be scaled to aircraft weight. The Amendments therefore discharge the Department's statutory obligation to set "standards or guidelines that shall be used by the Secretary in determining . . . whether an airport fee is reasonable," 49 U.S.C. § 47129(b)(2).
Nonetheless the ATA faults the DOT for "us[ing] the word `reasonable' [in the Order promulgating the Amendments] as though it [were] self-defining." Many of the specific instances of which the ATA complains appear in the background section of the Order — the "concise general statement of . . . basis and purpose" required of every regulation subject to the Administrative Procedure Act, 5 U.S.C. § 553(c) — not in the Amendments themselves. Surely the DOT may discuss reasonableness in general terms when introducing and explaining the purpose of a rule. As for the use of "reasonable" in the Amendments themselves, we fail to see why adding the requirement of reasonableness to a rule that independently provides adequate guidance takes the rule out of compliance with the statutory mandate. If, for example, a highway has a posted speed limit and at the same time a statute prohibits "driv[ing] a vehicle on a highway at a speed greater than is reasonable," Ariz. Rev. Stat. § 28-701, it simply would not follow that a motorist is given inadequate guidance about how fast he may drive. See Arizona v. Rich, 115 Ariz. 119, 563 P.2d 918, 919-20 (Ct.App. 1977) (rejecting vagueness challenge).
D. Change of Policy
The ATA argues that because the Amendments work a change in DOT policy the Department "has additional obligations to justify that change." We have long held that "an agency changing its course must supply a reasoned analysis indicating that prior policies and standards are being deliberately changed, not casually ignored." Greater Boston Television Corp. v. FCC, AAA F.2d 841, 852 (1970). Here the ATA identifies two specific changes of policy: (1) including in the rate base costs of some facilities not yet in service, and (2) including in the rate base of a primary airport the costs of a secondary airport. The DOT first denies having made any changes in policy that require explanation because it "has not previously addressed modified congestion pricing by airports." We need not resolve that particular squabble, however, because we conclude the DOT adequately explained its reasons for promulgating the two bits about which the ATA complains.
In 1996 the DOT explained, "when fees are based on cost, it is generally unreasonable to charge users for facilities they do not benefit from or use," but at the same time recognized that doing so might be reasonable in some circumstances. 61 Fed.Reg. at 32, 002/2. The DOT then balanced various "conflicting concerns" and concluded the only costs of future facilities an airport could include in its rate base, and then only under certain circumstances, were "the costs of land acquired for future airport development." Id. at 32, 020/3. The present Amendments to the 1996 Policy allow an airport more broadly to add to its rate base "a portion of the costs of an airfield project under construction," again subject to certain conditions. 73 Fed.Reg. at 40,445.
The 1996 Policy also permits an airport proprietor to include the costs of an alternate airport in the rate base of a primary airport if those costs "are reasonably related to the aviation benefits that the other airport provides or is expected to provide to aeronautical users of the first airport." 61 Fed.Reg. at 32, 020/3; see also id. at 32, 014. The Policy specifies that the requirement of benefits to the users of the first airport "will be presumed to be satisfied if the other airport is designated as a reliever airport for the first airport [by] the FAA[]." Id. at 32,020/3. The Amendments do not change the general standard, but they do add that benefits to the users of the first airport also will be presumed if
adding airfield costs of the second airport to the rate base of the first airport during congested hours would have the effect of reducing or preventing congestion and operating delays at [the first] airport in those hours.
73 Fed.Reg. at 40,445/2.
The DOT provided a "reasoned analysis" for these two aspects of the Amendments, considering that "[a]n agency's view of what is in the public interest may change, either with or without a change in circumstances." Greater Boston, AAA F.2d at 852. Most fundamentally, the DOT identified a major change in the world around it between 1996 and 2008: Airport congestion had increased significantly. In explaining the need for the Amendments, it detailed congestion at specific airports and recounted the findings of the Federal Aviation Administration about chronic congestion. See 73 Fed.Reg. at 40,431-32 (citing Federal Aviation Administration, Capacity Needs in the National Airspace System 2007-2025: An Analysis of Airports and Metropolitan Area Demand and Operational Capacity in the Future (May 2007)). It reasoned that congestion pricing "could encourage more efficient use of [congested] airports" and explained how increasing an airport's rate base and allowing it to impose a two-part landing fee could approximate congestion pricing. 73 Fed. Reg. at 40,431-32.
Of course, congestion is not an entirely new problem. More than 40 years ago "the press, the government, the airlines, the airport operators themselves, and a host of others [told us] that our airports are in a state of `crisis.'" Levine, Landing Fees, 12 J.L. Econ. at 79. The DOT, however, has a continuing mandate to manage the Nation's air transportation system. As the airspace is used ever more intensively, it is unsurprising that the Department would update its approach to landing fees in an effort to relieve airport congestion. So long as it complies with the applicable statutes, its creativity should be welcomed on its merits, not spurned for its novelty.
III. Conclusion
For the foregoing reasons, the petition for review is Denied.