127 F.4th 563
5th Cir.2025Background
- In 2024, the U.S. Department of Transportation (DOT) issued a rule requiring airlines to disclose certain ancillary fees (e.g., checked bags, cancellations) upfront during airfare searches, citing authority under 49 U.S.C. § 41712(a).
- Two groups of airlines challenged the rule, arguing that DOT lacked statutory authority and that the rule violated the Administrative Procedure Act (APA) and potentially the First Amendment.
- The DOT’s rule was intended to enhance transparency, enabling consumers to better compare true travel costs.
- During rulemaking, DOT relied on new data (the Rupp study) to justify the rule's consumer benefits, but this data was not available or open to comment during the notice period.
- The Fifth Circuit consolidated the challenges, considered the legality of DOT's authority, and stayed implementation of the rule while the case was pending.
- The court remanded the rule to DOT for further proceedings due to APA procedural failings, specifically the lack of public comment on the key data relied upon.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| DOT's statutory authority under § 41712 | DOT has only adjudicatory, not rulemaking, authority; “stop” means only after individualized findings | DOT can issue prescriptive regulations under § 41712 and has done so historically | DOT has rulemaking authority under § 41712 |
| Major questions/nondelegation doctrine | Rule presents a major question and is an unconstitutional delegation | DOT's authority is neither novel nor vast; historically consistent | No violation; authority is within intelligible principle |
| Consistency with Airline Deregulation Act | Rule is a rate-filing requirement, contrary to deregulatory intent | Rule is a disclosure, not rate-filing, requirement; Dereg Act retained unfairness authority | Rule is disclosure, not preempted by Act |
| APA procedural compliance (notice and comment) | DOT used new, critical data not available for comment, violating APA | New data merely supplemented record; no prejudice | DOT failed to allow comment on new data; remand required |
Key Cases Cited
- Morales v. Trans World Airlines, Inc., 504 U.S. 374 (scope of federal authority post-deregulation)
- Nw., Inc. v. Ginsberg, 572 U.S. 273 (interpretation of federal aviation regulation and Deregulation Act)
- American Hospital Ass’n v. NLRB, 499 U.S. 606 (agency may resolve general issues via rulemaking)
- Lopez v. Davis, 531 U.S. 230 (agency discretionary rulemaking even for individualized statutory schemes)
- Whitman v. Am. Trucking Ass’ns, 531 U.S. 457 (nondelegation doctrine—intelligible principle standard)
- Statland v. American Airlines, Inc., 998 F.2d 539 (agency rulemaking in post-deregulation context)
- United Air Lines v. Civil Aeronautics Board, 766 F.2d 1107 (historical practice of rulemaking under predecessor)
- Gundy v. United States, 588 U.S. 128 (broad congressional delegations are permitted with guidance)