Opinion for the Court filed by Senior Circuit Judge STEPHEN F. WILLIAMS.
For the third time, we must review the lawfulness of a Federal Aviation Administration regulation establishing fees for air traffic control services for “overflights”— flights by planes that go across some part of the United States but do not take off or land there. For the third time, we find that the FAA disregarded its statutory mandate.
In 1996 Congress directed the FAA to set and collect fees for the provision of air traffic control services for “overflights.” 49 U.S.C. § 45301(a); see also § 273 of the Federal Aviation Reauthorization Act, Pub.L. 104-264. “Services for which costs may be recоvered include the costs of air traffic control, navigation, weather services, training and emergency services ... and other services provided by the [FAA] or by programs financed by the [FAA].” Id. § 45301(b)(1)(B). In the form originally enacted (and applicable when the agency promulgated thе rules at issue here), it said that the fees must be “directly related to the Administration’s costs of providing the service rendered.” Id.
The FAA published its first interim final rule establishing fees in 1997, but we found that its methodology did not yield fees “directly related to ... the costs.” Asiana Airlines v. FAA,
In August 2001 the FAA re-promulgated the overflight rule in largely the same form as before. Fees for FAA Services for Certain Flights, 66 Fed.Reg. 43,680 (2001) (the “Final'Rule”). Most importantly for this case, the agency retained the assumption that it incurred virtually identical per-mile costs in servicing overflights аnd non-overflights in the so-called Enroute and Oceanic airspaces. During the notice and comment period, petitioners reiterated their prior objections that labor costs incurred in providing traffic control services for overflights were substantially lower than for non-overflights, and submitted supporting declarations by two air traffic control experts. These experts most crucially contended that (1) traffic controller costs are not “fixed,” because the FAA varies the number of controllers on duty “depending on the volume of aircraft оperating within the particular geographical area or sector”; (2) flights in the “High-Altitude” sector (18,000 feet and above)
In response, the agency provided four arguments:
(1) The agency incurs the “vast majority of costs by making its comprehensive [air traffic control] system available to all flights (regardless of the type of aircraft ...);”
(2) “[T]he FAA’s marginal cost, including labor cost, for providing services to any flight is close to zero”;
(3) “[T]he majority of FAA’s costs аre common and fixed costs”; and
(4) “[T]he controllers’ responsibilities for Overflights are not fundamentally any different than for non-Overflights.”
Final Rule, 66 Fed.Reg. at 43,685/1. In support of these positions, the agency cited a new report by the economic consulting firm of Capital Economics; but thе report failed to confront the challengers’ claims with evidence more specific, or with an analysis more compelling, than those of the agency’s comments cited above.
On October 11, 2001 the petitioners filed in this court for review of the Final Rule. On November 19, 2001 Congress adopted a statute with language amending § 45301’s standards for computing the overflight fee and limiting jurisdiction for judicial review. See § 119(d) of the Aviation and Transportation Security Act of 2001 (the “2001 Act”), Pub.L. 107-71. We save discussion of those provisions for later, but note in the meantime that the 2001 Act also included a savings clause, § 141(d), saying,
This Act shall not affect suits commenced before the date of the enactment of this Act [with certain irrelevant exceptions]. In all such suits, proceedings shall be had, appeals taken, and judgments rendered in the same manner and with the same effect as if this Act had not been enacted.
Pub.L. 107-71, § 141(d).
As a result of the 2001 Act, FAA requested and received from this court a remand in this case to determine the extent to which the statutory amendments might require a modification of the Final Rule. The FAA received public comments but then terminated thе remand proceeding in June 2002, deciding that § 119 “merely clarifies and amplifies congressional intent so as to provide further validation” of the Final Rule, so that no new rulemaking was required. 67 Fed.Reg. 42462, 42464/1 (2002). Thus, the appeal resumed.
The FAA argues at the outset that § 119 of the 2001 Act deprives us of jurisdiсtion over the key issue of this case — the FAA’s cost-allocation judgment. Section 119(d)(3) modifies § 45301(b)(1)(B) by adding at the end the following sentence: “The Determination of such costs by the Administrator is not subject to judicial review.” Pub.L. 107-71, § 119(d)(3).
We pretermit the parties’ competing interpretations of just what “cost” determinations § 119(d)(3) screens from judicial review. The language of the savings clause quoted above clearly and explicitly bars the application of § 119(d)(3) to this suit — which indubitably “commenced before the date of enactment” of § 119. We note that the savings provision contains two explicit exceptions, but it is plain — and the FAA does not argue to the contrary— that neither has any relation to this case.
Thus, we reach the merits. We have summarized above the assertions of petitioners’ experts, which make a substantial case refuting the agency’s unexplicated insistence that miles of overflights and non-overflights in the Enroute and Oceanic airspaces are apрroximately equivalent in their per-mile generation of costs. In response the agency offers what amount to little more than conclusory denials.
Although consideration of the agency’s specific arguments may seem like flogging a dead horse, we proceed with thе exercise so that it may be assured that we have scrutinized its arguments. It said in the rulemaking, for example, that the controllers’ responsibilities in servicing overflights are not “fundamentally any different” from those involved in servicing non-overflights. Final Rule, 66 Fed.Reg. at 43,685/1. But there was never any contention by petitioners that the work differed in some inherent quality. The fact that the type of labor does not vary with flight altitude tells us little about the quantity of labor required to service the different altitude sectors. Petitioners’ experts say without contradiction not only that more air traffic controllers are needed on a per-mile basis to monitor and communicate with low-altitude aircraft than with high-altitude aircraft, but that it would be simple for the agency to calculate how many more, because the FAA treats high- and low-altitude control as different shifts. Beaudoin Declaration, J.A. 251-52. Each individual controller may service both altitude sectors over the course of his career, and maybe even over the course of the day, but no controller services both types of flights at the same time. Or so say petitioners’ experts, without contradiction. Thus, assuming the truth of petitioners’ other largely uncontradicted claim — that overflights are overwhelmingly at altitudes above 18,000 feet — the agency need only count the number of shifts devoted to high-altitude flights to calculate the range within which overflights are generating costs.
The agency also insists that the benefits of the air traffic control system are somehow indivisible, so that throughout an aircraft’s time in U.S. airspace it benefits from “the entire [air traffic control] infrastructure and full scope of services ..., regardlеss of the type of flight, user, or aircraft.” Appellee’s Br. at 44-45. We may assume that planes at low altitudes benefit from services that keep high-altitude planes on course, and even the converse. But that in no way contradicts petitioners’ evidence that the costs оf keeping planes on course vary markedly as between the high and low altitudes.
Nor does the agency fare better with its conclusions that “the FAA’s marginal cost, including labor cost, for providing services to any flight is close to zero,” and, in what amounts to the same thing, “the majority of FAA’s costs are common and fixed.” Final Rule, 66 Fed.Reg. at 43,685/1. These conclusions are based largely upon one section of the Capital Economics report, in which it explains that air traffic controllers are paid the same amount no matter whether they service overflights or non-overflights; all controllers receive the same training; radar and navigation equipment are common and fixed costs; and telecommunications capabilities are common and fixed costs. Final Rule,
The agency attempts to remedy this deficiency by arguing that because the FAA “has a set number of controllers to рrovide ... services nationwide ..., [and t]hese numbers do not change daily to manage an additional Overflight, or a non-Overflight,” Final Rule, 66 Fed.Reg. at 43,709/3, fixed and common costs dominate; thus any difference in the marginal cost of servicing an additional overflight as opposed to an additiоnal non-overflight is immaterial, id. at 43,709/3-710/1. But the lumpiness of costs, which is what the FAA points to here, is quite separate from the notion that costs do not systematically diverge as between the two services. Petitioners are not advocating that the FAA should somehow compute either thе incremental or the marginal cost of servicing each overflight. On that subject, the FAA’s observation that “the metering costs of identifying ... differences in marginal costs would be substantial,” id. at 43,709/3, is both pertinent and uncontradicted by petitioners. But it has no bearing on petitioners’ actual clаim: that overflights occur almost exclusively in the high-altitude range, for which the FAA makes assignments of controllers separate from assignments for the low-altitude, and that per-mile servicing costs are systematically lower in the high-altitude range.
The agency finally turns to the substantive provisiоns of the 2001 Act. Where the statute previously required that the fees be “directly related to the ... costs,” 49 U.S.C. § 45301(b)(1)(B), the 2001 Act changed it to read “reasonably related to the ... costs.” 2001 Act, § 119(d)(1). Of course as we have noted the Act’s savings clause prevents it from having any direct effect in this case, but the agency resourcefully suggests that even then the new language merely “clarifies” the old, pointing to the legislative history (quoted above) that in fact suggests such a pur
Finding the Final Rule “not in accordance with law,” 5 U.S.C. § 706(2)(A), we set it aside and order the case remanded, id. § 706(2).
So ordered.