AIR TRANSPORT ASSOCIATION OF AMERICA, INC., DOING BUSINESS AS AIRLINES FOR AMERICA AND INTERNATIONAL AIR TRANSPORT ASSOCIATION v. UNITED STATES DEPARTMENT OF AGRICULTURE, ET AL.
No. 21-5118
United States Court of Appeals, FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 17, 2022 Decided June 21, 2022
Appeal from the United States District Court for the District of Columbia (No. 1:16-cv-00919)
Anton Metlitsky argued the cause for appellants. With him on the briefs were Benjamin G. Bradshaw, Bradley N. Garcia, and Anna O. Mohan.
Leif Overvold, Attorney, U.S. Department of Justice, argued the cause for appellees. With him on the brief were Brian M. Boynton, Acting Assistant Attorney General, and Abby C. Wright, Attorney.
Before: TATEL* and PILLARD, Circuit Judges; and SENTELLE, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge SENTELLE.
I. Background
The Animal and Plant Health Inspection Service (“APHIS“) is a federal agency, housed within the Department of Agriculture, responsible for administering the Agricultural Quarantine and Inspection Program (“Inspection Program“). Whenever an international air, rail, truck, or maritime shipment arrives at a United States port, APHIS may inspect the shipment, vessel, and any passengers for foreign animal and plant materials, pests, and diseases.
Originally, the Inspection Program was funded exclusively through congressional appropriations, but in 1990, Congress enacted the Food, Agricultural, Conservation, and Trade Act (“FACT Act“) of 1990.
When first enacted, the FACT Act authorized the Secretary of Agriculture to collect user fees for only one purpose: “to cover the cost of providing agricultural quarantine and inspection services . . . .”
In setting these fees, APHIS must “ensure that the amount of the fees is commensurate with the costs of agricultural quarantine and inspection services with respect to the class of persons or entities paying the fees.”
Between 2007 and 2012, APHIS received criticism from the Inspectors General of the Departments of Homeland Security and Agriculture as well as the Government Accountability Office that APHIS was not providing proper justification for its fees. In response to this criticism, APHIS retained Grant Thornton LLP, an audit, tax, and advisory firm, to develop a model to better align fees with costs.
In a 2012 Report, Grant Thornton proposed new fee levels for the various Inspection Program user classes. After publishing a proposed rule in 2014, APHIS adopted its final rule in 2015 increasing the Commercial Aircraft User Fee to $225 for commercial flights and reducing the Commercial Air Pаssenger Fee from $5 to $3.96. Notably, these fees were calculated in a way to fund not only the costs of the inspections, but also a reserve balance. In the Final Rule, eight user classes were exempted from paying any inspection fees at all.
On May 13, 2016, the Air Transport Association of America, Inc. and International Air Transport Association (“Appellants“), two air carrier trade associations, filed suit against the Department of Agriculture and its Secretary, APHIS and its administrator, the Department of Homeland Security and its Secretary, and Customs and Border Protection and its Commissioner (collectively referred to as “Appellees” or “APHIS“) in the district court contesting the Final Rule under both the FACT Act and the Administrative Procedure Act. In Count I, Appellants asserted that APHIS exceeded its Authority under the Act and the APA by charging both a per-passenger and a per-aircraft fee to fund inspections of a single aircraft. In Count II, Appellants alleged that the Final Rule violated the FACT Act by imposing incommensurately high fees—the surplus from which allegedly cross-subsidized non-fee-paying exempt user class inspections—and violatеd the APA by failing to explain how the $225 Commercial Aircraft User Fee was “commensurate” with inspection costs, or necessary at all given the Commercial Air Passenger Fee. In Count III, Appellants alleged that the Final Rule‘s imposition of a reserve surcharge exceeded the authority granted to the Secretary because the
APHIS responded, asserting, among other things, that despite the time limitation in
On remand, APHIS issued a final interpretive rule insisting that even if it no longer had the authority to collect a reserve surcharge under
We have jurisdiction over this appeal under
II. Analysis
Appellants contest four aspects of the Final Rule: (1) that the collection of a reserve surcharge violates the FACT Act; (2) that the Final Rule violates the FACT Act‘s prohibition on cross-subsidization; (3) that the Final Rule violates the FACT Act and the APA by charging both a per-passenger and a per-aircraft fee on one aircraft; and (4) that APHIS violated the APA by withholding certain information during the rulemaking process.
A. The Reserve Surcharge
In its 1996 amendments to the FACT Act, Congress clarified when APHIS is permitted to collect user fees: (A) “to cover the cost of providing agricultural quarantine and inspection services“; (B) “to cover the cost of administering this subsection“; and (C) “through fiscal year 2002, to maintain a reasonable balance in the Agricultural Quarantine Inspection User Fee Account . . . .”
Appellants’ argument raises a question of statutory interpretation. We review an agency‘s interpretation of a statute using the familiar Chevron framework. Chevron, U.S.A., Inc. v. Natural Def. Council, Inc., 467 U.S. 837, 843-44 (1984). In Step One of the Chevron analysis, we аpply ordinary tools of statutory construction to determine “whether Congress has directly spoken to the precise question at issue.” Merck & Co., Inc. v. United States Dep‘t of Health & Human Servs., 962 F.3d 531, 535 (D.C. Cir. 2020) (citation omitted). Should we conclude that the statute does speak to the matter at hand, our analysis ends there. However, if the statute is ambiguous, we defer to an agency‘s interpretation of the statute so long as it is reasonable. Id. at 536.
In this case, the question at issue is whether the FACT Act authorizes APHIS to collect a reserve surcharge after fiscal year 2002. Appellants offer that Congress spoke to this issue in
APHIS contends that the authority to continue collecting a reserve fee after 2002 exists in subparagraphs
Per APHIS‘s reading of the statute, its authority to collect a fee to fund a reserve in its account is included in the authority to collect fees covering the cost of providing services,
APHIS‘s argument that subparagraph
Congress spoke to the question of whether APHIS could collect fees to fund a reserve in subparagraph
Appellants’ reading of the statute is further supported by the FACT Act‘s revision history. When originally enacted, the authority to collect fees to maintain a reasonable balance in the User Fee Account did not include the “through fiscal year 2002” limitation.
Congress has directly addressed the question of whether APHIS may continue to collect fees to fund a reserve after fiscal year 2002. They may not do so. We will remand this case to the district court for vacating insofar as the Final Rule authorizes collecting fees to maintain a reserve account. Appellants’ other arguments do not fare so well.
B. The Aircraft Fees
Under the Final Rule, it is possible for inspections of a single aircraft to be funded by two different fees. The Commercial Aircraft User Fee is charged to all arriving international commercial aircraft with more than 64 seats. The Commercial Air Passenger Fee is charged to passengers arriving on international commercial aircraft. Commercial aircraft are subject to the Commercial Aircraft User Fee regardless of whether a particular flight is carrying cargo.
Appellants contend that charging both fees to the same arriving aircraft violates the FACT Act‘s requirement that APHIS “ensure that the amount of [Inspection Program] fees is commensurate with the costs of agricultural quarantine and inspection services with respect to the class of persons or entities paying the fees,”
1. The Costs of “Related” Inspections
Section
Our review of agency statutory interpretation, like the reserve fee issue above, is governed by the Chevron framework. First, we look to whether Congress has directly addressed the question at issue in the statute. If it has not, we defer to an agency‘s interpretation of the statute so long as it is reasonable. Chevron, U.S.A., Inc. v. Natural Def. Council, Inc., 467 U.S. 837, 843-44 (1984).
Appellants contend that Congress has spoken precisely to the issue of whether a single aircraft may be subject to both fees in the statute and that the analysis should conclude at Chevron Step One. We agree that the analysis concludes at Chevron Step One, but we disagree with Appellants’ ultimate conclusion.
The construction of this statute hinges on the word “related” in
As above, we “construe a statute so as to give effect to ‘every clause and word.‘” Amoco Production Co. v. Watson, 410 F.3d 722, 733 (D.C. Cir. 2005) (quoting United States v. Menasche, 348 U.S. 528, 538-39 (1955)). We will not interpret a statute to be read the same way regardless of whether a substantive term is included in the reading. In this statute, “related” performs an important narrowing function. “Related” is defined as “[c]onnected by reason of an established or discoverable relation,” Related, def. 1, Merriam-Webster‘s Unabridged Dictionary (2022), and “[c]onnected in some way; having relationship to or with something else,” Related, Black‘s Law Dictionary (11th ed. 2019).
The inclusion of “related” in the statute clearly limits which inspections commercial air passengers are responsible for funding. This statute does not say that they are responsible for the costs of the inspection of the entire aircraft; they are responsible for the costs of inspections related to themselves and their presence on the aircraft. This is further supported by the use of the plural “inspections” in the statute.
2. The Application of Both Fees and the APA
Appellants further contend that the imposition of a Commercial Aircraft User Fee on aircraft with passengers paying a Commercial Air Passenger Fee is arbitrary and capricious because the Grant Thornton analysis did not support the imposition of both fees and APHIS failed to explain why it deviated from this recommendation. We will hold an agency action unlawful and set it aside when it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
a. The Grant Thornton Analysis
According to Appellants, APHIS acted arbitrarily and capriciously because the reports prepared by Grant Thornton, which were relied upon in establishing the Final Rule, assumed that individual aircraft would be assessed only the Commercial Air Passenger Fee if they carried passengers, and APHIS neither acknowledged this nor explained why it rejected this assumption in the Final Rule. However, no explanation was necessary because Appellants misconstrue the Grant Thornton reports. Appellants’ argument emphasizes statements throughout the Grant Thornton reports that appear to indicate that the Commercial Air Passenger Fee would cover the cost of inspecting the entirety of the aircraft. JA 510; JA 373-74; JA 356. However, as argued by APHIS and found by the district court, these statements and distinctions do not tell the entire story. Grant Thornton‘s calculations of fee amounts clearly presume that APHIS will continue funding inspections of arriving aircraft by charging both the Commercial Aircraft User Fee and the Commercial Air Passenger Fee. APHIS relied on this methodology when prоmulgating the Final Rule.
The Final Rule bears this out. In both the Grant Thornton documentation and the Final Rule, the Commercial Aircraft User Fee was calculated by dividing the total costs of inspecting Commercial Aircraft by the total number of Commercial Aircraft (cargo-only and aircraft with passengers). See JA 471-72 (Grant Thornton Model Documentation stating that there were 139,798 cargo-only aircraft and 517,629 commercial aircraft in Fiscal Year 2010 totaling 657,427 total aircraft); JA 244 (Final Rule listing costs and calculating the Commercial Aircraft User Fee based on 657,427 aircraft in Fiscal Yeаr 2010). Had Grant Thornton included only the 139,798 cargo-only aircraft in its calculation of the Commercial Aircraft User Fee, its proposed fee would have been hundreds of dollars higher than the $225 fee it did propose.
All of Appellants’ arguments regarding the dual application of the Commercial Aircraft User Fee and the Commercial Air Passenger Fee fail.
C. Cross-subsidization
Appellants further argue that the Final Rule violates the FACT Act by permitting
Appellants’ ground their cross-subsidization arguments in the FACT Act‘s “commensurate” requirement. Per the FACT Act, APHIS must “ensure that the amount of the fees is commensurate with the costs of agricultural quarantine and inspection services with respect to the class of persons or entities paying the fees.”
There are eight user classes of the Inspection Program that are exempt from paying any fees at all. These are private vehicles, pedestrians, buses, private vessels, private aircraft, military inspections, rail passengers, and passenger aircraft with 64 or fewer seats. While all are subject to the same inspections as other Inspection Program users, they are not required to pay for the service. APHIS offers that the inspections for these exempted user classes are funded through congressional appropriations.
Appellants have two overarching arguments about that form of alleged cross-subsidization. First, Appellants aver that any reliance on appropriations violates Congress‘s intent that the Inspection Program be self-funded through user fees rather than through appropriations. Second, they argue that the record does not support that any supposed appropriations cover the costs of the inspections for exempted user classes. But these arguments rely on a distorted interpretation of the FACT Act and cannot succeed.
Appellants argue that the use of appropriations to fund inspections of the exempt user classes is contrary to the FACT Act because it prohibits the use of appropriations to fund the Inspection Program. This is not the case. There is no language in the Act that prohibits APHIS from funding parts of the Inspection Program via appropriations. The FACT Act providеs that APHIS “may prescribe and collect fees . . . .”
Further, the record demonstrates that no such cross-subsidization is occurring. According to the record before us, the cost of providing inspection services to the exempted user classes makes up approximately 24% of all Inspection Program costs. Appellant Opening Br. 47 (citing JA 17-18, 237). Per APHIS‘s Regulatory Impact & Final Regulatory Flexibility Analysis, apprоpriations were expected to cover up to 30% of total inspection costs. JA 149.
Appellants’ argument that APHIS may not comingle funds collected from various user classes into a single account fails as well. The statute does not include any prohibition on funds collected from one user class being used to fund inspections of another fee-paying user class. The section containing the “commensurate” language is a limitation on how much can be collected in fees from a particular user class. It is not a limitation on how those fees may be spent. Therefore, Appellants’ argument that fees collected from multiple user classes cannot be comingled in a fund that pays for the inspections of fee-paying user classes fails because the FACT Act does not prohibit this form of cross-subsidization. The district court reached this same conclusion. Air Transp., 303 F. Supp. 3d at 53-54.
D. The Withheld Information
Appellants’ final argument is that APHIS violated the APA by relying on unreleased informatiоn. Specifically, Appellants contend that APHIS violated the APA by withholding underlying Grant Thornton fee model documentation that was central to its analysis and the Final Rule.
The APA requires that “interested persons” have “an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation.”
Appellants contend that they were denied a meaningful chance to comment on the rulemaking because APHIS did not release the underlying Grant Thornton fee model documentation, JA 304-496, and cost output data, AR 656-69780, before promulgating the Final Rule. According to Appellants, this additional information would have further supported their position that Grant Thornton did include the costs of inspecting the entire aircraft in its calculation of the Commercial Air Passenger Fee, which we held not to be the case above.
In this case, after receiving the withheld information, Aрpellants have provided no arguments substantively different from their original arguments. Appellants argue that they would have been able to further support their arguments that APHIS violated the APA in the Final Rule by applying the Commercial Aircraft User Fee and the Commercial Air Passenger fee to arriving passenger aircraft. But Appellants point to the information that they were
Appellants have not shown a harm from the withholding of this data. Therefore, the failure to release the requested data prior to the promulgation of the Final Rule did not violate the APA.
III. Conclusion
For the reasons stated above, we affirm the district court‘s judgment in part, reverse it insofar as the challenged rule authorizes collecting fees to fund a reserve after 2002, and remand for proceedings consistent with this opinion.