Southern Airways Express, LLC v. DOTSouthern Airways Express, LLC v. DOT
Kenneth S. Nankin argued the cause and filed the briefs for petitioner.
Erin D. Hendrixson, Senior Trial Attorney, U.S. Department of Transportation, argued the cause for respondents. With her on the briefs were Robert B. Nicholson and Steven J. Mintz, Attorneys, U.S. Department of Justice, Gregory D. Cote, Acting General Counsel, U.S. Department of Transportation, Charles E. Enloe, Assistant General Counsel, U.S. Department of Transportation, and Peter J. Plocki, Deputy Assistant General Counsel, U.S. Department of Transportation.
Before: HENDERSON and RAO, Circuit Judges, and EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge EDWARDS.
EDWARDS, Senior Circuit Judge: In 1978, Congress passed the Airline Deregulation Act,
This case concerns a challenge to an action taken by the U.S. Department of Transportation (the “Department” or “DOT“) to implement the terms of the EAS program. In 2024, DOT selected SkyWest Airlines, Inc. (“SkyWest“), from among several applicants, to receive a federal subsidy to provide EAS for Morgantown, West Virginia. Order Selecting Air Carrier (“Final Order“), DOT Order 2024-9-18 (Sep. 20, 2024), reprinted in Joint Appendix (“J.A.“) 106-15. Southern Airways Express, LLC (“Southern“) now petitions
In considering the applications from carriers seeking to serve as the Morgantown EAS provider, the Department weighed five statutory factors: (1) the reliability of the applicant; (2) the types of agreements “the applicant has made with a larger air carrier serving the hub airport“; (3) the community‘s preferences; (4) whether the carrier has a marketing proposal; and (5) “the total compensation proposed by the air carrier.”
Following the issuance of DOT‘s Final Order, Southern filed this action, pursuant to
As a threshold matter, we agree with the parties that we have jurisdiction to review Southern‘s petition pursuant to the specific grant of jurisdiction to this court in
On the merits, we are unpersuaded by Southern‘s arguments. The record in this case confirms that DOT made findings of fact with respect to the applicable statutory factors governing the EAS carrier selection process. Those findings are supported by substantial evidence in the administrative record. It is also clear that DOT reasonably weighed the evidence before reaching a judgment in favor of SkyWest to serve as the EAS carrier for Morgantown. In sum, DOT‘s findings and analysis in the Final Order are sufficient for this court to discern its reasoning and comprehend the permissible bases for its selection of SkyWest. We thus have no grounds upon which to overturn DOT‘s action.
Accordingly, for the reasons explained below, we deny Southern‘s petition for review.
A. Essential Air Service Program
As explained above, the EAS program ensures that eligible communities continue to receive a minimum level of scheduled air service even if they do not generate sufficient demand for carriers to cover the cost of servicing these communities. See Mesa Air Grp. v. DOT, 87 F.3d 498, 500 (D.C. Cir. 1996). The EAS program thus authorizes the Department to award federal subsidies to air carriers that are selected to provide essential air service to eligible communities.
EAS subsidies are awarded through a competitive bidding process, which allows the Department to keep subsidy costs in check and to switch carriers, when appropriate. Essential Air Service, U.S. DEP‘T OF TRANSP. (Nov. 4, 2024), https://www.transportation.gov/policy/aviation-policy/small-community-rural-air-service/essential-air-service. When selecting among air carriers that are competing for an EAS subsidy, the Department must weigh, “among other factors,” five statutory factors, as follows:
First, “the demonstrated reliability of the applicant in providing scheduled air service.”
Second, “the contractual, marketing, code-share, or interline arrangements the applicant has made with a larger air carrier serving the hub airport.”
Third, “the preferences of the actual and potential users of air transportation at the eligible place, including the views of the elected officials representing the users.”
Fourth, “whether the air carrier has included a plan in its proposal to market its services to the community.”
And fifth, “the total compensation proposed by the air carrier for providing scheduled air service under this section.”
There is a sixth statutory factor that is not applicable here because it only pertains to eligible places in Alaska.
B. The Morgantown EAS
The facts in this case are largely undisputed. We will recite them as they are presented in the administrative record. See Camp v. Pitts, 411 U.S. 138, 142 (1973) (“[T]he focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court.“).
The Morgantown Municipal Airport is located approximately three miles northeast of Morgantown, West Virginia, and it serves north central West Virginia and the surrounding areas. Southern was scheduled to provide essential air services at Morgantown between November 2016 and October 31, 2024.
Southern‘s application proposed two options, both for service to Dulles International Airport and Pittsburgh International Airport on nine-seat aircrafts. The first option proposed nineteen weekly round-trip flights to Dulles and Pittsburgh and requested approximately $4.4 to $4.8 million in annual subsidies. The second option proposed twenty-six weekly round-trip flights to Dulles and twelve to Pittsburgh; this option requested approximately $4.6 to $5.0 million in annual subsidies. Southern‘s proposal also reflected the reliability of its service, its interline agreements with American Airlines, Alaska Airlines, United Airlines, and Hawaiian Airlines, and its marketing budget and plans.
Boutique Air and Cape Air each proposed service packages that were similar to the proposal offered by Southern, but they requested higher subsidies. Their proposals offered service to Dulles and Pittsburgh on eight- or nine-seat aircrafts as well as interline arrangements with major airlines, including American and United. They each attested to their reliability and detailed marketing plans for the community.
SkyWest‘s proposal, in turn, was significantly different. It offered service to Dulles and Chicago O‘Hare International Airport on 50-seat aircrafts, with a total of 12 round-trip flights per week. SkyWest also touted a codeshare agreement with United Airlines that would allow it to “operate United Express service to the Morgantown community.” SkyWest Airlines’ Essential Air Service Proposal for Morgantown, W.V. (July 5, 2024) (“SkyWest Proposal“), J.A. 96. It attested to the reliability of its service and articulated a marketing strategy in partnership with the community. SkyWest‘s requested subsidy, at approximately $6.0 to $6.9 million per year, was neither the highest nor the lowest among the applicants.
After receiving the proposals from interested carriers, the Department solicited comments from the Morgantown community. Morgantown assembled a committee that reviewed the proposals and recommended selecting SkyWest because the proposed service to Chicago and Dulles would provide the community with greater access to the national transportation system.
On September 10, 2024, Southern submitted comments concerning the Department‘s upcoming selection of an EAS carrier for Morgantown. Southern emphasized that it had proposed the least expensive service option and that the FAA Reauthorization Act of 2024 required the Department to consider the “total compensation proposed” by each carrier. See
On November 15, 2024, Southern petitioned this court for review, pursuant to
II. ANALYSIS
A. This Court Has Jurisdiction to Review Southern‘s Petition
Southern‘s petition for review invokes this court‘s jurisdiction under
(a) . . . [A] person disclosing a substantial interest in an order issued by the Secretary of Transportation . . . in whole or in part under this part [Part A,
49 U.S.C. §§ 40101-6507 ], part B [49 U.S.C. §§ 47101-534 ], or subsection (l) or (r) of section 114 [49 U.S.C. § 114 ] may apply for review of the order by filing a petition for review in the United States Court of Appeals for the District of Columbia Circuit . . .(c) When the petition is sent to the Secretary, . . . the court has exclusive jurisdiction to affirm, amend, modify, or set aside any part of the order and may order the Secretary[] . . . to conduct further proceedings.
The parties in this case were asked to submit supplemental briefs addressing whether this case was properly brought pursuant to
It is telling that the Supreme Court has noted that jurisdiction under the Tucker
Section 46110(a) clearly applies to this case. It explicitly grants this court jurisdiction to review the type of order at issue here. The match between the actions at issue in this case and the language of
Furthermore, this court has consistently held that it has jurisdiction to review cases that fall squarely within the text of
In sum, we agree with the parties that
B. Standard of Review
In reviewing this petition under
This court “must exercise [its] independent judgment in deciding whether an agency has acted within its statutory authority.” Loper Bright Enters. v. Raimondo, 603 U.S. 369, 412 (2024). “But when an agency exercises discretion granted by a statute, judicial review is typically conducted under the Administrative Procedure Act‘s deferential
C. Southern‘s Substantial Evidence and Arbitrary or Capricious Claims Fail
Southern‘s central contention is that the Final Order is arbitrary and capricious under the APA and not supported by substantial evidence under
Section 46110(c) provides that the Department‘s findings of fact are “conclusive” if they are “supported by substantial evidence.”
The Department‘s conclusions may still be arbitrary and capricious under the APA if the agency failed to establish and articulate “a ‘rational connection between the facts found and the choice made.‘” State Farm, 463 U.S. at 43 (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962)). Thus, an agency action “would be arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.” Id. Beyond that, the court‘s only role is “to assure that the agency has given reasoned consideration to all the material facts and issues.” Greater Boston Television Corp. v. FCC, 444 F.2d 841, 851 (D.C. Cir. 1970) (citations omitted).
As noted above,
1.
First, the Department found that “SkyWest has a proven record of providing reliable EAS in markets around the country.” Final Order at 4, J.A. 109. Our review confirms that there is nothing in the record to cast doubt on SkyWest‘s reliability. SkyWest attested to the reliability of its service. SkyWest Proposal at 1, J.A. 96 (explaining that SkyWest‘s aircrafts are “safe and reliable,” that it has “well-timed schedules,” and that it “will provide passengers with quality air service“). And, in the Final Order, the Department noted that SkyWest is subject to the Department‘s continuing requirement that an air carrier be “fit, willing, and able to provide reliable service,” and “no information ha[d] come to the Department‘s attention” that would call SkyWest‘s fitness into question. Final Order at 6, J.A. 111 (citing
Second, the Department found that “SkyWest‘s codeshare agreement with United Airlines will give passengers broad access to the national air transportation system via United‘s extensive domestic and international network.” Final Order at 4, J.A. 109. The administrative record confirms that SkyWest proposed service for the Morgantown community through its codeshare agreement with United Airlines, SkyWest Proposal at 1, J.A. 96, and that SkyWest was the only carrier to offer a codeshare arrangement, Final Order at 3, J.A. 108. Southern does not contest that these findings are supported by the administrative record, and it does not doubt that the findings weigh heavily in favor of the Department‘s selection of SkyWest.
Third, the Department found that the Morgantown community “expressed a preference for SkyWest‘s proposal.” Id. at 4, J.A. 109. The Morgantown community‘s letter of recommendation unambiguously endorsed SkyWest‘s proposal because it offered connections to “two airline hubs [that] will provide the community with greater use of the National Transportation System.” Morgantown Municipal Airport Letter of Recommendation for EAS (Aug. 5, 2024), J.A. 98. Southern does not dispute the Morgantown community‘s clear preference for SkyWest, nor does it challenge the conclusion that this factor strongly weighs in favor of SkyWest‘s proposal.
Fourth, the Department found that “SkyWest included a plan to market its services within the community.” Final Order at 4, J.A. 109. SkyWest‘s proposal clearly states that it “will actively partner with the community to market the service with a variety of promotions including print, digital, radio and online.” SkyWest Proposal at 1, J.A. 96. Southern nonetheless contests the sufficiency of the Department‘s finding. Southern argues that the Department “provides no analysis as to SkyWest‘s marketing plan,” including whether it is a “good plan,” or how it compares to other proposed marketing plans. Pet‘r‘s Br. 13. But the statute does not require this. Rather, the statute only
Fifth, addressing the total compensation factor, the Department found that “SkyWest‘s subsidy request f[ell] within the competitive range of options” and was “reasonable.” Final Order at 4, J.A. 109. Southern again contests the sufficiency of DOT‘s analysis, doubting the reasonableness of the Department‘s selection of a “proposal costing almost one-third more than Southern‘s lowest-cost proposal.” Pet‘r‘s Br. 14. Southern‘s challenge is misguided. The statute only requires that DOT consider “the total compensation proposed by the air carrier for providing scheduled air service under this section.”
In sum, the Department‘s findings for each
2. The Department‘s Selection of SkyWest Is Reasonable and Reasonably Explained
Separate from the consideration of the individual statutory factors, Southern also claims that the Department‘s selection of SkyWest is, on the whole, arbitrary and capricious because the Department failed to explain how the statutory factors weighed and balanced in favor of SkyWest. In particular, Southern alleges that DOT‘s reliance on a “vague ‘totality of the circumstances‘” explanation is “legally inadequate” because all the Department did was “recite[] the factors and then combine[] them in an unexplained manner to arrive at its conclusion.” Pet‘r‘s Br. 16 (citations omitted). We disagree.
Under the deferential arbitrary and capricious standard, “[w]e will . . . uphold a decision of less than ideal clarity” as long as “the agency‘s path may reasonably be discerned.” State Farm, 463 U.S. at 43 (internal quotation marks and citation omitted). In this case, we can easily understand the Department‘s eminently reasonable bases for selecting SkyWest. The Department stated that it “consider[ed] the circumstances as a whole,” as it was statutorily required to do, see
To the extent that Southern also disputes the substantive reasonableness of the Department‘s selection of SkyWest, its claims are unfounded. As discussed above, the only role for the court is to “assurance that the agency has given reasoned consideration to all the material facts and issues.” Greater Boston Television Corp., 444 F.2d at 851 (citations omitted). The Department made findings of fact establishing that SkyWest satisfied each statutory factor and then offered a brief explanation in support of its selection of SkyWest. That is sufficient to assure the court that the Department engaged in the required “reasoned consideration.” Accordingly, we find that the Final Order is “reasonable and reasonably explained,” Seven Cnty., 605 U.S. at 180 (citations omitted), and, thus, not arbitrary or capricious.
D. The Department Did Not Exceed Its Statutory Authority
Finally, Southern claims that the Department exceeded its statutory authority by failing to consider the factors enumerated in the statute. See
Southern concedes that “when a statute requires agencies to consider particular factors, it imposes upon agencies duties that are essentially procedural. The only role for a court is to [e]nsure that the agency has considered the factor.” Getty v. Fed. Sav. & Loan Ins. Corp., 805 F.2d 1050, 1055 (D.C. Cir. 1986) (cleaned up). However, Southern urges that “[s]tating that a factor was considered[] . . . is not a substitute for considering it.” Pet‘r‘s Br. 12 (quoting Getty, 805 F.2d at 1055). This is a hollow claim in light of the record in this case.
As discussed in the preceding sections, the Department made findings of fact with respect to each statutory factor and explained why SkyWest prevailed when all of the factors were weighed. Southern attempts to analogize the Department‘s treatment of the statutory factors here to the impermissibly cursory treatment the agency gave in Getty. In Getty, the agency attested to the fact that it had considered a required statutory factor, but it only offered a “boilerplate recitation” of the factor itself. 805 F.2d at 1055. In short, there was “no evidence that [the agency] paid any attention” to the factor. Id. at 1056. That is not what happened in this case.
In this case, the Department‘s analysis is clear, and it shows that all of the carriers that applied to serve as the EAS carrier for Morgantown were given full and fair consideration with respect to the applicable statutory factors and as against each other. It was not necessary for the Final Order to be lengthy to convey the Department‘s meaning on each point and to show that the Department‘s judgments were supported and reasonable. See M2Z Networks, Inc. v. FCC, 558 F.3d 554, 560 (D.C. Cir. 2009) (“Though not lengthy, the Commission‘s order in this case was neither a boilerplate recitation of
III. CONCLUSION
For the foregoing reasons, we deny Southern‘s petition for review.
So ordered.