Southwest Airlines Co. v. Transportation Security Administration

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 6, 2008 Decided February 3, 2009

Reissued April 10, 2009

No. 07-1279

SOUTHWEST AIRLINES CO.,

PETITIONER

v.

TRANSPORTATION SECURITY ADMINISTRATION,

RESPONDENT

Consolidated with 07-1280, 07-1281, 07-1282, 07-1283, 07-

1284, 07-1285, 07-1286, 07-1287, 07-1288, 07-1289, 07-

1290, 07-1291, 07-1292, 07-1293, 07-1294, 07-1296, 07-

1297, 07-1298, 07-1323, 07-1338, 07-1347

On Petitions for Review of a Final Order of the Transportation

Security Administration

M. Roy Goldberg argued the cause for petitioners. With

him on the joint briefs were Robert W. Kneisley, Carl B.

Nelson Jr., Bruce H. Rabinovitz, Neil J. King, Jonathan B.

Hill, David J.A. Hayes III, Robert E. Cohn, Patrick F.

Philbin, Gregory L. Skidmore, Charles F. Donley, Edward W.

Sauer, Lorraine B. Halloway, Charles C. Lemley, Thomas M.

Messner, Lester M. Bridgeman, Richard D. Mathias, and

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David Endersbee. Michael D. Shumsky entered an

appearance.

Jay P. Lefkowitz, Patrick F. Philbin, and Gregory L.

Skidmore were on the briefs for petitioner Northwest Airlines.

Carl B. Nelson Jr. was on the briefs for petitioner

American Airlines, Inc.

Charles C. Lemley and Thomas M. Messner were on the

briefs for petitioner Spirit Airlines, Inc.

David A. Berg, Michael S. Sundermyer, and Richard A.

Olderman were on the brief for amicus curiae Air Transport

Association of America in support of petitioners and seeking

reversal.

Jeffrey Clair, Attorney, U.S. Department of Justice,

argued the cause for respondent. With him on the brief were

Jeffrey S. Bucholtz, Acting Assistant Attorney General, and

Scott R. McIntosh, Attorney.

Before: GARLAND and BROWN, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS.

WILLIAMS, Senior Circuit Judge: Before the terrorist

attacks of September 11, 2001, commercial airlines exercised

responsibility for screening passengers and property at U.S.

airports. Shortly after the attacks, Congress passed the

Aviation and Transportation Security Act (“ATSA”), Pub. L.

No. 107-71, 115 Stat. 625 (2001), establishing the

Transportation Security Administration (“TSA”) and

entrusting it with the primary responsibility for civil aviation

security. 49 U.S.C. § 114. We deal here with several airlines’

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arguments that TSA has erroneously overcharged them for

their statutory portion of these security costs.

The ATSA authorizes TSA to impose two types of fees to

fund its security services. The first, which is not at issue here,

is a fee on airline passengers. 49 U.S.C. § 44940(a)(1). The

second type of fee—referred to as the Aviation and Security

Infrastructure Fee (“ASIF”), 49 C.F.R. § 1511.1(b)—is

imposed directly on airlines. It is meant to plug the gap

between the costs of TSA’s civil aviation security services and

the sums raised by the passenger fee, but it is subject to two

important limits. 49 U.S.C. § 44940(a)(2)(A). Petitioners—a

group of 22 airlines—are claiming that TSA improperly

subjected them to approximately $98 million a year in

increased ASIF liabilities.

ATSA’s two limits on fees are its “overall” and its “per-

carrier” limits. Under the overall limit, the fees in each fiscal

year “may not exceed, in the aggregate, the amounts paid in

calendar year 2000 by carriers . . . for screening passengers

and property, as determined by the Under Secretary.” 49

U.S.C. § 44940(a)(2)(B)(i). Under the per-carrier limit, the

fees collected from a carrier for fiscal years 2002, 2003 and

2004 “may not exceed the amount paid in calendar year 2000

by that carrier for screening passengers and property, as

determined by the Under Secretary.” 49 U.S.C.

§ 44940(a)(2)(B)(ii) (emphasis added). Starting with fiscal

year 2005, the act allows the Under Secretary to determine the

per-carrier limit “on the basis of market share or any other

appropriate measure in lieu of actual screening costs in

calendar year 2000.” 49 U.S.C. § 44940(a)(2)(B)(iii).

In its implementing regulations, TSA required every

covered carrier to submit a form—referred to as “Appendix

A”—detailing its passenger and screening costs for the year

2000. 49 C.F.R. § 1511.5(d). It also required carriers to

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provide an audit of their reported costs. Id. § 1511.9. For the

years 2002-2004, TSA generally set each carrier’s annual fee

at the level of costs listed in the carrier’s Appendix A.

In 2004, with the Department of Homeland Security

Appropriations Act, Pub. L. No. 108-334, 118 Stat. 1298

(2004) (the “2004 DHS Appropriations Act”), Congress

intervened to make sure that TSA was collecting its full

entitlement under ATSA. It directed the Government

Accountability Office (“GAO”) to review the airlines’ cost

information for the year 2000. And it stated that, beginning

with amounts due in the year 2005, if “the result of this review

is that an air carrier or foreign air carrier has not paid the

appropriate fee to the Transportation Security

Administration . . . , the Secretary of Homeland Security shall

undertake all necessary actions to ensure that such amounts

are collected.” Id.

The GAO’s report concluded that the airlines had

collectively under-reported their security screening costs in

the year 2000 by an estimated $129 million. United States

Government Accountability Office, Aviation Fees: Review of

Air Carriers’ Year 2000 Passenger and Property Screening

Costs 7 (2005).

Relying in part on the GAO’s analysis, TSA determined

that each of petitioners had under-reported its year 2000

screening costs. It began by calculating the industry’s average

cost per passenger screened. It then compared that average

with each airline’s reported cost per passenger screened. For

those airlines whose reported costs were at or above the

industry average, it assessed no additional liability. It also

gave a pass to airlines whose reported costs were below the

industry average, but that had presented an adequate audit of

their reporting costs.

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When TSA determined—as it did for all of the

petitioners—that an airline reported below-average costs and

did not provide an adequate audit, TSA presumed that its

screening costs per passenger in the year 2000 were equal to

the industry average. It then calculated the airline’s total

screening costs for 2000 by multiplying the industry average

by the number of passengers that airline screened in 2000.

Finally it estimated each airline’s additional ASIF liability by

subtracting its reported year 2000 costs from the new figure.

TSA’s director of revenue sent each petitioner a letter

describing this method and advising the petitioner of its

additional liability. Petitioners appealed to TSA, which

upheld the initial decisions in all relevant respects.

In their joint brief, petitioners challenge TSA’s final

decisions, claiming that they reflected substantive statutory

violations, were arbitrary and capricious, and were flawed

procedurally. We find merit in the attack on TSA’s

understanding of the ATSA’s “overall” limit, but not in the

other objections.

In addition, three of the petitioners advance individual

claims, one of which (that of Spirit Airlines (“Spirit”))

prevails.

* * *

Before reaching the merits, we need to address the effect

of two ATSA provisions for jurisdiction-stripping. The

original ATSA provided that “[d]eterminations of the Under

Secretary under this subparagraph [i.e., 49 U.S.C.

§ 44940(a)(2)(B), stating the limitations on air carrier fees]

are not subject to judicial review.” Pub. L. No. 107-71, 115

Stat. 597, 625 (2001). In the Consolidated Appropriations

Act, P.L. 110-161, § 540, 121 Stat. 1944 (December 26,

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2007), Congress relaxed this restriction, creating an exception

for “estimates and additional collections made pursuant to the

appropriation for Aviation Security in Public Law 108-334

[i.e., collections made pursuant to the 2004 DHS

Appropriations Act]: . . . Provided . . . That such judicial

review shall be limited only to additional amounts collected

by the Secretary before October 1, 2007.” 49 U.S.C.

§ 44940(a)(2)(B)(iv). As the collections here within the scope

of the jurisdiction-stripping provision were made pursuant to

the directive of the 2004 DHS Appropriations Act, and all the

issues apply in part to amounts collected by TSA before

October 1, 2007, we have jurisdiction over all issues that

petitioners pose. Because some of the issues fall outside the

basic jurisdiction-stripping clause, we will note below—as to

each issue on which petitioners prevail—whether our

judgment applies to collections on or after October 1, 2007.

* * *

“Overall limit.” The ATSA’s “overall limit” provides

that the fees in each fiscal year “may not exceed, in the

aggregate, the amounts paid in calendar year 2000 by carriers

. . . for screening passengers and property.” 49 U.S.C.

§ 44940(a)(2)(B)(i) (emphasis added). Petitioners argue that

TSA violated the plain language of the provision by basing its

calculation of the fees on a GAO estimate which had included

the costs of screening non-passengers, such as “meeters-and-

greeters” and sightseers. TSA acknowledges inclusion of the

costs of screening such individuals, but seeks to justify doing

so. Its arguments do not convince us.

TSA argues that the reference to “screening passengers”

is ambiguous, that the word “screening” may mean something

more than the simple evaluation of whether a passenger poses

a threat to aviation security. “To screen” may also mean “to

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protect.” (“The mother screened her child from the pounding

hailstones.”) Therefore, TSA suggests, the phrase “screening

passengers” can be read to include anything done to protect

passengers, which of course would include exerting control

over the access of potentially dangerous non-passengers. But

“[a]mbiguity is a creature not of definitional possibilities but

of statutory context.” Brown v. Gardner, 513 U.S. 115, 118

(1994). In the context of airport security, the phrase

“screening passengers” has a widely understood meaning: it

refers to the process of searching airline passengers at an

airport security checkpoint, not to the entire set of activities

undertaken to promote passenger safety.

TSA also notes that the statute refers not merely to

screening passengers, but also to screening “property.” True

enough; and the statute does not limit the relevant “property”

to that of passengers. Thus, TSA could include the costs of

screening the property of non-passengers in its calculation.

But that authority provides it no justification for also

including the costs of screening the non-passengers

themselves.

TSA also asserts an equally unpersuasive argument from

statutory purpose. It asserts that Congress did not intend to

“bestow a windfall on carriers by assuming the full burden of

providing services that inured to the benefit of the industry,

and that had previously been provided at the industry’s

expense.” Respondent’s Br. at 39. The argument might

conceivably trump the statutory language if it accorded with

the facts, but it doesn’t. As petitioners observe, sightseers and

meeters-and-greeters “have been barred from secure airport

areas since the September 11 attacks and, therefore, are not

screened by TSA.” Petitioners’ Reply Br. at 11. TSA’s

interpretation serves no windfall-prevention purpose.

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Finally, TSA argues that petitioners’ interpretation is

inconsistent with another part of the statute. It points to 49

U.S.C. § 44901(a), which directs TSA to “provide for the

screening of all passengers and property.” TSA suggests that

this provision must be interpreted to give it the power to

screen all persons who enter controlled boarding areas; it

would be absurd to deny TSA power to screen non-

passengers. And if “passengers and property” includes non-

passengers in § 44901(a), TSA argues, the phrase should have

the same meaning in § 44940(a)(2)(B)(i). Supporting TSA’s

theory is the standard presumption that “identical words used

in different parts of the same act are intended to have the same

meaning.” Sorenson v. Sec’y of Treasury, 475 U.S. 851, 860

(1986) (quoting Helvering v. Stockholms Enskilda Bank, 293

U.S. 84, 87 (1934)). But this presumption is not so strong as

to displace the plain meaning of a statutory provision simply

by virtue of the fact that interpreting a different provision the

same way would or might be absurd. In addition, although the

question of § 44901(a)’s meaning is not before us, we note

that we are not convinced that it is the only possible source of

TSA’s power to screen non-passengers. See 49 U.S.C.

§ 44903(h) (authorizing TSA screening of “all individuals”

before entry into a secured area of covered airports); 49

C.F.R. §§ 1540.105, 1540.107 (including 49 U.S.C. § 44903

among sources of authority for certain airport screening

activities). In short, TSA violated the plain meaning of the

ATSA’s overall limit when it included the costs of screening

non-passengers in its estimate of the costs of covered

screening in 2000.

This holding governs amounts collected before October 1,

2007; what of the effect of the jurisdiction-stripping provision

on amounts collected thereafter? Our conclusion rests not on

a review of a “determination . . . under” the subparagraph

covered by the provision, but rather resolves the question

whether TSA has made the kind of determination required by

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the statute. We drew just this distinction in COMSAT Corp. v.

FCC, 114 F.3d 223 (D.C. Cir. 1997), which involved a

provision precluding judicial review of “increases or

decreases in fees made by amendments pursuant to this

paragraph.” Id. at 224 (quoting 47 U.S.C. § 159(b)(3)). We

read the clause to mean simply that “the courts may not

review the Commission’s actions where the Commission has

acted within the scope of its authority” under the controlling

statute. Id. at 227. So, too, here. Therefore, the jurisdiction-

stripping provision does not apply, and our holding on this

point governs the collections made after 2007.

“Per-carrier limit.” Petitioners’ argument here is far less

persuasive. They assert that the statutory language—which

limits each carrier’s ASIF to “the amount [it] paid in calendar

year 2000 . . . for screening passengers and property, as

determined by the Under Secretary,” § 44940(a)(2)(B)(ii)—

unconditionally precludes TSA’s use of the industry average

as a proxy for petitioners’ cost per passenger screened. We

see no such preclusion.

First, the statute’s “amount paid” language is qualified:

“as determined by the Under Secretary.” As then-Judge

Roberts observed in AFL-CIO v. Chao, 409 F.3d 377 (D.C.

Cir. 2005), “We have noted in the past the ‘distinction

between the objective existence of certain conditions and the

Secretary’s determination that such conditions are present,’

stressing that a statute phrased in the latter terms ‘fairly

exudes deference’ to the Secretary.” Id. at 393 (Roberts, J.,

concurring in part and dissenting in part) (quoting Kreis v.

Sec’y of Air Force, 866 F.2d 1508, 1513 (D.C. Cir. 1989).

The ATSA similarly gives TSA broad discretion to choose a

suitable method for making the required determination.

Here TSA’s choices were clearly permissible. Although

the airlines may prefer that TSA rely on their Appendix A

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information, TSA was certainly entitled to conclude that, in

the absence of an audit, such data were not reliable enough.

TSA was also free to select a reasonable alternative, such as

the industry’s average cost. That average cost—multiplied by

a logically chosen carrier-specific variable, the number of

passengers screened by the carrier in the year 2000—in fact

constitutes a measurement of a specific carrier’s screening

costs.

The 2004 DHS Appropriations Act called for GAO

review of “the calendar year 2000 cost information for

screening passengers and property pursuant to section

44940(a)(2),” 118 Stat. at 1303 (emphasis added); petitioners

therefore reframe their per-carrier argument to claim that the

2004 Act requires the GAO to examine the individual air

carriers’ “actual” security costs, instead of using sampling

data. Petitioners’ Br. at 38, 40. The argument fails here,

naturally, for the same reasons as it did in the context of

§ 44940(a)(2)(B) itself.

Starting with the fiscal year 2005, of course, 49 U.S.C.

§ 44930(a)(2)(B)(iii) gives TSA even broader latitude,

authorizing application of the per-carrier limit by reference to

“market share or any other appropriate measure.” For the

collections at issue here, however, TSA hasn’t invoked this

section.

Finally, we note that the per-carrier limit, like the overall

limit, rests on an estimate of the costs of “screening

passengers and property.” Because TSA’s industry average

included the costs of screening non-passengers, that

calculation was not a “determination . . . under” 49 U.S.C.

§ 44940(a)(2)(B), and must be corrected on remand.

Claims that TSA acted arbitrarily and capriciously.

Petitioners’ first such argument is that TSA penalized them

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for not complying with its requirement of providing an

unqualified audit opinion for their Appendix As—a

requirement they say was impossible to fulfill. Their records

were inadequate to provide the required information without

making significant assumptions, and thus their auditors would

not provide unqualified opinions.

Assuming arguendo that TSA was obligated to supply a

feasible alternative before relying on an industry average, this

argument still fails because TSA did in fact supply such an

alternative. In response to the industry’s concerns, TSA

announced that it would accept a qualified opinion if an

auditor could not provide an unqualified one. But TSA

stipulated that, as the qualified opinions would not supply

adequate “details and reasoning,” a carrier relying on such an

opinion would have to submit the auditor’s working papers

(rather than merely assuring their availability to TSA). See

Joint Appendix (“J.A.”) 365-67.

Petitioners do not claim that they complied with this

alternative procedure. In their reply brief, however, they seem

to argue that they could not have done so, on the grounds that

an auditor’s working papers are its property, not theirs.

Petitioners’ Reply Br. at 15. It is not clear to us why an

auditor’s property interest (presumably a negotiable matter in

any event) would allow the airlines to make the papers

available upon request, but not to submit them in the way

outlined by TSA. In any event, petitioners waived the

argument by failing to make it in their opening brief.

Carducci v. Regan, 714 F.2d 171, 177 (D.C. Cir. 1983).

In petitioners’ second arbitrary-and-capricious argument,

they reformulate their contention that TSA misread the

statute’s per-carrier limit, now saying that it was arbitrary to

use the industry average cost per passenger as a proxy for

each petitioner’s per-passenger cost. They also say that TSA

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wrongly ignored their Appendix As and failed to give proper

weight to their evidence that their screening costs were below

the industry average.

Assuming this argument is actually distinct from the

statutory interpretation claim, it fares no better. Given the

technical character of the issue, TSA is entitled to a good deal

of deference on its resolution. See, e.g., West Virginia v.

EPA, 362 F.3d 861, 867 (D.C. Cir. 2004); Milk Train, Inc. v.

Veneman, 310 F.3d 747, 754 (D.C. Cir. 2002). Here, the

carriers’ own explanations as to why it was impossible for

them to obtain unqualified audits completely undermine their

position: for carriers that did not collect adequate carrier-

specific information on screening costs for 2000, it was hardly

arbitrary for TSA to rely on an industry average.

Petitioners then object that the GAO report on which

TSA relied had allocated excessive amounts of airport law

enforcement officer (“LEO”) costs to passenger screening.

(The calculations, of course, were based on TSA’s mistaken

decision to include the costs of non-passenger screening; it

may be that the redo necessitated by our decision will

occasion agreement between the parties on these subsidiary

issues, or at least less disagreement.) Specifically, when an

airport explicitly identified an LEO charge as being for

“Flexible Response,” GAO, in reliance on its contractor,

included 100% of LEO costs in screening; when an airport

allocated a portion of its airport-wide LEO budget to “the

terminal cost center,” GAO accepted its contractor’s decision

to “judgmentally” apply 50% of such costs to screening. See

J.A. 15-16 (GAO), 108 (contractor).

These allocations are hardly rock solid. But TSA was

operating in a data-poor environment, as shown by

petitioners’ own arguments about their carrier-specific data.

TSA’s contractor interviewed airport officials, eliciting a wide

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range of statements about the actual role of LEOs. This is

most certainly not a case where there is reason to believe that

materially superior information could be readily obtained, and

where, accordingly, a court would be likely to find an

agency’s disregard of the alternative as arbitrary. Air

Transport Ass'n of Canada v. FAA, 323 F.3d 1093, 1095-97

(D.C. Cir. 2003). Any decision here would have required

considerable guesswork, and we cannot say that TSA’s

guesses were unreasonable.

Petitioners also claim that the GAO report relied on faulty

statistical techniques. They argue, for instance, that in

estimating the cost of private screening contractors, the GAO

relied on data from only nine companies, which were not

shown to be representative of the field as a whole. In fact

GAO’s contractor has sought data from the 10 largest

screening contractors, which represented between 84% and

95% of the market (depending on whether one relies on

number of screeners or number of passengers screened). J.A.

72. It excluded data from the largest simply because nearly

7000 of its invoices appeared to be incomplete and

inconsistent. J.A. 79. While complaining about GAO’s

reliance on “such small samples,” Petitioners’ Br. at 58,

petitioners quite sensibly make no argument for inclusion of

data from the largest screening company. Nor do they

acknowledge the contractor’s finding that the 2d-through-10th

largest firms accounted for between 63% and 67% of all

screening. J.A. 80.

TSA accepted the results, observing that, while other

approaches to data collection and statistical analysis were

available, they would not have yielded results that were

“substantially different or more reliable.” J.A. 565, 566.

Even before us, petitioners do not directly claim the existence

of an alternative so visibly superior that TSA could be faulted

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for making the choice it did. We cannot say the choice was

arbitrary or capricious.

Petitioners similarly object to the GAO’s extrapolation of

other airport costs for all 419 airports from a sample of 59.

(In fact GAO sought data from 70 airports, the top 20 and 50

others. O’Hare did not provide sufficient information for

inclusion, but the other top 19 did.) The 70 sampled airports

accounted for about 75% of screened passengers in 2000. J.A.

15, 98.

They argue that the extrapolation was unreliable because

it was based on screened passenger volumes, which do not

correlate closely with actual airport costs. TSA found,

however, that this objection was invalid because the

formulation used by the GAO was not directly tied to the

volume of the passengers screened. J.A. 567. More

generally, the TSA found that the lack of independently

verifiable data forced the GAO to make assumptions based on

its “professional judgment and expertise” as well as the

available data. J.A. 566. Although these assumptions can be

questioned, it was not arbitrary and capricious for the TSA to

rely on them.

Finally, petitioners argue that the decisions were arbitrary

and capricious because TSA violated its own regulations,

specifically 49 C.F.R. §§ 1511.11(a), 1511.5(c) & (d), which

petitioners try to read as mandating individual company audits

by TSA rather than reliance on GAO. A glance at the

regulations shows that they impose no such mandate.

Procedural claims. Petitioners claim a right under the

due process clause to see certain documents relevant to TSA’s

decisions, such as the data file used by the GAO. TSA

responded to this claim with an assertion that the airlines’

access to the GAO report and their own records should be

15

“sufficient to substantiate all relevant grounds, if any, for

relief” from TSA’s claims for additional compensation. J.A.

373. (The airlines also, of course, had the GAO contractor’s

report, with considerable additional detail.)

The airlines correctly cite McClelland v. Andrus, 606

F.2d 1278, 1285 (D.C. Cir. 1979), for the general proposition

that in some circumstances due process will entitle a party to

discovery in an agency proceeding. There we appeared to

assume that the decision was adjudicative, and thus belonged

to the class of cases for which due process is typically, and

almost exclusively, applicable. See Decatur Liquors, Inc. v.

District of Columbia, 478 F.3d 360, 363 (D.C. Cir. 2007);

Wisconsin Gas Co. v. FERC, 770 F.2d 1144, 1166 & n.35

(D.C. Cir. 1985). Compare Londoner v. Denver, 210 U.S. 373,

385 (1908), with Bi-Metallic Inv. Co. v. State Bd. of

Equalization, 239 U.S. 441, 445-46 (1915). Moreover, as a

later decision recognized, “McClelland was seeking a specific

document ‘uniquely relevant to [his] case.’” Echostar

Communications Corp. v. FCC, 292 F.3d 749, 756 (D.C. Cir.

2002). The document requests here appear both less specific

and less urgent than McClelland’s. In Echostar, in fact, we

found no due process violation even though the agency’s

explanation was “terse” and “cryptic.” Id. at 755, 756. Given

the nature of TSA’s decision—an inquiry into industry-wide

costs (once TSA validly decided to rely on such data rather

than on petitioners’ Appendix As)—and the “extreme

deference” with which we review agency denials of discovery,

id. at 756, the denial here clearly passes (again assuming the

application of due process requirements at all).

Petitioners also object to contacts between the official

who rendered the final decisions and those responsible for the

initial decisions, contacts that we may assume would violate

the separation-of-functions rules of the Administrative

Procedure Act (“APA”) if those rules were applicable. See 5

16

U.S.C. § 554(d). But § 554 applies only to “adjudication[s]

required by statute to be determined on the record after

opportunity for an agency hearing,” 5 U.S.C. § 553(a), and

nothing in the ATSA or the DHS Appropriations Act requires

such a hearing. Cf. Dist. No. 1., Pac. Coast Dist., Marine

Eng’rs Beneficial Ass’n v. Maritime Admin., 215 F.3d 37, 42

(D.C. Cir. 2000) (addressing claim of ex parte contacts in

matter not covered by the APA’s ban).

Petitioners also assert a constitutional theory, resting

primarily on Stone v. FDIC, 179 F.3d 1368 (Fed. Cir. 1999), a

case involving discharge of a government employee found to

have a property interest in his job and thus clearly entitled to

due process. Id. at 1374-75. But the court in Stone expressly

confined its opinion to instances where the decider received

“new and material” information, of which there is no claim,

nor any reason to suspect, here. Thus the Stone decision

appears quite consistent with Withrow v. Larkin, 421 U.S. 35,

58 (1975), rejecting any due process requirement of separation

of functions unless special circumstances indicate “that the

risk of unfairness is intolerably high.” Even if we assumed in

petitioners’ favor that the proceeding was subject to due

process requirements at all, we would not have the rare

conditions rendering the agency’s procedures

unconstitutional. See also Gottlieb v. Pena, 41 F.3d 730, 737

(D.C. Cir. 1994) (upholding against due process challenge an

adjudicative procedure allowing staff to communicate ex parte

with the ultimate decisionmaker); Chem. Waste Mgmt. Inc. v.

EPA, 873 F.2d 1477, 1484 (D.C. Cir. 1989) (relying on

Withrow v. Larkin to reject facial attack on regulations

allowing combination of functions).

Finally, petitioners argue that they had a due process right

to an oral hearing. Again, assuming that the proceeding was

of a nature to make due process requirements applicable, the

claim fails because of the nature of the issues. Here they

17

involved statutory construction, the validity of GAO’s

statistical methods, and the accuracy of the carriers’ cost

information—issues of a kind that can be adequately resolved

on written submissions. See Lomak Petroleum, Inc. v. FERC,

206 F.3d 1193, 1199 (D.C. Cir. 2000); CNG Transmission

Corp. v. FERC, 40 F.3d 1289, 1295 (D.C. Cir. 1994).

Petitioners rely primarily on Gray Panthers v. Schweiker, 652

F.2d 146, 170 (D.C. Cir. 1980), a healthcare benefits case.

There we held: “Where factual issues involving the credibility

or veracity of the claimant are at stake, particular

consideration of a policy granting on request an oral interview

before the final denial on reconsideration should be given.”

Id. at 172 (emphasis added). The difference in the character

of issues could hardly be more stark.

Individual airline claims. We close with the individual

claims of Spirit, American Airlines (“American”) and

Northwest Airlines (“Northwest”), in that order.

TSA acknowledged that the language of the audit

submitted by Spirit complied with the requirements of the

relevant regulation, 49 C.F.R. § 1511.9, yet declined to

classify the opinion as “unqualified.” It explained that the

audit did not include information that was “further required by

clarification published in the Federal Register,” citing 67 Fed.

Reg. 21,582, 21,584 (May 1, 2002). It therefore subjected

Spirit to additional ASIF liability. J.A. 1824.

But the “clarification” to which TSA referred was

contained in a guidance that explicitly states that it “does not

impose any additional requirements” and that “[c]arriers

should not infer that it represents the only acceptable means of

completing Appendix A.” 67 Fed. Reg. 21,582, 21,582,

21583. Thus the guidance did not “further require” anything,

and TSA’s stated grounds for rejecting Spirit’s audit do not

hold water. We therefore set aside the additional ASIFs

18

imposed on Spirit with respect to all amounts collected before

October 1, 2007. As TSA’s error here is plainly a

“determination . . . under” 49 U.S.C. § 44940(a)(2)(B),

however, the jurisdictional bar of 49 U.S.C.

§ 44940(a)(2)(B)(iv) applies to later collections.

American argues that TSA owes it almost $14 million for

development and installation of an inline baggage security

system. It asserts that under the common law right of offset,

its ASIF should be reduced by the amount it is owed. The

initial version of this opinion disposed of American’s claim by

relying on 41 U.S.C. § 605, a statute not cited by the parties.

American later petitioned for rehearing, arguing that our

analysis of the statute was erroneous, but conceding that its

claim was not validly presented in this proceeding.

Ordinarily, we would not excise a legal analysis from an

opinion simply on the basis of the losing party’s conceding

the ultimate issue on another ground. In this case, however,

we accept American’s concession rather than rely on a

resolution that the parties never had an opportunity to

satisfactorily address. Thus, assuming without deciding that

a petitioner has the right to claim an offset from an agency

before our court, American has not validly presented any such

claim.

Finally, Northwest objects to being charged for screening

costs that TSA did not assume. When calculating its total

year 2000 costs for its Appendix A, Northwest excluded

screening costs that it continued to bear. In 2005 TSA

informed Northwest that it should have included those costs in

its ASIF payment. As a result, quite independently of TSA’s

substitution of its calculation of screening costs for the

carriers’, Northwest was over $3 million in arrears and would

have to pay higher fees going forward. J.A. 1548-49.

19

Northwest has a two-fold claim: it argues that statute

prohibits TSA from imposing ASIFs based on security costs it

has not taken over, and that in any case TSA was not

authorized to impose these fees retroactively. Both arguments

fail.

Northwest’s insuperable difficulty is that the limit that it

seeks to impose—that an airline can only be charged for as

much of its year 2000 screening costs as TSA has taken

over—is nowhere to be found in the statute. We rehearsed at

the outset the statute’s overall and per-carrier limits, and those

are the only ones it states. It thus provides no protection for

airlines against what may seem to be double collection for

costs an airline continues to bear.

Nor is there anything retroactive—in any legally material

sense—in TSA’s collection of the additional fees. TSA is not

retroactively imposing a new rate; rather, it is collecting

amounts that Northwest, because of its mistaken calculation,

had failed to pay.

* * *

In sum, TSA erred in its interpretation of the ATSA’s

overall limit and in its classification of Spirit’s audit opinion.

We therefore remand for modifications consistent with this

opinion, and otherwise affirm TSA’s decision in all respects.

So ordered.