Air Transport Ass'n of America, Inc. v. United States Department of Transportation

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 15, 2009 Decided July 13, 2010

No. 08-1293

AIR TRANSPORT ASSOCIATION OF AMERICA, INC.,
PETITIONER

v.

UNITED STATES DEPARTMENT OF TRANSPORTATION AND
FEDERAL AVIATION ADMINISTRATION,
RESPONDENTS

AIRPORTS COUNCIL INTERNATIONAL – NORTH AMERICA,
INTERVENOR

On Petition for Review of an Order
of the Department of Transportation
and the Federal Aviation Administration

Robert S. Span argued the cause and filed the briefs for
petitioner.

Peter R. Maier, Attorney, U.S. Department of Justice,
argued the cause for respondents. With him on the brief were
Michael Jay Singer, Attorney, Paul M. Geier, Assistant
General Counsel for Litigation, U.S. Department of
Transportation, and Mary F. Withum, Trial Attorney. Lewis
 2
Yelin, Attorney, U.S. Department of Justice, entered an
appearance.

Scott P. Lewis argued the cause for intervenor. With him
on the brief was Douglas H. Wilkins.

Before: GINSBURG and HENDERSON, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge GINSBURG.

I. Background.......................................................................... 3 
A.  The Problem of Congestion ....................................... 3 
1.  Excess Demand.................................................... 4 
2.  Possible Solutions ................................................ 5 
B.  Regulation of Landing Fees ....................................... 6 
1.  Statutory Requirements ....................................... 7 
2.  The 2008 Amendments ........................................ 8 
II. Analysis ............................................................................ 12 
A.  Unreasonable and Discriminatory Fees ................... 13 
1.  The Standard of Review .................................... 13 
2.  Reasonableness .................................................. 15 
3.  Unjust Discrimination........................................ 16 
B.  Preemption ............................................................... 18 
C.  Guidance to Airports ............................................... 22 
D.  Change of Policy ..................................................... 24 
III. Conclusion ...................................................................... 27 

GINSBURG, Circuit Judge: In order to reduce congestion
at major airports the Department of Transportation in 2008
amended its 1996 Policy Regarding Airport Rates and
Charges. The Amendments allow an airport to charge aircraft
higher landing fees at peak times, a practice known as
congestion pricing. The Air Transport Association of
America (ATA), on behalf of U.S. scheduled airlines,
 3
petitions for review of the Amendments, arguing they (1)
allow airports to charge unreasonable and discriminatory fees,
(2) allow state and local airport authorities to charge fees that
are preempted by federal law, (3) provide inadequate
guidance to airports on how the DOT will evaluate the
reasonableness of the fees, and (4) constitute an unexplained
reversal of prior policy. Airports Council International (ACI),
which represents governmental bodies that own and operate
major airports in the U.S., including 36 of the 37 airports the
DOT deems “currently congested,” has intervened in support
of the DOT. We deny the petition for review.

I. Background

As the primary manager of the Nation’s air transportation
system, the DOT determines whether the fees an airport
charges its users comply with the various federal statutes
requiring that the fees be reasonable. The Secretary of
Transportation is required by statute to publish regulations
“establishing ... the standards or guidelines” he will use to
evaluate the reasonableness of an airport’s fees. 49 U.S.C.
§ 47129(b)(2). This case involves a challenge to one set of
regulations promulgated under that statute.

A. The Problem of Congestion

In the 12 years between the promulgation of the 1996
Policy and of the 2008 Amendments, the number of landings
by airlines in the United States increased more than 25%, to
10.3 million from 8.2 million per year. See Bureau of
Transportation Statistics, National Transportation Statistics,
Table 1-34 (April 2010).* This increase in traffic has led to

*
These data are for departures rather than arrivals, but for
present purposes the terms are interchangeable because what goes
 4
more frequent and longer delays; in 2007, for instance, “flight
arrivals were delayed by a total of 4.3 million hours.” U.S.
Congress Joint Economic Committee, Report, Your Flight
Has Been Delayed Again: Flight Delays Cost Passengers,
Airlines, and the U.S. Economy Billions 1 (May 22, 2008).
The causes for delay range from inclement weather to
mechanical problems; this case involves delays caused by
excess demand for airport takeoff and landing capacity.

1. Excess Demand

Excess demand arises when demand for a good or service
at the prevailing price exceeds the supply, which results in
would-be buyers having to queue. In the air transportation
system, the buyers are airlines, the service is allowing an
aircraft to land at a particular airport, and the price is the
landing fee the airport charges the airline for landing. The
delays in landing are manifestations of there being a queue.

In an ordinary market, supply and price adjust to
eliminate excess demand, but this is no ordinary market.
Airports cannot readily increase the supply of landing slots
because building more runways takes years and at some
airports is not feasible at all. See Policy Regarding Airport
Rates and Charges, 73 Fed. Reg. 3310, 3312/3 (proposed Jan.
17, 2008). Nor may airports freely increase the price as
demand increases; the amount an airport may charge as a
landing fee is constrained by the oversight of the DOT and by
several federal statutory restrictions.

up must come down, see generally Isaac Newton, Philosophiæ
Naturalis Principia Mathematica (1687), and airplanes almost
always come down at an airport.
 5
Adding to the difficulty of managing congestion, the
volume of air traffic varies significantly both throughout the
day and from one airport to another. Not all airports suffer
from significant congestion, even at the most desirable times
(or “rush hours”). Addressing this variation in the demand
for landings requires giving airports some flexibility in rate-
setting.

2. Possible Solutions

There are two ways in which an airport might increase its
landing fee to the market-clearing level — that is, to the price
just high enough to eliminate the excess demand and hence
the queue at peak times. The first is to sell at auction the right
to land an aircraft at a particular airport at a particular time;
that right is called a “landing slot.” In an auction an airport
would first determine the number of landings it can
accommodate during a given period of time, such as an hour,
and then allow airlines to bid for each slot in an auction; the
winning bid would determine the price of the landing slot.
The alternative is “congestion pricing,” which entails the
airport itself increasing the price (landing fee) until it elicits
demand for only as many landings as it can accommodate,
thereby eliminating queuing and delay. Both a slot auction
and congestion pricing will converge upon the same price and
the same quantity.

In principle neither system is preferable to the other. See
Martin L. Weitzman, Prices vs. Quantities, 41 Rev. Econ.
Stud. 477 (1974). Many commentators, however, have
advocated slot auctions rather than congestion pricing
because an airport operator knows how many landings the
airport can safely accommodate per hour but can learn only
by trial and error what fee will yield that many landings. See,
e.g., S.J. Rassenti et al., A Combinatorial Auction Mechanism
 6
for Airport Time Slot Allocation, 13 Bell J. Econ. 402 (1982);
D. Grether et al., The Allocation of Landing Rights by
Unanimity Among Competitors, 71 Am. Econ. Rev. 170, 170–
71 (1981). But see Michael E. Levine, Landing Fees and the
Airport Congestion Problem, 12 J.L. & Econ. 79 (1969)
(proposing a system of congestion pricing). The regulations
under review represent the DOT’s attempt to implement a
system of congestion pricing.*

B. Regulation of Landing Fees

As the air transportation system has become increasingly
congested, the Department of Transportation’s task of
managing the system has become increasingly difficult. The
Department has tried to solve the problem of congestion using
its statutory authority to supervise the fees an airport charges
its users, including the landing fees paid by airlines.

*
The DOT previously tried to use slot auctions to manage
congestion. In 2008 it promulgated rules requiring slot auctions for
the three major airports serving New York City. See Congestion
Management Rule for LaGuardia Airport, 73 Fed. Reg. 60,574
(Oct. 10, 2008); Congestion Management Rule for John F.
Kennedy International Airport and Newark Liberty International
Airport, 73 Fed. Reg. 60,544 (Oct. 10, 2008). We stayed those
rules pending our resolution of petitions for review challenging the
DOT’s authority to require a system of slot auctions. See Dec. 8,
2008 Order, Port Authority of N.Y. & N.J. v. FAA, No. 08-1329.
While that case was being held in abeyance and after the DOT had
promulgated the 2008 Amendments here under review, the DOT
rescinded the slot auction regulations. See 74 Fed. Reg. 52,134
(Oct. 9, 2009); 74 Fed. Reg. 52,132 (Oct. 9, 2009).
 7
1. Statutory Requirements

The Airports and Airways Improvements Act requires
that airports “be available for public use on reasonable
conditions and without unjust discrimination.” 49 U.S.C.
§ 47107(a)(1).* We have interpreted that obligation as “a
requirement that [an] airport’s fees be reasonable.” Air
Transp. Ass’n of Am. v. DOT, 119 F.3d 38, 39 (1997) (ATA I)
(citing New England Legal Found. v. Mass. Port Auth., 883
F.2d 157, 169–70 (1st Cir. 1989)). The Anti-Head Tax Act
also requires that the fees be reasonable. See 49 U.S.C.
§ 40116(e). The Federal Aviation Administration
Authorization Act requires the Secretary of Transportation to
publish regulations, such as the ones here under review,
“establishing ... the standards or guidelines that [he will use]
in determining ... whether an airport fee is reasonable.” 49
U.S.C. § 47129(b)(2).

Airports currently operate under the DOT’s 1996 Policy
Regarding Airport Rates and Charges, 61 Fed. Reg. 31,994
(June 21, 1996), vacated in part by ATA I, 119 F.3d 38, as
amended at 129 F.3d 625 (D.C. Cir. 1997), which, as we have
noted before, provides airports with precious little guidance,
see ATA I, 119 F.3d at 41 (the “‘guideline’ seems to be
missing a ‘line’”). As a result, airlines and airport proprietors
regularly ask the DOT whether a particular landing fee is

*
In order to receive an airport improvement project grant, an
airport must give the Secretary of Transportation “written
assurances” that it “will be available for public use on reasonable
conditions and without unjust discrimination.” 49 U.S.C.
§ 47107(a). This condition is in effect everywhere because “[a]ll
commercial service airports operating in the United States ... have
accepted [the] grants.” Policy Regarding Airport Rates and
Charges, 73 Fed. Reg. 40,430, 40,431/1 (July 14, 2008).
 8
reasonable, see 49 U.S.C. § 47129, and seek judicial review
of its decision in this court. See, e.g., Alaska Airlines, Inc. v.
DOT, 575 F.3d 750 (2009); Port Auth. of N.Y. & N.J. v. DOT,
479 F.3d 21 (2007); City of Los Angeles v. DOT, 165 F.3d
972 (1999); Air Canada v. DOT, 148 F.3d 1142 (1998); City
of Los Angeles v. DOT, 103 F.3d 1027 (1997).

2. The 2008 Amendments

The DOT finally sought to update its regulations
regarding landing fees in 2008, more than a decade after we
had vacated much of the 1996 Policy. Rather than address the
various problems we identified with the original policy,
however, the Department promulgated Amendments to the
1996 Policy solely in order to implement a system of
congestion pricing. This the Amendments do by allowing an
airport to: (1) add to its rate base certain previously excluded
costs, which enables it to increase the landing fees it charges;
(2) alter the structure of those fees so as to encourage airlines
to use a more efficient mix of large and small aircraft at
congested airports; and (3) charge higher fees during peak
periods. See Policy Regarding Airport Rates and Charges, 73
Fed. Reg. 40,430 (July 14, 2008).

Increasing the price. If an airport wants to reduce
congestion then it must eliminate the excess demand by
reducing the number of planes that airlines want to land
during peak periods. In order to do so, it must have some
method of allocating the scarce resource of the opportunity to
land. Congestion pricing accomplishes this by increasing the
price. If the fee is high enough, then an airline will adjust its
schedule by shifting a flight to a less congested time or an
alternate airport, using fewer but larger aircraft, or simply
canceling some flights.
 9
An airport may not freely increase its prices, however,
because of its public service obligation to charge only
reasonable fees. The DOT enforces that obligation by
limiting the total airfield fees an airport may collect, including
landing fees. This limit is based upon the historical costs the
airport is allowed to include in its “rate base.” In order to
increase the allowable landing fee, therefore, an airport must
somehow increase its rate base.

The Amendments allow an airport to do just that. In
certain circumstances an airport may now for the first time
include in its rate base certain costs, viz., “a portion of the
costs of an airfield project under construction” and the “costs
associated with another [commonly-owned] airport.” The
1996 Policy allowed an airport to include the latter costs only
if “the costs of the other airport to be included in the first
airport’s rate base are reasonably related to the aviation
benefits that the other airport provides or is expected to
provide to the aeronautical users of the first airport.” 61 Fed.
Reg. at 32,020/3. That condition was, however, “presumed to
be satisfied if the other airport [was] designated as a reliever
airport for the first airport [by] the FAA[].” Id. A reliever
airport is an alternative to a primary airport for general
aviation, see Federal Aviation Administration, 2009–2013
National Plan of Integrated Airport Systems at 28 (2008);
Van Nuys Airport in Los Angeles, California, for example, is
a reliever airport for Los Angeles International Airport
(LAX), see id. at App’x A-22. Under the Amendments, that
condition will also be presumed satisfied if “the other airport
has been designated by the FAA as a secondary airport.” 73
Fed. Reg. at 40,445/2. A secondary airport is an alternative to
a primary airport for commercial and general aviation, see
2009–2013 National Plan at 28; LA/Ontario International
Airport in Ontario, California is a secondary airport for LAX,
see Appendix to Notice, Docket No. FAA-2008-0036-0007.1
 10
(Jan. 23, 2008). Allowing an airport to include the costs of
facilities under construction and of secondary airports in its
rate base enables the airport to raise the landing fee it charges.

Price Structure. Increasing the landing fee will decrease
the number of flights landing at an airport, but the DOT also
has an interest in ensuring airports accommodate the flying
public. Currently an airport may base its landing fees only
upon the weight of the aircraft, which usually gives the airline
little or no incentive to schedule fewer flights with more
passengers on each. For example, at Chicago O’Hare
International Airport the fee to land a Boeing 757-200, a mid-
size jet that seats about 200 passengers, is $520, or about
$2.60 per passenger; landing a Canadair CRJ200, a regional
jet that seats about 50 passengers, costs $120, or about $2.40
per passenger. See Katherine Ashley & Ian Savage, Pricing
Congestion for Arriving Flights at Chicago O’Hare Airport,
12 J. Air Transp. Mgmt. 36, 40 (2010). E.g., the 20-cent
difference in price per person per flight is unlikely to alter the
choice of aircraft.

Each flight, regardless of the number of passengers on
board, imposes a cost upon all the other airlines serving the
same airport and upon their passengers. The DOT wants to
reduce congestion but also wants to accommodate as many
passengers as possible consistent with reduced congestion.
The Amendments, therefore, provide an incentive for airlines
to offer fewer flights with more seats per aircraft, a practice
called “upgauging.”

This they do by authorizing an airport to institute “a two-
part landing fee consisting of a combination of a per-
operation charge and a weight-based charge.” 73 Fed. Reg. at
40,444–45. The per-operation (i.e., per landing) charge is
fixed because the number of landings an airport can
 11
accommodate in a given time does not vary greatly. The
weight-based charge is variable, reflecting that “marginal
airport costs do tend to vary with aircraft weight.” Steven A.
Morrison, The Structure of Landing Fees at Uncongested
Airports: An Application of Ramsey Pricing, 16 J. Transport
Econ. & Pol’y 151, 151 (1982); see A.A. Walters, Airports—
An Economic Survey, 12 J. Transport Econ. & Pol’y 125, 133
(1978).

Varying the Price. Finally, the Amendments allow an
airport to use these new pricing techniques only during peak
periods because there is no reason to alter the incentives
facing off-peak users. This concept is not unfamiliar to
airlines; prices for flights frequently vary depending upon the
time of day, in line with the variation in demand. The
practice is common in other industries, as well. For example,
mobile phone plans typically allot a different number of
minutes for calls at peak versus off-peak times.

The Amendments encourage higher peak pricing only
indirectly: During peak times, they allow an airport (1) to
include the costs of secondary airports and unfinished
projects, and hence to charge a higher price; and (2) to impose
the two-part fee, including the per-operation charge. During
other times, the airport will use the existing rate base and
weight-based fee structure, resulting in lower fees at off-peak
times. Specifically, the Amendments allow an airport to
include in its rate base the costs of projects under construction
and of a secondary airport only if doing so “during congested
hours would have the effect of reducing or preventing
congestion and operating delays at [the primary] airport in
those hours.” 73 Fed. Reg. at 40,444–45. Similarly, the
Amendments allow an airport to implement the two-part
charge only if doing so “reasonably allocates costs to users on
 12
a rational and economically justified basis.” The Department
gives the following example:

The proportionately higher costs per passenger for
aircraft with fewer seats that will result from the per-
operation component of a two-part fee may be justified
by the effect of the fee on congestion and operating
delays and the total number of passengers accommodated
during congested hours.[*]

73 Fed. Reg. at 40,445.

These three changes — allowing an airport to include
certain costs in the rate base for determining landing fees
during congested hours, instituting the two-part fee structure,
and permitting landing fees to vary throughout the day — are
the basic elements of the DOT’s plan to decrease congestion.
The ATA argues that each one is facially inconsistent with
one or more statutes.

II. Analysis

The ATA makes four principal arguments. (1) The
Amendments authorize airports to charge unreasonable and
unjustly discriminatory landing fees, in violation of the
Airports and Airways Improvement Act of 1982, 49 U.S.C.
§ 47107(a)(1), and the Anti-Head Tax Act, 49 U.S.C.
§ 40116(e)(2); (2) those fees are state or local governmental
regulations preempted by the Airline Deregulation Act of
1978, 49 U.S.C. § 41713(b)(1); (3) the DOT failed to meet its

*
“A congested hour is an hour during which demand exceeds
average runway capacity resulting in volume-related delays, or is
anticipated to do so” — in other words, an hour during which there
is excess demand. 73 Fed. Reg. at 40,445/3.
 13
obligation under § 113 of the Aviation Administration
Authorization Act of 1994, 49 U.S.C. § 47129, to provide
guidance to airports; and (4) the Amendments are arbitrary
and capricious because they are unexplained departures from
prior policies. We find each argument unpersuasive for the
reasons that follow.

A. Unreasonable and Discriminatory Fees

An airport may not charge a fee that is unreasonable or
unjustly discriminatory. See 49 U.S.C. § 40116(e)(2) (airport
may collect only “reasonable ... landing fees”); 49 U.S.C.
§ 47107(a)(1) (airport must “be available for public use on
reasonable conditions and without unjust discrimination”).
The ATA argues that (1) including the costs of future
facilities and of secondary airports in the rate base and (2)
charging a two-part landing fee comprising a weight-based
charge and a per-operation charge are each independently
both unreasonable and unjustly discriminatory.

1. The Standard of Review

The ATA brings only a facial challenge to the
Amendments, presumably because, as the parties related at
oral argument, no airport has implemented the system of
congestion pricing allowed by the Amendments. To prevail
in a facial challenge, the ATA “must establish that no set of
circumstances exists under which the [Amendments] would
be valid.” Reno v. Flores, 507 U.S. 292, 301 (1993) (quoting
United States v. Salerno, 481 U.S. 739, 745 (1987)).
Therefore, to make its point that the DOT lacked authority to
promulgate the Amendments, it is not enough to show there is
a “mere possibility” an airport might apply the Amendments
in such a way as to set an unlawful fee. Bldg. & Constr.
Trades Dep’t v. Allbaugh, 295 F.3d 28, 33 (D.C. Cir. 2002).
 14
Pursuant to Chevron U.S.A., Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837 (1984), we give
“substantial deference” to the DOT’s interpretation of a
statute that requires it to ensure fees are reasonable but “does
not set standards for assessing reasonableness” because the
Secretary of Transportation, not the court, “is charged with
administering the federal aviation laws.” Northwest Airlines,
Inc. v. County of Kent, 510 U.S. 355, 366–67 (1994) (citing
Chevron, 467 U.S. at 842–845). The ATA would have us
apply the specific standard used in Northwest, 510 U.S. at
369, which was based upon that in Evansville-Vanderburgh
Airport Auth. Dist. v. Delta Airlines, 405 U.S. 707, 716–17
(1972): A fee “is reasonable ... if it (1) is based on some fair
approximation of use of the facilities, (2) is not excessive in
relation to the benefits conferred, and (3) does not
discriminate against interstate commerce.” As the DOT
points out, however, the Court in Northwest was evaluating a
particular set of fees imposed by a single airport — before
passage of the statute that requires the Secretary to establish
“the standards or guidelines [he will use] in determining ...
whether an airport fee is reasonable,” Pub. L. No. 103-305,
108 Stat. 1569 § 113, 49 U.S.C. § 47129(b). The Court
explained that because it “[l]ack[ed] guidance from the
Secretary [of Transportation]” regarding how to evaluate the
reasonableness of those fees, it had to “look elsewhere” for a
standard. Northwest, 510 U.S. at 367. The Court expressly
noted that when the Secretary creates a standard, as he has
here, “for determining whether fees are ‘reasonable’ ... his
exposition will merit judicial approbation so long as it
represents ‘a permissible construction of the statute.’” Id. at
368 n.14 (quoting Chevron, 467 U.S. at 842–45). For the
same reasons, we defer to the DOT’s reasonable
interpretation of the statutory prohibition of unjust
discrimination.
 15
2. Reasonableness

An aircraft that lands at a congested time imposes a
significant cost, in the form of delay, both upon other airlines
that want to land aircraft at the same time and upon the
passengers aboard those aircraft. Each additional aircraft
seeking to land at that time adds to the congestion and
imposes additional delays upon other users of the system.
Meanwhile, the airline that successfully lands an aircraft at
the peak time reaps a substantial benefit because it is able to
offer a valuable service to its customers. As long as the costs
to the airline landing the aircraft during a peak hour are less
than the benefits to that airline, it will land the aircraft even if
the total social costs — including delays to other users of the
system — exceed the total social benefits. See Garrett
Hardin, The Tragedy of the Commons, 162 Science 1243
(1968).

The ATA argues the fees authorized by the Amendments
necessarily will be unreasonable because the Amendments do
not comply with the principle, common in rate regulation,
“that an asset must be ‘used and useful’ before it can be
included in the rate base” of a regulated utility. Mid-Tex
Elec. Coop. v. FERC, 773 F.2d 327, 332 (D.C. Cir. 1985)
(citing Smyth v. Ames, 169 U.S. 466 (1898)). Neither an
airport nor the DOT, however, is required to adhere to that
principle. As the DOT argues, the relevant statutes require
only reasonable and non-discriminatory fees, not fees based
upon a particular form of cost recovery. We have explained
elsewhere that the “used and useful” principle is “simply one
of several permissible tools of ratemaking, one that need not
be, and is not, employed in every instance.” Jersey Cent.
Power & Light Co. v. FERC, 810 F.2d 1168, 1175 (D.C. Cir.
1987) (en banc). Accordingly, an agency may “depart from
the ‘used and useful’ standard” in order to pursue another
 16
legitimate objective. Wash. Gas Light Co. v. Baker, 188 F.2d
11, 20 (D.C. Cir. 1951); see Mid-Tex, 773 F.2d at 346
(holding it reasonable, and consistent with the principle of
“used and useful,” to include in the rate base certain funds for
unfinished projects). We focus our inquiry not upon each
asset included in the rate base, but rather upon whether the
end result is reasonable. See Jersey, 810 F.2d at 1177–78; see
also Fed. Power Comm’n v. Hope Nat. Gas Co., 320 U.S.
591, 603 (1944) (“end result” test for whether rates are just
and reasonable).

It is entirely reasonable to expect an airline, and in turn
its passengers, to pay a premium for the opportunity to arrive
at a peak time. If an airport is able to reduce congestion by
using the two-part scheme and including in its rate base the
costs of a future facility or of a secondary airport then,
without more, it is impossible to say its increased landing fee
must be unreasonable. The increased fee will drive other
aircraft away — whether in time or in space — and thereby
will benefit the airline that pays the fee to land at a peak time.
Depending upon the actual amount of the fee, therefore, it
may well be reasonable.

3. Unjust Discrimination

The ATA complains in various ways the Amendments
will require an airline to subsidize its competitor, as though a
cross-subsidy necessarily implies “unjust discrimination.” 49
U.S.C. § 47107(a)(1). The variation in the fees permitted by
the Amendments need not be unjustly discriminatory,
however. Each aircraft that lands at a particular airport
during a particular hour will be subject to the same fee,
adjusted only, as it is now, for weight. Although landing fees
will vary from one airport to another and from one hour to
another, the DOT has adequately justified such differences
 17
based upon variations in the degree of congestion at different
airports and different times.

First, the ATA complains that to include in an airport’s
rate base the costs of (1) a different but commonly owned
airport or (2) an unfinished project is to force that airline to
subsidize its competitors. The ATA’s objection is implicitly
based upon the principle that the total fees collected by an
airport may not exceed the total costs incurred by the airport:
If a primary airport includes in its rate base the cost of a
secondary airport, then it must reduce its rate base in the
second airport by an equal amount; similarly, if it includes the
cost of a project under construction, then it may not recover
the same costs again upon completion of the project. See 73
Fed. Reg. at 40,445/1–2. In each case the actual users of the
facilities newly included in the rate base will pay lower fees
than they would otherwise do. In other words, if the fees at
one airport go up, then the fees at another must come down,
and that is a “subsidy” for users of the secondary airport,
including airlines that compete with the airlines that use the
primary airport; likewise, the objection goes, present users
paying for facilities to be used by future users “subsidize
them.”

The effect of the pricing scheme may look like a subsidy
but it does not necessarily work an unjust discrimination,
regardless whether all components of the rate base are
actually used by the airlines that pay the landing fees, because
off-peak users are not responsible for the costs of the present
congestion or of any future expansion necessitated thereby.
In an industry with high fixed costs it is not unreasonable or
unjust for peak load users to pay more than off-peak users
because the peak price is being used to allocate a scarce
resource. See 1 Alfred E. Kahn, The Economics of
Regulation: Principles and Institutions 89 (1970) (“The off-
 18
peak users impose no such costs on society. ... The necessity
for expansion is imposed by the customers at the peak
hours.”).

The ATA also argues a two-part fee will more adversely
affect “airlines with a business model dependent on the use of
certain size aircraft flying at certain times of day or with
certain frequencies.” That is true, of course. An airline that
lands a small aircraft at a peak time, however, imposes nearly
as much cost upon the other users of the airport as does an
airline that lands a larger aircraft. A landing fee increased to
reflect that fact might make it unprofitable for the former
airline to leave its present schedule and fleet unchanged, but
that is the point of peak-load pricing, not a defect that makes
the price differential unjustly discriminatory.

We cannot, of course, rule out the possibility that an
airport will implement a system of fees that complies with the
Amendments but is nonetheless unreasonable or unjustly
discriminatory. Because an airport can also implement the
Amendments in a way that is reasonable and not unjustly
discriminatory, however, the ATA’s facial challenge must
fail.

B. Preemption

In another facial attack the ATA argues the DOT lacked
authority to promulgate the Amendments because the Airline
Deregulation Act of 1978 preempts and thus prohibits any
state or local airport authority’s attempt to implement
congestion pricing. The ADA provides a state or local
authority “may not enact or enforce a law, regulation, or other
provision having the force and effect of law related to a price,
route, or service of an air carrier.” 49 U.S.C. § 41713(b)(1).
This clause limits what most airports can do because most
airports are operated by a local authority. See Tae H. Oum,
 19
Nicole Adler, & Chunyan Yu, Privatization, Corporatization,
Ownership Forms and their Effects on the Performance of the
World’s Major Airports, 12 J. Air Transp. Mgmt. 109, 109 &
n.1 (2006).

The ATA argues “an airport proprietor necessarily would
violate the ADA by establishing congestion landing fees”
because varying fees based upon the time of day “for the
purpose of influencing airline service decisions” is a measure
“related to a price, [etc.], ... of an air carrier.” Surely,
however, an airport may charge some fee authorized by the
Amendments without violating the ADA.*

First, as the DOT points out, a state or local authority that
owns or operates an airport is expressly authorized by the
Anti-Head Tax Act to charge a reasonable landing fee. See
49 U.S.C. § 40116(e) (“a State or political subdivision of a
State may levy or collect ... reasonable ... landing fees”).
Second, nothing in the ADA prohibits an airport from
charging a reasonable landing fee pursuant to the just-cited
authority; on the contrary, the very preemption section of the
ADA upon which the ATA bases its argument contains an
exception allowing an airport authority, notwithstanding other
provisions of the Act, to “carry[] out its proprietary powers
and rights.” 49 U.S.C. § 41713(b)(3). Because some fees
authorized by the Amendments may be reasonable, it is
within an airport’s “proprietary powers and rights” to charge
those fees. The facial challenge therefore fails because the
ATA must, but cannot, “establish that no set of circumstances

*
Because we hold charging a reasonable landing fee is within
an airport’s proprietary powers and therefore is not prohibited by
the ADA, we need not address the ACI’s alternative argument that
such a fee is not “related to a price, route, or service of an air
carrier.” 49 U.S.C. § 41713(b)(1).
 20
exists under which the [Amendments] would be valid.” Reno,
507 U.S. at 301 (quoting United States v. Salerno, 481 U.S.
739, 745 (1987)).

The ATA raises three other arguments related to the
ADA. First, citing Rowe v. New Hampshire Motor Transport
Ass’n, 552 U.S. 364, 373 (2008), it argues the Amendments
will create precisely the “patchwork of local regulation of air
service” the Congress intended the ADA to prevent. This is a
problem, it claims, because “[a]irlines’ schedule, staffing, and
equipment decisions are made based on a complicated and
comprehensive view of a nationwide or even global network.”
The differences among the patches at issue, however, are
differences in price only and take the form of state and local
regulations only because state and local authorities operate
most airports.

We recognize, of course, that prices alter behavior — that
is the premise upon which the Amendments are based — and
understand prices that vary from place to place will yield
incentives that vary as well. Neither the ADA nor any other
statute concerning air traffic, however, demands uniform
prices or uniform incentives. The statute that allows airport
authorities to collect fees expressly forbids some types of
levies, e.g., a “head charge,” but it allows all others so long as
they are reasonable. See 49 U.S.C. §§ 40116(b), (e). Another
statute compels the DOT to evaluate whether a fee imposed
upon an airline is reasonable but expressly forbids the
Department from “set[ting] the level of the fee.” 49 U.S.C.
§ 47129(a)(3). That necessarily means state and local
authorities will “set the level of the fee[s]” and they will not
be uniform. Id.

In sum, although the ADA forbids states and local
authorities from directly regulating air traffic, the structure
 21
the Congress created virtually ensures, and surely accepts,
that fees will vary across airports. The resulting differences
in incentives are unavoidable, not unlawful.

Indeed, the ATA does not claim the landing fees now
being charged are uniform, nor could they be because the
historical costs upon which they are based vary from airport
to airport. Moreover, airlines already operate subject to
constraints that vary among airports, including differences in
fuel prices, operating hours and, of course, the degree of
congestion. See John S. Stroup & Richard D. Wollmer, A
Fuel Management Model for the Airline Industry, 40
Operations Res. 229 (1992) (describing the practice of
“tankering” fuel between airports because of cost
differences); Metropolitan Washington Airports Authority
Regulations § 3.11 (setting curfew for airline operations at
only one of three area airports); Scott McCartney, Why a Six-
Hour Flight Now Takes Seven, Wall St. J., Feb. 4, 2010, at D1
(explaining schedule padding in response to congestion). We
think it obvious the Congress also anticipated non-uniform
landing fees and the non-uniform incentives they produce.

Second, the ATA argues that under the ADA the
incentives created by non-uniform landing fees should be
permitted only if the differences are incidental rather than
intentional. The ATA points to nothing in the ADA,
however, that suggests the intent of an airport authority in
setting rates is at all relevant to the lawfulness of those rates.
So long as a state or local measure is “related to a price, route,
or service of an air carrier,” it is forbidden unless it comes
within the exception for proprietary powers. And, as we
already have said, setting landing fees that comply with all
applicable statutes and regulations is within the scope of an
airport authority’s power as proprietor.
 22
Finally, the ATA argues the First Circuit has already
rejected the type of two-part fee structure at issue here. See
New England Legal Found. v. Mass. Port Auth., 883 F.2d 157
(1989). In that case, however, the airport had adopted a fee
structure without authorization from the DOT; the Secretary
rejected only that particular fee structure – not the concept of
a two-part tariff — because it was “not scientifically derived”
and therefore not reasonable and not saved by the exception
for proprietary powers. Id. at 165–66, 170. The First Circuit,
deferring pursuant to Chevron, agreed. Id. at 170. The
ATA’s facial challenge derives no support from that ruling.

C. Guidance to Airports

The ATA next argues the Amendments do not comply
with 49 U.S.C. § 47129(b)(2). That provision requires the
Department to establish “standards or guidelines” for the
Secretary of Transportation to use “in determining ... whether
an airport fee is reasonable,” but airports understandably use
that guidance to anticipate how the Secretary will evaluate the
reasonableness of the fees they charge. The ATA maintains
the only guidance the Amendments provide is the tautology
that a fee “is not unreasonable as long as it is reasonable.”
The DOT responds that, because the Amendments “specif[y]
the methodologies [airports] may use” to set landing fees at
congested times, the Amendments provide more and
sufficient guidance, and we agree.

We have not hesitated in the past to fault the DOT when
it failed to provide adequate guidance to airport operators.
The 1996 Policy capped airfield fees at historical cost but
allowed airports to set non-airfield fees using essentially “any
reasonable methodology,” 61 Fed. Reg. at 32,020/3; upon the
ATA’s petition for review, we noted the “‘guideline’ seems to
be missing a ‘line’” because the concept of “any reasonable
 23
methodology .... does not seem to add much—if anything—to
the statutory requirement that airport fees be reasonable.”
ATA I, 119 F.3d at 41. We vacated portions of the 1996
Policy because the Department failed adequately to explain
the distinction it drew between airfield and non-airfield fees.
See id. at 43; 129 F.3d at 625.

As we have pointed out, however, when the “Congress
has ‘not specified the level of specificity expected of the
agency, ... the agency [is] entitled to broad deference in
picking the suitable level.’” Cement Kiln Recycling Coal. v.
EPA, 493 F.3d 207, 217 (2007) (quoting Ethyl Corp. v. EPA,
306 F.3d 1144, 1149 (D.C. Cir. 2002)). Here, because the
call for “standards or guidelines” in the Federal Aviation
Authorization Act, 49 U.S.C. § 47129(b)(2), “does not
mandate any particular level of specificity,” Cement Kiln, 493
F.3d at 218, we will defer to any reasonable interpretation by
the DOT. See Chevron, 467 U.S. 837; Cement Kiln, 493 F.3d
at 217 (citing Chevron).

Because the Amendments leave only two variables to the
discretion of the airport proprietor, and thus set out a nearly
complete pricing algorithm, we conclude the DOT has
provided sufficient guidance. The two-part fee the
Amendments permit reflects two major components of
airfield costs: the cost per landing and the cost imposed in
proportion to the weight of an aircraft. See 73 Fed. Reg. at
40,443–44. Limiting the fees to those components provides
specific guidance and is specific enough to constrain an
airport proprietor’s pricing discretion. In addition, the
Amendments and the 1996 Policy limit the total fees an
airport may collect. See id. at 40,445/1–2; 61 Fed. Reg. at
32,019/2–3.
 24
The Amendments set reasonably specific standards
because the airport proprietor is free only to calculate the
fixed charge per operation and to determine how the variable
weight component is to be scaled to aircraft weight. The
Amendments therefore discharge the Department’s statutory
obligation to set “standards or guidelines that shall be used by
the Secretary in determining ... whether an airport fee is
reasonable,” 49 U.S.C. § 47129(b)(2).

Nonetheless the ATA faults the DOT for “us[ing] the
word ‘reasonable’ [in the Order promulgating the
Amendments] as though it [were] self-defining.” Many of the
specific instances of which the ATA complains appear in the
background section of the Order — the “concise general
statement of ... basis and purpose” required of every
regulation subject to the Administrative Procedure Act, 5
U.S.C. § 553(c) — not in the Amendments themselves.
Surely the DOT may discuss reasonableness in general terms
when introducing and explaining the purpose of a rule. As for
the use of “reasonable” in the Amendments themselves, we
fail to see why adding the requirement of reasonableness to a
rule that independently provides adequate guidance takes the
rule out of compliance with the statutory mandate. If, for
example, a highway has a posted speed limit and at the same
time a statute prohibits “driv[ing] a vehicle on a highway at a
speed greater than is reasonable,” Ariz. Rev. Stat. § 28-701, it
simply would not follow that a motorist is given inadequate
guidance about how fast he may drive. See Arizona v. Rich,
563 P.2d 918, 919–20 (Ariz. Ct. App. 1977) (rejecting
vagueness challenge).

D. Change of Policy

The ATA argues that because the Amendments work a
change in DOT policy the Department “has additional
 25
obligations to justify that change.” We have long held that
“an agency changing its course must supply a reasoned
analysis indicating that prior policies and standards are being
deliberately changed, not casually ignored.” Greater Boston
Television Corp. v. FCC, 444 F.2d 841, 852 (1970). Here the
ATA identifies two specific changes of policy: (1) including
in the rate base costs of some facilities not yet in service, and
(2) including in the rate base of a primary airport the costs of
a secondary airport. The DOT first denies having made any
changes in policy that require explanation because it “has not
previously addressed modified congestion pricing by
airports.” We need not resolve that particular squabble,
however, because we conclude the DOT adequately explained
its reasons for promulgating the two bits about which the
ATA complains.

In 1996 the DOT explained, “when fees are based on
cost, it is generally unreasonable to charge users for facilities
they do not benefit from or use,” but at the same time
recognized that doing so might be reasonable in some
circumstances. 61 Fed. Reg. at 32,002/2. The DOT then
balanced various “conflicting concerns” and concluded the
only costs of future facilities an airport could include in its
rate base, and then only under certain circumstances, were
“the costs of land acquired for future airport development.”
Id. at 32,020/3. The present Amendments to the 1996 Policy
allow an airport more broadly to add to its rate base “a portion
of the costs of an airfield project under construction,” again
subject to certain conditions. 73 Fed. Reg. at 40,445.

The 1996 Policy also permits an airport proprietor to
include the costs of an alternate airport in the rate base of a
primary airport if those costs “are reasonably related to the
aviation benefits that the other airport provides or is expected
to provide to aeronautical users of the first airport.” 61 Fed.
 26
Reg. at 32,020/3; see also id. at 32,014. The Policy specifies
that the requirement of benefits to the users of the first airport
“will be presumed to be satisfied if the other airport is
designated as a reliever airport for the first airport [by] the
FAA[].” Id. at 32,020/3. The Amendments do not change the
general standard, but they do add that benefits to the users of
the first airport also will be presumed if

adding airfield costs of the second airport to the rate base
of the first airport during congested hours would have the
effect of reducing or preventing congestion and operating
delays at [the first] airport in those hours.

73 Fed. Reg. at 40,445/2.

The DOT provided a “reasoned analysis” for these two
aspects of the Amendments, considering that “[a]n agency’s
view of what is in the public interest may change, either with
or without a change in circumstances.” Greater Boston, 444
F.2d at 852. Most fundamentally, the DOT identified a major
change in the world around it between 1996 and 2008:
Airport congestion had increased significantly. In explaining
the need for the Amendments, it detailed congestion at
specific airports and recounted the findings of the Federal
Aviation Administration about chronic congestion. See 73
Fed. Reg. at 40,431–32 (citing Federal Aviation
Administration, Capacity Needs in the National Airspace
System 2007–2025: An Analysis of Airports and Metropolitan
Area Demand and Operational Capacity in the Future (May
2007)). It reasoned that congestion pricing “could encourage
more efficient use of [congested] airports” and explained how
increasing an airport’s rate base and allowing it to impose a
two-part landing fee could approximate congestion pricing.
73 Fed. Reg. at 40,431–32.
 27
Of course, congestion is not an entirely new problem.
More than 40 years ago “the press, the government, the
airlines, the airport operators themselves, and a host of others
[told us] that our airports are in a state of ‘crisis.’” Levine,
Landing Fees, 12 J.L. & Econ. at 79. The DOT, however, has
a continuing mandate to manage the Nation’s air
transportation system. As the airspace is used ever more
intensively, it is unsurprising that the Department would
update its approach to landing fees in an effort to relieve
airport congestion. So long as it complies with the applicable
statutes, its creativity should be welcomed on its merits, not
spurned for its novelty.

III. Conclusion

For the foregoing reasons, the petition for review is

Denied.