Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-01-01175/USCOURTS-caDC-01-01175-0/pdf.json

Parties Involved:
Federal Aviation Administration
Respondent
Jane F. Garvey
Respondent
LTU Lufttransport-Unternehmen GmbH.
Petitioner

Document Text:

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United States Court of Appeals

For The District of Columbia Circuit

No. 00-1334 September Term, 2001

Filed On: December 28, 2001

[647886]

Air Transport Association of Canada,

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

__________________________________________

Consolidated with 00-1342, 00-1343, 00-1344,

00-1345, 00-1346, 00-1347, 00-1351, 01-1170,

01-1171, 01-1172, 01-1173, 01-1174, 01-1175,

01-1176, 01-1177

BEFORE: Henderson, Tatel, and Garland, Circuit Judges

O R D E R

Upon consideration of the respondents' petition for rehearing, filed 

August 24,

2001, and the petitioners' response thereto, it is

ORDERED that the petition for rehearing be granted and the interim final 

rule

reviewed by the court be remanded without vacatur. See Fed. R. App. P. Rule 

40(a)(4).

Accordingly, it is

FURTHER ORDERED that the opinion in Air Transport Association of Canada 

v.

FAA, 254 F.3d 271 (D.C. Cir. 2001), be amended as follows:

(1) The words "vacate the rule and" be deleted from the opening

paragraph, 254 F.3d at 274;

(2) Footnote 7 be deleted in its entirety, 271 F.3d at 278; and

(3) The words "vacate the 2000 Rule and" be deleted from the final 

paragraph,

254 F.3d at 279. It is

FURTHER ORDERED that the Clerk be directed to vacate the judgment filed

July 13, 2001, and enter a new judgment in accordance with this order. It is

FURTHER ORDERED that the Clerk be directed to issue the mandate herein

seven days after issuance of this order. See D.C. Cir. Rule 41.

USCA Case #01-1175 Document #609580 Filed: 07/13/2001 Page 1 of 17
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Per Curiam

FOR THE COURT:

Mark J. Langer, Clerk

BY:

Deputy Clerk

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 14, 2001 Decided July 13, 2001

No. 00-1334

Air Transport Association of Canada,

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

No. 00-1342

Societe Air France,

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

---------

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No. 00-1343

Deutsche Lufthansa A.G. (Lufthansa German Airlines),

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

No. 00-1344

British Airways Plc,

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

No. 00-1345

LTU Lufttransport-Unternehmen GmbH.,

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

---------

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No. 00-1346

Qantas Airways Limited,

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

No. 00-1347

Air New Zealand,

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

No. 00-1351

KLM Royal Dutch Airlines,

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

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No. 01-1170

Air Transport Association of Canada,

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

No. 01-1171

Air New Zealand,

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

No. 01-1172

British Airways Plc,

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

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No. 01-1173

Deutsche Lufthansa A.G. (Lufthansa German Airlines),

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

No. 01-1174

KLM Royal Dutch Airlines,

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

No. 01-1175

LTU Lufttransport-Unternehmen GmbH.,

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

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No. 01-1176

Qantas Airways Limited,

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

No. 01-1177

Societe Air France,

Petitioner

v.

Federal Aviation Administration and Jane F. Garvey,

Administrator, Federal Aviation Administration,

Respondents

On Petitions for Review of an Interim Final Rule

of the Federal Aviation Administration

M. Roy Goldberg for Air Transport Association of Canada

argued the cause for the joint petitioners. Michael Goldman

for Societe Air France, Sheila C. Cheston for Deutsche Lufthansa A.G. (Lufthansa German Airlines), Don H. Hainbach

for British Airways Plc, Frederick S. Hird, Jr. for LTU

Lufttransport-Unternehmen GmbH., Moffett B. Roller for

Qantas Airways Limited, Frederick Robinson for Air New

Zealand and Paul V. Mifsud for KLM Royal Dutch Airlines

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were on the joint brief for all the petitioners. Robert W.

Kneisley entered an appearance.

Robert D. Kamenshine, Attorney, United States Department of Justice, argued the cause for the respondents. Robert S. Greenspan, Attorney, United States Department of

Justice was on brief.

Before: Henderson, Tatel and Garland, Circuit Judges.

Opinion for the court filed by Circuit Judge Henderson.

Karen LeCraft Henderson, Circuit Judge: The petitioners, Air Transport Association of Canada, Societe Air France,

Deutsche Lufthansa A.G. (Lufthansa German Airlines), British Airways Plc, LTU Lufttransport-Unternehmen GmbH.,

Qantas Airways Limited, Air New Zealand and KLM Royal

Dutch Airlines, challenge an interim final rule issued by the

Federal Aviation Administration (FAA) establishing fees for

certain flights that transit through United States-controlled

airspace but neither take off from, nor land in, the United

States (overflights). They argue, inter alia, that the rule

does not accord with the authorizing statute. Because the

FAA has failed to explain why the fees it established satisfy

the statutory requirements, we remand to

the FAA for further proceedings.

I.

The Federal Aviation Reauthorization Act of 1996, Pub. L.

No. 104-264, s 273, 110 Stat. 3213, 3239-40, codified at 49

U.S.C. s 45301 (Act), directs the FAA to establish a fee

schedule and collection process to cover air traffic control and

related services provided to overflights.1 The Act requires

that the fees imposed on overflights be directly related to the

__________

1 The Act provides in relevant part:

(a) Schedule of fees.--The Administrator shall establish a

schedule of new fees, and a collection process for such fees, for

the following services provided by the Administration:

(1) Air traffic control and related services provided to

aircraft other than military and civilian aircraft of the United

FAA's costs of providing the service rendered to those flights.

The FAA has twice attempted to establish the fees authorized

by the Act.

In 1997 the FAA issued an interim final rule establishing

the first fee schedule for overflights (1997 Rule). See Fees

for Air Traffic Services for Certain Flights Through U.S.-

Controlled Airspace, 62 Fed. Reg. 13,496 (Mar. 20, 1997).

The 1997 Rule explained that the services provided to overflights required two types of expenditures: incremental (i.e.,

costs that increased with the quantity of services provided)

and fixed and common (i.e., costs that remained unchanged

regardless of the quantity of services provided--for example

__________

States government or of a foreign government that neither

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take off from, nor land in, the United States.

(2) Services (other than air traffic control services) provided

to a foreign government or services provided to any entity

obtaining services outside the United States, except that the

Administrator shall not impose fees in any manner for

production-certification related service performed outside the

United States pertaining to aeronautical products manufactured outside the United States; and

(b) Limitations.--

(1) Authorization and impact considerations.--In establishing fees under subsection (a), the Administrator--

(A) is authorized to recover in fiscal year 1997

$100,000,000; and

(B) shall ensure that each of the fees required by subsection (a) is directly related to the Administration's costs of

providing the service rendered. Services for which costs may

be recovered include the costs of air traffic control, navigation, weather services, training and emergency services

which are available to facilitate safe transportation over the

United States, and other services provided by the Administrator or by programs financed by the Administrator to

flights that neither take off nor land in the United States.

(2) Publication; comment.--The Administrator shall publish

in the Federal Register an initial fee schedule and associated

the cost of radar installations and computer software--and

costs that could not be attributed to any particular flight or

class of flights). See Asiana Airlines v. FAA, 134 F.3d 393,

395-96, 401 (D.C. Cir. 1998) (describing 1997 Rule). The

FAA decided to recoup from overflights both types of expenditures. To compute the appropriate amount of fixed and

common costs that should be allocated to overflights, the FAA

relied on a methodology called "Ramsey pricing," which distributed the costs among "classes of users based on the

elasticity of their demand for services in an effort to minimize

the effect of the regulation on the behavior of users." Id. at

396.

Airlines affected by the fee schedule challenged the 1997

Rule, contending that the FAA exceeded its statutory authority by computing fees, at least in part, on the value of the

services to the recipient rather than on costs. We were

persuaded by the argument. See id. at 401. We explained

that "[s]tatutory language requiring that 'each' fee be 'directly related to ... costs of providing the service rendered,'

expresses a clear congressional intent that fees must be

established in such a way that each flight pays according to

the burden associated with servicing that flight," id. at 402,

and "insofar as the FAA allocated fixed and common costs

using the Ramsey pricing methodology, its fee structure

impermissibly included a component based on value to the

user." Id. at 401. Accordingly, we vacated the 1997 Rule

and remanded to the FAA for further proceedings.

In June 2000 the FAA published another interim final rule

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establishing a new schedule of overflight fees (2000 Rule).

See Fees for FAA Services for Certain Flights, 65 Fed. Reg.

36002 (June 6, 2000). Effective August 1, 2000, an overflight

travelling in "enroute" airspace must pay $37.43 per 100

nautical miles (or portion thereof), while an overflight using

only "oceanic" airspace must pay $20.16 per 100 nautical miles

(or portion thereof).2 The 2000 Rule itself does not explain

__________

collection process as an interim final rule, pursuant to which

public comment will be sought and a final rule issued.

49 U.S.C.A. s 45301(a), (b) (footnote omitted).

2 The 2000 Rule defines "enroute" airspace as "airspace where

primarily radar-based air traffic services are provided." 65 Fed.

how the FAA arrived at the enroute and oceanic rates but

refers to two record documents that "detail how the fees in

this rule were determined and calculated." Id. The first

document is a report by the Arthur Anderson accounting firm

entitled "Cost Methodology Used to Develop Cost of Enroute

and Oceanic ATC Services" (Arthur Anderson Report). It

describes (1) how the FAA's cost accounting system tracks

the costs incurred by the FAA and (2) how the FAA assigned

those costs to enroute and oceanic air traffic control services.

The second document is a report entitled "Overflight Fee

Development Report" (Overflight Report). It was prepared

by the FAA itself and details the FAA's methodology used to

calculate the fees imposed by the 2000 Rule.

The Overflight Report explains that the fee development

process involved four steps: (1) determining the FAA's full

costs of providing both enroute and oceanic air traffic control

services to all flights--that is, overflights and nonoverflights;3 (2) determining which of the costs identified in

step one met the requirement of being "directly related" to

the services rendered by the FAA; (3) determining, based on

the costs computed in step two, unit costs for providing

enroute and oceanic air traffic control services to overflights;4

and (4) establishing overflight fees that cover air traffic

control service costs as well as billing and collection costs.

To compute the "unit costs" (step three), the FAA divided the

"directly related" costs identified in step two by the total

number of miles flown by all aircraft using the enroute

_________

Reg. at 36004. "Oceanic" airspace is in turn defined as "airspace

where primarily procedural air traffic services are provided." Id.

3 Non-overflights are flights that either take off from or land (or

both) in the United States.

4 The Arthur Anderson Report explains that costs incurred in

providing air traffic control services to aircraft arriving to and

departing from airport facilities (known as "terminal" services) are

not included in the enroute or oceanic cost pools. Also excluded

from the two cost pools are costs incurred for providing services--

like pilot briefings, search and rescue coordination, aviation weather

information (known as "flight services")--to non-overflights.

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airspace and oceanic airspace, respectively. Explaining that

the unit costs computed in step three were an appropriate

measure of the cost of services provided to overflights, the

FAA stated:

Because the level of [air traffic control] services are [sic]

assumed identical for all aircraft operations within a

particular environment (i.e., enroute or oceanic), it is

reasonable to assume that the costs of providing [air

traffic control] services to overflights are proportional to

total ATC costs within each environment. Consequently,

the unit costs of providing [air traffic control] services to

overflights within each environment is [sic] identical to

the unit costs of providing [air traffic control] services to

all air traffic within each environment.

Revised Joint Appendix (JA) 19; see also JA 13 (same).

Based on this methodology, the FAA concluded that unit

costs for enroute overflights were $36.14 per 100 nautical

miles (or portion thereof) and unit costs for oceanic overflights were $19.47 per 100 nautical miles (or portion thereof).

The amounts were adjusted to include billing and collection

expenses, resulting in the $37.43 and $20.16 fees set forth in

the 2000 Rule.

Within 60 days of publication of the 2000 Rule, the petitioners sought review in this court. See 49 U.S.C. s 46110(a).5

__________

5 Earlier in this case, the FAA argued the petitioners' appeals

might be premature and therefore it was "a close question" whether

we had jurisdiction. The FAA has since conceded that no jurisdictional problem prevents our deciding the case on the merits.

Respondents' Response to Joint Motion to Consolidate Petitions for

Review (filed April 23, 2001). We are satisfied that the petitioners'

notices of appeal were timely and that we have jurisdiction pursuant

to 49 U.S.C. s 46110(a). See id. ("[A] person disclosing a substantial interest in an order issued by the Secretary of Transportation

(or the Administrator of the Federal Aviation Administration with

respect to aviation safety duties and powers designated to be

carried out by the Administrator) under this part 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 ....").

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II.

The petitioners' first argument is that in promulgating the

2000 Rule the FAA was required (but failed) to comply with

the notice and comment requirements of the Administrative

Procedure Act (APA).6 Section 553 of the APA requires an

agency to publish a "[g]eneral notice of proposed rule making" and to "give interested persons an opportunity to participate in the rule making." 5 U.S.C. s 553(b), (c); see Asiana,

134 F.3d at 396. The Congress may modify the requirements

but a "[s]ubsequent statute may not be held to supersede or

modify [the APA] ... except to the extent that it does so

expressly." 5 U.S.C. s 559; see Asiana, 134 F.3d at 396. In

Asiana, we held that section 45301(b)(2) exempted the 1997

Rule from the APA's notice and comment requirements. See

__________

6 Section 553(b) and (c) of the APA provides in relevant part:

(b) General notice of proposed rule making shall be published in the Federal Register, unless persons subject thereto are

named and either personally served or otherwise have actual

notice thereof in accordance with law. The notice shall include--

(1) a statement of the time, place, and nature of public

rule making proceedings;

(2) reference to the legal authority under which the rule is

proposed; and

(3) either the terms or substance of the proposed rule or a

description of the subjects and issues involved.

...

(c) After notice required by this section, the agency shall

give interested persons an opportunity to participate in the rule

making through submission of written data, views, or arguments with or without opportunity for oral presentation. After

consideration of the relevant matter presented, the agency

shall incorporate in the rules adopted a concise general statement of their basis and purpose.

5 U.S.C. s 553(b), (c).

id. at 399 ("To summarize, we hold that, to the extent that

s 45301 specified otherwise, the FAA was not required to

conform to APA s 553 procedures. Because the FAA complied with s 45301, the process by which it implemented fees

for overflights withstands the petitioners' challenge."). The

question now before us is whether section 45301(b)(2) authorizes the adoption of the 2000 Rule without notice and comment as well. We conclude that it does.

The Act authorizes the FAA to "publish in the Federal

Register an initial fee schedule and associated collection

process as an interim final rule, pursuant to which public

comment will be sought and a final rule issued." 49 U.S.C.

s 45301(b)(2). The petitioners reason that, because the 1997

Rule already established the "initial" fee schedule authorized

by the statute, the fee schedule established by the 2000 Rule

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was not the "initial" fee schedule and, accordingly, in promulgating it the FAA should have complied with the APA's notice

and comment provisions. We disagree.

Our decision in Asiana vacated the 1997 fee schedule in its

entirety. As we have explained before, "[t]o 'vacate' ...

means 'to annul; to cancel or rescind; to declare, to make, or

to render, void; to defeat; to deprive of force; to make of no

authority or validity; to set aside.' " Action on Smoking &

Health v. Civil Aeronautics Bd., 713 F.2d 795, 797 (D.C. Cir.

1983) (per curiam) (citations omitted). Thus, the Asiana

holding had the effect of restoring the status quo ante,

namely that no fee schedule was in effect. See id. ("[B]y

vacating or rescinding the recissions [sic] proposed by ER1245, the judgment of this court had the effect of reinstating

the rules previously in force...."). In light of the status quo

ante, the 2000 Rule plainly establishes only "an initial [rather

than a subsequent] fee schedule and associated collection

process." Accordingly, the FAA was entitled to establish the

overflight fees using an interim rulemaking without notice

and comment.

III.

We review the FAA's adoption of the 2000 Rule to determine whether it is "arbitrary, capricious, an abuse of discretion, or not in accordance with law." 5 U.S.C. s 706(2)(A).

As the Supreme Court explained in Motor Vehicle Manufacturers Ass'n v. State Farm Mutual Automobile Insurance

Co., 463 U.S. 29 (1983):

The scope of review under the "arbitrary and capricious"

standard is narrow and a court is not to substitute its

judgment for that of the agency. Nevertheless, the

agency must examine the relevant data and articulate a

satisfactory explanation for its action including a "rational connection between the facts found and the choice

made." Burlington Truck Lines, Inc. v. United States,

371 U.S. 156, 168 (1962). In reviewing that explanation,

we must "consider whether the decision was based on a

consideration of the relevant factors and whether there

has been a clear error of judgment." Bowman Transp.,

Inc. v. Arkansas-Best Freight System, Inc., 419 U.S.

281, 285 (1974); Citizens to Preserve Overton Park v.

Volpe, 401 U.S. 402, 416 (1971). Normally, an agency

rule 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 differUSCA Case #01-1175 Document #609580 Filed: 07/13/2001 Page 14 of 17
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ence in view or the product of agency expertise. The

reviewing court should not attempt itself to make up for

such deficiencies; we may not supply a reasoned basis

for the agency's action that the agency itself has not

given. SEC v. Chenery Corp., 332 U.S. 194, 196 (1947).

We will, however, "uphold a decision of less than ideal

clarity if the agency's path may reasonably be discerned." Bowman Transp. Inc., 419 U.S. at 286. See

also Camp v. Pitts, 411 U.S. 138, 142-143 (per curiam).

Id. at 43. To survive arbitrary and capricious review, the

2000 Rule must contain a "satisfactory explanation" for the

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FAA's conclusion that the overflight fees imposed are "directly related" to the FAA's cost of providing service to overflights. See 49 U.S.C. s 45301(b)(1)(B); Asiana, 134 F.3d at

402. In view of the methodology followed by the FAA in

establishing the fees, see supra pages 10-11, there must be at

least record support for the proposition that the FAA incurs

the same costs in providing service to overflights and nonoverflights using either the enroute airspace or the oceanic

airspace. If that proposition is not true, the overflight fees

established by the 2000 Rule would not be "directly related"

to the FAA's costs of providing service to overflights as the

Act requires.

The petitioners contend that the FAA erroneously concluded that costs for providing services to non-overflights are the

same as the costs of providing services to overflights. Overflights are different from other flights, the petitioners argue;

they fly in high altitudes and do not require air traffic control

assistance to ascend or descend either to airports or to lower

altitudes surrounding airports. "Because [the] FAA must

expend a substantially greater level of effort (in manpower

and other resources) to provide air traffic control services to

low altitude and transitional flights than it does for overflights, the FAA's costs of providing these services to an

overflight must be lower, on average, than the FAA's cost of

providing these services to all aircraft within a particular

environment." Revised Opening Brief of Petitioners at 27-

28.

The FAA defends its decision and argues the overflight

fees conform to the Act's requirements. That may be so but

we are unable on this record to evaluate the merits of the

FAA's arguments. The FAA failed to provide any record

justification for the proposition that costs for servicing overflights are the same as costs for servicing non-overflights. It

simply assumed it was so. See JA 19 ("Because the level of

[air traffic control] services are [sic] assumed identical for all

aircraft operations within a particular environment (i.e., enroute or oceanic), it is reasonable to assume that the costs of

providing [air traffic control] services to overflights are proportional to total ATC costs within each environment." (emUSCA Case #01-1175 Document #609580 Filed: 07/13/2001 Page 16 of 17
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phasis added)). Even under the more deferential standard of

review applicable to an interim rule, see Competitive Telecomms. Ass'n v. FCC, 87 F.3d 522, 531 (D.C. Cir. 1996) ("The

proper judicial response to an interim rule is ... to review it

with the understanding that the agency may reasonably limit

its commitment of resources to refining a rule with a short

life expectancy."), this is not enough. And, while we agree

with the FAA that " 'we do not sit as a panel of referees on a

professional economics journal, but as a panel of generalist

judges obliged to defer to a reasonable judgment by an

agency acting pursuant to congressionally delegated authority,' " Revised Brief for Respondent at 38 (quoting City of Los

Angeles v. Department of Transp., 165 F.3d 972, 977 (D.C.

Cir. 1999)), "[w]ith its delicate balance of thorough record

scrutiny and deference to agency expertise, judicial review

can occur only when agencies explain their decisions with

precision, for '[i]t will not do for a court to be compelled to

guess at the theory underlying the agency's action....' "

American Lung Ass'n v. EPA, 134 F.3d 388, 392 (D.C. Cir.

1998) (quoting SEC v. Chenery Corp., 332 U.S. 194, 196-97

(1947)).

Because the FAA has failed to articulate the basis for its

conclusion that "the unit costs of providing [air traffic control]

services to overflights within each environment is [sic] identical to the unit costs of providing [air traffic control] services

to all air traffic within each environment," we

remand to the FAA for further proceedings consistent with this opinion.

So ordered.

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