Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-05-01276/USCOURTS-caDC-05-01276-0/pdf.json

Parties Involved:
Airports Council International - North America
Amicus Curiae for Petitioner
Mary E. Peters
Respondent
Port Authority of New York and New Jersey
Petitioner
United States Department of Transportation
Respondent

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 11, 2006 Decided March 2, 2007

No. 05-1222

PORT AUTHORITY OF NEW YORK AND NEW JERSEY

PETITIONER

v.

DEPARTMENT OF TRANSPORTATION AND

MARY E. PETERS, SECRETARY OF TRANSPORTATION,

RESPONDENTS

BRENDAN AIRWAYS, LLC, D/B/A USA3000 AIRLINES, ET AL.,

INTERVENORS

Consolidated with

05-1276, 05-1316

On Petitions for Review of Orders of the

United States Department of Transportation

Jeffery A. Tomasevich argued the cause for petitioner Port

Authority of New York and New Jersey. With him on the briefs

were Steven S. Rosenthal, Douglas A. Tucker, and Carlene V.

McIntyre.

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John Longstreth argued the cause for petitioners Brendan

Airways, LLC, et al. With him on the briefs were James R.

Weiss and Christopher S. Huther.

Patricia A. Hahn, Thomas R. Devine, and Arthur P. Berg

were on the brief for amicus curiae Airports Council International - North America in support of petitioner Port Authority of

New York and New Jersey and in opposition to petitioners

Brendan Airways, LLC, et al. 

David J. Frantz was on the brief for amicus curiae United

Kingdom of Great Britain and Northern Ireland in support of

petitioners Brendan Airways, LLC, et al., urging affirmance in

part and reversal in part.

Mary F. Withum, Trial Attorney, U.S. Department of

Transportation, argued the cause for the respondents. With her

on the brief were Thomas O. Barnett, Assistant Attorney

General, U.S. Department of Justice, Robert B. Nicholson and

Steven J. Mintz, Attorneys, Jeffrey A. Rosen, General Counsel,

U.S. Department of Transportation, Paul M. Geier, Assistant

General Counsel, and Dale C. Andrews, Deputy Assistant

General Counsel. John J. Powers, III, Attorney, U.S. Department of Justice, entered an appearance.

Steven S. Rosenthal, Jeffery A. Tomasevich, Douglas A.

Tucker, and Carlene V. McIntyre were on the brief for intervenor Port Authority of New York and New Jersey in support of

the respondents.

James R. Weiss and John Longstreth were on the brief for

intervenors Brendan Airways, LLC, et al. in support of the

respondents.

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Before: TATEL and BROWN,Circuit Judges, and EDWARDS,

Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge BROWN.

BROWN, Circuit Judge: The Port Authority of New York

and New Jersey (“Port Authority”) runs Newark Liberty

International Airport (“EWR”). When the Port Authority

increased the fees charged at EWR’s International Terminal B

(“ITB”), thirteen airlines operating out of that terminal complained to the Department of Transportation (“DOT”) pursuant

to 49 U.S.C. § 47129, claiming the rates were unreasonable and

unjustly discriminatory. The DOT agreed with the airlines in

part and ordered the Port Authority to issue revised fees and to

refund excess fees already collected. Deeming the DOT’s

orders insufficient, the complainant airlines sought review in

this court, disputing the DOT’s evidentiary rulings and its

finding that the proposed fees were nondiscriminatory. The Port

Authority likewise petitioned for review, contending its rate

calculations were in fact reasonable. More fundamentally, the

Port Authority argued § 47129 applied only to U.S. air carriers

and thus excluded twelve of the thirteen complaining airlines.

For reasons discussed below, we grant the Port Authority’s

petitions for review, deny the airlines’ petition for review, and

remand to the DOT for further proceedings.

I

A 1998 report commissioned by the Port Authority indicated ITB would soon reach capacity. In response, the Port

Authority negotiated a deal with Continental Airlines (“Continental”) permitting Continental to expand Terminal C, which

Continental leased from the Port Authority for its exclusive use

pursuant to a 1985 agreement. Continental issued over $700

million in bonds to fund the construction of C-3, a new internaUSCA Case #05-1276 Document #1026021 Filed: 03/02/2007 Page 3 of 42
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tional concourse at Terminal C, and the Port Authority leased

the land for C-3 to Continental. Continental then moved its

international flights from ITB to C-3.

Carriers operating international flights out of ITB pay the

Port Authority Federal Inspection Facility Space (“FIS”) fees on

all incoming international passengers who are not pre-screened,

and General Terminal Charge (“GTC”) fees on all passengers,

whether domestic or international and whether inbound or

outbound. In return, the Port Authority maintains the gates and

FIS facilities at ITB. The Port Authority does not charge GTC

or FIS fees at Terminal C but recovers costs from Continental

through its fixed lease.

Following the attacks of September 11, 2001, traffic at

EWR declined, and with it the Port Authority’s FIS and GTC

revenues. Continental’s move to C-3 exacerbated the situation.

In response, the Port Authority decided to raise FIS and GTC

fees at ITB. Carriers complained, demanding a more adequate

explanation and threatening to leave EWR if the Port Authority

increased rates by too much. However, the Port Authority

persevered and implemented the increase effective February 1,

2005, raising FIS fees from $13.50 to $22 per person and GTC

fees from $5.50 to $8 per person.

Thirteen of the eighteen carriers at ITB filed a 49 U.S.C.

§ 47129 complaint (“the Complaint”), arguing the increase was

unreasonable. Of these thirteen carriers (“the Complainants” or

“the Airlines”), only Brendan Airways is a U.S. air carrier. The

Complainants paid the fee increase under protest during the

DOT adjudication, and the Port Authority posted bonds to cover

any repayments the DOT might order.

The DOT determined the Complaint constituted a significant dispute. Instituting Order, Brendan Airways, LLC, Order

2005-3-21, Docket OST-05-20407-36, at 19 (DOT Mar. 16,

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2005). The DOT denied the Port Authority’s motion to exclude

the foreign carriers and issued two discovery orders: (1)

ordering the Port Authority to disclose specified documents

related to the proposed rate increase; and (2) establishing

standards for the Administrative Law Judge (“ALJ”) to use in

subsequent evidentiary rulings in light of the Airlines’ failure to

include supporting testimony with their Complaint, an oversight

that exposed them to limits under 14 C.F.R. §§ 302.603–605 on

their ability to introduce evidence.

The Complainants sought to have additional documents

disclosed and to depose a Port Authority employee regarding the

disclosures—requests the ALJ denied. The ALJ likewise

generally denied a motion to introduce expert testimony

responding to the disclosures, allowing additional testimony

only to the extent it was advertised in the Airlines’ original

pleadings.

At the hearing, the Complainants claimed the Port Authority’s “Expense Reclassification charge” from 2004 should not

have been included in the cost forecast for 2005. In addition,

they contended the Port Authority’s lease to Continental

effectively charged Continental much lower GTC and FIS fees,

giving that airline an unfair advantage.

The ALJ issued a Recommended Decision, Brendan

Airways, LLC, Docket OST-05-20407-116 (DOT May 9, 2005),

available at http://dms.dot.gov/reports, which the DOT reviewed and substantially adopted in its own Final Decision,

Brendan Airways, LLC, Order 2005-6-11, Docket OST-05-

20407-129 (DOT June 14, 2005). The Final Decision determined: (1) it was unreasonable for the Port Authority to include

its 2004 Expense Reclassification charge in its forecast for 2005

direct costs; (2) the Complainants failed to demonstrate unjust

discrimination; and (3) the ALJ’s evidentiary rulings were

proper.

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The DOT ordered the Port Authority to revise its proposed

FIS and GTC fees and to compensate the Complainants for

amounts collected beyond those revised fees. The DOT

accepted the Port Authority’s revised proposal, which excluded

the Expense Reclassification charge. Brendan Airways, LLC,

Order 2005-7-10, Docket OST-05-20407-133, at 6 (DOT July

12, 2005) (“July 12 Order”). With the DOT’s permission, the

Port Authority repaid the excess in the form of credits on the

Complainants’ accounts.

The Port Authority and the Complainants both sought

judicial review of the Final Decision in timely fashion. See 49

U.S.C. § 46110. In a subsequent—but likewise timely—petition

for review, the Port Authority challenged the July 12 Order,

which instituted fees the Port Authority had proposed only under

protest. The Port Authority asks this court to vacate the DOT’s

denial of its motion to dismiss the foreign carriers and to reverse

the DOT’s determination that it was unreasonable to include the

Expense Reclassification charge in cost forecasts. The Complainants, meanwhile, challenge the ALJ’s evidentiary rulings,

and ask us to vacate the DOT’s determination that the proposed

fees were nondiscriminatory, as well as any other orders relying

on those evidentiary rulings. We address the claims of each

petitioner in turn.

II

We first consider the Port Authority’s contention that 49

U.S.C. § 47129 adjudication procedures are available only to

U.S. air carriers. As a threshold matter, the DOT claims the Port

Authority forfeited this argument by failing to raise it in its brief

to the Secretary before the Final Decision. Indeed, this court

may not consider objections to final orders in § 47129 adjudications “unless objection was urged before an administrative law

judge or the Secretary at a proceeding under this subsection

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[§ 47129(c)] or, if not so urged, unless there were reasonable

grounds for failure to do so.” 49 U.S.C. § 47129(c)(6). However, that same subsection requires the Secretary to “dismiss the

complaint if no significant dispute exists or . . . [to] assign the

matter to an administrative law judge.” § 47129(c)(2). The Port

Authority challenged the participation of the foreign carriers

during the DOT’s determination of whether a “significant

dispute” existed—a “proceeding under this subsection.” Thus,

we have jurisdiction to review the DOT’s ruling.

Turning to the merits, we begin with the statute. Section

47129 establishes an expedited process for determining whether

fees imposed on “one or more air carriers (as defined in section

40102 of this title)” are reasonable. 49 U.S.C. § 47129(a)(1).

The problem, as illustrated by this case, is that § 40102 contains

definitions for both “air carrier,” § 40102(a)(2), and “foreign air

carrier,” § 40102(a)(21). In the vernacular, “foreign air carrier[s]” would appear to comprise a subset of “air carrier[s],” but

§ 40102 instead mandates that the two sets be disjoint. Only a

United States citizen can be an “air carrier” in the sense of

(a)(2), while only a non-citizen can be a “foreign air carrier” in

the sense of (a)(21). The DOT however maintains that in

§ 47129, unlike in § 40102(a)(2), the term “air carrier” embraces

all providers of air transportation, regardless of citizenship. See

14 C.F.R. § 302.601(a) (2006) (“This subpart contains the

specific rules that apply to a complaint filed by one or more air

carriers or foreign air carriers (‘carriers’), pursuant to 49 U.S.C.

47129(a) . . . .”); Policy Regarding Airport Rates and Charges,

61 Fed. Reg. 31,994, 32,019 ¶ 1.2.1 (June 21, 1996) [hereinafter

Policy Statement] (same).

Brendan Airways and twelve foreign air carriers filed a

§ 47129 complaint requesting determination of the reasonableness of the proposed rate increase. The Port Authority concedes

Brendan Airways is an “air carrier” even within the narrow

definition laid out in § 40102(a)(2), and hence that the DOT

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acted within its authority when it issued the requested

determination.

The disagreement centers on the remedies available to the

foreign complainants. Under § 47129, amounts paid under

protest by “a complainant air carrier” are subject to refund if the

fees are deemed unreasonable, and to assure timely repayment,

“the airport shall obtain a letter of credit, or surety bond, or other

suitable credit facility, equal to the amount in dispute.”

§ 47129(d)(1)(B)–(C). If the non-U.S. complainants are not “air

carriers” in the sense of § 47129(a)(1), then they were not

properly parties to the § 47129 complaint and cannot qualify for

the refunds due “complainant air carrier[s].” Moreover, if

§ 47129(d)(1)(B) gives the DOT no authority to order airports

to refund excess fees to non-U.S. carriers, then the

§ 47129(d)(1)(C) requirement that airports obtain bonds to

secure such potential payments likewise disappears. Thus, this

issue’s resolution hinges on whether “air carrier” in

§ 47129(a)(1) includes non-U.S. carriers.

In resolving this question, we must first determine the

appropriate standard of review. Agency interpretations of the

statutes they administer are generally reviewed according to the

deferential standard set out in Chevron U.S.A. Inc. v. NRDC, 467

U.S. 837 (1984). When applying that standard of review, we

must give effect to the intent of Congress if that intent is clear.

Id. at 842–43. If instead the statute is silent or ambiguous with

respect to the issue at hand, we should defer to the agency’s

interpretation so long as it is reasonable. Id. at 843–44. In

determining whether the intent of Congress is clear, we avail

ourselves of traditional tools of statutory construction. Id. at 843

n.9.

However, we do not automatically apply Chevron deference

regardless of the context. Statutory interpretations by agencies

are “not entitled to deference absent a delegation of authority

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from Congress to regulate in the areas at issue.” Motion Picture

Ass’n of Am. v. FCC, 309 F.3d 796, 801 (D.C. Cir. 2002); see

also Gonzales v. Oregon, 126 S. Ct. 904, 916 (2006) (applying

Chevron deference only to those interpretations “promulgated

pursuant to authority Congress has delegated” to the agency).

Here, Congress delegated authority to the DOT to regulate

in this area, but that power was arguably limited to designing

§ 47129 adjudication procedures and setting rules for determining whether a fee is reasonable. See 49 U.S.C. § 47129(b).

Thus, the DOT’s interpretation at 14 C.F.R. § 302.601(a) of

§ 47129 as including non-U.S. carriers was not issued pursuant

to any explicit delegation. Still, such a delegation can be implicit, in which case “a court may not substitute its own construction of a statutory provision for a reasonable interpretation

made by the administrator of an agency.” Chevron, 467 U.S. at

844; see also Ry. Labor Executives’ Ass’n v. Nat’l Mediation

Bd., 29 F.3d 655, 671 (D.C. Cir. 1994) (en banc). Furthermore,

the fact that the statutory language in question determined the

scope of the DOT’s authority to adjudicate, and in particular to

order retroactive awards, does not in itself render Chevron

inapplicable. See Detroit Edison Co. v. FERC, 334 F.3d 48, 53

(D.C. Cir. 2003); Independent Petroleum Ass’n of Am. v.

DeWitt, 279 F.3d 1036, 1040 (D.C. Cir. 2002).

In the end, we need not definitively answer this question,

because we find that the reference in § 47129 to air carriers “as

defined in section 40102 of this title” unambiguously incorporates § 40102(a)(2)’s limitation of this term to U.S. citizens.

The Complainants as intervenors, the DOT as respondent, and

the Government of the United Kingdom as amicus offer several

arguments in opposition to this reading of § 47129. As we

would vacate the DOT’s interpretation even under the more

deferential Chevron standard, we shall assume in reviewing

these arguments that Chevron applies.

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First, the Complainants contend that since § 47129 refers to

air carriers “as defined in section 40102” and not “as defined in

section 40102(a)(2),” the statute actually incorporates all of the

definitions from § 40102, including in particular both (domestic)

air carriers at § 40102(a)(2) and foreign air carriers at

§ 40102(a)(21). If § 40102(a)(2) in fact defined “domestic air

carrier” rather than simply “air carrier,” this argument would

clearly carry the day. But even as § 40102 stands, the Complainants’ suggestion is at least plausible, for assuming the drafters

of § 47129 intended to include both “air carriers” and “foreign

air carriers,” there is no obvious, succinct formulation that

encapsulates the union of those two terms and no more.

The Complainants effectively read § 40102 as bifurcating

the generic category “air carrier” and then (inconveniently)

assigning to one subdivision the name commonly associated

with the broader class. In such a circumstance, an external

provision using the term “air carrier” might well be read to mean

either the specific subdivision defined in § 40102(a)(2) or else

the more general category, depending on the context.

Section 40102(a)(2) defines “air carrier” as “a citizen of the

United States undertaking by any means, directly or indirectly,

to provide air transportation.” If § 40102(a)(21) defined

“foreign air carrier” as “a person, not a citizen of the United

States, undertaking by any means, directly or indirectly, to

provide air transportation,” then the question would be close.

We would have a natural concept, namely “a person undertaking

by any means, directly or indirectly, to provide air transportation,” which would commonly be termed “air carrier,” and

which would be subdivided by § 40102 into (domestic) “air

carrier” and “foreign air carrier” based on citizenship, with the

term “air carrier” thus rendered ambiguous.

But § 40102(a)(21) does not define “foreign air carrier” that

way. Rather, it states that “foreign air carrier” means “a person,

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not a citizen of the United States, undertaking by any means,

directly or indirectly, to provide foreign air transportation.”

§ 40102(a)(21) (emphasis added). Section 40102(a)(5) in turn

defines “air transportation” as “foreign air transportation,

interstate air transportation, or the transportation of mail by

aircraft,” so that “foreign air transportation” is a strict subset of

“air transportation.” Hence, the definition of “foreign air

carrier” is twice distinguished from the definition of “air

carrier”—first by citizenship, and second by the type of transportation provided.

Thus, the Airlines’ argument breaks down. If § 40102

merely subdivided the pre-statutory term “air carrier” based on

U.S. citizenship, then § 47129’s explicit citation to § 40102

could perhaps be taken as a reference only to the shared terms

in § 40102(a)(2) and § 40102(a)(21). But given that the two

definitions, taken together, indicate no natural, broader concept,

we cannot force such a tortured interpretation on § 47129. See

Brown v. Gardner, 513 U.S. 115, 118 (1994) (“Ambiguity is a

creature not of definitional possibilities but of statutory context

. . . .”). We therefore reject the Airlines’ first argument.

Second, the Complainants point to § 47129(e)(1), which

states that § 47129 does not apply to “a fee imposed pursuant to

a written agreement with air carriers using the facilities of an

airport.” § 47129(e)(1) (emphasis added). By their logic, if “air

carriers” means only “U.S. air carriers” in § 47129, then

§ 47129(e)(1) pointedly bars only U.S. air carriers from challenging fees imposed pursuant to written agreements, so that by

implication foreign air carriers may indeed challenge such fees

via § 47129. Arguing that challenges by any carrier to fees

imposed pursuant to written agreements would run counter to

the purpose of the statute, the Complainants reason that

§ 47129(e)(1) must be read to exclude both U.S. and foreign

carriers, and hence that “air carriers” in § 47129(e)(1) covers

foreign carriers as well. With no indication that “air carriers”

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1The Airlines in fact maintain that the legislative history reveals

a clear intention to include foreign air carriers, but none of their

citations are convincing. Senator Ford’s assurance that § 47129 “will

not affect the fees and arrangements that are a part of a written

agreement between an airport and the airlines,” 140 CONG. REC.

13,261 (1994), merely restates § 47129(e)(1), and is equally true

regardless how “air carrier” is interpreted. Senator Feinstein’s

reference to “a partnership interest between air carrie[r]s and airport

owners” indeed appears to include foreign air carriers, but Senator

Feinstein was not describing the effects of the immediate bill but

rather broadly opining on “the entire reason we are dealing with the

issue of rates and charges.” 140 CONG. REC. at 13,264. Senator

Feinstein further emphasized that the bill would not affect the ongoing

dispute in Los Angeles, id. at 13,265, but since § 47129(e)(2)–(3) and

(f)(2) explicitly exclude preexisting conflicts from the new procedure,

should mean different things in different parts of § 47129, the

Complainants then infer that this same, broad definition applies

in § 47129(a)(1).

But this argument ignores the basic structure of § 47129.

Section 47129(a)(1) states that “air carriers,” and only air

carriers, may make use of § 47129. Section 47129(e)(1) does

not provide an exhaustive list of all persons unable to use

§ 47129, but rather merely carves out specific exceptional

circumstances in which the “air carriers” mentioned in

§ 47129(a)(1) cannot use § 47129, that earlier subsection

notwithstanding. Therefore, regardless of how we interpret “air

carrier,” § 47129(e)(1) cannot be read to authorize anyone to

contest fees imposed pursuant to written agreements.

Section 47129(e)(1) thus provides no insight into the proper

interpretation of “air carrier” in § 47129, and we reject the

Complainants’ second argument.

Third, all three parties argue that there is no legislative

history indicating an intention to exclude foreign air carriers

from § 47129 procedures.1

 In the words of the Complainants,

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this again sheds no light on the meaning of “air carrier.” This court

had occasion to interpret these same comments in Los Angeles

Department of Airports v. U.S. DOT, 103 F.3d 1027 (D.C. Cir. 1997).

But our statement there that “Congress specifically intended that the

airlines be able to use the newly-created procedure to challenge the

LAX fee increase,” id. at 1037, concerned the time limits in 49 U.S.C.

§ 47129(a)(1)(B), not the applicability of § 47129 to foreign air

carriers. All in all, the Airlines point to no statement that proves even

one Senator or Representative intended § 47129 to cover non-U.S.

carriers, much less that the majority in each chamber agreed.

“The Port Authority does not cite a shred of evidence based on

the history, purpose or structure of the statute to support its

notion that Congress intended to deny foreign carriers the

benefits of Section 47129.” Comp’ts’ Intervenor Br. 17.

Amicus amplifies this point, claiming it would have been

“inconsistent” and not “logical” for Congress to create an

expedited adjudication procedure that excluded foreign air

carriers so soon after the United States signed a bilateral

agreement with the United Kingdom requiring each party to

“maintain a system to safeguard users from charges that do not

meet the criteria” of the agreement, including “a process for

resolving complaints which the contracting parties in principle

expect to be used in the first instance.” U.K.’s Amicus Br. 14

(internal quotation marks omitted) (quoting Agreement Between

the Government of the United States of America and the

Government of the United Kingdom of Great Britain and

Northern Ireland Concerning Air Services, U.S.-U.K., July 23,

1977, 28 U.S.T. 5367, as amended by Agreement Between the

United States of America and the United Kingdom of Great

Britain and Northern Ireland, U.S.-U.K., Mar. 11, 1994, T.I.A.S.

No. 12,536 [hereinafter Bermuda II], art. 10(4)).

Indeed, legislative history is silent on this point. Section

47129 began life as House Bill 2739 in 1993. The House of

Representatives’ version of the bill made no reference to

expedited resolution of fee disputes. See H.R. 2739, 103d

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Cong., 139 CONG. REC. 24,036–54, 24,272–81 (as passed by

House of Representatives, Oct. 13, 1993). The Senate’s version

would have inserted most of the current § 47129 into the Airport

and Airway Improvement Act of 1982, Pub. L. No. 97-248, tit.

V, 96 Stat. 324, 671–702, in which the definitions now contained at 49 U.S.C. § 40102 did not apply. H.R. 2739, sec. 504,

§ 536, 103d Cong., 140 CONG. REC. 13,513, 13,520–21 (as

passed by Senate, June 16, 1994). The reference to the § 40102

definition first appeared in the conference report reconciling

these two versions, which provided no explanation for the

change, absent which the DOT would have been free to interpret

“air carrier” in the resulting provision in any reasonable fashion.

H.R. REP. NO. 103-677, at 9, 69 (1994) (Conf. Rep.). Congress’s motivation in adopting this new provision must hence

remain a mystery.

But ours not to reason why: Be it ever so illogical and

inconsistent with government policy, § 47129 was duly passed

by Congress and signed by the President, and we must give it

effect. The plain language of a statute is strong evidence of

Congress’s intent. See Sierra Club v. EPA, 294 F.3d 155, 161

(D.C. Cir. 2002) (“The most reliable guide to congressional

intent is the legislation the Congress enacted . . . .”). We

certainly cannot aggrandize an agency’s power in contravention

of such plain language based solely on Congressional silence as

to the impetus behind its chosen phrasing. That way madness

lies. See Ry. Labor Executives’ Ass’n, 29 F.3d at 671 (“Were

courts to presume a delegation of power absent an express

withholding of such power, agencies would enjoy virtually

limitless hegemony, a result plainly out of keeping with Chevron

and quite likely with the Constitution as well.”). We therefore

refuse the DOT’s invitation to pare § 47129 down to only those

portions explained in the Congressional Record.

Fourth, the DOT argues § 47129 must be construed in

keeping with the United States’ international commitments as a

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2The DOT’s suggestion that such interpretation is required by 49

U.S.C. § 40105(b)(1) is incorrect. Section 40105(b)(1) states that

“[i]n carrying out this part, the Secretary of Transportation and the

Administrator . . . shall act consistently with obligations of the United

States Government under an international agreement.” § 40105(b)(1)

(emphasis added). But § 40105 is in Part A of Title 49, Subtitle VII,

while § 47129 is in Part B of that subtitle.

3Whether Part 16 can be so interpreted as to permit such

retroactive remedies is a question for the DOT in the first instance, and

we do not purport to decide it today. Likewise, while 14 C.F.R.

§ 16.1(a) disallows the use of Part 16 in “disputes between U.S. and

foreign air carriers and airport proprietors concerning the

reasonableness of airport fees covered by 14 CFR part 302,” which

regulates § 47129 adjudications, in light of our holding today it is

unclear whether § 16.1(a) still bars foreign air carriers from Part 16

procedures, and the DOT has the first say in this matter.

matter of basic statutory interpretation.2 According to the DOT

and the United Kingdom, the United States would be in breach

of Bermuda II if it barred non-U.S. carriers from § 47129

adjudications, given that the DOT’s alternative fee dispute

procedure, 14 C.F.R. Part 16, does not clearly authorize retroactive remedies.3

 As the DOT rightly notes, “an act of Congress

ought never to be construed to violate the law of nations if any

other possible construction remains.” Murray v. The Schooner

Charming Betsy, 6 U.S. (2 Cranch) 64, 118 (1804). But this

leaves open the question of whether the DOT’s proposed

construction is possible. As the Supreme Court has cautioned:

When [a treaty and a federal statute] relate to the same

subject, the courts will always endeavor to construe them so

as to give effect to both, if that can be done without violating the language of either; but if the two are inconsistent,

the one last in date will control the other, provided always

the stipulation of the treaty on the subject is self-executing.

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4 In similar fashion, the DOT’s assertion that its interpretation

deserves especial deference on account of its vintage fails to change

the final result. It is true that we “will normally accord particular

deference to an agency interpretation of longstanding duration,”

Barnhart v. Walton, 535 U.S. 212, 220 (2002) (internal quotation

marks omitted); see also Sec’y of Labor v. Excel Mining, LLC, 334

F.3d 1, 7–8 (D.C. Cir. 2003), but as such deference must still yield to

the plain meaning of the statute, this point more properly addresses the

second step under Chevron, which we do not reach.

5The change from “Act” to “part” is less dramatic than it appears.

All but one of the references to “air carriers” in the Federal Aviation

Whitney v. Robertson, 124 U.S. 190, 194 (1888). Where, as

here, the statute admits of only one reasonable interpretation,

that interpretation governs even in the face of strongly contrary

language in earlier international agreements.4

Fifth, the DOT urges us to interpret § 47129 in light of the

since-deleted section 101 of the Federal Aviation Act of 1958.

In relevant part, this provision read as follows:

As used in this Act, unless the context otherwise requires—

. . . .

(3) “Air carrier” means any citizen of the United States who

undertakes, whether directly or indirectly or by a lease or

any other arrangement, to engage in air transportation . . . .

Federal Aviation Act of 1958, Pub. L. No. 85-726, § 101, 72

Stat. 731, 737 (codified with some differences in language at 49

U.S.C. app. § 1301 (1988)) (repealed 1994) (emphasis added).

This definition was codified at 49 U.S.C. § 40102 by Public Law

No. 103-272 in 1994, prior to the passage of § 47129. The

codification act changed “As used in this Act” to “In this part”

and dropped entirely the proviso, “unless the context otherwise

requires.”5

 However, that same act indicated that its first four

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17

Act were moved to Part A of Title 49, Subtitle VII. The lone

exception, the current 39 U.S.C. § 5007(b), explicitly refers to the

definition: “In this subsection, ‘air carrier’ and ‘aircraft’ have the

same meanings given those terms in section 40102(a) of title 49.” 39

U.S.C. § 5007(b)(1). 6The DOT cites two cases in which courts overrode the § 40102

definition for “air carrier” based on context. However, even leaving

aside the fact that the cases were decided when section 101 of the

Federal Aviation Act—including the context proviso—was still in

sections, which restated and replaced laws not yet codified,

“may not be construed as making a substantive change” in “laws

enacted before July 1, 1993.” Act of July 5, 1994, Pub. L. No.

103-272, § 6(a), 108 Stat. 745, 1378. The DOT infers that, if the

deletion of the context proviso effected no substantive change,

then the proviso must be implicit in 49 U.S.C. § 40102. By this

logic, when § 47129 appeals to § 40102 for the definition of “air

carrier,” it incorporates the proviso and is hence susceptible to

variable interpretation. If true, this would take us to the second

step of Chevron.

But the DOT’s analysis misses the mark. Even if we

assume arguendo that § 47129 incorporates the context proviso,

the context surrounding “air carrier” in § 47129(a)(1) in fact

demands a narrow reading of that term. Specifically,

§ 47129(a)(1) says to interpret “air carrier” “as defined in

section 40102 of this title.” 49 U.S.C. § 47129(a)(1). Absent

this explicit cross-reference, the definition from § 40102 would

not apply to § 47129, as § 47129 is in Part B of Title 49, Subtitle

VII, while § 40102 covers only Part A of that subtitle. See

§ 40102(a). It can hardly have been Congress’s intention to

include this cross-reference and thereby incorporate the otherwise inapplicable definition, only to have the DOT disregard the

definition. Thus, the cross-reference to § 40102, contained as it

is in the immediate context of the term requiring interpretation,

is determinative, and § 47129(a)(1) cannot be read to include

foreign air carriers.6

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18

force, they both dealt with statutes that referenced outside language

supporting a broad definition, whereas here § 47129 references outside

language supporting a narrow definition. In South African Airways v.

Dole, 817 F.2d 119 (D.C. Cir. 1987), we analyzed the meaning of “air

carrier” in section 306(a)(1) of the Comprehensive Anti-Apartheid Act

of 1986, Pub. L. No. 99-440, 100 Stat. 1086, 1100 (repealed 1993),

which referenced the Agreement Between the Government of the

United States of America and the Government of the Union of South

Africa Relating to Air Services Between Their Respective Territories,

U.S.-S. Afr., May 23, 1947, 61 Stat. 3057 [hereinafter South Africa

Agreement]. South Africa’s power under the South Africa Agreement

to “designate[]” carriers extended only to South African carriers.

South Africa Agreement annex § 1. Hence, when section 306(a)(1)

discussed “the rights of any air carrier designated by the Government

of South Africa under the [South Africa Agreement],” the external

language militated for an interpretation of “air carrier” that included

foreign (specifically South African) companies. Similarly, in Lawal

v. British Airways, PLC, 812 F. Supp. 713 (S.D. Tex. 1992), a district

court interpreted “air carrier” in the phrase “any air carrier having

authority under subchapter IV of this chapter to provide air

transportation,” 49 U.S.C. app. § 1305(a)(1) (1988), to include foreign

air carriers, because “[s]ubchapter IV deals with economic regulation

of various types of carriers, including foreign air carriers.” Lawal, 812

F. Supp. at 718. Finally, the DOT’s related reference to Morales v.

Trans World Airlines, Inc., 504 U.S. 374 (1992), is unpersuasive, as

Morales did not discuss whether “air carrier” included foreign air

carriers.

In summary, the language of § 47129(a)(1) leaves us no

choice but to infer that Congress intended to limit § 47129

procedures to U.S. carriers. We must therefore give effect to

that clear Congressional intent, the DOT’s contrary interpretation of the statute notwithstanding. Chevron, 467 U.S. at

842–43. The DOT makes a compelling case for the more

inclusive approach, which might indeed fit better with the

United States’ international obligations. But it is Congress, not

the courts, that has the power to expand § 47129 to include

foreign air carriers. Cf. Friends of the Earth, Inc. v. EPA, 446

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19

F.3d 140 (D.C. Cir. 2006) (instructing the EPA to “take its

concerns to Congress” if it objected to the plain meaning of a

statute). In keeping with the statute as it currently stands, we

grant the Port Authority’s petition for review of the Final

Decision and set aside the DOT’s denial of the Port Authority’s

motion to dismiss the Complaint as to the twelve non-U.S.

carriers.

III

Pursuant to 49 U.S.C. § 47129(a)(1), the DOT declared the

Port Authority’s new GTC and FIS fees unreasonable to the

extent they were based on a $2.13 million “Expense Reclassification charge” from 2004. The Port Authority now asks us to

reverse this determination.

Section 47129(b) instructed the Secretary of Transportation

to publish, not later than November 21, 1994, “regulations,

policy statements, or guidelines establishing . . . the standards or

guidelines that shall be used by the Secretary in determining . . .

whether an airport fee is reasonable.” 49 U.S.C. § 47129(b). In

response, the DOT released the Policy Statement, 61 Fed. Reg.

31,994, described above. The Policy Statement placed separate

limits on airfield fees and non-airfield fees. Compare Policy

Statement ¶ 2.5.1 (“In determining the total costs that may be

recovered from fees for the use of airfield assets and public-use

roadways in the rate base, the airport proprietor must value them

according to their historic cost to the original airport proprietor

(HCA).”) with id. ¶ 2.6 (“For other facilities and land . . . , the

airport proprietor may use any reasonable methodology to

determine fees, so long as the methodology is justified and

applied on a consistent basis to comparable facilities . . . .”).

This court deemed the DOT’s disparate treatment of airfield and

non-airfield fees arbitrary and capricious, Air Transp. Ass’n v.

DOT, 119 F.3d 38, 41–44 (D.C. Cir. 1997), and thus vacated

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20

many paragraphs of the Policy Statement, id. at 45, as modified

on reh’g, 129 F.3d 625. To date, the DOT has not revised the

Policy Statement. See Policy Regarding Airport Rates and

Charges, 68 Fed. Reg. 6530 (Feb. 7, 2003) (withdrawing

Advance Notice of Proposed Policy, which was to supersede the

Policy Statement).

Lacking a regulation directly applicable to FIS and GTC

(non-airfield) fees, the DOT used the Policy Statement’s rules

for airfield fees as “guidance.” Final Decision at 11. Uniform

application of such rules to both airfield and non-airfield fees

would at least arguably resolve the problems we noted in Air

Transport Ass’n. The Port Authority contested the applicability

of those Policy Statement rules before the DOT but did not

renew this objection before us. Hence, we assume without

deciding that Policy Statement paragraphs 2.2 to 2.5.4 provide

a valid test for the reasonableness of the disputed fees.

Under the Policy Statement, fees are unreasonable if they

generate revenue exceeding the “rate base”; i.e., the cost of

providing airport services to aeronautical users. Policy Statement ¶¶ 2.2–2.3, 4.2; see also 49 U.S.C. § 47107(b)(1) (listing

permissible uses of airport revenues). In setting fees for 2005,

the Port Authority forecasted its 2005 costs based on actual costs

for 2002–2003 and estimated costs for 2004. Direct International Facility Expenses made up the largest component of these

costs. The Port Authority scaled up its 2004 Direct International

Facility Expenses by 3% for its 2005 forecast. The 2004 figure

included an Expense Reclassification charge of $2,131,482.

Hence, in effect, the Port Authority predicted that it would take

a similar Expense Reclassification charge in 2005. Moreover,

the proposed fee increase was predicated on the inclusion of the

Expense Reclassification charge in the rate base, with the Port

Authority including that charge in the pro forma income

statement it used to demonstrate the increased fees would result

in no appreciable surplus. See Policy Statement ¶ 4.2 (“In

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21

establishing new fees, and generating revenues from all sources,

airport owners and operators should not seek to create revenue

surpluses that exceed the amounts to be used for airport system

purposes and for other purposes for which airport revenues may

be spent under 49 U.S.C. § 47107(b)(1) . . . .”). The Port

Authority now challenges the DOT’s determination that it was

unreasonable to include this Expense Reclassification charge

forecast in its rate base for ITB.

The Expense Reclassification charge consists of two

components. The first reflects signage expenditures that were

erroneously coded as capital expenditures and then reclassified

as operating expenses. If this error was both made and corrected

in 2004, then the expenses recognized in 2004 properly reflect

the costs allocable to that year, and it was appropriate for the

Port Authority to include the reclassified signage expense in its

2005 cost forecast. However, if the signage expenditures

reclassified in 2004 were in fact capitalized back in 2003, then

it was unreasonable for the Port Authority to include that charge

in its 2005 forecast: If such expenditures are made annually,

then the 2004 income statement includes both 2004 signage

expenses and reclassified 2003 signage expenditures, so that by

including all 2004 expenses in its 2005 forecast, the Port

Authority doubled the appropriate signage expense forecast;

alternatively, if such expenditures are not made annually, then

it was improper for the Port Authority to include in its 2005

forecast the full signage expense as recognized in 2004, rather

than a pro-rated amount. In short, the Port Authority’s treatment

of the signage reclassification charge in its 2005 forecast was

proper if and only if the expenditures underlying that charge

were originally capitalized in 2004, not some earlier year.

The record gives no clear indication of whether the signage

expenditures were capitalized in 2003 or 2004. The Complainants’ witness, Dr. Daniel Kaplan, described the Expense

Reclassification charge as “capital charges that had been

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22

charged in the previous period,” Tr. 97:11–12, but did not

indicate whether this “period” was a previous year or just an

earlier quarter within 2004. The Complainants’ attorney asked

the Port Authority’s witness, David Kagan, whether this charge

represented “expenses that were capitalized or anticipated as

capital expenses in prior years that [the Port Authority] reclassified as costs in this year, in 2004,” Tr. 396:4–6 (emphasis

added), but Mr. Kagan’s answer gave no indication of timing.

The DOT’s findings of fact are conclusive if supported by

substantial evidence, 49 U.S.C. § 47129(c)(6), but here there is

no evidence on the crucial issue of when the signage expenditures were originally capitalized. Accordingly, we vacate the

Final Decision’s current ruling on the reasonableness of

including the signage component of the Expense Reclassification charge in the Port Authority’s 2005 cost forecast, and we

remand this case to the DOT for further consideration of that

issue. In addition, we grant the Port Authority’s petition for

review of the July 12 Order and vacate that order to the extent

it implements fees calculated pursuant to the DOT’s ruling on

the signage component.

The second component represents accumulated planning

costs for capital projects that were canceled in 2004. In essence,

the Port Authority argues that while this component includes

costs incurred prior to 2004, Supp. Kagan Decl. 16 ¶ 59, the

Complainants failed to demonstrate that similar charges would

not be taken in subsequent years. We disagree. For the 2004

charge, which covers planning costs incurred over multiple

years, to serve as a reasonable forecast for future single-year

charges, it would have to be the case that the Port Authority

routinely pursued multiple capital projects simultaneously and

canceled at least one per year, of a magnitude similar to that

seen in 2004. The record indicates no such pattern of annual

cancellations. Mr. Kagan described as “normal Port Authority

practice” the designation of capitalized planning costs as

Expense Reclassification charges upon cancellation, id., and yet

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7While the record does not indicate how much of the 2004 charge

comes from each of the two components, the complete absence of such

a charge in 2002, on its own, provides substantial evidence for the

DOT’s finding.

those charges registered exactly zero in 2002 and only $279,797

in 2003 before skyrocketing to over $2.13 million in 2004. Such

a discrepancy casts significant doubt on the 2004 figure as an

accurate basis for forecasts.7

 We therefore find the DOT’s

determination that 2004’s canceled project charge was not

representative to be supported by substantial evidence and hence

conclusive.

In rebuttal, the Port Authority argues its forecast for 2005

Direct International Facility Expenses was lower than the

average from 2002 to 2004, so that it could not be an unreasonable forecast. However, this merely shows the Port Authority

reduced direct expenses other than the Expense Reclassification

charge between 2003 and 2004. The similarity between

2002–2003 costs and the 2005 forecast is probative only if it

was expected that those reduced direct expenses would return to

2003 levels in 2005, and the Port Authority presented no

evidence to support this theory.

In the alternative, the Port Authority cites Policy Statement

¶ 2.3, which allows “all costs” to be included in the rate base,

and reasons that it was improper for the DOT to declare the

Expense Reclassification charge in the rate base unreasonable

simply because it was not an “ordinary and recurring” expense.

While the ALJ arguably did treat “ordinary and recurring” status

as a sine qua non for inclusion in the rate base, Recommended

Decision at 14, it is the DOT’s Final Decision that we must

review, and that decision was rather more nuanced:

While we agree generally with the principle cited by the

Port Authority that it is entitled to recover its costs incurred,

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8We continue to refer to the Complainants in the plural, as they

collaborated on their briefs and arguments before this court, but in

light of our holding in Part II above, any ruling in their favor would

inure to the benefit of Brendan Airways alone.

we disagree that the Port Authority is entitled to use

$2.13M in one time costs to establish its cost basis for fee

increases. Were evidence presented by the Port Authority

to show, in response to the complainants’ prima facie

showing of unreasonableness, that the Port Authority has

incurred expense reclassification costs in the range of their

2005 estimate of $2M for each of the last several years,

then we could find that the Port Authority could reasonably

base an estimate of $2M going forward into 2005 and

beyond. . . . Because the Port Authority did not present

such evidence, we determine that the Expense Reclassification portion of the fee is unreasonable.

Final Decision at 16–17. We find this logic compelling, and we

affirm the DOT’s decision with regard to the abandoned capital

projects.

IV

The Complainants8

 likewise seek review of particular

components of the DOT’s Final Decision, but as a threshold

matter, they object to certain evidentiary rulings underlying that

order. Specifically, the Complainants maintain the ALJ erred

when he refused (1) to amend the Instituting Order, (2) to order

Mr. Kagan to submit to a deposition, and (3) to admit additional

testimony responding to Port Authority disclosures.

In order to meet 49 U.S.C. § 47129’s aggressive time limits,

the DOT has promulgated regulations requiring complaints to

include “all supporting testimony and exhibits on which the

filing party intends to rely.” 14 C.F.R. § 302.603(a) (2005). A

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9Contrary to 14 C.F.R. § 302.603(c)(3), the certification did not

“specify the date and form of the carrier’s request for information

from the airport owner or operator.” The form letter the Airlines sent

to the Port Authority “request[ed] that the information required by the

Policy Statement be provided for Terminal C as well as Terminal B,”

Complaint Ex. C at 2 (emphasis added), when in fact the Policy

Statement does not “require” the sharing of any information

whatsoever, see Policy Statement ¶ 1.1.2 (“Appendix 1 of this policy

statement contains a description of information that the Department

considers would be useful to the U.S. and foreign air carriers . . . .”

(emphasis added)); id. app. 1 (“The Department of Transportation

ordinarily expects the following information to be available to

aeronautical users . . . .” (emphasis added)).

complainant’s reply “may include supporting testimony and

exhibits responsive to new matters raised in the answers,”

§ 302.605(b), but aside from that exception, once the complaint

is filed, complainants can generally introduce new evidence only

to the extent it relies on information the respondents had

previously refused to disclose, see § 302.603(c)(3).

Here, the Complaint certified that “[a]dditional information

on which Joint Complainants intend to rely is not included with

the brief, exhibits, or testimony because the Airport owner or

operator has expressly refused to make that information available.” Complaint at 19. Despite the defects in this certification,9

 the DOT ordered the Port Authority to disclose additional

information described in Attachment 1 to the Instituting Order.

Furthermore, the Instituting Order specified the ALJ could, “for

good cause shown, modify Attachment 1 if the ALJ believes the

circumstances so warrant.” Instituting Order at 28. Finally, the

Airlines were permitted to submit testimony based on information the Port Authority would disclose pursuant to Attachment

1, but the ALJ was instructed “not [to] allow Complainants to

submit new evidence at the hearing without a showing of good

cause.” Id. at 3.

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The Complainants now challenge the ALJ’s rulings on two

of its subsequent motions. First, the Complainants moved to

amend Attachment 1 so as to require additional disclosures by

the Port Authority and asked to depose Mr. Kagan regarding the

disclosures. Finding no “good cause” for either request, the ALJ

denied the motion. Second, after the Port Authority made the

required Attachment 1 disclosures, the Complainants moved to

introduce testimony responding to those disclosures. Again

finding good cause lacking, in that the Complainants had failed

to show (1) that the testimony could not have been introduced

earlier; (2) that the disclosures raised new issues warranting

additional testimony; or (3) that the testimony directly responded to the disclosures, the ALJ disallowed most of the

proffered testimony.

We review agency rulings on discovery with “extreme

deference.” Hi-Tech Furnace Sys., Inc. v. FCC, 224 F.3d 781,

789 (D.C. Cir. 2000) (internal quotation marks omitted). “[T]he

conduct and extent of discovery in agency proceedings is a

matter ordinarily entrusted to the expert agency in the first

instance and will not, barring the most extraordinary circumstances, warrant the Draconian sanction of overturning a

reasoned agency decision.” Trailways Lines, Inc. v. ICC, 766

F.2d 1537, 1546 (D.C. Cir. 1985).

We see no reason to disturb the ALJ’s denial of the Airlines’ motion to amend Attachment 1. The Airlines’ proposed

additions went well beyond the material specified in Appendix

1 to the Policy Statement, which formed the basis for their preComplaint requests for information from the Port Authority.

Their case for good cause relied solely on the specified documents’ relevance and unavailability, factors the Instituting Order

deemed sufficient for the introduction of new evidence, but not

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10The Instituting Order set out separate standards for these two

events: “The ALJ accordingly should not allow any party to introduce

additional evidence except for good cause, for example, if a party was

unable to submit relevant and material evidence earlier due to its

inability to obtain it from an opposing party.” Instituting Order at 28

(emphasis added). “The ALJ assigned to this proceeding may, for

good cause shown, modify Attachment 1 if the ALJ believes the

circumstances so warrant.” Id. (emphasis added). It is not clear that

the inability to obtain relevant evidence, which the order describes as

good cause for permitting the introduction of such evidence, likewise

qualifies as good cause for modifying Attachment 1. Furthermore,

even if good cause is present, the ALJ is merely permitted to (“may”)

modify the attachment, not required to do so. 

for the forced discovery of such evidence.10 The Airlines

themselves admitted “the Port Authority’s responses may well

contain all of the information needed to resolve the issues in this

proceeding.” Br. Supp. Comp’ts’ Mot. Modify Attach. 1 at 3.

We therefore defer to the ALJ’s decision to deny the motion, as

reaffirmed by the DOT in its Final Decision at 12.

The ALJ’s refusal to order a deposition of Mr. Kagan was

likewise sound. The Instituting Order foresaw no such depositions. Moreover, Mr. Kagan actually appeared as a witness in

the hearing before the ALJ. Finding no “extraordinary circumstance[]” warranting reversal, we defer to the DOT’s ruling in

this matter.

The ALJ’s restrictions on the Complainants’ follow-on

testimony present a closer question. The Instituting Order

included the following instructions:

We are, however, requiring the Port Authority to provide

additional information on its fee methodologies, so the

Complainants may submit testimony based on the new

information at the hearing. The ALJ shall not allow

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28

Complainants to submit new evidence at the hearing

without a showing of good cause.

Instituting Order at 3. It is not clear whether the second sentence was intended to constrain the first, with “evidence”

subsuming “testimony,” or whether instead the two sentences

mere meant to indicate two separate standards for admissibility,

with “testimony” generally admissible so long as it was “based

on the new information,” but “evidence” (i.e., exhibits) admissible only upon a showing of good cause.

The ALJ read the good cause requirement as applying to

testimony and measured good cause based on the degree to

which the proffered testimony was truly “based on the new

information.” For example:

Complainants fail to establish good cause for expanding the

scope of Mr. Brennan’s testimony. Specifically, Complainants fail to show why the expanded proffer could not

have previously been introduced or submitted. They fail to

establish how the new documents and information provided

pursuant to Attachment 1 of the I.O. [Instituting Order]

presented new issues warranting the expended [sic] testimony of Mr. Brennan. They fail to show how expansion of

Mr. Brennan’s testimony . . . responds directly to the

additional documents and information the I.O. directed the

Respondent to provide.

Order Pursuant Comp’ts’ Mot. Intro. Witness Testimony at 3.

The Final Decision adopted the ALJ’s evidentiary ruling,

reaffirming that testimony was to be admitted only upon a

showing of good cause, which in particular required that the

testimony respond to new information:

The complainants gave only vague descriptions of the

testimony to be offered and did not meet their burden to

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11As we find the DOT’s interpretation of the Instituting Order’s

instructions reasonable, we do not consider the ALJ’s erroneous

quotation of those instructions particularly problematic. Compare

Instituting Order at 22 (“The ALJ should allow a party to submit

additional evidence only for good cause shown.” (emphasis added))

with Order Pursuant Comp’ts’ Mot. Intro. Witness Testimony at 2

(“‘The ALJ should allow a party to submit additional testimony only

for good cause shown.’” (emphasis altered) (quoting Instituting Order

at 22)) and Order Pursuant Mot. Recons. at 4 (same).

show good cause. Because complainants did not establish

that the testimony they wished to submit was based on new

information from the Port Authority, the ALJ was correct to

deny the complainants’ Motion for Testimony.

Final Decision at 12–13. In light of the ambiguity in the

Instituting Order’s instruction, we defer to the DOT’s interpretation and thus deem the ALJ to have applied the proper test when

determining whether the proffered testimony was admissible.11

Were we reviewing the DOT’s application of this test de

novo, we might reach a different conclusion than did the ALJ.

According to the Complainants’ motion, Dr. Kaplan was to

“testify as to the economics of the cost-allocation and fee-setting

methodologies utilized by the Port Authority, as revealed by the

newly-produced materials and information,” and accountant

Robert N. Yerman was to “explain how the costs of the services

provided by the Port Authority are allocated among various

users.” Joint Comp’ts’ Mot. Intro. Testimony Pursuant Inst.

Order at 3, 5. Both of these seem directly responsive to information disclosed pursuant to Attachment 1, such as “[t]he

methods used by the Port Authority in allocating the Terminal

B ‘Expense’ categories” and “the allocation methodology” for

“direct and indirect costs” at “Terminals A, B, and C and all

components thereof,” Attachment 1 ¶¶ 5, 7.

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But we do not review evidentiary rulings de novo. In light

of the time pressures inherent in § 47129 adjudications, it was

not unreasonable for the ALJ to demand a more specific proffer

before admitting testimony not included in the Complaint.

While the DOT’s decision in this matter may be surprising, it

does not rise to the level of the “extraordinary circumstances”

we require for reversal. We therefore affirm all of the challenged evidentiary rulings.

V

Finally, the Complainants ask us to review the DOT’s

rejection of their discrimination claim. The Port Authority’s

new FIS and GTC fees applied only to ITB carriers, not to

Continental, which operates out of Terminal C. The Complainants maintained the resulting difference in costs between

Terminal B and Terminal C unjustly discriminated against the

ITB carriers vis-à-vis Continental. The DOT’s Final Decision

rejected this claim, reasoning that Continental was a “signatory”

in the sense of 49 U.S.C. § 47107(a)(2)(B)(ii) and that Policy

Statement ¶ 3.1.1 therefore permitted the Port Authority to treat

the ITB carriers and Continental differently.

The Complainants object to the DOT’s ruling on their

discrimination claim on five grounds. First, the Complainants

argue Continental did not in fact qualify for differential treatment under Policy Statement ¶ 3.1.1. In reviewing the DOT’s

application of ¶ 3.1.1, we must give the Department’s interpretation of that paragraph “controlling weight unless it is plainly

erroneous or inconsistent with the regulation.” Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (internal

quotation marks omitted); see also Nat’l Treasury Employees

Union v. Chertoff, 452 F.3d 839, 859 (D.C. Cir. 2006).

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Paragraph 3.1.1, which was not invalidated by Air Transport Ass’n, reads as follows:

The prohibition on unjust discrimination does not prevent

an airport proprietor from making reasonable distinctions

among aeronautical users (such as signatory and nonsignatory carriers) and assessing higher fees on certain

categories of aeronautical users based on those distinctions

(such as higher fees for non-signatory carriers, as compared

to signatory carriers).

Policy Statement ¶ 3.1.1. This language is in turn based on 49

U.S.C. § 47107(a)(2)(B), which permits “differences based on

reasonable classifications, such as between—(i) tenants and

nontenants; and (ii) signatory and nonsignatory carriers.”

Superficially, it seems significant that ¶ 3.1.1 drops

§ 47107’s reference to tenant status. The DOT cannot simply

equate signatories with tenants, since Congress in 1987 explicitly added the signatory distinction to § 47107’s predecessor,

which had theretofore recognized only tenancy as a reasonable

basis for classification, while retaining tenancy as a separate

ground for differential treatment. See Airport and Airway

Safety and Capacity Expansion Act of 1987, Pub. L. No. 100-

223, § 109(a)(3), 101 Stat. 1486, 1499 (1987). However, the

reference in ¶ 3.1.1 to distinctions such as signatory status

suggests that other distinctions, including tenant status, may

qualify as “reasonable” in the sense of ¶ 3.1.1, and under such

a reading ¶ 3.1.1 would not conflict with the plain meaning of

§ 47107(a)(2)(B). See Chevron, 467 U.S. at 842–43. Indeed,

the Final Decision reads ¶ 3.1.1 in just that way. Final Decision

at 23 (“The DOT Policy Statement also expressly permits

differences in treatment of differently situated airlines, and

makes clear that tenant/non-tenant and signatory/non-signatory

airlines are not similarly situated. DOT Policy Statement

¶ 3.1.1.”). As this interpretation of ¶ 3.1.1 is not “plainly

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12The Complainants have not claimed to qualify for either of

these preferred categories.

13The Final Decision also found Continental was a signatory.

Final Decision at 23. As the Complainants indicate, the DOT gave no

explanation for this finding. However, since the DOT permissibly

read Policy Statement ¶ 3.1.1 to permit differential treatment on the

basis of tenancy, as well, see Thomas Jefferson Univ., 512 U.S. at 512,

erroneous,” we treat it as controlling. Thomas Jefferson Univ.,

512 U.S. at 512.

Continental therefore benefits from Policy Statement ¶ 3.1.1

provided it qualifies as either a “tenant” or a “signatory.”12 In

testing whether Continental qualifies for either status, we must

rely on the DOT’s decision as stated, not our own analysis from

first principles. See Detroit Newspaper Agency v. NLRB, 435

F.3d 302, 311 (D.C. Cir. 2006) (“[W]e must accept the Board’s

decision on it[s] own terms, ignoring post-hoc rationalizations

by counsel and rejecting the temptation to supply reasons to

support the Board’s decision that the Board itself has not

offered.”). The Final Decision treats “tenant” as synonymous

with “lessee.” See Final Decision at 23 (“[Section 47107]

allows airports to treat signatory and non-signatory carriers (and

carriers with leases and those without) differently.”). The record

demonstrates definitively that Continental leases the land under

Terminal C from the Port Authority, Complainants’ Ex. CA29-

61 (“Continental leases from the Port Authority, pursuant to the

Port Authority Leases, the premises on which the Project is

located.”), and the ALJ so found, Recommended Decision at 21.

The Final Decision “agree[d] with and adopt[ed] the conclusions

of the ALJ” on this point, noting in particular the ALJ’s finding

that non-ITB carriers “are not similarly situated because

compensation to the Port Authority is incorporated into leases.”

Final Decision at 23. Thus, the DOT reasonably determined

Continental was a lessee and hence eligible for preferential

treatment under Policy Statement ¶ 3.1.1.13

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33

the Complainants’ first argument fails even if we excise the finding of

signatory status from the Final Decision.

14As 49 U.S.C. § 47107 is in Part B of Title 49, Subtitle VII, the

definitions from § 40102 do not apply, and the DOT may reasonably

interpret “air carrier” in this context to include non-U.S. carriers.

In their second argument, the Complainants suggest the

differences in fees permitted by Policy Statement ¶ 3.1.1 are in

fact barred by 49 U.S.C. § 47107(a)(2), which mandates that at

federally subsidized airports:

air carriers making similar use of the airport will be subject

to substantially comparable charges—

(A) for facilities directly and substantially related to

providing air transportation; and

(B) regulations and conditions, except for differences

based on reasonable classifications, such as between—

(i) tenants and nontenants; and

(ii) signatory and nonsignatory carriers . . . .

49 U.S.C. § 47107(a)(2). A fee schedule that violated this

mandate—such as by subjecting classes of air carriers14 to

charges that are not “substantially comparable”—would be

patently unreasonable. However, Policy Statement ¶ 3.1.1

permits just such dissimilar fees, provided they are based on

“reasonable distinctions among aeronautical users (such as

signatory and non-signatory carriers).” This provision is valid

only if it falls within the exception to § 47107(a)(2) stated at

§ 47107(a)(2)(B).

Observing that the phrase “except for differences based on

reasonable classifications” is placed within § 47107(a)(2)(B),

and not in the flush text of § 47107(a)(2), the Complainants infer

reasonable classifications excuse dissimilar regulations and

conditions but not dissimilar charges. However, assuming the

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34

15The compilers’ notes accompanying this codification act

indicate that the language in § 2210(a)(1)(A) was changed “to

eliminate unnecessary words” and “surplus” phrases, “because of the

definition of ‘airport’ in section 47102 of the revised title,” and

(ironically) “for clarity.” 49 U.S.C. § 47107 note.

Airlines properly advanced this theory before the DOT, see 49

U.S.C. § 47129(c)(6), we reject this line of reasoning.

If the arrangement of § 47107 renders the statute ambiguous, we should defer to the DOT’s reasonable interpretation.

Chevron, 467 U.S. at 842–44. Moreover, DOT’s interpretation

is consistent with the original statute, requiring airports seeking

federal grants to deliver assurances that

each air carrier using such airport (whether as a tenant,

nontenant, or subtenant of another air carrier tenant) shall

be subject to such nondiscriminatory and substantially

comparable rates, fees, rentals, and other charges with

respect to facilities directly and substantially related to

providing air transportation and such nondiscriminatory

and substantially comparable rules, regulations, and

conditions as are applicable to all such air carriers which

make similar use of such airport and which utilize similar

facilities, subject to reasonable classifications such as

tenants or nontenants, and signatory carriers and nonsignatory carriers . . . .

49 U.S.C. app. § 2210(a)(1)(A) (1988) (emphases added).

Logically, we must read § 2210(a)(1)(A) to permit only “such

. . . charges . . . and such . . . rules . . . as are applicable to all

such air carriers . . . , subject to reasonable classifications,” with

the reasonable classifications applying to rules and charges

equally. As noted above, the act codifying this provision

indicated no intention to change the substance of existing laws.

See Pub. L. No. 103-272, § 6(a), 108 Stat. at 1378.15 Indeed, “it

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35

is well established that language revisions in codifications will

not be deemed to alter the meaning of the original statute.”

Rainbow Navigation, Inc. v. Dep’t of the Navy, 783 F.2d 1072,

1076 (D.C. Cir. 1986). We therefore interpret the current 49

U.S.C. § 47107(a)(2) as permitting differences in charges based

on tenant or signatory status as described at Policy Statement

¶ 3.1.1 and hence reject the second argument.

Third, the Airlines contend the DOT wrongly applied a “per

se test” to the question of discrimination, holding that since

Continental was a lessee or signatory and the ITB carriers were

not, any difference in their fee structures was permissible. Even

if Policy Statement ¶ 3.1.1 permits airports to charge non-lessees

more than lessees, the Airlines argue, there is some maximum

difference beyond which the distinction should be deemed

unreasonable.

Determining the difference in fees under the proposed rate

increase is not unproblematic, as Continental pays the Port

Authority under a fixed lease, with no per-passenger FIS or GTC

fees. However, by adjusting Continental’s lease payments for

the costs it saves the Port Authority by maintaining Terminal C

itself, one can estimate Continental’s implied FIS and GTC fees.

Under a per se test these implied fees would be immaterial, with

Continental’s status as a lessee dispositive as to questions of

discrimination. Under the Complainants’ preferred test,

however, the proposed rate increase would be unreasonable

unless the difference between Continental’s implied fees and the

new fees at ITB were commensurate with the carriers’ difference in status.

The Complainants propose numerous grounds for finding

that a per se test is improper. While several of these are without

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16 First, the Airlines argue that we should resolve the ambiguity

of § 47107 so as to avoid conflict with various international

agreements to which the United States is a party, which they read as

barring per se tests. Second, they contend that the DOT’s Policy

Statement foresees a limit on rate differences based on signatory

status, in that it states that extra costs and risks incurred by airport

operators in serving non-signatories “would provide a justification for

imposing a surcharge, in some amount, on non-signatory carriers” and

concludes that the new rules “provide adequate flexibility to airport

proprietors to charge reasonable surcharges to non-signatory carriers.”

Policy Statement, 61 Fed. Reg. at 32015 (emphases added).

merit, we find two at least arguably valid.16 We hence assume

without deciding that a per se test would indeed be improper, so

that the Final Decision would be invalid if it rejects the Complainants’ discrimination claim based solely on a per se test. But

the Final Decision is ambiguous as to which test it applies.

While much of its language suggests a per se test, it nonetheless

entertains the notion that details of the deal between Continental

and the Port Authority could override the per se result: “The

record does not show the nature of the contractual relationship

between Continental and the Port Authority, so the Department

is without any basis for saying that the fees are unjustly discriminatory.” Final Decision at 23–24.

In essence, this sentence recognizes the Airlines failed to

carry their burden of persuasion concerning the degree to which

fees could reasonably differ between ITB and Terminal C.

While the Complainants undeniably have the burden of persuasion as to their claim of discrimination, 5 U.S.C. § 556(d), the

exception at 49 U.S.C. § 47107(a)(2)(B) could arguably be

viewed as an affirmative defense. Still, since the statute does

not resolve the ambiguity, the agency is free to choose which

party bears the burden of proof. See NLRB v. Transp. Mgmt.

Corp., 462 U.S. 393, 401–03 (1983) (allowing NLRB in mixedmotive cases to treat proof that an employee would have been

fired even absent union activity as an affirmative defense, with

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37

17The Final Decision’s separate reference to a burden placed on

the Port Authority apparently indicates a burden of production, not

persuasion. The DOT first recites the rule for the burden of persuasion

and then discusses the shifting burden of production:

When an airline seeks a determination as to the reasonableness of

a fee imposed on the airline by an airport, the airline bears the

burden of proof. The airline complainants must submit evidence

sufficient to show that the challenged fees are unreasonable.

However, if the complainants present a prima facie case that a fee

is unreasonable, the burden shifts to the airport. The airport must

then submit sufficient evidence to show that the fee is, in fact,

reasonable.

Final Decision at 14 (first and third emphases added) (citations

omitted). The final sentence would violate 5 U.S.C. § 556(d) if it

placed the full burden of persuasion on the Port Authority as to the

reasonableness of the proposed fees. See Nat’l Mining Ass’n v. Dep’t

of Labor, 292 F.3d 849, 871–72 (D.C. Cir. 2002) (discussing how

Greenwich Collieries permits a shift in the burden of production but

not in the burden of “proof”; i.e., persuasion).

18Without deciding whether a per se test would violate the Policy

Statement or § 47107(a)(2), we note the Final Decision comes close

to applying one. While we find here that the DOT’s ambiguous

statement slightly favors a reading that defeats the Complainants’ third

the burden of persuasion placed on the employer), reaffirmed in

Dir., OWCP v. Greenwich Collieries, 512 U.S. 267, 278 (1994)

(“And although we reject Transportation Management’s reading

of § 7(c), the holding in that case remains intact. . . . [T]he

NLRB place[d] the burden of persuasion on the employer as to

its affirmative defense.”). Hence, the DOT did not err when it

assigned this burden to the Airlines.17

As the Complainants put forward no evidence detailing the

value to the Port Authority of Continental’s signatory or lessee

status, the DOT had no basis for finding the estimated difference

in fees was not commensurate with the difference in costs the

Port Authority incurred at each terminal.18 Given the DOT’s

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38

argument, the Department would do well to make its reasoning

explicit, as “[w]e cannot defer to what we cannot perceive,” Int’l

Longshoremen’s Ass’n v. Nat’l Mediation Bd., 870 F.2d 733, 736

(D.C. Cir. 1989).

permissible assignment of the burden of proof to the Complainants, the Final Decision’s ruling was valid even if we excise its

reliance on a per se test.

Fourth, the Complainants object to the DOT’s reliance on

the ITB carriers’ ability to leave EWR as a basis for charging

higher fees. They argue the DOT’s approach “undermine[s] the

protections afforded by [§ 47107] and the bilateral treaties,”

which assume “international airports will remain open on

relatively equal terms to all airlines who want to use them, and

not that some airlines will face unequal rates with their recourse

being to leave the airport entirely.” Comp’ts’ Br. 36. But this

fundamentally mischaracterizes the Final Decision’s reasoning.

The primary recourse available to non-signatory airlines that

object to paying higher fees is signatory status. See

§ 47107(a)(3) (“[T]he airport operator will not withhold

unreasonably the classification or status of tenant or signatory

from an air carrier that assumes obligations substantially similar

to those already imposed on air carriers of that classification or

status.”). As § 47107(a)(2)(B) recognizes, higher fees compensate airport operators for the risk that non-tenant airlines will

leave on short notice. Here, the DOT found the Complainants

had put forward no evidence tending to show the incremental

fees imposed on them as non-tenants were not commensurate

with the incremental risk the Port Authority incurred by letting

them use ITB without long-term leases. If the Complainants felt

that the higher fees hurt them more than signatory status would,

they could sign a lease; they were not given a Hobson’s choice

of paying fees at a non-signatory level or else abandoning the

airport entirely.

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39

Finally, in their fifth line of attack, the Complainants argue

the difference in fees between Terminal C and ITB cannot have

been “based on” the extra costs and risks incurred by the Port

Authority in servicing the ITB carriers, as required by

§ 47107(a)(2) and the Policy Statement, because the Port

Authority admittedly did not take into account the fees charged

at other terminals when it set the fees at ITB, see Tr. 280:14–19,

282:4–9, 283:7–10. By the Complainants’ logic, even if the

proposed fees happened not to differ from those imposed on

Continental by enough to qualify as discrimination, the mere

fact that the Port Authority did not consider this possibility when

setting the rates so taints the process as to render the resulting

rates unreasonable.

As the record demonstrates, the DOT has steadfastly

refused to treat the fee-setting process as a basis for finding fees

unjustly discriminatory. The ALJ noted the Complainants

objected to “the Port Authority’s methodology” in setting the

rates, Recommended Decision at 20, but rejected this argument

because the Policy Statement required consistent application of

methodologies only across “similarly situated” or “comparable”

aeronautical users, id. at 21 (internal quotation marks omitted);

see also Policy Statement ¶¶ 2.1, 3.1. The Final Decision’s

analysis of the Complainants’ discrimination claim does not

discuss the Port Authority’s rate-setting process at all. See Final

Decision at 23–24. As the DOT’s test clearly rejects the logic

of the Complainants’ fifth argument, in order to prevail they

must show the DOT’s test is improper.

If § 47129, § 47107, or the Policy Statement required a

different test, then the Airlines might prevail, but they do not.

First, on its face, § 47129(a)(1) instructs the Secretary of

Transportation to determine the reasonableness of a fee, not of

the process used to set the fee. Moreover, we can find nothing

in the United States’ international obligations that would

preclude the passage of a statute creating expedited review of

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40

the amount of a fee in the absence of investigation into the fee’s

origin. Cf. Chevron, 467 U.S. at 843 n.9; Murray, 6 U.S. (2

Cranch) at 118. Thus, § 47129 can reasonably be interpreted in

keeping with the DOT’s current test.

Similarly, § 47107(a)(2) requires airport proprietors to

certify that “air carriers making similar use of the airport will be

subject to substantially comparable charges” in order to receive

development grants but demands no such certification regarding

the processes used to set the charges. Nothing in the United

States’ bilateral agreements would seem to block the government from imposing such a requirement on grant applicants; nor

do the agreements require the government to obtain certifications disavowing discriminatory processes before issuing grants.

Therefore § 47107, too, can be read so as to permit the DOT’s

current test.

The Complainants’ argument with regard to the Policy

Statement is equally unavailing. An unexplained deviation from

the Policy Statement could lead us to set the Final Decision

aside, see, e.g., Chelsea Indus., Inc. v. NLRB, 285 F.3d 1073,

1075–76 (D.C. Cir. 2002) (“The agency acts unreasonably if it

departs from established policy without giving a reasoned

explanation for the change . . . .”), but we find no such deviation. The Policy Statement includes the following rule:

Relevant provisions of the Convention on International

Civil Aviation (Chicago Convention) and many bilateral

aviation agreements specify, inter alia, that charges imposed on foreign airlines must not be unjustly discriminatory, must not be higher than those imposed on domestic

airlines engaged in similar international air services and

must be equitably apportioned among categories of users.

Charges to foreign air carriers for aeronautical use that

are inconsistent with these principles will be considered

unjustly discriminatory or unfair and unreasonable.

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Policy Statement ¶ 3.3 (emphasis added). In light of our holding

above that foreign air carriers are not “air carriers” in the sense

of § 47129(a)(1), it is not clear that ¶ 3.3, which deals only with

“[c]harges to foreign air carriers,” can serve as a ground for

finding fees unreasonable in § 47129 proceedings. However,

assuming arguendo that this is the case, we believe ¶ 3.3

measures discrimination based on the size of charges, not on the

process that produces them. Paragraph 3.3 does not explicitly

indicate otherwise, and the convention and bilateral agreements

it incorporates by reference all focus on the magnitude of fees

rather than the processes behind them. See, e.g., Bermuda II,

art. 10(2) (describing as “unjustly discriminatory” user charges

that are higher than those imposed on similar domestic airlines);

Air Transport Agreement Between the Government of the

United States of America and the Government of the Kingdom

of the Netherlands, U.S.-Neth., art. 7(a), Apr. 3, 1957, 12 U.S.T.

837, as amended by Aviation Transport Services Agreement

Between the United States of America and the Netherlands,

U.S.-Neth., ¶ 8(1), May 11, 1993, T.I.A.S. No. 11,976 (requiring

that user charges be assessed “on terms not less favorable than

the most favorable terms available to any other airline at the

time the charges are assessed”); Convention on International

Civil Aviation, art. 15, opened for signature Dec. 7, 1944, 61

Stat. 1180, 15 U.N.T.S. 295 (barring charges that are higher than

those imposed on domestic carriers). As the DOT’s test does

not violate the Policy Statement either, it is permissible. We

thus reject all of the Airlines’ proposed grounds for setting aside

the DOT’s finding that the fee increase was not unjustly

discriminatory.

VI

For the foregoing reasons, the Port Authority’s petitions for

review are granted, and the Complainants’ petition for review is

denied. The DOT’s Final Decision is vacated to the extent it

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requires the Port Authority to pay refunds to carriers other than

Brendan Airways. The DOT’s finding that the Port Authority’s

inclusion of its 2004 Expense Reclassification charge in its 2005

cost forecast was unreasonable is affirmed to the extent it relates

to costs incurred on canceled capital projects, but vacated to the

extent it relates to signage expenses. As the Port Authority’s

revised fee proposal was based on the DOT’s ruling on signage

expenses, the July 12 Order is likewise vacated to the extent it

implements that fee proposal. All other challenged portions of

the DOT’s Final Decision and July 12 Order are affirmed. The

case is remanded to the DOT for whatever further proceedings

should be required, consistent with this opinion. On remand, the

DOT is instructed to dismiss the Complaint to the extent it

applies to carriers other than Brendan Airways.

So ordered.

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