Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-07-01323/USCOURTS-caDC-07-01323-0/pdf.json

Parties Involved:
Air Transport Association of America
Amicus Curiae for Petitioner
Spirit Airlines, Inc.
Petitioner
Transportation Security Administration
Respondent

Document Text:

United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 6, 2008 Decided February 3, 2009 

 Reissued April 10, 2009 

No. 07-1279 

SOUTHWEST AIRLINES CO., 

PETITIONER

v. 

TRANSPORTATION SECURITY ADMINISTRATION, 

RESPONDENT

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

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

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

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

On Petitions for Review of a Final Order of the Transportation 

Security Administration 

M. Roy Goldberg argued the cause for petitioners. With 

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

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

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

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

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

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

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David Endersbee. Michael D. Shumsky entered an 

appearance. 

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

Skidmore were on the briefs for petitioner Northwest Airlines. 

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

American Airlines, Inc. 

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

briefs for petitioner Spirit Airlines, Inc.

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

Olderman were on the brief for amicus curiae Air Transport 

Association of America in support of petitioners and seeking 

reversal. 

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

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

Jeffrey S. Bucholtz, Acting Assistant Attorney General, and 

Scott R. McIntosh, Attorney.

Before: GARLAND and BROWN, Circuit Judges, and 

WILLIAMS, Senior Circuit Judge. 

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS. 

WILLIAMS, Senior Circuit Judge: Before the terrorist 

attacks of September 11, 2001, commercial airlines exercised 

responsibility for screening passengers and property at U.S. 

airports. Shortly after the attacks, Congress passed the 

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

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

Transportation Security Administration (“TSA”) and 

entrusting it with the primary responsibility for civil aviation 

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

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arguments that TSA has erroneously overcharged them for 

their statutory portion of these security costs. 

The ATSA authorizes TSA to impose two types of fees to 

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

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

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

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

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

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

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

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

group of 22 airlines—are claiming that TSA improperly 

subjected them to approximately $98 million a year in 

increased ASIF liabilities. 

ATSA’s two limits on fees are its “overall” and its “percarrier” limits. Under the overall limit, the fees in each fiscal 

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

calendar year 2000 by carriers . . . for screening passengers 

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

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

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

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

by that carrier for screening passengers and property, as 

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

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

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

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

appropriate measure in lieu of actual screening costs in 

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

In its implementing regulations, TSA required every 

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

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

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

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

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

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

In 2004, with the Department of Homeland Security 

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

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

intervened to make sure that TSA was collecting its full 

entitlement under ATSA. It directed the Government 

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

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

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

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

appropriate fee to the Transportation Security 

Administration . . . , the Secretary of Homeland Security shall 

undertake all necessary actions to ensure that such amounts 

are collected.” Id. 

The GAO’s report concluded that the airlines had 

collectively under-reported their security screening costs in 

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

Government Accountability Office, Aviation Fees: Review of 

Air Carriers’ Year 2000 Passenger and Property Screening 

Costs 7 (2005). 

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

that each of petitioners had under-reported its year 2000 

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

cost per passenger screened. It then compared that average 

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

those airlines whose reported costs were at or above the 

industry average, it assessed no additional liability. It also 

gave a pass to airlines whose reported costs were below the 

industry average, but that had presented an adequate audit of 

their reporting costs. 

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When TSA determined—as it did for all of the 

petitioners—that an airline reported below-average costs and 

did not provide an adequate audit, TSA presumed that its 

screening costs per passenger in the year 2000 were equal to 

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

screening costs for 2000 by multiplying the industry average 

by the number of passengers that airline screened in 2000. 

Finally it estimated each airline’s additional ASIF liability by 

subtracting its reported year 2000 costs from the new figure. 

TSA’s director of revenue sent each petitioner a letter 

describing this method and advising the petitioner of its 

additional liability. Petitioners appealed to TSA, which 

upheld the initial decisions in all relevant respects. 

In their joint brief, petitioners challenge TSA’s final 

decisions, claiming that they reflected substantive statutory 

violations, were arbitrary and capricious, and were flawed 

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

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

other objections. 

In addition, three of the petitioners advance individual 

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

prevails. 

* * * 

Before reaching the merits, we need to address the effect 

of two ATSA provisions for jurisdiction-stripping. The 

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

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

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

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

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

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

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2007), Congress relaxed this restriction, creating an exception 

for “estimates and additional collections made pursuant to the 

appropriation for Aviation Security in Public Law 108-334 

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

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

review shall be limited only to additional amounts collected 

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

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

of the jurisdiction-stripping provision were made pursuant to 

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

issues apply in part to amounts collected by TSA before 

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

petitioners pose. Because some of the issues fall outside the 

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

each issue on which petitioners prevail—whether our 

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

* * * 

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

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

aggregate, the amounts paid in calendar year 2000 by carriers 

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

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

TSA violated the plain language of the provision by basing its 

calculation of the fees on a GAO estimate which had included 

the costs of screening non-passengers, such as “meeters-andgreeters” and sightseers. TSA acknowledges inclusion of the 

costs of screening such individuals, but seeks to justify doing 

so. Its arguments do not convince us. 

TSA argues that the reference to “screening passengers” 

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

more than the simple evaluation of whether a passenger poses 

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

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

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

passengers” can be read to include anything done to protect 

passengers, which of course would include exerting control 

over the access of potentially dangerous non-passengers. But 

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

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

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

“screening passengers” has a widely understood meaning: it 

refers to the process of searching airline passengers at an 

airport security checkpoint, not to the entire set of activities 

undertaken to promote passenger safety. 

TSA also notes that the statute refers not merely to 

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

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

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

screening the property of non-passengers in its calculation. 

But that authority provides it no justification for also 

including the costs of screening the non-passengers 

themselves. 

TSA also asserts an equally unpersuasive argument from 

statutory purpose. It asserts that Congress did not intend to 

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

providing services that inured to the benefit of the industry, 

and that had previously been provided at the industry’s 

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

conceivably trump the statutory language if it accorded with 

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

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

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

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

interpretation serves no windfall-prevention purpose. 

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Finally, TSA argues that petitioners’ interpretation is 

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

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

screening of all passengers and property.” TSA suggests that 

this provision must be interpreted to give it the power to 

screen all persons who enter controlled boarding areas; it 

would be absurd to deny TSA power to screen nonpassengers. And if “passengers and property” includes nonpassengers in § 44901(a), TSA argues, the phrase should have 

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

theory is the standard presumption that “identical words used 

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

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

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

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

to displace the plain meaning of a statutory provision simply 

by virtue of the fact that interpreting a different provision the 

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

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

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

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

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

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

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

among sources of authority for certain airport screening 

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

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

non-passengers in its estimate of the costs of covered 

screening in 2000. 

This holding governs amounts collected before October 1, 

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

on amounts collected thereafter? Our conclusion rests not on 

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

covered by the provision, but rather resolves the question 

whether TSA has made the kind of determination required by 

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

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

provision precluding judicial review of “increases or 

decreases in fees made by amendments pursuant to this 

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

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

review the Commission’s actions where the Commission has 

acted within the scope of its authority” under the controlling 

statute. Id. at 227. So, too, here. Therefore, the jurisdictionstripping provision does not apply, and our holding on this 

point governs the collections made after 2007.

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

persuasive. They assert that the statutory language—which 

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

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

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

unconditionally precludes TSA’s use of the industry average 

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

see no such preclusion. 

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

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

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

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

between the objective existence of certain conditions and the 

Secretary’s determination that such conditions are present,’ 

stressing that a statute phrased in the latter terms ‘fairly 

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

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

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

The ATSA similarly gives TSA broad discretion to choose a 

suitable method for making the required determination. 

Here TSA’s choices were clearly permissible. Although 

the airlines may prefer that TSA rely on their Appendix A 

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information, TSA was certainly entitled to conclude that, in 

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

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

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

a logically chosen carrier-specific variable, the number of 

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

constitutes a measurement of a specific carrier’s screening 

costs. 

The 2004 DHS Appropriations Act called for GAO 

review of “the calendar year 2000 cost information for 

screening passengers and property pursuant to section 

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

therefore reframe their per-carrier argument to claim that the 

2004 Act requires the GAO to examine the individual air 

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

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

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

§ 44940(a)(2)(B) itself. 

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

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

authorizing application of the per-carrier limit by reference to 

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

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

section. 

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

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

passengers and property.” Because TSA’s industry average 

included the costs of screening non-passengers, that 

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

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

Claims that TSA acted arbitrarily and capriciously. 

Petitioners’ first such argument is that TSA penalized them 

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for not complying with its requirement of providing an 

unqualified audit opinion for their Appendix As—a 

requirement they say was impossible to fulfill. Their records 

were inadequate to provide the required information without 

making significant assumptions, and thus their auditors would 

not provide unqualified opinions. 

Assuming arguendo that TSA was obligated to supply a 

feasible alternative before relying on an industry average, this 

argument still fails because TSA did in fact supply such an 

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

announced that it would accept a qualified opinion if an 

auditor could not provide an unqualified one. But TSA 

stipulated that, as the qualified opinions would not supply 

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

opinion would have to submit the auditor’s working papers 

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

Joint Appendix (“J.A.”) 365-67. 

Petitioners do not claim that they complied with this 

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

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

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

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

auditor’s property interest (presumably a negotiable matter in 

any event) would allow the airlines to make the papers 

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

outlined by TSA. In any event, petitioners waived the 

argument by failing to make it in their opening brief. 

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

In petitioners’ second arbitrary-and-capricious argument, 

they reformulate their contention that TSA misread the 

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

use the industry average cost per passenger as a proxy for 

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

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wrongly ignored their Appendix As and failed to give proper 

weight to their evidence that their screening costs were below 

the industry average. 

Assuming this argument is actually distinct from the 

statutory interpretation claim, it fares no better. Given the 

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

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

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

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

carriers’ own explanations as to why it was impossible for 

them to obtain unqualified audits completely undermine their 

position: for carriers that did not collect adequate carrierspecific information on screening costs for 2000, it was hardly 

arbitrary for TSA to rely on an industry average. 

Petitioners then object that the GAO report on which 

TSA relied had allocated excessive amounts of airport law 

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

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

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

may be that the redo necessitated by our decision will 

occasion agreement between the parties on these subsidiary 

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

airport explicitly identified an LEO charge as being for 

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

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

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

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

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

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

These allocations are hardly rock solid. But TSA was 

operating in a data-poor environment, as shown by 

petitioners’ own arguments about their carrier-specific data. 

TSA’s contractor interviewed airport officials, eliciting a wide 

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

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

materially superior information could be readily obtained, and 

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

agency’s disregard of the alternative as arbitrary. Air 

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

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

considerable guesswork, and we cannot say that TSA’s 

guesses were unreasonable. 

Petitioners also claim that the GAO report relied on faulty 

statistical techniques. They argue, for instance, that in 

estimating the cost of private screening contractors, the GAO 

relied on data from only nine companies, which were not 

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

GAO’s contractor has sought data from the 10 largest 

screening contractors, which represented between 84% and 

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

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

72. It excluded data from the largest simply because nearly 

7000 of its invoices appeared to be incomplete and 

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

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

petitioners quite sensibly make no argument for inclusion of 

data from the largest screening company. Nor do they 

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

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

screening. J.A. 80. 

TSA accepted the results, observing that, while other 

approaches to data collection and statistical analysis were 

available, they would not have yielded results that were 

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

Even before us, petitioners do not directly claim the existence 

of an alternative so visibly superior that TSA could be faulted 

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

arbitrary or capricious. 

Petitioners similarly object to the GAO’s extrapolation of 

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

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

others. O’Hare did not provide sufficient information for 

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

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

15, 98. 

They argue that the extrapolation was unreliable because 

it was based on screened passenger volumes, which do not 

correlate closely with actual airport costs. TSA found, 

however, that this objection was invalid because the 

formulation used by the GAO was not directly tied to the 

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

generally, the TSA found that the lack of independently 

verifiable data forced the GAO to make assumptions based on 

its “professional judgment and expertise” as well as the 

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

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

rely on them. 

Finally, petitioners argue that the decisions were arbitrary 

and capricious because TSA violated its own regulations, 

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

petitioners try to read as mandating individual company audits 

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

regulations shows that they impose no such mandate. 

Procedural claims. Petitioners claim a right under the 

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

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

responded to this claim with an assertion that the airlines’ 

access to the GAO report and their own records should be 

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

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

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

report, with considerable additional detail.) 

The airlines correctly cite McClelland v. Andrus, 606 

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

that in some circumstances due process will entitle a party to 

discovery in an agency proceeding. There we appeared to 

assume that the decision was adjudicative, and thus belonged 

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

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

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

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

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

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

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

later decision recognized, “McClelland was seeking a specific 

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

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

2002). The document requests here appear both less specific 

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

found no due process violation even though the agency’s 

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

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

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

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

deference” with which we review agency denials of discovery, 

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

application of due process requirements at all). 

Petitioners also object to contacts between the official 

who rendered the final decisions and those responsible for the 

initial decisions, contacts that we may assume would violate 

the separation-of-functions rules of the Administrative 

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

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

required by statute to be determined on the record after 

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

nothing in the ATSA or the DHS Appropriations Act requires 

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

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

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

matter not covered by the APA’s ban). 

Petitioners also assert a constitutional theory, resting 

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

case involving discharge of a government employee found to 

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

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

confined its opinion to instances where the decider received 

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

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

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

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

of functions unless special circumstances indicate “that the 

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

petitioners’ favor that the proceeding was subject to due 

process requirements at all, we would not have the rare 

conditions rendering the agency’s procedures 

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

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

adjudicative procedure allowing staff to communicate ex parte

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

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

Withrow v. Larkin to reject facial attack on regulations 

allowing combination of functions). 

Finally, petitioners argue that they had a due process right 

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

of a nature to make due process requirements applicable, the 

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

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involved statutory construction, the validity of GAO’s 

statistical methods, and the accuracy of the carriers’ cost 

information—issues of a kind that can be adequately resolved 

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

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

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

Petitioners rely primarily on Gray Panthers v. Schweiker, 652 

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

There we held: “Where factual issues involving the credibility 

or veracity of the claimant are at stake, particular 

consideration of a policy granting on request an oral interview 

before the final denial on reconsideration should be given.” 

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

of issues could hardly be more stark. 

Individual airline claims. We close with the individual 

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

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

TSA acknowledged that the language of the audit 

submitted by Spirit complied with the requirements of the 

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

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

audit did not include information that was “further required by 

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

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

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

 But the “clarification” to which TSA referred was 

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

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

should not infer that it represents the only acceptable means of 

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

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

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

hold water. We therefore set aside the additional ASIFs 

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imposed on Spirit with respect to all amounts collected before 

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

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

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

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

 American argues that TSA owes it almost $14 million for 

development and installation of an inline baggage security 

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

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

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

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

American later petitioned for rehearing, arguing that our 

analysis of the statute was erroneous, but conceding that its 

claim was not validly presented in this proceeding. 

Ordinarily, we would not excise a legal analysis from an 

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

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

we accept American’s concession rather than rely on a 

resolution that the parties never had an opportunity to 

satisfactorily address. Thus, assuming without deciding that 

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

before our court, American has not validly presented any such 

claim. 

 Finally, Northwest objects to being charged for screening 

costs that TSA did not assume. When calculating its total 

year 2000 costs for its Appendix A, Northwest excluded 

screening costs that it continued to bear. In 2005 TSA 

informed Northwest that it should have included those costs in 

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

substitution of its calculation of screening costs for the 

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

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

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

prohibits TSA from imposing ASIFs based on security costs it 

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

authorized to impose these fees retroactively. Both arguments 

fail. 

 Northwest’s insuperable difficulty is that the limit that it 

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

much of its year 2000 screening costs as TSA has taken 

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

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

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

airlines against what may seem to be double collection for 

costs an airline continues to bear. 

 Nor is there anything retroactive—in any legally material 

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

retroactively imposing a new rate; rather, it is collecting 

amounts that Northwest, because of its mistaken calculation, 

had failed to pay. 

* * * 

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

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

We therefore remand for modifications consistent with this 

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

So ordered. 

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