Opinion ID: 187447
Heading Depth: 2
Heading Rank: 2

Heading: Rent Per Square Foot

Text: Both the T1/T3 Airlines and the City find fault with the DOT's treatment of FMV. The T1/T3 Airlines argue the Final Decision is arbitrary and capricious because the DOT failed to explain why, although an airport may not use FMV, as measured by opportunity cost, when setting airfield rental rates, it is permitted to use opportunity cost in setting FMV rates for space inside a terminal. The City objects to the DOT's dual requirements that, in using FMV to set terminal rates, the City may look to the opportunity cost of devoting the space only to other aeronautical uses, and must use an independent appraiser to determine FMV. Finally, the T1 Airlines argue the DOT erred in holding the City's use of FMV was unreasonable as applied only to the T3 Airlines on the ground that the T1 Airlines had failed to complain to the DOT within the time allotted by statute.
In LAX I we held the Anti-Head Tax provision of the Federal Aviation Act does not prohibit an airport from considering its opportunity cost in setting airfield fees. 103 F.3d at 1034. We directed the DOT on remand to decide whether an FMV methodology that considers the most valuable alternative use of the land would more accurately reflect [its] true cost. Id. In Air Transport Association of America v. DOT (ATA), 119 F.3d 38, 40 (1997), we reviewed the subsequent Policy Statement, in which the DOT distinguished between airfield feesaeronautical fees charged for the use of runways, taxiways, ramps, aprons, and roadway land, and the fees for the use of all other airport space. Id. The Policy Statement required airports to set airfield fees based upon historic cost but allowed them to use any reasonable methodology, including opportunity cost, to set non-airfield fees. Id. In vacating the Policy Statement we observed: [T]he [DOT] simply has not explained why fair market valuation may be appropriate for other portions of the airport, but [is purportedly] too difficult to use in valuing airfield assets. Id. at 44. The T1/T3 Airlines argue the DOT has again failed to explain its disparate treatment of fees for airfield and for non-airfield ( i.e., terminal) space. The Final Decision merely tracks the Policy Statement, asserting it is within [the DOT's] discretion to allow an airport to consider opportunity cost when setting non-airfield fees, Final Decision, 2007 DOT Av. LEXIS 437, at , and adds that nothing in the controlling decisional guidance precludes the use of FMV, id. at . Both statements may be true, but neither is a reasoned basis for allowing an airport to use opportunity cost as a measure of FMV for one type of airport space and not another. We must therefore grant the T1/T3 Airlines' petition and again remand the matter to the DOT either to justify or to abandon its disparate treatment of airfield and non-airfield space.
Although it approved of using FMV in theory, the DOT went on to hold the City may not base terminal rents upon a measure of FMV that takes account of what non-aeronautical users, such as retail merchants, would be willing to pay for terminal space. The City argues this limitation was arbitrary and capricious because the DOT failed to offer a satisfactory explanation for its disparate treatment of aeronautical and non-aeronautical uses. The DOT supported its position with the observation that airports have grant assurance obligations to operate the facility for aeronautical purposes. Id. at . In LAX II we upheld the DOT's decision to bar setting airfield rates based upon the opportunity cost of non-aeronautical uses, City of Los Angeles v. DOT, 165 F.3d 972, 977-79 (1999), because the City was legally obligated to use the airfield land as an airport. Id. at 976 (The Department ... concluded that it would be unreasonable for the City to recover compensation through its landing fees for a `lost opportunity' that does not lawfully exist). The DOT offers the same rationale to justify the prohibition against considering non-aeronautical uses for space inside the terminal. Although an airport is obligated to use non-airfield space to support airport services, the DOT does not suggest all non-airfield space must be dedicated solely to aeronautical uses, which would be to deny the obvious; these days commercial airports feature many retail vendors of food, clothing, toiletries, periodicals, and more. A commercial airport foregoes lost opportunities aplenty when it leases to an airline space it could lease to a non-aeronautical tenant. The difference between the airfield and the terminal is that aeronautical and non-aeronautical uses cannot coexist in the airfield; safety, among other reasons, precludes retail or other non-aeronautical operations on the tarmac or runways. In the terminal, by contrast, aeronautical and non-aeronautical businesses are compatible, perhaps even complementary. It makes no sense, therefore, to say the City may not rely upon the rental value of retail space in calculating the FMV of terminal space leased to airlines because airports have grant assurance obligations to operate the facility for aeronautical purposes. Final Decision, 2007 DOT Av. LEXIS 437, at . An airport does not cease to operate for aeronautical purposes because it also rents terminal space to a retailer. The DOT's decision to limit the City's use of FMV to the consideration of lost aeronautical opportunities is therefore arbitrary and capricious. We grant the City's petition in this respect and direct the DOT on remand, either to justify or to abandon its objection to the City's considering non-aeronautical uses when setting terminal rents based upon FMV.
The City also argues it was arbitrary and capricious for the DOT to require that it obtain a neutral third party appraisal, id. at , in order to determine the FMV of rental space. The DOT's concern was that the City's establishment of fair market value was not an objective determination, but rather a determination established ... in-house by the City itself. Id. at . The City objects to the notion that an in-house appraisal may not be objective and reliable. Be that as it may, one need not consult precedents to see that requiring an independent appraisal to ensure an objective determination of the FMV for terminal space is neither arbitrary nor capricious but only a prudent acknowledgement of human nature and institutional incentives.
An air carrier may appeal to the DOT for review of an airport charge per 49 U.S.C. § 47129(a)(1)(B), as follows: The Secretary of Transportation shall issue a determination as to whether a fee imposed upon one or more air carriers... by the owner or operator of an airport is reasonable if ... a written complaint requesting such determination is filed with the Secretary by an affected air carrier within 60 days after such carrier receives written notice of the establishment or increase of such fee. When the T1/T3 Airlines filed their complaint, only the T3 Airlines had received notice that their non-airfield rent would be based upon FMV. The City did not give notice to the T1 airlines until after the complaint had been filed. The ALJ advised the T1 Airlines that because the complaint had already been filed, it was unnecessary to revise the complaint in order for the T1 Airlines to join the T3 Airlines' arguments against the City's use of FMV. Upon review, however, the DOT held [t]he reasonableness of the market method [as applied] to the T1 Carriers ... is outside the scope of this proceeding. Final Decision, 2007 DOT Av. LEXIS 437, at  n. 5. In support of their petition for review by this court, the T1 Airlines argue the ALJ's invitation equitably tolled the 60 day requirement. The DOT responds that the 60 day requirement limits the agency's jurisdiction and therefore could not be equitably tolled. As the Supreme Court has observed, the law typically treats a limitations defense as an affirmative defense that the defendant must raise at the pleadings stage and that is subject to rules of forfeiture and waiver .... [and] permit[s] courts to toll the limitations period in light of special equitable considerations. John R. Sand & Gravel Co. v. United States, 552 U.S. 130, 128 S.Ct. 750, 753, 169 L.Ed.2d 591 (2008). Some statutes of limitations however, seek not so much to protect a defendant's case-specific interest in timeliness as to achieve a broader system-related goal.... The Court has often read the time limits of these statutes as more absolute, ... forbidding a court to consider whether certain equitable considerations warrant extending a limitations period. As a convenient shorthand, the Court has sometimes referred to the time limits in such statutes as jurisdictional. Id. (internal citations omitted). In Zipes v. Trans World Airlines, the Supreme Court held the statute that required filing with the Equal Employment Opportunity Commission a claim under Title VII of the Civil Rights Act of 1964 was not jurisdictional because it does not speak in jurisdictional terms or refer in any way to the jurisdiction of the tribunal. 455 U.S. 385, 394, 102 S.Ct. 1127, 71 L.Ed.2d 234 (1982). Nor does § 47129(a) speak in jurisdictional terms or refer in any way to the Secretary's authority. The statute simply requires the Secretary to issue a determination upon receiving a timely-filed written complaint; it is silent as to whether the Secretary may, in his discretion, act upon a complaint that does not meet all the formalities. Cf. Wilbur v. CIA, 355 F.3d 675, 676-78 (D.C.Cir.2004) (per curiam) (finding jurisdiction where agency, in its discretion, accepted appeal four years after deadline). The DOT argues its interpretation of the statute is owed deference pursuant to Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694: If the Congress has directly spoken to the precise question at issue, id. at 842, 104 S.Ct. 2778, then we must give effect to the unambiguously expressed intent of Congress, id. at 843, 104 S.Ct. 2778; if instead the statute is silent or ambiguous with respect to the specific issue, then we defer to the DOT's interpretation so long as it is based on a permissible construction of the statute. Id. Here the statute is silent as to whether the Secretary may exercise his jurisdiction without having received a timely-filed complaint. But the DOT's interpretation is not based upon a permissible construction of the statute because it ignores both John R. Sand & Gravel and Zipes. The former case teaches that a statute of limitations ordinarily serves only as an affirmative defense, 128 S.Ct. at 753, the latter that a statute of limitations is jurisdictional only if it speaks in jurisdictional terms. Consequently we hold the 60-day time limit in 49 U.S.C. § 47129(a) is not a jurisdictional requirement but is rather the type of limitation that, when raised as an affirmative defense, is subject to rules of forfeiture, waiver, and equitable tolling. Accordingly, on remand the DOT must consider any argument the T1 Airlines have preserved that the 60-day limitation ought not be enforced against them.