Opinion ID: 187447
Heading Depth: 2
Heading Rank: 3

Heading: Rentable Space

Text: Because the T1/T3 carriers and the airlines with longterm leases are making similar use of the airport but are not subject to substantially comparable charges, the DOT held the rentable space methodology used by the City ran afoul of the requirement of non-discrimination in 49 U.S.C. § 47107(a)(2). The City disputes neither that the rentable space methodology leads to substantially higher charges for the T1/T3 Airlines, nor that the T1/T3 Airlines and the long-term lessee airlines make similar use of airport common areas. Instead the City argues, as it did before the DOT, that the T1/T3 Airlines are not situated similarly to the long-term tenants, which struck their bargains with LAX more than two decades ago. This distinction, the City contends, creates a reasonable classification such that the two groups may lawfully be charged different rates. The City also argues the Final Decision is contrary to law because the DOT improperly placed upon it the burden of persuasion that the difference in rents was based upon a reasonable classification. In Port Authority of New York and New Jersey v. DOT (Newark), we considered a petition filed by several airlines for review of a DOT decision denying their claim of unjust discrimination under § 47107. 479 F.3d 21, 39-45 (2007). In that case the airport did not charge Continental Airlines certain fees it charged other airlines because Continental, unlike the others, operated and maintained its own terminal. Id. at 42. We held the airline complaining of unjust discrimination had the burden of showing another airline making similar use of the airport was not subject to comparable charges. See id. ; 49 U.S.C. § 47107(a)(2). On the other hand, as we said, the statutory exception for a difference based upon a reasonable classification, see 49 U.S.C. § 47107(a)(2)(B), could arguably be viewed as an affirmative defense, as to which the agency is free to choose which party bears the burden of proof, 479 F.3d at 42. We were quite clear, however, the DOT would violate [§ 556(d) of the Administrative Procedure Act] if it placed the full burden of persuasion on the [airport] as to the reasonableness of the proposed fees. Id. at 43 n. 17; see 5 U.S.C. § 556(d) (the proponent of a[n] ... order has the burden of proof). Before the DOT in this case, the City argued it can reasonably distinguish between airlines who signed long-term leases in the 1980s ... on the one hand, and airlines who did not sign leases of that duration ... on the other hand. Final Decision, 2007 DOT Av. LEXIS 437, at . In support of this affirmative defense, the City pointed to its need to expand LAX for the 1984 Olympic Games, which the longterm leases facilitated. Id. at . There is indeed evidence in the record that the airlines with long-term leases got them in return for their part in helping LAX secure financing for the needed expansion, whereas at least some of the T1/T3 Airlines declined the same offer. Because the City asserted and placed evidence in the record that the rate differential was based upon a reasonable classification, thus perfecting its affirmative defense, the burden rested upon the complaining T1/T3 Airlines to persuade the DOT that the City's classification was not reasonable. See Newark, 479 F.3d at 43 n.17. There is no mention in the Final Decision of any evidence the T1/T3 Airlines introduced to show the City's distinction between the long-term tenants and the T1/T3 Airlines was not reasonable; the T1/T3 Airlines simply stated the size of the fee disparity and that the various airlines made similar use of their terminal space. The DOT nonetheless ruled as follows: Because carriers making similar use are not being charged on a comparable basis, and because [the City] has not offered an adequate justification for this practice, we think the use of the rentable space methodology in [this] context... violates the prohibition against unjust discrimination. Final Decision, 2007 DOT Av. LEXIS 437, at -50. By holding the City's justification inadequate without pointing to any evidence to that effect put forward by the T1/T3 Airlines, the DOT effectively assigned the burden of persuasion to the City, whereas the Administrative Procedure Act places that burden squarely upon the complaining airline. 5 U.S.C. § 556(d); see Newark, 479 F.3d at 43 n.17. Because the DOT failed to require the T1/T3 Airlines to put forward evidence that the City's distinction between long and short-term tenants was unreasonable, the Final Decision contains no discussion of whether the economic conditions facing LAX and the airlines in the 1980s justified the disparate treatment of the long-term tenants. We therefore grant the City's petition to the extent of directing the DOT on remand to revisit the T1/T3 Airlines' complaint of discrimination and to apply to them the burden of persuasion that their disparate treatment is unjust.