Court Opinion

ID: 4176995
Source: CourtListenerOpinion
Date Created: 2017-06-13 15:04:56.987948+00
Date Added: 2024-06-11T07:47:12.983585
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 21, 2017                   Decided June 13, 2017

                         No. 16-1200

                   UNITED AIRLINES, INC.,
                        PETITIONER

                               v.

       TRANSPORTATION SECURITY ADMINISTRATION,
                    RESPONDENT

           On Petition for Review of a Decision of
          the Transportation Security Administration

    Adam P. Feinberg argued the cause for petitioner. With
him on the briefs was Adam W. Braskich.

     Jeffrey Clair, Attorney, U.S. Department of Justice, argued
the cause for respondent. With him on the brief were Benjamin
C. Mizer, Principal Deputy Assistant Attorney General, and
Scott R. McIntosh, Attorney.

    Before: BROWN and PILLARD, Circuit Judges, and
SILBERMAN, Senior Circuit Judge.

    Opinion for the Court filed by Senior Circuit Judge
SILBERMAN.
                                   2

     SILBERMAN, Senior Circuit Judge:         Petitioner United
Airlines sought refunds from the Department of Homeland
Security’s Transportation Security Administration (TSA) for
overpayments it made to TSA. These payments relate to fees
charged airline passengers that fund aviation security expenses
and are to be remitted to TSA. In an informal adjudication, TSA
refused to consider Petitioner’s refund request because four
years before TSA had concluded an audit of United’s
remittances during the relevant period, the audit did not
discover any overpayments, and United had not objected to the
report of the audit. We conclude, however, that TSA’s position
is unsupportable.

                                  I.

     The Aviation and Transportation Security Act created TSA
and tasked the agency with civil aviation security.1 To fund
some of its security measures, the TSA is required to impose a
per-passenger fee on travelers, which is collected by the airlines
and remitted to the agency.2 The agency conducts audits
pursuant to its statutory authority to require airlines to provide
information “necessary to verify that fees have been collected
and remitted at the proper times and in the proper amounts.”3
(Two regulations govern the audit process: carriers must
establish a system to account for the fees collected and remitted,
and the agency may conduct audits to ensure that the security

    1
     See 49 U.S.C. § 114; see also 6 U.S.C. § 203(2) (transferring
TSA to Department of Homeland Security).
    2
        See 49 U.S.C. § 44940(a)(1); id. § 44940(e).
    3
        Id. § 44940(e)(4).
                                    3

service fees are accurately collected and remitted.4) The Act
provides that the agency “may refund any fee paid by mistake or
any amount paid in excess of that required.”5

     United Airlines claimed a refund after it hired an outside
consultant to review payments it had made to TSA. The
consultant determined that Petitioner had overpaid the agency
during 2010, 2011, and 2012 in the amount of $1.5 million.6 On
April 8, 2016, the consultant sent an email to TSA requesting a
refund. He included in the email all of the data and calculations
supporting the request. On April 18, 2016, ten days after
receiving the refund request, TSA denied it. According to TSA,
Petitioner’s problem was that TSA had already conducted an
audit for the relevant time period. That audit was conducted in
2012 “to evaluate the accuracy and reliability of [the fees]
imposed, collected, recorded, refunded, remitted, and reported
. . . for the periods in which [Petitioner] is seeking to re-
examine.” It was determined that Petitioner owed the agency
$3.07, which Petitioner promptly paid following a final exit

     4
         See 49 C.F.R. § 1510.15(a); id. § 1510.19.
     5
         49 U.S.C. § 44940(g).
     6
        The consultant discovered that Petitioner had incorrectly
calculated the fees owed to TSA based on two different errors. First,
Petitioner paid approximately $1 million to the agency for passengers
that were involuntarily transferred to Petitioner’s flights. The original
carrier that sold the ticket, not Petitioner, was responsible for
collecting and remitting those payments. See 49 U.S.C. § 44940(e)(2).
Second, Petitioner overpaid approximately $500,000 due to foreign
currency fluctuation that occurred during the time period after
collection and before remittance.
                                4

conference. Therefore, TSA concluded that United had
“accepted and agreed with” the agency’s audit findings.

     Shortly thereafter, Petitioner responded to TSA’s denial.
Petitioner “request[ed] [TSA’s] guidance concerning the TSA’s
rules and procedures for obtaining . . . administrative review,”
and Petitioner suggested that it was “hoping to keep this matter
within TSA’s administrative review process.” It requested a
response from the agency within four days. When it did not
receive a reply, Petitioner filed this petition for review,
identifying the April 18 Refund Denial as the agency decision
under review.

     On August 10, 2016, after this petition for review was filed
and two months after the Petitioner’s second request, TSA
finally responded. The agency again pointed out that Petitioner
had been the subject of an audit of the fees collected during the
contested period, and that the audit report stated that Petitioner
had thirty days to submit an administrative appeal. Instead, it
only paid the trivial sum owed, $3.07. Nor did United file a
petition for review before us within sixty days of TSA’s audit—
which TSA described as its “final order.” Then, TSA
concluded: “Given the foregoing, TSA has determined that
United has no entitlement to administrative review or judicial
review.”

                               II.

     We are met with a jurisdictional objection. The government
argues that since Petitioner’s request for administrative review
was pending when the petition was filed in our court, the
petition was incurably premature, and we should therefore
dismiss it. See TeleSTAR, Inc. v. FCC, 888 F.2d 132, 134 (D.C.
Cir. 1989). This contention is a rather thin one; it depends on
                                    5

the interpretation of Petitioner’s June 6 letter which, in relevant
part, stated:

    On behalf of our client, we respectfully disagree with this
    action and request review of the TSA’s determination. To
    this end, we request your guidance concerning the TSA’s
    rules and procedures for obtaining such administrative
    review.

    Because we are hoping to keep this matter within TSA’s
    administrative review process, we ask for your reply by
    June 10, 2016.

     It’s clear, then, that Petitioner wished to seek administrative
review, but it is also clear that Petitioner wanted to learn how to
do so before it pulled the trigger. After all, there were no
general regulations describing a procedure for exhaustion of
administrative remedies. (The thirty-day period to appeal the
audit would be relevant only if Petitioner was challenging the
audit.) And Petitioner’s specific request for a quick response
was obviously designed to allow a petition to our court within
the sixty-day period for review of an agency final order, i.e., the
April 18 Refund Denial.7 In sum, the challenge to our
jurisdiction barely passes the frivolous.

    The rest of the case turns on the significance of the 2012
audit. Petitioner contends that a fair interpretation of the statute
authorizing TSA’s audit, as well as TSA’s regulations
implementing the statute, led United to understand the purpose
of TSA audits was solely to determine whether carriers had
remitted a sufficient amount to TSA to satisfy their obligation.

    7
        See 49 U.S.C. § 46110(a).
                                    6

And that the statutory authority allowing the Under Secretary to
issue refunds to carriers because of mistakes is a wholly
independent legal authority. The government contends, on the
other hand, that the audit was designed to be symmetrical to
determine whether a carrier has either underpaid or overpaid
during the period covered by the audit. If the government were
correct, then its argument that it had virtually unreviewable
discretion whether to “reopen” the audit might be persuasive.

     But the government is not correct. First of all, TSA has
never indicated to the regulated carriers that an audit had the
double purpose. Indeed the audit report stated that its purpose
was to assess compliance with the security fee regulations. It
concluded that the security fee “was correctly imposed,
collected, and remitted to the TSA” (with the exception of
$3.07). An audit typically seeks to verify information for a
particular reason. Here, the audit sought to verify that Petitioner
was collecting the security fee from passengers and remitting the
collected fees to TSA. Nothing about the audit suggested it also
examined whether the airline was too generous in identifying
tickets subject to the fee or in calculating currency exchange
rates bearing on the amounts it owed.8 We therefore reject the
notion that Petitioner’s request for a refund was a tardy effort to
reopen the audit.

    Putting aside the audit as irrelevant, there still remains the
question whether it was arbitrary and capricious for the Under
Secretary to refuse to pay a refund, as he is statutorily

     8
       If the audit was meant to be symmetrical, i.e., the liability could
have been negative, it was incumbent on the agency to make that
clear.
                                     7

authorized—but not commanded—to do.9 The government
argues that revisiting liability four years old would burden the
agency’s enforcement resources; a carrier should not be
permitted to sit on relevant data for years before bringing the
claim to the agency’s attention. That argument is not without
merit, but it would have much more force if an agency
regulation, or some other method of giving notice, would
indicate how long is too long.10

     The government also contends that granting a refund to
United would somehow prejudice other airlines. We simply do
not understand this argument—at all.11

    Therefore, we remand to TSA for proceedings consistent
with this opinion.

                                                             So ordered.

     9
         See 49 U.S.C. § 44940(g).
     10
       On that point, Petitioner also contends that if the agency wished
to make the audit symmetrical or otherwise define the scope and
consequences of the audit, it needed to do so through notice-and-
comment rulemaking. We need not reach the question of whether
notice may be effectuated through a means other than rulemaking.
     11
       For those overpayments due to involuntary transfers, there is
no reason to suspect that the carrier that sold the original ticket did not
also pay TSA, i.e., it is equally likely that TSA was paid double. TSA
would, then, have no discernable reason to go around “reopening”
those other audits.