Court Opinion

ID: 8996853
Source: CourtListenerOpinion
Date Created: 2022-11-27 12:46:17.139282+00
Date Added: 2024-06-11T17:11:05.427920
License: Public Domain

DAVID A. NELSON, Circuit Judge,
concurring in part and dissenting in part.
I would affirm the judgment of the district court in its entirety. I agree with what Judge Contie has written with respect to the issues addressed in Part III(C) of Judge Kennedy’s lead opinion (allocation of fair share costs to concessions and general aviation), but I am not persuaded that the airport acted unreasonably in its treatment of the cost of crash/fire/rescue services. Accordingly, I dissent from Section III(D) of the lead opinion and from the portion of the judgment that orders a remand.
In joining Judge Kennedy’s opinion on the allocation of costs between the airlines and other users, I wish to add a few words on the treatment of the public spaces in the passenger terminal building. Under 49 U.S.C. App. § 1513(b), the airport is allowed to levy and collect “reasonable” rental charges from aircraft operators. The airport has considerable leeway in determining what is reasonable, and even if the record showed that 100 percent of the amortization and operation and maintenance cost of the public spaces in the terminal was being allocated to the airlines, I would be reluctant to conclude that such an allocation was unreasonable.
It would not be unreasonable, I think, to view airline traffic as the raison d’etre of the terminal. Professor Ferdinand Levy, a highly qualified economist, testified that “you could cut out all the concessions [through the use of satellite parking and so forth] and you could still have the airport and the airlines.” (Trial transcript, pp. 993-94.) And if the fundamental purpose of the terminal is to serve the airlines and their customers, it would not be unreasonable to assign to the airlines the full breakeven cost of the terminal’s public spaces.
The same logic informs the district court’s discussion of the assignment to the airlines of the cost of crash/fire/rescue (“CFR”) services:
“Plaintiffs argue that they should not be charged 100% of CFR expenses. This Court agrees with the Indianapolis court that such costs are properly alloca-ble 100% to the airlines. 733 F.2d at 1271. The CFR costs are incurred solely because of the presence of plaintiffs and other commercial airlines at the Airport. If all the concessionaires, general aviation and fixed based operators terminated their tenancies with the Airport, the Airport would still be required to provide CFR. If all the commercial airlines ceased service at the Airport, the Airport would no longer be required to provide CFR. In addition, at trial Dean Nitz, an FAA agent, testified that it was appropriate to charge all CFR costs to the commercial airlines. Therefore, the Court finds that a charge of 100% of CFR to plaintiffs does not violate the AHTA.” Northwest Airlines, Inc. v. County of Kent, Michigan, 738 F.Supp. 1112, 1119 (W.D.Mich.1990).
I agree with this analysis.
The airport’s method of allocating CFR costs is not the only acceptable method, to be sure, just as its method of allocating terminal space costs is not the only accept*1066able method. Economists and cost accountants recognize a wide variety of different methods for assigning costs within a business that offers, multiple services to multiple customers. In the absence of a statutory cost allocation formula, however, the courts have no warrant to require the use of one acceptable method in preference to another. Colorado Interstate Gas Co. v. Federal Power Commission, 324 U.S. 581, 589, 65 S.Ct. 829, 833, 89 L.Ed. 1206 (1945). Justice Douglas, who spoke for the Court in Colorado Interstate Gas, explained that
“where as here several classes of services have a common use of the same property difficulties of separation are obvious. Allocation of costs is not a matter for the slide-rule. It involves judgment on a myriad of facts. It has no claim to an exact science.” Id. (Citation omitted.)
Cf. National Association of Greeting Card Publishers v. United States Postal Service, 462 U.S. 810, 825, 103 S.Ct. 2717, 2727, 77 L.Ed.2d 195 (1983), a unanimous opinion where the last three sentences of this passage were quoted with obvious approval.
Rate-making, including the cost-allocation component of rate-making, “is essentially a legislative function.” Colorado Interstate Gas, 324 U.S. at 589, 65 S.Ct. at 833, citing Munn v. Illinois, 94 U.S. 113, 24 L.Ed. 77 (1876). Where, as here, a challenged rate structure rests on essentially legislative judgments that meet the applicable statutory test, it is not appropriate for the courts to substitute their judgment for the judgment of the rate-makers.
ORDER
April 16, 1992.
Before: KENNEDY and NELSON, Circuit Judges; and CONTIE, Senior Circuit Judge.
The court having received a petition for rehearing en banc, and the petition having been circulated not only to the original panel members but also to all other active judges of this court, and less than a majority of the judges having favored the suggestion, the petition for rehearing has been referred to the original hearing panel.
The panel has further reviewed the petition for rehearing and concludes that the issues raised in the petition were fully considered upon the original submission and decision of the case. Accordingly, the petition is denied.