Southwest Airlines Co. v. United States Department of Transportation , 832 F.3d 270 ( 2016 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 12, 2016 Decided August 9, 2016
No. 15-1036
SOUTHWEST AIRLINES CO.,
PETITIONER
v.
UNITED STATES DEPARTMENT OF TRANSPORTATION,
RESPONDENT
DELTA AIR LINES, INC.,
INTERVENOR
On Petition for Review of an Order of the
United States Department of Transportation
M. Roy Goldberg argued the cause for petitioner. With
him on the briefs was Robert W. Kneisley.
Benjamin M. Shultz, 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, Michael S. Raab, Attorney, Paul M. Geier,
Assistant General Counsel for Litigation, U.S. Department of
Transportation, Peter J. Plocki, Deputy Assistant General
Counsel for Litigation, and Charles E. Enloe, Trial Attorney.
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Jeffrey M. Harris argued the cause for intervenor. With
him on the brief were Paul D. Clement, Edmund G. LaCour,
Jr., Kenneth P. Quinn, and Jennifer Trock.
Before: SRINIVASAN and WILKINS, Circuit Judges, and
GINSBURG, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge SRINIVASAN.
SRINIVASAN, Circuit Judge: Southwest Airlines seeks
our review of a letter from the Department of Transportation
(DOT) to the City of Dallas addressing competition policies
for airlines operating at Love Field airport. According to
Southwest, the views expressed by DOT in the letter are
substantively incorrect and procedurally improper. We
dismiss Southwest’s petition for review because we find
DOT’s letter does not constitute a final agency action, a
prerequisite to our review. In particular, the letter does not
reflect the consummation of DOT’s decisionmaking on the
issues it discusses. DOT in fact has instituted an
administrative proceeding (which remains ongoing) that will
address and resolve, among other things, the precise issues
and policies broached in the letter. Because we conclude that
the challenged letter is not a final agency action, we dismiss
Southwest’s challenge.
I.
A.
Southwest Airlines, Love Field, and the City of Dallas
have a long and somewhat complicated history. Love Field
served as Dallas’s municipal airport starting in the 1920s. The
City of Fort Worth (located about thirty miles away) operated
its own municipal airports.
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In 1964, federal regulators required the two cities to
designate a single airport to service the Dallas-Fort Worth
metropolitan area, leading to the construction of the
Dallas/Fort Worth International Airport (DFW). In order to
ensure that all commercial air traffic would be routed through
DFW instead of the municipal airports, all interstate
commercial carriers agreed to transfer their service to DFW.
Southwest refused to move. In 1973, a federal court ruled
that Southwest must be allowed to operate from Love Field as
an intrastate commuter airline. City of Dallas v. Southwest
Airlines Co., 371 F. Supp. 1015 (N.D. Tex. 1973), aff’d, 494
F.2d 773 (5th Cir. 1974).
A few years later, federal regulators allowed Southwest
to begin interstate service to New Orleans from Love Field.
Some Members of Congress raised concerns “that if
Southwest were to operate on an unrestricted basis from Love
Field (closer to Dallas than DFW) many travelers to and from
Dallas would choose that option rather than using DFW, thus
undermining the economic viability of DFW.” Kansas v.
United States, 16 F.3d 436, 438 (D.C. Cir. 1994). Congress
responded by enacting the Wright Amendment, named for
then-Texas Representative and Speaker of the House Jim
Wright. The Wright Amendment confined interstate
commercial air traffic from Love Field to Texas’s four border
states: Louisiana, Arkansas, Oklahoma, and New Mexico.
Pub. L. No. 96-192 § 29, 94 Stat. 35, 48-49 (1980).
(Congress later added Kansas, Alabama, and Mississippi to
that list. Pub. L. No. 105-66 § 337(b), 111 Stat. 1425, 1447
(1997).)
In July 2006, the Cities of Dallas and Fort Worth, the
DFW Airport Board, American Airlines, and Southwest
agreed to seek the repeal of the Wright Amendment in order
to allow interstate service from Love Field to the rest of the
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country. The contract embodying their agreement became
known as the “Five-Party Agreement.” Later that year,
Congress enacted the Wright Amendment Reform Act of
2006 (WARA), codifying many provisions of the Five-Party
Agreement. Pub. L. No. 109-352, 120 Stat. 2011 (2006). The
WARA ended all geographic limitations on flights from Love
Field as of October 13, 2014, and limited the number of gates
at Love Field to twenty. Id. §§ 2, 5(a). Southwest leases
sixteen of those twenty gates and also subleases two of the
remaining gates.
B.
In the petition before us, Southwest challenges a
Department of Transportation guidance letter addressing
“accommodation” policies at Love Field. Accommodation is
a process by which an airline can gain access to operate
flights from an airport at which it leases no gates. One of the
airport’s tenant airlines “accommodates” the non-tenant
airline’s flights by letting the non-tenant airline use one or
more of the accommodating tenant’s gates. Accommodation
may be voluntary, in the form of an agreement between two
airlines. Accommodation also may be forced, when the
airport requires a tenant airline to make room for a non-tenant
airline.
The accommodation procedures for Love Field are set
out in the airport’s gate lease with tenant airlines. The lease
contains provisions for both voluntary and forced
accommodation, as well as a “scarce resource provision,”
which calls for the City to choose which airline will be forced
to accommodate a new entrant (if necessary) and sets out the
terms for an accommodation. The WARA also speaks to
accommodation at Love Field, requiring the City to
“determine the allocation of leased gates and manage Love
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Field in accordance with contractual rights and obligations” as
they existed on WARA’s effective date and to “honor the
scarce resource provision of the existing Love Field leases”
when “accommodat[ing] new entrant air carriers.” Pub. L.
No. 109-352 § 5(a), 120 Stat. 2011, 2012 (2006).
Two federal statutes addressing airport operations and
competition—the Airport and Airway Improvement Act, 49
U.S.C. §§ 47101, et seq., and the “Competition Plan” statute,
id. § 40117(k)—also pertain to accommodation. In order to
receive funds under either statute, most airports, including
Love Field, must submit a “competition plan” to DOT,
outlining “the availability of airport gates and related
facilities, leasing and sub-leasing arrangements, gate-use
requirements, gate-assignment policy, [and] financial
constraints.” Id. §§ 47106(f), 40117(k). In 2009, the City of
Dallas submitted its most recent plan for Love Field, which
DOT approved.
Before receiving a grant through the Airport and Airway
Improvement Act, an airport must also agree in writing to a
number of grant assurances, including, for example, that it
“will be available for public use on reasonable conditions and
without unjust discrimination,” id. § 47107(a)(1), and will
give no airline “an exclusive right to use the airport,” id.
§ 47107(a)(4). If DOT believes an airport has breached one
of the grant assurances, the agency, acting through the Federal
Aviation Administration (FAA), may initiate an
administrative process to investigate—and if necessary
adjudicate—the alleged noncompliance. See 49 U.S.C.
§ 47122; 14 C.F.R. §§ 16.1(a)(5), 16.101. That process is
known as a “Part 16” proceeding.
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C.
In 2014, Delta Airlines sought voluntary accommodation
to fly five daily flights out of Love Field. Having no luck
with the tenant airlines, it sought assistance from the City,
invoking the City’s obligations to accommodate non-tenant
airlines under the grant assurances and the City’s competition
plan for Love Field. Delta, the tenant airlines, and the City
then exchanged a flurry of letters and emails debating
whether, and on what terms, one of the tenant airlines should
be forced to accommodate Delta. On December 1, 2014, the
City notified the tenant airlines that it was invoking the
process for forced accommodation set out in the airlines’
leases.
Shortly thereafter, the City sought guidance from DOT
about the City’s legal obligations under the grant assurances
and competition plan. On December 17, 2014, DOT
responded with a letter—the one at issue in this case—
providing “guidance” to the City. In the letter, DOT made the
following statements discussing its understanding of the
City’s obligations to force accommodation of a non-tenant
airline:
Our competition plan policy requires airport
proprietors to assist requesting carriers seeking
access, and we expect that, if a requesting
carrier is unable to arrange a voluntary
accommodation with a signatory carrier, the
City will accommodate the requesting carrier to
the extent possible given the current gate usage,
without impacting current or already-
announced, for-sale services by the signatory
carriers.
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With respect to the length of the
accommodation, for the accommodation to be
meaningful at [Love Field], it is our position
that, once accommodated, the accommodated
carrier is entitled to an ongoing similar pattern
of service as long as the carrier continues to
operate the accommodated flights. Importantly,
the accommodated carrier should not be pushed
out by incumbent carriers at a later date. It is
the City’s responsibility to continue the
accommodation and ensure that space is
available so that the requesting carrier is able to
maintain its pattern of service on an ongoing
basis, based on the available space on the
snapshot date of the original accommodation
request, even after the expiration or termination
of any agreement between the accommodated
carrier and signatory carriers.
DOT’s December 17, 2014 Letter, at 2 (J.A. 002).
On February 13, 2015, Southwest filed a petition for
review of the letter, giving rise to this case. Southwest
disputes the substance of DOT’s letter on two fronts: (i)
DOT’s position that the City should determine a tenant
airline’s “current gate usage” on a “snapshot date”; and (ii)
DOT’s position that forced accommodation would continue at
least “as long as the [accommodated] carrier continues to
operate the accommodated flights.” Id. Southwest’s concerns
grow out of its plans to increase its service at some point after
the “snapshot date” referenced in DOT’s letter. Southwest
contends that forced accommodation of Delta based on the
snapshot date, for as long as Delta operates accommodated
flights, would impair its ability to increase its schedule as it
desires. In Southwest’s view, its right to increase its service
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should supersede any accommodation claim Delta might
have.
After receiving the December 17 letter, the City took no
action to implement DOT’s guidance. Rather, the City asked
the agency for additional guidance. See Compl. at ¶ 76, City
of Dallas v. Delta Air Lines, Inc., No. 15-cv-02069 (N.D. Tex.
June 17, 2015). In response, DOT sent the City another
guidance letter. On August 13, 2015, Southwest filed a
petition for review of the second letter. That case has been
held in abeyance pending the outcome of this one.
Meanwhile, and significantly for our purposes, on August
7, 2015, the FAA initiated a Part 16 proceeding to assess the
City’s compliance with its grant obligations. See Notice of
Investigation, In re Compliance with Federal Obligations by
the City of Dallas, FAA Docket No. 16-15-10 (Aug. 7, 2015).
In its notice initiating the proceeding, the FAA explicitly
stated that the December 17 letter was not its final word on
the accommodation issue. See id. at 10 n.12. And although
the City is the only respondent in the proceeding, the FAA
invited Southwest, Delta, and other interested airlines to
participate in the proceeding by filing briefs “containing any
information or argument that it believes the FAA should
consider.” Notice of Opportunity, FAA Docket No. 16-15-10
(Nov. 6, 2015).
II.
In its petition for review of DOT’s December 17 letter,
Southwest argues that DOT’s guidance violates the
accommodation terms of Southwest’s lease, and thus also
infringes the WARA’s statutory command that the City honor
the scarce resource provision of the Love Field gate leases.
Southwest further contends that the letter amounts to a
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legislative rule for which the Administrative Procedure Act
(APA) required prior notice and opportunity for comment.
See 5 U.S.C. § 553.
Southwest’s petition for review invokes this court’s
jurisdiction under 49 U.S.C. § 46110(a). That provision gives
us jurisdiction over DOT and FAA “order[s]” as defined in
the APA: “the whole or a part of a final disposition, whether
affirmative, negative, injunctive, or declaratory in form, of an
agency in a matter other than rule making.” 5 U.S.C.
§ 551(6); SecurityPoint Holdings, Inc. v. TSA, 769 F.3d 1184,
1187 (D.C. Cir. 2014). To be subject to judicial review under
the APA, an FAA order must be a final agency action. See id.
In Bennett v. Spear, the Supreme Court established a two-
part test for determining whether an agency action qualifies as
final so as to be subject to judicial review:
First, the action must mark the consummation of
the agency’s decisionmaking process—it must
not be of a merely tentative or interlocutory
nature. And second, the action must be one by
which rights or obligations have been
determined, or from which legal consequences
will flow.
520 U.S. 154, 177-78 (1997) (internal quotation marks and
citations omitted). An order must satisfy both prongs of the
Bennett test to be considered final. See Ctr. for Auto Safety v.
Nat’l Highway Traffic Safety Admin., 452 F.3d 798, 807 (D.C.
Cir. 2006).
We conclude that the DOT’s December 17 letter fails at
the first prong. In assessing whether a particular agency
action qualifies as final for purposes of judicial review, this
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court and the Supreme Court have looked to the way in which
the agency subsequently treats the challenged action See,
e.g., U.S. Army Corps of Eng’rs v. Hawkes Co., 136 S. Ct.
1807, 1813-14 (2016); Whitman v. Am. Trucking Ass’ns, 531
U.S. 457, 478-79 (2001); Nat’l Mining Ass’n v. McCarthy,
758 F.3d 243, 253 (D.C. Cir. 2014); Amerijet Int’l, Inc. v.
Pistole, 753 F.3d 1343, 1349 (D.C. Cir. 2014); Nat’l Envtl.
Dev. Ass’n’s Clean Air Project v. EPA, 752 F.3d 999, 1007
(D.C. Cir. 2014); Holistic Candlers & Consumers Ass’n v.
FDA, 664 F.3d 940, 944 (D.C. Cir. 2012). In McCarthy, for
instance, we found a guidance document was non-final in part
because there was no indication that the agency had applied
the guidance as if it bound regulated parties. 758 F.3d at 253.
Here, we conclude that the agency’s initiation of a Part
16 proceeding—to resolve, among other things, the very
issues addressed in the challenged December 17 letter—
undermines Southwest’s claim that the letter marked the
consummation of the agency’s decisionmaking process.
When the FAA opens an investigation under Part 16, it sends
a notice of investigation to “the person(s) subject to
investigation” (in this case, the City), setting forth its
concerns and rationale and requesting a response within 30
days. 14 C.F.R. § 16.103. The FAA’s notice here makes
clear that the agency did not consummate its decisionmaking
process in the December 17 letter (or thereafter). The notice
specifies that the “City will be afforded a full opportunity to
raise arguments in this proceeding on . . . any . . . relevant
topic including the guidance provided by the DOT letters of
December 2014 and June 2015.” Notice of Investigation at
12 (emphasis added). The notice further states that,
“[b]ecause the [December 17] letter only offered guidance, it
was not intended to constitute a definitive resolution of the
dispute.” Id. at 10 n.12.
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The agency, moreover, did more than simply issue a post-
hoc statement characterizing a prior action (the December 17
letter) as non-final. DOT put its money where its mouth is, so
to speak. The agency invested its time and resources in
undertaking exactly the type of action—a Part 16
proceeding—that will lead to a final resolution of the matters
addressed in the letter. And it went further: it specifically
stated in the Notice of Investigation that it would entertain
arguments about the guidance set forth in its prior letters, and
it invited Southwest (and other interested parties) to
participate and file a brief on those issues.
We thus have no occasion in this case to consider
whether an agency’s mere characterization of a previously
issued guidance letter as open to reconsideration would
suffice to render the letter non-final. Here, the agency did
more than simply say it would give further consideration to
issues addressed in its prior guidance: it instituted the process
by which it could do so, confirming that the December 17
letter is not the agency’s final word on the issues at hand.
The Part 16 process will afford an opportunity to address
the issues Southwest raises in its petition here. In fact, the
submissions in the Part 16 proceeding raise for the agency’s
consideration the very issues Southwest claims were finally
decided in the December 17 letter. See Response of
Southwest Airlines Co. at 38-49, FAA Docket No. 16-15-10
(Dec. 23, 2015); Invited Brief of Delta Air Lines, Inc. at 15-
19, FAA Docket No. 16-15-10 (Dec. 23, 2015); Response of
the City of Dallas at 71, 79-87, FAA Docket No. 16-15-10
(Nov. 23, 2015). And the Part 16 process will result in a final
decision subject to judicial review. If the FAA and the City
cannot resolve the FAA’s concerns through informal means,
the agency may conduct a hearing to determine the City’s
compliance with its obligations under the grant assurances, 14
12
C.F.R. §§ 16.201, 16.202, or the Director may make a
determination without a hearing, id. §§ 16.105, 16.31. In
either case, the initial determination may be appealed to the
Associate Administrator for Airports, who issues a final
decision. Id. §§ 16.33(b), 16.241(b), (c). Such a decision
constitutes a final agency action for purposes of the APA and
is subject to judicial review in the courts of appeals. Id.
§ 16.247.
The relevant regulations also make clear that any
decisions or determinations at earlier stages of the Part 16
process are not final agency actions (and, as such, are not
subject to judicial review). See id. We would be hard-
pressed to find that a letter sent months before the initiation of
the Part 16 proceeding, addressing issues to be vetted and
resolved in that proceeding, is somehow more “final” than the
proceeding’s non-final, early-stage decisions (which of course
come after the letter). At the end of the Part 16 proceeding,
the agency might ultimately adhere to the views expressed in
the December 17 letter, or it might take a different approach.
At this point, though, we cannot be sure of the agency’s final
stance on the issues addressed in the letter.
Southwest contends that the letter nonetheless was final
agency action because DOT has not rescinded or disavowed
the letter. In making that argument, we note that Southwest
necessarily agrees with our approach of examining
subsequent agency actions in considering finality—they’ve
explicitly asked us to do so. But Southwest provides no
support for its argument, and has pointed us to no cases in
which we have required an agency to rescind non-final advice
or guidance in order to prove that its decisionmaking process
has yet to be consummated. We find the argument
unpersuasive.
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It is unclear whether Southwest, the City, or any other
affected entities at one time may have viewed the December
17 letter as a definitive mandate requiring the City to force
accommodation on the terms outlined in the letter. The City,
for its part, took no action to implement the guidance set out
in the letter, instead seeking further guidance from DOT. In
any event, now that the Part 16 process is underway, any such
view of the December 17 letter which may have existed at one
time would have no continuing force.
Because DOT’s December 17 letter did not mark the
consummation of the agency’s decisionmaking process for
purposes of the first prong of Bennett’s finality test, the letter
was not a final agency action. In light of that conclusion, we
have no occasion to reach Southwest’s arguments under the
second Bennett prong. For the same reason, we also do not
consider Southwest’s contention that the letter amounted to a
legislative rule as to which the agency was required to give
prior notice and opportunity for comment.
* * * * *
For the foregoing reasons, we dismiss the petition for
review.
So ordered.