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Agency Fee Structure Must Follow Congressional Mandate, Not Economic Methodology
Description FAA's fee structure for access to U.S. airspace was based on economic methods of estimating elasticity of demand. The court found that the FAA exceeded its authority because the statute specified cost recovery as the fee basis.
Topic Administrative Law
Key Words Statutory Authority
C A S E   S U M M A R Y
Facts The Federal Aviation Reauthorization Act of 1996 directed the FAA to establish a fee schedule to collect $100 million a year to cover air traffic control services provided to commercial aircraft that "neither take off from, nor land in, the United States." The FAA issued an Interim Final Rule (IFR) that was contested by several foreign airlines that would pay the fees for their flights that cross U.S. airspace. The statute required that the fees be directly related to the FAA's costs of providing the service. The FAA based the fee on economic methodology (Ramsey pricing) based on "the user's elasticity of demand" for the service.
Court Decision The fee structure was vacated and remanded to the FAA to be issued in a manner more consistent with the statutory guideline of Congress, which was to base the fee to reflect the cost incurred by the FAA in monitoring flights over U.S. airspace. Congress did not specify that the fee could be based on its value to the user, so the FAA exceeded it statutory authority. This fee method may make good economic sense but is inconsistent with the mandate of Congress.
Citation Asiana Airlines v. Federal Aviation Administration, 134 F.3d 393 (D.C. Cir., 1998)

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