Exhaustless Inc. v. Federal Aviation Administration

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 13, 2019 Decided August 2, 2019
No. 18-1303
EXHAUSTLESS INC.,
PETITIONER
v.
FEDERAL AVIATION ADMINISTRATION,
RESPONDENT
Consolidated with 18-1304
On Petitions for Review of Orders
of the Federal Aviation Administration
Kevin M. Blair argued the cause and filed the briefs for
petitioner.
Benjamin M. Shultz, Attorney, U.S. Department of Justice,
argued the cause for respondent. With him on the brief were
Michael S. Raab, Attorney, U.S. Department of Justice, and
Steven G. Bradbury, General Counsel, Paul M. Geier,
Assistant General Counsel, Joy K. Park, Senior Trial Attorney,
and Arjun Garg, Chief Counsel, Federal Aviation
Administration.

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Before: HENDERSON, SRINIVASAN, and PILLARD, Circuit
Judges.
Opinion for the Court filed by Circuit Judge SRINIVASAN.
SRINIVASAN, Circuit Judge: In 1968, the Federal
Aviation Administration began limiting the number of flights
serving LaGuardia and John F. Kennedy Airports in New York
in order to reduce flight delays. In 2000, Congress mandated
the repeal of the relevant regulations based on concerns about
their anticompetitive effects. The phase-out process, however,
caused flight delays to skyrocket at LaGuardia and JFK
Airports. The FAA then issued interim orders again limiting
the number of flights serving those airports. The FAA has
since extended the interim orders many times as efforts to
establish a permanent solution have failed.
Exhaustless, Inc., brings two petitions for review of the
latest interim extension orders. Exhaustless would like
LaGuardia and JFK Airports to implement the company’s
patent-pending product, Aviation 2.0 Operating System, to
manage the allocation of takeoff and landing “slots” to airlines.
We dismiss Exhaustless’s petitions for lack of standing.
The company fails to demonstrate that vacating the interim
FAA orders would redress its injury—i.e., a lack of market
opportunity for its product. Vacating the interim orders would
leave takeoffs and landings at the airports unregulated,
eliminating the need for the company’s product at the federal
level. To the extent Exhaustless argues that the local airport
authority could employ Aviation 2.0 if there were no federal
regulation, we find any such possibility too speculative to
support the company’s standing to bring these petitions.

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I.
The Federal Aviation Act calls for the FAA to “assign by
regulation or order the use of the airspace necessary to ensure
the safety of aircraft and the efficient use of airspace.” 49
U.S.C. § 40103(b)(1). Navigable airspace includes the
“airspace needed to ensure safety in the takeoff and landing of
aircraft.” Id. § 40102(a)(32).
Since 1968, the FAA has restricted the number of takeoffs
and landings at certain highly congested airports in order to
reduce inefficient flight delays. The restrictions were codified
in a series of regulations known as the High Density Rule. As
of 2000, the rule placed numerical limits on the hourly takeoffs
and landings at five highly congested airports: Newark
Liberty, LaGuardia, JFK, O’Hare, and Ronald Reagan
Washington National. 14 C.F.R. § 93.123 (2000).
By then, Congress had grown concerned with the High
Density Rule’s collateral effects on airport access for carriers
and competition among carriers. Acting on those concerns in
2000, Congress prohibited the use of the High Density Rule at
LaGuardia or JFK Airports after January 1, 2007. 49 U.S.C.
§ 41715(a). For the period leading up to that date, Congress
directed the FAA to grant slot exemptions for carriers servicing
smaller airports and carriers with little or no existing service at
the airports. Id. § 41716.
Congress’s action led to an immediate increase in airport
congestion at LaGuardia. As the FAA began granting slot
exemptions, “the number of scheduled flight operations at
LaGuardia began to far exceed the airport’s capacity even
under optimal operating conditions.” 71 Fed. Reg. 54,331,
54,331 (Sept. 14, 2006). The average minutes of delay for
arriving flights increased 144% between March and September

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of 2000. Id. at 54,332. By September 2000, flight delays at
LaGuardia accounted for 25% of the delays nationwide. Id.
The FAA responded by limiting the number of slot exemptions.
From late 2000 until the end of 2006, the High Density Rule,
with the exemption cap, governed the number of slots at
LaGuardia. Id. at 54,332 & n.9.
Because the High Density Rule was set to expire by 2007,
the FAA, in August 2006, proposed a new permanent
congestion management rule for LaGuardia and requested
comments. 71 Fed. Reg. 51,360 (Aug. 29, 2006). A few weeks
later, the agency explained that the permanent rule would not
be finalized by the end of the year and that it was necessary to
implement an interim rule to avert crippling delays. 71 Fed.
Reg. 54,331 (Sept. 14, 2006).
The FAA issued an interim order in December 2006. 71
Fed. Reg. 77,854 (Dec. 27, 2006). The rule made clear that it
was a temporary measure and reiterated the agency’s “need to
complete the rulemaking, because the final decision in that
proceeding should establish a more rational basis for the
regulation of flight operations at LaGuardia.” Id. at 77,856.
The interim rule resembled the High Density Rule and
generally grandfathered the slots held by airlines under the
previous regime. Id. at 77,859–61.
Regulatory efforts concerning JFK Airport followed a
somewhat different path but ended in much the same place.
With respect to JFK, the FAA allowed the High Density Rule
to expire in 2007 without a replacement. Unsurprisingly, the
number of flights at JFK spiked, and with more planes came
more delays. In 2007, the average daily operations at JFK
increased 21% over the prior year and on-time arrival rates
declined from 68.5% to 62.2%. 73 Fed. Reg. 3510, 3511 (Jan.
18, 2008).

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In 2008, the FAA published an interim order limiting the
number of takeoffs and landings at JFK. Id. at 3516–42. Like
the LaGuardia order, the JFK order stressed its “short-term
nature,” stating that it was “not intended to create a long-term
solution to congestion.” Id. at 3513–14.
The FAA’s first attempt at a permanent solution for
LaGuardia and JFK Airports came via rules promulgated in
October 2008. 73 Fed. Reg. 60,574 (Oct. 10, 2008); 73 Fed.
Reg. 60,544 (Oct. 10, 2008). Under those rules, a portion of
the slots would be allocated using an auction. 73 Fed. Reg. at
60,577; 73 Fed. Reg. at 60,547. A number of airlines and trade
groups, along with the local airport authority, promptly
challenged the rules in our court. The challengers moved for
an immediate stay, contending that the FAA lacked statutory
authority to conduct slot auctions. We granted the motion.
Order, Port Auth. of N.Y. & N.J. v. FAA, No. 08-1329 (D.C.
Cir. Dec. 8, 2008), J.A. 365. The FAA then rescinded the rules.
74 Fed. Reg. 52,134 (Oct. 9, 2009); 74 Fed. Reg. 52,132 (Oct.
9, 2009).
The agency extended the interim orders for both
LaGuardia and JFK Airports until October 2011, noting that a
permanent solution would require more time. 74 Fed. Reg.
51,653 (Oct. 7, 2009); 74 Fed. Reg. 51,650 (Oct. 7, 2009). A
series of additional extensions followed. In April 2011, the
FAA extended the orders until October 2013. 76 Fed. Reg.
18,620 (Apr. 4, 2011); 76 Fed. Reg. 18,616 (Apr. 4, 2011). In
May 2013, the FAA extended the orders to October 2014. 78
Fed. Reg. 28,278 (May 14, 2013); 78 Fed. Reg. 28,276 (May
14, 2013). And in March 2014, the FAA again extended the
orders, to October 2016. 79 Fed. Reg. 17,222 (Mar. 27, 2014);
79 Fed. Reg. 16,854 (Mar. 26, 2014).

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In January 2015, the agency proposed a final rule for New
York–area airports that included a secondary market for the
purchase, sale, lease, or trade of slots between airlines. 80 Fed.
Reg. 1274 (Jan. 8, 2015). But in May 2016, after receiving
comments, the FAA withdrew the proposed rule. 81 Fed. Reg.
30,218 (May 16, 2016). That led the agency to extend the
interim orders yet again, until October 2018. 81 Fed. Reg.
33,126 (May 25, 2016); 81 Fed. Reg. 32,636 (May 24, 2016).
In September 2018, the FAA once more extended the
interim orders for LaGuardia and JFK Airports, this time until
October 2020. 83 Fed. Reg. 47,065 (Sept. 18, 2018); 83 Fed.
Reg. 46,865 (Sept. 17, 2018). Those latest extensions are at
issue here. While the orders largely match the prior extensions
in substance, they are less committal about a permanent rule,
stating only that the agency “will continue to consider potential
rulemaking in the future to codify the slot management policies
at [LaGuardia], and also at John F. Kennedy International
Airport (JFK).” 83 Fed. Reg. at 47,065.
Petitioner Exhaustless, Inc., as noted, has developed a
patent-pending product called Aviation 2.0 Operating Standard
for allocating airline slots at airports. Using Aviation 2.0,
carriers would compete in semi-annual auctions to purchase
slots for a six-month period, with the total number of slots
determined by Exhaustless using its proprietary technology.
Passengers would then pay demand-calibrated congestion
premiums (on top of their airfare) when purchasing tickets.
Both the congestion premiums and the auction proceeds would
go to Exhaustless.
II.
Exhaustless asserts several challenges to the latest interim
extension orders in its petitions for review, including

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arguments that the FAA exceeded its statutory authority and
violated the Administrative Procedure Act. We cannot address
the merits of those claims unless Exhaustless has constitutional
standing. See Steel Co. v. Citizens for a Better Env’t, 523 U.S.
83, 101–02 (1998). To establish standing, Exhaustless must
demonstrate that: (i) it has suffered an injury-in-fact that is
“concrete and particularized” and “actual or imminent”; (ii) the
injury is “fairly traceable to the challenged action” of the
respondent; and (iii) it is “likely, as opposed to merely
speculative, that the injury will be redressed by a favorable
decision.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61
(1992) (formatting modified).
The latter two elements, traceability and redressability,
“overlap as two sides of a causation coin.” Dynalantic Corp.
v. Dep’t of Def., 115 F.3d 1012, 1017 (D.C. Cir. 1997). When
a petitioner itself is the object of the challenged agency action,
there usually is little doubt of causation. See Lujan, 504 U.S.
at 561–62. But when a petitioner’s injury arises from an
agency’s “unlawful regulation (or lack of regulation) of
someone else,” causation often is “substantially more difficult”
to establish because the petitioner must demonstrate that the
injury does not result from “the independent action of some
third party not before the court.” Id. at 560, 562.
Exhaustless fails to demonstrate redressability. The
company contends that it “is being deprived of the opportunity
to compete in the market with its patent-pending proposed
solution” Aviation 2.0 so long as the FAA’s interim orders
remain in place. Exhaustless Br. 25; id. at 27. Exhaustless
envisions that, if the interim orders—including their limitations
on slots at LaGuardia and JFK—were withdrawn, the agency
would then “transfer the management of service (slot volumes),
for congestion-prevention purposes, to Exhaustless.”
Exhaustless Inc., Aviation 2.0—Explained, FAA Add. A39.

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Vacatur of the interim orders, however, would not get the
company closer to that goal. Without the orders, there would
be no federally mandated number of takeoff and landing slots
at LaGuardia and JFK Airports, no scarce resource for the FAA
to auction, and hence no market for Exhaustless’s product, at
least as concerns the federal government. The relief sought by
the company in its petitions for review—i.e., vacatur of the
interim orders—thus would not redress its claimed injury.
The appropriate administrative channel for Exhaustless to
pursue instead is a petition for rulemaking with the agency to
employ the company’s technology. And because the interim
rules are revocable at will, the orders challenged by
Exhaustless in this proceeding do not stand in the way of the
company’s attempting to persuade the FAA to adopt its
technology via a rulemaking. Indeed, Exhaustless has already
filed such a petition for rulemaking. Petition for Rulemaking—
FAA-2007-0001 (filed May 21, 2018), J.A. 499. The petition
remains pending with the FAA, and, should the agency reject
it, Exhaustless would have standing to seek judicial review.
At oral argument, Exhaustless submitted that vacatur of
the FAA’s interim rules would create a different market
opportunity: vacatur in theory would result in transfer of
control over flight schedules at LaGuardia and JFK Airports
from federal to local authority, i.e., the Port Authority of New
York and New Jersey, which could then elect to use Aviation
2.0. That argument for standing fares no better.
While the loss of an opportunity to compete for business
can constitute Article III injury, there must be a “realistic
possibility” of winning the eventual competition. Ranger
Cellular v. FCC, 348 F.3d 1044, 1050 (D.C. Cir. 2003)
(quoting Albuquerque Indian Rights v. Lujan, 930 F.2d 49, 56
(D.C. Cir. 1991)). Here, the hurdles to the Port Authority’s

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adoption of Aviation 2.0 to manage flights at the airports are
too significant and too numerous for us to find it “likely, as
opposed to merely speculative,” that vacatur of the interim
orders would redress Exhaustless’s injury. Lujan, 504 U.S. at
561 (internal quotation marks omitted).
First, the FAA operates under a duty “to ensure . . . the
efficient use of airspace.” 49 U.S.C. § 40103(b)(1). Since
1968, the Administration has fulfilled that responsibility by
limiting the number of takeoffs and landings at LaGuardia and
JFK because the airports cannot accommodate the number of
flights airlines would like to operate there without causing
undue congestion. See 33 Fed. Reg. 17,896 (Dec. 3, 1968).
The Chief Operating Officer of the FAA’s Air Traffic
Administration testified that, absent the interim orders, she
would expect “demand for additional flights . . . to far exceed
the runway capacity resulting in extensive localized and
systemic delays and flight cancellations.” Bristol Decl. ¶ 4,
FAA Add. A28. Recall that, in 2000, merely allowing
exemptions from slot limitations caused LaGuardia to account
for 25% of flight delays nationwide. 71 Fed. Reg. at 54,332.
Exhaustless’s suggestion that our vacating the interim orders
would lead the FAA to delegate authority over flight schedules
at LaGuardia and JFK Airports to the Port Authority defies
history and blinks reality.
Second, both LaGuardia and JFK Airports have accepted
federal grants for airport development under the Airport
Improvement Program. Federal Aviation Administration, FY
2019 Primary Entitlements (May 10, 2019),
https://www.faa.gov/airports/aip/grantapportion_data/media/F
Y-2019-Primary-Entitlements.pdf. As a condition of accessing
those funds, the airports must pledge that they will be
“available for public use on reasonable conditions and without
unjust discrimination.” 49 U.S.C. § 47107(a)(1). That

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assurance prohibits airlines from assessing unreasonable fees.
See Air Transp. Ass’n of Am. v. DOT, 613 F.3d 206, 210 (D.C.
Cir. 2010). And Congress has assigned the Secretary of
Transportation primary responsibility for determining whether
airport fees are reasonable. See 49 U.S.C. § 47129. Under
current regulations, airports may charge landing fees so long as
they do not exceed the historical costs captured by an airport’s
“rate base.” 78 Fed. Reg. 55,330, 55,333–35 (Sept. 10, 2013);
Air Transp., 613 F.3d at 211. But Exhaustless’s technology
relies on charging carriers a market-clearing auction price
rather than a cost-based landing fee, and in doing so runs into
conflict with JFK’s and LaGuardia’s grant assurances.
Third, there are substantial obstacles to charging
passengers a “dedicated Congestion-Prevention Premium,” as
Exhaustless contemplates. Exhaustless Inc., Aviation 2.0—
Explained, FAA Add. A39. To the extent the company
envisions that the local airport authority would assess the
premium, it fails to account for the Anti-Head Tax Act, which
provides that any “political subdivision of a State . . . may not
levy or collect a tax, fee, head charge, or other charge on . . . an
individual traveling in air commerce.” 49 U.S.C. § 40116(b).
To the extent the company contemplates collection of the fee
by the airlines, the FAA’s Director of the Office of Aviation
Analysis explained that Exhaustless’s “proposal would require
the carriers to substantially redesign their technology to
integrate a dynamic third-party fee” and that it was “unlikely
that carriers would do this voluntarily.” Homan Decl. ¶ 4, FAA
Add. A56. And if the companies decline to collect the fee
voluntarily, Exhaustless does not explain the airports’ authority
to compel airlines to assess the charge.
Fourth, adopting Exhaustless’s proposal could jeopardize
the United States’ compliance with international agreements on
commercial air travel. For instance, an agreement between the

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United States and Canada guarantees Canadian airlines a
minimum of 42 slots at LaGuardia. See Air Transport
Agreement Between the Government of the United States and
the Government of Canada, T.I.A.S. No. 07-312, Ann. II § 1
(Mar. 12, 2007). Yet Exhaustless evidently seeks to auction
off all the slots at LaGuardia without regard to a carrier’s
nationality.
Finally, even if Exhaustless were able to overcome each of
those hurdles, Aviation 2.0 remains an unproven product. The
product has yet to be adopted by any airport in the nation even
though the vast majority of them are not subject to FAA slot
regulation and thus could adopt it today. We find it doubtful
that two of the busiest airports in the nation would volunteer to
act as the test sites for Aviation 2.0, even assuming the agency
would permit them to do so. In view of all of those legal and
practical obstacles, the notion that vacating the interim orders
would create a business opportunity for Exhaustless amounts
to mere conjecture.
Our conclusion in that regard does not mean that the
challenged interim orders are entirely insulated from review.
Standing principles under Article III exist to ensure that a
litigant alleges “such a personal stake in the outcome of the
controversy as to warrant his invocation of federal-court
jurisdiction.” Summers v. Earth Island Inst., 555 U.S. 488, 493
(2009) (internal quotation marks omitted). An airline or airport
authority likely would have standing to petition for review of
the orders. But no member of the regulated community has
joined Exhaustless’s challenge or (as far as we know) filed its
own petition for review, suggesting a form of acceptance
among the parties having the most direct stake. Article III
denies us any license to disrupt that evident acceptance today.

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* * * * *
For the foregoing reasons, we dismiss Exhaustless’s
petitions for review for lack of jurisdiction.
So ordered.

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