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Case number 11-1483 at L. Independent Pilots Association Petitioner versus Federal Aviation Administration.

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Mr. Pills for the petitioner, Mr. Penick for the respondent, and Mr. O'Quinn for the intervener.

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Good morning.

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May I please the court?

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Eric Pills for Petitioner.

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With me at council table is my colleague Steve Vossett and IPA General Counsel Bill Trent.

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Also in the courtroom are Bob Travis and a number of other pilots representing the other 2,500 professional pilots represented by IPA.

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Congress told the FAA to issue regulations based on the best available scientific information to address problems of pilot fatigue.

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The FAA's 2011 decision to exclude cargo operations from that rule based solely on a cost-benefit analysis violates that straightforward command because it left cargo pilots subject to the old Part 121 regulations that the FAA admits are not based on the best available scientific information and further admits do not adequately address the problem of pilot fatigue.

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In addition to a sharp departure from the F.A.'

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's past practice of treating all pilots under the same basic safety and health rules, regardless of the nature of operation, the F.A.'

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's decision ignores its own scientific determinations that fatigue affects all pilots in the same manner, regardless of... Let me say ignores.

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Didn't they ever discuss that subject?

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Well, they did discuss the science.

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And they didn't ignore it, did they?

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Well, Your Honor, what I mean by that is in making the decision.

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What you mean by that is they didn't ignore it.

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Don't tell us something that is refutable in the record.

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Make your argument based on the real record.

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We like honesty.

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I appreciate that, Your Honor.

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What I meant by that was that the decision to exclude the cargo based only on the cost-benefit analysis ignored the science that Congress had.

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They didn't ignore it.

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It apparently decided that it was outweighed by the self-benefit.

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I take your point, Your Honor.

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The point was the decision to exclude cargo pilots was not based on the science, which is what Congress... But the statute doesn't require that.

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Yeah.

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What's the last paragraph of the instructions to the...

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The last paragraph says that in issuing the regulations, the administrative may consider any other matter that he deems necessary or appropriate to issue the regulations.

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And the key, I think, to that point is to look at the actual language of the statute.

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Which makes it clear that the list is part of the language of the statute.

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It is.

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Absolutely, Your Honor.

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But it's limited in scope because the entire list in subsection two is designed to inform the administrator's decision to issue regulations based on the best available science.

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I don't think that's correct.

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What you just said.

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If you look at subsection G,

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It's tab 5.

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Yes.

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Do you have it?

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I do, Your Honor.

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And that says, take into account international standards regarding flight schedules and duty periods, correct?

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Yes.

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The international standards are based on not only the science regarding fatigue, but also costs.

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Are you aware of that?

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The International Civil Aviation Organization, which is a UN body, takes into account or devises standards designed to support safe, efficient, and economically sustainable civil aviation.

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The International Federation of Air Pilots Association also says that operators should seek to achieve a realistic balance between safety, productivity, and costs.

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So not all the factors deal only with science.

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one of the factors before you even get to the catch-off is the cost effectiveness.

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And I think the point though that I'm making, that may, I don't, obviously they don't disagree with what you're saying, Your Honor, but what Congress wrote in this statute is that all of the factors that they list, including the international standards, are to inform the FAA's decision about making the regulations based on the best available scientific information.

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If you were right, Ann would have said, any other

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related matters or any other scientific matters.

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But it says any other, any, any, any other matters that he considers appropriate.

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I mean, we deal with statutory language all the time.

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That's about as broad as it gets.

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Well, two points, Your Honor.

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First, as I said- Some people would probably argue it's unconstitutionally broad.

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But it is very broad.

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Except that, number one, it's limited by the matters that preceded and the context in which it's offered.

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What makes you think that?

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It says any other matter.

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The words any other would suggest.

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If I say to you, you have to do one through 10,

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and anything else you want, what makes you think that that's limited by 1 through 10?

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It says any other.

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Because this court's precedent on similar language in cases has made clear that to take one term

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in isolation without considering the context of the statute and the overall purpose of the statute is improper.

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And here you're taking this one phrase at the end of this list of factors that the agency may consider in order to issue regulations based on the best available science and say in effect you can ignore the science, you can put it to the side and base your decision on something else.

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And that doesn't make, I don't think, any sense under the structure and intent of the statute.

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It essentially creates a loophole that swallows the entire rule of law.

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I think you're overstating your case when you say they ignored the signs.

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They certainly considered the signs.

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I don't see how you can make the claim, but they did.

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You're right, Your Honor.

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This doesn't make a difference.

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I am quibbling with the words, because I really get ticked off at lawyers who think

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lower buddies ignored something they didn't ignore.

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It's not just a quibble.

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We have a standard of review that involves arbitrary and capricious, and perhaps if you could credibly say they ignored it, that might help you get toward that standard.

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And again, all I mean is that in basing the decision only on cost-benefit, they forget the scientific reasons for the rule as it applied to everyone else.

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And that's my only point on that.

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They certainly did consider the science in issuing the part 17 rules or formulating them.

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But then they turned their back on that science when they said, but we're not going to apply it to cargo only because of cost.

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Because we're going down to the other factors raised by Judge Randolph and the other factors in the catch-all paragraph in deciding that

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they weigh enough to exempt this portion.

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But again, to read that catch-all provision as allowing the consideration, as allowing the decision to be based on something other than the best available scientific information is squarely inconsistent with the operative part of the statute in subsection A and would allow essentially the tail wagging the dog a small catch-all provision that's essentially saying Congress

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There may be other things that may help you, administrator, issue decisions based on the best available scientific information.

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We don't pretend to know everything.

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You can consider those.

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But to take something that has nothing to do with science, with nothing to do with addressing the problem of fatigue, and saying you can not only consider it, but base your decision on it, I think goes way too far.

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And as the cases we cite in our brief, the court has

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You know, has cautioned against using that kind of approach to take a broad or ambiguous term sort of in isolation.

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What's the closest case that you have to this?

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I think the public citizen, the NRC case at 901F2nd 157 is one.

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Tell me about what it said and what the circumstance.

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The language here says, but in this case, the NRC has taken the impermissible step of plucking the ambiguous term out of its context in the statute, interpreting it in a vacuum, and then twisting the meaning of the unambiguous term in the statute to fit its interpretation of the ambiguous one.

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Is that what you're saying happened here?

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Yes.

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You're saying they interpreted an ambiguous statute

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in a way that was not contextually acceptable.

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I think the ambiguous term, the all necessary matters, which is broad.

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That depends on your company in chief's argument.

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Yes, it does, in part, and also maybe more fundamentally, in the operative language of subsection A itself, which, again, fundamentally directs the FAA to issue the regulations based on the best available scientific information.

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Read me the most specific command on about the best scientific.

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In the statute?

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Yes.

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The Federal Aviation Administration, and I'm reading from section 212 of the Act, subsection A. What's the code of that, Dave?

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It's in the note of 49 USC 44701.

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Okay.

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The FAA shall issue regulations, based on the best available scientific information, to specify limitations on the hours of flight and duty time allowed for pilots to address problems relating to pilot fatigue.

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And the factors in subsection two, which include the all necessary provision in sub-M, are designed to inform the FAA's decision on making issuing regulations based on the best available scientific information.

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And to allow costs to become the basis for that decision would plainly ignore Congress's direct command.

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You know, the intervenors cited our decision in Michigan versus EPA, which you didn't respond to in your brief.

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Yes, Your Honor.

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Quote, clear congressional intent to preclude consideration of costs.

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It says,

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It is only, it says, it is only where there is clear congressional intent.

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to preclude consideration of costs?

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I think that case is similar to the more recent Supreme Court mission of the EPA case, where there's broad language about issuing regulations that are necessary to do something.

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It's a broader grant of authority to issue regulations than you have here.

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That's one point.

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The second point is it really begs the question of why did Congress put in the language

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based on the best available scientific information, if not to limit consideration of the regulations to the best available information.

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Why didn't they say it was limited?

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I mean, that's a 280 sword you're asking there.

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If they meant it to be limited to that, why did they not say that?

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Well, I think based on is, while it may not be absolutely limited, it is certainly, it defines the basis for the regulation.

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And it focuses the decision-making process on that.

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It tells you to make regulations, and why would not the language for Michigan be?

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I didn't like Michigan at the time, but what it stands to do is tell you what the law isn't.

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And you already said what the law was.

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Your Honor, the language in Michigan, and if you give me a moment, I think I have it handy.

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The language in Michigan, again, is

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much broader than what we have here.

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And so I think anytime you look at a statute, obviously, you have to look at the specific language in front of you.

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And that language is broad in the same way that the... I thought it was very specific in Michigan in the majority.

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The majority said it had to be a clear command not to consider costs before they can consider costs.

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In the face of a broad grant of authority, like to issue regulations that are necessary to accomplish something.

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Like it was in Michigan.

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Right, that's what I'm saying.

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In Michigan, that might not be improper, I'm not going to argue that it was improperly decided, but that makes sense in that context because you had a broad grant of regulatory authority that wasn't otherwise limited.

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Here you've got the opposite.

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It was otherwise limited, as I recall, in Michigan.

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I think you talked about the effectiveness being the, not cost effectiveness,

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but the most effective method of controlling the pollutant in the interstate.

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Right.

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But again, the lead-in to that was necessary or appropriate.

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It was a much broader grant of how do you get to that point than what you have here.

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I think here it's really limited to the best available or based on and focused on the best available scientific information.

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At the time that this statute was passed, the provisions you're talking about, there were executive orders in effect requiring executive agencies

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The FAA is an executive agency to consider cost-benefit analysis.

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assume that Congress was aware that the FAA was under an executive, as an executive agency, was under an executive order whenever it passed regulations to consider cost-benefit?

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Why shouldn't we assume that Congress knew?

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Well, they may well, I mean, I assume that they did on some level.

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If they wanted, in that situation, one would expect that if Congress didn't want the agency to comply with the executive order, they would have

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Except the executive orders are actually written in the opposite way to say that if Congress says something else, then you can't base your decision on costs.

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Congress's language controls.

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And so when Congress says what they say, the first question is,

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have they specified the basis for regulation?

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And does that basis for regulation include basing it on a cost-benefit analysis?

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Sort of yes or no.

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Here, the answer, we think, is clearly no.

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And the fact that there's an executive order that says, well, nonetheless, you have to do it, is trumped by plain language of the statute here.

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I hope there are no further questions.

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I'll reserve any time I have left.

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Thank you.

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May I please the court, Mark Penick, the Department of Justice.

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I represent the respondent of the Federal Aviation Administration.

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With me at council's table is John O'Quinn, who represents the intervening cargo carriers.

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The IPA wants it both ways.

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They want this court to order the FAA to extend this rule, which was developed on the basis of cost justification and cost benefit analysis, to the cargo carriers.

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And yet, they attack the rule itself on the basis that cost justification and cost benefit analysis is illegal.

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So the idea that you can extend the rule.

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Well, I don't understand that.

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I mean, that's their argument.

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That is their argument.

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Their argument, they want it extended.

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And they say the agency doesn't have authority to take account of cost benefit analysis.

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Now, they may be right or wrong about that, but that's their argument.

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Yes.

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What's the matter with that?

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I mean, I'm not asking whether they're right or wrong,

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Well, I don't understand they want it both ways.

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Why don't you just focus on their argument, which is they say the agency has no authority to take account of cost-benefit analysis.

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If they're right about that, then the agency will have to extend this to number two.

[00:16:43] Speaker 03:
Well, for the reasons we've outlined in our brief, Your Honor, the elites who have took conclusions.

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You're saying that the rule has applied to passengers, carrying passengers, was itself based on the cost-benefit analysis.

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Correct, and it was the same cost benefit analysis that was used.

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So they want that rule applied to them even though it was based on the cost benefit analysis.

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Exactly the same analysis, that's right.

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And so you can't do what they've asked to do without remanding it to the agency, and this leads to the very absurd conclusions I want to address here.

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The statute says to the agency to address problems, pilot fatigue.

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Now, that in itself is ambiguous.

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What are the problems that we have?

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Now, the agency deliberately excluded all pilots from that.

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Because the agency regulates pilots, everything from the general aviation, to student pilots, to crop dusters, to commuter planes, to passenger airplanes, and Airbus 380s.

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So instead, they limit it to passenger carriers, because that was the most cost-benefit way of proceeding.

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Because the potential benefits for doing so far outstripped on the high-case analysis, those are the costs.

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They defined the benefits in terms of saving lives, because the agency thought that every life on this would assume it was worth $6.2 million.

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you have an average carrier, a cargo carrier, has 3.2 people on it.

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The agency assumed, because most of these accidents, and there's page 60 of the final supplemental regulatory impact analysis, uses the six crashes that took place during the relevant time period, the 10 years, and 112 fatalities.

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And they extended that in the high case analysis to use a regional carrier's jet that had 88 seats.

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Now they could just as easily extend that to a jumbo jet carrying 400 or 800.

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So it's a very conservative analysis, and they potentially use it as a conservative analysis, so it's not to overstate the benefits.

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And they said, we're going to draw a line here, because it doesn't make any sense to impose these kind of costs on cargo carriers, where they crash once every 10 years.

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And they used the Poisson probability distribution analysis to calculate what it would take for this to be cost effective.

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I don't know the answer that we can find that but the point is this I thought there were there may well be I just don't know

[00:19:22] Speaker 03:
Now, if you look at the criteria that the statute requires the agency to consider, it's not just anything, any other matter that the administrator finds appropriate.

[00:19:34] Speaker 03:
But the criteria itself involves not just subsection G, which has cost by virtue of international standards, but the rest of it.

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For example, it says the effects of commuting, the means of commuting, and the length of the commute.

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If you want to address fatigue only, you could bar computing completely, because any commute might affect fatigue.

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But the agency elected not to do that because of the trade-offs.

[00:20:00] Speaker 03:
The same thing, subsection K, the agency should consider medical screening and treatment.

[00:20:06] Speaker 03:
Now, you could seemingly require every pilot to have a blood test before they take off.

[00:20:11] Speaker 03:
There are millions of departures of cargo carriers at issue here.

[00:20:15] Speaker 03:
You just want to make sure they're not sick and hence contributing to their fatigue.

[00:20:19] Speaker 03:
Does that make any sense?

[00:20:20] Speaker 03:
Of course not.

[00:20:21] Speaker 03:
But that could be the whole idea of having fatigue is the only criteria which we're supposed to consider.

[00:20:28] Speaker 03:
Alternatives, another is H, alternative procedures to facilitate alertness in the cockpit.

[00:20:34] Speaker 03:
Under plaintiff's petitioner's view of the world, if there is one alternative, which is more fictitious, efficacious, and reducing fatigue, the agency must adopt it, regardless of whether it costs a million dollars more than the alternative, because it means one slightly more fictitious than the other.

[00:20:49] Speaker 03:
That's absurd.

[00:20:51] Speaker 03:
The whole idea in finding the problem is that you have to make a trade-off.

[00:20:56] Speaker 02:
And there's nothing in this statute that... Well, it may be absurd, but it's their right that the statute's clear, right?

[00:21:02] Speaker 03:
I mean, that's the end of it.

[00:21:03] Speaker 03:
I have yet to see anything in this statute that says the agency may not consider costs.

[00:21:07] Speaker 02:
OK, that's your argument, isn't it?

[00:21:09] Speaker 02:
Right.

[00:21:09] Speaker 02:
Yes, it is.

[00:21:09] Speaker 02:
The argument's not that the statute doesn't clearly prohibit the agency, right?

[00:21:13] Speaker 03:
Well, I think my argument is, at the very least, the statute is ambiguous enough to allow the agency to engage in these trade-offs.

[00:21:21] Speaker 03:
And if it's ambiguous enough, then the question is whether or not the agency's construction is reasonable.

[00:21:27] Speaker 03:
And it most clearly is because without this construction, the statute leads to absurd results.

[00:21:34] Speaker 03:
And that's the point I'm having.

[00:21:35] Speaker 03:
Now, I think, by the way, Congress left it to the administrator to define the relevant universe.

[00:21:43] Speaker 03:
If you look at 212b, where the agencies require each Part 121 carrier to submit a fatigue risk management plan, they define the universe.

[00:21:56] Speaker 03:
They do so in Section 214, 215, and 260.

[00:21:59] Speaker 03:
Each of those reference Part 121 specifically.

[00:22:02] Speaker 03:
That's not found in 212a.

[00:22:05] Speaker 03:
And it left it to the administrator's judgment, at policy judgment, what was the best remedy to address problems of power fatigue.

[00:22:15] Speaker 03:
I mean, that's about as broad as you can get.

[00:22:17] Speaker 03:
It leads to the agency, the ability to find the problem, and it leads to the agency how to best address it.

[00:22:23] Speaker 03:
And it allows the agency, as Judge Taylor has referenced here, to consider any other matter that the administrator might find appropriate, which is about as broad as you can get.

[00:22:32] Speaker 06:
What is the Part 121 area?

[00:22:35] Speaker 03:
Part 121 carrier are basically the cargo carriers and the passenger carriers, including the regional carriers.

[00:22:43] Speaker 03:
So the agency defines the number of seats.

[00:22:47] Speaker 03:
I think nine below is a commuter carrier.

[00:22:50] Speaker 03:
I think 30 and more is a regional carrier.

[00:22:53] Speaker 03:
The accidents that took place that are listed on page 16 of the final supplemental impact analysis were all regional carriers.

[00:23:00] Speaker 03:
There were six of them in the 10-year period.

[00:23:02] Speaker 03:
There was one cargo carrier that resulted in no fatalities.

[00:23:05] Speaker 03:
The agency did a low base case and a high case analysis of that and used in the high case bigger aircraft.

[00:23:11] Speaker 06:
A private jet is generally not... It's general aviation.

[00:23:15] Speaker 06:
It's not part 121.

[00:23:17] Speaker 03:
That's correct.

[00:23:18] Speaker 03:
So Donald Trump's airplane would be under general aviation.

[00:23:22] Speaker 03:
So the point on this is, is the agency had to draw a line someplace in order to make this a rational rule.

[00:23:28] Speaker 03:
You don't impose $452 million in cost on a cargo system when you have $10 million worth of benefits.

[00:23:36] Speaker 03:
It's just irrational.

[00:23:38] Speaker 03:
If the court has no further questions, I will see you there.

[00:23:42] Speaker 02:
I think we're done.

[00:23:44] Speaker 02:
Did counsel have any time left?

[00:23:48] Speaker 02:
Oh, right.

[00:23:49] Speaker 02:
Sorry, we have the end of the year.

[00:23:50] Speaker 02:
Go ahead.

[00:23:51] Speaker 01:
Thank you, Judge Tatel.

[00:23:52] Speaker 01:
May it please the court, John O'Quinn on behalf of the Intervenor Cargo Airlines Association.

[00:23:57] Speaker 01:
The IPA's central argument that the 2010 Act categorically prohibits the consideration of benefits and costs in determining what regulations to adopt to address the problems relating to pilot fatigue cannot be reconciled with the statute itself.

[00:24:14] Speaker 01:
the case law or 30 years of agency practice.

[00:24:17] Speaker 01:
And to that point, Judge Randolph, you made the point that Congress here was legislating against a known background, and that is literally 30 years of agency practice, 30 years of executive orders, and indeed, legislating against the background of the Supreme Court's Riverkeeper decision, which had come down just the year before, that made clear that it's generally always appropriate for an agency to consider costs,

[00:24:40] Speaker 01:
And in fact, the Michigan decision makes clear, both in the majority opinion and in the dissent, that quote, cost is almost always relevant and usually it is a highly important factor in regulation.

[00:24:53] Speaker 01:
Here, of course, you have a statute that does not, by its terms, prohibit the consideration of cost.

[00:24:58] Speaker 01:
Sub-factor M says that the administrator may consider any other matter appropriate.

[00:25:05] Speaker 01:
Appropriate being the same word that was before the Supreme Court in Michigan versus EPA and being the classic broad word that includes all relevant factors and cost is always a relevant factor.

[00:25:16] Speaker 01:
And finally on this point Judge Randolph, you pointed out that

[00:25:20] Speaker 01:
Section G, of course, takes into account considerations other than just science, but builds into a cost.

[00:25:26] Speaker 01:
And there are other sub-factors that do as well, as we highlighted in our brief.

[00:25:31] Speaker 01:
H, J, K, L, all of them have cost embedded into it.

[00:25:36] Speaker 01:
So this is simply not a situation where Congress has in any way restricted the consideration of cost, much less clearly so.

[00:25:45] Speaker 01:
And as such, we submit the petition for review should be denied.

[00:25:48] Speaker 01:
If the panel has questions, I'm happy to take them.

[00:25:51] Speaker 02:
Thank you.

[00:25:52] Speaker 01:
Thank you, Judge.

[00:25:52] Speaker 02:
Okay, now any time left?

[00:25:55] Speaker 02:
Okay, you can have one minute.

[00:25:58] Speaker 04:
One point because I think it's critical.

[00:26:00] Speaker 04:
When the FAA actually drafted the substance of the Part 117 regulations, they very carefully went through and considered both the science and the cost and other considerations raised in comments by the Cargo Airline Association and the other industry commenters, as well as the IPA, and made a balanced decision based on costs, based on operational considerations, but fundamentally based on science that these are the regulations, the Part 117 regulations, that best reflect the science and address the problem of fatigue.

[00:26:30] Speaker 02:
Well, under your theory, wasn't that a violation of the statute?

[00:26:35] Speaker 04:
No, and this is the point.

[00:26:37] Speaker 04:
We don't have a problem with the Part 117 regulations as they ended up.

[00:26:41] Speaker 04:
The problem we have is that once they did that, they then applied this, not quite post-decisional, but after the fact cost-benefit analysis, to carve cargo out of those rules.

[00:26:52] Speaker 04:
And that's what I mean by ignoring the science.

[00:26:55] Speaker 04:
They turned their back on their own analysis

[00:26:57] Speaker 04:
and based on something else, based on something other than science.

[00:27:01] Speaker 04:
The Part 117 process itself considered costs in the appropriate manner by saying, we understand there's costs, but what does the science say?

[00:27:10] Speaker 04:
What does it take to get to safe airspace and non-fatigue pilots, which is what Congress asked us, told us to do?

[00:27:18] Speaker 04:
And that's the rule we came up with.

[00:27:19] Speaker 04:
We recognize it's going to impose some costs.

[00:27:21] Speaker 04:
We've trimmed them where we can.

[00:27:23] Speaker 04:
But this is where we end up.

[00:27:25] Speaker 04:
Then they said we're going to sort of throw all that out the window with respect to cargo, because we're not going to look at the science anymore.

[00:27:31] Speaker 04:
We're going to do this cost-benefit analysis.

[00:27:33] Speaker 04:
That's our fundamental problem.

[00:27:35] Speaker 04:
That's the proper role of cost, and we're the excited.

[00:27:38] Speaker 06:
You may have mentioned it in your brief, but I forgot.

[00:27:40] Speaker 06:
There was a National Academy of Sciences study that was supposed to be done.

[00:27:45] Speaker 06:
Was in fact that done?

[00:27:47] Speaker 04:
I don't know if that's been done.

[00:27:49] Speaker 04:
I think the time is up.

[00:27:50] Speaker 04:
That had to do with the commuting time study.

[00:27:54] Speaker 04:
I don't know if that's been done.

[00:27:58] Speaker 04:
OK, thank you.

[00:27:58] Speaker 04:
Thank you, Your Honor.

[00:27:59] Speaker 02:
The case is submitted.