NEW ORLEANS (WJET/WFXP) — A U.S. appeals court has blocked the Department of Transportation’s (DOT) rule that requires airlines to disclose fees to customers during the booking process.
The ruling Monday will block the rule, which took effect July 1 and would force airlines to fully comply by April 30, 2025.
On May 31, various airlines and airline associations asked the DOT to delay implementation of the rule while a review was being sought. The DOT declined, and the airlines challenged the rules in the U.S. Court of Appeals for the Fifth Circuit requesting the court to impose a stay pending review.
The airlines argue the rule exceeds the DOT’s authority, is arbitrary and capricious and wrongly bypassed notice and comment. The court largely agreed with those arguments and granted the stay Monday.
The judges said the airlines made a strong point showing the DOT had exceeded its authority. The court agreed with the airlines who said, “(t)he Rule doesn’t just prohibit — it prescribes,” rather than following the process that has been set out, which includes a notice and a hearing, and for the DOT to find that the carrier’s online sales practices are unfair or deceptive. Only after all these steps are completed can the DOT order the airline(s) to “stop” it.
Federal statute authorizes the Transportation secretary to: “(I)nvestigate and decide whether an air carrier … has been or is engaged in an unfair or deceptive practice or an unfair method of competition in … the sale of air transportation.”
The court said the rule essentially enacts a code of online disclosure practices, which is not authorized by federal statute.
The judges continued by saying the DOT’s defense of the rule fails to grapple with the statute text, and instead points to a general provision that authorizes the secretary to “take action (he) … considers necessary to carry out” his duties, “including conducting investigations, prescribing regulations, standards, and procedures, and issuing orders.”
This doesn’t help the DOT’s argument, the court said, ruling that they have held before that the agency’s authority cannot be extended beyond the scope of what it is tasked with carrying out.
The court rule the airlines have shown sufficient evidence that they will likely suffer “significant and irreparable harm from the rule” and “there is generally no public interest in the perpetuation of unlawful agency action.”