FIFTH CIRCUIT HALTS BIDEN-ERA ANCILLARY FEES DISCLOSURE RULE
February 4, 2025
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On January 28, 2025, the U.S. Court of Appeals for the Fifth Circuit (“Fifth Circuit”) blocked the Biden-era ancillary service fees disclosure rule which was previously stayed on July 29, 2024, pending further judicial review. For reference, the rule required airlines to disclose ancillary fees which were infamously labeled “junk fees” by airline critics. While the Fifth Circuit determined that DOT had authority to issue rulemaking targeting unfair or deceptive fees, the court ruled that regulators failed to comply with procedural requirements pursuant to the Administrative Procedure Act (“APA”) by relying on cost-benefit data from a study that was not available during the notice-and-comment period. In other words, the Fifth Circuit identified procedural errors under the APA since the new data was outside the administrative record and thus airlines did not have an opportunity to submit comments on the data. Accordingly, the Fifth Circuit remanded the rule to DOT to remedy the procedural shortcoming. Since the rulemaking was first issued, the U.S. regulatory regime has shifted from a robust consumer protection approach to a more business-friendly environment. Going forward, this rule and others will face uncertain futures as Secretary Duffy implements the current administration’s agenda.
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