United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 7, 2012 Decided July 24, 2012

No. 11-1219

SPIRIT AIRLINES, INC., ET AL.,

PETITIONER

SOUTHWEST AIRLINES CO.,

INTERVENOR

UNITED STATES DEPARTMENT OF TRANSPORTATION,

RESPONDENT

AMERICAN SOCIETY OF TRAVEL AGENTS, INC.,

INTERVENOR

Consolidated with 11-1222

On Petitions for Review of Final Rules

of the U.S. Department of Transportation

David M. Kirstein argued the cause for petitioners. With

him on the brief was Joanne W. Young.

M. Roy Goldberg and Robert W. Kneisley were on the

briefs for intervenor Southwest Airlines Co. in support of

petitioners.

Bert W. Rein and Roger H. Miksad were on the brief for

amicus curiae International Air Transport Association in

support of petitioners and intervenor.

Andrew B. Steinberg and Jeffrey S. DeVore were on the

brief for amicus curiae Air Transport Association of America,

Inc. in support of petitioners. Robert P. Silverberg entered an

appearance.

Daniel Tenny, Attorney, U.S. Department of Justice,

argued the cause for respondent. With him on the brief were

Tony West, Assistant Attorney General, Michael S. Raab,

Attorney, Paul M. Geier, Assistant General Counsel for

Litigation, U.S. Department of Transportation, Timothy H.

Goodman, Senior Trial Attorney, and Blane Workie, Deputy

Assistant General Counsel for Aviation Enforcement and

Proceedings.

Dale C. Andrews was on the brief for amicus curiae

Interactive Travel Services Association in support of

respondent.

Before: HENDERSON and TATEL, Circuit Judges, and

RANDOLPH, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge TATEL.

Opinion concurring in part and dissenting in part filed by

Senior Circuit Judge RANDOLPH.

TATEL, Circuit Judge: Pursuant to its authority to regulate

“unfair and deceptive” practices in the airline industry, the

Department of Transportation issued a final rule entitled

“Enhancing Airline Passenger Protections.” 76 Fed. Reg.

23,110 (Apr. 25, 2011). Spirit Airlines and others challenge

three of the rule’s provisions—the requirement that the most

prominent figure displayed on print advertisements and

websites be the total price, inclusive of taxes (as arbitrary and

capricious and a violation of the First Amendment); the

requirement that airlines allow consumers who purchase their

tickets more than a week in advance the option of canceling

their reservations without penalty for twenty-four hours

following purchase (as arbitrary and capricious); and the

prohibition against increasing the price of air transportation

and baggage fees after consumers purchase their tickets (as

procedurally defective and otherwise arbitrary and

capricious). For the reasons set forth in this opinion, we deny

the petitions for review.

Prior to 1978, the federal government regulated the fares

airlines could charge and the routes they could fly, and had

authority to take administrative action against certain

deceptive trade practices. Federal Aviation Act of 1958, Pub.

L. No. 85-726, §§ 403–404, 411, 1002, 72 Stat. 731, 758–60,

769, 788–91. That changed in 1978 when Congress passed the

Airline Deregulation Act, Pub. L. No. 95-504, 92 Stat. 1705,

which, among other things, eliminated the government’s

ability to set airfares on the theory that “maximum reliance on

competitive market forces would best further efficiency,

innovation, and low prices as well as variety and quality of air

transportation services,” Morales v. Trans World Airlines,

Inc., 504 U.S. 374, 378 (1992) (alteration, omission, and

internal quotation marks omitted). Notwithstanding these

changes, the government, through the Department of

Transportation (DOT), retained authority to prohibit “unfair

or deceptive practice[s] . . . in air transportation or the sale of

air transportation.” 49 U.S.C. § 41712(a).

Pursuant to that authority, DOT issued a final rule

entitled “Enhancing Airline Passenger Protections.” See 76

Fed. Reg. 23,110. Three of its provisions are at issue in this

case.

The first relates to the advertising of airfares. Since 1984,

DOT has required that any advertised price for air

transportation disclose the “entire price to be paid by the

customer to the air carrier.” 49 Fed. Reg. 49,440, 49,440

(Dec. 20, 1984) (codified as amended at 14 C.F.R

§ 399.84(a)). Prior to the rulemaking at issue here, DOT

allowed airlines to advertise the pre-tax price of tickets

provided that the advertisement clearly disclosed the amount

of the tax. See 75 Fed. Reg. 32,318, 32,327 (June 8, 2010)

(explaining DOT enforcement policy regarding the 1984

rule). For example, airlines could advertise a “$167 base fare

+ $39 taxes and fees” even though consumers would have to

add these two numbers to arrive at the total, final price they

would have to pay—$206. DOT reaffirmed this policy in

2006. See 71 Fed. Reg. 55,398, 55,401 (Sept. 22, 2006)

(withdrawing Notice of Proposed Rulemaking and retaining

status quo). But in the challenged rule, DOT, citing consumer

confusion, revised its policy to require airlines to state the

total, final price—$206. See 76 Fed. Reg. at 23,166

(amending 14 C.F.R § 399.84(a)). Under this so-called

“Airfare Advertising Rule,” airlines remain free to provide an

itemized breakdown (displaying to the customer the amount

of the base fare, taxes, and other charges), but they may not

display such price components “prominently” or “in the same

or larger size as the total price.” Id. In subsequent guidance,

DOT explained that airlines may not list price components “in

a more prominent place on a webpage or in a print

advertisement than the advertised total fare.” Office of

Aviation Enforcement & Proceedings, Dep’t of Transp.,

Answers to Frequently Asked Questions 22 (Oct. 19, 2011),

available at http://airconsumer.ost.dot.gov/rules/EAPP_2_

FAQ_10-19-2011.pdf. In other words, to ensure that

consumers will clearly understand what final price they will

have to pay, the total cost must be the most prominent figure.

DOT describes this as a change in “enforcement policy.” See

75 Fed. Reg. at 32,327 (discussing the proposed change).

DOT issued the second challenged provision, the

“Refund Rule,” in the context of a broader effort to curb

deception and unfairness in the airline industry. Relying on

customer feedback and Office of Inspector General reports,

72 Fed. Reg. 65,233, 65,236 (Nov. 20, 2007), DOT found that

many airlines failed either to provide consumers with clear

customer service plans or to adhere to whatever plans they did

provide. Accordingly, DOT ordered U.S. carriers to adopt

customer service plans that address a list of topics, including

whether the airline “[a]llow[s] reservations to be held without

payment or cancelled without penalty for a defined amount of

time.” 74 Fed. Reg. 68,983, 69,003 (Dec. 30, 2009)

(amending 14 C.F.R. § 259.5(b)(4)). But in a later

rulemaking, the one at issue here, DOT found this insufficient

and that further steps were necessary to “ensure that . . . plans

are specific and enforceable.” 75 Fed. Reg. at 32,323. It found

that some airlines had adopted “vague[]” policies that made it

“difficult for a consumer to know” what exactly to expect. Id.

For example, Allegiant Air’s plan told customers that they

could “cancel their reservations up to 24 hours before the

scheduled time of departure, but fail[ed] to mention that there

are significant fees associated with cancellation.” Letter from

Susan Kurland, Assistant Sec’y for Aviation & Int’l Affairs,

Dep’t of Transp., to Joanne W. Young & David M. Kirstein,

Counsel for Petitioners 6 (July 20, 2011) (denying stay of the

rule and explaining DOT’s findings). Responding to such

shortcomings, DOT proposed “establishing minimum

standards for the plans,” which would “result in consumers

being better informed and protected,” 75 Fed. Reg. at

32,323—the idea being that anything less than the guarantees

contained in the rule constitutes an unfair practice or has an

unacceptably high risk of deceiving customers. One such

requirement, the Refund Rule, directs airlines to allow

passengers to cancel reservations without penalty for twenty-

four hours “if the reservation is made one week or more prior

to a flight’s departure.” 76 Fed. Reg. at 23,165 (amending 14

C.F.R. § 259.5(b)(4)).

Finally, the “Post-Purchase Price Rule” prohibits airlines

from “increas[ing] . . . the price of the seat,” the “price for the

carriage of passenger baggage,” or the “applicable fuel

surcharge, after the air transportation has been purchased by

the consumer, except in the case of an increase in a

government-imposed tax or fee.” Id. at 23,167 (amending 14

C.F.R. § 399.88(a)). DOT has now advised us that “it will

undertake another rulemaking process to assess the

appropriateness of applying the rule to ancillary charges other

than baggage charges that traditionally have been included in

the price of air transportation” and that “[u]ntil the conclusion

of that rulemaking, the agency will only enforce the rule as

applied to charges the consumer has already paid, to any

charges for carry-on baggage and first and second checked

bags, and to mandatory charges like fuel surcharges.” DOT

Br. 9.

Spirit Airlines and Allegiant Air (collectively Spirit)

claim that all three rules are arbitrary and capricious and that

the Airfare Advertising Rule violates the First Amendment

rights of airlines to engage in commercial and political

speech. Intervening on behalf of petitioners, Southwest

Airlines challenges only the Airfare Advertising Rule.

II.

Beginning with their challenge to the Airfare Advertising

Rule, the airlines argue that there is nothing inherently

deceptive about listing taxes separately and that DOT lacked

substantial evidence for concluding that doing so is deceptive

in practice. By the airlines’ count, only six commenters

suggested that existing airline displays were confusing or

misleading, and just two of those pointed to the exclusion of

taxes from base fares as the source of their confusion. The

airlines also emphasize that in 2010 (the year of the

rulemaking), there were only 77 complaints about advertising,

as compared, for example, to 3,336 about flight-related

problems. Spirit Br. 27 (citing Office of Aviation

Enforcement & Proceedings, Dep’t of Transp., Air Travel

Consumer Report 42 (Feb. 2011)). Thus, they argue, DOT

acted arbitrarily and capriciously when it relied on such scant

evidence, particularly given (1) the general norm in the U.S.

economy of listing prices exclusive of taxes, (2) DOT

precedent rejecting consumer comments about feeling

deceived as insufficient to demonstrate deception, and (3) the

fact that in 2006, DOT reaffirmed its policy of allowing base-

fare advertising (i.e., not requiring airlines to integrate taxes

into their advertised fare), even though roughly 500

commenters urged it to depart from that policy, see 71 Fed.

Reg. at 55,399, 55,401.

We are unpersuaded. For one thing, DOT left unaltered

the rule’s key language (though it did add language allowing

airlines to state charges, fees, and taxes separately while

prohibiting them from doing so “prominently” or “in the same

or larger size as the total price,” 14 C.F.R. § 399.84). Since

1984, DOT has required any advertised price for air

transportation to state the “entire price to be paid by the

customer to the air carrier.” 49 Fed. Reg. at 49,440 (codified

as amended at 14 C.F.R § 399.84(a)). Because neither Spirit

nor Southwest challenges the original rule, the only question

before us is whether DOT acted arbitrarily and capriciously

when it decided to enforce that rule by requiring that airlines

actually add the taxes to the base fare and disclose the total

price. In considering this question, “we give substantial

deference to an agency’s interpretation of its own regulations,

according the agency’s interpretation thereof controlling

weight unless it be plainly erroneous or inconsistent with the

regulation.” St. Luke’s Hosp. v. Sebelius, 611 F.3d 900, 904

(D.C. Cir. 2010) (internal quotation marks omitted). Not only

have the airlines offered us no basis for questioning DOT’s

interpretation of its rule, but they give short shrift to the

record as a whole. In addition to the comments mentioned by

the airlines, DOT relied on the following evidence: (1)

comments from the original 1984 rulemaking, (2) roughly 500

comments from the 2006 hearing explaining how consumers

were being confused by advertisements that itemized price

components rather than display a single, total price, and (3)

feedback from its “Regulation Room,” an online forum DOT

employs to solicit comments. Spirit contests the relevance of

the Regulation Room, claiming that DOT framed the issue to

elicit comments helpful to its end. But we need not consider

the Regulation Room comments because the other two

categories of evidence sufficiently support the intuitive

conclusion that customers are likely to be deceived by price

quotes significantly lower than the actual cost of travel. See

Kornman v. SEC, 592 F.3d 173, 184 (D.C. Cir. 2010)

(“Substantial evidence . . . means such relevant evidence as a

reasonable mind might accept as adequate to support a

conclusion.” (internal quotation marks omitted)).

The airlines also challenge DOT’s prohibition on

disclosing government taxes and fees “prominently,” arguing

that “DOT provides no explanation [for] why the prominent

disclosure of taxes and fees would be confusing to

consumers,” and that DOT acted arbitrarily and capriciously

by “requir[ing] airlines to prominently and conspicuously

disclose airline-imposed fees but . . . bury[ing] in fine print

the taxes and fees that the government itself imposes on air

transportation.” Southwest Br. 28–29. DOT responds that it

“reasonably declined to allow the airlines to state, with equal

prominence, the breakdown of that figure as between base

fare, airline-imposed fees, and government taxes and fees.”

DOT Br. 27. In addition, it clarifies that its prohibition on

prominently stating taxes “ ‘means that the break-out of per-

person charges cannot be in a more prominent place on a web

page or in a print advertisement than the total advertised

fare.’ ” Id. at 28 (quoting Office of Aviation Enforcement &

Proceedings, Dep’t of Transp., Answers to Frequently Asked

Questions 22).

DOT has the better argument. Contrary to the airlines’

repeated suggestions, nothing in the Airfare Advertising Rule

requires airlines to hide the taxes—or, as Spirit’s website puts

it, the “Government’s Cut.” It just requires that the total, final

price be the most prominently listed figure, relying on the

reasonable theory that this prevents airlines from confusing

consumers about the total cost of their travel. This limited

imposition hardly amounts to an arbitrary exercise of DOT’s

statutory authority to prevent “unfair or deceptive

practice[s],” 49 U.S.C. § 41712(a). See Petal Gas Storage,

LLC v. FERC, 496 F.3d 695, 703 (D.C. Cir. 2007) (under the

arbitrary and capricious standard of review, an agency “is not

required to choose the best solution, only a reasonable one”).

Next, the airlines contend that the Airfare Advertising

Rule violates the First Amendment. The parties dispute which

standard of review governs: strict scrutiny, applied to laws

burdening political speech, FEC v. Wis. Right to Life, Inc.,

551 U.S. 449, 464 (2007); intermediate scrutiny, as defined in

Central Hudson and applied to laws regulating commercial

speech, Cent. Hudson Gas & Elec. Corp. v. Pub. Serv.

Comm’n of N.Y., 447 U.S. 557 (1980); or reasonableness

review, as defined in Zauderer and applied to laws requiring

“purely factual” disclosures “reasonably related to the State’s

interest in preventing deception of consumers,” Zauderer v.

Office of Disciplinary Counsel of the Supreme Court of Ohio,

471 U.S. 626, 651 (1985).

The airlines argue that strict scrutiny applies because they

have “a First Amendment right to engage in political speech

that informs [their] customer base of the huge tax burden that

the federal government imposes on air travel.” Southwest Br.

29; see also Spirit Br. 36–37. For support, they point to

Consolidated Edison Co. v. Public Service Commission of

New York, 447 U.S. 530 (1980), where the Supreme Court

invalidated a rule prohibiting utilities from including pro-

nuclear energy statements in their invoice envelopes. In doing

so, the Court treated the ban as a restriction on political

speech, meaning that it had to be “a precisely drawn means of

serving a compelling state interest,” id. at 540. According to

the airlines, because they wish to inform their customers

about the large and burdensome taxes imposed on airfare, the

Airfare Advertising Rule must also be subject to strict

scrutiny. We disagree.

The speech at issue here—the advertising of prices—is

quintessentially commercial insofar as it seeks to “do[] no

more than propose a commercial transaction,” Va. State Bd. of

Pharmacy v. Va. Citizens Consumer Council, Inc., 425 U.S.

748, 762 (1976) (internal quotation marks omitted).

According to the airlines, their speech does more than propose

a transaction, as it also makes a political point. See also

Dissenting Op. at 4 n.2. But where speech “cannot be

characterized merely as proposals to engage in commercial

transactions,” it is nonetheless commercial in certain

circumstances, for instance when it is an “advertisement[],”

“refer[s] to a specific product,” and the speaker “has an

economic motivation” for it. Bolger v. Youngs Drug Prods.

Corp., 463 U.S. 60, 66–67 (1983). “The combination of all

these characteristics”—undoubtedly present in this case—

suffices to classify the speech as “commercial speech” under

Bolger. See id. at 67 (emphasis omitted). As the Court

explained there, “advertising which links a product to a

current public debate is not thereby entitled to the

constitutional protection afforded noncommercial speech.” Id.

at 68 (internal quotation marks omitted). “A company has the

full panoply of protections available to its direct comments on

public issues, so there is no reason for providing similar

constitutional protection when such statements are made in

the context of commercial transactions. Advertisers should

not be permitted to immunize false or misleading product

information from government regulation simply by including

references to public issues.” Id. (footnote and citation

omitted).

This leaves either the Central Hudson or Zauderer

frameworks, and we think the latter applies. The Central

Hudson cases have at least two features not fully present here.

As the Court recently explained, where, as in this case, laws

are “directed at misleading commercial speech,” and where

they “impose a disclosure requirement rather than an

affirmative limitation on speech,” Zauderer, not Central

Hudson, applies, Milavetz, Gallop & Milavetz, P.A. v. United

States, 130 S. Ct. 1324, 1339 (2010)—i.e., “an advertiser’s

rights are adequately protected as long as disclosure

requirements are reasonably related to the State’s interest in

preventing deception of consumers.” Zauderer, 471 U.S. at

651. In Central Hudson itself, an electric utility challenged

the constitutionality of a state regulation banning promotional

advertising by the utility. 447 U.S. at 558. The Court

explained that because “[t]he First Amendment’s concern for

commercial speech is based on the informational function of

advertising, . . . there can be no constitutional objection to the

suppression of commercial messages that do not accurately

inform the public about lawful activity. The government may

ban forms of communication more likely to deceive the public

than to inform it.” Id. at 563. But “[i]f the communication is

neither misleading nor related to unlawful activity”—as was

the advertising the state had banned in that case—the

government “must assert a substantial interest to be achieved

by restrictions on commercial speech.” Id. at 564. Likewise,

in In re R.M.J., 455 U.S. 191 (1982), the Court applied

intermediate scrutiny to ethics rules that “prohibited attorneys

from advertising their practice areas in terms other than those

prescribed by the State Supreme Court and from announcing

the courts in which they were admitted to practice.” Milavetz,

130 S. Ct. at 1340 (citing In re R.M.J., 455 U.S. at 197–98).

As the Court held there, and as it has since explained, there

was no reason—in common sense or in experience—to

suggest the prohibited “advertisements were themselves likely

to mislead consumers.” Id. (citing In re R.M.J., 455 U.S. at

205). In addition, the rule in In re R.M.J. completely

prohibited a category of speech (advertising practice areas in

non-prescribed terms).

By contrast, in Zauderer the Court faced a rule that,

instead of prohibiting speech, simply required a clarifying

disclosure. Specifically, the rule required attorneys

advertising contingency-fee services “to disclose in their

advertisements that a losing client might still be responsible

for certain litigation fees and costs.” Id. at 1339 (describing

Zauderer, 471 U.S. 626). The Court concluded that “an

attorney’s constitutionally protected interest in not providing

the required factual information is ‘minimal.’ ” Id. (quoting

Zauderer, 471 U.S. at 651). In doing so, the Court demanded

no evidence that the advertisements would be misleading

because, as it explained, “the possibility of deception” in that

case was “self-evident.” Zauderer, 471 U.S. at 652–53

(emphasis added). And in Milavetz, the Court applied the

Zauderer standard to uphold a law requiring debt relief

agencies to “ ‘clearly and conspicuously disclose in any

advertisement of bankruptcy assistance services . . . that the

services or benefits are with respect to bankruptcy relief’ ”

and to include the following, “ ‘or a substantially similar

statement’ ”: “ ‘We are a debt relief agency. We help people

file for bankruptcy relief under the Bankruptcy Code.’ ”

Milavetz, 130 S. Ct. at 1330 (quoting 11 U.S.C. § 528(a)(3),

(4)). Citing Zauderer, the Court explained that the

government had no need to produce “evidence that [the]

advertisements are misleading” because, based on experience

and common sense, the “likelihood of deception” in that case

was “hardly a speculative one.” Id. at 1340 (internal quotation

marks omitted).

As in the Zauderer cases and unlike in the Central

Hudson cases, the Airfare Advertising Rule targets misleading

speech and does not constitute what the case law defines as an

affirmative limitation on speech. To begin with, the

government, as in Milavetz, had no need to produce additional

“evidence that [the] advertisements are misleading” because

the “likelihood of deception” here is “hardly . . . speculative,”

id. (internal quotation marks omitted). Based on common

sense and over three decades of experience and complaints,

DOT concluded that it was deceitful and misleading when the

most prominent price listed by an airline is anything other

than the total, final price of air travel. Disclosure

requirements, moreover, are not the kind of limitations that

the Court refers to when invoking the Central Hudson

standard of review. To be sure, the airlines claim that the rule

here imposes an affirmative limitation on speech because it

requires them to post the total, final price in the most

prominent manner, thus prohibiting them from posting other

numbers as prominently or more prominently than the total,

final price. But by mentioning affirmative limitations on

speech, the Court was referring to rules that prohibit certain

kinds of speech—like the one in In re R.M.J., which flatly

“prohibited attorneys from advertising their practice areas in

terms other than those prescribed by the State Supreme Court

and from announcing the courts in which they were admitted

to practice.” Milavetz, 130 S. Ct. at 1340 (citing In re R.M.J.,

455 U.S. at 197–98); see also Thompson v. W. States Med.

Ctr., 535 U.S. 357, 360, 368 (2002) (applying intermediate

scrutiny to a law prohibiting providers of “compounded

drugs” from advertising or promoting particular drugs);

Central Hudson, 447 U.S. 557 (intermediate scrutiny for a

law prohibiting promotional advertising by electric utilities);

Virginia State Bd., 425 U.S. at 773 (rejecting state statute that

“completely suppress[ed] the dissemination of concededly

truthful information about entirely lawful activity”). By

contrast, the Airfare Advertising Rule does not prohibit

airlines from saying anything; it just requires them to disclose

the total, final price and to make it the most prominent figure

in their advertisements. Though limiting the manner in which

airlines may advertise information, this neither prohibits nor

significantly burdens airlines’ ability to provide that

information.

And indeed they do. For example, Spirit’s website

prominently displays “Our Price”—broken down into “Base

Fare + Fuel”—and then adds, with a plus sign,

“Government’s Cut,” which is displayed clearly and

separately, and then finally provides, in slightly larger font,

the “Total Price.” See Appendix A (a screenshot of a sample

flight advertised on Spirit’s website). The website also

separately states, underlined and in bold, the “government tax

rate” for each flight price quote, so that consumers know the

tax burden in both absolute and relative terms. Moreover, a

bright orange link (in the form of a question mark) appears

next to each of those price components—i.e., “Base Fare,”

“Fuel,” and “Government’s Cut”—and if one clicks that link,

the site provides a further breakdown of what makes up the

cost of airfare. For example, the base fare on domestic flights

generally includes the cost of “Flight,” a “Passenger Usage

Fee,” and what Spirit labels a fee for the “Unintended

Consequences of DOT Regulations.” See generally Spirit,

www.spirit.com (last search conducted on June 6, 2012); see

also Oral Arg. Rec. 32:37–33:05 (government attorney

acknowledging that Spirit’s current website is compliant with

the new enforcement policy). All of this demonstrates what

the rule’s text already tells us: the rule is aimed at providing

accurate information, not restricting it. Nothing in the rule

prohibits the airlines from separately alerting the public to the

taxes imposed on air transportation, much as the utility in

Consolidated Edison, 447 U.S. 530, advised its customers of

its support for nuclear energy. The airlines can even call

attention to taxes and fees in their advertisements; what they

cannot do is call attention to them by making them more

prominent than the total, final price the customer must pay.

Having determined that the Zauderer standard applies,

we have no doubt that DOT’s final rule, which requires the

total, final price to be the most prominently listed figure, is

“ ‘reasonably related to the [government’s] interest in

preventing deception of consumers.’ ” Milavetz, 130 S. Ct. at

1340 (quoting Zauderer, 471 U.S. at 651). The rule aims to

prevent consumer confusion about the total price they have to

pay, and it goes without saying that requiring the total price to

be the most prominent number is reasonably related to that

interest.

The dissent disagrees, arguing that the rule fails under the

Central Hudson test. To reach that conclusion, the dissent

says that the rule bans airlines “from displaying taxes and fees

prominently.” Dissenting Op. at 3 (internal quotation marks

omitted). But DOT interprets the rule to mean only that the

“ ‘break-out of per-person charges cannot be in a more

prominent place on a web page or in a print advertisement

than the total advertised fare,’ ” such as “ ‘at the top of the

page, ahead of the total price,’ ” or with “ ‘special

highlighting that sets it apart and makes it more prominent

than the total price,’ ” DOT Br. 28–29 (quoting Office of

Aviation Enforcement & Proceedings, Dep’t of Transp.,

Answers to Frequently Asked Questions 22). We owe

“substantial deference” to the government’s interpretation of

its own rule, “according [it] controlling weight unless it be

plainly erroneous or inconsistent with the regulation,” see St.

Luke’s Hosp., 611 F.3d at 904 (internal quotation marks

omitted). Confirming this interpretation, government counsel

stated at oral argument that Spirit’s website, which displays

taxes and fees vividly, see Appendix A, is fully compliant

with the rule. See Oral Arg. Rec. 32:37–33:05.

So interpreted, the rule satisfies even the Central Hudson

test. That test requires that we ask three questions. First, is the

asserted government interest substantial? Central Hudson,

447 U.S. at 566. This is easy. The Supreme Court has already

held that “[f]or purposes of [the Central Hudson] test, there is

no question that [the government’s] interest in ensuring the

accuracy of commercial information in the marketplace is

substantial,” Edenfield v. Fane, 507 U.S. 761, 769 (1993).

The second and third inquiries are related: “whether the

regulation directly advances the governmental interest

asserted,” Central Hudson, 447 U.S. at 566, and “whether the

fit between the government’s ends and the means chosen to

accomplish those ends ‘is not necessarily perfect, but

reasonable,’ ” Pearson v. Shalala, 164 F.3d 650, 656 (D.C.

Cir. 1999) (quoting Bd. of Trs. of the State Univ. of N.Y. v.

Fox, 492 U.S. 469, 480 (1989)). These too are easy. The

government interest—ensuring the accuracy of commercial

information in the marketplace—is clearly and directly

advanced by a regulation requiring that the total, final price be

the most prominent. Moreover, such a regulation appears

reasonably tailored to accomplish that end. Unlike in other

cases—where the government expressly prohibits certain

kinds of speech on the premise that consumers need

government to protect them from accurate information, see

Bates v. State Bar of Ariz., 433 U.S. 350, 375 (1977) (“[W]e

view as dubious any justification that is based on the benefits

of public ignorance.”); cf. 44 Liquormart, Inc. v. Rhode

Island, 517 U.S. 484, 503 (1996) (opinion of Stevens, J.)

(“The First Amendment directs us to be especially skeptical

of regulations [of truthful, nonmisleading information] that

seek to keep people in the dark for what the government

perceives to be their own good.”)—the rule simply regulates

the manner of disclosure. It imposes no burden on speech

other than requiring airlines to disclose the total price

consumers will have to pay. This the First Amendment plainly

permits.

III.

Next, we address Spirit’s challenge to the Refund Rule,

which allows consumers to cancel reservations without

penalty for twenty-four hours provided that they made those

reservations more than a week in advance of the flight. Spirit

argues that the rule violates the Airline Deregulation Act,

which prohibits regulation of fares. It also argues that “DOT

did not make a finding or even discuss the possibility that

charging a cancellation penalty is deceptive” or unfair. Spirit

Br. 49–50. Finally, Spirit points out that cancellation penalties

allow airlines to ensure that their planes are full. Without

cancellation penalties, consumers could book several seats to

cover their contingencies, cancel, and get full refunds, leaving

the airlines with insufficient time to rebook.

Again, we are unpersuaded. For one thing, the rule has

nothing to do with airfares. Instead, it regulates cancellation

policies on the basis of a finding that existing practices were

deceptive and unfair—a regulation plainly allowed under 49

U.S.C. § 41712 so long as it “was reasonable and . . .

supported by substantial evidence in the record,” Nat’l Ass’n

of State Util. Consumer Advocates v. FCC, 372 F.3d 454, 461

(D.C. Cir. 2004). It was. DOT’s finding of deception and

unfairness in the context of an ongoing effort to reduce

unfairness in the industry rests on over a decade’s worth of

recorded experience. DOT found that airlines were routinely

misleading consumers with vague customer service policies.

One manifestation of that unfairness, DOT found, was that

consumers were led to expect, based on widespread

advertising and general practices, that they may cancel

reservations without penalty for twenty-four hours only to

have that expectation thwarted by airlines with vague policies

that often departed from this practice. Viewing this as unfair

and deceptive, DOT now requires airlines to meet a basic set

of customer service guarantees—guarantees that it crafted

after canvassing industry norms and gauging consumer

expectations. Finally, DOT took account of Spirit’s concern

about ensuring that its planes are full: it amended the

proposed rule to apply only if seats are purchased more than a

week in advance, thus allowing airlines at least that much

time to rebook.

In sum, Spirit gives us no reason to believe that the

Refund Rule—developed as part of a systematic effort aimed

at preventing unfair and deceptive practices—is arbitrary or

capricious. See Petal Gas Storage, 496 F.3d at 703 (agencies

“[are] not required to choose the best solution, only a

reasonable one”).

IV.

This brings us, finally, to the Price Rule, which prohibits

airlines from increasing the price of air transportation after

consumers purchase their tickets. Because of some dispute as

to whether the rule applies to ancillary charges, such as in-

flight refreshments, DOT has informed us that it “will

undertake a new notice-and-comment procedure before

enforcing the post-purchase price increase provision to any

ancillary service other than the carriage of carry-on baggage

and the first and second checked bag.” DOT Br. 51. Taking

DOT at its word, we agree that the only issue before us is

whether DOT appropriately prohibited airlines from raising

the price of airline tickets, carry-on luggage, or the first two

checked bags after customers buy their tickets.

According to Spirit, the Price Rule is procedurally

unlawful because the final rule was not “a logical outgrowth

of its notice” of proposed rulemaking. See CSX Transp., Inc.

v. Surface Transp. Bd., 584 F.3d 1076, 1079 (D.C. Cir. 2009)

(internal quotation marks omitted). In the Notice of Proposed

Rulemaking, DOT explained it was considering prohibiting

airlines “from raising the price after the consumer completes

the purchase.” 75 Fed. Reg. at 32,330. Given this, Spirit tells

us that it “reasonably believed the proposal would prohibit the

collection of additional amounts for a ticket after the

passenger purchased a ticket, or for an optional service such

as a checked bag or seat selection after the passenger paid for

the optional service.” Spirit Br. 53. Until the final rule was

promulgated, it had no idea “that DOT also intended to

prohibit price increases for optional services, which a

passenger can select after he buys a ticket, before the

passenger purchases them.” Id. at 53–54. Thus, DOT failed to

give adequate “notice of the scope and general thrust of the

proposed rule.” Id. at 56. (internal quotation marks omitted).

This argument is ridiculous. As the government points

out, the proposed rule deemed it an unfair and deceptive

practice for a “seller of scheduled air transportation . . . to

increase the price of that air transportation to a consumer,

including but not limited to increase in the price of the seat,

increase in the price for the carriage of passenger baggage,

or increase in an applicable fuel surcharge, after the air

transportation has been purchased by the consumer.” 75 Fed.

Reg. at 32,341 (emphasis added). The final rule adopted the

same operative language with the following amendments: (1)

adding “except in the case of an increase in a government-

imposed tax or fee,” and (2) specifying that a “purchase is

deemed to have occurred when the full amount agreed upon

has been paid by the consumer.” 76 Fed. Reg. at 23,167

(amending 14 C.F.R. § 399.88(a)).

Spirit next argues that the Refund Rule is arbitrary and

capricious. According to Spirit, DOT based the rule on its

concern that “some air tour operators (who were also subject

to the notice requirements) . . . were burying consumer

notices about the possibility of price increases in their

conditions of carriage.” Spirit Br. 57. But, Spirit argues, this

has no relationship to raising the price of an optional service

before a consumer purchases it—especially given that “under

the status quo, airlines are prohibited from increasing prices

without first giving consumers notice prices could go up.” Id.

at 58. In addition, Spirit points out, “a passenger can protect

himself against future price increases by purchasing optional

services at the same time as (or as soon as possible after) he

purchases his ticket.” Id. at 59. But DOT saw this as a classic

bait and switch. It found that when consumers purchase

airline tickets, they assume that the price they pay for extra

bags at the airport will be the price advertised when they

bought their ticket. Thus, DOT concluded, increasing the

price of these very commonly purchased and practically

necessary services (like the ability to carry bags onto the

flight) amounts to an unfair practice. Under the APA, we ask

only whether DOT’s conclusion “was reasonable and . . .

supported by substantial evidence in the record.” Nat’l Ass’n

of State Util. Consumer Advocates, 372 F.3d at 461. It was.

For the foregoing reasons, the petitions for review are

denied.

So ordered.

APPENDIX A

RANDOLPH, Senior Circuit Judge, concurring in part and

dissenting in part: Speech about government, especially speech

critical of government, is at the core of “the freedom of speech.”

The First Amendment thus protects speech complaining about

taxes. One of the Department of Transportation’s new rules

restricts such speech. The new rule dictates how airlines and

others selling air transportation may convey information

criticizing the taxes and fees exacted from their customers. The

government is thus attempting to restrict speech critical of the

government. The majority opinion upholds the rule. I think the

rule violates the First Amendment.

The Department’s rule regulates airfare advertising. I

join the majority in its decision sustaining the rule’s requirement

that such advertisements must state the total price of airfare. 14

C.F.R. § 399.84(a). My problem is with the following portion

of the rule: “Although charges included within the single total

price listed (e.g., government taxes) may be stated separately or

through links or ‘pop ups’ on websites that display the total

price, such charges may not be false or misleading, may not be

displayed prominently, may not be presented in the same or

larger size as the total price, and must provide cost information

on a per passenger basis that accurately reflects the costs of the

item covered by the charge.” Id.

The rule does not define “not . . . prominently.” In the

past, the Department used “prominently” to describe text that

was “clear” and “large enough to alert a reader to the [subject].”

Trans World Airlines, Inc., Dep’t of Transp., Order 95-7-46

(July 28, 1995). The preamble to the advertising rule reflects

that definition. It explains that sellers of air transportation may

display taxes and government-imposed fees “on the same page”

as an advertised fare if the taxes and fees appear “in fine print.”

The preamble goes on to say that taxes and fees must “be

presented in significantly smaller type” than the total price.

Enhancing Airline Passenger Protections, 76 Fed. Reg. 23,110,

23,143 (Apr. 25, 2011). A guidance document issued to explain

the regulation states: “‘Prominent’ under this rule means that the

break-out of per-person charges cannot be in a more prominent

place . . . than the advertised total fare.” Office of Aviation

Enforcement and Proceedings, Dep’t of Transp., Answers to

Frequently Asked Questions 22 (Oct. 19, 2011). The document

adds that taxes and fees “cannot be at the top of the page, ahead

of the total price. The total price should be in larger font. The

[taxes] should not have special highlighting that sets [them]

apart and makes [them] more prominent than the total price

(e.g., bold font, underlined, or italicized).” Id.

The majority quibbles about how much smaller the

typeface of taxes and fees must be in comparison to the typeface

of the total price.

This is a classic red herring, an attempt to

The majority accuses me of not accepting the government’s

interpretation of its rule because I state that the rule requires taxes and

fees to be displayed in “fine print” or a “significantly smaller” font

size than the total price. Maj. Op. at 15-16. “Fine print” and

“significantly smaller” are not my words. They are the Transportation

Department’s interpretation of what its rule requires. See 76 Fed. Reg.

at 23,143. The guidance document the majority invokes does not

suggest otherwise; that document interprets only the word

“prominently,” retains the requirement that the total price be listed in

“larger font,” and says nothing about how much smaller taxes and fees

must be in comparison. Office of Aviation Enforcement and

Proceedings, Dep’t of Transp., Answers to Frequently Asked

Questions 22.

The majority strains to support its ruling by reaching outside

the record, in violation of the Administrative Procedure Act. See

Camp v. Pitts, 411 U.S. 138, 142-43 (1973). It examines Spirit’s

current website and proclaims that although taxes and fees are not

displayed in fine print, Spirit is not violating the rule. Maj. Op. at 15-

16. And how exactly does the majority know this? Because the

Department of Justice attorney supposedly said so during oral

divert attention from what is really at stake here. No matter how

hard the majority tries, it cannot disguise the fact that the

government has forbidden airlines from displaying taxes and

fees “prominently”; that it has made it illegal for airlines to put

these government charges in the same or larger typeface than

that of the total price; that the government has ordered airlines

not to place government taxes and fees above the total price and

not to show these items in bold or italics or with underlining.

The airlines say they are engaging in political speech

rather than commercial speech when they inform customers, and

potential customers, of the amount of the total airfare

attributable to government taxes and fees. For this reason they

believe they are entitled to the full protection of the First

Amendment. Their speech about taxes and fees will be in

advertisements, and the airlines, of course, have an economic

incentive for educating the public about these charges: if

discourse regarding these charges results in the government

lessening the financial burden it imposes, airfares would become

more affordable and people would fly more often. These

circumstances – advertising and economic incentive – do not

necessarily disqualify the airlines’ speech from being treated as

political speech. In one of the leading First Amendment cases,

New York Times Co. v. Sullivan, 376 U.S. 254 (1964), the Court

held that an advertisement placed in a newspaper to raise money

was political speech the First Amendment protected. See also

Consol. Edison Co. v. Pub. Serv. Comm’n, 447 U.S. 530 (1980).

argument. But the Justice Department attorney said no such thing.

How could he? There is no indication that the attorney had ever seen

Spirit’s website (it was Judge Tatel who brought it up during Spirit’s

argument). And at no point did the attorney say anything about how

much smaller the type size of taxes and fees must be in comparison to

the total price, which is the subject the Transportation Department

discussed in the passages I quoted.

The majority opinion nevertheless holds that anything

the airlines say in their advertisements regarding taxes and fees

falls within the category of commercial speech, and is therefore

subject to less than full constitutional protection. Maj. Op. at

10-11. No Supreme Court decision has ever dealt with the sort

of regulation we have here. That is, none of the commercial

speech cases – including Bolger v. Youngs Drug Products Corp.,

463 U.S. 60 (1983),

on which the majority relies – involved the

government’s attempt to control and to muffle speakers who are

critical of the government. As the Sixth Circuit wrote in an

analogous situation, a law “looks like a ban on core political

speech” if it restricts companies from “announcing who bears

political responsibility for a new tax . . . in the forum most likely

to capture voters’ attention” – here, in an advertisement.

Bellsouth Telecomms., Inc. v. Farris, 542 F.3d 499, 504-05 (6th

Cir. 2008). Because the law in Bellsouth was unconstitutional

even if it regulated commercial speech, the Sixth Circuit found

it unnecessary decide how the speech in that case should be

classified. Id. The same is true here, and I am therefore content

to assume arguendo that we have before us a law restricting

commercial speech.

For commercial speech the current test, despite

criticism,

is still Central Hudson Gas & Electric Corp. v.

Bolger defined commercial speech as “speech which does ‘no

more than propose a commercial transaction.’” 463 U.S. at 66

(quoting Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council,

Inc., 425 U.S. 748, 762 (1976)). The airlines want to do more than

“merely” propose that the customer purchase airfare: the airlines want

to criticize the government by revealing prominently the full extent of

the costs government imposes on their customers’ air travel.

See, e.g., Thompson v. W. States Med. Ctr., 535 U.S. 357,

377 (2002) (Thomas, J., concurring); 44 Liquormart, Inc. v. Rhode

Island, 517 U.S. 484, 501-04 (1996) (opinion of Stevens, J., joined by

Public Service Commission, 447 U.S. 557 (1980): restrictions on

commercial speech are permissible if the government

demonstrates (1) that it has a substantial interest in the

restriction; (2) the regulation directly advances that interest; and

(3) the regulation is not more extensive than necessary. Id. at

566. False, deceptive, or misleading advertisements can be

banned altogether. Ibanez v. Fla. Dep’t of Bus. & Prof’l

Regulation, 512 U.S. 136, 142 (1994).

What then are the government’s interests here? The

government’s brief offers two: the “interest in ensuring that

consumers are accurately informed of the cost of air travel”; and

the interest in preventing consumers from being “confuse[d] . .

. as to the actual price” of airfare.

With respect to the first – ensuring accurate information

– the Transportation Department in the rulemaking never

mentioned this in connection with the taxes and fees restrictions.

And for good reason. The accuracy of the amount of fees and

taxes listed in an advertisement does not depend on font size,

positioning, prominence, or anything else regulated by the

advertising rule.

And of course there is no evidence – how

could there be? – that smaller typeface for taxes and fees, or

anything else the rule requires for these charges, leads to more

accurate airline advertising.

Kennedy and Ginsburg, JJ.); id. at 517 (Scalia, J., concurring in part

and concurring in judgment).

The only evidence in the record indicates that consumers

“feel” misled when the total price is not disclosed or is hidden in

footnotes and hyperlinks. See 76 Fed. Reg. at 23,142-43; Enhancing

Airline Passenger Protections, 75 Fed. Reg. 32,318, 32,327-28

(proposed June 8, 2010); Price Advertising, 71 Fed. Reg. 55,398,

55,401-02 (Sept. 22, 2006). But the part of the rule addressing this

topic is not the subject of my dissent.

The second interest – preventing confusion – was the

only justification mentioned in the rulemaking.

But neither the

Department in its rulemaking nor the government in its brief

explains why disclosure of taxes in the same or larger font size

as the total price, or at the top of a page rather than at the

bottom, or in bold typeface rather than regular typeface, would

confuse anyone. And neither the Department in its rulemaking

nor the government in its brief cites any sort of evidentiary

support for such a notion. The majority’s opinion cites nothing

either. These omissions should have resulted in a holding that

this aspect of the advertising rule is unconstitutional.

The entirety of the Transportation Department’s explanation

is the following non sequitur: Disclosure of taxes and fees “must

accurately reflect the actual costs to the carrier of the service or matter

covered, be displayed on a per passenger basis, and be displayed in a

manner that otherwise does not deceive consumers. Consequently, the

rule requires that any such listing not be displayed prominently and be

presented in significantly smaller type than the listing of the total price

to ensure that consumers are not confused about the total price they

must pay.” 76 Fed. Reg. at 23,143.

A further consideration is worth mentioning. Airlines, like

most businesses, market their products through a variety of mediums.

The preamble identifies social networking websites like Facebook and

Twitter as popular ways to sell and advertise airfares. 76 Fed. Reg. at

23,143. The Notice of Proposed Rulemaking points to the common

practice of marketing via text message. 75 Fed. Reg. at 32,327. In

addition to being popular means for advertising, Facebook, Twitter,

and text messages have this additional characteristic in common: only

one font size currently is possible. The user can input text and

numbers, but can do nothing more with regard to style or size before

his message is distributed.

This leaves airlines three options when advertising on many

platforms: (1) disclose taxes and violate the regulation; (2) suppress

In commercial speech cases, the government’s burden is

to demonstrate that its speech restriction “directly” advances the

interest it identifies. Central Hudson, 447 U.S. at 566. To this

end, the Supreme Court has required an evidentiary showing that

the regulation advances the government’s interest to a material

extent. See, e.g., Greater New Orleans Broad. Ass’n, Inc. v.

United States, 527 U.S. 173, 188 (1999); 44 Liquormart, 517

U.S. at 505 (plurality); Rubin v. Coors Brewing Co., 514 U.S.

476, 486-90 (1995); Ibanez, 512 U.S. at 142-43; Edenfield v.

Fane, 507 U.S. 761, 770 (1993); cf. Bose Corp. v. Consumers

Union of United States, Inc., 466 U.S. 485, 499 (1984).

Government “speculation” or “conjecture” will not suffice.

Ibanez, 512 U.S. at 143 (quoting Edenfield, 507 U.S. at 770).

tax information and comply with the rule; or (3) cease marketing on

the platform altogether. The government addressed this problem at

oral argument by explaining that it was “not aware of the [mediums]

where you only have a choice of one font, but if [airlines] have a

particular problem with the rule as applied in some situation like that

. . . they can make that point with the agency.” Oral Arg. Rec. at

33:31-46. If I understand the point, the onus is on the airlines to

justify same-size disclosures whenever fine print is not an option, and

it is the agency’s prerogative to exempt truthful disclosures from the

rule’s reach. This is completely backwards; supplication and

administrative clemency have no place in the First Amendment. “If

the First Amendment means anything, it means that regulating speech

must be a last – not first – resort.” Thompson, 535 U.S. at 373.

In Milavetz, Gallop & Milavetz, P.A. v. United States, 130

S. Ct. 1324, 1340 (2010), a commercial speech case dealing with the

constitutionality of a federal statute, the Court accepted as evidence

material in the congressional record and stated that it was self-evident

that the advertisements at issue were misleading. Milavetz has no

bearing on the relevant portion of the tax and fee rule. The opinion

dealt with the requirement of disclosure. Id. at 1339; Maj. Op. at 12-

13. The issue I am addressing deals with suppression of speech.

Yet the government has presented not a shred of

evidence to support its tax and fee rule, and it has offered no

reasoning to explain why a significant number of consumers

would be confused without the rule. The lack of evidence is

particularly telling. It is not because the Transportation

Department was without experience with a system in which

taxes were stated in large type. For more than a quarter of a

century before the current advertising rule, the Department

required airlines not to bury the amount of taxes in fine print,

but to state the amount of taxes “clearly” and prominently, in a

typesize at least as large as “the price of the trip.” Request of the

Air Transp. Ass’n of Am. for an Exemption, Dep’t of Transp.,

Order 85-12-68 (Dec. 24, 1985). Yet there is no history, no

example, of anyone reading the airlines’ advertisements and

coming away with the belief that the taxes and fees amounted to

the total price of the airfare. The idea that the new rule is now

needed to prevent such confusion is, to put it mildly, absolutely

absurd. Taxes and fees for air travel are steep, but – the record

shows – they still make up only twenty percent of the total cost

of a ticket. Given the fact that the total airfare and the total

taxes and fees included therein would be labeled as such, only

a fool would confuse or misunderstand the two, regardless of

how prominently the taxes and fees were displayed in

comparison to the total charge. People get bills all the time that

breakout the components of the total amount due. (Many list the

total amount due at the bottom of the page – not at the top as the

Department’s rule requires.) Maybe someone somewhere at

some time would be confused. But one of the abiding principles

of the commercial speech cases is that the government may not

restrict speech on the basis that someone somewhere may

misread a particular advertisement.

The Supreme Court has rejected the proposition “that the public

is not sophisticated enough to realize the limitations of advertising,

and that the public is better kept in ignorance than trusted with correct

I therefore dissent from the majority opinion to the

extent that it upholds the rule prohibiting sellers of air

transportation from prominently displaying government taxes

and fees. I join the balance of the majority’s opinion.

but incomplete information.” Bates v. State Bar of Ariz., 433 U.S.

350, 374-75 (1977).

Even if commercial speech “may be potentially misleading to

some consumers, that potential does not satisfy the [government’s]

heavy burden of justifying a categorical prohibition against the

dissemination of accurate factual information to the [wider] public.”

Peel v. Attorney Registration & Disciplinary Comm’n, 496 U.S. 91,

109 (1990).