Lopez, C v. FAA ( 2003 )

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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 6, 2002 Decided February 11, 2003
No. 01-1427
CARLOS LOPEZ,
PETITIONER
v.
FEDERAL AVIATION ADMINISTRATION,
RESPONDENT
On Petition for Review of an Order of the
Federal Aviation Administration
David M. McDonald argued the cause and filed the briefs
for petitioner.
Kenneth G. Caplan, Special Attorney to the Attorney Gen-
eral, Federal Aviation Administration, argued the cause and
filed the brief for respondent.
Before: EDWARDS, ROGERS and GARLAND, Circuit Judges.
Opinion for the Court filed by Circuit Judge ROGERS.
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
2
ROGERS, Circuit Judge: Carlos Lopez petitions for review
of the decision of the Federal Aviation Administration
(‘‘FAA’’) not to renew his appointment as a Designated
Engineering Representative (‘‘DER’’). He challenges the
decision on substantive and procedural grounds as well as
maintaining that he had a property and liberty interest in the
continued renewal of his designation, entitling him to due
process under the Fifth Amendment. Although the court
does not have jurisdiction to review the substance of the
FAA’s decision because it is ‘‘committed to agency discretion
by law,’’ 5 U.S.C. § 701(a)(2) (1996), the court does have
jurisdiction to review Lopez’s procedural claim that the FAA
failed to follow its nonrenewal procedures. Insofar as there
was any such failure, we hold that Lopez has failed to show
prejudice and that, in light of circuit precedent, because his
claim of a liberty or property interest in a DER designation is
without merit, Lopez cannot show that he was entitled to
renewal of his status or to constitutional due process. Ac-
cordingly, we deny the petition for review.
I.
Under the Federal Aviation Act (‘‘Act’’), 49 U.S.C.
§ 44702(d)(1), the FAA Administrator ‘‘may delegate to a
qualified private person’’ the authority to undertake the ‘‘ex-
amination, testing, and inspection necessary’’ to issue certifi-
cates identifying aircraft as compliant with FAA regulations.
See 49 U.S.C. §§ 44702, 44704. The Administrator, through
local Aircraft Certification Offices (‘‘certification office’’), has
appointed a group of individuals, called DERs, to perform
these tasks. 14 C.F.R. § 183.11(c)(1) (2002). DER appoint-
ments are for one year subject to renewal for additional one-
year periods at the Administrator’s discretion. 14 C.F.R.
§ 183.15(b). The Administrator may rescind such appoint-
ments, or choose not to renew them, at ‘‘any time for any
reason the Administrator considers appropriate.’’ 49 U.S.C.
§ 44702(d)(2); 14 C.F.R. § 183.15(d).
In accordance with FAA regulations, DERs may perform
their responsibilities on U.S. registered aircraft located
3
abroad under certain limited conditions if they have prior
approval of the certification office. Designated Engineering
Representative (DER) Guidance Handbook, FAA Order
8110.37C ¶ 609 (Sept. 30, 1998). The regulations require, as
relevant here, that before granting such approval, the certifi-
cation office provide the foreign civil aviation authority
(‘‘CAA’’) with written notification requesting its concurrence
in the proposed work. Id. at ¶ 609(b)(3)(a). Only after
receiving approval from the CAA, will the certification office
authorize the proposed DER activity. Id. at ¶ 609(b)(3)(a).
The regulations also require DERs to obtain specific authori-
zation from the certification office prior to authorizing a
major repair or alteration of an aircraft, regardless of wheth-
er it is located in the United States or a foreign country. Id.
at ¶ 611(c).
The FAA reviews the performance of DERs annually. Id.at ¶ ¶ 703–04. The regulations provide that if the FAA
decides to terminate or not renew a DER’s designation, the
DER is to be sent written notice of the decision at least thirty
days before the intended effective date, including specific
reasons for it, and is to be given an opportunity to respond in
writing or in person. Id. at ¶ 706(b); see also Procedures for
Termination/Nonrenewal of Aircraft Certification Service
Designations and Delegations, FAA Order 8130.24 ¶ 6 (Oct.
21, 1991). The regulations also provide for two levels of
agency review. Thus, if the DER requests review of the
decision, a first-level review is conducted by the appointing
certification office manager. FAA Order 8110.37C
¶ 706(c)(1). If the DER seeks further relief, the DER is
entitled to a second-level review by the manager of the
appropriate geographic directorate. Id. at ¶ 706(c)(2). If the
directorate manager concurs with the decision to terminate or
not renew, the regulations require that a letter be sent to the
DER reciting the justifications for the decision and advising
the DER that the decision is final. Id. at ¶ 706(c)(3). The
regulations also require this notice to indicate that the DER’s
remaining legal remedy is an appeal to a federal appeals
court, as provided in FAA Order 8130.24 ¶ 7(b)(2). Id.4
Lopez received notice that his DER would not be renewed
and pursued the two levels of review. By letter of February
15, 2000, Melvin D. Taylor, the manager of the Atlanta
certification office, informed Lopez that his DER designation
would not be renewed when it expired on February 29, 2000.
Taylor stated that his decision was based upon findings that
Lopez had neither ‘‘properly exercised and performed the
duties of [his] designation’’ nor ‘‘demonstrated the care and
integrity necessary to merit special public responsibility.’’
These general findings were based, in turn, upon more partic-
ular concerns that Lopez had (1) approved engineering data
and found compliance with FAA regulations outside his dele-
gated authority; (2) failed to notify and obtain authorization
from the certification office before performing work on air-
craft outside the United States and failed to notify the
certification office of his anticipated activities and length of
stay in Europe; and (3) failed to adhere to ‘‘good practice’’
principles while acting as an FAA designee. With respect to
Lopez’s failure to adhere to ‘‘good practice’’ principles, Taylor
stated that Lopez had exhibited a lack of integrity with
regard to his contacts with the FAA and the Direction
Generale de L’Aviation Civile (‘‘DGAC’’) while in France;
failed to notify the certification office of his foreign activities
after having been counseled to do so; and created interna-
tional friction between the FAA and the DGAC by trying to
obtain a U.S. Supplemental Type Certificate (‘‘STC’’) for a
French company with regard to a U.S.-registered aircraft in
violation of the United States and French Bilateral Airworthi-
ness Agreement. (In regard to the latter, Lopez sent letters
to his Congressman and the Commerce Department’s Inspec-
tor General seeking clarification of the FAA’s approval pro-
cess for STCs.) Taylor’s letter informed Lopez that he could
request reconsideration of the decision not to renew his DER
status, and that his request should include information he
wished the FAA to review. Lopez responded, by letter of
February 24, 2000, to Taylor’s reasons for not renewing his
DER status, and requested reconsideration of Taylor’s deci-
sion.
5
The first-level review took place on March 1, 2000. At that
time Lopez’s counsel submitted exhibits on Lopez’s behalf
and received documents from the FAA in support of Taylor’s
position. Following the meeting, Lopez’s counsel wrote Tay-
lor, on March 10, 2000, more extensively refuting Taylor’s
rationale for not renewing Lopez’s designation. Taylor re-
sponded by letter of April 4, 2000, that ‘‘[a]fter reviewing the
file and considering the information provided by [Lopez] and
[his] counsel,’’ the Atlanta certification office concluded that
‘‘the original findings’’ contained in the February 15 letter
‘‘were accurate and justifiable,’’ and that consequently, Lo-
pez’s DER designation would not be renewed or reinstated.
Taylor reiterated his reasons for his nonrenewal decision, and
advised Lopez of his right to request reconsideration. On
April 17, 2002, Lopez, through counsel, requested reconsider-
ation of the decision reached by the Atlanta certification office
from the manager of the Central Region Directorate, Mike
Gallagher.
The second-level review took place on June 14, 2000. As a
result of concern that the certification office had not taken ‘‘a
more active role in reviewing [Lopez’s] work,’’ Gallagher, on
August 3, 2000, informed Lopez of his interim decision to
allow Lopez to function on a Recommend Only Approval
status for a period of six months. During that time, Lopez
would be required to submit Recommend Only Approval
requests for evaluation by the Atlanta certification office;
failure to submit projects, or submission of projects of mini-
mal difficulty would result in Lopez’s termination. Gallagher
denied Lopez’s request for reconsideration of the interim
decision for failure to raise any new issues. When Lopez
subsequently complained that he could not find any work to
perform on a Recommend Only Approval basis, Gallagher, on
November 21, 2000, extended the time period for Lopez to
find work. Having received no submissions from Lopez as of
May 18, 2001, Gallagher wrote Lopez that he had ninety days
to submit data for review or face termination. On August 20,
2001, upon receiving no submissions, Gallagher issued a final
decision terminating Lopez’s DER appointment effective im-
mediately. Lopez now seeks relief from the court.
6
II.
On appeal, Lopez challenges the FAA’s decision not to
renew his DER designation on three grounds: first, the
decision was arbitrary and capricious, and that insofar as it
was a retaliatory response to Lopez’s complaint to his con-
gressman and the Inspector General about how the FAA
handled his work abroad, it was an abuse of process; second,
the FAA failed to follow its internal procedures for nonrenew-
al of DERs; and third, the FAA violated his Fifth Amend-
ment due process rights to property and liberty.
A.
As a threshold matter, the FAA maintains that the court
does not have jurisdiction to review the substance of its
nonrenewal decision because the decision is committed to
agency discretion by law. Most recently, in Steenholdt v.
FAA, 2003 WL 69564 *4–5 (D.C. Cir. 2003), the court held
that because the decision not to renew a DER delegation is
committed to the Administrator’s discretion under 49 U.S.C.
§ 44702(d), judicial review of the substantive merits of that
decision is precluded under the Administrative Procedure
Act, 5 U.S.C. § 701(a)(2). See also Greenwood v. FAA, 28
F.3d 971, 974–75 (9th Cir. 1994); Adams v. FAA, 1 F.3d 955,
956 (9th Cir. 1993). There is no need to repeat the court’s
analysis in Steenholdt. Accordingly, in light of Steenholdt, we
hold that we lack jurisdiction to review Lopez’s contention
challenging the FAA’s nonrenewal decision on substantive
grounds as being arbitrary and capricious and an abuse of
process.
B.
The FAA similarly maintains that the court does not have
jurisdiction to consider Lopez’s procedural challenge to the
nonrenewal decision because the FAA’s nonrenewal proce-
dures are also committed to agency discretion as a matter of
law. Alternatively, the FAA maintains that, if the court does
have jurisdiction, Lopez’s procedural challenge fails because
the FAA substantially followed its internal procedures, and to
7
the extent that it did not, Lopez failed to prove he was
prejudiced.
Most recently, again in Steenholdt, the court rejected a
challenge to the FAA’s nonrenewal of a DER on the ground
that the FAA had failed to follow its procedures. 2003 WL
69564 at *6. In Steenholdt, the petitioner argued that the
court had jurisdiction to review his procedural challenge
because, under Accardi v. Shaughnessy, 347 U.S. 260 (1954),
federal agencies are required to ‘‘follow their own rules, even
gratuitous procedural rules that limit otherwise discretionary
actions.’’ 2003 WL 69564 at *6. Without expressly adopting
the Accardi doctrine, the court implicitly held that it had
jurisdiction to address the procedural challenge, citing Doe v.
United States Dep’t of Justice, 753 F.2d 1092, 1098 (D.C. Cir.
1985), for the proposition that courts ‘‘have long required
agencies to abide by internal, procedural regulations TTT even
when those regulations provide more protection than the
Constitution or relevant civil service laws.’’ The court other-
wise left undefined the analysis by which it reached the
conclusion that it had jurisdiction. Today, we fill that gap.
In a series of decisions, the Supreme Court has entertained
challenges to agency actions that failed to conform to agency
regulations. In SEC v. Chenery Corp., 318 U.S. 80, 87–88
(1943), the Court held that an agency is bound to the stan-
dards by which it professes its action to be judged. In
Accardi, a case involving a habeas challenge to the denial of
suspension of deportation, the Court objected to the agency’s
‘‘alleged failure to exercise its own discretion contrary to
existing valid regulations.’’ 347 U.S. at 268. In the employ-
ment context, the Court held in Service v. Dulles, 354 U.S.
363, 373–76 (1957), that where dismissal from employment is
based on a defined procedure, even though generous beyond
the requirements binding the agency, that procedure must be
scrupulously observed, and in Vitarelli v. Seaton, 359 U.S.
535 (1959), that the dismissal of a former government employ-
ee was illegal and of no effect because the agency’s dismissal
‘‘fell substantially short of the requirements of the applicable
department regulations.’’ Id. at 545. See also Morton v.
Ruiz, 415 U.S. 199, 234 (1974); Lincoln v. Vigil, 508 U.S. 1828
(1993). In other words, ‘‘[a] court’s duty to enforce an agency
regulation [, while] most evident when compliance with the
regulation is mandated by the Constitution or federal law,’’
United States v. Caceras, 440 U.S. 741, 749, embraces as well
agency regulations that are not so required.
The Supreme Court has, however, distinguished between
the types of internal agency regulations that are reviewable.
In American Farm Lines v. Black Ball Freight Serv., 397
U.S. 532, 539 (1970), a case involving regulations designed to
provide the agency with information it needed to reach an
informed decision, the Court held that the regulations were
unreviewable absent a showing of substantial prejudice by the
complaining party. On the other hand, had the agency’s
rules been ‘‘intended primarily to confer important procedural
benefits upon individuals in the face of otherwise unfettered
discretion as in Vitarelli,’’ id. at 538–39, or had the agency
failed to exercise independent discretion required by the rule,
as in Accardi, id. at 539, the Court indicated the case would
be ‘‘exempt’’ from the general principle that an administrative
agency may ‘‘relax or modify its procedural rules adopted for
the orderly transaction of business TTT when TTT the ends of
justice require it.’’ Id.Given this instruction, this court has been careful to distin-
guish between procedural rules benefitting the agency (Amer-
ican Farm Lines) and procedural rules benefitting the party
otherwise left unprotected by agency rules (Vitarelli), as well
as cases in which the agency has failed to exercise discretion
required by its regulations (Accardi). Compare Associated
Press v. FCC, 448 F.2d 1095, 1105 (D.C. Cir. 1971), Mun.
Light Bds. v. FPC, 450 F.2d 1341, 1347–48 (D.C. Cir. 1971),
and Neighborhood TV Co. v. FCC, 742 F.2d 629, 636 (D.C.
Cir. 1984) with Doe, 753 F.2d at 1098, and Mazaleski v.
Treusdell, 562 F.2d 701, 719 (D.C. Cir. 1977). These distinc-
tions are particularly visible in the employment context,
where this court has long recognized that, contrary to the
type of internal regulations in American Farm Lines, agen-
cies cannot ‘‘relax or modify’’ regulations that provide the
only safeguard individuals have against unlimited agency
discretion in hiring and termination. Thus, in Mazaleski, the
9
court held, citing Vitarelli, that where ‘‘a government employ-
ee has no procedural due process rights apart from those
which the agency has chosen to create by its own regulations,
scrupulous compliance with those regulations is required to
avoid any injuries.’’ 562 F.2d at 719. The court rejected the
notion that a ‘‘failure to inform [the employee] of the specific
grounds of the termination decision, though merely an over-
sight, can[ ] be excused as a de minimus or harmless violation
of its own regulations.’’ Id. Likewise, in Doe the court
explained, citing Vitarelli and Service, that when agencies
establish ‘‘special’’ ‘‘pre-termination procedures,’’ they are
bound to follow them. 753 F.2d at 1098. Our sister circuits
have similarly required agencies to follow procedural rules
‘‘designed to benefit aggrieved parties during [employment]
proceedings.’’ Bates v. Sponberg, 547 F.2d 325, 330 nn.6–7
(6th Cir. 1976); see also Gaballah v. Johnson, 629 F.2d 1191,
1202–03 (7th Cir. 1980).
The FAA’s procedures challenged by Lopez are not primar-
ily intended to provide information to the agency, but are
instead aimed at protecting the DER from the Administra-
tor’s otherwise unlimited discretion. It is uncontested that
FAA Orders 8110.37C and 8130.24 provide procedural safe-
guards that are the only available protection for DERs whose
designation can otherwise be terminated by the FAA for ‘‘any
reason considered appropriate by the Administrator.’’ 49
U.S.C. § 44702(d)(2); 14 C.F.R. § 183.15(d); FAA Order
8130.24(5)(a)(10). The Administrator issued FAA Order
8110.37C to ‘‘prescribe[ ] the guidance and procedures to be
used TTT in administering the Designated Engineering Repre-
sentative management program,’’ id. at ¶ 1, and issued Order
8130.24 to ‘‘ensure that due process is accorded before a final
decision is made on termination or nonrenewal of [DER]
designations.’’ Id. at ¶ 1. We hold, as the court implicitly
held in Steenholdt, 2003 WL 69564 at *6, that the court has
jurisdiction to review whether the FAA followed its procedur-
al rules in terminating Lopez’s DER status because ‘‘scrupu-
lous observance of departmental procedural safeguards is
clearly of particular importance’’ where no other agency rules
protect the employee. Vitarelli, 359 U.S. at 540.
10
Lopez’s procedural challenge focuses on two FAA failures
as requiring reversal of the nonrenewal decision: the FAA
failed first, to provide him with thirty days advance written
notice of its decision not to renew his DER designation, as
required by FAA Order 8110.37C ¶ 706, and second, to coun-
sel him about his shortcomings prior to making its nonrenew-
al decision, as required by FAA Order 8110.37C ¶ 700(b). As
to the first failure, Lopez does not indicate how he was
prejudiced by receiving less than thirty days notice of the
FAA’s decision, and nothing in the record indicates that he
was. He responded to the initial notice from Taylor and
pursued his rights under the FAA regulations to seek recon-
sideration from the agency. With the assistance of counsel
he submitted materials on several occasions in support of his
defense to the original claim that his performance was unsat-
isfactory. Lopez does not argue either that he was pressed
for time in responding to the FAA’s view of his performance
or that other defenses would have been presented with addi-
tional time. Thus, his circumstances are readily distinguish-
able from those in Vitarelli, where the denial of material
procedural protections left the former government employee
at a severe disadvantage in defending against his dismissal.
Vitarelli, 359 U.S. at 540–44. As to the second failure, the
record shows that any failure of the FAA not to afford
counseling to Lopez was ameliorated by its subsequent ac-
tions: in his August 3, 2000 letter to Lopez, the directorate
manager issued an interim decision, that he later extended,
providing Lopez with a further opportunity to demonstrate
that he could perform DER work at an acceptable level. Yet
over the course of more than a year, Lopez never submitted
any work for review. Moreover, the record reveals disputes
over performance that were not remediable by mere counsel-
ing; the FAA would have had to change practices and policies
to allow Lopez to perform as he had. Under the circum-
stances, Lopez fails to show that the FAA’s initial oversight
was other than harmless. See Mazaleski, 562 F.2d at 719.
Consequently, we conclude that Lopez fails to show that the
proceedings leading to the nonrenewal of his DER status ‘‘fell
substantially short of the requirements of the applicable
11
departmental regulations.’’ Vitarelli, 359 U.S. at 544, result-
ing in prejudice to him. Steenholdt, 2003 WL 69564 at *6.
C.
Finally, as follows from our decision in Fried v. Hinson, 78
F.3d 688 (D.C. Cir. 1996), Lopez’s challenge on constitutional
grounds to the FAA’s nonrenewal decision fails. Lopez con-
tends that his Fifth Amendment due process rights to proper-
ty and liberty were violated by the FAA’s failure to renew his
DER designation and by the FAA’s alleged public disclosures
of the reasons for his discharge.
In Fried the court held that a Designated Pilot Examiner
(‘‘DPE’’) does not have a legitimate property or liberty inter-
est in his DPE delegation. See also Greenwood, 28 F.3d 971.
Explaining why a DPE has no cognizable property interest in
renewal of that designation, the court pointed to 49 U.S.C.
§ 44702(d), which allows the Administrator to ‘‘rescind [this]
delegation TTT at any time for any reason,’’ and 14 C.F.R.
§ 183.15, which permits the FAA to determine annually
whether to renew a designee. Id. at 692. These same
provisions apply to DERs who, like DPEs, serve at the FAA’s
discretion and therefore have no more ‘‘than a unilateral
expectation’’ of renewal. Bd. of Regents v. Roth, 408 U.S.
564, 577 (1972). Any doubt that DERs lack a property
interest in renewal of their designation is clarified by FAA
Order 8110.37C ¶ 5(b), which states: ‘‘Designation of a pri-
vate person as a DER is a privilege granted by the Adminis-
trator. It is not the right of every qualified applicant to be
granted a DER designation.’’ Combined with Lopez’s admis-
sion that ‘‘a DER designation is a privilege and not a right,’’
Petitioner’s Br. at 25, we hold that he has no property right
in his DER status.
Furthermore, as in Fried, Lopez does not have a legitimate
liberty interest because nonrenewal neither automatically
bars him from future jobs nor stigmatizes him in a way that
would ‘‘substantially preclude the professional use of his
skills.’’ Fried, 78 F.3d at 692 (citation omitted). Lopez’s
12
contention that the FAA violated his liberty interest is based
on a September 13, 1999 letter that the manager of the FAA’s
International Airworthiness Programs Staff, sent Lopez’s
client, Aviation Sale and Leasing Corporation, which stated in
relevant part:
While we understand your company’s sense of urgency
because of a pending customer for these aircraft, we
believe this situation was unnecessarily complicated
through the actions of your representative in France, Mr.
Carlos Lopez. The advice and actions taken by Mr.
Lopez were not correct for modification of N-registered
aircraft.
Lopez maintains that the letter was a ‘‘stigmatizing public
disclosure’’ that adversely affects his business reputation. He
provides no evidence, however, that the letter impugned his
good name, reputation, honesty or integrity, Roth, 408 U.S. at
573, let alone that it ‘‘substantially preclude[s]’’ the use of his
skills. Fried, 78 F.3d at 692. Although Lopez cannot serve
as a DER for the FAA, he has not been deprived of his
career as an engineer, Roth, 408 U.S. at 573. Without loss of
some legitimate protected interest, Lopez’s claim that the
FAA violated his constitutional right to due process is unsus-
tainable.
Accordingly, because the court does not have jurisdiction to
review the substance of the FAA’s nonrenewal decision, be-
cause any FAA failure to follow internal nonrenewal proce-
dures caused no prejudice to Lopez, and because his constitu-
tional claim is without merit, we deny the petition for review.