Aerial Banners, Inc. v. Federal Aviation Administration

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
Aug. 26, 2008
No. 08-10042
THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
Agency No. 7711-1
AERIAL BANNERS, INC.,
Petitioner,
versus
FEDERAL AVIATION ADMINISTRATION,
Respondent.
________________________
Petition for Review of a Decision of the
Federal Aviation Administration
_________________________
(August 26, 2008)
Before BLACK, PRYOR and KRAVITCH, Circuit Judges.
PER CURIAM:
The Federal Aviation Administration grants waivers of certain regulations
to businesses that tow advertising banners behind airplanes. Without the waiver, a
business cannot conduct air towing operations because aerial towing is generally
prohibited. See 14 C.F.R. § 91.311. Aerial Banners, as its name indicates, towed
aerial banners for advertisers pursuant to a waiver. After a series of safety
problems, the FAA revoked Aerial Banners’ waiver, putting the company out of
business. Aerial Banners has petitioned this court to set aside the FAA’s
revocation. After review of the briefs and the administrative record, we deny the
petition.
I.
Aerial Banners operated its banner towing business out of North Perry
Airport in Broward County, Florida. It received a waiver permitting it to conduct
banner towing operations. The waiver was renewed periodically, most recently on
October 1, 2006, for a period of two years. The waiver contained a handful of
boilerplate conditions, called Standard Provisions, as well as three pages of
Special Provisions which regulated in some detail the manner in which Aerial
Banner’s towing operations were to be conducted. The waiver also contained
addenda specifying the pilots and aircraft to which it applied. The Special
Provisions provide that “[t]he FAA retains the right to revoke this Waiver of
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Authorization at any time the Standard or Special Provisions are not strictly
adhered to.”
The FAA revoked Aerial Banner’s waiver by letter dated December 14,
2007. The letter stated that the revocation decision was reached after considering
nine safety “events,” ranging from paperwork violations to plane crashes, over the
preceding two years. The letter noted that some of the events resulted in serious
injuries to Aerial Banner pilots. Accordingly, the letter “cancell[ed] the Certificate
of Waiver/Authorization issued by the FAA . . . based upon our determination that
safety and the public interest would not be served [by] allowing the continuation
of such a waiver.” The nine incidents, in the order they appear in the FAA’s
revocation letter and with some elucidation, are the following:
1. September 25, 2005. This was a hard landing by an Aerial Banners pilot,
who was uninjured and stated the hard landing was caused by a downdraft. Minor
damage to the plane resulted. The plane was not carrying a banner at the time, but
was attempting to pick one up.
2. September 26, 2005. An Aerial Banners pilot was forced to land his
airplane outside an airport because he ran out of fuel.
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3. December 18, 2005.1 This was another hard landing by an Aerial
Banners pilot, this time flying with a banner. (A pilot different from the
September 25 incident was flying.) The plane suffered some damage. The pilot
was fired for failing to follow Aerial Banners’ internal training policies. The
National Transportation Safety Board investigation attributed the accident to the
pilot’s failure to maintain airspeed, which was in part a result of the pilot’s
“intentional operation of the airplane with known deficiencies” in violation of the
waiver’s Special Provisions.
4. June 23, 2006. An Aerial Banners pilot crashed after losing control of a
plane following an abrupt turn. He suffered burn injuries. An NTSB investigation
attributed the accident to pilot error. The pilot was fired by Aerial Banners.
5. November 10, 2007. This is an airplane crash still under investigation by
the NTSB. The plane stalled during a sharp turn after dropping its banner in
preparation to land. The FAA’s incident report reflects that the airplane was
destroyed in the crash. Aerial Banners contends that the NTSB has informally
informed it that pilot error was the primary cause of the crash, that air traffic
control requested the pilot conduct a series of unusual turns, which was a
1
The FAA incorrectly noted in the revocation letter that this incident occurred December
22 rather than December 18.
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contributing factor to the crash, and that mechanical failure was not involved.
6. June 5, 2003. Robert Benyo, Aerial Banners’ owner and a mechanic for
its aircraft, was cited for a paperwork violation concerning his mechanic’s license.
7. September 13, 2005.2 Following the irregular landing on September 26,
2003 off-field landing, an FAA investigation into Aerial Banners revealed a
discrepancy concerning required maintenance forms filed September 13, 2005.
8. December 12, 2005. This was a paperwork violation discovered during
the investigation of the December 22, 2005 hard landing. It appears that the
FAA’s investigation revealed that Aerial Banners’ had not obtained proper
certifications after making modifications to an airplane.
9. December 5, 2007. This violation, which was discovered during an
investigation of the November 10 crash, appears to involve a new engine being
installed on an Aerial Banners plane “without approved data . . . and [a] new
airworthiness certificate.”
In short, between 2005 and 2007, Aerial Banners saw two planes crash, two
pilots engage in landings hard enough to damage the planes, one pilot run out of
fuel and undertake an emergency landing outside an airport, and four paperwork
2
The facts of this incident are not clear from the record. For purpose of argument, we
will assume Aerial Banners’ characterization of the incident is correct.
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violations. (Calling the latter incidents paperwork violations understates the
safety risks involved, as in some cases the airworthiness of Aerial Banners’ planes
could have been impacted by flying with unapproved modifications.) Two of the
incidents caused injury to pilots. Pilot error caused the most serious incidents. In
some cases, Aerial Banners pilots flew planes which they knew were in violation
of the Special Provisions. None of the incidents caused injury to a third person or
damage to property other than Aerial Banners’ own aircraft. Aerial Banners does
not dispute that these incidents occurred, but merely disputes their significance
and the company’s culpability.
II.
Aerial banners contends that the FAA’s decision to revoke its waiver was
arbitrary and capricious, an abuse of discretion, and unsupported by substantial
evidence, in violation of the Administrative Procedure Act. See 5 U.S.C. § 706.
Venue and jurisdiction lie in this court pursuant to 49 U.S.C. § 46110(a), which
provides, inter alia, for judicial review of FAA orders in the circuit court of
appeals in which a “person disclosing a substantial interest” in the order “resides
or has its principal place of business.” We have authority to “affirm, amend,
modify, or set aside any part of the order.” 49 U.S.C. § 46110(c). We may also
order the FAA’s Administrator to conduct further proceedings if necessary. Id.6
Importantly, “findings of fact by the . . . Administrator, if supported by substantial
evidence, are conclusive.” Id. As the foregoing implies, our review of the FAA’s
action is limited to the administrative record.
The standard of review is also deferential. See Eastern Airlines v. FAA,
772 F.2d 1508, 1511 (11th Cir. 1985). We will overturn the FAA’s factual
findings only if unsupported by substantial evidence in the administrative record.
49 U.S.C. § 46110(c); see also Boca Airport Inc. v. FAA, 389 F.3d 185, 189 (D.C.
Cir. 2004). We will uphold the agency’s decision unless it is arbitrary and
capricious, an abuse of discretion, or otherwise contrary to law. 5 U.S.C. § 706;
see also Zukas v. Hinson, 124 F.3d 1407, 1409 (11th Cir. 1997); Boca Airport,
389 F.3d at 189. In other words, when reviewing agency action under the APA,
we do not substitute our own judgment for the agency’s about what action is
warranted in the circumstances. Rather, we will set aside the FAA’s order on
substantive grounds only if the agency “relied on improper factors, failed to
consider important relevant factors, or committed a clear error of judgment that
lacks a rational connection between the facts found and the choice made.” U.S.
Steel Corp. v. Astrue, 495 F.3d 1272, 1279 (11th Cir. 2007) (citations omitted.)
An agency may also act arbitrarily and capriciously by failing to follow its own
regulations and procedures. Simmons v. Block, 782 F.2d 1545, 1550 (11th Cir.
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1986). We will not consider arguments not raised before the FAA. Eastern
Airlines, 772 F.2d at 1512.
We must also review the applicable law governing the issuance of waivers
like the one that permitted Aerial Banners to operate. The law makes clear that the
granting of such waivers is discretionary with the FAA. Federal statute gives the
FAA Administrator discretionary authority to grant an exemption from air safety
regulations “if the Administrator finds the exemption is in the public interest.” 49
U.S.C. § 44701(f). FAA regulations further provide that the Administrator “may
issue” a waiver of any safety rule “if the Administrator finds that the proposed
operation can be safely conducted under the terms of that certificate of waiver.”
14 C.F.R. § 91.903(a). Procedures for obtaining and cancelling a waiver are
governed in more detail by Chapter 18 of FAA’s Order 7210.3U. Paragraph 18-1-
9 of that Order, “Cancellation of Waivers and Authorizations,” provides as
follows:
A waiver or authorization may be canceled at any time by the
Administrator [or other authorized officials]. As a general rule, a
waiver or authorization should be canceled when it is no longer
required or there is an abuse of its provisions or unforeseen safety
factors develop. Failure to comply with the waiver or authorization is
cause for cancellation. Cancellation procedures, as applicable, shall
be used as follows:
a. Notify the holder immediately.
b. Verify and document the basis for the cancellation.
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c. Notify the appropriate Service Area office, as well as the issuing
office.
d. Provide the holder with written notice of cancellation, or written
confirmation of a verbal cancellation, with copies to appropriate
offices.
e. Take any other action deemed necessary.
In short, the language of statute, regulation, and FAA Order all make clear that the
granting and revocation of waivers is a discretionary judgment for the FAA to
make with the public interest in aviation safety in mind.
Aerial Banners argues that the revocation of its waiver (i) was unsupported
by substantial evidence in the record, and (ii) was arbitrary and capricious, in that
the FAA failed to follow its own regulations and procedures in Order 7210.3U for
revoking a waiver. We begin with the “substantial evidence” argument, although
in this case that appellation is a misnomer. The substantial evidence standard
governs a challenge to the FAA’s factual conclusions. 49 U.S.C. § 46110(c).3
Aerial Banners agrees that all nine incidents cited in the revocation letter in fact
occurred, and that the administrative record so reflects. Rather, Aerial Banners’
“substantial evidence” argument is that the FAA has overstated Aerial Banner’s
culpability in the incidents, and that the FAA’s response (revocation of the waiver)
3
Substantial evidence challenges may also be raised to formal rulemakings pursuant to 5
U.S.C. § 556-57, or to “agency hearings provided by statute.” 5 U.S.C. § 706(2)(E). No such
challenge is raised here.
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was disproportionate and unfair. This challenge is, in essence, that the agency’s
response was a substantive abuse of discretion. Properly understood, then, this
challenge must be judged by the deferential standard for substantive APA review:
the petitions should be granted only if the FAA “relied on improper factors, failed
to consider important relevant factors, or committed a clear error of judgment that
lacks a rational connection between the facts found and the choice made.” U.S.
Steel Corp., 495 F.3d at 1279. Aerial Banners’ argument is based on the last
prong. It argues that the facts showed pilot error, not deficient oversight by Aerial
Banners management, was to blame for the most serious of the nine safety
incidents, and hence that the FAA’s decision to shut the company down lacks a
rational connection to the facts, which do not show that the company poses a
threat to aviation safety.
Aerial Banners’ substantive APA challenge is deeply flawed. It relies in
large measure on its own characterization of the nine incidents as trivial. The
severity of the incidents may be subject to reasonable dispute, but that militates
against finding the FAA’s response to be an abuse of discretion. In a two year
period, Aerial Banners suffered two crashes, two hard landings, a plane which ran
out of fuel, and a record of making mechanical modifications to its planes without
obtaining proper airworthiness certificates and clearance to fly thereafter. These
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facts have ample connection to the company’s ability to fly its planes safely; we
can hardly conclude the FAA made a clear error of judgment or made a decision
with no rational connection to the facts. Instead, weighing the gravity of these
incidents, and deciding what response best serves the public interest in aviation
safety, is precisely the sort of discretionary judgment where we should defer to the
FAA’s expertise.
Aerial Banners’ also contends that the FAA erred by holding the company
accountable for its pilots’ errors. This argument is unpersuasive both as a factual
matter, as Aerial Banners was not free from fault in the accidents, and as a legal
matter, because the FAA is within its rights to hold Aerial Banners responsible for
pilot errors which violate the terms of a waiver.
First, while Aerial Banners contends its maintenance practices were
spotless, the record suggests otherwise. For example, one of the paperwork
violations which the FAA’s investigation uncovered was that Benyo installed an
new engine on a plane, and then permitted it to be flown without proper
documentation of its airworthiness. And one of the hard landings was attributed in
part to an “inoperative banner release and inadequate installation of the banner
tow-release hook assembly by company maintenance personnel.” This violated
the waiver’s Special Provisions, which require the pilot to make a pre-flight
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inspection and prohibit operation of the plane unless the banner apparatus,
including its release handle, are inspected for satisfactory operation on a daily
basis. And violation of the Special Provisions is itself sufficient grounds for
revocation of the waiver.
Moreover, even if Aerial Banners had a spotless record in its maintenance
and training practices, and the crashes and irregular landings were entirely a result
of its pilots ignoring company policies, the FAA would still be within its
discretion to hold Aerial Banners accountable. The waiver makes clear that the
party to which the waiver is issued, Aerial Banners, is responsible for ensuring
compliance with its conditions, including requirements such as pre-flight
inspection of banner equipment by pilots. The distinction Aerial Banners seeks to
draw between the culpability of its pilots and the culpability of the company itself
is not one the Special Provisions permit. If the FAA wishes to hold Aerial Banner
strictly liable for violations of the waiver’s conditions by company pilots, it is
within its rights under the Special Provisions. And given the FAA’s mandate to
ensure aviation safety, and its broad discretion to grant waivers only where it
“finds the exemption is in the public interest,” 49 U.S.C. § 44701(f), it is also well
within its rights to insist on such Special Provisions in the first place. Since the
waiver may be revoked for violations of the Special Provisions, and the
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administrative record is crystal clear that Aerial Banners pilots violated those
Provisions by flying with faulty equipment, the FAA’s revocation was not
arbitrary and capricious.
In short, the administrative record supports the FAA’s decision to revoke
Aerial Banner’s waiver because the company, through its pilots, violated the terms
of the waiver. And we will defer to the FAA’s decision that revocation of the
waiver is necessary for public safety. Aerial Banners’ substantive APA challenge
must be rejected.
Aerial Banners also raises a procedural APA challenge, contending that the
FAA’s revocation letter violated the agency’s own procedures because it did not
adequately explain the reason for the revocation. This argument is frivolous.
Contrary to Aerial Banners’ insinuation, the FAA’s procedures for revoking a
waiver do not require a revocation letter to contain a detailed explanation of the
factual or legal basis for the agency’s action. As the above-quoted provision of
Order 7210.3U., paragraph 18-1-9(d) makes clear, a revocation letter’s purpose is
simply to notify the affected company of the FAA’s decision. It need not recite
chapter and verse. In any event, it is abundantly clear from the letter that Aerial
Banner’s waiver was revoked for repeated safety infractions; indeed, those
infractions are specifically identified. The FAA followed its regulations and
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provided adequate notice concerning the revocation; no error has been shown in
this respect.
The petition for review is DENIED.
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