Steenholdt, Randy v. FAA, No. 01-1331 (D.C. Cir. 2003)

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 7, 2002 Decided January 10, 2003

No. 01-1331

Randy Steenholdt,

Petitioner

v.

Federal Aviation Administration,

Respondent

On Petition for Review of an Order of the

Federal Aviation Administration

Jason A. Dickstein 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 for

respondent. On the brief was R. Brooke Lewis, Special

Attorney to the Attorney General.

 Before: Sentelle, Rogers and Garland, Circuit Judges.

Opinion for the Court filed by Circuit Judge Sentelle.

Sentelle, Circuit Judge: Petitioner Randy Steenholdt

challenges the decision of the Federal Aviation Administra-

tion ("FAA") not to renew his authority to examine certain

aircraft repairs for compliance with the FAA's airworthiness

regulations. Because the decision is "committed to agency

discretion by law," 5 U.S.C. s 701(a)(2) (1996), we have no

jurisdiction to review the substance of the FAA's decision.

Petitioner also argues that the Administration failed to follow

its own procedures. Insofar as there was any such failure, it

was without prejudice to any right of the Petitioner, and we

therefore deny the petition for review.

I

The Federal Aviation Act ("FA Act") provides that the

FAA Administrator "may delegate to a qualified private

person ... the examination, testing, and inspection neces-

sary" to issue certificates identifying aircraft as compliant

with the standards set forth in the Federal Aviation Regula-

tions, and may "rescind this delegation ... at any time for

any reason." 49 U.S.C. s 44702(d) (1997). The Administra-

tor has appointed a network of private individuals to serve as

Designated Engineering Representatives ("DERs"), who per-

form certain examinations, tests, and inspections required to

determine compliance with FAA airworthiness regulations.

The Administrator has delegated the authority to select

DERs to Managers of local Aircraft Certification Offices

("ACOs"). 14 C.F.R. s 183.11 (2002). DER appointments

are for one-year periods and may be renewed for additional

one-year periods at the Administrator's discretion. 14 C.F.R.

s 183.15.

The FAA evaluates a DER's performance annually to

determine whether that DER is performing at a satisfactory

level. If the DER's performance is not satisfactory, the FAA

may take corrective action ranging from counseling to nonre-

newal. 14 C.F.R. s 183.15 lists the circumstances under

which the FAA may choose not to renew a DER's designa-

tion. The regulation recites five specific bases for termi-

nation, and a sixth open-ended basis: "[f]or any reason the

Administration considers appropriate." 14 C.F.R.

s 183.15(6). If the DER requests review of that decision, a

first-level review is conducted by the appointing ACO Manag-

er. If the DER seeks further review, a second-level review is

conducted by the Manager of the Directorate. Designated

Engineering Representative (DER) Guidance Handbook,

FAA Order No. 8110.37C p 706 (Sept. 30, 1998).

In 1991, the Administrator issued Order 8130.24 "establish-

ing ... procedures for the termination or nonrenewal of the

certificate" for among others, a designated engineering repre-

sentative. The order recites as a purpose that "these proce-

dures are intended to ensure that due process is accorded

before a final decision is made on termination or nonrenewal

of the ... designations." FAA Order 8130.24, p 1. The

order, by its terms, specifies "conditions that may require the

termination of a designation or delegation and list[s] the

procedures that field offices should employ to accomplish such

actions." FAA Order 8130.24, p 4(b). The order notes that

the FAA developed the procedures therein because "designa-

tion holder[s] must be provided with adequate notice and

afforded the opportunity to respond to the proposed action."

FAA Order 8130.24, p 4c.

The order directs that the appropriate FAA office will

provide written notice to the DER of the proposed nonrenew-

al of the designation. The notice "shall include" among other

things the "[s]pecific reasons for the proposed ... nonrenew-

al, including examples of unacceptable conduct, when applica-

ble" and "permission to request reconsideration." FAA Or-

der 8130.24, p 6a(1).

Upon reconsideration, if the Manager of the ACO confirms

the proposed nonrenewal, he will send a letter to the DER,

clearly stating "the decision and the justification therefor"

and responding "to each of the arguments presented by the

[DER]." FAA Order 8130.24, p 6a(4). The letter shall also

state that the DER is permitted to request second-level

review with the Directorate Manager responsible for the

relevant ACO. Id.

If second-level review occurs and the Directorate Manager

concurs in the decision not to renew the DER, the Director-

ate Manager will send a letter to the DER "reciting the final

decision and justification." FAA Order 8130.24, p 6b(2). The

letter will "respond to each of the arguments presented by

the [DER]." Id. In addition, the letter will state that the

FAA's decision is final but that the DER may petition for

review in a U.S. Court of Appeals within 60 days. Id.

In 1992, Petitioner Steenholdt received designation from

the Chicago ACO as a Company DER for Northwest Airlines,

authorizing him to operate as a DER only for Northwest

Airlines. Gregory Michalik, Airframe Branch Manager of the

Chicago ACO, was appointed as Petitioner's FAA Advisor.

Shortly thereafter, Petitioner received his Consultant DER

authorization, which allowed him to offer DER services to

others seeking such services. Michalik served as Petitioner's

FAA Advisor for Petitioner's Consultant designation as well.

In November of 1995, oversight of Petitioner's work as a

Consultant DER was transferred to Manzoor Javed. Peti-

tioner and Javed did not get along well and had disputes

about the quality of Petitioner's work. Some of Petitioner's

clients began complaining about Javed, and Javed began

writing unfavorable reviews of Petitioner's work. By Sep-

tember of 1997, the FAA had become concerned about Peti-

tioner's work. Javed and ACO engineer Joe McGarvey re-

ported that Petitioner had exceeded the authority of his

designation by approving a repair for an engine anti-icing

valve attachment when his authorization included only air-

frame repairs. Further, the ACO found that Petitioner did

not address the problem fully in his submittals to the FAA.

In 1998, the ACO reported further problems with Petition-

er's work. In February of 1998, Petitioner attended a coun-

seling meeting regarding the quality of his work and his

performance as a DER. Subsequently, Javed and McGarvey

stated that Petitioner failed to properly apply the Federal

Aviation Regulations, failed to show sound judgment in his

submittals, and failed to include sketches and figures in his

engineering analyses. They recommended that Petitioner

attend another counseling meeting.

The ACO reported that Petitioner's work continued to

deteriorate in 1999. Javed reported that Petitioner failed to

show sound judgment or sound technical competence with

respect to a project involving the landing weight of an air-

craft. Around this time, Javed recommended that Petition-

er's designation be limited to repairs. (Originally, Petitioner

had both repair and alteration authority.) McGarvey went so

far as to recommend that Petitioner's Consultant DER desig-

nation not be renewed. The FAA did renew Petitioner's

Consultant DER designation at this time but limited his

authorization to repairs only.

In 2000, after further unsatisfactory reviews, Javed recom-

mended nonrenewal of Petitioner's designation, stating that

his "DER performance is lacking in spite of two face-to-face

meetings within the last two years. He requires excessive

oversight[,] compromising the purpose of the Designee Sys-

tem. In order to maintain the integrity of the Designee

System, I recommend his DER appointment should not be

renewed." (Letter from Prather to Dickstein of 1/11/2001, at

enclosure 6 (DER Performance Evaluation Form for period

from August 1999 to September 2000, completed by Javed).)

In September 2000, Petitioner's designation was renewed,

but only for a period of three months. On October 26, 2000,

Mary Ellen Schutt (Manager of the Airframe & Administra-

tive branch of the Chicago ACO) notified Petitioner that she

did not intend to renew his DER designation, effective Janu-

ary 1, 2001. She listed several areas in which Petitioner's

performance was lacking during the previous year and during

the three years prior. Schutt sent Petitioner a second letter,

on November 1, 2000, highlighting specific problems with

several of Petitioner's Engineering Authorization submittals.

On November 6, 2000, Petitioner through counsel request-

ed reconsideration of Schutt's proposed nonrenewal. Along

with this request, Petitioner filed a list of points and answers

to the points raised in Schutt's two letters relating to the

proposed nonrenewal. Petitioner also attached letters from a

few of his clients, indicating that difficulties with Javed were

the cause of Petitioner's apparently deteriorating perfor-

mance.

On November 20, 2000, Schutt sent Petitioner a letter

extending Petitioner's DER designation through September

2001 while Petitioner's request for reconsideration awaited

resolution. On January 11, 2001, Royace Prather, Manager

of the Chicago ACO, sent a letter to counsel for Petitioner

responding to a letter requesting reconsideration of the

FAA's proposal not to renew Petitioner's designation.

Prather's letter rejected the request and confirmed that the

FAA would not renew Steenholdt's consultant DER appoint-

ment beyond its then-current expiration date of March 1,

2001. Prather reviewed Petitioner's performance and stated

that despite meetings and counseling, Petitioner "has not

acted on the counseling provided him and his performance is

still lacking in the key areas we identified in our previous

letter of October 26, 2000." (Letter from Prather to Dick-

stein of 1/11/01, at 1.) Prather's letter included as enclosures

several letters and evaluations of Petitioner that detailed

problems with Petitioner's performance. Prather included

negative factual assertions about Petitioner that Schutt had

not mentioned earlier in her recommendation of nonrenewal.

Prather's letter also gave Petitioner notice that "standard

procedure gives you permission to request a second level re-

consideration" by the Directorate Manager responsible for

the local ACO. (Id. at 5.)

Petitioner, through counsel, sought second-level review

with the Manager of the Small Airplane Directorate. Peti-

tioner requested that the Directorate overturn the decision of

the local ACO or allow Petitioner to meet with the Director-

ate Manager and to file a written document in support of his

position. (Petitioner's Notice of Appeal to Small Airplane

Directorate of 2/12/01 (incorrectly marked as 2/12/00).) The

Directorate Manager responded to Petitioner's counsel by

letter dated February 22, 2001. The Directorate Manager

stated that after reviewing all "available data on this matter,"

he "did not find sufficient evidence that the earlier decision

for non-renewal be overturned." (Letter from Gallagher to

Dickstein of 2/22/01.) The Directorate Manager offered Peti-

tioner the opportunity "to meet with the Manager of the

Small Airplane Directorate, or his representative, should [the

Directorate Manager] not be available" and requested that

Petitioner file his supporting document prior to any such

meeting. (Id.)

Petitioner submitted a document in support of his position

on March 23, 2001. On May 18, 2001, Petitioner, accompa-

nied by counsel, met with the Directorate Manager's repre-

sentative, Melvin Taylor, other ACO employees, and agency

counsel. At this meeting, Petitioner submitted evidence in

support of his position. Petitioner's counsel attempted to

question Javed (who was in attendance); however Taylor

explained that Petitioner would not be permitted to question

any FAA employees. The FAA presented no evidence and

made no argument. At the conclusion of Petitioner's presen-

tation of evidence, Taylor directed Petitioner and his counsel

to leave the room. Agency personnel remained in the meet-

ing room to discuss Petitioner's case.

On May 29, 2001, the Directorate Manager informed Peti-

tioner by letter that he was affirming the ACO's decision not

to renew Petitioner's DER designation. The Directorate

Manager stated that he "considered all the available informa-

tion including that which [Petitioner] and [Petitioner's] attor-

ney presented at the [May 18] meeting." (Letter from

Gallagher to Petitioner of 5/29/01, at 1.) The Directorate

Manager stated that he had not found sufficient evidence to

overturn the decision of the Chicago ACO and that "the

decision to non-renew has been confirmed by this office based

on [Petitioner's] DER performance in the following key areas:

Integrity, Sound Judgement [sic], Cooperative Attitude; Ap-

plication of Regulations, Policy, and Guidance; Quality of

Submittals; and Adherence to DER Procedures." (Id.) The

letter referenced five previous letters in which Petitioner's

deficiencies were discussed at length.

 Petitioner filed a timely petition for review with this Court

on July 27, 2001. The FAA argues that this Court lacks

jurisdiction to review its nonrenewal decision because both

the substance and the procedure of that decision are commit-

ted to agency discretion by law.

II

A

There is a strong presumption of reviewability under the

Administrative Procedure Act ("APA"), Abbott Labs. v. Gard-

ner, 387 U.S. 136, 140 (1967); however, the APA expressly

precludes judicial review of agency action "committed to

agency discretion by law." 5 U.S.C. s 701(a)(2). Agency

action is committed to agency discretion by law when "the

statute is drawn so that a court would have no meaningful

standard against which to judge the agency's exercise of

discretion." Heckler v. Chaney, 470 U.S. 821, 830 (1984). If

no "judicially manageable standard" exists by which to judge

the agency's action, meaningful judicial review is impossible

and the courts are without jurisdiction to review that action.

Id. This Court has noted that judicially manageable stan-

dards "may be found in formal and informal policy statements

and regulations as well as in statutes." Padula v. Webster,

822 F.2d 97, 100 (D.C. Cir. 1987). In determining whether

agency statements create such a standard, the Court inquires

whether the statements create binding norms by imposing

rights or obligations on the respective parties. Id.

The FA Act very clearly commits the renewal/nonrenewal

designation to agency discretion. Section 44702(d)(2) empow-

ers the Administrator of the FAA to rescind a DER designa-

tion "at any time for any reason the Administrator considers

appropriate." The regulations promulgated pursuant to the

FA Act also give the Administrator of the FAA unfettered

discretion, in that they allow rescission of a designation "[f]or

any reason the Administration considers appropriate." 14

C.F.R. s 183.15(d)(6). Although the exception to reviewabili-

ty created by the "committed to agency discretion by law" is

a "narrow exception" applicable only where "statutes are

drawn in such broad terms that in a given case there is no

law to apply," Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 410 (1970) (internal quotations omitted), this is just

such a case. With regard to the substance of the FAA's

nonrenewal decision, there is no law to apply. See Adams v.

FAA, 1 F.3d 955, 956 (9th Cir. 1993); Greenwood v. FAA, 28 F.3d 971, 974-75 (9th Cir. 1994).

Petitioner argues that the conclusive language of section

701 of the APA applies only to bar review under the APA.

Petitioner contends that section 46110 of the FA Act specifi-

cally provides for review of orders, like the one for which he

seeks review in this case, "issued by the Secretary of Trans-

portation [or the Administrator of the FAA]." 49 U.S.C.

s 46110(a). He further contends that the "committed to

agency discretion" bar of section 701 of the APA has no

applicability to this independent basis of review. We dis-

agree. As the Ninth Circuit stated in Adams, "[a]lthough the

chapter of the [FA] Act relevant to this case provides for

judicial review of any order issued by the Board or Secretary

of Transportation ..., there is no judicially-manageable stan-

dard by which we may review the FAA administrator's

decision not to renew Adams' designation." 1 F.3d at 956.

That chapter simply outlines judicial review of FAA orders

generally; 49 U.S.C. s 46110 identifies who can apply for

review, in what court review may be had, deadlines for filing,

and so forth.

Petitioner suggests that the "substantial evidence" stan-

dard in s 46110 provides us with a means to review the

FAA's present decision. However, this argument begs the

question: substantial evidence of what? For any decision

made by the Administrator, there will always be substantial

evidence that the decision was made "at any time for any

reason." Because there are no constraints on the Adminis-

trator's discretion, there certainly are no judicially managea-

ble standards by which to judge the Administrator's action.

Petitioner's mistake is that he confuses the presence of a

standard of review with the existence of law to apply. Were

we to accept this as a basis for review of the Administrator's

action, there would be "law to apply" in every agency action;

no agency action could ever be committed to agency discre-

tion by law because the "substantial evidence" standard of

section 706(2)(E) of the Administrative Procedure Act applies

generally to all agency action. Petitioner's interpretation

would render section 701(a)(2) meaningless.

B

In addition to arguing that the FAA erred in the substance

of its decision, a subject over which we have no jurisdiction,

Petitioner additionally asserts that the FAA failed to follow

its own procedures - specifically, the procedures set out for

the renewal of designations in FAA Order 8130.24. In sup-

port of our jurisdiction to review this claim, Petitioner relies

upon United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260 (1954). The Accardi doctrine requires federal agencies to

follow their own rules, even gratuitous procedural rules that

limit otherwise discretionary actions. "Courts, of course,

have long required agencies to abide by internal, procedural

regulations ... even when those regulations provide more

protection than the Constitution or relevant civil service

laws." Doe v. United States Dep't of Justice, 753 F.2d 1092,

1098 (D.C. Cir. 1985) (referring to employment regulations);

see also American Farm Lines v. Black Ball Freight Serv.,

397 U.S. 532, 539 (1970). However, Petitioner's allegation of

procedural error avails him nothing. Insofar as Petitioner

demonstrates any violation of the procedures in Order

8130.24, such violations are without prejudice, let alone sub-

stantial prejudice.

Petitioner alleges several deficiencies in the FAA's review

process. He contends that the FAA ignored the arguments

he made at his first-level review, and objects to what he

perceives as the addition of new complaints against him at his

first-level review. Petitioner is incorrect. The FAA's series

of letters to Petitioner, including the final order, identify

Petitioner's deficiencies generally and give specific examples.

The final order lists Petitioner's problem areas and refers

back to the prior letters to set forth the basis of the FAA's

final decision. In addition, the FAA clearly addresses Peti-

tioner's arguments in Prather's letter on first-level review.

With regard to the allegedly new complaints lodged against

Petitioner during first-level review, Petitioner claims that

Prather raised issues about Petitioner's approval of a power-

plant part and about Petitioner's approval of certain certifica-

tion test plans. However, it appears that Petitioner may

have raised both of these issues initially. (Letter from Dick-

stein to Small Airplane Directorate of 11/6/00, at 8 (raising

powerplant part issue).) It is unclear whether Petitioner or

the FAA first raised the certification test plan issue. Never-

theless, Petitioner has not shown that the addition of allega-

tions has prejudiced him to any extent. Furthermore, noth-

ing in the FAA's rules precludes the ACO Manager from

basing his determination on reasons not stated in the original

proposal of nonrenewal. Fried v. Hinson, 78 F.3d 688, 691

(D.C. Cir. 1996).

With regard to second-level review, Petitioner again con-

tends that the FAA failed to address his arguments. Peti-

tioner also argues that the FAA failed to identify any specific

reasons for its decision. These arguments fail for the same

reasons as Petitioner's similar arguments with respect to the

first-level review.

Petitioner also claims that the FAA failed to maintain a

record of the second-level review meeting. In addition, Peti-

tioner objects to the FAA refusal to permit him to question

FAA personnel present at the second-level review meeting, to

the Directorate Manager's failure to attend the meeting, and

to what Petitioner perceives as ex parte communications

among FAA personnel after the meeting.

With regard to these claims, it appears that Petitioner

mistakes the FAA's review process for a formal adjudication.

Petitioner identifies no FAA rule that gives him a right to

question FAA personnel at review meetings, nor does he

explain how he is prejudiced by the Directorate Manager's

absence from the meeting or by the alleged ex parte commu-

nications. Similarly, with respect to the possibly weak record

of the second-level review hearing, Petitioner (who was pres-

ent at the meeting) has presented no theory under which the

weak record prejudiced his opportunity to access the proce-

dures of the FAA.

In sum, the FAA acted in substantial compliance with its

gratuitous procedural rules, and any departure therefrom was

in no way prejudicial to Petitioner. Petitioner had notice of

and an opportunity to respond to all allegations at every step

in the FAA's process. Because Petitioner has not been

prejudiced by the FAA's alleged departure from its gratu-

itous procedures, the Accardi doctrine - even if it provides an

independent basis for review in other cases (a question we

need not answer today) - does not give Petitioner a basis for

review.

III

In sum, we lack jurisdiction to review the FAA's decision

not to renew Petitioner's DER designation. As to Petition-

er's allegation of violations of the FAA's own procedure, we

find none that cause him any substantial prejudice. Accord-

ingly, we deny the petition for review.