Penobscot Air Services, Ltd. v. F.A.A.

• Decision Date: 09 October 1998
• Docket Number: No. 98-1133,98-1133
• Citation: 164 F.3d 713
• Parties: PENOBSCOT AIR SERVICES, LTD., Petitioner, v. FEDERAL AVIATION ADMINISTRATION, Respondent. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 713

164 F.3d 713

PENOBSCOT AIR SERVICES, LTD., Petitioner, v. FEDERAL AVIATION ADMINISTRATION, Respondent.

No. 98-1133.

United States Court of Appeals First Circuit.

Heard Oct. 9, 1998.

Decided Jan. 19, 1999.

Joseph D. Kuchta, with whom Kuchta & Brinker were on brief for petitioner.

John S. Koppel, Attorney, with whom Frank W. Hunger, Assistant Attorney General, and Anthony J. Steinmeyer, Attorney, United States Department of Justice, Civil Division, were on brief for respondent.

Before BOUDIN, Circuit Judge, BOWNES, Senior Circuit Judge, and LYNCH, Circuit Judge.

BOWNES, Senior Circuit Judge.

This case comes to us on a petition for review of a final decision of the Federal Aviation Administration (FAA), pursuant to 49 U.S.C. § 46110. Penobscot Air Services, Inc. (Penobscot) filed with the FAA a complaint alleging that the Knox County Board of Commissioners (Knox County), owner of the Knox County Regional Airport, violated Penobscot's rights under the Federal Aviation Act (the Act). Specifically, Penobscot alleged that Knox County violated provisions of the Act that bar unjust discrimination, see 49 U.S.C. § 47107(a)(1), (5), and the award of an "exclusive right," see 49 U.S.C. § 40103(e). The complaint also claimed that Penobscot was entitled to an evidentiary hearing pursuant to 49 U.S.C. §§ 46101, 46104. The FAA rejected Penobscot's claims; we affirm.

I BACKGROUND

Penobscot is a tenant leasing space at Knox County Regional Airport. It is a fixed-base operator (FBO) at the airport, which means it provides "services similar to those that a service station provides for those who operate automobiles." City of Pompano Beach v. F.A.A., 774 F.2d 1529, 1532 n. 5 (11th Cir.1985) (internal quotation marks omitted). It also provides air charter service.

Penobscot filed a formal complaint at the FAA in 1997, charging that Knox County had violated Penobscot's rights under the Federal Aviation Act. Specifically, Penobscot alleged that Knox County had violated provisions of the Act and applicable grant agreements in two ways: by charging Penobscot higher rent than another FBO (Downeast Airlines) that leased space at the airport; and by prohibiting Penobscot from conducting its aircraft repair business on the same terms as another company, Barnstorm Aviation, because Knox County allegedly did not require Barnstorm to comply with its minimum standards, as it required of Penobscot.

The Director of the FAA Office of Airport Safety and Standards evaluated Penobscot's complaint, the answer filed by Knox County, and the documentary evidence submitted by the parties, and issued a decision dismissing all of Penobscot's claims. The 28-page Record of Decision (ROD) analyzed the issues and concluded that Knox County did not violate its federal obligations. The ROD also found that Penobscot was not entitled to an evidentiary hearing in this case.

Penobscot administratively appealed the FAA's initial agency decision, reiterating the same arguments. The FAA Associate Administrator for Airports issued the agency's final decision affirming the ROD. This appeal followed.

II Standard of Review

The applicable standard of review for FAA action is provided by the Federal Aviation Act and, by default, the Administrative Procedure Act (APA), 5 U.S.C. § 706 (1994). See Public Citizen, Inc. v. F.A.A., 988 F.2d 186, 196 (D.C.Cir.1993). These statutes require us to apply different standards of review depending upon what type of determination we are reviewing.

A. The FAA's Factual Findings

Under the Federal Aviation Act (the Act), we review the FAA's findings of fact to determine whether they are "supported by substantial evidence." 49 U.S.C. § 46110(c) (1994). Findings of fact that are so supported are "conclusive" and may not be disturbed on appeal. Id.

As the Court has explained in the context of the APA, substantial evidence review is conducted on the record considered as a whole. ¹ Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456 (1951); see Greater Orlando Aviation Auth. v. F.A.A., 939 F.2d 954, 958 (11th Cir.1991). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera, 340 U.S. at 477, 71 S.Ct. 456 (internal quotation marks omitted), quoted in American Textile Mfrs. Inst. v. Donovan, 452 U.S. 490, 522, 101 S.Ct. 2478, 69 L.Ed.2d 185 (1981) (ATMI ); see also F.T.C. v. Indiana Fed'n of Dentists, 476 U.S. 447, 454, 106 S.Ct. 2009, 90 L.Ed.2d 445 (1986). The reviewing court must take into account contradictory evidence in the record. Universal Camera, 340 U.S. at 487-88, 71 S.Ct. 456 (The reviewing court must consider "the record in its entirety ..., including the body of evidence opposed to the [agency's] view."); see Greater Orlando Aviation Auth., 939 F.2d at 958. But "the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence." ATMI, 452 U.S. at 523, 101 S.Ct. 2478 (internal quotation marks omitted).

In Allentown Mack Sales & Serv., Inc. v. N.L.R.B., 522 U.S. 359, 118 S.Ct. 818, 823, 139 L.Ed.2d 797 (1998), the Court equated the substantial evidence standard with "whether on this record it would have been possible for a reasonable jury to reach the [agency's] conclusion." The "substantial evidence" test "gives the agency the benefit of the doubt, since it requires not the degree of evidence which satisfies the court that the requisite fact exists, but merely the degree that could satisfy a reasonable factfinder." Id. at 828. This is an "objective test," id., so, for example when the agency "purports to be engaged in simple factfinding, ... it is not free to prescribe what inferences from the evidence it will accept and reject, but must draw all those inferences that the evidence fairly demands," id. at 829; see Indiana Fed'n of Dentists, 476 U.S. at 454, 106 S.Ct. 2009. ² The agency's findings "must ... be set aside when the record before a Court of Appeals clearly precludes the [agency's] decision from being justified by a fair estimate of the worth of the testimony of witnesses or its informed judgment on matters within its special competence or both." Universal Camera, 340 U.S. at 490, 71 S.Ct. 456.

B. The agency's decisions on legal issues.

In view of Section 46110's silence as to the standard for reviewing nonfactual matters, the standard of review for such matters is provided by section 10(e) of the Administrative Procedure Act. Public Citizen, 988 F.2d at 196.

Errors of law are reviewed by the court de novo. See 5 U.S.C. § 706 ("[T]he reviewing court shall decide all relevant questions of law."); Bureau of Alcohol, Tobacco and Firearms v. Federal Labor Relations Auth., 464 U.S. 89, 97 n. 7, 104 S.Ct. 439, 78 L.Ed.2d 195 (1983); Dubois v. United States Dep't of Agric., 102 F.3d 1273, 1284 (1st Cir.1996); Howard v. F.A.A., 17 F.3d 1213, 1215 (9th Cir.1994). "The legal issues presented--that is, the identification of governing legal standards and their application to the facts found--are, by contrast [to factual findings], for the courts to resolve, although even in considering such issues the courts are to give some deference to the [agency's] informed judgment" in applying statutory terms if the statute is silent or ambiguous on the issue. Indiana Fed'n of Dentists, 476 U.S. at 454, 106 S.Ct. 2009.

That deference is described in the familiar two-step test of Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-44, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), which applies to the FAA as to other agencies. "On a pure question of statutory construction, our first job is to try to determine congressional intent, using 'traditional tools of statutory construction.' If we can do so, then that interpretation must be given effect, and [agency regulations] must be fully consistent with it." N.L.R.B. v. United Food & Commercial Workers' Union, Local 23, 484 U.S. 112, 123, 108 S.Ct. 413, 98 L.Ed.2d 429 (1987) (UFCW ) (emphasis added) (quoting I.N.S. v. Cardoza-Fonseca, 480 U.S. 421, 446-48, 107 S.Ct. 1207, 94 L.Ed.2d 434 (1987)). Thus, if the legislative intent is clear, we do not defer to the agency and we end the Chevron analysis at step one. See Duckworth v. Pratt & Whitney, Inc., 152 F.3d 1, 5-6 & n. 6 (1st Cir.1998).

We reach the second step of Chevron if "the statute is silent or ambiguous with respect to the specific issue"; then "the question for the court is whether the agency's answer is based on a permissible construction of the statute." UFCW, 484 U.S. at 123, 108 S.Ct. 413 (quoting Chevron, 467 U.S. at 843, 104 S.Ct. 2778). "Under this principle, we have traditionally accorded the [agency] deference with regard to its interpretation of the [statute] as long as its interpretation is rational and consistent with the statute." Id.

Even where such deference is due, the agency's "explication" of its reasoning must be "not inadequate, irrational or arbitrary." Allentown Mack, 118 S.Ct. at 822 (internal quotation marks omitted); see id. at 826 (The APA "establishes a scheme of reasoned decisionmaking," under which "[n]ot only must an agency's decreed result be within the scope of its lawful authority, but the process by which it reaches that result must be logical and rational.") (internal quotation marks omitted); Bureau of Alcohol, Tobacco and Firearms, 464 U.S. at 97, 104 S.Ct. 439 (explaining that reviewing court "must not rubber-stamp ... administrative decisions") (alteration in original). The reviewing court remains "the final authority on issues of statutory construction." Pompano Beach, 774 F.2d at 1540; see 5 U.S.C. § 706(2)(A).

C. Review of FAA's Other Action and Conclusions

With respect to other agency action, findings, and conclusions, the APA requires the reviewing court to hold them unlawful and set them aside if they are found to be "arbitrary,...