Board of County Com'rs of County of Adams v. Isaac, 93-9505

• Citation: 18 F.3d 1492
• Decision Date: 16 March 1994
• Docket Number: No. 93-9505,93-9505
• Parties: The BOARD OF COUNTY COMMISSIONERS OF the COUNTY OF ADAMS; Front Range Airport Authority; Lloyd Equities, doing business as Centerport International, Inc.; and United Parcel Service, Inc., Petitioners, v. Frederick M. ISAAC, Regional Administrator, Northwest Mountain Region, Federal Aviation Administration; Federal Aviation Administration, an agency of the United States; Administrator, Federal Aviation Administration; Secretary, United States Department of Transportation; and Department of Transportation, an agency of the United States, Respondents.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1492

18 F.3d 1492

The BOARD OF COUNTY COMMISSIONERS OF the COUNTY OF ADAMS Front Range Airport Authority; Lloyd Equities, doing business as Centerport International, Inc.; and United Parcel Service, Inc., Petitioners, v. Frederick M. ISAAC, Regional Administrator, Northwest Mountain Region, Federal Aviation Administration; Federal Aviation Administration, an agency of the United States Administrator, Federal Aviation Administration; Secretary United States Department of Transportation; and Department of Transportation, an agency of the United States, Respondents.

No. 93-9505.

United States Court of Appeals Tenth Circuit.

March 16, 1994.

David H. Wollins (Michael A. Zahorik, McGeady Weston Sisneros & Wollins, Denver, CO; and Robert J. Loew, Adams County Atty., Brighton, CO, with him on the briefs), McGeady Weston Sisneros & Wollins, Denver, CO, for petitioners.

Peter R. Steenland, Jr. (Myles, E. Flint, Acting Asst. Atty. Gen., and Andrea Nervi Ward, Dept. of Justice; Daphne A. Fuller, Office of Chief Counsel, Federal Aviation Admin., and Karl B. Lewis, Office of Asst. Chief Counsel, FAA Northwest Mountain Region, with him on the briefs), Dept. of Justice, Washington, DC, for respondents.

Before MOORE, Circuit Judge, McWILLIAMS, Senior Circuit Judge, and COOK, Senior District Judge. ^*

JOHN P. MOORE, Circuit Judge.

This petition for review centers on whether the Federal Aviation Administration acted arbitrarily and capriciously in reversing a decision to approve and partially fund the construction of facilities for a major air cargo hub at the Front Range Airport, a general aviation facility in the Denver metropolitan area. Upon review, we conclude substantial evidence supports the agency's determination, and the FAA did not act as accused. We therefore affirm.

With the prospective closing of Denver's Stapleton International Airport, cargo carriers operating there needed a new location to continue their businesses. Many carriers found Denver's plans for Stapleton's replacement, Denver International Airport (DIA), undesirable because they located cargo operations at the airport's northern end. Carriers contended that site did not provide them ready access to interstate highways.

Seeing the need for an alternative to DIA, Adams County, the Front Range Airport Authority (Airport Authority), and Centerport International, Inc. submitted to the FAA, in 1991, a proposal to expand the existing general aviation facility, Front Range Airport (Front Range), into an air cargo hub. Adams County borders the City and County of Denver, and DIA and Front Range are relatively close.

In March 1992, in its Record of Decision (ROD), the FAA approved the Front Range expansion to accommodate sizable air cargo traffic anticipated in the Denver metropolitan area. The FAA assumed the absence of this expansion would leave unattended the needs of air cargo carriers because of Stapleton's closing and the carriers' rejection of DIA's northern air cargo site.

Later that month, the FAA issued a funding letter informing the parties the agency would allocate $15 million under the Airport Improvement Program to Adams County and the Airport Authority for fiscal year 1992 "subject to revision after bids have been opened; and ... subject to signed leases with the air cargo carriers." The letter expressed no commitment, however, to provide funds beyond 1992 and conditioned an intention to supply fiscal 1993 funding upon the enactment of "new legislation."

On the basis of these FAA documents, the Airport Authority expended funds to begin the expansion and to solicit cargo carriers. At least one carrier signed a long-term agreement with Centerport to lease property adjacent to Front Range; one company which provides support services paid the Airport Authority for a twelve-month lease option; and others expressed interest in Front Range Airport if the FAA provided funding. Through letters and meetings, the Airport Authority kept the FAA informed of its progress and submitted formal applications for funding.

In August 1992, Denver decided to change its plans and applied to the FAA for approval of cargo facilities on the southern end of DIA. In response, Federal Express, abandoning its earlier preference for Front Range, and Airborne Express entered long-term leases with DIA. In the meantime, "signed leases" between the Airport Authority and air freight carriers, upon which the FAA had predicated its original ROD, never materialized. ¹

In November 1992, the regional administrator of the FAA issued an order withdrawing the March ROD and FAA approval of the Front Range project. The order stated, in part:

Since issuance of the ROD eight months ago, circumstances have changed considerably, drawing into question the purpose and need for the [Front Range] expansion project and eliminating much of the uncertainty regarding the viability of DIA as an alternative for air carrier cargo operations. Recently several of the major cargo carriers that previously had made tentative commitments to locate their base of operations at [Front Range], made new tentative commitments to base their operations at DIA. These commitments were contingent upon relocation of the areas on DIA currently designated for cargo operations from the north to the south side of the airport.

The order set forth other changed circumstances, the "willingness of cargo carriers to relocate to DIA" and Denver's willingness to accommodate the needs of the carriers. The regional administrator concluded the changed circumstances were significant and "supersede[d]" the previously perceived need for the Front Range expansion.

The following month, the FAA approved DIA's newly-situated cargo facilities. As a matter of judicial notice, we recognize DIA is poised to open with a southern air cargo facility in place.

The Board of County Commissioners for Adams County and other interested parties claim this court should void the reversal order and reinstitute funding because the reversal order is not supported by substantial evidence as required by 49 U.S.C. app. Sec. 1486(e) and 5 U.S.C. Sec. 706(2)(E), and because the FAA acted arbitrarily and capriciously in reversing its initial stance as condemned in 5 U.S.C. Sec. 706(2)(A). Petitioners also raise a conflict claim to justify the reinstatement of the original ROD and contend the FAA should be estopped from denying the money it initially promised.

I.

The Airport Authority, Adams County, Centerport, and United Parcel Service contend the FAA does not have substantial evidence to support its reversal order as required by 49 U.S.C. App. Sec. 1486(e) and 5 U.S.C. Sec. 706(2)(E). Petitioners argue the FAA did not consider all the evidence it found persuasive in reaching its original decision and failed to show a rational connection between the facts and its conclusions. They assert the FAA ignored the superior attributes of Front Range over cargo facilities on DIA's southern side, including Front Range's proximity to transportation routes, low development and operating costs, and new investment opportunities. Also, the FAA ignored the signed long-term leases and commitments from cargo carriers to locate at Front Range if the FAA provided funding.

Petitioners contend the failure to consider these commitments to Front Range and other factors demonstrate the FAA acted arbitrarily and capriciously in violation of 5 U.S.C. Sec. 706(2)(A). The FAA failed to provide enough detail of the relevant factors underlying its reversal decision. Furthermore, they claim, the FAA based its reversal order on irrelevant factors: the willingness of two of the seven largest carriers to locate at DIA and DIA's decision to switch the site of cargo operations to accommodate carriers. Petitioners also argue the FAA chose between Front Range and DIA while earlier it recognized the two would compete for the air cargo business. Contending DIA's decision to move its cargo facilities to the south did not eliminate the need for Front Range, petitioners claim the agency should have chosen Front Range if the FAA believed it was compelled to fund only one cargo facility. Petitioners argue the FAA's asserted reason for choosing DIA over Front Range, DIA's closer proximity to interstate highways, did not overcome the reasons the FAA favored Front Range originally. Moreover, petitioners believe the FAA acted in response to passenger airlines and not cargo carriers, and many cargo operators hastily secured space at DIA because of the uncertainty of federal funding for Front Range after the FAA decided to support DIA's southern cargo facilities. Petitioners fault the FAA for crediting the tentative commitments of cargo carriers to DIA when it would not credit their earlier tentative commitments to Front Range. The FAA played favorites when it should have remained neutral. Therefore, the FAA's decision, according to petitioners, was irrational.

The Administrative Procedure Act provides a reviewing court shall

(2) hold unlawful and set aside agency action, findings, and conclusions found to be--

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; [or]

....

(E) unsupported by substantial evidence

....

5 U.S.C. Sec. 706. The standards of review in 5 U.S.C. Sec. 706 are each separate, Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 284, 95 S.Ct. 438, 441, 42 L.Ed.2d 447 (1974) (citation omitted), and applicable to an agency's modification of an earlier action. Motor Vehicle Mfrs. Ass'n of the U.S. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 41, 103 S.Ct. 2856, 2865-66, 77 L.Ed.2d 443 (1983). In addition, 49 U.S.C. App. Sec. 1486(e) states the FAA's factual findings are conclusive if supported by "substantial evidence."

"Substantial evidence" in 5 U.S.C. Sec. 706(2)(E) means more than a mere scintilla but less than the weight of the evidence and refers to relevant evidence which reasonably supports a...