Thunderbird Propellers v. Fed. Aviation Admin., 98-9520

Decision Date13 September 1999
Docket NumberNo. 98-9520,98-9520
CourtU.S. Court of Appeals — Tenth Circuit


[Copyrighted Material Omitted] Edward A. McConwell, (Catherine E. Moore on the brief), Mission, Kansas, for Plaintiff-Appellant.

Robert P. Vente, (Peter J. Lynch, Assistant Chief Counsel on the brief), Washington, D.C., for Defendants-Appellees.

Before BRORBY, HOLLOWAY and LUCERO, Circuit Judges.

HOLLOWAY, Circuit Judge.

The Federal Aviation Administration (FAA), on January 22, 1998, issued an Emergency Order of Revocation revoking Thunderbird Propellers, Inc.'s (Thunderbird) Air Agency Certificate for various alleged violations of federal aviation regulations. I App. at 1. Thunderbird immediately appealed the order and sought a hearing before an administrative law judge.

The ALJ conducted a hearing on February 22, 1998, and announced his Oral Initial Decision and Order, I App. 74 97, on February 27, 1998. The judge dismissed six of the eight counts against Thunderbird but found Thunderbird had intentionally falsified records that Thunderbird was required to keep and maintain pursuant to Federal Aviation Regulations (FARs) 43.12(a), 43.13(a), 145.57 and 145.61. I App. at 88 (Count III).1 The judge further found that Thunderbird had worked on a propeller while its air certificate was suspended. Id. at 90 (Count V). This was a violation of FAR 145.3.2

Thunderbird appealed the ALJ's order to the National Transportation Safety Board (NTSB). The NTSB adopted an Opinion and Order on March 26, 1998, denying Thunderbird's appeal and affirming the emergency order of revocation as modified by the ALJ, and affirming his initial decision. I App. 99-107. Thunderbird then appealed the NTSB's decision to this court.

We are asked to consider three issues: (1), whether the "stale complaint rule," 49 C.F.R. § 821.33, mandates dismissal of the complaint against Thunderbird;(2), whether the record contains substantial evidence to support the ALJ's findings as to Counts III and V; and(3), whether violations of Count III and V warrant a revocation penalty. We exercise jurisdiction under 49 U.S.C. § 44709 and must affirm the NTSB's order unless it is arbitrary, capricious or otherwise contrary to law. Copsey v. NTSB, 993 F.2d 736, 738 (10th Cir. 1993). We conclude that the order was not in error and affirm.


Thunderbird was a certified repair station operating under an air agency certificate. From March through July 1996 Randy Foster was an aviation safety inspector for the FAA. In March he visited Thunderbird's station at Wiley Post Airport in Oklahoma City. He observed Thunderbird using MS nuts during the overhaul of propellers manufactured by Hartzell Propeller Inc. (Hartzell). I App. at 108-10. Hartzell did not approve of the use of MS nuts for its propellers; instead, the manufacturer-approved nut was the A-2043-1 nut. " . . on an aluminum prop, it holds the hub halves together, and on steel hub props, it holds the clamp that holds the blade on the propeller." I App. at 110.

Foster informed the president of Thunderbird, Paul Finefrock, that the substitution of MS nuts for A-2043-1 nuts was improper. I App. at 148-49. Finefrock acknowledged Thunderbird was using MS nuts as substitutes, II App. at 196, because they were significantly cheaper than the A-2043-1 nuts. I App. at 148. Finefrock further explained that Foster's predecessor inspector had approved Thunderbird's practice of using MS nuts. II App. at 208. The ALJ found that MS nuts are as airworthy as A-2043 nuts. I App. at 88.

During the March inspection, the FAA obtained a copy of work order #2152 which stated that Thunderbird had used A-2043 nuts on the overhaul of a propeller but that this was not correct. I App. 112; I App. at 109-13; II App. at 285-87. FAA regulations require a repair station to keep copies of work orders for two years. I App. at 181, 183-84. The FAA further found that in work orders #2000 and #2156, Thunderbird represented that it had overhauled propellers pursuant to Hartzell's OH Manual # 117D. II App. at 302-06; 310-13. Hartzell's manual authorizes only the A-2043 nut. II App. at 320; 301 ("Where a Hartzell part number is specified for a fastener, use of replacement parts which do not provide these controls is unacceptable."). However, Tommy Allison, a former FAA employee, testified at the administrative hearing that under FARs 21.303, 43.13(b) and FAA advisory circular 4313-1, use of MS standard hardware is acceptable to the FAA. II App. at 220-21. He further testified that "common hardware such as nuts and bolts are exempted" from the FAA approval process and that Thunderbird was authorized to make repairs using MS nuts "as long as [Thunderbird] uses materials that will cause the product to be equal to its original condition." Id. at 221-22.

Foster again attempted to inspect Thunderbird's station in June and July of 1996, I App. at 108-10, but was denied access to the facility. As a result, on July 10, 1996, the FAA issued an emergency order suspending Thunderbird's certificate until Thunderbird permitted the inspection. Id. Thunderbird appealed the order to the NTSB and petitioned this court, filing an emergency motion to stay the FAA's order. We denied the emergency motion. Thunderbird Propellers, Inc. v. United States, No. 96-9525 (10th Cir. 1996)(unpublished disposition).

In August 1996, Jeffrey Rowray delivered to Thunderbird aircraft N777SM for repair of an oil leak in the propeller. II App. at 245, 248-50. Rowray told Foster, and Foster testified, that Thunderbird Propellers performed maintenance on the propeller, including removal and installation. II App. at 229-30, 244. On two occasions, Finefrock contacted Rowray and asked him to fly the plane to test the repairs. II App. at 245-45; 254-55. During these tests, Finefrock informed Rowray of the work that had been done on the plane.

On September 19, 1996, Thunderbird permitted the FAA to inspect its facilities and withdrew its petition before our court. The FAA withdrew its order of suspension. During this round of inspections, Foster obtained another copy of work order #2152. The reference to A-2043 nuts had been crossed out and the copy carried the notation: "Record corrected August 26, 1996. Should have been MS 20365-624." I App. at 125; II App. at 307-09. Finefrock testified the "correction" was made on advice from counsel. II App. at 211.


Thunderbird argues that Counts III and V should be dismissed pursuant to the "stale complaint rule" of 49 C.F.R. § 821.33, as had other counts. The "stale complaint rule" operates as a form of statute of limitations, requiring dismissal of charges "[w]here the [FAA's] complaint states allegations of offenses that occurred more than six months prior to the FAA advising [the certificate holder] as to the reasons for the proposed action . . . ." 49 C.F.R. § 821.33. The FAA concedes that the conduct constituting Counts III and V occurred more than six months prior to the issuance of the Emergency Order of Revocation.

However, the "stale complaint rule" contains an exception which the FAA argues applies here. If the FAA's complaint alleges that the certificate holder lacks the qualifications to hold the certificate, then the "stale complaint rule" does not apply. Id. To determine whether the "lack of qualifications" exception applies, courts use a two-step analysis. Zukas v. Hinson, 124 F.3d 1407 (11th Cir. 1997). First, if the complaint alleges a lack of qualifications, the ALJ is required to determine whether the complaint presents an issue of qualifications, assuming the allegations to be true. Id. at 1410-11 n.7. Qualifications cover more than technical proficiency, also, including judgment and integrity. See Borregard v. NTSB, 46 F.3d 944, 947 (9th Cir. 1995); Twomey v. NTSB, 821 F.2d 63, 68 (1st Cir. 1987). Second, if the complaint presents an issue of qualifications, then the matter proceeds to a hearing on the issue of qualification. Zukas v. Hinson, 124 F.3d at 1410-11 n.7.3 Id.; see also Administrator v. Sorenson, No. EA-4191, 1994 WL 250085 ( NTSB, June 3, 1994).

We are persuaded the "lack of qualifications" exception applies. The FAA's instant complaint presents an issue of qualifications because Count III alleges Thunderbird intentionally falsified required records and Count V alleges Thunderbird operated while under suspension. These allegations alone implicate Thunderbird's qualifications. See Cowell v. NTSB, 612 F.2d 505, 506-07 (10th Cir. 1980)(making false statements to the FAA makes the stale complaint rule inapplicable); see also Borregard, 46 F.3d at 947 ("The law is well-settled that '[a]n Inspection Authorization holder who knowingly misrepresents a logbook entry bearing on the condition of an aircraft . . . clearly lacks the judgment a qualified certificate holder is expected and required to possess.'")(quoting Administrator v. Rice, 5 NTSB 2285 (1987)).


Thunderbird next argues that there was not substantial evidence to support the ALJ's findings with regard to Counts III and V. We review legal conclusions de novo but must accept findings of fact as conclusive if they are supported by substantial evidence. Cowell, 612 F.2d at 506.

Count III states that Thunderbird intentionally falsified maintenance records in violation of 14 C.F.R. § 43.12(a). Section 43.12(a) provides in relevant part:

No person may make or cause to be made:

(1) Any fraudulent or intentionally false entry in any record or report that is required to be made, kept, or used to show compliance with any requirement under this part . . . .

Id. To prove intentional falsification, the FAA must show Thunderbird made a knowing misrepresentation of a material fact in a required record. See ...

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