Peter Pan Bus Lines, Inc. v. Federal Motor Carrier Safety Administration

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 9, 2006 Decided December 19, 2006

No. 05-1436

PETER PAN BUS LINES, INC. AND
BONANZA ACQUISITION, LLC,
PETITIONERS

v.

FEDERAL MOTOR CARRIER SAFETY ADMINISTRATION,
RESPONDENT

On Petition for Review of an Order of the
Federal Motor Carrier Safety Administration

Jeremy Kahn argued the cause for the petitioners.
Kathy L. Krieger, Craig M. Cibak and Richard P.
Schweitzer were on the joint brief for amici curiae American
Bus Association, Inc. and Amalgamated Transit Union in
support of petitioners.
Robert D. Kamenshine, Attorney, United States Department
of Justice, argued the cause for the respondent. Peter D.
Keisler, Assistant Attorney General, Robert S. Greenspan,
Attorney, United States Department of Justice, Paul M. Geier,
Assistant General Counsel, and Mary F. Withum, Senior Trial
Attorney, United States Department of Transportation, were on
brief.
Before: HENDERSON, TATEL and GRIFFITH, Circuit Judges.
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Opinion for the court filed by Circuit Judge HENDERSON.
Concurring opinion filed by Circuit Judge TATEL.
KAREN LECRAFT HENDERSON, Circuit Judge: Peter Pan
Bus Lines, Inc. and its subsidiary Bonanza Acquisition, LLC
(collectively, Peter Pan) seek review of a decision of the Federal
Motor Carrier Safety Administration (FMCSA), an entity within
the Department of Transportation (DOT). The challenged
decision rejected Peter Pan’s protest of an FMCSA decision
authorizing Fung Wah Transportation, Inc. (Fung Wah) to
operate regular-route passenger transportation between Boston
and New York City. Peter Pan protested Fung Wah’s
certification application on the ground that Fung Wah was
unwilling or unable to comply with the requirements of the
regulations DOT has promulgated under the Americans With
Disabilities Act (ADA), 42 U.S.C. §§ 12101 et seq. The
FMCSA concluded that the language of 49 U.S.C. § 13902,
which authorizes the FMCSA to make compliance findings and
issue certificates registering motor carriers, prevents the
FMCSA from considering whether a certificate applicant is in
compliance with DOT’s ADA regulations. Because the FMCSA
premised its construction on the plain language of the statute,
which it treated as unambiguous, and because we find that the
statutory language is in fact ambiguous, we vacate the FMCSA’s
decision and remand for it to interpret the statute accordingly.
I.
On April 4, 2005 Fung Wah filed an application for motor
passenger carrier authority to operate a passenger bus line
between Boston and New York City. On May 4, 2005 Peter Pan
submitted a protest under 49 C.F.R. § 365.203 based on Fung
Wah’s “asserted unwillingness and/or inability to comply with
regulations of the Secretary implementing the [ADA].” Joint
App. (JA) 15. The FMCSA’s licensing team, however, granted
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Fung Wah a certificate as requested on May 12, 2005,
apparently unaware of Peter Pan’s protest.
On May 16, 2005 Peter Pan filed a motion for rehearing,
asking that the FMCSA “immediately vacate the award of its
certificate to applicant and then render a decision on the merits
only after first taking into account protestants’ serious
allegations regarding fitness” and, “in particular, applicant’s
demonstrated failure to meet its obligations under the Americans
With Disabilities Act to assure the availability of transportation
for all members of our society.” JA 49, 48. On October 26,
2005 the FMCSA issued a decision denying rehearing on the
ground that section 13902(a)(1) “does not permit FMCSA to
withhold registration for failure to comply with ADA
requirements.” Fung Wah Bus Transp., Inc., No. MC-405969
(Oct. 26, 2005) (FMCSA Dec.), reprinted in JA at 58, at 3.
Section 13902(a)(1), enacted as part of the Interstate Commerce
Commission Termination Act of 1995, Pub. L. No. 104-88, 109
Stat. 803 (1995), (ICCTA) provides:
(a) Motor carrier generally.—
(1) In general.—Except as provided in this section,
the Secretary shall register a person to provide
transportation subject to jurisdiction under subchapter
I of chapter 135 of this title as a motor carrier if the
Secretary finds that the person is willing and able to
comply with—
(A) this part and the applicable regulations
of the Secretary [of Transportation] and the
[Surface Transportation] Board;
(B)(i) any safety regulations imposed by the
Secretary;
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(ii) the duties of employers and employees
established by the Secretary under section
31135; and
(iii) the safety fitness requirements
established by the Secretary under section
31144; and
(C) the minimum financial responsibility
requirements established by the Secretary
pursuant to sections 13906 and 31138.
49 U.S.C. § 13902(a)(1).1 The FMCSA determined that the
phrase “applicable regulations” in subsection (a)(1)(A) modifies
the preceding phrase “this part,” which refers to “title 49,
subtitle IV, Part B, which consists of statutory authority
transferred from the [ICC] to the Secretary of Transportation
and the Surface Transportation Board following enactment of
the ICCTA.” FMCSA Dec. at 2. The FMCSA then concluded
that it is without authority to enforce compliance with DOT’s
ADA regulations in the certification process because the ADA
regulations were not promulgated pursuant to Part B and do not
fit in any of the categories identified in subsections (a)(1)(B) or
(a)(1)(C). FMCSA Dec. at 2.
On November 21, 2005 Peter Pan filed a petition for review
challenging the FMCSA’s construction of section 13902(a)(1).

1
The statute was amended during the certification proceeding to
add the language in subsection (a)(1)(B)(ii), which did not appear in
the version the FMCSA quoted in its rehearing decision. Safe,
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy
for Users, § 4113(b), Pub. L. No. 109-59, 119 Stat. 1144, 1725 (2005).
The new language affects neither the FMCSA’s decision nor Peter
Pan’s challenge.
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II.
Because this appeal involves the FMCSA’s “interpretation
of a statute the agency is charged with implementing, we apply
the two-part test of Chevron U.S.A. Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837 (1984).” Pub. Citizen, Inc.
v. Nat’l Highway Traffic Safety Admin., 374 F.3d 1251, 1257
(D.C. Cir. 2004) (parallel citation omitted). “[U]nder the
Chevron two-step, we stop the music at step one if the Congress
‘has directly spoken to the precise question at issue’ because
we—and the agency—‘must give effect to [its] unambiguously
expressed intent.’ ” Northpoint Tech., Ltd. v. FCC, 412 F.3d
145, 151 (D.C. Cir. 2005) (quoting Chevron, 467 U.S. at 842-
43). “But if the statute is silent or ambiguous, we dance on and,
at step two, defer to the Commission's interpretation if it is
‘based on a permissible construction of the statute.’ ” Id.
(quoting Chevron, 467 U.S. at 843). The text of the FMCSA’s
decision certifying Fung Wah makes clear that the Agency
construed section 13902(a)(1) as an unambiguous expression of
the Congress’s intent, thereby triggering review under Chevron
step 1.
In rejecting Peter Pan’s argument that the phrase
“applicable regulations of the Secretary” refers to all of DOT’s
regulations that are applicable to motor carriers, including its
ADA regulations, the FMCSA unequivocally declared: “This
interpretation is not consistent with the plain language of the
statute and the legislative history of the [ICCTA], which enacted
section 13902 into law. The term ‘applicable regulations of the
Secretary’ is clearly meant to modify the term ‘this part.’ ”
FMCSA Dec. at 2 (emphasis added). Thus, the FMCSA
concluded, section 13902(a)(1) “does not permit FMCSA to
withhold registration for failure to comply with ADA
requirements.” Id. at 3 (emphasis added). To the contrary, we
find the text of the statute to be ambiguous.
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The FMCSA rejected Peter Pan’s interpretation in part
because “if ‘applicable regulations of the Secretary’ included all
DOT regulations applicable to motor carriers, sections
13902(a)(1)(B) and (C) would be superfluous, since FMCSA
regulations governing safety and financial responsibility would
fall within section 13902(a)(1)(A).” FMCSA Dec. at 2. The
FMCSA’s reading of “applicable regulations of the Secretary,”
however—to include only regulations applicable to Part B of
Subtitle IV—itself renders superfluous the reference in section
13902(a)(1)(C) to “minimum financial responsibility
requirements established by the Secretary pursuant to section[]
13906” because section 13906 is codified in Part B and financial
requirements established pursuant to it are therefore already
included under section 13902(a)(1)(A).2 Thus, section 13902
contains surplusage under either reading and, as a result, we
cannot say that either proffered construction reflects the
Congress’s unambiguously expressed intent. Cf. NLRB v.
FLRA, 952 F.2d 523, 532 (D.C. Cir. 1992) (“[p]etitioners cannot
plausibly make a Chevron step one argument” to support
interpretation that makes other statutory language “surplusage”)
(emphasis in original). We therefore cannot uphold the
FMCSA’s interpretation under step 1 of Chevron. Nor may we
review it under step 2.
In PDK Laboratories, Inc. v. DEA, 362 F.3d 786 (D.C. Cir.
2004), we recently affirmed a line of circuit decisions which
hold that “deference to an agency's interpretation of a statute is
not appropriate when the agency wrongly ‘believes that
interpretation is compelled by Congress.’ ” 362 F.3d at 798
(quoting Arizona v. Thompson, 281 F.3d 248, 254 (D.C. Cir.

2
While “requirements” is not synonymous with “regulations” used
in subsection (a)(1)(A), the FMCSA in fact established minimum
levels of financial responsibility for passenger motor carriers by
regulation. See 49 C.F.R. pt. 387, subpt. B.
 7

2002)); (citing ITT Indus., Inc. v. NLRB, 251 F.3d 995, 1004
(D.C. Cir. 2001); Transitional Hosps. Corp. v. Shalala, 222 F.3d
1019, 1028-29 (D.C. Cir. 2000); Alarm Indus. Commc’ns Comm.
v. FCC, 131 F.3d 1066, 1072 (D.C. Cir. 1997)); see also Teva
Pharms. USA, Inc. v. FDA, 441 F.3d 1, 4-5 (D.C. Cir. 2006);
Prill v. NLRB, 755 F.2d 941, 956-57 (D.C. Cir. 1985). As we
explained in PDK, Chevron step 2 deference is reserved for
those instances when an agency recognizes that the Congress’s
intent is not plain from the statute’s face. “In precisely those
kinds of cases, it is incumbent upon the agency not to rest
simply on its parsing of the statutory language”—“[i]t must
bring its experience and expertise to bear in light of competing
interests at stake.” PDK, 362 F.3d at 797-98 (citing Chevron,
467 U.S. at 865-66) (footnote omitted). “When it does so it is
entitled to deference, so long as its reading of the statute is
reasonable.” Id. at 798. But here, as in PDK Labs, the Agency
has not done so and “at this stage it is not for the court ‘to
choose between competing meanings.’ ” Id. (quoting Alarm
Indus. Commc’ns Comm., 131 F.3d at 1072) (citing Prill, 755
F.2d at 956-57; Transitional Hosps. Corp., 222 F.3d at 1028-29;
ITT Indus., Inc., 251 F.3d at 1004; Arizona v. Thompson, 281
F.3d at 254). We must therefore remand for the FMCSA to
interpret the statutory language anew. See id. (“The law of this
circuit requires in those circumstances that we withhold Chevron
deference and remand to the agency so that it can fill in the
gap.”).3

3
In this case, unlike PDK, the Agency expressly requested
Chevron deference. Compare Resp’t’s Br. at 18 (invoking Chevron
and stating “ ‘[u]nless the statute resolves the issue, [the Court] must
uphold the [FMCSA] so long as its interpretation is reasonable’ ”
(quoting Safe Food & Fertilizer v. EPA, 350 F.3d 1263, 1268 (D.C.
Cir. 2003) (alterations in original))), with PDK Labs, 362 F.3d at 794
(“DEA neither invokes Chevron . . . nor asks us to give any special
deference to the Deputy Administrator's judgment about the meaning
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For the foregoing reasons, the decision of the FMCSA is
vacated and the case is remanded to the FMCSA to fill the gap
in section 13902(a)(1) by interpreting the ambiguous term
“applicable” in subsection (a)(1)(A), taking into account the
particular statutes and regulations that are enumerated in
subsections (a)(1)(B) and (a)(1)(C). In so ruling, we express no
opinion on whether the construction of section 13902(a)(1) the
FMCSA now advances is permissible under Chevron step 2.
So ordered.

of the provision.”) (ellipsis added). We find this distinction of no
significance because it is “[t]he expertise of the agency, not its
lawyers,” that “must be brought to bear on this issue in the first
instance.” Pub. Citizen v. FMCSA, 374 F.3d 1209, 1218 (D.C. Cir.
2004) (citing SEC v. Chenery Corp., 318 U.S. 80, 87-88 (1943)).
 TATEL, Circuit Judge, concurring: I agree with my
colleagues that section 13902 is not so clear as to allow us to
rule for the FMCSA under Chevron step one. I also agree that
because FMCSA acted under a mistaken belief that the statute
compelled the result it reached we must remand before
moving on to Chevron step two. I write separately to set forth
my serious doubts regarding the reasonableness of FMCSA’s
principal justification for declining to review bus company
ADA compliance during the registration process.

In its brief, FMCSA explains that denying Fung Wah
the registration it seeks “hardly is in the public interest even if
Fung Wah has serious ADA-problems that must be rectified.”
Resp’t’s Br. 32. Amplifying this point at oral argument,
FMCSA counsel told us that even if an applicant carrier
declared its intention to provide low-cost service by operating
buses without wheel-chair lifts, the agency would register that
company, leaving it to the Department of Justice to
investigate. Oral Arg. at 30:49. FMCSA’s position is
puzzling given that Congress, having enacted the statute to
keep motor carriers off the road until they demonstrate they
are willing and able to follow the law, must have understood
that this requirement would lead to temporary sacrifices of
competition. FMCSA’s argument, therefore, must rest on the
proposition that, unlike the interests protected by “the
applicable regulations of the Secretary,” the interests of the
disabled are so unimportant that they must yield to the interest
in competition. If the “applicable regulations of the
Secretary” consisted only of safety regulations, then perhaps
FMCSA’s interpretation would represent a plausible
understanding of congressional intent. But the regulations
promulgated under Part B – which FMCSA concedes it must
consider – go beyond safety to address, among other things,
financial responsibility, 49 C.F.R. § 387, race discrimination,
49 C.F.R. § 374.101, .105, and less weighty interests such as
noise emissions, 49 C.F.R §§ 325.1-325.93, radar detectors,
49 C.F.R § 392.71, and records storage, 49 C.F.R § 379.5.
 2

Absent a satisfactory explanation for why the interests
protected by the Americans with Disabilities Act are less
important than the interests protected by these other
regulations, I doubt very much that FMCSA’s justification
could survive Chevron step two.