Steenholdt v. Federal Aviation Administration

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.