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CSI Aviation Services, Inc. v U.S. Department of Transportation

Case No. 09-1307 (C.A. D.C., Apr. 1, 2011)

The Department of Transportation ordered CSI Aviation Services, Inc., to cease and desist from acting as a broker of air-charter services for the federal government. Because the agency failed to justify its authority to issue the order, we grant CSI’s petition for review.

I

Since 2003, CSI has been under contract with the General Services Administration (GSA) to broker air-charter service for various federal agencies. On March 10, 2009, CSI won a competitive bid to renew its status as a GSA contractor through 2014. A few days prior, on March 6, the Department of Transportation (DOT) sent CSI a letter requesting information to determine whether the company was engaging in “indirect air transportation” without the certificate of authority required by the Federal Aviation Act, 49 U.S.C. § 41101(a).

After the company provided the requested information, DOT sent another letter, stating that it had “review[ed] the information submitted by CSI” and “consult[ed] with GSA.” Letter from Samuel Podberesky, Assistant Gen. Counsel for Aviation Enforcement Proceedings, DOT, to David M. Hernandez, Counsel for CSI (Oct. 16, 2009) [hereinafter Oct. 2009 Letter to CSI]. The letter then declared:
Based on this information, CSI has been acting as an unauthorized indirect air carrier in violation of section 41101 with respect to business transacted via its GSA schedule listing. Violations of section 41101 also constitute unfair and deceptive practices and unfair methods of competition in violation of 49 U.S.C. § 41712.
Violations of these provisions subject CSI and its principals to the assessment of civil penalties . . . of up to $27,500 for each violation. Each day such violation continues is a separate violation.
. . . .
. . . Accordingly, CSI is warned to cease and desist from any further activity that would result in it engaging in indirect air transportation. If CSI immediately ceases from entering into new contracts pursuant to the GSA schedule, and ceases all its activities governed by existing GSA contracts within 180 days from the date of this letter, we will refrain from taking enforcement action regarding its past violations as discussed above.
Id.
 

 

Judge(s): Thomas Griffith
Jurisdiction: U.S. Court of Appeals, D.C. Circuit
Related Categories: Administrative Law
 
Circuit Court Judge(s)
Thomas Griffith
David Sentelle
David Tatel

 
Petitioner Lawyer(s) Petitioner Law Firm(s)
David Hernandez

 
Respondent Lawyer(s) Respondent Law Firm(s)
Kristen Limarzi U.S. Department of Justice
Robert Nicholson U.S. Department of Justice
Paul Geier U.S. Department of Transportation
Peter Plocki U.S. Department of Transportation
Mary Withum U.S. Department of Transportation

 

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Click the maroon box above for a formatted PDF of the decision.
review. whether socal had violated the law--and whether service for gsa. csi timely filed this petition for review in black's law dictionary 226 (8th ed. 2004). some courts gsa contracts within 180 days from the date of this 5 as a common carrier for compensation," id. 40102(a)(25) the agency has since issued a one-year extension of the original if csi is not a common carrier under its gsa contract, then it the agency's rationale at the time of decision." pension interlocutory nature." id. at 178 (citations omitted). the circuit judges. u.s.c. 41101(a). in this case, dot failed to explain why the federal information submitted by csi" and "consult[ed] with gsa." indirect provision of "air transportation." but this reading develop a record before granting judicial review. and third, for various federal agencies. on march 10, 2009, csi won a avoid acting arbitrarily or capriciously in implementing its 11 did the statement of position admit of no ambiguity, but it "provid[ing]" "transportation of passengers or property by interpretation," ciba-geigy, 801 f.2d at 438 n.9, we held that adequate understanding of the statute. promised rulemaking has yet to occur, and csi's exemption is official sent letters to twenty private companies directing argued september 21, 2010 decided april 1, 2011 does not engage in "air transportation" and its services for from unscrupulous contractors." id. whether the agency has acted reasonably and within its "superseded the department's warning letter and completely justice, paul m. geier, assistant general counsel, u.s. preliminary determination that the [company's] sprinkler heads factual issues and the creation of a record," as well as the exercise violated the law. the court dismissed the case for lack of for determining whether current or proposed transportation additional investigation or explanation." fla. power & light "csi has been acting as an unauthorized indirect air carrier in the supreme court set the standard for finality in bennett v. product hazard'; and [] yet to issue any compliance orders." id. significant burden on csi. the agency effectively declared united states court of appeals 41101(a). the term "air carrier" means "a citizen of the undisputed that csi's service is indirect air transportation." in the absence of any disputed facts that would bear on this enforcement action, with key facts still in dispute, standard csi alone chose to challenge dot's determination, asking 2 spear, 520 u.s. 154, 178 (1997). an agency action is final violations of these provisions subject csi and its of transportation (dot) sent csi a letter requesting transportation," id. 40102(a)(5), which in turn means the dot argues that this case is moot for two reasons. first, requirement. in support of csi's petition, gsa wrote to dot [dot]," id. 1. the circular acknowledges that "[p]ersons the risk of prosecution at an uncertain point in the future--a obvious reading of the statute, however, is that a company can grounds that the act requires a certificate of authority only for 41101 with respect to business transacted via its gsa transportation" is defined to include "interstate air company to the painful choice between costly compliance and opinion for the court filed by circuit judge griffith. view that . . . the provision of air services for u.s. 10 noting that "an agency may not avoid judicial review final agency action for three reasons. first, the agency had csi to continue operating. if the agency does not see fit to without further factual development.2 services administration (gsa) to broker air-charter service "legal issue . . . fit for judicial resolution." standard oil, 449 signed by the assistant secretary for aviation and department of transportation, argued the cause for operator needs economic authority as an `air carrier' from "common carrier" is a well-known term that comes to us in "indirect air transportation" without the certificate of criminal penalties." id. at 437. change its legal position or extend csi's exemption, the does not believe it is covered by the "air transportation" capricious, and hence unlawful. where we "cannot evaluate pronouncement was sufficiently burdensome to make six sector." letter from kris e. durmer, gen. counsel, gsa, to [was] warranted and that a complaint should initiate law was only a "threshold determination that further inquiry letter, we will refrain from taking enforcement action comers who are willing to pay the fare, "without refusal." 4 exemption, which is now scheduled to expire on april 14, 2012. present[ed] a `substantial product hazard.'" id. at 729. that case is shutting down its operations, csi also submitted a petition to disputed facts, the case did not present a fully crystallized operating as a gsa contractor is engaged in the provision of air charter brokers under gsa contract require agency provide an explanation that will enable the court to evaluate indiscriminately"). but whatever the particular test, some type no. 09-1307 business are amplified by the looming threat of a legal kibosh. consumer product safety act, "clearly involve[d] the resolution of determine conclusively its jurisdiction to regulate; [] yet to the federal aviation act provides that "a person proceedings." id. at 241. this contrasts sharply with dot's 41101. position. its initial warning letter clearly took the position that at 435. the legal question we review concerns the meaning of f.2d 516 (5th cir. 1993) (concluding that an air carrier had imposed on csi. as the supreme court explained, the ftc's question, our review of the agency's legal position would not disclosing a substantial interest in an order issued [under the noting that "this distinction determines whether or not the premature intervention in the administrative process, our warning letter and the exemption order taken together amount dot failed to address this critical issue both in its cease- the companies refused, the epa would consider the pesticides business." id. at 243. here, however, dot's legal position the agency's letter imposed an immediate and significant the more baffling because csi twice informed dot that it (emphasis added). third, the ftc's enforcement action against socal did almost every aspect of its long-term planning, and impaired 14 decisionmaking process" and is not merely of a "tentative or other fields," as long as they can "show that the private providers of "transportation for hire which they perform in contracts. "acquisition [of air service] by the federal 613 f.3d 1131, 1137 (d.c. cir. 2010). in ciba-geigy, an epa principals to the assessment of civil penalties . . . of up to carrier" and sometimes not. indeed, dot itself has taken this transportation ordered csi aviation services, inc., to cease the agency "plans to hold a rulemaking on this subject [that] consideration or possible modification." ciba-geigy, 801 docket no. ost-2009-0311, at 4 (apr. 14, 2010) (dot). the government are not common carriage. letter from david m. resolved the controversy" before us. id. at 10. actually harms the company now. csi is in the business of absence of disputed facts that would bear on the statutory certification. the letter declared in no uncertain terms that the federal aviation act, which is antecedent to and distinct statutory interpretation--whether an air charter broker that have yet to produce any definitive legal conclusions. but definitive statement that "the provision of air services for u.s. portion of the federal aviation act--once in csi's letter to respondents. with her on the brief were robert b. nicholson all three factors from ciba-geigy are present here. first, operations by air constitute private or common carriage," oil of california (socal) filed a lawsuit arguing that the ftc "complementary" to bennett. reckitt benckiser, inc. v. e.p.a., 1 the government relies on ftc v. standard oil co. of robert s. rivkin, gen. counsel, dot (march 1, 2010). dot appears to have assumed that, as a broker of charter action is subject to judicial review varies based on the from entering into new contracts pursuant to the gsa indirect air transportation. if csi immediately ceases the warning letter." resp't's br. 11-12. and second, the merely temporary. thus, dot's assurances provide nothing provider, not as a common carrier. under the gsa contract, david m. hernandez argued the cause and filed the interpretation. see 5 u.s.c. 706(2). among other things, 2 muscle, dot cannot now evade judicial review. "holds itself out to the public" and is willing to take all dot has issued a "definitive" statement of the agency's legal "benefit from a more concrete setting." ciba-geigy, 801 f.2d to all comers. thus, within the scope of the contract, csi does the very heart of the present controversy. denying the right of gsa contractors to continue operating there was a "reason to believe" it had--depended on a large international affairs, indicated that dot "remain[ed] of the f.2d at 436-37. the challenged agency action on the basis of the record before it is clear from standard oil that courts should take care authority to allow it to bring a misbranding action before brokers operating under gsa contract. the act states that "an for the foregoing reasons, the petition for review is continues is a separate violation. . . . . that "the provision of air services for u.s. government employed a term with a well-settled common law meaning). ii operations. thus, whereas socal had "the burden of there is no need to withhold review pending further factual this requires the agency to "take whatever steps it needs to this is not such a case. dot took a definitive legal position perhaps one could argue that if a company is a common id. the central issue in this case is whether dot properly the law cannot support dot's interpretation, but we leave the viability of csi's ongoing business. it also put the lawsuit seeking injunctive and declaratory relief. for review" in this court. 49 u.s.c. 46110(a). to avoid taken a final legal position that is fit for judicial review and foreclose all pre-enforcement challenges. our most instructive found a lack of finality where the commission sent a letter common carrier. see woolsey v. nat'l transp. safety bd., 993 in the meantime, csi has continued to provide air sprinkler heads qualified as "consumer products" under the (d.c. cir. 1986), which we have recently described as united states undertaking by any means, directly or for fear of prosecution. having thus flexed its regulatory the company's ability to fend off competitors. indeed, the judicial review." 801 f.2d at 439. dot's legal united states department of transportation and fundamental question in reviewing an agency action is not to inject themselves into fact-bound agency proceedings determine whether the sprinkler heads present[ed] a `substantial approach in the past. in advisory circular no. 120-12a, benefit guar. corp. v. ltv corp., 496 u.s. 633, 654 (1990). legal question that was amenable to immediate judicial business and outside the scope of its holding out." id. at 4.h. finality. id. at 238. conducting such business hold economic authority from the risk of prosecution, ciba-geigy filed a pre-enforcement resisted, claiming that the epa was misreading its legal review of final agency orders." puget sound traffic ass'n v. obtain such a hearing at all. under its contract with the gsa as a dedicated service cease-and-desist order was anything other than arbitrary and since 2003, csi has been under contract with the general review of agency action "has been judicially restricted to before: sentelle, chief judge, tatel and griffith, action must be one in which "rights or obligations have been the federal government. because the agency failed to justify before this court. yet dot's brief inexplicably claims, "it is any further activity that would result in it engaging in taken a "definitive" legal position concerning its statutory in the present case, it appears that csi has performed of course, whether an agency letter threatening enforcement gave no indication that it was subject to further agency government agencies through the gsa contracting system and, equally important, the question at issue there, whether holds a certificate issued under this chapter." 49 u.s.c. authority from the department to act as indirect air carriers." circumstances. in reliable automatic sprinkler co. v. consumer not appear to provide "transportation of passengers or government agencies through the gsa contracting system exemption will expire and the company will face the full force based on this information, csi has been acting as an raymond l. lahood, secretary, of "agency expertise" prior to court involvement. id. at 734. department to act as indirect air carriers." final order, the term refers to a commercial transportation enterprise that csi. 9 u.s. at 239 (quoting abbott labs. v. gardner, 387 u.s. 136, co. v. lorion, 470 u.s. 729, 744 (1985). it appears to us that statutory authority. the agency must not only adopt a of the adverse legal determination that dot has announced. standard oil differs from the present case in three key v "to cease and desist from any further activity that would result cast a shadow over csi's customer relationships, tainted the private sector and does not present the consumer v. of the department of transportation the company's operations unlawful and warned the company explaining at length why the act's certification requirements carrier in any aspect of its business, it necessarily acts "as a following the registration cancellation process required by dot granted csi a temporary exemption that was merely by choosing the form of a letter to express its to csi. at the very least, this cast a cloud of uncertainty over in favor of following common law usage where congress has antitrust laws had no significant "effect upon [socal's] daily 3 final order, docket no. ost-2009-0311, at 4 (apr. 14, 2010) "private carriage versus common carriage of persons or csi aviation services, inc., hearing, id. at 242, csi faced the more troubling question of of holding out to the public is the sine qua non of the act of transacted via its gsa schedule listing," oct. 2009 letter to property" (apr. 24, 1986), the agency provided "guidelines very purpose of dot's legal pronouncements, accomplished in it engaging in indirect air transportation." oct. 2009 letter constitute unfair and deceptive practices and unfair companies that operate "as a common carrier," 49 u.s.c. finding of a "reason to believe" that socal had violated the expertise and fact-finding capability. in the presence of resp't's br. at 13-14. not only is this a disputed point, it is at 13 through 2014. a few days prior, on march 6, the department commission act. id. at 234. in the midst of the ftc's permissible reading of the authorizing statute, but must also when it marks "the `consummation' of the agency's requirement. the exemption order reiterated dot's position aircraft as a common carrier." 49 u.s.c. 40102(a)(25), schedule, and ceases all its activities governed by existing proper functioning of the agency and [imposed] a burden [on] without certification from the agency. this order imposed a 8 gsa do not fall within the certification requirement of the "there are a number of ways in which the federal agencies the letter was not definitive because the commission had "yet to practical burden on ciba-geigy, ordering the company to id. product safety commission, 324 f.3d 726 (d.c. cir. 2003), we $27,500 for each violation. each day such violation advance planning. the daily difficulties of running such a mary f. withum, senior trial attorney, u.s. briefs for petitioner. respondents aviation enforcement proceedings, dot, to david m. with six other companies, was to prompt csi to shut down its women, inc., 537 u.s. 393, 402 (2003) (noting presumption been premature: it would have caused "interference with the conclude otherwise in the future, after demonstrating a more statute. facing the choice between costly compliance and the enforcement action upon finding "reason to believe" that docket no. ost-2009-0311, at 4 (apr. 14, 2010) (dot), and 153 (1967)). granting socal's petition for review would have did not definitively state its legal position. the ftc's stated agencies through the gsa contracting system constitutes an methods of competition in violation of 49 u.s.c. on petition for review of an order on november 25, 2009, seeking another way to avoid conundrum that we described in ciba-geigy as "the very 41712. bennett highlights the importance of avoiding disruption csi protested and explained why it believed dot to be respects. first, unlike in this case, the ftc in standard oil information to determine whether the company was engaging the statute, we find it impossible to conclude that the agency's [us], the proper course . . . is to remand to the agency for case on this point is ciba-geigy corp. v. epa, 801 f.2d 430 act] . . . may apply for review of the order by filing a petition review. segregate its operations, acting sometimes "as a common unauthorized indirect air carrier in violation of section that gsa contractors require certification. federal aviation act. and desist from acting as a broker of air-charter services for iii dot for an emergency exemption from the certification lacked the requisite "reason to believe" the company had misreading its statutory authority, the agency refused to authority required by the federal aviation act, 49 segment of the public as being willing to transport for hire, and third, dot has imposed an immediate and will most likely change the legal landscape that gave rise to complied by terminating their status as contractors for gsa. argument is mistaken. in standard oil, the ftc initiated an second, the petition in standard oil did not raise a purely transportation "as a common carrier." before reaching this them to modify their pesticide labels. the letters stated that if responding to the charges made against it" in a formal the courts." id. at 242. here, by contrast, we face a clean dot sent another letter, stating that it had "review[ed] the civil aeronautics bd., 536 f.2d 437, 438-39 (d.c. cir. 1976). open the possibility that the government may reasonably whether it was willing to risk serious penalties in order to operating as common carriers in a certain field" may be 12 (dot). the extension order does not revise the agency's position that "csi has been acting as an unauthorized indirect air contract engage in indirect air transportation and so require government . . . is distinct in several ways from acquisition in constitutes an engagement in air transportation," final order, for common carriage make no sense for government griffith, circuit judge: the department of seventeen of the twenty companies complied but ciba-geigy dilemma [the supreme court has found] sufficient to warrant from the common law. see try scheidler v. nat. org. for aviation act requires a certificate of authority for air charter 2009 letter to csi]. the letter then declared: whether dot's grant of an exemption for csi has rendered more than the mere possibility that the agency might allow schedule listing. violations of section 41101 also . . . accordingly, csi is warned to cease and desist from logistics, both of which require a substantial amount of the agency to withdraw the cease-and-desist letter on the csi provides charter service to government agencies only, not protection related concerns typically at issue in the private this not only raises the specter of future harm to csi, but air transportation "as a common carrier" and therefore certification from dot despite the statutory provision that carriage is clearly distinguishable from its common carriage authority. id. at 436. second, the case presented "a purely that brokers conducting such business hold economic the epa's assertion of its statutory authority was reviewable carrier in violation of section 41101 with respect to business change its legal position. instead it issued an order granting gen. counsel for enforcement proceedings, dot (nov. 19, issue, however, we must first consider whether dot has i petitioner its authority to issue the order, we grant csi's petition for acted "as a common carrier" in offering services pursuant to (dot).1 enforcement action. in light of ciba-geigy, however, this not impose the same magnitude of hardship that dot has competitive bid to renew its status as a gsa contractor engagement in air transportation, necessitating that brokers granted. definitive position on a general question of statutory negotiated contracts to members of the music industry six other companies received similar letters. all six have allowed that holding out on an all-comers basis to a term. under the relevant part of the statute, "air this case moot. question of statutory interpretation with no disputed facts. december 2009. concluded that air charter brokers that operate under gsa indirectly, to provide air transportation." id. 40102(a)(2). 7 after the company provided the requested information, department of transportation, and peter j. plocki, deputy for the district of columbia circuit informing a sprinkler company that it "intended to make a inapposite here because it lacked two key factors for reviewability. that purchase air charter broker services . . . are protected of the administrative decisionmaking process, but it does not legal" question of "statutory interpretation." id. at 435. in the 2009). constitutes an engagement in air transportation, necessitating flights for the federal government, csi was engaged in the substantial burden on csi, and the disputed statutory common carrier" in all aspects of its business. the more given dot's complete failure to explain its reading of hernandez, counsel for csi, to samuel podberesky, assistant letter from samuel podberesky, assistant gen. counsel for authority underlying the order is fully fit for judicial review development that might clarify the issue. from whether csi itself has violated the law. bidding for air-travel contracts and arranging air-charter violation of section 41101." oct. 2009 letter to csi. after assistant general counsel. air carrier may provide air transportation only if the air carrier requires certification only for those who provide air tentative determination that socal might be violating the dot dated november 19, 2009, and again in csi's brief certification requirement. in dot's view, this exemption iv 40102(a)(25), and that csi's charter flights for the federal interstate "transportation of passengers or property by aircraft to a definitive statement of dot's legal position. "not only determined" or "from which legal consequences will flow." see final order, docket no. ost-2009-0311 (mar. 3, 2011) we reject dot's mootness arguments. the agency's "conform to the new labeling requirement on pain of civil and 6 and kristen c. limarzi, attorneys, u.s. department of hernandez, counsel for csi (oct. 16, 2009) [hereinafter oct. other gsa contractors terminate their air charter operations second, this case presents a "purely legal" question of we turn at last to the merits of csi's petition. the csi a temporary exemption from the certification standard oil's quasi-monopoly violated the federal trade "misbranded," leading to enforcement actions and penalties. agency granted csi a temporary exemption from the statutory action in a case like this one requires the completion of a full body of unresolved facts, best sorted out by the ftc with its property by aircraft as a common carrier." id. 40102(a)(25). scheduled to expire in april 2011. the exemption order, requires a certificate of authority. 49 u.s.c. 40102(a)(25). and-desist order and in its brief to this court. this failure is all regarding its past violations as discussed above. question, there was no benefit in waiting for the agency to failed to engage with the special statutory definition of that california, 449 u.s. 232 (1980), to argue that final agency limited segment of the public might be enough to qualify as a because it had "held itself out to the public or to a definable


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