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Teton Historic Aviation Foundation v. United States

United States District Court, District of Columbia

March 31, 2017

TETON HISTORIC AVIATION FOUNDATION, et al., Plaintiffs,
v.
UNITED STATES OF AMERICA, et ah, Defendants.

          MEMORANDUM OPINION [DKTS. #111, #112]

          RICHARD J. LEON United States District Judge

         Plaintiffs Teton Historic Aviation Foundation and Teton Avjet LLC ("the Tetons") operate a non-profit organization dedicated to maintaining historic aircraft. In order to undertake the maintenance of military aircraft, they require replacement parts, which they sometimes obtain from surplus aircraft that the Department of Defense ("DOD") releases for sale to the public. Plaintiffs bring this suit to challenge the classification of certain parts it wants, which parts DOD and related sub-agencies (together, hereinafter, "DOD" or "the Government") classified as unavailable for release to the public. It also challenges various other aspects of DOD's process for selling parts to the public or destroying parts that it does not sell to the public, as the case may be. This case is currently before the Court on cross-motions for summary judgment based on the administrative record. [Dkts. #111, #112]. Upon consideration of the pleadings, the administrative record, and the relevant case law, the Court concludes that plaintiffs have not presented any legal basis to invalidate DOD's classification decisions or the way DOD executed its discretion in disposing of surplus aircraft parts. Accordingly, the defendants' motion [Dkt. #112] is GRANTED and the plaintiffs' motion [Dkt. #111] is DENIED.

         BACKGROUND

         I will not recite the detailed chronology of the controversy that gives rise to this case because it can be found at Teton Historic Aviation Found, v. Dep 't of Defense, 785 F.3d 719 (D.C. Cir. 2015) and in the January 18, 2013 decision [Dkt. #84] that gave rise to that appeal. A brief summary of the facts will suffice. Plaintiffs, the Tetons, won an auction that entitled them to request parts from five surplus military aircraft and to purchase, at the auction price, whichever of those parts DOD policy would allow to be released. Alternatively, they could pass on the option to purchase if the parts to be released were not worth the auction price. Between the time the Tetons won the auction and the time DOD issued a decision about which requested parts it would release, the agency changed its policy pursuant to a report by the Government Accountability Office that had recommended tightening controls on surplus military equipment. The new policy made many previously available parts unexpectedly unavailable to the Tetons.[1]The agency also evaluated for the first time a number of parts from the aircraft that the Tetons had bid on. The parts being classified for the first time were assigned Demil Code D, which meant they were unavailable. Not being satisfied with the parts they would receive, the Tetons began a protracted discussion with DOD challenging that the parts should be made available. They also objected to the time and cost for removing the parts from the planes, even though, once again, these matters were explicitly left up to DOD in the option contract. After the time had passed for the Tetons to exercise their right to purchase the parts, the sub-agency responsible for handling surplus military equipment destroyed the aircraft.[2] Subsequently, the third-party contractor responsible for facilitating the auction and the ensuing transaction formally notified the Tetons that it was exercising its right under the contract to cancel the sale. DOD has since set aside other aircraft of the same type in order to ensure plaintiffs could receive the parts if so entitled.

         The Tetons filed suit to challenge DOD's decision that certain parts were unavailable for sale.[3] The prior District Court Judge handling this case dismissed the claims for lack of standing, holding that plaintiffs might not be able to get the parts they sought even with a favorable outcome. See 917 F.Supp.2d 129');">917 F.Supp.2d 129 [Dkts. #84, #85]. On appeal, our Circuit Court reversed. Teton, 785 F.3d 719. The Government argued before the Circuit that DOD had no obligation to put the parts up for sale even if the Tetons prevailed on the question of how parts should be classified. Therefore, the Government reasoned, plaintiffs could not expect a legal victory to redress their injuries. The Circuit agreed with the premise, but disagreed that it made plaintiffs' injury unredressable. Although DOD indeed "might do almost anything with its own property whether Teton wins or loses, " id. at 726, and despite the fact that "no [] rule or law would force the [DOD] to do anything at all" with respect to the surplus parts, id. at 727, it was still reasonably likely based on prior experience that DOD would release the parts for sale if they were classified differently upon review. The Circuit therefore remanded for merits proceedings, that is, to decide whether DOD was required to reclassify, as available to be released, the parts plaintiffs want.[4]

         On remand, plaintiffs amended their complaint slightly, this time including more factual allegations purporting to show that the parts pose no safety concern and also including a more specific request for relief. See Motion to Amend Am. Compl. [Dkt. #102]. In all other respects, the Fourth Amended Complaint remains the same as the previously operative pleading. The parties then submitted cross-motions for summary judgment on the basis of the administrative record. Plaintiffs move for judgment on several grounds, some of which are only barely developed in their memoranda. Construing their filings in a light most favorable, I will address the following arguments: (1) the requirement for reasonable agency action in the Administrative Procedure Act ("APA") prohibits DOD from classifying certain parts as unavailable to the public, (2) the APA requires better support on the record for certain classification decisions, (3) statutory law and DOD's own regulations prohibit DOD from destroying certain parts, (4) the APA prohibits DOD from charging an unreasonable amount to remove parts, and (5) the requirement for reasonable agency action prohibited DOD's "rush" to destroy the planes at issue when discussion about the sale of parts was still underway. Government defendants respond that there is no legal prohibition on destroying surplus parts; they also move for judgment on the ground that the decision whether and how to make surplus parts available to the public is not reviewable under the APA, but if it is, the decision was lawful, reasonable, and supported in the record.

         STANDARD OF REVIEW

         On motion for summary judgment involving judicial review of final agency action under the APA, "the Court's role is limited to reviewing the administrative record." Air Tramp. Ass'n of Am. v. Nat'l Mediation Bd, 719 F.Supp.2d 26, 32 (D.D.C. 2010) (citations omitted). "[T]he function of the district court is to determine whether or not as a matter of law the evidence in the administrative record permitted the agency to made the decision it did." Select Specialty Hosp.-Bloomington, Inc. v. Sebelius, 893 F.Supp.2d 1, 4 (D.D.C. 2012) (citations and internal quotation marks omitted).

         Under the APA, the Court must set aside agency action that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(a). The hallmarks of such impermissible agency action are (1) relying on factors which Congress did not intend for the agency to consider, (2) failing to consider an important aspect of the problem, (3) offering an explanation that runs counter to the evidence before the agency, and (4) offering an explanation that is so irrational that it could not be ascribed to a difference of view or the product of agency expertise. Motor Vehicle Mfrs. Ass 'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). In order for courts to properly review agencies under this standard, the agency must also explain on the record its final decision by reference to "the relevant data." Id. And although it is permissible for an agency to make a decision that directly contradicts an earlier approach to a similar situation, when so doing, it must "supply a reasoned analysis for the change." Jicarilla Apache Nation v. U.S. Dep 't of Interior, 613 F.3d 1112, 1119 (D.C. Cir. 2010); accord FCC v. Fox Television Studios, Inc., 556 U.S. 502, 514-15(2009).

         ANALYSIS

         I. Plaintiffs Are Excused From Pursuing Further Administrative Remedies.

         As a threshold matter, I will address the Government's suggestion that this matter is not ripe for the Court to decide because plaintiffs have not pursued the administrative appeal remedy that was available to them. Defs.' Mem. & Opp'n 13, n.4 [Dkt. #112-1]. Curiously, the Government raises this contention in a footnote. Perhaps that is because it does not dispute plaintiffs response that this is the first time in seven years of litigation that the agency has suggested further administrative recourse, including the time plaintiffs-during their attempt to secure the aircraft parts-requested information about what internal process they might use to challenge DOD's classification decisions. See Pis.' Reply 24-25 & n.20 [Dkt. #115]. Nor does the Government claim that the exhaustion of administrative remedies is a jurisdictional prerequisite in this case-that is, the Government identifies no law requiring plaintiffs to proceed through an administrative process before seeking judicial review. Accordingly, "the district court may, in its discretion, excuse exhaustion if the litigant's interests in immediate judicial review outweigh the Government's interests in the efficiency or administrative autonomy that the exhaustion doctrine is designed to further." Avocados Plus Inc. v. Veneman, 370 F.3d 1243, 1247 (D.C. Cir. 2004) (internal quotation marks omitted) (quoting McCarthy v. Madigan, 503 U.S. 140, 146 (1992)). Because the Government has not identified any specific interest it has in forcing plaintiffs through the administrative process, I find that plaintiffs, who made reasonable attempts to use the correct procedure and have long awaited judicial review, are excused from pursuing any additional administrative remedies.

         II. The APA Does Not Require DOD to Reclassify the Surplus Aircraft Parts or Offer Them for Sale.

         Plaintiffs challenge as arbitrary and capricious both the classification of certain parts as Demil Code D and the policy that parts with a Demil Code B, sensitive Q, and D be prohibited from sale to the public. See Pis.' Reply 23 ...


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