AIR ONE HELICOPTERS, INC. v. F.A.A

Citation Codes

Equivalent Citations

citation codes

Docket Number

No. 94-70245

Attorney(S)

Kenneth G. Caplan, Federal Aviation Administration, Washington, D.C., for the respondent. Ronald E. Werner and Denice N. LeBourveau, Werner, Nabb LeBourveau, San Jose, California, and Patricia E. Fox, Sunnydale, California, for the petitioner.

Judges

David R. Thompson
Diarmuid Fionntain O'Scannlain

Acts

Transportation — Aviation Programs — Registration And Recordation Of Aircraft — Air Commerce And Safety — Safety — Operation Of Aircraft
Transportation — Aviation Programs — Investigations And Proceedings — Air Commerce And Safety — Enforcement And Penalties — Judicial Review
Government Organization And Employees — Judicial Review — The Agencies Generally — Scope Of Review
Transportation — Aviation Programs — Registration And Recordation Of Aircraft — Air Commerce And Safety — Safety — Registration Requirements

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Smart Summary

Factual and Procedural Background

Air One Helicopters, Inc. purchased a Sikorski S-58T helicopter in 1990 from a Spanish company, Helisca Helicopters, S.A., and sought to register the aircraft with the Federal Aviation Administration (FAA) under U.S. federal law. The FAA denied registration because the helicopter was still registered in Spain, and international law (the Chicago Convention) prohibits dual registration. The FAA required Air One to obtain a statement from Spain's national aircraft registry (DGAC) confirming the Spanish registration was invalid. However, the DGAC refused to issue such a statement due to a lien recorded under the name of a Norwegian entity, Sameiet Heli Invest I, which was not a legally incorporated corporation and no longer existed. Air One provided affidavits and attempted to persuade the DGAC and the U.S. Embassy in Madrid to de-register the helicopter, but these efforts failed. After unsuccessful attempts to satisfy the FAA's evidentiary requirements, Air One petitioned for judicial review of the FAA's denial of registration.

Legal Issues Presented

Whether the court has jurisdiction to review the FAA's denial of registration given the FAA's letters and whether those letters constitute final agency action.
Whether the FAA's refusal to register the helicopter was lawful under federal statutes, regulations, and the Chicago Convention.
Whether the court may determine the validity of a foreign registration and override the Spanish registration status without a Spanish court ruling.
Whether ordering the FAA to register the helicopter conflicts with applicable federal statutes and international treaties.

Arguments of the Parties

Petitioner (Air One Helicopters, Inc.)

Argues that it is the undisputed owner of the helicopter, has discharged the lien, and that the Spanish registration is no longer valid.
Contends the FAA's refusal to register the helicopter is unjustified and that obtaining the Spanish deregistration statement is impossible due to the nonexistence of the Norwegian corporation.
Claims the FAA letters denying registration constitute final agency action and that exhaustion of administrative remedies would be futile.

Respondent (Federal Aviation Administration)

Argues that the FAA letters do not constitute final agency action as they do not impose obligations or deny rights but only specify evidentiary requirements for registration.
Maintains it lacks discretion to register the helicopter while it remains registered in Spain, consistent with the Chicago Convention and applicable federal law.
Contends that Air One has not exhausted administrative remedies as it has not obtained a court judgment in Spain invalidating the registration, which is required under FAA regulations.
Asserts that the court lacks jurisdiction to review the FAA's position and that the FAA’s refusal to register complies with both statute and treaty obligations.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Air California v. U.S. Dep't of Transportation, 654 F.2d 616 (9th Cir. 1981)	Defines final agency action as an order that imposes an obligation, denies a right, or fixes a legal relationship.	Used to analyze FAA letters' reviewability; majority treated letters as final agency action due to futility of further administrative attempts, dissent disagreed.
SAIF Corp./Oregon Ship v. Johnson, 908 F.2d 1434 (9th Cir. 1990)	Judicial economy permits bypassing exhaustion of administrative remedies when exhaustion would be futile.	Majority invoked to justify jurisdiction despite FAA letters not being final agency action, given futility of further administrative process.
Henderson v. FAA, 7 F.3d 875 (9th Cir. 1993)	Agency decisions may be set aside if arbitrary, capricious, an abuse of discretion, or not in accordance with law under 5 U.S.C. § 706(2)(A).	Referenced to establish standard of review for FAA's decision.

Court's Reasoning and Analysis

The court first addressed jurisdiction, concluding that although the FAA's letters might not constitute final agency action under the traditional definition, the futility of further administrative attempts justified treating the letters as final. This allowed judicial review of the FAA's denial to register the helicopter.

On the merits, the court acknowledged the FAA's obligation under the Chicago Convention to avoid dual registration. However, it emphasized that the FAA has discretion to determine when a foreign registration is no longer valid. The FAA’s regulation, 14 C.F.R. § 47.37, requires an applicant to provide a statement from the foreign registry that the registration has ended or become invalid.

Air One could not produce the required Spanish statement because the DGAC demanded a corporate document from a defunct Norwegian entity that never legally existed. The court found that the lien was discharged and the Spanish registration was effectively invalid, notwithstanding the absence of the formal statement. The court held that requiring Air One to produce an impossible document served only to perpetuate bureaucratic gridlock and diminish Air One's ownership interest.

Accordingly, the court concluded that the FAA's refusal to register the helicopter was contrary to law and ordered the FAA to register the aircraft in Air One's name.

Judge O'Scannlain dissented, arguing that the court lacked jurisdiction because the FAA letters were not final agency actions and that Air One had not exhausted administrative remedies as it had not pursued a Spanish court judgment invalidating the registration. He further contended that the court lacked authority to invalidate the Spanish registration without applying Spanish law and that ordering FAA registration conflicted with federal statute and the Chicago Convention, thereby violating international comity and treaty obligations.

Holding and Implications

Holding: The court granted Air One's petition for review, reversed the FAA's denial, and ordered the FAA to register the Sikorski S-58T helicopter, serial number 58-1626, showing Air One Helicopters, Inc. as the owner.

Implications: This decision resolves the bureaucratic impasse preventing Air One from registering its helicopter in the United States despite its undisputed ownership and discharged lien. The court prioritized practical ownership realities over strict adherence to formal foreign registry documentation, effectively allowing the FAA discretion to recognize invalid foreign registrations absent impossible evidentiary requirements. The opinion does not establish new precedent on the broader issue of foreign registration validity but directly affects the parties by compelling FAA registration. The dissent warns of potential conflicts with statutory and treaty mandates and stresses the importance of jurisdictional and international law considerations.

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AIR ONE HELICOPTERS, INC., a California corporation, Petitioner, v. FEDERAL AVIATION ADMINISTRATION, Respondent.

OPINION

THOMPSON, Circuit Judge:Page 881

Air One Helicopters, Inc. (Air One), the undisputed owner of a helicopter, has been ensnared in webs of bureaucratic regulation spun by two countries, Spain and the United States. The effect has been to preclude Air One from registering its helicopter with the Federal Aviation Administration (FAA) even though it is crystal clear Air One owns the aircraft, has discharged the lien which once attached to it, and the aircraft's current registration in Spain is no longer valid.

We grant review and end the bureaucratic gridlock. We reverse the FAA's denial of Air One's application, and direct the FAA to register the helicopter showing Air One as its owner.

I. [4] FACTS

Air One bought the helicopter, a Sikorski S-58T, serial number 58-1626, in 1990 from a Spanish company, Helisca Helicopters, S.A. (Helisca), and attempted to register the aircraft with the FAA pursuant to federal law and FAA implementing regulations. See 49 U.S.C. § 1401 et seq; 14 C.F.R. § 47.37.

Title 49 had been revised since the incidents giving rise to this petition. The revisions do not make any substantive changes in the law relevant to this case. We will refer to the old citations in the text because they governed the actions of the parties.
49 U.S.C. § 1401 is now codified at 49 U.S.C. § 44101, et seq.

In 1992, the FAA issued an opinion letter which stated that Air One's helicopter was not eligible for registration because the aircraft was still registered in Spain. An aircraft cannot have dual registration under the Chicago Convention on International Civil Aviation (Chicago Convention). See 61 Stat. 1180, T.I.A.S. 1591 (December 7, 1944). The FAA instructed Air One to obtain from the Direccion General de Aviacion Civil (DGAC), Spain's national aircraft registry, a statement that the helicopter's Spanish registration was no longer valid. Without such a statement, the FAA deemed Air One's helicopter ineligible for registration in the United States.

Air One unsuccessfully petitioned the DGAC in Spain for a statement of de-registration. The DGAC refused to provide such a statement because the registry showed a lien on the helicopter in the name of a Norwegian corporation, Sameiet Heli Invest I (Sameiet). The DGAC insists Air One must obtain an official corporate document from Sameiet declaring the corporation has been paid in full for the helicopter before the DGAC will de-register the aircraft.

Sameiet, however, was never a corporate entity registered under Norwegian law or elsewhere, and it no longer exists in any form. Therefore, there is no possibility that Air One will ever be able to obtain the official corporate document from Sameiet which the DGAC in Spain demands.

Air One has diligently attempted to get the DGAC to de-register the aircraft without such a statement, but the DGAC has steadfastly resisted these efforts. Air One provided the DGAC with a sworn affidavit from Asmud Simonson, the President of the parent company of Sameiet, stating that Helisca had paid Sameiet in full for the helicopter. The record indicates that Simonson "formed" Sameiet for the sole purpose of buying and selling this particular helicopter. Although he used the Sameiet name in its corporate form for the transaction, he did not incorporate Sameiet under Norwegian law, or anywhere else. As a result, there never were any officers or directors of Sameiet, and it never had a corporate seal. There is absolutely no way it can provide the official corporate document the DGAC demands. Simonson's affidavit explaining the circumstances was deemed insufficient by the DGAC, which again demanded a corporate document. Air One has since enlisted the assistance of the United States Embassy in Madrid, but it was unable to persuade the DGAC to de-register the helicopter. Air One, with the cooperation of Simonson and Helisca, retained legal counsel in Spain. The attorneys advised Air One that bringing a court challenge there will be unsuccessful because of the Spanish judiciary's deference to the DGAC's administrative decisions and that a court challenge might take up to ten years.

Air One filed two registration applications with the FAA explaining these circumstances and including all of the relevant correspondence. Each time, the FAA has responded with letters stating Air One's helicopter is ineligible for registration in the United States unless Air One obtains a de-registration statement from Spain.

II. [11] DISCUSSION

The first question we consider is whether we have jurisdiction to entertain Air One's petition for review. The FAA argues the position it has taken in its opinion letter and in its two additional letters is not reviewable because these letters do not constitute "final agency action" within the meaning of section 1006(a) of the Federal Aviation Act, 49 U.S.C. § 1486(a). The FAA contends the letters do not amount to a definitive statement of the agency's position, nor do they impose any obligation, deny any right, or fix any legal relationship as required by our decision in Air California v. U.S. Dep't of Transportation, 654 F.2d 616, 620-21 (9th Cir. 1981). [1] Whether or not the letters amount to final agency action, we are not precluded from reviewing the FAA's failure to register the helicopter. The FAA has admitted that any further attempts by Air One to obtain a different decision will be futile. It is a common rule of judicial economy that we will not require a party to exhaust administrative procedures when exhaustion would be futile. SAIF Corp./Oregon Ship v. Johnson, 908 F.2d 1434, 1440-41 (9th Cir. 1990). Here, there is no question it would be futile for Air One to attempt to persuade the FAA to change the position it clearly sets forth in the letters. Accordingly, we will treat the letters as final agency action and consider the merits of Air One's petition for review.

49 U.S.C. § 1486(a) is now codified at 49 U.S.C. § 46110.

Agency decisions may be set aside only if "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." 5 U.S.C. § 706(2)(A); Henderson v. FAA, 7 F.3d 875, 877 (9th Cir. 1993).

The FAA contends that its decision cannot be an abuse of discretion because it lacks any discretion to register Air One's helicopter so long as the helicopter is registered in Spain. The FAA argues that this is a basic requirement imposed upon it by the Chicago Convention. 61 Stat. at 1185. The FAA is correct that the Convention prohibits dual registration, but we can determine when and if a registration in a foreign country remains valid.

[2] Chapter III, Article 18 of the Chicago Convention provides: "An aircraft cannot be validly registered in more than one State, but its registration may be changed from one State to another." Id. (emphasis added). The FAA has adopted regulations to determine the validity of a foreign registration. See 14 C.F.R. § 47.37(b)(1) ("satisfactory evidence of termination" includes a statement by a foreign official or decree of a court applying foreign law that the registration has ended or become invalid). It is the FAA, not the Chicago Convention, that declares what will suffice as satisfactory evidence of an invalid foreign registration.

[3] We hold the FAA's decision refusing to register Air One's helicopter is contrary to law, because the Spanish registration is no longer valid.

[4] The FAA based its decision on 14 C.F.R. § 47.37, which sets forth the evidentiary burden an applicant for registration must bear. Section 47.37(b)(1) requires an applicant to provide "a statement by the official having jurisdiction over the national aircraft registry of the foreign country, that the registration has ended or is invalid . . . ."

[5] Air One cannot meet this evidentiary burden. But the reason it can't is not because the lien is valid, but because the appropriate Spanish bureaucrat won't say the lien is no longer valid — even though everyone concerned knows that it is no longer valid. The appropriate Spanish official refuses to say whether the lien is no longer valid unless he receives a document from the abortive Norwegian "corporation." That document, however, is not only impossible to provide, it would add nothing of substance to what is already before the DGAC. On the basis of the record, there can be no doubt the lien has been discharged, is no longer valid, and the helicopter's registration in Spain is at an end.

[6] Further delay would serve only to diminish even more the value of Air One's ownership interest in the helicopter. While Air One has not presented the statement by the foreign official referred to in 14 C.F.R. § 47.37(b)(1), it has indisputably proved that getting the statement is impossible and the helicopter's registration in Spain has ended. In the circumstances of this case, this is sufficient.

III. [20] CONCLUSION

[7] Air One's petition for review is granted. The FAA is ordered to register the Sikorski S-58T helicopter, serial number 58-1626, showing Air One Helicopters, Inc. as the owner.

REVIEW GRANTED.

[23] O'SCANNLAIN, Circuit Judge, dissenting:

I respectfully dissent. While I empathize with Air One's plight, I conclude that (1) this court lacks jurisdiction to entertain Air One's petition for review, (2) the court lacks authority to rule that the Spanish registration is invalid (and has erred by doing so without applying Spanish law), and (3) the majority's opinion ordering the FAA to register Air One's helicopter in the United States directly conflicts with both a statute and a treaty.

The appropriate jurisdictional test is that outlined in Air California v. U.S. Dept. of Transportation, 654 F.2d 616 (9th Cir. 1981). In that case, this court stated that under 49 U.S.C. App. § 1486(a), FAA "[a]dministrative orders are not final and reviewable `unless and until they impose an obligation, deny a right, or fix some legal relationship as a consummation of the administrative process.'" Id. at 621 (citations omitted).

This provision has since been repealed and recodified, without significant change, at 49 U.S.C. § 46110.

Air One argues that the FAA letters in this case are final orders because they effectively deny Air One its right to register its helicopter. I disagree. None of the letters denied Air One's registration application; to the contrary, the letters merely told Air One what it needed to provide in order to get the application approved, namely a certificate from a Spanish authority (either the Spanish National Aircraft Registry or a Spanish court) that the Spanish registration was invalid. Accordingly, the letters do not impose any obligation, deny any right or fix any legal relationship as the consummation of the administrative process.

The majority states that "[w]hether or not the [FAA] letters amount to final agency action," this court has jurisdiction to review the FAA's alleged "failure to register the helicopter" because exhaustion of administrative remedies would be futile. In support of its conclusion on this point, it states that "[t]he FAA has admitted that any further attempts by Air One to obtain a different decision will be futile."

I cannot agree with this latter statement. The FAA has not conceded that exhaustion of administrative remedies would be futile; to the contrary, the FAA has said that it would accept a final judgment or decree from a court of competent jurisdiction in Spain that the registration is invalid. See Appellee's Brief at 26-27; Jan. 3, 1996 memorandum from Kenneth G. Caplan, Special Attorney to the U.S. Attorney General. The relevant federal regulations state that such a judgment would constitute "satisfactory evidence of termination of the foreign registration." 14 C.F.R. § 47.37(b)(2). Air One cannot argue that any efforts to obtain a different decision from the FAA would be "futile" when it refuses to pursue the very remedy which the FAA has suggested and which is mandated by the relevant federal regulations. Accordingly, Air One has a remedy available to it, and the FAA's letters do not "impose an obligation, deny a right, or fix some legal relationship as a consummation of the administrative process." Air California, 654 F.2d at 621. For that reason, they "are not final and reviewable," id., and this court lacks jurisdiction to hear Air One's appeal.

In addition, in light of Air One's decision not to pursue such a judgment in the Spanish courts, I respectfully submit that the majority's statement that "bringing a court challenge will be unsuccessful" is nothing more than pure speculation.

II.

Even if this court has jurisdiction to consider Air One's appeal, I do not believe that we have authority to hold that the Spanish registration is invalid.

The majority states that "we can determine when and if a registration in a foreign country remains valid." Op. at 6851 (emphasis added). In doing so, the majority apparently relies on 14 C.F.R. § 47.37(b)(2). However, it has misapplied the provision. That regulation states that satisfactory evidence of termination of the foreign registration may be —

. . . .

(2) A final judgment or decree of a court of competent jurisdiction that determines, under the law of the country concerned, that the registration has become invalid.

14 C.F.R. § 47.37(b)(2) (emphasis added). I strongly doubt that this court is one of "competent jurisdiction" to determine that the Spanish registration is invalid; I suspect that only a Spanish court so qualifies.

More important, however, is the fact that the majority does not even purport to apply Spanish law in holding the Spanish registration invalid, as is clearly required by the regulation. Even assuming that we are a "court of competent jurisdiction" to decide the issue, the parties have not provided any briefing on Spanish law, and we should not decide such an issue in a vacuum.

III.

Finally, the majority's opinion also forces the FAA to register Air One's helicopter even though the FAA can do so only by violating both a statute and a treaty. First, under federal law, "[a]n aircraft [owned by a citizen of the United States] may be registered [in the United States] only when the aircraft is — (1) not registered under the laws of a foreign country . . . ." 49 U.S.C. § 44102(a) (emphasis added). As Air One concedes, its helicopter is in fact "registered under the laws of a foreign country." The majority's opinion ordering the FAA to register Air One's helicopter in the United States clearly contravenes this statute.

In spite of the majority's holding that the Spanish registration is invalid, this conclusion cannot and does not alter the basic fact that the helicopter remains "registered under the laws of a foreign country."

Second, as the majority notes, Chapter III, Article 18 of the Chicago Convention states that "[a]n aircraft cannot be validly registered in more than one State . . . ." The only Spanish authority yet to rule on the subject has stated that the aircraft is in fact "validly registered" in Spain. Accordingly, the majority's opinion clearly places the United States in violation of this treaty. In addition, the majority's decision to invalidate the Spanish registration, before the Spanish courts have even been given an opportunity to rule on the subject, contravenes basic principles of international comity. Finally, the majority's opinion provides a dangerous precedent which may encourage foreign courts to rule, in subsequent cases, that aircraft registered by the FAA in the United States are not in fact "validly" registered here. The practical effect of the majority's ruling is thus to render the treaty a virtual nullity.

There is no question that Air One has been the victim of a protracted, intercontinental bureaucratic nightmare, and I empathize completely with Air One's plight and with the majority's strong desire to remedy it. However, federal courts are courts of limited jurisdiction. Because of that fact, we sometimes confront cases, such as the one at bar, where we simply lack authority to act. And even if we do act, we must always do so in a manner consistent with federal laws and regulations. Because I fear that the majority's opinion may be inconsistent with these principles, I respectfully dissent.