Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-01-01427/USCOURTS-caDC-01-01427-0/pdf.json

Parties Involved:
Federal Aviation Administration
Respondent
Carlos Lopez
Petitioner

Document Text:

Notice: This opinion is subject to formal revision before publication in the

Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify

the Clerk of any formal errors in order that corrections may be made

before the bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

–————

No. 01-1427 September Term, 2002

Filed On: February 11, 2003

CARLOS LOPEZ,

PETITIONER

v.

FEDERAL AVIATION ADMINISTRATION,

RESPONDENT

–————

BEFORE: Edwards, Rogers and Garland, Circuit Judges

O R D E R

It is ORDERED, on the court’s own motion, that the

opinion filed on February 11, 2003, be amended as follows:

Page 1, first line of opinion heading, delete ‘‘Argued December 6, 2002’’ and ‘‘Decided February 11, 2003’’ and insert

in lieu thereof ‘‘Filed February 11, 2003’’

Page 1, line 10 of the opinion heading, delete ‘‘argued the

cause and filed the briefs for petitioner’’ and insert in lieu

thereof ‘‘was on the briefs for petitioner’’

USCA Case #01-1427 Document #731266 Filed: 02/11/2003 Page 1 of 14
2

Page 1, line 12 of the opinion heading, delete ‘‘argued the

thereof ‘‘was on the brief for respondent’’cause and filed the

brief for respondent’’ and insert in lieu

Per Curiam

FOR THE COURT:

Mark J. Langer, Clerk

 BY:

 Deputy Clerk

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Notice: This opinion is subject to formal revision before publication in the

Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify

the Clerk of any formal errors in order that corrections may be made

before the bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Filed February 11, 2003

No. 01-1427

CARLOS LOPEZ,

PETITIONER

v.

FEDERAL AVIATION ADMINISTRATION,

RESPONDENT

On Petition for Review of an Order of the

Federal Aviation Administration

David M. McDonald was on the briefs for petitioner.

Kenneth G. Caplan, Special Attorney to the Attorney General, Federal Aviation Administration, was on the brief for 

respondent.

Before: EDWARDS, ROGERS and GARLAND, Circuit Judges.

Opinion for the Court filed by Circuit Judge ROGERS.

 Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

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ROGERS, Circuit Judge: Carlos Lopez petitions for review

of the decision of the Federal Aviation Administration

(‘‘FAA’’) not to renew his appointment as a Designated

Engineering Representative (‘‘DER’’). He challenges the

decision on substantive and procedural grounds as well as

maintaining that he had a property and liberty interest in the

continued renewal of his designation, entitling him to due

process under the Fifth Amendment. Although the court

does not have jurisdiction to review the substance of the

FAA’s decision because it is ‘‘committed to agency discretion

by law,’’ 5 U.S.C. § 701(a)(2) (1996), the court does have

jurisdiction to review Lopez’s procedural claim that the FAA

failed to follow its nonrenewal procedures. Insofar as there

was any such failure, we hold that Lopez has failed to show

prejudice and that, in light of circuit precedent, because his

claim of a liberty or property interest in a DER designation is

without merit, Lopez cannot show that he was entitled to

renewal of his status or to constitutional due process. Accordingly, we deny the petition for review.

I.

Under the Federal Aviation Act (‘‘Act’’), 49 U.S.C.

§ 44702(d)(1), the FAA Administrator ‘‘may delegate to a

qualified private person’’ the authority to undertake the ‘‘examination, testing, and inspection necessary’’ to issue certificates identifying aircraft as compliant with FAA regulations.

See 49 U.S.C. §§ 44702, 44704. The Administrator, through

local Aircraft Certification Offices (‘‘certification office’’), has

appointed a group of individuals, called DERs, to perform

these tasks. 14 C.F.R. § 183.11(c)(1) (2002). DER appointments are for one year subject to renewal for additional oneyear periods at the Administrator’s discretion. 14 C.F.R.

§ 183.15(b). The Administrator may rescind such appointments, or choose not to renew them, at ‘‘any time for any

reason the Administrator considers appropriate.’’ 49 U.S.C.

§ 44702(d)(2); 14 C.F.R. § 183.15(d).

In accordance with FAA regulations, DERs may perform

their responsibilities on U.S. registered aircraft located

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abroad under certain limited conditions if they have prior

approval of the certification office. Designated Engineering

Representative (DER) Guidance Handbook, FAA Order

8110.37C ¶ 609 (Sept. 30, 1998). The regulations require, as

relevant here, that before granting such approval, the certification office provide the foreign civil aviation authority

(‘‘CAA’’) with written notification requesting its concurrence

in the proposed work. Id. at ¶ 609(b)(3)(a). Only after

receiving approval from the CAA, will the certification office

authorize the proposed DER activity. Id. at ¶ 609(b)(3)(a).

The regulations also require DERs to obtain specific authorization from the certification office prior to authorizing a

major repair or alteration of an aircraft, regardless of whether it is located in the United States or a foreign country. Id.

at ¶ 611(c).

The FAA reviews the performance of DERs annually. Id.

at ¶ ¶ 703–04. The regulations provide that if the FAA

decides to terminate or not renew a DER’s designation, the

DER is to be sent written notice of the decision at least thirty

days before the intended effective date, including specific

reasons for it, and is to be given an opportunity to respond in

writing or in person. Id. at ¶ 706(b); see also Procedures for

Termination/Nonrenewal of Aircraft Certification Service

Designations and Delegations, FAA Order 8130.24 ¶ 6 (Oct.

21, 1991). The regulations also provide for two levels of

agency review. Thus, if the DER requests review of the

decision, a first-level review is conducted by the appointing

certification office manager. FAA Order 8110.37C

¶ 706(c)(1). If the DER seeks further relief, the DER is

entitled to a second-level review by the manager of the

appropriate geographic directorate. Id. at ¶ 706(c)(2). If the

directorate manager concurs with the decision to terminate or

not renew, the regulations require that a letter be sent to the

DER reciting the justifications for the decision and advising

the DER that the decision is final. Id. at ¶ 706(c)(3). The

regulations also require this notice to indicate that the DER’s

remaining legal remedy is an appeal to a federal appeals

court, as provided in FAA Order 8130.24 ¶ 7(b)(2). Id.

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Lopez received notice that his DER would not be renewed

and pursued the two levels of review. By letter of February

15, 2000, Melvin D. Taylor, the manager of the Atlanta

certification office, informed Lopez that his DER designation

would not be renewed when it expired on February 29, 2000.

Taylor stated that his decision was based upon findings that

Lopez had neither ‘‘properly exercised and performed the

duties of [his] designation’’ nor ‘‘demonstrated the care and

integrity necessary to merit special public responsibility.’’

These general findings were based, in turn, upon more particular concerns that Lopez had (1) approved engineering data

and found compliance with FAA regulations outside his delegated authority; (2) failed to notify and obtain authorization

from the certification office before performing work on aircraft outside the United States and failed to notify the

certification office of his anticipated activities and length of

stay in Europe; and (3) failed to adhere to ‘‘good practice’’

principles while acting as an FAA designee. With respect to

Lopez’s failure to adhere to ‘‘good practice’’ principles, Taylor

stated that Lopez had exhibited a lack of integrity with

regard to his contacts with the FAA and the Direction

Generale de L’Aviation Civile (‘‘DGAC’’) while in France;

failed to notify the certification office of his foreign activities

after having been counseled to do so; and created international friction between the FAA and the DGAC by trying to

obtain a U.S. Supplemental Type Certificate (‘‘STC’’) for a

French company with regard to a U.S.-registered aircraft in

violation of the United States and French Bilateral Airworthiness Agreement. (In regard to the latter, Lopez sent letters

to his Congressman and the Commerce Department’s Inspector General seeking clarification of the FAA’s approval process for STCs.) Taylor’s letter informed Lopez that he could

request reconsideration of the decision not to renew his DER

status, and that his request should include information he

wished the FAA to review. Lopez responded, by letter of

February 24, 2000, to Taylor’s reasons for not renewing his

DER status, and requested reconsideration of Taylor’s decision.

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The first-level review took place on March 1, 2000. At that

time Lopez’s counsel submitted exhibits on Lopez’s behalf

and received documents from the FAA in support of Taylor’s

position. Following the meeting, Lopez’s counsel wrote Taylor, on March 10, 2000, more extensively refuting Taylor’s

rationale for not renewing Lopez’s designation. Taylor responded by letter of April 4, 2000, that ‘‘[a]fter reviewing the

file and considering the information provided by [Lopez] and

[his] counsel,’’ the Atlanta certification office concluded that

‘‘the original findings’’ contained in the February 15 letter

‘‘were accurate and justifiable,’’ and that consequently, Lopez’s DER designation would not be renewed or reinstated.

Taylor reiterated his reasons for his nonrenewal decision, and

advised Lopez of his right to request reconsideration. On

April 17, 2002, Lopez, through counsel, requested reconsideration of the decision reached by the Atlanta certification office

from the manager of the Central Region Directorate, Mike

Gallagher.

The second-level review took place on June 14, 2000. As a

result of concern that the certification office had not taken ‘‘a

more active role in reviewing [Lopez’s] work,’’ Gallagher, on

August 3, 2000, informed Lopez of his interim decision to

allow Lopez to function on a Recommend Only Approval

status for a period of six months. During that time, Lopez

would be required to submit Recommend Only Approval

requests for evaluation by the Atlanta certification office;

failure to submit projects, or submission of projects of minimal difficulty would result in Lopez’s termination. Gallagher

denied Lopez’s request for reconsideration of the interim

decision for failure to raise any new issues. When Lopez

subsequently complained that he could not find any work to

perform on a Recommend Only Approval basis, Gallagher, on

November 21, 2000, extended the time period for Lopez to

find work. Having received no submissions from Lopez as of

May 18, 2001, Gallagher wrote Lopez that he had ninety days

to submit data for review or face termination. On August 20,

2001, upon receiving no submissions, Gallagher issued a final

decision terminating Lopez’s DER appointment effective immediately. Lopez now seeks relief from the court.

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II.

On appeal, Lopez challenges the FAA’s decision not to

renew his DER designation on three grounds: first, the

decision was arbitrary and capricious, and that insofar as it

was a retaliatory response to Lopez’s complaint to his congressman and the Inspector General about how the FAA

handled his work abroad, it was an abuse of process; second,

the FAA failed to follow its internal procedures for nonrenewal of DERs; and third, the FAA violated his Fifth Amendment due process rights to property and liberty.

A.

As a threshold matter, the FAA maintains that the court

does not have jurisdiction to review the substance of its

nonrenewal decision because the decision is committed to

agency discretion by law. Most recently, in Steenholdt v.

FAA, 2003 WL 69564 *4–5 (D.C. Cir. 2003), the court held

that because the decision not to renew a DER delegation is

committed to the Administrator’s discretion under 49 U.S.C.

§ 44702(d), judicial review of the substantive merits of that

decision is precluded under the Administrative Procedure

Act, 5 U.S.C. § 701(a)(2). See also Greenwood v. FAA, 28

F.3d 971, 974–75 (9th Cir. 1994); Adams v. FAA, 1 F.3d 955,

956 (9th Cir. 1993). There is no need to repeat the court’s

analysis in Steenholdt. Accordingly, in light of Steenholdt, we

hold that we lack jurisdiction to review Lopez’s contention

challenging the FAA’s nonrenewal decision on substantive

grounds as being arbitrary and capricious and an abuse of

process.

B.

The FAA similarly maintains that the court does not have

jurisdiction to consider Lopez’s procedural challenge to the

nonrenewal decision because the FAA’s nonrenewal procedures are also committed to agency discretion as a matter of

law. Alternatively, the FAA maintains that, if the court does

have jurisdiction, Lopez’s procedural challenge fails because

the FAA substantially followed its internal procedures, and to

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the extent that it did not, Lopez failed to prove he was

prejudiced.

Most recently, again in Steenholdt, the court rejected a

challenge to the FAA’s nonrenewal of a DER on the ground

that the FAA had failed to follow its procedures. 2003 WL

69564 at *6. In Steenholdt, the petitioner argued that the

court had jurisdiction to review his procedural challenge

because, under Accardi v. Shaughnessy, 347 U.S. 260 (1954),

federal agencies are required to ‘‘follow their own rules, even

gratuitous procedural rules that limit otherwise discretionary

actions.’’ 2003 WL 69564 at *6. Without expressly adopting

the Accardi doctrine, the court implicitly held that it had

jurisdiction to address the procedural challenge, citing Doe v.

United States Dep’t of Justice, 753 F.2d 1092, 1098 (D.C. Cir.

1985), for the proposition that courts ‘‘have long required

agencies to abide by internal, procedural regulations TTT even

when those regulations provide more protection than the

Constitution or relevant civil service laws.’’ The court otherwise left undefined the analysis by which it reached the

conclusion that it had jurisdiction. Today, we fill that gap.

In a series of decisions, the Supreme Court has entertained

challenges to agency actions that failed to conform to agency

regulations. In SEC v. Chenery Corp., 318 U.S. 80, 87–88

(1943), the Court held that an agency is bound to the standards by which it professes its action to be judged. In

Accardi, a case involving a habeas challenge to the denial of

suspension of deportation, the Court objected to the agency’s

‘‘alleged failure to exercise its own discretion contrary to

existing valid regulations.’’ 347 U.S. at 268. In the employment context, the Court held in Service v. Dulles, 354 U.S.

363, 373–76 (1957), that where dismissal from employment is

based on a defined procedure, even though generous beyond

the requirements binding the agency, that procedure must be

scrupulously observed, and in Vitarelli v. Seaton, 359 U.S.

535 (1959), that the dismissal of a former government employee was illegal and of no effect because the agency’s dismissal

‘‘fell substantially short of the requirements of the applicable

department regulations.’’ Id. at 545. See also Morton v.

Ruiz, 415 U.S. 199, 234 (1974); Lincoln v. Vigil, 508 U.S. 182

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(1993). In other words, ‘‘[a] court’s duty to enforce an agency

regulation [, while] most evident when compliance with the

regulation is mandated by the Constitution or federal law,’’

United States v. Caceras, 440 U.S. 741, 749, embraces as well

agency regulations that are not so required.

The Supreme Court has, however, distinguished between

the types of internal agency regulations that are reviewable.

In American Farm Lines v. Black Ball Freight Serv., 397

U.S. 532, 539 (1970), a case involving regulations designed to

provide the agency with information it needed to reach an

informed decision, the Court held that the regulations were

unreviewable absent a showing of substantial prejudice by the

complaining party. On the other hand, had the agency’s

rules been ‘‘intended primarily to confer important procedural

benefits upon individuals in the face of otherwise unfettered

discretion as in Vitarelli,’’ id. at 538–39, or had the agency

failed to exercise independent discretion required by the rule,

as in Accardi, id. at 539, the Court indicated the case would

be ‘‘exempt’’ from the general principle that an administrative

agency may ‘‘relax or modify its procedural rules adopted for

the orderly transaction of business TTT when TTT the ends of

justice require it.’’ Id.

Given this instruction, this court has been careful to distinguish between procedural rules benefitting the agency (American Farm Lines) and procedural rules benefitting the party

otherwise left unprotected by agency rules (Vitarelli), as well

as cases in which the agency has failed to exercise discretion

required by its regulations (Accardi). Compare Associated

Press v. FCC, 448 F.2d 1095, 1105 (D.C. Cir. 1971), Mun.

Light Bds. v. FPC, 450 F.2d 1341, 1347–48 (D.C. Cir. 1971),

and Neighborhood TV Co. v. FCC, 742 F.2d 629, 636 (D.C.

Cir. 1984) with Doe, 753 F.2d at 1098, and Mazaleski v.

Treusdell, 562 F.2d 701, 719 (D.C. Cir. 1977). These distinctions are particularly visible in the employment context,

where this court has long recognized that, contrary to the

type of internal regulations in American Farm Lines, agencies cannot ‘‘relax or modify’’ regulations that provide the

only safeguard individuals have against unlimited agency

discretion in hiring and termination. Thus, in Mazaleski, the

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court held, citing Vitarelli, that where ‘‘a government employee has no procedural due process rights apart from those

which the agency has chosen to create by its own regulations,

scrupulous compliance with those regulations is required to

avoid any injuries.’’ 562 F.2d at 719. The court rejected the

notion that a ‘‘failure to inform [the employee] of the specific

grounds of the termination decision, though merely an oversight, can[ ] be excused as a de minimus or harmless violation

of its own regulations.’’ Id. Likewise, in Doe the court

explained, citing Vitarelli and Service, that when agencies

establish ‘‘special’’ ‘‘pre-termination procedures,’’ they are

bound to follow them. 753 F.2d at 1098. Our sister circuits

have similarly required agencies to follow procedural rules

‘‘designed to benefit aggrieved parties during [employment]

proceedings.’’ Bates v. Sponberg, 547 F.2d 325, 330 nn.6–7

(6th Cir. 1976); see also Gaballah v. Johnson, 629 F.2d 1191,

1202–03 (7th Cir. 1980).

The FAA’s procedures challenged by Lopez are not primarily intended to provide information to the agency, but are

instead aimed at protecting the DER from the Administrator’s otherwise unlimited discretion. It is uncontested that

FAA Orders 8110.37C and 8130.24 provide procedural safeguards that are the only available protection for DERs whose

designation can otherwise be terminated by the FAA for ‘‘any

reason considered appropriate by the Administrator.’’ 49

U.S.C. § 44702(d)(2); 14 C.F.R. § 183.15(d); FAA Order

8130.24(5)(a)(10). The Administrator issued FAA Order

8110.37C to ‘‘prescribe[ ] the guidance and procedures to be

used TTT in administering the Designated Engineering Representative management program,’’ id. at ¶ 1, and issued Order

8130.24 to ‘‘ensure that due process is accorded before a final

decision is made on termination or nonrenewal of [DER]

designations.’’ Id. at ¶ 1. We hold, as the court implicitly

held in Steenholdt, 2003 WL 69564 at *6, that the court has

jurisdiction to review whether the FAA followed its procedural rules in terminating Lopez’s DER status because ‘‘scrupulous observance of departmental procedural safeguards is

clearly of particular importance’’ where no other agency rules

protect the employee. Vitarelli, 359 U.S. at 540.

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Lopez’s procedural challenge focuses on two FAA failures

as requiring reversal of the nonrenewal decision: the FAA

failed first, to provide him with thirty days advance written

notice of its decision not to renew his DER designation, as

required by FAA Order 8110.37C ¶ 706, and second, to counsel him about his shortcomings prior to making its nonrenewal decision, as required by FAA Order 8110.37C ¶ 700(b). As

to the first failure, Lopez does not indicate how he was

prejudiced by receiving less than thirty days notice of the

FAA’s decision, and nothing in the record indicates that he

was. He responded to the initial notice from Taylor and

pursued his rights under the FAA regulations to seek reconsideration from the agency. With the assistance of counsel

he submitted materials on several occasions in support of his

defense to the original claim that his performance was unsatisfactory. Lopez does not argue either that he was pressed

for time in responding to the FAA’s view of his performance

or that other defenses would have been presented with additional time. Thus, his circumstances are readily distinguishable from those in Vitarelli, where the denial of material

procedural protections left the former government employee

at a severe disadvantage in defending against his dismissal.

Vitarelli, 359 U.S. at 540–44. As to the second failure, the

record shows that any failure of the FAA not to afford

counseling to Lopez was ameliorated by its subsequent actions: in his August 3, 2000 letter to Lopez, the directorate

manager issued an interim decision, that he later extended,

providing Lopez with a further opportunity to demonstrate

that he could perform DER work at an acceptable level. Yet

over the course of more than a year, Lopez never submitted

any work for review. Moreover, the record reveals disputes

over performance that were not remediable by mere counseling; the FAA would have had to change practices and policies

to allow Lopez to perform as he had. Under the circumstances, Lopez fails to show that the FAA’s initial oversight

was other than harmless. See Mazaleski, 562 F.2d at 719.

Consequently, we conclude that Lopez fails to show that the

proceedings leading to the nonrenewal of his DER status ‘‘fell

substantially short of the requirements of the applicable

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departmental regulations.’’ Vitarelli, 359 U.S. at 544, resulting in prejudice to him. Steenholdt, 2003 WL 69564 at *6.

C.

Finally, as follows from our decision in Fried v. Hinson, 78

F.3d 688 (D.C. Cir. 1996), Lopez’s challenge on constitutional

grounds to the FAA’s nonrenewal decision fails. Lopez contends that his Fifth Amendment due process rights to property and liberty were violated by the FAA’s failure to renew his

DER designation and by the FAA’s alleged public disclosures

of the reasons for his discharge.

In Fried the court held that a Designated Pilot Examiner

(‘‘DPE’’) does not have a legitimate property or liberty interest in his DPE delegation. See also Greenwood, 28 F.3d 971.

Explaining why a DPE has no cognizable property interest in

renewal of that designation, the court pointed to 49 U.S.C.

§ 44702(d), which allows the Administrator to ‘‘rescind [this]

delegation TTT at any time for any reason,’’ and 14 C.F.R.

§ 183.15, which permits the FAA to determine annually

whether to renew a designee. Id. at 692. These same

provisions apply to DERs who, like DPEs, serve at the FAA’s

discretion and therefore have no more ‘‘than a unilateral

expectation’’ of renewal. Bd. of Regents v. Roth, 408 U.S.

564, 577 (1972). Any doubt that DERs lack a property

interest in renewal of their designation is clarified by FAA

Order 8110.37C ¶ 5(b), which states: ‘‘Designation of a private person as a DER is a privilege granted by the Administrator. It is not the right of every qualified applicant to be

granted a DER designation.’’ Combined with Lopez’s admission that ‘‘a DER designation is a privilege and not a right,’’

Petitioner’s Br. at 25, we hold that he has no property right

in his DER status.

Furthermore, as in Fried, Lopez does not have a legitimate

liberty interest because nonrenewal neither automatically

bars him from future jobs nor stigmatizes him in a way that

would ‘‘substantially preclude the professional use of his

skills.’’ Fried, 78 F.3d at 692 (citation omitted). Lopez’s

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contention that the FAA violated his liberty interest is based

on a September 13, 1999 letter that the manager of the FAA’s

International Airworthiness Programs Staff, sent Lopez’s

client, Aviation Sale and Leasing Corporation, which stated in

relevant part:

While we understand your company’s sense of urgency

because of a pending customer for these aircraft, we

believe this situation was unnecessarily complicated

through the actions of your representative in France, Mr.

Carlos Lopez. The advice and actions taken by Mr.

Lopez were not correct for modification of N-registered

aircraft.

Lopez maintains that the letter was a ‘‘stigmatizing public

disclosure’’ that adversely affects his business reputation. He

provides no evidence, however, that the letter impugned his

good name, reputation, honesty or integrity, Roth, 408 U.S. at

573, let alone that it ‘‘substantially preclude[s]’’ the use of his

skills. Fried, 78 F.3d at 692. Although Lopez cannot serve

as a DER for the FAA, he has not been deprived of his

career as an engineer, Roth, 408 U.S. at 573. Without loss of

some legitimate protected interest, Lopez’s claim that the

FAA violated his constitutional right to due process is unsustainable.

Accordingly, because the court does not have jurisdiction to

review the substance of the FAA’s nonrenewal decision, because any FAA failure to follow internal nonrenewal procedures caused no prejudice to Lopez, and because his constitutional claim is without merit, we deny the petition for review.

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