Teton Historic Aviation Foundation v. United States Department of Defense, 248 F. Supp. 3d 104

Background

Plaintiffs Teton Historic Aviation Foundation and Teton Avjet LLC won an auction granting an option to request and purchase parts from five surplus military aircraft, subject to DOD classification and other contract terms.
Between the auction and DOD’s final decision, DOD adopted a November 2008 policy (informed by a GAO report) tightening controls and making many parts (Demil Code B, sensitive Q, and D) unavailable for public sale.
Plaintiffs challenged DOD classifications (arguing some parts should be Demil Code B, not D), the policy barring sale of certain Demil Codes, the destruction of aircraft, and procedural complaints about removal costs and alleged rush to destroy planes.
The D.C. Circuit remanded for merits review, finding plaintiffs’ injury potentially redressable based on DOD’s historical practices of releasing reclassified parts.
On cross-motions for summary judgment, the district court reviewed the administrative record under the APA and denied plaintiffs’ challenges, upholding DOD’s classifications, policy change, and destruction authority.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether DOD misclassified parts (used Category VIII instead of Category IX)	Parts (attack trainers) should be classified as military training equipment (Category IX) and thus presumed Demil Code B	Category VIII (Military Aircraft) is the correct, more specific category; manual exempts training aircraft only when they have reciprocating engines	DOD’s reading of the manual is reasonable; Demil Code D classification affirmed
Whether APA forbids DOD from prohibiting sale of Demil B, sensitive Q, and D parts	It is arbitrary to bar sale when similar parts are already in private hands or FAA permits operation	Policy change responds to GAO findings; agency discretion to restrict release to mitigate security risks	Policy change justified and supported by record; not arbitrary or capricious
Whether statutes, settlement, or DOD policy bar destruction of surplus parts	Statutes (e.g., 18 U.S.C. §§ 641,1361), 40 U.S.C. § 527, or a prior settlement prohibit destruction	Criminal statutes inapplicable to authorized agency acts; §527 permissive; settlement does not prohibit destruction and contemplates unsalable parts	No legal prohibition shown; DOD may destroy parts; plaintiffs’ arguments fail
Whether court can review DOD’s procedures (removal cost/time, rush to destroy)	Procedures were unreasonable and procedurally flawed; plaintiffs had contract right to challenge	These are internal, ministerial, discretion-laden implementation choices not amenable to judicial management	Procedural complaints are nonjusticiable agency implementation matters; plaintiffs contractually accepted DOD discretion

Key Cases Cited

Morton v. Ruiz, 415 U.S. 199 (1974) (agency must follow its own published rules when they affect private interests)
Mass. Fair Share v. Law Enf't Assistance Admin., 758 F.2d 708 (D.C. Cir. 1985) (courts can apply agency manuals where they affect concrete interests)
Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (standards for arbitrary and capricious review)
Jicarilla Apache Nation v. U.S. Dep't of Interior, 613 F.3d 1112 (D.C. Cir. 2010) (agency must supply reasoned analysis when changing course)
FCC v. Fox Television Stations, Inc., 556 U.S. 502 (2009) (requirements for reasoned explanation when agency changes prior policy)
Heckler v. Chaney, 470 U.S. 821 (1985) (certain agency enforcement/discretion decisions are presumptively unreviewable)
Vermont Yankee Nuclear Power Corp. v. Nat. Res. Def. Council, Inc., 435 U.S. 519 (1978) (procedural rulemaking and procedural formulation generally within agency discretion)
LaShawn A. v. Barry, 87 F.3d 1389 (D.C. Cir. 1996) (law-of-the-case doctrine guidance)
Air Transp. Ass'n of Am. v. Nat'l Mediation Bd., 719 F. Supp. 2d 26 (D.D.C. 2010) (review of agency action on administrative record)