                           PUBLISHED

UNITED STATES COURT OF APPEALS
                 FOR THE FOURTH CIRCUIT


UNITED STATES OF AMERICA,               
                 Plaintiff-Appellant,
                 v.                              No. 02-4667
RICK JOE BAER,
                 Defendant-Appellee.
                                        
UNITED STATES OF AMERICA,               
                 Plaintiff-Appellant,
                 v.                              No. 02-4750
WILLIAM F. CHAN,
               Defendant-Appellee.
                                        
          Appeals from the United States District Court
         for the Eastern District of Virginia, at Norfolk.
Henry Coke Morgan, Jr., and Raymond A. Jackson, District Judges.
                    (CR-02-110, CR-02-108)

                      Argued: February 25, 2003

                      Decided: March 31, 2003

        Before WILKINS, Chief Judge, and WIDENER and
                  MICHAEL, Circuit Judges.



Reversed and remanded by published opinion. Chief Judge Wilkins
wrote the opinion, in which Judge Widener and Judge Michael joined.
2                       UNITED STATES v. BAER
                             COUNSEL

ARGUED: Michael James Elston, Assistant United States Attorney,
Alexandria, Virginia, for Appellant. Brian Gay, THE B & G LAW
GROUP, P.C., Virginia Beach, Virginia, for Appellee Baer; Larry W.
Shelton, Assistant Federal Public Defender, Norfolk, Virginia, for
Appellee Chan. ON BRIEF: Paul J. McNulty, United States Attor-
ney, Justin W. Williams, Assistant United States Attorney, Alexan-
dria, Virginia, for Appellant. Frank W. Dunham, Jr., Federal Public
Defender, Frances H. Pratt, Research and Writing Attorney, Norfolk,
Virginia, for Appellee Chan.


                             OPINION

WILKINS, Chief Judge:

   In these consolidated appeals, the United States challenges district
court rulings dismissing the indictments against Rick Joe Baer and
William Fung Chan (collectively, "Appellees"). Appellees were
indicted separately for making materially false statements on their
applications for Secure Identification Display Area (SIDA) badges,
see 18 U.S.C.A. § 1001(a)(2) (West 2000). After Appellees’ motions
to dismiss were considered separately by different judges, the district
court dismissed both indictments on the basis that the allegedly false
statements were not material as a matter of law. For the reasons that
follow, we reverse and remand for further proceedings.

                                  I.

                                  A.

  As part of the Aviation Security Improvement Act of 1990, Pub.
L. No. 101-604, 104 Stat. 3066 (1990), Congress required an
employment- and criminal-history investigation of any airport
employee with unescorted access to a SIDA.1 See 49 U.S.C.A.
    1
  Slightly different versions of § 44936 were in effect when Baer and
Chan signed their SIDA badge applications. The differences are not
                        UNITED STATES v. BAER                          3
§ 44936 (West 1997 & Supp. 2002). The following portion of
§ 44936 is relevant to this litigation:

       (b) Prohibited Employment.—(1) . . . [A]n air carrier,
    foreign air carrier, airport operator, or government may not
    employ . . . an individual in a position [involving unescorted
    access to a SIDA] if—

    ....

            (B) the results of [the required] investigation
         establish that, in the 10-year period ending on the
         date of the investigation, the individual was con-
         victed (or found not guilty by reason of insanity)
         of—

              (i) a crime referred to in section 46306,
            46308, 46312, 46314, or 46315 or chapter 465
            of this title or section 32 of title 18;
              (ii) murder;
              (iii) assault with intent to murder;
              (iv) espionage;
              (v) sedition;
              (vi) treason;
              (vii) rape;
              (viii) kidnapping;
              (ix) unlawful possession, sale, distribution,
            or manufacture of an explosive or weapon;
              (x) extortion;
              (xi) armed or felony unarmed robbery;
              (xii) distribution of, or intent to distribute, a

material to this appeal. When Baer and Chan signed their SIDA badge
applications, the statute and implementing regulations were administered
by the Federal Aviation Administration (FAA). That responsibility has
since been transferred to the Transportation Security Administration. See
49 U.S.C.A. § 114(f)(7) (West Supp. 2002). Throughout this opinion, we
will refer to the FAA as administrator of the statute and regulations.
4                       UNITED STATES v. BAER
            controlled substance;
               (xiii) a felony involving a threat;
               (xiv) a felony involving—
                  (I) willful destruction of property;
                  (II) importation or manufacture of a con-
               trolled substance;
                  (III) burglary;
                  (IV) theft;
                  (V) dishonesty, fraud, or misrepresenta-
               tion;
                  (VI) possession or distribution of stolen
               property;
                  (VII) aggravated assault;
                  (VIII) bribery; and
                  (IX) illegal possession of a controlled
               substance punishable by a maximum term of
               imprisonment of more than 1 year, or any
               other crime classified as a felony that the
               Under Secretary determines indicates a pro-
               pensity for placing contraband aboard an air-
               craft in return for money; or
               (xv) conspiracy to commit any of the acts
            referred to in clauses (i) through (xiv).

49 U.S.C.A. § 44936(b)(1) (emphasis added). Additionally, subsec-
tion (b)(2) authorizes the administering agency to "specify other fac-
tors that are sufficient to prohibit the employment of an individual in
a position" involving unescorted access to a SIDA.

   Pursuant to its statutory authority, the FAA promulgated a regula-
tion implementing § 44936(b), which is presently codified at 49
C.F.R. § 1544.229(d) (2002).2 The regulation reiterates the list of pro-
hibited crimes found in the statute, with two notable additions: unlaw-
ful use of a firearm, see id. § 1544.229(d)(20) ("Unlawful possession,
use, sale, distribution, or manufacture of an explosive or weapon."),
    2
   This regulation was previously codified at 14 C.F.R. § 107.31(b). The
differences between the previous and current versions of the regulation
are not material to this litigation.
                        UNITED STATES v. BAER                         5
and felony arson, see id. § 1544.229(d)(24). This regulation was in
effect when Appellees signed their SIDA badge applications.

                                  B.

                                   1.

   Baer began employment as a firefighter for the Norfolk, Virginia
Airport Authority in 1989. In May 2002, Baer was required to apply
for a SIDA badge. One of the questions on the form inquired whether,
in the previous ten years, Baer had been convicted of "[u]nlawful pos-
session, use, sale, distribution, or manufacture of an explosive or
weapon." J.A. 8 (internal quotation marks omitted). Baer answered
this question "no." However, in late 1992 Baer had been convicted of
brandishing a firearm in violation of Virginia law, a misdemeanor
offense.

   The district court judge granted Baer’s motion to dismiss the
indictment, concluding that the list of offenses set forth in
§ 44936(b)(1)(B) was "exhaustive" and that the FAA therefore lacked
authority to add any prohibited crimes pursuant to the "other factors"
language of subsection (b)(2). Id. at 13. Further, the district judge
concluded that even if the FAA had authority to add to the list of pro-
hibited crimes, only felony offenses could be added. The judge con-
cluded that because the FAA did not have authority to prohibit SIDA
employment on the basis of misdemeanor convictions for firearms
use, Baer’s failure to divulge his conviction could not be material, and
hence he could not be found guilty of violating § 1001(a)(2). Cf.
United States v. Arch Trading Co., 987 F.2d 1087, 1095 (4th Cir.
1993) (stating that conviction for violating § 1001 requires proof of
a false statement that was made willfully and that was "material to a
matter within the jurisdiction of the agency").

                                   2.

  In March 2000, Chan, a line technician for Piedmont Hawthorne
Aviation, was required to apply for a SIDA badge. In completing the
application, Chan responded "no" to the question of whether he had
ever been convicted of unlawful use of a firearm. In fact, Chan was
6                       UNITED STATES v. BAER
convicted in 1997 of discharging a firearm within city limits, a misde-
meanor. Like Baer, Chan was indicted for violating § 1001(a)(2) after
the falsehood was discovered.

   In dismissing Chan’s indictment, the district court judge started
from the premise that the list of disqualifying crimes in § 44936(b)(1)
comprises only felonies, indicating congressional intent that misde-
meanors would not be disqualifying. The judge further observed that,
in the context of a related rulemaking, the FAA had stated that "the
disqualifying crimes [in § 44936(b)(1)] are serious felonies." J.A. 61
(internal quotation marks omitted). The judge took this to mean that
"the FAA believes that the . . . § 44936(b)(1) list must be limited to
felonies." Id. In light of this conclusion, the judge determined that,
even assuming the FAA had the authority to add to the list of disqual-
ifying crimes, the agency intended to add only felony convictions for
firearms use. Chan’s misdemeanor conviction was therefore not dis-
qualifying, and his failure to disclose it could not be a material mis-
statement.

                                  II.

   The Government argues that the indictments against Appellees
were improperly dismissed. It first maintains that the FAA possesses
the authority to add to the list of disqualifying crimes pursuant to
§ 44936(b)(2). Second, the Government asserts that this authority is
not limited to felony offenses. We agree with both of these conten-
tions.

                                  A.

   In determining the validity of an agency regulation, we must con-
sider first "whether Congress has directly spoken to the precise ques-
tion at issue." Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc.,
467 U.S. 837, 842 (1984). If so, the agency lacks authority to enact
regulations inconsistent with the congressional directive. See id. at
842-43. On the other hand, "if the statute is silent or ambiguous with
respect to the specific issue, the question for the court is whether the
agency’s answer is based on a permissible construction of the statute."
Id. at 843. Moreover, when Congress explicitly leaves a gap for the
agency to fill, regulations promulgated to fill the gap "are given con-
                        UNITED STATES v. BAER                          7
trolling weight unless they are arbitrary, capricious, or manifestly
contrary to the statute." Id. at 844.

   Such a regulatory gap is found in § 44936(b)(2), which grants the
administering agency authority to "specify other factors that are suffi-
cient to prohibit the employment of an individual in a position"
involving unescorted access to secured areas. The FAA is therefore
entitled to specify other factors through regulation, so long as it does
so in a manner that is not "manifestly contrary to the statute." Chev-
ron U.S.A., 467 U.S. at 844.

   In Baer’s case, the district court determined that the grant of
authority to specify "other factors" did not extend so far as to allow
the FAA to identify additional disqualifying offenses. While this is
one permissible construction of subsection (b)(2), it is not the only
one. We agree with the Government that it is not manifestly contrary
to the will of Congress to construe subsection (b)(1) as setting a floor,
not a ceiling; therefore, the FAA did not exceed its authority in speci-
fying additional disqualifying crimes in its regulation.

                                   B.

   In both Baer’s and Chan’s cases, the district court held that even
assuming the FAA possessed authority under subsection (b)(2) to
identify additional disqualifying offenses, an applicant for a SIDA
badge could not be disqualified on the basis of a misdemeanor con-
viction. In Baer’s case, the district judge reasoned that the FAA could
not add misdemeanor offenses because the list of disqualifying
offenses in subsection (b)(1) was limited to felonies. In Chan’s case,
the district judge concluded that the FAA did not intend to include
misdemeanor offenses as disqualifying convictions. We disagree with
both of these conclusions.

                                   1.

   With regard to Baer’s case, even assuming that only felonies are
designated in subsection (b)(1), nothing in subsection (b)(2), the pro-
vision that grants the FAA authority to specify additional disqualify-
ing offenses, limits the authority of the FAA in any way. There is thus
8                        UNITED STATES v. BAER
no reason to think that, if subsection (b)(2) includes the authority to
specify additional disqualifying crimes, that authority is limited to fel-
ony offenses.

   Additionally, the judge’s observation that all of the disqualifying
offenses in subsection (b)(1) are felonies is simply incorrect. For
example, subsection (b)(1)(B)(i) disqualifies any person convicted of
"a crime referred to in . . . chapter 465 of this title." 49 U.S.C.A.
§ 44936(b)(1)(B)(i). One provision in Chapter 465 applies to "[a]n
individual on an aircraft . . . who commits an act that . . . violate[s]
section 113, 114, 661, 662, 1111, 1112, 1113, or 2111 or chapter
109A of title 18." 49 U.S.C.A. § 46506 (West 1997). Sections 661
and 662 refer to theft and receipt of stolen property, both of which are
misdemeanors if the value of the property is no more than $1,000. See
18 U.S.C.A. §§ 661, 662 (West 2000). Additionally, all convictions
involving "unlawful possession, sale, distribution, or manufacture of
an explosive or weapon," 49 U.S.C.A. § 44936(b)(1)(B)(ix), are dis-
qualifying, notwithstanding that such an offense may be a misdemea-
nor under federal or state law. See, e.g., 18 U.S.C.A. § 924(a)(5)
(West 2000) (providing misdemeanor penalty for unlawful sale of a
firearm).

   Appellees argue that "[t]o the extent that misdemeanors are
included within the list [of disqualifying crimes], they relate directly
to aircraft or to secured areas, and therefore their inclusion does not
undermine the requirement that other offenses not related directly to
aircraft or airport security must be felonies." Consolidated Br. of
Appellees at 9. This is incorrect: as noted above, the list of disqualify-
ing offenses includes misdemeanor firearms offenses under federal
law, and likely reaches many other state-law misdemeanors. Appel-
lees acknowledge this fact, but urge us to disregard it because prose-
cutions for such offenses are relatively rare. However, they offer no
reasoning for why the rarity of prosecution is relevant (or indeed, any
proof of this claim), and no language in the statutory text supports
such a limitation on the disqualifying crimes.

                                    2.

  In Chan’s case, the judge examined the regulation and its history
and concluded that the FAA did not intend to include misdemeanor
                         UNITED STATES v. BAER                           9
firearms use as a disqualifying offense. The judge relied in part on
language from the Federal Register, in which the FAA stated that it
had added only "felony arson" to the list of disqualifying crimes "in
order to exclude instances of minor vandalism." 60 Fed. Reg. 51,854,
51,859 (1995). The judge erred in construing this statement to indi-
cate a general intent on the part of the FAA to limit disqualifying
crimes to felonies. Rather, the statement demonstrates that the FAA
knew how to limit disqualifying crimes to felonies; therefore, the fact
that it did not do so with respect to firearms use is particularly telling.

   Appellees rely on other language from the Federal Register in
which the FAA stated that its additions to the list of disqualifying
crimes were intended to clarify the statutory list, not substantively
expand it. Based on this statement, Appellees maintain that the FAA
could not have intended to reach misdemeanor convictions because
doing so would substantively expand the list of disqualifying
offenses. This argument, however, rests on Appellees’ incorrect asser-
tion, discussed above, that the statutory list does not include misde-
meanors.

   In short, nothing in the statements of the FAA regarding its adop-
tion of the regulations indicates any intent to limit disqualifying fire-
arms use convictions to felonies. It was error to conclude that
misdemeanor convictions were not disqualifying under the regulation.

                                   III.

   Because the FAA acted within its authority in designating misde-
meanor use of a firearm as a disqualifying offense, the district court
erred in ruling that the alleged falsehoods by Baer and Chan were not
material as a matter of law. We therefore reverse the judgments of the
district court and remand for further proceedings.

                                          REVERSED AND REMANDED
