Petition for Writ of Certiorari — Edwards v. Wilkins

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Otfico-Supreme Court, U.S.

L‘GRARY- *: FILED

HREM COURT. Us Be | JAN 13 1965

No.

, CLERK

Supreme Court of the United States

OctToRBER TERM, 1964

Pan AMeErnIcAN-Grace Atrways, INc., and BRANIFF

Atrways, Ixc., Petitioners,

Crvin Akronattics Boarp, LvrrHansa Grruan AIR-

LINES, Pan AMERICAN Worup Atrways, Inc., and

Master EXxecetive Covxcits or Pots oF BRANIFF

Atrways, Inc., And Pax AMERICAN-@Grack Atr-

wavs, Ixc., Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE DISTRICT

OF COLUMPIA CIRCUIT

Howarp C. WrEstwoop

Winttiam H. ALLEN

ALEXANDER E. BENNETT

701 Union Trust Building

Washington, D. C. 20005

Attorneys for Petitioner

Pan American-Grace

Airways, Tne.

B. Howes. Hin.

PRANK H. StrricKLer

815 - 15th Street, N.W.

Washington, D.C. 20005

Attorneys for Petitioner

Of Counsel: Braniff Aireeaus, Tne.

COVINGTON & BURLING

WHITEFORD, Hart, CanmMopy

& WILSON

January 1965

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Flee oe

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TABLE OF CONTENTS

Page

Opinions Below .....----eeeeececseseeee terest eee 2

Sie Cg cccie tn cecenchs du ansaaresma gts ee s eee ee4 2

Question Weenie. ..c cis vaseea ges Secenrtns tans ese ees? 2

Statutes and Executive Agreements Involved ......---eeee: 2

ie cys oa kde a ke AON OAS TR PU ERECT SWEETS SNS 3

Reasons for Granting the Writ .....-----ssserrsrrrr 5

Appendix A—Statutes and Executive Agreements Involved .. la

Appendix B—Opinion of the Court of Appeals ......--++++: Ta

Appendix C—Opinion and Order of the Civil Aeronautics

I 5 kd 5 54 b 4a dL ARU ES ED EEE NATE TERETE SS 24a

Appendix D—Judgment of the Court of Appeals ...-------: 27a

INDEX TO CITATIONS

Cases:

Ashbacker Radio Corp. v. FCC, 326 U.S. 327 (1945) .....--- 6, 10

British Overseas Airways Corp.. 99 (.A.B. 583 (1959) ...--- 10

British Overseas Airways Corp. V. CAB, 304 F.2d 952 (D.C.

ee Pr rt leer ae 2

Chicago & Southern Air Lines v. Waterman S.S. Corp., 333

TUE MO CANT Dis ccs eee vec nesercnses ten? gegeer ht ** , 14

Delta Air Lines v. CAB, 228 F.2d 17 (D.C. Cir. 1955) ...--- 7,13

Delta Air Lines v. CAB, 275 F.2d 632 (D.C. Cir. 1959), cert.

denied, 362 U.S. 969 (1960) ....----- seer eee sree el 6, 18

National Airlines v. CAB, 249 F.2d 13 (D.C. Cir. 1957)

Northwest Airlines v. CAB, 194 F.2d 339 (D.C. Cir. 1952) ... 7

Pan American World Airways V. United States, 371 U.S. 296

i err ce re ee 3

Seaboard & Western Airlines V. CAB, 181 F.2d 777 (D.C. Cir.

RE Pere ue ges hao aaa 15

United Air Lines Transport Corp., 1 C.A.A. 778 Se 9

Western Air Lines v. CAB, 184 F.2d 545 (9th Cir. 1950) .... 7

ii Index to Citations Continued

Statutes: Page

Federal Aviation Act of 1958, 72 Stat. 731, 49 U.S.C. § 1301

et seq.

can tepekateu iv066450006604) aneneneetoae tee 6

eda ice ln wallcencc sirens ened seacesacneinceenas 2,9

Pn cos pan beeees beeen éebsesbsseeenencnerens 2, 6, 8, 9, 10

ion etl ENeebasvakted ent bubdvedvectnvasss 2, 7, 8,9, 10

ned eee eee cheba eee eanesees seetehons seeens 2,7,8

ea radian evesia nivkveen es 4, 14, 15

DEE Gaeesesseteracaces Schone si nceeeesereeixeséa 2, 8,9, 10

| Peer TerrrrrT Tere reir Trier irre 2

Executive Agreements:

Air Transport Agreement and Related Exchange of Notes Be-

tween the United States of America and the Federal Re-

public of Germany, July 7, 1955, 7 U.S.T. & O.1.A. 527,

ee etch e bused nkecectteee eae 3,7

Miscellaneous:

Initial Decision of Examiner Edward T. Stodola, CAB Docket

ee EE oo wesc née cv euaeyacéecectdicncos 12

S. Rep. No. 1875, 84th Cong., 2d Sess. (1955) .............. 12

Supreme Court of the United States

Octoser TERM, 1964

No.

Pan AMERICAN-GrRAcCE ArRwAYsS, INC., and BRANIFF

Arways, Inc., Petitioners,

Vv.

Crvi. AgRonauTics Boarp, LUFTHANSA GERMAN AIR-

LINES, PAN AMERICAN WORLD AIRWAYS, Inc., and

MASTER EXECUTIVE CoUNCILS OF PiLots OF BRANIFF

Arrwavys, Inc., AND PaN AMERICAN-GRACE ATR-

ways, Inc., Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE DISTRICT

OF COLUMBIA CIRCUIT

Petitioners pray that a writ of certiorari issue to

review a judgment of the United States Court of Ap-

peals for the District of Columbia Cireuit dismissing

petitions for review of an order of the Civil Aeronau-

ties Board that denied contemporaneous, comparative

hearing and consideration of petitioners’ applications

for airline route licenses with the mutually exclusive

application of Lufthansa German Airlines for a license

to operate the same airline route.

OPINIONS BELOW

The opinion of the Court of Appeals (R. 2025-43)"

is not yet reported. It is set forth as Appendix B

hereto, pp. 7a-23a, infra. The order of the Civil Aero-

nauties Board (J.A. 51-53) is not reported and is

printed as Appendix C hereto, pp. 24a-26a, infra.

JURISDICTION

The judgment of the Court of Appeals dismissing

the petitions for review was entered on October 30,

1964. (R. 2045; App. D, p. 27a, infra ). The order of

the court denying petitioners’ timely-filed petition for

rehearing en bane was entered on December 11, 1964.

(R. 2045-A). The jurisdiction of this Court is invoked

under 28 U.S.C. § 1254(1).

QUESTION PRESENTED

Whether United States air carriers, which have filed

applications under Section 401 of the Federal Aviation

Act for licenses to operate an international airline

route, are entitled to contemporaneous, comparative

hearing and consideration of their applications with

the mutually exclusive application of a foreign air car-

rier under Section 402 of the Act for a license to oper-

ate the same airline route.

| STATUTES AND EXECUTIVE AGREEMENT INVOLVED

The statute principally invelved is the Federal Avi-

ation Act of 1958, 72 Stat. 731, 49 U.S.C. § 1301 et seq.

Pertinent provisions of Sections 102, 401, 402, 801 and |

1102 thereof are set forth in Appendix A hereto, pp. |

1 References ‘‘(R. ...)’’ are to the record of proceedings in the

court below filed in this Court. References ‘‘(J.A. ...)’’ are to

the page numbers of the joint appendix printed for the use of the

court below, which is included in the record certified to this Court.

la-4a, infra. Also involved are provisions of the

Air Transport Agreement and Related Exchange of

Notes Between the United States of America and the

Federal Republic of Germany, July 7, 1955, TUS.T. &

O.1.A. 527, T.I.A.8. 3536, which are also set forth in

Appendix A, pp. 5a-6a, infra.

STATEMENT

Petitioners Panagra and Braniff are United States

flag air carriers that have routes down the west coast

of South America. The route of neither carrier ex-

tends as far north as New York. The Braniff route

terminates at Miami on the east coast of tie United

States and the Panagra route at Balboa, Canal Zone.

Both petitioners participate in the provision of

through-plane service between New York and South

America by interchange arrangements with other car-

riers; these interchange flights make several inter-

mediate stops. Each of the petitioners filed with the

respondent Civil Aeronautics Board in 1962 an appli-

cation for a license extending its route to New York

by way of points that include Kingston and Montego

Bay, Jamaica. (J.A. 113-15, 116-17). ‘Those applica-

tions have been consolidated by the Board into the

United States-Caribbean-South America I nvestigation,

CAB Docket No. 12895, a major route case in which

present-day air service needs between the United States

and South America will be considered by the Board.

The Board’s order instituting this investigation

(J.A. 54-60) is familiar to this Court; it was printed

as an appendix to the Court’s opinion in Pan Ameri-

can World Airways v. United States, 371 U.S. 296, 314

(1963). In it the Board stated its tentative determina-

tion that the available traffic would support only one

United States airline between the United States and

points on the west coast of South America. (J.A. 58;

see J.A. 62). This determination was based upon an

elaborate study by the Board’s staff (J.A. 58; see J A.

60-86), and in large part the lack of traffic potential ‘or

United States carriers was attributed to the services

provided by foreign flag carriers operating between the

United States and South America (J.A. 56; see J.A.

67-68, 79-86).

The hearings in this investigation are scheduled to

be eonducted this coming spring. Meanwhile, the

Board on March 10, 1964, received an application from

the respondent Lufthansa German Airlines for a li-

cense extending its route from New York to the very

points in the Caribbean and South America for which

Panagra and Braniff both are applicants: Kingston

and Montego Bay, Jamaica; Quito and Guayaquil,

Ecuador; Lima, Peru; and Santiago, Chile. (J.A. 5-

7). Lufthansa already has routes linking South Amer-

ica and its home country, West Germany, but it has

no authority to conduct operations between New York

(a terminal of one of its routes from Europe to the

United States) and points in the Caribbean or in

South America.

- Panagra and. Braniff moved to consolidate Luft-

hansa’s application and their applications for iden-

tical authority, alleging that the applications were

mutually exclusive, i.e., that because of the lack of

sufficient traffic potential not all of the applications

could be granted. (J.A. 21-27, 29-31). The Board

denied these motions and set Lufthansa’s application

for expedited hearing. (J.A. 51-53; pp. 24a-26a, infra).

Panagra and Braniff filed petitions for review of the

Board’s order denying consolidation in the_Court of

Appeals for the District of Columbia Cireuit under

Section 1006 of the Federal Aviation Act, 72 Stat. 795,

49 U.S.C. § 1486. On petitioners’ motions the court

stayed the Board proceedings on Lufthansa’s applica-

tion pending its final disposition of the petitions for

review or until further order of the court. (R. 2046-

48). A motion of Lufthansa to dismiss the petitions

for want of jurisdiction was denied (R. 2049) as were

subsequent motions of the Board and Lufthansa to dis-

solve the stay (R. 2050-52).

After briefing and argument a three-judge panel of

the Court of Appeals decided, with Judge McGowan

dissenting, that petitioners were not entitled to a com-

parative hearing with Lufthansa on their respective

applications for licenses for the same airline route be-

eause the issuance of permits to foreign air carriers in-

volves different considerations from those involved in

determining whether certificates should be issued to

United States carriers. Therefore, the court ruled,

the Board’s order deprived petitioners Panagra and

Braniff of no legal rights and so it was non-final and

non-reviewable, and the petitions were ordered dis-

missed. It was immaterial, on the view of the majority

of the court, that the award of a permit to Lufthansa

might in fact preclude, as a matter of economics, an

award of a certificate to either or both of petitioners.

CR. 2025-33; pp. Ta-13a, infra).

A petition for rehearing en bane was ‘denied (R.

9045-A). and thereafter the Court granted petitioners’

motion to stay transmission of its mandate to the

Board pending this Court’s action cn a petition for

certiorari to be filed on or before “anuary 13, 1965.

REASONS FOR GRANTING THE WRIT

1. The decision of the Court of Appeals for the Dis-

trict of Columbia Circuit affects the administration of

the Federal Aviation Act in an important elass of

cases before the Civil Aeronautics Board. The court

decided that Congress meant by key provisions of the

Act to authorize the granting of a license to a foreign

earrier to operate an airline route to the exclusion of

vitizen applicants for the same route without affording

the citizen applicants a meaningful hearing on their

applications.? The decision poses an important ques-

tion of federal law that has not been and should be

decided by this Court.

In the case of applicants for federal licenses gen-

erally the answer to the question posed in this case is

provided by this Court’s decision in Ashbacker Radio

Corp. v. FCC, 326 U.S. 327 (1945). The doctrine

established by that case is that where there are two or

more applicants for licenses for the same authority,

entitled as are petitioners and Lufthansa by the terms

of the Federal Aviation Act to hearings on their ap-

plications, and there is, physically or economically,

room for less than all of them, their applications must

be heard and considered together.

‘‘TW ]|here two bona fide applications are mutually

exclusive the grant of one without a hearing to

both deprives the loser of the opportunity which

Congress chose to give him.’’ Id. at 333.

Petitioners’ applications were filed under Section

401 of the Federal Aviation Act, and by an unbroken

line of decisions of the lower federal courts there is no

doubt that the righ+ to a hearing conferred by that

section ordinarily would entitle petitioners to the pro-

tection of the Ashbacker doctrine. Delta Air Lines v.

2 Petitioners are corporations. ‘‘Citizen of the United States’’

is defined by § 101(13) of the Federal Aviation Act to include a

corporation organized under United States law of which the presi-

deat and two-thirds of the board of directors are citizens and in”

which three-quarters of the voting interest is held by citizens.

CAB, 275 F. 2d 632 (D.C. Cir. 1959), cert. denied, 362

U.S. 969 (1960) ; Delta Air Lines v. CAB, 228 F. 26 17

(D.C. Cir. 1955) ; Northwest Airlines v. CAB, 194 F. 2d

339 (D.C. Cir. 1952) ; Western Air Lines v. CAB, 184

F. 2d 545 (9th Cir. 1950).

The majority of the court below decided that peti-

tioners were not entitled to have their applications

heard with Lufthansa’s application because ‘‘quite

different considerations bear upon Lufthansa’s appli-

sation and those of petitioners... .”’ (R. 2030; p. 11a,

infra).

The couri discussed the sources from which the dif-

ference in considerations was thought to arise. The

first of these is an executive agreement concluded be-

tween this country and the Federal Republic of Ger-

many in 1955. A schedule to the agreement provides

for, among others, a route for a earrier designated by

the German Government between Germany and cities

in the United States including New York ‘‘and beyond

to points in the Caribbean Sea and beyond to South

Ameriea.’”’ (p. 6a, infra). The agreement is specific

that the German carrier may be required to ‘‘qualify

hefore the competent aeronautical authorities of .. .

[the United States], under the laws and regulations

normally applied by these authorities, before being per-

mitted to engage in the operations contemplated by this

Agreement.”’ (Art. 3, p. da, infra).

“rT }he laws and regulations normally applied by”’

the Civil Aeronautics Board, which is the United

States aeronautical authority referred to in the bi-

lateral agreement, see Art. 1(a), p. 5a, infra, are set

forth in Sections 402 and 801 of the Federal Aviation

Act, which the court below next turned to. By Section

402 the Board ‘‘is empowered”’ to issue a permit to a

foreign air carrier to operate over a route between this

country and some other after notice and hearing and

upon findings that the carrier is fit, willing and able

to perform the transportation and to eonform to ap-

plicable laws and regulations and that the transporta-

tion for which the permit is sought ‘‘will be in the

public interest.”” Lufthansa’s application was filed

under Section 402. Section 801 makes a Board order

granting (or denying) a foreign air carrier permit

subject to the approval of the Fresident.

Petitioners filed their applications pursuant to Sec-

tion 401 of the Federal Aviation Act, which provides

that after notice and hearing the Board ‘‘shall issue a

certificate’? granting the whole or any part of the au-

thority sought in the application if it finds the appli-

eant fit, willing and able to perform the transportation

and to conform to applicable laws and regulations and

that the transportation is required by tae public con-

venience and necessity. Section 801 makes the Presi-

dent the fina] judge of whether petitioners’ applica-

tions under Section 401 for certificates of public con-

venience and necessity covering routes extending be-

yond the United States should be granted, just as he is

the final judge of whether Lufthansa’s application

under Section 402 for a public interest permit should

be granted. No ‘‘different considerations”’ arise from

the ultimate power of the President, then, because the

situation is the same as to all three carriers.

Whatever ‘‘different considerations’’ there may be

must derive from Section 1102 of the Act, which directs

the Board to exereise its powers under the Act con-

sistently with obligations assumed by the United States

through treaty or executive agreement. It was ap-

parently this statutory provision, and the United

States-German executive agreement describing in

vague terms a route from New York to South America

that a German carrier might seek to qualify to operate,

that led the court below to say that the ‘“‘public in-

terest’? test that must be satisfied by a foreign air

carrier permit applicant under Section 402 differs

from the test of the ‘‘public convenience and ne-

cessity”? to which a United States airline is subject

by Section 401. The fact is, however, that Section 102

of the Act directs the Board to consider the same fac-

tors both as being in the public interest and as being in

accordance with the juhlic convenience and necessity.

The two phrases are ixterchaageable. See United Air

Lines Transport Corp., 1 C.A.A. 778, T79-80 (1940).

There is a difference between Section 402 and Sec-

tion 401. By Section 402 the Board ‘‘is empowered,”’

not directed, to issue a foreign air carrier permit when

it finds the applicant fit and its proposed service in the

publie interest. By contrast, Section 401 provides that

the Board “‘shall issue”’ a certificate to a citizen carrier

when it makes the statutory findings concerning fitness

and the publie convenience and necessity. This is a

quite natural Congressional direction that even a quali-

fied foreign applicant ordinarily obtains its permit to

carry passengers and freight in and out of the United

States as a matter of grace, whereas the qualified cit-

izen applicant is entitled to a certificate as a matter of

right. The apparent significance of Section 1102 in

this statutory scheme is that when the section is ap-

plicable, i.c., when the route for which a permit is

sought is the subject of an international agreement,

the permit must be granted if the applicant satisfies

the statutory eriteria by proving at a hearing that it

is fit and that its service will be in the public interest.

Section 1102 by its terms does not alter the governing

public interest criterion.

Even if, however, the public interest test under Sec-

tion 402 does differ in some way from the public con-

venience and necessity test under Section 401, as the

court below believed, it does not follow that the Board

may lawfully deny a citizen applicant a comparative

hearing with a foreign applicant when their applica-

tions are mutually exclusive. A comparative assess-

ment may be more difficult if the eriteria are different,

but it is the mutual exclusivity of applications, not the

sameness of criteria, that entitles the usual license ap-

plicanis to comparative hearing and consideration.

Ashbacker Radio Corp. v. FCC, 326 U.S. 327 (1945).

The decision of the court below can be sustained, we

submit, only if Section 1102 is construed to override

altogether the public interest test of Section 402. The

Board has denied that the provision is properly so con-

strued. It has denied that Section 1102 means that a

foreign air carrier permit shall be granted as in the

‘‘nublie interest’? whenever the route for which the

permit is sought is covered by an international agree-

ment. British-Overseas Airways Corp., 29 C.A.B. 583,

593 (1959).°

In any event, the question whether Congress meant

that Section 1102 should have this effect, or that the

provisions of law cited by the court below in combina-

tion mean that a foreign carrier’s application can de

8 See also the quotation from the Board’s brief in the court below

set out in Judge MeGowan’s dissenting opinion: The Board said

that it ‘‘considers that it is not required to recommend issuance

of a foreign air carrier permit to the President merely because

there is an agreement providing for such permit.’’ (R. 2040; p.

20a, infra).

granted without United States carriers’ having been

heard on mutually exclusive applications, is appropri-

ately one for resolution by this Court. This Court

alone can authoritatively decide whether a foreign

line’s application can lawfully be granted without a

domestic ecarrier’s having had a meaningful oppor-

tunity to prove that it could perform the service needed

on the route as well as the foreign line or better. The

question is important as well as novel.

9. The court below cast its opinion and judgment in

terms of jurisdiction, ordering the petitions for review

dismissed. Its decision, however, was actually on the

merits of the novel and important question of law we

have just described. The court said that ‘‘in the con-

ventional case deprivation of ... [an Ashbacker] hear-

ing to a party entitled thereto would heve such aspects

of finality as to be reviewable.’? (R. 2030; p. 11a,

infra). An order effecting such a deprivation satis-

fies the test laid down by this Court in Chicago &

Southern Air Lines v. Waterman S.S. Corp., 333 U.S.

103, 112-13 (1947), that ‘‘administrative orders are

not reviewable unless anda until they impose an obliga-

tion, deny a right or fix some legal relationship as a

consummation of the administrative process.”’

‘Under this test, a final order need not necessarily

be the very last order.”” Isbrandtsen Co. v. United

States, 211 F. 2d 51, 55 (D.C. Cir. 1954), cert. denied,

347 U.S. 990 (1954). Where only one of two license

applications can be granted, an order refusing 2 com-

parative hearing to one of the applicants effectively

denies him a substantial right. This makes it a final

order for purposes of review. The court below dis-

missed for want of jurisdiction only because of its con-

clusion that, on account of differences in considerations

arising from the statute, petitioners were not entitled

to a comparative heering and therefore had not been

deprived of any such right. The decision was on that

question of law.

The court thus quite properly eschewed the basis on

which the Board placed its order denying consolidation

of the three applications. The Board, which held no

hearing but decided the matter on pleadings, said that

it was ‘‘not persuaded that grant of Lufthansa’s ap-

plication would, as a matter of economic fact, preclude

the subsequent grant of Braniff’s application.” (J.A.

52).4 The statement cannot be squared with what the

4 Among the reasons given by the Board for not being persuaded

that there was in fact any mutual exclusivity was that ‘‘Lufthansa’s

schedules would be subject to the capacity provisions’’ of the agree-

ment between the United States and Germany and that ‘‘ Lufthansa

would be required to tailor its capacity offered between the U.S.

and South America to the traffic demands: between Germany and

the South American points in question.’”’ (J.A. 52). Capacity

controls are chimerical. In a report that dealt at this point with

the very provision of the United States-German agreement relied

upon by Lufthansa, the Senate Interstate and Foreign Commerce

Committee said that policing capacity

‘‘would ultimately reduce the level of frequencies to so low

a number as to produce complaints of unfairness. Diplomati-

eally, this would be difficult ; practically, it has never been done

before.

‘‘Our Government appears to have concluded that, once a

route has been granted which is economically sustainable by

the traffic moving between its termini because that is the most

direct routing between those points, then the carriers should

be left considerable freedom to operate the amount of capacity

over that route to provide adequate service to the public. This

is substantially the interpretation given by the CAB spokesman

in his further testimony.’’ S. Rep. No. 1875, 84th Cong., 2d

Sess. 18-19 (1955). (Emphasis in original.)

Foreign air carriers have resisted, so far successfully, efforts to

compel them even to report their traffic statistics to the Board.

See British Overseas Airways Corp. v. CAB, 304 F.2d 952 (D.C.

Cir. 1962) ; Initial Decision of Examiner Edward T. Stodola, CAB

Docket No. 12063, June 21, 1962.

Board said in its order instituting the South America

Investigation.

In that order the Board indicated that perhaps only

one United States carrier should be authorized to

serve the route from New York to the west coast of

South America because of insufficient traffic in the

markets involved. The Board attributed that problem

in large part to services by foreign flag carriers over

the route, saying:

‘‘Not only do these services rendered by non-US.

flag carriers dilute the potential economic support

for the services of the U.S. carriers, but also they

bring into question the need for point-to-point

duplication of such services.”’ (J.A. 56).

There was thus at the very least a serious question of

mutual exclusivity on the face of the Board’s own prior

findings. Ordinarily an applicar ~ entitled in those

cireamstances to attempt to sustain its allegation of

actual mutual exclusivity in a comparative hearing.

Delta Air Lines v. CAB, 275 F. 2d 632 (D.C. Cir. 1959),

cert. denied, 362 U.S. 969 (1960) ; Delta Air Lines v.

CAB, 228 F. 2d 17 (D.C. Cir. 1955). That was the

view of Judge McGowan in dissent. He said that he

considered the Board’s order final and therefore re-

viewable because it ‘‘effectively put an end to peti-

tioners’ opportunity to press their claim of right to

an Ashbacker determination, either on the record as it

stood at the time the order was entered or after the re-

ceipt by the Board in the future of evidence on the

exclusivity issue.’’ (R. 2034; p. 15a, infra).

‘This case does not involve any of the rules that agencies, pal’-

ticularly the Civil Aeronautics Board, have devised to channel

Ashbacker claims in the interest of orderly procedure. There is

no question of timely filing of competitive applications or motions

to consolidate such applications, or of anything like a requirement

that to avoid proliferation of issues an applicant for authority

Petitioners, to be sure, were admitted as intervenors

in the proceeding on Lufthansa’s application, but, as

the court below said after reciting this fact, ‘denial of

a comparative hearing with Lufthansa may preclude

petitioners from showing economic superiority over

Lufthansa in operating the route in question.”” (R.

2029; p. 10a, infra).

3 Petitioners do not believe that there are in this

ease any of the considerations that underlie this

Court’s holding in Chicago & Southern Air Lines Vv.

Waterman S.S. Corp., 333 U.S. 103 (1947). Section

1006 of the Federal Aviation Act, the judicial review

provision of the Act, excepts from review in the courts

of appeals ‘‘any order in respect of any foreign air

earrier subject to the approval of the President as pro-

vided in Section 801 of this Act... .’’ In the W ater-

man ease this Court decided that orders affecting

domestic air carriers’ certificates subject to Presi-

dential approval under Section 803 likewise could not

be judicially reviewed.

The Board and Lufthansa urged below that the

court lacked jurisdiction because, as it was put by the

partially within and partially without the geographical confines

of a major airline route case must substantiate in the course of

the case his claim of mutual exclusivity with applications for

authority between points wholly within the area covered by the

proceeding. See Eastern Air Lines v. CAB, 271 F.2d 752, 756-57

(2d Cir. 1959), cert. denied, 362 U.S. 970 (1960) ; Nationa! Airlines

v. CAB, 249 F.2d 13 (D.C. Cir. 1957). Here there is point-to-point

duplication. Certainly after the decision of the court below that

conclusive proof of mutual exclusivity would not entitle them to a

comparative hearing, it*would be futile for petitioners to attempt

to make such proof in the Lufthansa application proceeding, even

assuming that the Board would permit them to do so; it has never

said that it would so permit them. Cf. National Airlines v. CAB,

supra at 14-15.

Board, ‘‘ultimate decision in the Board’s proceedings

is committed to the President.” Judge Wright, spe-

cially concurring below, accepted the contention. (R.

2033-34; p. 14a, infra). We do not believe that any-

thing in the Waterman case requires that the exception

from reviewability stated in Section 1006 be extended

to include any order dealing with a foreign carrier

permit or a certificate of public convenience and neces-

sity for foreign air transportation even though that

order is not subject to approv al of the President. The

court below at least assumed the correctness of our

belief in Seaboard & Western Airlines v. CAB, 181 F.

9d 777, 779 (D.C. Cir. 1949), where it said that an

order denying comparative consideration of mutually

exclusive applications for international certificates

would be reviewable. See also footnote 1 of Judge Mc-

Gowan’s dissenting opinion below. (R. 2035; p. loa,

infra).

If renewed here, the jurisdictional contention of the

Board and Lufthansa would itself present a question

meriting this Court’s attention.

Petitioners’ views on the question, in brief, are these:

The order that is under review here was not subject to

the approval of the President. It was not submitted to

him or approved by him. It is fully effective without

his approval. Of couse, the ultimate decision whether

Lufthansa should be awarded the permit it seeks or

petitioners the certificates they seek is for the Presi-

Gent. Petitioners simply seek to have placed before

the Board for its recommendation to the President and

before the President for his appraisal and decision

their qualificaticns for operating the New York-South

America route at the same time that Lufthansa’s quali-

fications are presented. This they believe is their right

because of the likelihood the Board has found to exist

that one or more of the applicants, for reasons of eco-

nomics, cannot receive an award. For a court to direct

that petitioners have this opportunity is not an intru-

sion into Presidential prerogatives or otherwise beyond

judicial power. It is an exercise of the traditional

judicial function of assuring fair play and a fair hear-

ing, which is the genius of the Ashbacker doctrine.

CONCLUSION

The petition for writ of certiorar? should be granted.

Respectfully submitted,

Howarp C. WESTWOOD

WruiaM H. ALLEN

ALEXANDER BE. BENNETT?

701 Union Trust Building

Washington, D. C. 20005

Attorneys for Petitioner

Pan American-Grace

Airways, Inc.

B. Howse.i HILL

Frank H. STRICKLER

815 - 15th Street, N.W.

Washington, D. C. 20005 .

Attorneys for Petitioner

Braniff Airways, Inc.

Of Counsel:

Covinaton & BURLING

W HITEFORD, HaRkT, CARMODY

& WILSON

January 1965 ,

APPENDIX A

A. Pertinent provisions of the Federal Aviation <Act

of 1958, 72 Stat. 731, 49 U.S.C. $1301 ef seq., read as

follows:

DecLaRATION oF Poticy: THe Boarp

§ 102. In the exercise and performance of its powers and

duties under this Act, the Board shall consider the fol-

lowing, among other things, as being in the public interest,

and in accordance with the public convenience and neces-

sity :

(a) The encouragement and development of an air-

transportation system properly adapted to the present and

future needs of the foreign and domestic commerce of the

United States, of the Postal Service, and of the national

defense ;

(b) The regulation of air transportation in such manner

as to recognize and preserve the inherent advantages of,

assure the highest degree of safety in, and foster sound

economic conditions in, such transportation, and to improve

the relations between, and coordinate transportation by,

air carriers;

(ec) The promotion of adequate, economical, and efficient

service by air carriers at reasonable charges, without un-

just discriminations, undue preferences or advantages, or

unfair or destructive competitive practices ;

(d) Competition to the extent necessary to assure the

sound development of an air-transportation system prop-

erly adapted to the needs of the foreign and domestic

commerce of the United States, of the Postal Service, and

of the national defense ;

(e) The promotion of safety in air commerce; and

(f) The promotion, encouragement, and development of

civil aeronautics.

CertiricaTe or Pustic ConveNtENcE AND NECESSITY

Certificate Required

§ 401. (a) No air carrier shall engage in any air trans-

portation unless there is in force a certificate issued by the

Board authorizing such air carrier to engage in such

transportation.

Application for Certificate

(b) Application for a certificate shall be made in writing

to the Board and shall be so verified, shall be in such form

ar 1 contain such informetion, and shall be accompanied by

such proof of service upon such interested persons, as the

Board shall by regulation require.

Notice of Application

shall give due notice thereof to the public by posting a

notice of such application in the office of the secretary of

the Board and to such other persons as the Board may by

regulation determine. Any interested person may file with

the Board a protest or memorandum of opposition to or in

support of the issuance of a certificate. Such application

shall be set for a public hearing, and the Board shall dis-

pose of such application as speedily as possible.

Issuance of Certificate

(d)(1) The Board shall issue a certificate authorizing

the whole or any part of the transportation covered by the

application, if it finds that the applicant is fit, willing, and

able to perform such transportation properly, and to con-

form to the provisions of this Act and the rules, regula-

tions, and requirements of the Board hereunder, and that

such transportation is required by the public convenience

and necessity; otherwise such application shall be denied.

Permits To Foreign Arm CaRRIERS

Permit Required

§ 402. (a) No foreign air carrier shall engage in foreign

air transportation unless there is in force a permit issued

by the Board authorizing such carrier so to engage.

Issz:ance of Permit

(b) The Board is empowered to issue such a permit if it

finds that such carrier is fit, willing, and able properly to

perform such air transportation and to conform to the

provisions of this Act and the rules, regulations, and re-

quirements of the Board hereunder, and that such trans-

portation wil! be in the public interest.

Application for Permit

the Board, shal! be so verified, shall be in such form and

contain such information, and shall be accompanied by such

proof of service upon such interested persons, as the Board

shall be regulation require.

Notice of Application

(d) Upon the filing of an application for a permit the

Board shall give due notice thereof to the public by posting

a notice of such application in the office of the secretary of

the Board and to such other persons as the Board may

by regulation determine. Any interested person may file

with the Board a protest or memorandum of opposition to

or in support of the issuance of a permit. Such application

shall be set for public hearing and the Board shall dispose

of such application as speedily as possible.

* x *

Tizp PRESIDENT OF THE UNITED STATES

§ 801. The issuance, denial, transfer, amendment, can-

cellation, suspension, or revocation of, and the terms,

conditions, and limitations contained in, any certificate au-

thorizing an air carrier to engage in overseas or foreign

air transportation, or air transportation between places

in the same Territory or possession, or any permit issuable

to any foreign air carrier under section 402, shall be subject

to the approval of the President. Copies of all applications

in respect of such certificates and permits shall be trans-

mitted to the President by the Board before hearing

thereon, and all decisions thereon by the Board shall be

submitted to the President before publication thereof.

INTERNATIONAL AGREEMEENTS

§ 1102. In exercising and performing their powers and

duties under this Act, the Board and the Administrator

shall do so consistently with any obligation assumed by the

United States in any treaty, convention, or agreement that

may be in force between the United States and any foreign

country or foreign countries, and shall take into considera-

tion any applicable laws and requirements of foreign coun-

tries and the Board shall not, in exercising and performing

its powers and duties with respect to certificates of con-

venience and necessity, restrict compliance by any air car-

rier with any obligation, duty, or liability imposed by any

foreign country: Provided, That this section shall not apply

to any obligation, duty, or liability arising out of a contract

or other agreement, heretofore or hereafter entered into

between an air carrier, or any officer or representative

thereof, and any foreign country, if such contract or agree-

ment is disapproved by the Board as being contrary to the

public interest.

B. Pertinent provisions of the Air Transport Agreement

and Related Exchange of Notes Between the United States

of America and the Federal Republic of Germany, July 7,

1955, 7 U.S.T. & O.LA. 527, T.LA.S. 3536, read as follows:

ARTICLE 1

(a) The term ‘‘aeronautical authorities’’ shall mean in

the case of the United States of America, the Civil Aero-

nauties Board and any person or agency authorized to

perform the functions exercised by the Civil Aeronautics

Board and, in the case of the Federal Republic of Germany,

the Federal Minister of Transport and any person or

agency authorized to perform the functions exercised by

the said Federal Minister of Transport.

ARTICLE 2

(1) Each contracting party grants to the other contract-

ing party rights necessary for the conduct of international

air services by the designated airlines, as follows: the rights

of transit, of stops for non-traffic purposes, and of com-

mercial entry and departure for international traffic in

passengers, mail and cargo at the points in its territory

named on each of the routes specified in accordance with

paragraph (2).

(2) The routes over which the designated airlines of the

two contracting parties will be authorized to operate will

be specified in a Route Schedule, mutually agreed upon,

and set forth in an exchange of diplomatic notes.

ARTICLE 3

Air service on a specified route mav be inaugurated by

an airline or airlines of one contracting party at any time

after that contracting party has designated such airline

or airlines for that route and the other contracting party

has given the appropriate operating permission. Such

other party shall, subject to Article 4, be bound to give

this permission provided that the designated airline or

airlines may be required to qualify before the competent

aeronautical authorities of that party, under the laws and

regulations normally applied by these authorities, before

being permitted to engage in the operations contemplated

by this Agreement.

The Secretary of State to the Chargé d’Affaires

ad interim of the Federal Republic of Germany

Department of State

Washington

July 7, 1955

Sir:

I refer to paragraph 2 of Article 2 of the Air Transport

Agreement between the United States of America and the

Federal Republic of Germany, signed on July 7, 1955.

In the negotiations which have been conducted in con-

nection with the above-mentioned Agreement, it has been

agreed that air services may be operated in accordance

with the following route schedule.

Route Schedule

B. An airline or airlines designated by the Government

of the Federal Republic of Germany shall be entitled to

operate air services on each of the air routes specified via

intermediate points, in both directions, and to make

scheduled landings in the United States of America at the

points specified in this paragraph:

1. From the Federal Republic of Germany via in-

termediate points to Boston, New York and Philadel-

phia and beyond to points in the Caribbean Sea and

beyond to South America.

e * 7

For the Secretary of State:

Hessert Hoover, Jr.

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 18671

Pan Ameprican-Grace Airways, INc., PETITIONER

Crvu. Agronavutics Boarp, RESPONDENT

Master Executive Councizs or Pirots oF Branirr

Arrways, Inc., aNpD Pan American-Gracr AIRways, ‘Inc.,

LurrHansa GerMaN AIRLINES AND Pan AMERICAN Wor.p

Armways, INc., INTERVENOBS

No. 18672

Branirr Arrways, INc., PETITIONER

Civui, AERONAUTICS BoarD, RESPONDENT

Master Executive Councits or Pivots oF BRANIFF

Airways, Inc., anD Pan American-Grace Arrways, Inc.,

LurrHansa GeRMaN ArgLines AND Pan AMERICAN Wosr.p

Arrways, INc., INTERVENOBS

On Petitions for Review of an Order

of the Civil Aeronautics Board

Dezided October 30, 1964

Before Fany, Waicut and McGowan, Circuit Judges.

Fany, Circuit Judge: Petitioners, Braniff Airways, Inc.,

and Pan American-Grace Airways, Inc., are domestic air

carriers. They petition for review of an order of the

Civil Aeronautics Board denying a motion by Braniff,

supported by Pan American-Grace, that an application

previously “made to the Board by Lufthansa German Air-

lines, intervenor, to amend its foreign air permit be con-

solidated with the pending United States-Caribbean-Souin

American Investigation, known as the South American

Route Case, or that the Board defer proceedings on Luft-

hansa’s application until decision in the Route Case.

Petitioners moved in this court for a stay of the Board’s

proceedings in the Lufthansa case pending our review.

We granted the stay. Lufthanse moved in this court that

the petitions be dismissed. We denied this motion. There-

after several American airlines which operate in the

Federal Republic of Germany, herein referred to as Ger-

many, and points beyond, under reciprocal rights granted

in a bilateral Executive Agreement between the United

States and Germany, were allowed to intervene or file

briefs. The Master Executive Councils of Pilots of certain

airlines were also allowed to intervene.

The motion before the Board to consolidate and defer,

the denial of which is sought to be reviewed, was filed by

Braniff as an intervenor in the case involving Lufthansa’s

application pursuant to Section 402 of the Federal Avia-

tion Act, 72 Stat. 757, 49 U.S.C. § 1372 (1958), for an

extension of its Europe to New York air route to points

in South and Central America, in accordance with the

hijateral Executive Agreement referred to. This Agree-

ment grants to designated German carriers rights of tran-

sit in the United States, the specific routes to be set forth

in an exchange of diplomatic notes.’ Pursuant to this

procedure the Secretary of State specified points in the

United States and ‘‘points in the Caribbean Sea and be-

1 Air Transport Agreement between the Federal Republic of

Germany and the United States of America, Article 2, signed

July 7, 1955. 7 US.T. & O.L.A. 527 (1956).

yond to South America.”’ 2 The Agreement also requires

the foreign carrier to qualify under the ‘laws and regu-

lations normally applied’’ by the regulating body, the

Board in this case.

The route sought by Lufthansa is essentially that in-

volved in the Route Case. If its application were granted

Lufthansa would serve substantially the same points as

are presently served by petitioners, who are parties in

the Route Case. ,

The Route Case grew out of a study by the Board staff

which indicated that due to the economics of the situation,

and because of foreign competition in the area, the public

interest could be served more efficiently with newly design-

nated route patterns in place of routes presently operated

by the two American airlines. Moreover, the Board has

tentatively decided that only one American airline should

operate from the United States to the western coast of

South America; this route has several applicants includ-

ing petitioners. The Route Case has spawned other is-

sues, is very complicated, and hearings in the case will not

begin until January 1969.

In support of its claim of right to consolidation and

deferment Brainiff urges that comparative hearings are

required under the Ashbacker doctrine, Ashbacker Radio

Corp. v. FCC, 326 US. 327 (1945), since, it contends, the

applications of petitioners and Lufthansa are mutually

exclusive as a matter of economics. In denying the mo-

tion the Board said that assuming arguendo the doctrine

were applicable ‘‘to this type of situation,’’ the requisite

showing of mutual exclusivity was not made, pointing out

that Lufthansa’s traffic along the South American route

would be sharply restricted by the terms of the bilateral

2 Route Schedule made and agreed to by the Governments of

Germany and the United States pursuant to Article 2 of the Air

Transport Agreement. 7 US.T. & O.1.A. 527, 557 (1956).

10a

Agreement. The Board also found no need io defer the

Lufthansa -application since it felt that public interest

factors could be assessed without reference to the Route

Case and because, as a matter of policy, foreign carrier

applications should be expedited.

As intervenors before the Board petitioners will be able

to submit evidence to the Board relating to Lufthansa’s

diversion of business from domestic carriers operating in

the same area. But denial of a comparative hearing with

Lufthansa may preclude petitioners from showing eco-

nomic superiority over Lufthansa in operating the route

in question. *

We think the petitions must be dismissed for lack of

jurisdiction in this court. Our jurisdiction depends upon

Section 1006 of the Act, set forth in the margin. * Though

the action denying consolidation and postponement was

by means of an order, reviewable orders do not, ordi-

narily, include such interlocutory or procedural orders:

administrative orders are not reviewable unless and

until they impose an obligation, deny a right or fix

some legal relationship as a consummation of the ad-

30f course both petitioners will participate in comparative

hearings in the Route Case, to which only domestic carriers are

parties,

4Sec. 1006. (a) Any order, affirmative or negative, issued by

the Board or Administrator under this Act, except any order

in respect of any foreign air carrier subject to the approval of

the President as provided in section 801 of this Act, shall be subject

to review by the courts of appeals of the United States or the

United States Court of Appeals for the District of Columbia upon

petition, filed within sixty days after the entry of such order, by

any person disclosing 4 substantial interest in such order. After

the expiration of said sixty days a petition may be filed only by

leave of court upon a showing of reasonable grounds for failure

to file ‘the petition theretofore. 72 Stat. 795 (1958), as amended

by 74 Stat. 255 (1960), 75 Stat. 497 (1961), 49 U.S.C. § 1486

(1958).

lla

ministrative process. United States v. Los Angeles

& Salt Lake R. Co., 273 U.S. 299; United States v.

Illinois Central R. Co., 244 U.S. 82; Rochester frele-

phone Corp. v. United States, $07 U.S. 125, 131.

Chicago & Southern Air Limes v. Waterman S.S. Corp.,

333 U.S. 103, 113 (1948).

Petitioners contend, that the order denying consolida-

tion does deny them the substantial right to an Ashbacker

hearing with Lufthansa. In the conventional case de-

privation of such a hearing to a party entitled thereto

would have such aspects of finality as to be reviewable :

If the effect of the order denying consolidation in

the case at bar were effectually to preclude Seaboard

from rights which it otherwise would have, the order

would be final as to Seaboard. It follows, as it fre-

quently does in jurisdictional cases, for example, in

the WJR case,® that we must consider and decide a

portion of the controversy on the merits in order to

determine whether we do or do not have jurisdiction.

9WJR, The Goodwill Station, Inc., v. Federal Communica-

tions Comm., 1949, 85 U.S.App.D.C. 392, 178 F.2d 720 (on

mandate of Supreme Court).

Seaboard & Western Airlines v. CAB, 86 U.S.App.D.C.

9, 11, 181 F.2d 777, 779 (1949). And see Delta Air Lines,

Inc. v. CAB, 97 U.S.App.D.C. 46, 49, 228 F.2d 17, 20

(1955); cf. West Coast Exploration Co. v. McKay, 93 US.

App.D.C. 307, 318, 213 F.2d 582, 593 (1954).

Petitioners are not entitled to obtain review of the pres-

ent order under the principle referred to, because they

are not, in our view, entitled to an Ashbacker hearing

with Lufthansa. Quite different considerations bear upon

Lufthansa’s application and those of petitioners in the

Route Case. The bilateral Executive Agreement grants

Germany the right to designate a carrier to operate air

services to and from

the Federal Republic of Germany via intermediate

points to Boston, New York and Philadelphia, and

12a

beyond. to points in the Caribbean Sea and beyond to

South America. °

The right thus claimed to be exercised on behalf of Luft-

hansa is reciprocal to the right under the Agreement

granted to American domestic air carriers by Germany.

The manner in which the Federal Aviation Act dove-

tails into this situation is set forth in Sections 402 and

801. Under Section 402 a foreign air carrier may be

granted a permit by the Board if it finds that the carrier

is fit, willing and able properly to perform air transpor-

tation and to conform to the provisions of the Act, ‘‘and

that such transportation will be in the public interest.’’

72 Stat. 757, 49 U.S.C. § 1372 (1958). Section 801 pro-

vides that the issuance or amendment of any permit to a

foreign air carrier under Section 402 ‘‘shall be subject to

the approva! of the President.’’ 72 Stat. 782, 49 U.S.C.

§ 1461 (1958).

From the foregoing it is seen that the obligation of the

Board as an agent of the United States in connection with

Lufthansa’s application involves Presidential consideration

of our international relations with Germany as they arise

with respect both to Lufthansa and American domestic

carriers operating abroad. Such considerations are not

involved in the applications of petitioners, though the

route sought by them and Lufthansa may be the same and

the competition of each may be affected by the operations

of the other.

Petitioners contend that the criteria set forth in Section

102 of ‘‘publie interest,’’ pertinent to foreign air carrier

applications under Section 402, compels the Board to con-

sider the same factors as are involved in determining the

‘‘publie convenience and necessity’? applicable to a domes-

tic carrier under Section 401. But the public interest has

many facets. Under Section 102 of the Act the Board

5 Supra note 2.

13a

may consider other criteria than those therein specifically

~ mentioned, And Section 1102 directs the Board to act

consistently with obligations assumed by the United States

in bilateral Agreements. We cannot carry the use of

phraseology of similar character in the two sections to

the point of overcoming the fact that the public interest

involved in our obligations under the bilateral Agreement

cannot be equated with the public convenience and neces-

sity referred to in Section 401.

The public interest factors to be considered in cases

arising under Section 401, including the Route Case, are

primarily economic. Where the public interest referred

to in Section 102 is to be considered, and superiority in

one or more of the public interest factors is relevant to

the grant of an application, an Ashbacker hearing insures

an element of fairness in choosing among mutually ex-

clusive applications. But neither our obligations under

bilateral Agreements nor the motives for concluding them

are subjects for comparative hearings. In the Lufthansa

ease, comparative considerations, bearing primarily upon

econouies, would do little to dilute the public interest fac-

tor which perhaps weighs most heavily, that is, the policy

and obligations of the United States set forth in the bi-

lateral Avreements.

Under this view of the case we do not reach the issues

of mutual exclusivity or of alleged absence of findings of

fact to support the Board’s order. We hold only that

since petitioners are not entitled to an Ashbacker hear-

ing, the order remains interlocutory and non-reviewable.

The avenue open to petitioners through their permitted

intervention in the Lufthansa case before the Board can-

not now be said by us to be so restricted that petitioners

will be precluded from making available to the Board, and

through the Board to the President, such matters af-

fecting the publ's interest as will meet the requirements

of due process of law.

Dismissed for lack of jurisdiction.

léa

Wnicut, Circuit Judge, concurring: I concur in the

court’s opinion.

These proceedings, in my judgment, are an attempt, by

the carriers now enjovins the international routes in suit,

to frustrate executi* action by this Government with re-

spect io its contract obligation to the West German Gov-

ernment. I agree that neither this court nor the Board

should be a party to it. As the Secretary of State’ sug-

gests, to throw Lufthansa’s application into the pending

United States-Caribbean-South America investigation, the

so-called South America Route case, would delay—prob-

ably for years—executive action implementing the agree-

ment. It was precisely to prevent this type of embarrass-

ment to the conduct of our foreign affairs that the Con-

gress denied judicial appeal from Board action on inter-

national routes. 72 Strat. 795, 49 U.S.C. §1486(a). See

Chicago & Southern Atr Lines v. Waterman Steamship

Corp., 333 U.S. 102° (1948). What this court said in British

Overseas Airways Corp. v. CAB., 113 U.S.App.D.C. 76,

77, 304 F.2d 952, 953 (1962), is applicable to this case:

‘‘The prohibition [against appeal] cannot be circumvented

by the expedient attempted here.”’

McGowan, Circuit Judge, dissenting: My respectful dis-

agreement with the majority in this case extends both to

1 In his letter to the Attorney General with respect to this case,

the Secretary of State states, in part:

‘Tt is our view that any substantial delay in the processing

of Lufthansa’s application, whether for a period of months

or years, will severely compromise our interational aviation

relations and will impair our ability to negotiate effective

exchanges of air routes with other countries. Doubt would

be cast on our reliability in complying with the obligations set

forth in our bilateral agreements; the value of route grants

by the United States to foreign carriers would be significantly

reduced; and the operations of our carriers over routes

granted by foreign countries would be subjected to dilatory

or other retaliatory measures.’’

15a

the merits of the order in question and our jurisdiction

to review it. The court, working back from its conclusion

on the merits, finds that it is without jurisdiction. There

are, of course, situations in the law where this must be

the order of inquiry. In my view, this is not one of them.

Had I agreed with my colleagues on the merits, I still

would have thought the order properly before us.

The reviewability of this order depends in the first in-

stance upon its finality, and, secondarily, upon whether

the Congress has, in Section 1006(a) of the Federal Avia-

tion Act, expressly forbidden review of the order as one

‘“subject to the approval of the President.’’ The majority

opinion appears to me to assume finality in the coven-

tional sense, provided that petitioners in fact have an

Ashbacker right. The difference may not be too impor-

tant in terms of result here, but my own thought is that

finality attaches in this case because the order effectively

puts an end to petitioners’ opportunity to press their

claim of right to an Ashbacker determination, either on

the record as it stood at the time the order was entered or

after the receipt by the Board in the future of evidence

on the exclusivity issue. The Ashbacker claim was hardly

frivolous; and, thus, the order was appropriate for re-

view, even though petitioners might be unable to establish

their Ashbacker contentions to our satisfaction.

Section 1006(a) here contributes to finality. 1 It is urged

upon us that petitioners could have submitted evidence

1The order under review represents a procedural determina-

tion as to how certain applications are to be handled. It decides

nothing with respect to the merits of the applications. Whether

or not it is properly regarded as final rather than interlocutory

for judicial review purposes, it does not constitute an order ‘‘sub-

ject to the approval of the President’’ within the reach of Sec-

tion 1006 (a). That category is reserved for orders of the Board

which are inextricably intertwined with the merits of the grant

or denial of applications. Congress cannot be taken to have in-

tended that the President pass upon the various procedural orders

16a

on exclusivity in the hearings to be held upon the merits

of Lufthansa’s application and then argued to the Board

for an alteration of its procedure in the light of such evi-

dence. But certainly one outcome of the Section 402 hear-

ing can be an order granting the application. That order

would be one clearly subject to Presidential discretion ;

judicial review would be out; and petitioners would -pre-

sumably be left only with a strong personal conviction of

the justice of their Ashbacker position. The finality of

administrative orders, for purposes of amenability to

judicial review, is a highly practical concept. It derives

meaning only from the immediate context. In the dis-

tinective concatenation of circumstances in which petition-

ers found themselves upon the entry of the order before

us, I have no doubt that they could seek relief here and

that we were warranted in hearing them out, even though

we might ultimately disagree with what they said.

However, I do not so disagree. I take Ashbacker to

mean the following: Where a licensing agency has before

made by the Board in the course of moving towards a recommen-

dation on the merits. I do not find British Overseas Airways

Corp v. CAB, 113 U.S.App.D.C. 76. 304 F.2d 952 (1962), to be

to the contrary. There. the Board initiated a proceeding looking

toward the promulgation of a proposed regulation amending the

conditions upon which a foreign air carrier permit was to con-

tinue to be held. The carrier’s motion to dismiss the proceeding

was denied, and review was sought here of that order. This court

thought such review was barred by Section 1006(a), for the rea-

son that the conditions upon which foreign air carrier permits

are to be granted or withheld is ultimately a matter committed

to the President’s sole discretion. The court felt that it could not

review the Board order in question without getting into the area

of Presidential discretion. BOAC did not involve a ciaim of

unfairness in respect of a procedural determination; it involved

substantive issues. the resolution of which by this court would

inevitably impinge upon the role assigned to the President by

Congress. Conversely, how the Board schedules its hearings in

this case does not infringe in any way upon the President’s latitude

of action in determing whether, or upon what conditions, to grant

Lufthansa’s application.

17a

it at any one point in tinte two applicants for a grant

which surrounding circumstances indicate strongly can

justifiably be made only to one, it is not to go ahead and

decide for the one before it hears the other. To do other-

wise, said the Supreme Court, ‘‘may satisfy the strict !et-

ter of the law but certainly not its spirit or intent,’’ and

‘deprives the loser of the opportunity which Congress

chose to give him.’’ These procedural limitations in the

interest of fair hearing have been accepted as fully ap-

plicable by this court to applications by domestic air car-

riers under Section 401 of the Federal Aviation Act. ?

The question we now face is whether they also apply

when the Board has before it apparently conflicting appli-

cations under Section 401 and Section 402, the latter being

the provision made by Congress whereunder foreign air

carriers, as distinct from United States flag lines, may seek

authority to fly between the United States and foreign

countries.

Although the foregoing is, I believe, an accurate formu-

lation in general terms of the issue to be decided, it is the

part of caution to bear in mind that the resolution of any

Ashbacker problem cannot be divorced from the peculiar

facts giving rise to it. This Court has said in Delta that

Ashbacker is ‘‘a rule of substance and not a mere prescrip-

tion of form,’’ noting that the Supreme Court in its initial

formulation avowed its concern to be with the ‘‘practicali-

ties’? of the particular case before it. 97 U.S.App.D.C. 46,

50, 228 F.2d 17, 21 (1955). Fair hearing in tue

administrative area is nothing if not a fluid concept, with

its contours changing from case to case in accordance with

the realities confronting the parties. The central reality

faced by petitioners here is the Board’s view, announced

2 Delta Air Lines, Inc. v. CAB, 97 US.App.D.C. 46, 228 F.2d

17 (1955). See, also, Delta Air Lines, Inc. v. CAB, 107 U.S.App.-

D.C. 174, 275, F.2d 632 (1959), cert. denied, 362 U.S. 969 (1960),

and Northwest Airlines, Inc. v. CAB, 90 U.S.App.D.C. 158, 194

F.2d 339 (1952).

18a

in its order initiating an investigation of the Latin Ameri-

ean route situation, that the proliferation of foreign air

earriers on the route served by petitioners appeared to

make it desirable for one of them to have its route

oxtended to New York and for the other to be eliminated.

It is against this backdrop that one more in a long line of

foreign carriers presents itself to the Board with a Section

402 application to serve the New York-South America

route. The Board schedules that application for prompt

hearing and presumably prompt disposition. It tells peti-

tioners that their applications for single-line service from

New York to Latin America will be heard later. ®

I do not understand my colleagues as questioning the

substantial, as distinct from the merely formal, impact of

this proposed procedure upon petitioners. Their disposi-

tion not to interfere with the course the Board has deter-

mined to follow rests upon two foundations. One is essen-

tially the idea that Congress did not intend that the Board,

in considering an application by % foreign air carrier under

Section 402, should concern itself with the effects of the

granting of that application upon a domestic line currently

secking authority under Section 401 to serve the same

route. This position seems implicit in the opinion’s early

reference to ‘‘the obligation of the Board as agent of the

United States in connection with Lufthansa’s application

‘nvolves Presidential consideration of our international re-

lations with Germany as they arise with respect both to

3Some chronology may help to put the legal issue before us

in perspective. The Board’s order initiating an investigation of

petitioners’ routes and certificates was entered August 8, 1961.

In response to what that order foreshadowed, petitioners tiled

applications to extend their service to New York in June and

September, 1962, respectively. Lufthansa’s application was filed

February 27, 1964. This last application was set down for bear-

ing to commence June 10, 1964, whereas petitioners were told

that their applications would not be reached for hearing before

January of 1965. The hearing for Lufthansa has been stayed by

this court pending this appeal.

19a

Lufthansa and American domestic carriers operating

abroad.’’ If ‘‘abroad’’ here is read as ‘‘Germany,’’ as I

think may fairly be said to be its import, the thesis seems

to be that the Board has no significant aspect of the public

interest to weigh under Section 402 other than that of the

possible harm to be done to our international aviation in-

terests in Germany if this application is denied. The im-

plication is that to take a broader view of the public

iaterest would be to countenance repudiation or frustra-

tion of ‘he Executive purposes in entering into the 1955

agreement with the German Federal Republic.

The President cannot, of course, be repudiated or frus-

trated if he chooses not to be, since he is empowered by the

statute, for any or no reason and without exposure to

judicial scrutiny, to direct the Board to issue the requested

authority to Lufthansa, despite any recommendation the

Board might make to the contrary. But the argument

ceems to be that the Board was not intended by Congress

{o waste its time in an inquiry which might conceivably

lead the Board to be so presumptuous as to recommend

in the public interest a course of action contrary to that

contemplated by an executive agreement. A President who

had not negotiated the agreement in question, and a Con-

zress which has no function with respect to the approval

or disapproval of executive agreements, might each be of

the view that the Board’s conception of the entire public

mterest at any one point in time would be a useful ele-

ment in th: President’s store of knowledge as he turns to

the discharge of his responsibilities under Section 8(1.

Now there is no question but that our international re-

lations are a highly important factor for the Board to

take into account under Section 402. But it is not the

only one, nor is there to be attributed to it, in my view,

the almost overpoweringly dominant role contemplated by

the majority opinion. It would have been very easy for

Congress to make plain its purpose to make it so, if such

purpose it had. Section 402 could cleariy have said that,

20a

where the President has made a commitment to another

_wrtovereign nation that a national of the latter designated

by it shall be permitted to serve the United States, the

only issue before the Board upon such an application is

the fitness, willingness, and ability of the designee to pro-

vide the service and to observe our regulatory laws and

regulations. Section 402 presently sav’s as much. It also

says more, namely, that the Board is to find, further,

that the ‘‘transportation will be in the public interest.’’

Throughout I follow only the Board’s reading of the

statute. Its own concept of what it may do in passing

upon an application under Section 402 is set forth at pp.

7-8 of its brief. A fair summary is as follows: Despite

the provisions of Section 1102, directing the Board to act

‘‘eonsistently’’ with any international commitment, the

Board ‘‘econsiders that it is not required to recommend

issuance of a foreign carrier permit to the President

merely because there is an agreement providing for such

permit.’’ The Board receives evidence in respect of each

of the various standards set forth in Section 402. As to

that of the public interest, it ‘‘normally’’ regards the pre-

dominant issue to be that of whether the application

should be granted because of reciprocity considerations.

But where it is asserted thet the grant will be injurious

to U.S. carriers, ‘‘hence contrary to the public interest,”’

it weighs that adverse impact against the reciprocity

benefits, and submits its findings and conclusions to the

President so that ‘‘he has the benefit of the Board’s views

in determining what his action should be.’’ The existence

of a bilateral executive agreement is, in the Board’s view.

« ‘‘prima facie public interest factor pointing to the

grant,’’ and a ‘‘strong showing would be required to war-

rent a recommendation to the President that the applica-

tion should be denied and the bilateral denounced.”’

This all seems to me to say that one who hopes to per-

suade the Board to recommend to the President the denial

of a foreign air carrier permit contemplated by an execu-

21a

tive agreement has something of an uphill road. But the

way is there if he can make it, and the Board will, upon

a ‘“‘strong showing,’’ tell the President that it believes the

time has come to deny the permit and to denounce the

agreement. I do not understand petitioners to be under

any illusions as to the difficulties they face, or to be com-

plaining about them. Their claim is, rather, that fair

hearing comprehends the opportunity to mount the attack

on a scale commensurate with the barrier to be breached.

With the relevant standards prescribed as stated above,

Section 402 directs that public notice be given of the ap-

plication, and that a public hearing be held, with

yarticipation in the latter contemplated to be accorded to

‘any interested person.’’ The Board in this case has rec-

ognized its obligation in the latter respect by permitting

the intervention of petitioners in the Section 402 hearing,

and it tells us that it will receive evidence from them.

But the Board also tells us that, by reason of tue nar-

rower scope which it places upon the concept of *‘ public

interest,’’ petitioners will be limited in their showing to

representations of the adverse economic effect upon them

and, that upon a record so confined, the Board will pro-

ceed to formulate and transmit its recommendation to the

President before it turns to the more leisurely labor of

hearing petitioners’ applications. My colleagues say in

substance, and ag the second base of their holding, that,

even if the Board be deemed to be something more than a

mere agent of the President in his conduct of our inter-

national relations with Bonn, this restricted hearing

which the Board proposes to give petitioners is amply

adequate to the objectives which Congress subsumed under

the rubric of ‘‘the public interest.”’

Absent a more precise definition of that term than

Congress has given us, I am not convineed that this is so,

nor that the shadow of Ashbacker does not fall squarcly

across the procedure the Board has in prospect for the

handling of these applications. The concept of the ‘‘pub-

22a

lic interest,’’ when used in a public utility licensing statute,

immemorially and customarily comprehends, among others,

such things as which of two or more competing applicants

ean render the best and cheapest service to the public.

Until Congress says plainly that a consideration of this

kind is not to enter into the exploration of ‘‘ public interest”

as that term is used in Section 402, I am disabled from

saying that it is irrelevant. The Board, however, does not

intend to afford petitioners an opportunity to make the

affirmative case in support of their own applications until

after its recommendation with respect to Lufthansa has

gone to the President. By the time the Board hears, decides,

and makes recommendations to the President with respect

to petitioners’ applications, the additional service provided

py Lufthansa may be the last straw on the economic back

which compels the Board to effectuate its preliminary de-

terminetion that the market will not support both Panagra:

and Braniff. What consolation would there then be for

petitioners, or for the travelling pubiic, in the knowledge

that both petitioners .had demonstrated by affirmative evi-

dence their ability to furnish a better and cheaper service

than the foreign carrier? Is it conceivable that Congress

intended that the President should know that before he

acted on any of the Board’s recommendations ? *

4The President has, of course, am absolute and unreviewable

discretion to do as he pleases, and without stating his reasons,

of international routes. What petitioners seek here, however, 15

a meaningful chaace to try to persuade the Board that its ree-

ommendations to the President should be one way rather than

another. That is not an insubs.antial privilege, as anyone knows

who is familiar with the phstomenon in large organizations of

first-draft inertia. The Board is made up of Presidential appoint-

ees, presumably chosen for their expertise and because the Presi-

dent has confidence in their judgment. It is not to be assumed

that a course of action recommended to the President by the

Board is without significant weight in his deliberations.

23a

I do not, of course, intimate any opinion that petitioners

can in fact make such a showing. We are concerned here,

however, with the scope and timing of adminis‘rative

hearings, and not with their likely result. The Supreme

Court in Ashbacker was not motivated by any conjecture

that the aggrieved applicant would probably prevail if

he could only stave off decision until the merits of his case

were before the agency. It was impelled to the result it

reached by its divination of the sense of Congress as to

what would constitute a fair hearing under the special cir-

cumstances there present. I am not persuaded that the

problem here arises in a setting so different as to justify

a contrary appraisal of the legislative will.

Had the Board elected to follow a different plan and

to hear both the 401 and 402 applications before making

its recommendations to the President as to each, I doubt

that a protest by any one of the applicants would be re-

garded by us as presenting any serious legal problem.

What is argued in substance to us now by che Board is

that it cannot so elect because it will take it too long to

hear and pass upon petitioners’ applications; and that

the resulting delay will embarrass the President and the

Secretary of State in their conduct of our relations with

Germany. But Ashbacker appears to me to contemplate

some delay as a price Congress was willing to pay for

fairness; and there is nothing in this record demonstrating

utter incapacity in the Board to minimize the asserted

embarrassment to the Executive by proceeding to hear and

determine these applications with greater dispatch than

nas perhaps been characteristic of major route proceed-

ings in tke past.

24a

APPENDIX C

Order No. E-20794

UNITED STATES OF AMERICA

CIVIL AERONAUTICS BOARD

WASHINGTON, D. C.

Dockei 15073

Adopted by the ‘Civil Aeronautics Board

at its office in Washington, D. C.

on the 6th day of May, 1964

DeuTscHE LUFTHANSA AKTIENGESELLSCHAFT

(Lufthansa German Airlines)

Order

This proceeding involves the application of Lufthansa

German Airlines (Lufthansa) for amendment of its foreign

air carrier permit to extend its route beyond New York to

Santiago, Chile, via the intermediate points Montego Bay,

Jamaica; Kingston, J amaica; Quito, Ecuador; Guayaquil,

Ecuador; and Lima, Peru.

Braniff has filed a motion requesting that Lufthansa’s

application be deferred pending decision in the United

States - Caribbean - South America Investigation, Docket

12895, (kereinafter referred to as the Route Case)—or, in

the alternative, that Lufthansa’s application be consoli-

dated with that case for decision. Answers in support of

Braniff’s motion have been filed by Panagra and the Master

Executive Councils of Pilots of Branift, Panagra, and Pan

American. Answers in opposition to Braniff’s motion have

been filed by Lufthansa and Bureau Counsel.

Braniff alleges that (1) the public interest factors in-

herent in the 402 permit case cannot be fairly weighed

until a decision has been reached in the Route Case as to

future U.S. authority in the markets in issue, (2) the com-

petitive impact of Lufthansa’s operations cannot be known

or controlled, and the bilateral agreement cannot be com-

25a

plied with, until the scope of the U.S. carrier operations

nas been resolved in the Route Case, (3) the bilateral agree-

ment under which Lufthansa is seeking fifth freedom rights

may have been improvident and should perhaps be revised,

and (4) under the Ashbacker dectrine, deferral of Luft-

hansa’s application is required as a matter of law.

Upon consideration of the pleadings and all the relevant

facts, we have decided to deny Braniff’s motion. Assuming,

arguendo, that the Ashbacker Doctrine is applicable to this

type of situation, there is no showing that the Braniff and

Lufthansa applications are mutually exclusive as a matter

of economics. Lufthansa’s traffic in the markets for which

Braniff has applied would constitute fifth freedom traffic

for the German carrier, and Lufthansa’s schedules would

be subject to the capacity provisions of the bilateral agree-

ment. Pursuant to the bilateral agreement, Lufthansa

would be required to tailor its vapacity offered between the

U.S. and South America to the traffic demands between

Germany and the South American points in question. As

a result, Lufthansa’s operations would not be primarily

designed to accommodate the needs of New York-South

American traffic, and its ability to compete with unre-

stricted cazriers would be sharply restricted. In view of the

foregoing, we are not persuaded that grant of Lufthansa’s

application would, as a matter of economic fact, preclude

the subsequent grant of Braniff’s application.

Moreover, we find no warrant for deferring Lufthansa’s

application pending decision in the Route Case. Assuming

that the route pattern which finally emerges in the Route

Case, is different from that which presently obtains, it does

not follow that Lufthansa’s application must await future

resolution of the Route Case. The public interest aspects

of the foreign air carrier application including the question

of diversion from U.S. carriers can be adequately tected

in the light of the existing service pattern. It is true that

the competitive impact of Lufthansa’s services may change

26a

if the South American route pattern changes. However,

Braniff has assigned no persuasive reasons why Luft-

hansa’s application cannot be appraised in the light of.

present day circumstances. To the contrary, Braniff’s argu-

ments are addressei. for the most part, to the merits of

the foreign carrier’s application. Finally, we note that de-

ferral or consolidation of Lufthansa’s application would

be inconsistent with both our statutory mandate to dispose

of foreign air carrier applications as speedily as possible,

and our express policy of giving expedited treatment to

such applications.

In view of the foregoing, Braniff’s motion will be deisied.

Accorpincty, Ir Is ORDERED:

That the motion of Braniff to defer or, in the alternative

to consolidate Lufthansa’s application with the Route Case

for decision, be and it hereby is denied.

By the Civil Aeronautics Board:

Harotp R. SanDERSON

Secretary

(SEAL)

27a

APPENDIX PD

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

SerremMBer TERM, 1964

Ne 18671

Pan American-Grace Arsways, Inc., -

Petitioner,

Civm Agroravtics Boarp,

Respondent.

e e oe

No. 18672

BranirF Arrways, Lvc.,

Petitioner,

Crvrz Arronavutics Boar,

Respondent.

& e e

Judgment

These cases came on to be heard oa the record from the

Civil Aeronautics Board, and were argued by counsel.

ON CONSIDERATION WHEREOF, it is ordered and adjudged

by this court that these cases are hereby dismissed for lack

of jurisdiction.

Per Circuit Judge Fahy.

Dated : October 30, 1964

Separate concurring opinion by Circuit Judge Wright.

Separate dissenting opinion by Circuit Judge McGowan.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.