Appendix — American Airlines, Inc. v. Civil Aeronautics Board

UNITED STATES COURT. OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 18833

AMERICAN ArRuInzs, Inc., Petitioner -

v.

Civ, Azronauttcs Boarp, Respondent

Tue Suick Corporation,

Air Freicht Forwarpers ASSOocIATION,

Tue Fryine Ticer Linz, Inc., Intervenors.

No. 18834 |

Trans WORLD. AIRLINES, Inc., Petitioner

ne 3 |

Crvi, AzRonaltics Boarp, Respondent

Tue Stick Corporation, -

_.. Am Freicur Forwarpers AssociaTion,

Tae Fryine Ticer Linz, Ino., Intervenors.

No. 18840

‘Untrep A Linzs, Inc., Petitioner

i

' Crvm' Arronautics Boarp, Respondent

THe Suick Corporation,

Am Freicot Forwarpers Association,

Tue Fiyine Ticzr Linz, Inc., Intervenors.

On Petitions for Review of Orders of

The Civil Aeronautics Board.

" Decided April 15, 1965

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Before BazELon, Chief J udge, and DanaHER and Burcer,

Circuit Judges.

Bonam, Circuit Judge: indies review are two orders of

the’Civil Aeronautics Board, one (E. 21160) permitting i in-

‘tervenor, Slick Airways, a certificated carrier. handling

freight only, to put into effect a certain tariff schedule of

discounts for blocked space to which the shipper becomes

contractually committed and a second order (E 21170) -re-

_ jecting tariff schedules with tariffs the same as Slick’s

filed by petitioners, who are-also certificated earriers, han-

dling pagsengers as well as freight.

The effect of the figst order, as the Board advises in its

brief, ‘‘is to permit the Slick tariff to become effective

pending an investigation of its lawfulness, and the. effect

of the subsequent second order is to preclude petitioners

[American, Trans World Airlines, Inc. and United Air

Lines, Inc.] from providing blocked-space service’’ such as

is permitted for‘Slick. —.. _ ;

At the outset we note ‘that the air cargo transportation |

business since ‘its inception has been carried on by peti-

tioners, who. also carry passengers; at some ‘point two

other ‘earriers,- The Slick Corporation ‘and The Flying

Tiger Line, Inc., intervenors here, became certificated a

cargo carriers only. Cargo includes’ property and mail.:

In June 1964 intervenor Slick Corporation, one of the —

all-cargo carriers, filed with the Civil. Aeronautics Board

a tariff in which it proposed to offer sizable ‘‘blecked

. space’? discounts on transcontinental freight shipments.

‘To qualify for such a discount under the tariff a shipper

is required to reserve and contract for a certain amount |

' of space for regular use over a given period; having. con-

tracted for the —_ the shipper i is obliged to pay for it |

whether used, or not.

-|o Slick’s cies tariff petitioners, the three ‘so-

called ‘‘¢ombination carriers”’ (authorized to carry both —

passengers and freight on a scheduled basis), filed protests

on the ground that the proposed discounts were unlawful

under the Federal Aviation Act’s ratemaking provisions.

- In addition, the combination carriers filed ‘‘defensive’’

tariffs substantially identical with Slick’s in order to meet .

Slick’s competition, should the Board refuse to suspend

Slick’s tariff pending investigation of its lawfulness or °

ultimately find it lawful. ‘The Board first, suspended all

of the tariffs pending investigation.

Orders Under Review

On a 7, 1964, the Board issued Order E 21160, the

first of its two orders here under review. That order

vacated the suspension of Slick’s tariff while leaving in-

operative those of petitioners. As its reason for this ac-

tion the Board adverted to its simultaneously issued

“policy statement,’’ known as Reg. No. PS-24: Pt. 399,

‘approving the cxchisive right of all-cargo. carriers to sell

blocked space to combination carriers, air freight forward-

_ ers and large volume shippers. ’? (Emphasis added.)

On August 11 the Board entered order E 21170, the

— second order under review, rejecting petitioners’ tariffs

pursuant to its policy statement granting to all-cargo car- —

riers the exclusive right to provide blocked-space dis-

counts and dismissing the investigation of petitioners’

tariffs.

Conténtion of Air Freight Forwarders Association

We deal first with the contention of Air Freight For-

warders Association, an intervenor, that the blocked-space

- concept approved by the Board’s policy -statement and

the Slick tariff will subject its members. to unlawful and

uneconomic competition by-allowing unauthorized persons

to engage in forwarding activities. The Association, as

an intervenor, may be heard only on the issues posed by’

the petitions for review. See, e.g., Columbia Gas Co. v.

4a

~ Amer. Fuel Co., 322 U.S. 379, 383 (1944). Those peti-

tions, as will appear, do not challenge. the lawfulness of

the Slick tariff; and they challenge the Board’s blocked- |

space regulation only incidentally insofar: as it formed

- the basis of the two orders appealed from. Consequently

the questions posed ‘by the, Association may not be re-

solved mare. 3

; eng of Order E 21160

We accept the Board’s informal suggestion of mootneés

at argument, acquiesced in by the combination carriers,

as to the propriety of Order E 21160, which vacated the

a suspension of Slick’s tariff. Under the statute, the Board

‘may suspend a tariff for a maximum of 18 days. That

time has now run. Moreover, petitioners’ objections to

Order E 21160 are in a sense superseded, by their objec-.

tions to Order E 21170,. with which we deal fully below. ©

_ We thus do not reach the questions (1) whether this court

- may ‘review the Board’ s different treatment, pending ex-

amination of lawfulness, of substantially identical tariffs

when the ground for the disparity (as does Reg. No. PS-

‘24: Pt. 399) indicates that the Board has decided to deny

certain of the tariffs regardless of their lawfulness;’ and

(2) whether there may exist a basis for distinguishing. as

to reviewability between. initial determinations against

suspension and orders vacating prior. suspensions. 4

- Validity of Order E 21170

We come finally to Order E 21170, which rejected the

proposed tariffs of the combination carriers. Petitioners

contend that to allow all-cargo carriers to use blocked-

1 The Board argues that Arrow Transp. Co. v. Iiciiieabe R. Ca,

372 U.S. 658 (1962), > a determination that this order is

unreviewable.

S See, e.g., Kiclaalthe Gieaet Express v. United States, 138 F.

Supp. 411 (N:D. Tex. ne)

¢ 4 .

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.

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space discount tariffs exclusively and deny the same right

to combination carriers operates in .effect to revoke the

authority of the combination carriers to transport prop-

erty, since, so they assert, the result would be to put them

out of the ‘cargo business.’ Under section 401(g) of the

Act, certificated authority may not be revoked except for

an intentional violatidn of the Act, an order, rule or

-. regulation issued thereunder, or a provision of the cer-

tificate itself. Revocation may only be after notice and

hearing, and must be conditioned on the failure of the

. carrier to mend its ways within a reasonable period set

)

by the Board. - It is undisputed”that petitioners have not |

been put through these revocation procedures.

The Board contends, on the other hand, that no’ adjudi-

catory proceedings were necéssary, since its regulation

was a proper exercise of its rulemaking authority under

section 416(a) of the os That section provides as fol-

lows: .

o

The Board may from time to time establish ‘such

just and reasonable classifications or groups of air

carriers for the purposes of this-title as the nature

of the services performed by such air carriers shall

require; and such just and reasonable rules and regu-.

lations, pursuant to and consistent with the provi-

‘sions of this title, to be observed by each such class _

or group,'as the Board finds ee in the public

interest. :

The Reni’ policy statement was adopted after rulemak-

ing hearings which the Board tells us led it to believe

that its ‘‘delineation of roles’’ of: the two categories, of

carriers would serve the public interest.

In order to find that the ‘Board’s astion penn toa. Es

. revocation of petitioners’ certificated authority as cargo

carriers, we believe there must be a showing that. peti-

tioners would in fact lose a. substantial part of their

-6a

cargo business, probably to the point where they could ‘not

conduct ecenomically feasible operations. There has been

no adjudicatory hearing on this question; the rulemaking

proceeding did not indicate such a result.

The Board has power to amend certificates upon a show-

| ing that the public convenience and necessity so require. ©

Such a showing is to’ be made, after notice, at an adjudi-

catory hearing. 49 U.S.C. § 1371(g). See Civil Aero-

nautics -Board y. Delta Air Lines, 367 U.S. 316 (1961).

We do not need more evidence than the record reveals to

see that the operative effect of: the Board’s action is to,

amend the outstanding certificates of petitioners. Indeed

_ the Board concedes the exclusion of petitioners from per-

forming the kind of: carriage they were originally cer-

tificated to perform and as to which they have made large

investments of capital.

The certificates of the All-cargo carriers and those of

the combination carriers bestow identical rights and im-

pose identical obligations with respect to the carriage of

property. It follows that the two types of carriers. must

be free to file identical tariffs. for the carriage of cargo.

_ By permitting the all-cargo carriers to file blocked-space —

tariffs the Board acknowledges their present authority to.-

file such tariffs under their’ existing certificates, which,

‘except as to passenger carriage, are the same as the com-

bination carriers’. By denying. the combination carriers ~

the opportunity to file such tariffs the Board in effect |

amends outStanding certificate authority. :

/ Board Order E.21170 is therefore of no effect because

of the Board’s failure to hold the hearing required by the.

Act. No remand on this issue is necessary such as that

in. CAB v. Amer. Air Transport, 91 US.App.D.C. 318,

201° F.2d 189 (1952), since no issue ariges as to the fact

of alteration of petitioners’ present certificated authority

to engage in the same classes of carriage as their long-

_ standing competitors.

Ve

a é

FPG v. Texaco, Ine., 377 US. 33 (1964),? advanced

by the Board as supporting its ‘‘delineation of roles,’’ is

not in point. That case did no more than to uphold the

Power Commission’s power to provide for summary re-

_ jection of contracts with pricing provisions other than

those allowed under its regulations. The petitioners there _

- ., were not being deprived of any authority they had previ-

* ously exercised ; rather, they had submitted applications

for certificates of public convenience and necessity which

disclosed impermissible pricing clauses. ‘The instant case,

in contrast, presents an attempt to abridge existing cer-

_tificated authority by rulemaking, not the formulation of |

reasonable, nondiseriminatory criteria to be met as condi-

tions of receiving ‘such authority in the first place. Nor ©

does Capitol Airways v.,CAB, 110 ee p-D.C. 262,.292 -

F.2d 755 (1961), support the Board. - lain implica-

' tion of that case is rather. that where the Board attempts,

- as here, to separate ‘‘sheep from goats’’ it can do so only |

by a process of adjudication.

he authorities cited in the disseft do not .indicate a

- Contrary result. Indeed, our -holding is’ in full accord |

with Great Lakes Airlines v. on 1 F.2d 354 (9th Cir.

1961) :

The question to be ‘dcteniiined is whether the terms

‘of such authority . .. were changed adversely to these

petitioners by the sub uent action of the Beard in

adopting the amendatory regulations to which peti-

| tioners call attention. ¥ so, serena d Proceed-

ings were-necessary .. |

‘

Td. at 366. That case ‘held — that there had been no

amendment of carrier authority, as a matter of law, since

‘‘the specific prohibitions of the amendatory regulations

in question were _made fer purposes -. clarification -of

_ + 8 See generally Comment, 39 N.Y.U.L. Rev. 947 (1964).

wey ies :

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. practices the Board previously considered violations of

the purpose and intent of existing regulations....’’ Id.

at 367. The Board, in other words, sought merely to

remedy ‘noncompliance with, existing binding ——

by promulgation of | stricter regulations. ene ha

8

Air Line Pilots Ass? m v. Quesada, 276 F2a g92 (ea AS

Cir. 1 , is even less apposite. That case’ involved the

narrow ‘issue of validity of a rule against pilots’ flying ‘

scheduled aircraft after age 60; there: was no amendment

of certificate authority in the sense here involved. The

licenses of the. pilots specifically provided that their dura-

_’ tion was as set out in current regulations. And the Act”

' itself imposes an express duty on the Administrator of |

the FAA to prescribe reasonable regulations. It was thus

in a very narrow and limited context that the court held -

that an- adjudicatory means was saad icity for each —

pilot.

- Cook Cleland ‘Catalina Airways v, CAB, 90 U.S.App.

- D.C; 220,195 F.2d 206 (1952), similarly provides no war-

‘rant for the Board action in this case.: We there held

. that it was proper for the. Board to ‘‘revoke’’ petitioner’s

_ {license’* to operate as an irregular carrier under a. -

blanket exemption without an adjudicatory hearing, since

no such hearing is required by the Act for such exemp-

- tions. No. one questions that revocation or amendment

of the certificated authority of a scheduled carrier. may

only be the résult-of an adjudicatory hearing. Cook Cle-

and thus has no bearing on the only question presented,

here, i.e., whether such revocation or amendment: has been

attempted by the Board in the @ guise of rulemaking. gee

‘The dissent next suggests that the. Board niay limit the |

. mse of the bloeked- -space concept to the all-cargo carriers

on. an experimental basis for some temporary period.

But the Boatd’s exclusion does. not purport to be tempo-

_rary;.only its oral argument suggests a time limita-

tion. . Moreover, even if the challenged aetion were limited

a

~

. service without’ a prior hearing’; but. Section 401 of the’

Act, there involved, expressly. provides for such action: ”

The.section concerns abandonment of certificated routes by

We ; . a Re pe

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*

- to an experimental-period, that, could not justify a breach ?

of the Act by the Board. .The Board is not free to erh-

bark on extra-legal experimentation at the expense of the.

Act. Not even ‘‘temporary’’.or “‘experimental”’ arhend- -

’ ments of existing certificated authority are permitted un--

‘der the Act without adjudicatory procedures. Since we

“hold the. Board’ s action: hereamounts to an.. amendment,

it is illegal however ephemeral. Nebraska. Dep’t of Aero-: amy

nautics v. CAB, 298 F.2d 286 (8th-€ir. 1962), relied on .. ..

by. the -dissent, is not to’ the contrary.. ‘That case upheld . | iy

‘ the’ Board’s authorization ‘of. a temporary suspension of

\ earriers.. It is correct that abandonment is not-to :be al-

~ lowed without a. hearing, but Congress explicitly provided

. “the Board may,. by regulations or otherwise, aythorize

_ such temporary suspension of, service as may be in“the -

. public interest.’? 49 U.S.C. §1371(j). (Emphasis ‘added.)

This express authority demonstrates that = N rene

Department case is not ‘in point.

The Board’s ofer: KK’ 21170 i is nee ore cali and: the

cases are remanded for action in conformity herewith.

a eis >... _ Order vacated’ and cases:

iS . remanded. —

. ; 10a et

Bazeton, Chief Judge, dissenting: Not every ‘ile of

the Board affecting a carrier certificate is an ‘‘amend-

ment’’ requiring an adjudicatory hearing.’ The purpose

“of such hearing is primarily to protect ‘‘what has been

called ‘security of route’—+.c., providing assurance to the

carrier that its investment in operations would be pro-

' tected insofar as reasonably possit e.”’? Civil Aeronautics

Board v. Delta Air Lines, 367 US. a6, 324 (1961) . (em-

phasis in original). ae

‘Here the Board expliciity found ime vadinataalon of

evidence and. oral ergpment in rule-making proceedings

‘ that the combination carriers’ present ‘‘segurity of route’’

would not be affected ‘by excluding them, at least for the

present, from the possible expansion of the air freight

market through blocked-space’ reduced rates. The Board

stated that reduced rates would primarily attract freight

‘now moved on surface carriers’’ and that the diversion to.

all-cargo carriers of freight presently on combination car-

riers would not be ee ” ee,

a See Great’ Lakes Airlines v. Civil ‘iiiediitete Board, 291 F. :

354 (9th Cir. 1961); Air Line Pilots Ass’n, Internati

Quesada, 276 F.2d 892 (2d Cir: 1960). Compare Civil Aer side

Board v. American Air Transport, 91 U.S. App.D.C. 318, 201 F.2d

. 189 (1952), which

‘involved an effort by the Board ‘to separate the ‘sheep from’ -

the goats: -to let the Large Irregular Carriers which had

obeyed the spirit and letter of the Board’s regulations remain

in business undisturbed, while limiting the operations of those -

which ‘had violated the authority given them. ... if the Board

it would be required to afford an evidentiary hearing to those

whose operating authority was to be suspended or revoked for

eause.’’ [Capitol Airways v. Civil Aeronautics Board, 110

U.S.App.D.C. 262, 265, 292 F.2d4°755, 758 (1961). (emphasis

supplied ).]

Cf. Cook Cleland Catalina Airways v. Civil Aeronautics Board, 90

U.S.App.D.C. 220, 195 F.2d 206 (1952).

proposed to discriminate between carriers in the same group, . .

_ characterizing some as law abiders and some as law breakers,

: ‘

sisdoninesinahenstinghen Se ay

Ar ER ies

7

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The court’s holding—that the ‘Board ‘‘amended’’ the -

combination carriers’ certificates because they can no

longer compete on precisely equivalent terms: with all-

cargo carriers—has only formalistic logic. In practical

terms, there is no significant change in the certificates if

‘the carriers will not be financially affected by the Board’ 8

action, and the Board has so found. ‘‘Needless to. say, we

are ill equipped to weigh such predictions of the ‘eco-

omic future. Nowis it our function to act as a super-

commission.’’ American Trucking Ass’n vy. United States, .

344 U.S. 298, 309 (1953).?. I therefore cannot agree that

the Board acted arbitrarily here in adoptiag, without ad-

judicatory hearing; a policy excluding combination :éar-

riers from offering blocked-space reduced rates."

Moreover, . the Board maintains: ‘that it has excluded

combination carriers from offering” blocked-space reduced

‘-rates only temporarily. . It found that any excess cargo,

~ capacity on. a. carrier offering reducéd. rates would make -

. such rates areal unfeasible for the carrier. It was -

+ Mn Deltg Air Lines, sities the Supreing Coutt lield ari adjudi-

catory hearing was required to ‘alter Delta’s' certificate’ barring

flights Delta was then operating. The Board had found that ‘‘no

significant adverse effect will result’’ to Delta from the certificate

_ alteration. The Court disregarded this finding, but unlike the

present case, the Board: had held no heating whatsoever before alter-

in ’s certificate and the alteration in itself clearly threatened

felta’s present investments. - 367 U.S. at 330. Compare. Standard

Airlines v. Civil Aeronautics Board, 85 U.S.App.D.C. 29, 177 F.2d

18 (1949).

8 The Board’ s action is authorized by § 416(a), Federal os

tion Act, 49 U.S.C. .§ 1886(a); ‘‘The Board may from time to.

time establish such just and reasonable classifications or groups of

air carriers for the purposes of this subchapter as the nature of the

services performed by such air carriers shall require; and such

. just and reasonable rules and regulations, pursuant to and con-

sistent with the provisions of this subchapter, to be observed by each

such class or group, as the Board finds — in the public

g

12a ;

thine necessary to restrict the number. of reduced rate ¢ar-

riers until the present air freight market expanded. The

Board chose all-cargo carriers because of their prior’ spe-

cialization in the market and because ‘‘the exclusive role

of performing blocked-space service will .. . provide them

with..a needed source of financial strengthening. 1 ee:

Board expects the air freight market to grow in response

to the reduced rates .and, by implication, the Board will ©

allow combination ‘carriers to offer these rates when the

_ market has grown sufficiently.

Adoption of this experimental, temporary policy. does

‘not require the ‘burdens of an adjudicatory proceeding.‘

But in order to insure that the temporary exclusion of

combination carriers from blocked-space reduced rates

will not become permanent by default, I would’ affirm ‘the «

Board’s action without prejudice to the combination car-

riers’ right to reopen the question of their exclusion upon

' sufficient showing to the Board. that: their present cargo

business was being adversely affected, or that the air

_ freight market had sufficiently expanded so. that they could _

participate in blocked-space reduced rates. » |

‘4 For inferential support of this proposition, see Nebraska Dept. *

of Aeronautics v. Civil Aeronautics Board, 298 F.2d 286, 292-92 -

(8th Cir. 1962); R: A. Holman & Co. v. Securities & Exchange

_ Comm/’n, 112 U.S.App.D.C. 43, 299 F.2d 127, cert. denied, 370 B.S.

911 (1962). In this court, the Board argued :

‘‘Certainly the Board should not: be required: to resort. to

cumbersome certificate amendment proceedings for the pur-

‘ pose of permitting an effective experiment with a new service

concept, with the consequence that still further certificate

amendment proceedings would be required to effectuate any

_ehange in policy or expansion of the number of carriers

‘ provide blocked-space service. On the contrary, the rule-

making method | represents the more flexible and desirable

method of procedure in this area.’’ Respondent’s brief at

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UNITED iat. COURT OF ‘APPEALS

_ BOR THE DISTRICT OF COLUMBIA CIRCUIT

o: | No. 18833

Amiipican Armuawes, Tre, Petitioner —

v.

X,

Orn Amonaunice gBoarp, Respondent ;

Tue Siick Corporation,

_ AiR FREIGHT Forwarpers ASSOCIATION,

THE Fuying to, Liz, Ivc., Intervenors

“Mo, 19834 -

‘Trans Wortp Armuines, Petitioner ~*~

.* ° , v. : ,

"Cre, AERONAUTICS Boarp, deities

Tue Stick Corporation, —_.

_Atm FRreicoT Forwarpers AssocisTIon,;

_ Tue Fryine Ticer Linz, Inc., Intervenors

No. 18840

Unrrep Am Livzs, Inc.,. Petitioner

‘ ,

Civ AzRonavtics Boakp , Respondent

ne Tue.Suick Corporation,

Am Freicut Forwarbers Association,

Tue Frying Ticer Ling, Inc., Intervenors

off Petitions for Review of Orders of ©

The Civil Aeronautics Board

ON REHEARING EN BANC“: .

| Decided March 2, 1966

»

, . | . | | e 14a . ; ap

‘Before : Bazewon, Chief Judge, Fany; Wasuincron*,

“Dananer, Burcer, Wricut, McGowan, Tamm and Lavan.

THAL, Circuit Judges, sitting en bance.

oe

LEVENTHAL, Circuit Judge: On August 7, 1964, the Civil -

- Aeronautics Board,’ two members dissenting, issued” a

‘policy statement’’ regulation (PS-24), providing that only.

all-cargo carriers may provide ‘‘blocked space service’’—

__ essentially the sale of space on flights at wholesale rates,

when ‘‘blocked’’ or reserved by the user on an agreement:

\ to use a specified amount of space. Concomitantly, the

Board vacated its suspension of a tariff proposing such

‘blocked space service filed by Slick Airways, one of the all-.

cargo carriers. , Defensive tariffs, similar to but not identi-

* Circuit Judge Washington became Senior Circuit J udge on

' November 10, 1965.

4 Hereafter sometimes referred to as the Board, or CAB.

2 Regulation No. PS-24, dated August 7, 1964, ‘‘Statements ..

of General Policy Blocked Space Service,’’ constituting Amend-

' - ment 3 to Part 399 of the Board’s regulations, contains statements

of policy adopted by the Board for the guidance of the public,

with certain -exceptions. Amendment 3 added to Subpart C

(Policies Relating to Rates and Tariffs) a new 1399. 37, now codi-_

fied as 14 C.E.R. § 399.37, defining. blocked es follows:

ee ae ee “Blocked space service’? means the carriage of property °

in all-cargo aircraft at wholesale rates pursuant to an effec-

tive tariff stating a rate applicable only when the user re-

serves and agrees to pay for a specified: amount Of space or

lift on a regularly ia basis for a ac ‘es not less:

than 60 days. -

8 Order No. E-21160, August 7, entered in » Dookst 15419. “Appel-

lant American Airlines’ sought a stay of Order E-21160.At-the ~

suggestion of this court, meow agape: + Ag “eourt to rule on that

tt , thé Board, by Order E-211 August 7, 1964, stayed

a

, the effectiveness of Order: E-21160 to August 17, 1964. On August

1964, a division of this court issued an order staying the

“effectiveness of the Board’s order pending hearing on the merits.

4 On October 20, 1964,.this court granted a petition for rehearing

—__+—en bane of the order granting a stay, vacated the court order of Au-

* a “a

=

‘are combination carriers, i.e. carriers authorized to. carry

= persons as well as property and mail. These tariffs were -

summarily rejected in Order No. E-21170, ugust 11, a

brought before this court on petitions for review.

The CAB? s regulation was the culmination of a rule

making proceeding (Docket 14148), held pursuant to notice

of January 23, 1964, and supplemental’notice of June 22,

1964. All interested parties had opportunity, of which

petitioners availed themselves, to present their positions

to the Board through oral arguments as well as written

_ data, views, and rebuttals. The procedure followed by

_ the Board admittedly complies fully with the requirements

* for rule making established in‘section 4 of the Administra-

tive Procedure Act, 5 U.S.C. § 1003. The question before

us is whether this regulation effected a modification of -

petitioners’ existing certificates which, under § 401(g) of

‘the Federal Aviation Act, 49 USC. § 1371(g), may be-.

accomplished only after a full adjudicatory hearing. ae rer

hold that the regulation was validly issued:

The Board’s ‘policy staternents in Regulation Ps. oA,

essentially legislative findings and conclusions in support

gust 14, 1964, and denied motion for stay. Since the maximum time

for suspension of a tariff would in any event have expired before.

the hearing of this case, the order is now moot and will not be

reviewed by this court.

. In Order E-21160 the Board directed that the ‘ividliasitinn into”

___the lawfulness of the Slick tariff in Decket 15419 should proceed.

4The Slick tariff which the Board permitted to.go into effect ©

imposed a minimum of 200 pounds for shipments: The defensive.

tariffs filed by petitioners as to the bhocked space re

contained no such limitation.

‘\ 8 This authority exiets by virtue of certificates eet under the

statutory ‘‘grandfather’’ provision. Civil Aeronautics. Act of

- 1988, §401(e), 52 Stat. 988. 7 eee Osea

“eal with Slick’s, were filed by American ‘Airlines, Trans- :

World Airlines and United Airlines,‘ petitioners. here, who

oS:

16a

of its decision,® may he summarized as fellcrwe:: There is

- a distinction between combination carriers and ‘all-cargo

carriers inherent: in. their. certificates and operating re-

sponsibilities thereunder. The reservation of blocked space —

to all-cargo carriers will further their role as specialists for

large volume air freight . service in all-cargo aircraft.. This

-ean be expected to be followed by a shift of small volume:

shipments to the combination carriers, whose cargo opera-

tions supplement | their. passenger services. ‘and who are

better suited for meeting the needs of this category _ of

traffic, ‘at ‘less cost. The blocked ‘space traffic, consisting

‘of traffic produced by frequent, regular and high volume

: shippers, has particular need-for a specialized type of

service marked, among other things, by low rates, appro-

privately convenient schedules and assurance that space will -

be available when needed. A large market of traffic now

moved on surface carriers will become available if air

carriers achieve a breakthrough in properly servicing such

traffic—a breakthrough dependent: on development of mar-

keting and performance techniques: adapted to serving the

peculiar needs of these-shippers, and dependent on attrac-

tion of high volume of traffic through -rate-reduction,: in:

- turn made possible by improved. planning and nd_ efficiency. So :

The Board considered that its statutory responsibility

to promote air transportation required it to pursue earliest

. possible achievement of the breakthrough, and. that this

depended on assigning the . exclusive role. of perfecting

blocked space ‘service to the specialized all-cargo carriers.

Of particular interest and significance were ia following

findings and conélusions : ,

However, the “needed improvement in equipment

utilization and load factors cannot be obtained if the °

6 We use ‘the term ‘legislative findings and conclusions” to .

avoid confusion with the ‘‘findings and conclusions’’ required by ©

§ 8(b) of the Administrative Procedure Act for adjudications and « —

rules required to be made on the record after opportunity for

ency hearing. —

<<“

R

17a | 4 . it ag f

traffic from blocked space arrangements is spread too ~

thinly among carriers: Thus, if the blocked space €on-

cept is to be given a true test; we must make sure. that

excessive blocked-space capacity is not a For .

- this réason in particular, our policy conte és that

_only.the all-cargo carriers will be permitted tp offer _

__—plocked space service at this time. . th a ak

” Assigning the all-cargo carriers the exclusive rol

of .performing blocked<spage service will, we believe,

provide them with a. needed source of financial

- strengthening. We recognize,: of course,~that, some.

traffie now moving on the cargo services of the com--

_ bination carriers may be diverted.to.the blocked space

services of the all-cargo carriers, but we do not be-.

lieve that such diversion would be significant. . More-,

over, these carriers; can be expected to acquire an

increasing share of small package shipments. Some —

traffic now moving on the all-cargo carriers at, reg-

ular rates will be diverted to their lower blocked space

rates. However, there is no reason to believe that

attractive blocked space rates.and the benefits of spe-

cialization will not ultimately bring about an increase

in traffic more than offsetting any such diversion. |

’ 1. Petitioners say that the Board has ‘no power, by sum- |

mary action, without hearing, to. Prevent a carrier or

group of carriers from competing fully with éther carriers. ©.

Their reliance on a‘‘fundamental principle’’ that carriers

should be able té compete with each other, though couched

here in procedural terms, has overtones of. an argument

on the merits. At the outset we reject the sweeping argu-

: ment, if that argument is being made or implied, that

‘such agency action would be invalid even if taken after ...

the most elaborate of procedures. That edmpetitors in a

regulated industry should be treated similarly in rate

rulings in order to preserve competition is not denied.

Tp But ‘that is not to say that reasonable distinctions between

\

18a.

$25 e

groups of competitors are impermissible, and that. differ--

ent\services and rates may not then be authorized for

the differént groups or classes. : Congress made.a broad

delegation of power to the Board, in § 416(a) of’-the Act

(49 U.S.C, § 1386(a)),-to ‘‘establish such just. and reason-

able classifications or groups of air carriers: . . as the -

‘nature of the services performed by such § air carriers shall

require.’ = 7 ee ats $

Petitioners have made no presentation that the Board’s

distinétion between combination carriers and all-cargo

carriers is meaningless or without rational foundation.

Congress has given the Board not only a.wide regulatory

authority, .but.a specific promotional function to initiate

“proposals for the purpose of expanding efficient civil avia-

tion transport;’ the power to classify, carriers and serv-

ice; and the power to issue implementing rules and. reg- ©

ulations.6 This combination of powers, together with the

. underlying findings and conclusions, suffices to sustain the

regulation on the merits, assuming nq procedural bar.

See generally United States v. ‘Storer Broadcasting Co.,

351 U.S..192 (1956); National Broadcasting Co. v. . United

. States, 319 U.S. 190 (1943). :

‘2. Petitioners claim: that § 401(g) of the Federal Avia- |

tion Act, 49 U.S.C. § 1371(g), assures them an "6 adjudica-

tory. hearing’’ because the Board action amounts to a

modification or suspension of existing rights under their —

. certificates of public convenience and necessity.

In . essence, petitioners’ argument is the same as’ the

thesis this court accepted ten years ago in the Storer

case,® only to be reversed by the — Court.’ ” pun

749 U.S.C. §§ 1302(a) and°(f), and 1908(b).

849 U.S.C. §1354(a). -

® Storer Broadcasting Co. v. United States, 95 U. 8: App. D.C.

97, 220 F.2d 204 (1955)...

LU nited ey v. Storer Broadoasting ~ 351 U. 8. 192 (1956).

> eee ~ -

: | 3 Mega ua aes

’~gourt held the rhultiple ownership’ rule ‘of the Federal +" ea

., Communications Commission invalid because of the inade- ©

-\ quacy of the rule making procedure followed inits adop- _

_ tion, an adjudicatory hearing being expressly guaranteed -

\by statute to applicants for licenses. - The Supreme Court, . «

however, held that notwithstanding the statutory hearing

.% . requirement’ the Commissian retained the’ power to pro-

mulgate rules of general application consistent with the

Act, and to deny an adjudicatory hearing to applicants ’

whose applications on their face showed violations of the “

rule. Storer’s vitality is attested by its recent application .

iti FPC v. Texaco, 377 US. 33, 39 (1964),"" where the

. Supreme Court stated: Rises Ge eas ns Ps

.

The. statutory requirement: for a hearing does not —

_ preclude the Commission from particularizing statu- .

tory standards through the rule-making: process and

barring at the threshold those who neither. measure ©

* up to them nor ‘show reasons why ‘in: the public

- interest the rule should be waived. ,

, : Peis

¢

. Petitioners argue that the Storer. doctrine is restricted >

_to regulations affecting future applications for new

- licenses , or certificates, whereas here the’ CAB regula- ae

tion affected rights under existing certificates. “That such

a restrictive reading of the Storer doctrine is unwarranted, are

is shown by such decisions as National Broadcasting Co.’ - -

11'The Federal Power Commission had’ validly adopted a rule “te

prohibiting certain pricing provisiéns in the rate schedules of , rat

independent producers of natural gas, and had summarily rejected .

‘applications for certificates of public conveniénee and necessity

which contained rate schedules: with provisions running: afoul of .

- the Commission’s rule... The Court. of Appeals for the Tenth °°

Cireuit held that the rule could not be. applied to deprive a’ cer-

tificate applicant of the adjudicatory hearing guaranteed him by . be

§ 7 of the Natural Gas Act. 276 F.2d at 896. The Supreme Court

--* reversed. See, generally Davis, 2 Administrative Law § 15.03

: (1958). : eee. tes ‘

a)

-y. United States, 319 US. 190 (1943) :!2 Air Lines Pilots.

_Ass’m v.. Quesada, 276 F.2d 892 (2d Cir. 1960); and

Capitol Airways, Inc. v. CAB, 110 U.S.App.D.C. 262, 292.

-

12 National Broadcasting Co. upheld’ the validity of regulations ©

applicable to radio stations engaged in chain broadcasting. The

regulations were issued in 1941 after an investigation and legisla-

tive hearings appropriate for rule making (see 319 U.S. at 194-95),

’ . but not -the adjudicatory-type - hearing prerequisite under the

Communications Act, even prior to the Administrative Procedure .

Act, for denial of a license application or ification or non-

‘renewal of license, see Ashbacker Radio Corp. v. FCC, 326 U.S.

327, 332 (1945).. The regulation required’ radio station licensees

-. engaged in chain broadcasting to alter long-standing business

practices—e.g. precluded network affiliation contracts for a term -

- longer than two years—to avoid revocation or at the very least

non-renewal of licenses. But theecourt found (p. 225) that there

was ‘‘ho basis for any claim that the Commission failed to observe

procedural safeguards required by law.’’

' 18The Court upheld -the promulgation, without sibabbaaiers

hearings, of a Féderal Aviation Agency regulation barring indi-

viduals sixty years old from serving as pilots, even though that

regulation modified rights under all outstanding licenses and ef-

. fecteg a termination without hearing of some outstanding licenses,

‘Rejecting a challenge by pilots relying on the statutory provision,

49 US.C.. § 1371(g), that an adjudicatory hearing must be pro-

vided before an airman’s license may be revoked or amended, the -

court stated (276 F.2d at 896) :

The Administrator’s action does not lose the character of

rule-making because it modifies the pldintiff pilots’ claimed

. property rights in their licenses and their contractual rights

under collective bargaining agreements . . . Administrative

regulations often limit in the public interest the use that

_ persons may make of their property without affording each

‘ . one affected an opportunity to present evidence upon the

fairness of the ——

A TPs endie ed ond

>

| R | a |

F.2d 755 (1961).* See also Transcontinental Television

. Corp, v. FCC, 113 U.S.App.D.C. 384; 308 F.2d 339 (1962).

The present case is different in particular aspects of

’ the facts or statutory provisions from Storer:and the

other, Storer doctrine cases. However, the Storer doctrine —

is not to be revised or reshaped by reference to fortui-

tous circumstances. It rests on a fundamental awareness

that rule making is a vital part” of the administrative

: process, particularly adapted to and needful for sound -

evolution. of policy -in ‘guiding the future development of

industries subject to intensive administrative. regulation ‘

in the public interest, and that such rule making i is not to

~ be shackled, in the absence of élear and specific Congres-

- sional requirement, by importation of formalities developed

for the adjudicatory process and basically unsuited for

policy rule making. | |

| 3. The need‘ for and. importance of policy een

made on the basis of a procedure appropriate thereto is

clearly identified in the Administrative Procedure Act

(APA), 5 USC §1001 et’-seq. In general, the APA

establishes a dichotomy between rule-making and adjudi-

cation. For adjamenton | a formal system is provided.”

<M Capitol Airways upheld a . CAB order amending its rules so

as to require ‘‘supplemental’’ air carriers serving military instal-

lations to apply for individual exemptions from restrictions on

their preexistent operating authority, rather than enjoying a

blanket exemption previously in effect under the Board’s rules.

. The court held that this action could be effected without. a hear-

ing, although the Board ‘‘has redrawn the rules of the game’’

in such a way that some competitors will survive while others

will not. 110 U.S.App.D.C. at 265, 292 F.2d at 758. ‘

15 Section 5 of the APA in substance provides that thé officers

who ‘receive the evidence shall make an initial decision, or at

least a recommended decision, and prohibits any officer engaged

in investigating or prosecuting functions from participating in

the decision. It ptotects the right of cross-examination and the

right of presenting oral testimony.

- 22a ae 7

re Rule making, however, is governed by § 4, which essen-

tially requires’ only. publication of notice of the subject

or issues involved, an opportunity for interested persons

to participate through submission of written data, and

the right of petition in respect of rules. These more

limited requirements are geared to the purpose of the

rule making proceeding, which is typically concerned with

_ broad policy considerations rather than review of indi-

vidual conduct. Compare the Attorney General’s Manual -

on the Administrative Procedure Act (1947), pp. 14-15:

The object of the rule making proceeding is the im-

plementation or prescription of law or policy for the

future, rather than the evaluation of a respondent’s

past conduct. Typically, the issues relate not to the

evidentiary facts, as to which the veracity and de-

meanor of witnesses would often be. important, but

rather to the policy-making conclusions to be drawn

from the facts. Senate Hearings (1941) pp. 657,

1298, 1451. Conversely, adjudication is concerned

with the determination of-past and present rights and

liabilities. Normally, there. is involved a decision as

to whether past conduct was unlawful, so thatthe

proceeding is characterized by an accusatory flavor

and may result in disciplinary action...

'» Not only were the draftsmen and proponents of the —

bill aware of this realistic distinction. between rule °

* making and een, but they: shaped the entire

Act around it.

A

Rule making has a unique value and importance as an

administrative technique for evolution of general policy, —

notwithstanding, or perhaps indeed because of, the freedom

from the procedures carefully prescribed to assure fair-.

a

v

ee a ne

23a

ness in eidintdiet adjudication. “SEC v. Chenery Corp. i

332 U.S. 194, 202, 208 (1947) .1* .

The regulation under discusston, being an peenay

statement of general . . . applicability and future effect

designed to erplemvent . . « . or prescribe law or policy,’’

' plainly satisfies the definition of ‘‘rule’’ in § 2(c). of the .

APA," as well as general understanding. There is there-

. fore a presumptive procedural validity for the rule making

‘procedure prescribed in §4 of the APA; unless counter-

manded by a different Congressional mandate.

J :

16 Chenery recognizes that an agency may have.the discretion to

determine how to proceed. The objective of pursuit of the “‘rule

‘of law,”’ in the administrative process, through development’ ‘of

relatively clear and informative public standards, can be achieved. ©

either. through rule making or the case-by-case adjudicatory system.

Fer some statenients reviewing the relative advantages and dis-

advantages of rule making procedures as opposed to adjudication

for the development of: agency policy, and ‘concluding that in-

creased use of rule making is in the public interest, see. e.g.

Friendly, The Federal Administrative Agencies: The ‘Need for

Better Definition of Standards (1962); Shapiro, The Choice of

Rule Making. or. Adjudication in the Development of Administra-

tive Policy, 78 Harv. L. Rev. 921 (1965); Baker, Policy By Rule

. or Ad Hoc Approach—Which Should it Be? 22 Law & Contemp.

Prob. 658 (1957).

Judge Friendly in effect suggests (p. 105) that the. case-by-case

technique as utilized by the CAB has.muddied the waters and

operated to avoid an ‘overall policy statement of approach to the .

route structure. :

175 US.C. § 1001 (ec) defines ‘‘rule’’ as meaning ‘‘any agency

statement of general or particular applicability and future effect

‘designed to implement, interpret, or prescribe law. or policy.’’ Pro-

fessor Davis points out that the words ‘‘or particular’’ were in- |

serted after Senate passage in order, said the House Committee, to

‘‘assure coverage of rule making addressed to named persons,’’ _

that the words were not intended to change into rule making what’

was previously considered adjudication but ‘‘to make sure- that

what has traditionally been regarded as a rule will still be a

rule even though it has particular instead of generat applicability. ”’

t Davis, supra note 11, § 5. 02.

Qda- -

4. Serious questions have been raised\concerning the |

adjudicatory-type hearings required and, held on initial

licensing involving specific carriers and routes. It has

been suggested ‘that air line certificates are an -instance

- where ‘‘functions that are more truly planning than adju-

dicatory have been forced too rigidly into the latter

mould,’’ and that officials engaged in planning functions

should be ‘‘free to use flexible procedures in. the search

. for ideas and policies’’ rather than be ‘‘bound either as a

‘matter of routine or law to pursue procedures ill-adapted

for the performart ce of such a function.’”®

The difficulties currently experienced in the ebnditetes-

tive process, sometimes referred to as its ‘‘malaise,’’

obviously do-not warrant departure from procedures man-

. dated by Congress. But they suggest the need for rela-

tive certitude before a court concludes that adjudicatory

procedures are required. The need for certitude is under-

scored if the adjudicatory procedure is to be required

on the ground that the proceeding involves an amendment

of licensing, for under the Administrative Procedure Act

that conclusion results in even more rigorous procedural

requirements than apply—to, initial licensing. Thus, the

examiner would not even be free fo consult with agency

technicians, as he is on initial licenses. And the presen-

tation to the agency heads would have to await an exam-

‘iner’s report and proceed on the basis of exceptions

thereto, whereas in initial licensing the agency may omit

18 Landis, Report o on the Regulatory Agenctes to the President- |

» Elect, p. 18 (1960).

_ A leading practitioner before the CAB lies even suggested that

the breakdown of the administrative’ process in protracted cases

should be overcome by the adoption of 4 conference-hearing pro-

cedure, with virtual elimination of oral testimony, including cross-

examination, and hearings confined in substance to conference dis-

cussions between lawyers and expert witnesses. Westwood, Admin-

istrative Proceedings: Techniques of Presiding, 50 A.BsA. J. 659 |

(1964).

»

Pa.

\ 25a

the examiner’s report and proceed on the premise that:

exceptions can be more glearly focused in the light of

proposals and views of the senior staff officials: In short,

the rigors of. the adjudicatory procedure could not even .

be softened® by the exceptions deliberately provided by.

Congress in the APA in cases of initial licensing (and .

rule making on the record) in order to provide the flexi-

bility requisite. for proceedings principally involving policy

determinations.” i tis :

5. We are not here concerned with a’ proceeding that

in form is couched as-rule making, ‘general in scope and

prospective in operation, but in substance. and effect is

individual in impact and condemnatory in purpose. The

proceeding before us is rule making both in form and

effect. There is no individual action here masquerading -

as a general rule. -We have no basis for supposing that

the Board’s regulation was based on a sham rather than _ .

a genuine classification. The classes of carriers were ©

analyzed both. functionally and in terms of capacity for

‘furthering the promotional purposes’ of the Act. The—————

class_of combination carriers is jot accorded the same ~

rights as the class of all-cargo éarriers, but the difference.

is in no sense a punishment for sins of commission or

omission. They are not, in Judge Washington’s phrase,

“‘goats” being separated from favored sheep.”

6. Petitioners’ contention is not advanced by CAB v.

‘ Delta Airlines, 367 U:S. 316 (1961). Once the Supreme

Court’ made clear that the original certificate order had

’ become final, it was undisputed that the second order,

19 S§ee Attorney: General’s Manual on the Administrative Pro- —

cedure Act, p.-15 (1947). . | eee :

” Capitol Airways, Inc. v. CAB, 110 US.App.D.C. 262, 265,

292 F.2d 755, 758 (1961). What Judge Washington had in mind

was the use of rules.as a guise for imposition of sanctions on some

‘parties for violations ef;the Act, not the kind of distinctions made

by the Board here.

26a

addressed to the one carrier (Delta) and prescribing for

it a less favorable route than the original order, was an

amendment of a certificate for which an adjudicatory

hearing is requisite under §401(g) of the Federal Avia-

stion Act. The ‘‘security of route’’ principle thus gives

protection to an individual carrier that has made an in-

vestment in order to carry on the certificated service,

_ assuring it that the CAB will not worsen its position by

action addressed against it individually, by ‘prescribing

inferior routes. “Since the Supreme Court gave no indiag-

tion in Delta. that it intended to depart from the Storer,

doctrine, we see no. basis for reading Delta as _ implying .

that the mere fact that licenses will be affected renders.

general rule’ making an impermissible means of an :

action governing all carriers, or. an appropriate general

_ class of, carriers, ee : , Ae

Where ‘the agency is considering an order ’ ‘against a

particular carrier or carriers there-is protection through

the requirement ‘of the adjudicatory procedure appro-

priate ‘for such imdividual actions and ‘amendments, a

requirement which Delta warns will..be strictly enforced.

Where the agency is considering a general regulation,

applicable to all carriers, or to all carriers within an

appropriate class, then each carrier is protected by the

-fact that it cannot be disadvantaged. except as the Board

takes action: against an entire class. For any such class —

regulation ‘there is also protection outside the field of

procedure in that the general regulation must be reason-

able both as to the classification employed, and as to the

“nature and extent of the restriction in relation to: the

evil ‘remedied or other general public purpose furthered,

7. There may be wisdom in providing for oral testi-

mony, at least in legislative-type hearings, in advance of

. the adoption of controversial regulations governing com-

petitive practices, even though the need for development

eae E

lee: as . é

of overall requirements precluded Congressional. require-

- ment of such, hearings for rule making generally.”

‘ This court has indicated its readiness to lay down pro-

cedural requirements deemed inherent in the very con-

’ cept of fair hearing for ‘eertain classes-of cases, even

though no such requirements had been specified by Con-

gress. Gonzalez v. Freeman, 118 U.S.AXpp.D.C, 180, 334. -

\

— : " om e

- 21 Compare pp. 107-08 of the Final Report of the Attorney Gen-.

- eral’s Committee on Administrative Procedure (S.Doc. 8, 77th

Cong., Ist Sess.) (1941) : | } pba

[Hearings] are now-generally held in connection with the

fixing of prices and wages, the prescription of miles for the

construction of vessels and other instruments of transporta-

_ tion, the regulation of the ingredients and physical properties

of food, the prescription of commodity standards,’ and the ,

regulation of competitive practices. The regulation of all

of these matters bears upon economic enterprise and touches

_ directly the financial aspects of great numbers of businesses

affected, either by imposing direct costs or by limiting oppor-

tunities for gain. Appreciation of these effects, both by busi-

nessmén and government officials, seems to be the chief cause

of the increased use of hearings in administrative rule making.

The Committee believes that-the practice of holding public

hearings in the formulation of rules of the character mentioned

above should be continued and established as standard admin-

istrative practice, to be extended as circumstances warrant °

into new areas of rule making. The difficulty of defining neces-

’ gary exemptions from aay general prescription argues strongly,

however, against the wisdom or feasibility of a statutory re- |

quirement that hearings invariably precede promulgation of a

a regulation. .. . Here, as elsewhere in the administrative proc-

~ ess, ultimate reliance must be upon administrative good faith

—good faith in not dispensing with hearings when contro-

versial additions to or changes in rules are contemplated.

e

3

28a

F. 2a 570. (1964) Pollack v. Simonson, —— U. S. S.App. D. C.

=, 350 F.2d 740 (1965).% -

However in the present. case the CAB did not limit

itself to minimum procedures, but ratheg gave the. parties

a significantly greater opportunity to persuade and en-

lighten,,the Board. It provided not merely for written

Ne comment, but in addition for oral argument. 2 The CAB,

presumably with the aid of its policy staff, sifted out the

dross and delineated key questions on which argument

could most helpfully be focused, including the question

material to the case at bar. «

If additional procedural safeguards are to be iil ;

as a requirement it would be more salutary to incorporate

_ them into a rule making ‘procedure than to adopt a blanket |

requirement of an adjudicatory procedure. A rule making

setting would better permit confinement of oral hearings

to the kind of factual issues which can best be determined

in the light of oral hearings, without undue elongation:

of the proceeding or sacrifice of the expedition and_flexi-.

bility available i in rule making. It would also permit the |

g5

22 Compare 9.Rep.No. 752, 79th on. Ist Sess. p. 18 (1945) ;

’ Administrative Procedure Act, Legislative History, p. 204 (S. °

Doe. No. 248). The Senate Judiciary Committee, while according

to ‘initial licensing certain exceptions from procedural require-

ments. generally applicable to adjudicatory determination ‘‘upon

the theory that in most licensing cases the original application

may be very much like rule making;’’ observed that some cases

“‘tend to be accusatory in form and involve sharply controverted

factual issues.- Agencies should not apply the exceptions in such

Leases, because they are not to be interpreted as — fair

procedure where it i required. is

a Opportunity for oral argument tothe board is not neces-.

_ sarily requisite even in adjudicatory proceedings,, NZRB v.

Clausen, 188 F.2d 439 (3rd Cir.), cert. denied, 342 U.S. 868 (1951).

Whether it is required by due process depends upon the circum-

- stances. FCC v. WJR,.The Goodwill aici 337 U.S. 265, 276:

(1949).

°

oe)

: 29a"

heating examiner to confer with experts and the Board

concerning ‘‘legislative facts’’ and policy questions.

However, there is no basis on the present record for

concluding that additional procedures were requisite for

fair hearing. We might view the case differently if we

were not confronted, solely with a broad conceptual

demand for an adjudicatory-type. proceeding, which is at

least consistent with, though we do not say it is a@trib- -

* “ utable to, a desire for protracted delay. Nowhere in the

record is there any specific proffer by petitioners <as go

the subjects they. believed required oral hearings, what

kind of facts they proposed to adduce, and by what wit-

- nesses, ‘ete. Nor was there any specific proffer as to par-

ticular lines of eross-examination which required explora-

tion at an oral hearing.* Wi, ee SIRE

The particular point most controverted by petitioners is

the effect of the CAB regulation on- their business. The

issue involves -what Professor Davis calls’ ‘‘legislative’’

~ rather than ‘‘adjudicative’’ facts.~ It is the kind of issue

* A request for cross-examination is generally of less value when

not coupled with a proffer of direct proof, see Westwood, supra

note 18. ° Paes

_ Petitioner United stated in its comments that “if the Board.

accepts the conclusions of its staff predicated as they are on in-

accurate and untested cost estimates, the combination carriers will

be penalized and their right to operate all-cargo aircraft somehow

‘impaired.’’ Disputes as to costs frequently involve judgment as

to cost allocations, and in, such matters, as Justice Brandeis noted

long ago, ‘‘experien hes us that it % much easier to reject

formulas presented as being misleading than to find one apparently.

adequate.’’ Groesbeck v. Duluth, 8.8. & A.R. Co., 250 U.S. 607,

614-15 (1919). © °

% ‘See 1-Davis, Administrative Law § 7.02, p. 413 (1958):

\Adjudicative facts ustally answer the questions of who did

‘what, where, when, how, why, with what motive or intent;

-_adjudicative facts are roughly the kind of facts that: go to a

jury,in a jury case. Legislative facts do not usually concern

the immediate parties but are general facts which help the

tribunal decide questions of law and policy and discretion.

- involving expert opinions and. forecasts;~whi cannot be ©

decisively resolved by testimony. It is the kind of issue.

where a month. of aperenee will be worth a year of.

-‘Board’s regulations provide that ‘‘any policy may be-.

gould not reasonably continue to be maintained in the

light. of actual experience, that their overall cargo busi- -

ness was significantly>impaired, or that. the air freight. -

“. : : -

hearings. — F .

It is part of the genhis of the adininistrative. process

that its flexibility permits, adoption of approaches subject 7

to expeditious adjustment in the light of experience.

‘Although the CAB’s regulation is not temporary: in- the

‘sense of being expressly limited in duration, the Board’s

findings plainly reflect its assumption that the regulation

was intended to be subject to. re-examination.”*: The

amended from time’ to time as experience or changing

eobnditions may require.’? 14 C.F.R. § 399.4. . In any gvent,

it is the obligation of an agency to make re-examinations

and adjustments in the light of experience.”

To avoid any possible misapprehension, our affirmange :

of the Board’s action is without prejudice to the right of |

-the combination carriers to reopen the question of their. ©

exclusion upon a showing that the Board’s assumptions

market had 8ufficiently expanded so that the promotion

-26Thus the Board noted its conclusion that expansion to com-

bination carriérs was not feasible ‘‘at this time.’’ In the accom- .

panying order permitting Slick’s tariff to go into effect, the Board

stated: ‘‘We believe that Slick is proposing a worthwhile experi-

ment which should be tested in the market place. . . . Permitting

Slick’s tariff to go into effect. now will also provide the Board with

experience data upon which we may better gauge the effect of the

‘ locked space service during the course ofthe ensuing’ investiga-

tion.’” Order No, E-21160, gee 7, 1964.

2 See National Broadcasting Co. v. United States, 319 U.S. 190,

"225 (1948); United States v. Storer Broadcasting Co., 351 US.

. 192, 205 (1956).

&

Bla. . ; o

of the air cargo ‘industry through blocked space reduced

rates would not be imperiled by their participation.

“Since our ‘records show that this Court took ‘action

‘more than a year ago to permit the regulation to become_”

effective (see note 3 supra), it should perhaps be men-

tioned that at the argument, respondents stated that thus

far there had been little blocked space traffic and no sig-

nificant diversiom from petitioners. Petitioners replied

that ‘this: period has not been a fair test, ‘since the all-

cargo carriers may have been awaiting the outcome of

the litigation. before: aggressively exploiting their newly

won privileges: It suffices to say that if and when’ peti-

tioners have. a showing to make based in significant *

measure on actual relevant. experience, they will have a,

remedy available to vindicate their asserted rights, both

_ before the Board and on judicial review in case of dis-

satisfaction with the Board’ s action or inaction.

Meanwhile they have’ been accorded a hearing con,

forming ‘to and surpassing the minimum. required. for rule.

_ making. They have: not been subject to a denial of pro-

», cedural rights That 3 undermines the Mca sd of the regula-

| tion. | O°

Affirmed.

32a

’

Wasuineton, Senior Cirowis en did’ not —

_ in this decision. :

BurceEr, Circuit Judge, with whom Dananer and Tam,

Circuit Judges, join, dissenting: Petitioners, three. air-

lines authorized to carry both passengers and cargo on a

regular basis, hold certificates for cargo carriage legally —

identical with the certificate held by Intervenor, Slick Cor-

poration, an all-cargo carrier. Without holding the

‘adjudicatory hearing required by statute before an out-

standing certificate»may be amended, the Civil Aeronau-

- ties Board laid down what it described as a ‘‘regulation’’

allowing: all-cargo carriers — but no’ others—to offer

_ reduced rates for “«Dlocked-space”’ shipments; it expressly

excluded combination airlines such as-Petitioners from the

benefits of offering the same reduced-rate service.

Acting under this ‘‘regulation’’ the Board issued the

order under review, specifically denying applications of

Petitioners to offer the same service Slick had been

authorized to offer. These actions were taken in response

to Slick’s request, over the opposition of its fellow all-

cargo carrier, Flying giger Line, that the Board. ‘‘délineate

the roles’” of combination and all-cargo carriers in such

: Federal Aviation Act 0£1958, § 401(g¢), 72 Stat. 756, 49 U.S. 0.

§ 1871 (g) ’ (1964) ; see O.A.B. v. Delta’ Air Lines, 367 U.S. 316 ~

(1961).

2The Board purported to find ‘authority for this delineation in

section 416(a) of the Act, 72 Stat. 771, 49 U.S.C. § 1386 (a) (are)

which provides:

The Board inay from time to time establish such just and

reasonable classifications or groups of air carriers for the

purposes of this title.as the nature of the sérvices performed ‘

by. such air carriers shall require ; and such just and reasonable

rules and regulations, pursuant to and consistent with the pro-

visions of this title, to be observed by each such class or group,

* as the Board finds necessary in the public interest.

The Board’s ‘‘Policy Statements,’’ described in the majority’ 8

footnote 2, asserted the following justification for its action:

A logical means of further delineating the role of the all-

cargo carriers is to — their development as specialists for

cr

~~

33a

a way as to make the all-cargo carriers the ‘‘wholesalers”’

and the combination carriers the ‘‘retailers’’ of air cargo

space. I have trouble seeing how a ‘‘regulation’’ which

turns identical certificates into- ones which place the

licensees in entirely distinct carrier roles, carrying differ-

ent types of cargo for different types of shippers, can be

said to be anything léss than an amendment of outstand-

ing certificates. This much is clear, for it is undisputed

that after the “regulation”? Petitioners could not lawfully

engage in the same carriage as their all-cargo competi-

tors. Indeed the Board concedes that its action has ex-

cluded Petitioners from performing the kind of carriage

which they were origitally certificated to perform and

in which they have made large investments of capital.

: 7 therefore dissent from the majority’s, conclusion that

ret tm judicatory hearing was not required. As I see it

this” is nothing more than a transparent device to favor

some carriers at the expense of others, .

The certificates of the all-cargo carriers and those of

‘the combination carriers bestow identical rights and

impose identical obligations with respect to the carriage’

of property. It follows that the’ two types of carriers

must be free to file identical tariffs for\the carriage of -

large volume air freight service in all-cargo aircraft. The

reservation of blocked space arrangements exclusively to the

\ all-cargo carriers is consistent with this objective. The in-

* eFeased concentration of the all-cargo carriers on large volume

traffic ‘can be expected to be followed by a shift of small volume

shipments to the combination carriers, whose cargo operations

supplement their passenger services and who are better suited

for meeting the needs of this category of traffic and at less

(Emphasis added.) ** In light of this statement, it, should~be re-

membered that the all-cargo airlines carry about 15 per cent of the

nation’s scheduled domestic airfreight, while the combination car-

riers carry 85 per cent. Of such freight transported in all-cargo

airplanes, the all-cargo lines carry 36 per cent, ead the combination

lines 64 per cent.

v

"34a

cargo. By permitting the all-cargo carriers to file blocked- .

space tariffs the Board acknowledges their - present

authority to file such tariffs under their existing certifi-

cates, which, except as to passenger carriage, are the same -

as’ those of the combination carriers. By denying the

combination carriers the opportunity to file such tariffs

_ the Board in effect amends outstanding certificate author-

ity. Cf.:FCC v. National nee Co. ety, 319

U.S. .239 (1943).

The.majority opinion cites a number of cases.in an —

effort to sustain its holding that the Board has authority

to amend Petitioners’ certificates by rulemaking rather

than an adjudicatory procedure.’ Those cases are’ not

in point. First, most of them dealt ‘with agencies. other |

than the CAB. The Supreme Court said recently in

another context, ‘‘federal agencies are not fungibles-.... —

—Congress has treated the matter with attention to the.

particular statutory scheme and agency.’? UAW v. Sco-

field, 382 U.S. 205, 210. (1965).° . We are dealing here

with a statute motivated in. large part by concern for

‘‘seeurity of certificate.’ CAB v. Delta Air Lines, 367 U.S.

316,.322 n.6, 324-25 (1961). This concern is reflected. in

the section 401(g) requiremeyg of an evidentiary hearing

before a certificate may even be amended. Second, none

of the cases relied on by the majority deals with a situa-

tion like ‘that before us, where an agency .attempts by

rulemaking to amend some—but not all—of the out-

standing certificates authorizing a particular kind of serv-

ice so as to deprive the licensees of a } significant part of

their license authority.

* This distinction is particularly applicable to Transcontinent

Television Corp. v. FCC, 113 U.S.App.D.C. 384, 308 F.2d 339

(1962), cited by the majority, which dealt with the very different

legislative situation of broadcast station license renewals under the

Communieations Act of 1934, which gives the FCC broad powers

to make frequencies unavailable by rule amendment.

>

35a

United States v. Storer Broadcasting Co., 351 U.S. 192

_(1956), upon which the majority chiefly relies, as well as

FPO v. Texaco, 377 US. 33 (1 4 and National Broad-

casting Co. v. United States, agus 190 (1943),° are

cases dealing with rulemaking pplying across the board

to all applicants for licenses or certificates. Petitioners

there were not being: deprived of any authority they had. .

formerly exercised; in ,those cases rulemaking was. used —

to formulate reasonable; nondiscriminatory criteria to be

met as conditions of receiving certificates in the first

_ place. By contrast, the present appeal involves a use of

rulemaking to abridge existing certificates to give favored

‘carriers a monopoly on certain classes of carriage for the

express purpose of ‘¢foster[ing]. their’ development”’ at

the expense of others not so favored. These differences

are not ‘fortuitous circumstances’’ recognition of which

leads to ‘‘revising’’ or. ‘‘reshaping’’ the Storer doctrine, |

as the majority suggests. They are basic not only to the

statute but also to the question of the appropriateness of

rulemaking procedures, as I will show. - 7

Air Line Pilots Ass’n v. Quesada,-276 F.2d 892 (24 Cir.

1960), is even less apposite. That case involved the

narrow issue of validity of a rule based on. flight safety

considerations against pilots flying scheduled aircraft.

after ‘reaching age 60; there was no amendment of cer-

tificate authority in the sense here involved. The \licenses

originally issued to the pilots specifically provid

their duration was as set out in current regulations.

the ‘Act itself imposes an express duty’ on the

istrator of the FAA’ to prescribe reasonable re ations

‘relating to pilot standards. It was thus in a very harrow

and limited context that the court held that an adjudica-

tory hearing was not required for each individual pilot;

4 See generally 39 N.Y:U.L. Rev. 347 (1964).

5 It is relevant to note that the opinion in National Broadcasting —

Co. does not: mention the issue before us. . | :

36a

. the rule laid down there was made applicable to all pilots,

not to certain ones selected by the Board. —

Finally, the majority relies on Capitol Airways v. CAB, .

110 U.S:App.D.C. 262, °292 F.2d 755 (1961), which

expressly distinguishes’ eases like the one before us and

includes dictum directly on point here, while distinguishing

_ CAB v. American. Air. Transport, Inc., 91 US.App.D.C.. °

_ 818, 201 F.2d 189 (1952) :

American Air Prenepor! ... involved an effort by .

the Board to separate the sheep from the goats....

This court remanded the case to the District Court

to determine whether the Board had in fact changed

_ the terms of existing licenses. The inference -to be

‘. drawn is that if the Board proposed to discriminate

_ between carriers in the same group, characterizing

some as law abiders and some as law breakers, it

would be required to afford an evidentiary hearing

to those whose operating authority was to be sus- .

_ pended or revoked for cause.

In contrast, in the present case the impact of the:

| Board’s decision is on an entire class, rather than

on particular members of the class who are- singled

out as law violators or labeled for some reason as

unfit or unworthy. Here, the Board has left all com- ~

_ petitors in the field, but has redrawn the rules of the

game. Some will be easily able to survive under these

new rules; some will not. But there is no a

. adjudicate the merits of individual firnte -

‘110 U.S.App.D.C. “ 265, 292 F.2d at 758. (Footnote .

omitted.) The majority seeks to distinguish the import

of this language and the American Air Transport- case

*on thé ground that here the Board does not accuse peti- .

tioners of violating the law. I confess great difficulty in

understanding why licensees not accused of violating the .

law are not as much entitled to an adjudicatory hearing

-

. os nance tre hits gn te

pi 87a

as licensees whe are so accused, wins the two are hs.

jected to equivalent’ Board action. The majority’s pro-

posed distinction seems to me to pose substantial prob-

- lems of equal Pore of the laws under the fifth and

fourteenth amendments. ae

Although it is not necessary to discuss the relive .

desirability of rulemaking and adjudicatery procedures

in a situation where Congress has spoken as clearly as it

hag here, I note that my conclusion as to congressional

meaning is reinforced by a consideration of the types of

issues involved here. Rulemaking is normally directed ~

toward the formulation of’ requirements having a general

application to all members of a broadly identifiable class.

As pointed out above, however, the CAB’s result here is

reached by a rule which has different impacts upon mem-

bers of the same basic category. When the Board makes

‘such a differentiation, the proceedings ineseapably become

highly adversary in character, especially where the final

determination purports to rest upon asserted differences in

capabilities and potentialities as between individua] car-

riers. The rulemaking procedure’s lack of direct testi-.

mony of witnesses, cross-examination, and other features

of adjudicatory hearings is totally inadequate for the

testing of such competing considerations, both factual ~

and inferential.

While the question whether er te rs ‘“blocked-

space’’ service may be offered by any carrier might well

be appropriate for rulemaking, the selection of particular

carriers to provide such service is clearly the’ sort of ques-

tion which can be resolved properly and fairly only in an

adjudicatory proceeding. Once the Board had decided

that it should not allow every freight carrier to offer

such service, it was faced with the. problem of picking.

and choosing among competing, mutually exclusive appli-

cations. Cf. Ashbacker Radio Corp. v. FCC, 326 U.S. 327

(1945). Furthermore, these were not applicants compet-

-

ing for a new right which neither had. previously held;

_ they were competing to retain a right which their cer- —

' tifidates already authorized. The Board’s action made some

carriers ‘‘more equal?’ than others.

~The majority ’ seems to be aEoery & repeated

'. references. to the combination carriers as a “class”, that’ ~

any multiple of one automatically makes a class for these

purposes; two seems sufficient to make a ‘‘elass’’ of the

only domestic all-cargo carriers now certificated. The

‘‘formal’’ procedural safeguards which seem to distress

the majority, see-pp. 10-14 supra, were written into law

by Congress precisely because Congress. believed that

they were necessary in making this crucial kind of deter-

- mination: A general dissatisfaction with the ‘‘rigors’’ of

procedural safeguards should not lead to dispensing with

them in a case where they are most appropriate, nor to —

amending the statute judicially.

While ‘it is not essential to my view of this case, it

seems to me of no little significance that the history of

all transportation, air, water or land, is that the carriage

of bulk freight becomes the dominant and most, lucrative |

business. I see no reason why this is not likely to be true |

in air carriage.® ‘Although passenger carriage is clearly

a major and profitable market now, it does not follaw that

it has the bright prospects for expansion that ar open

‘to air freight carriage. History indicates that the future °

will see a steadily increasing ratio of freight tonnage to

passenger tonnage..- The Board action here arbitrarily |

permits one group ef favored carriers to preempt much

- this lucrative and a — by ; ne

6 As the majority itself recognizes, the fact that experience

since ‘the order became effective shows ‘‘no significant diversion”’

of cargo from petitioners is a. makeweight argument lacking in

probative value. Moreover, such off-the-record egument is not

properly before us.

ree 398 vi

omnis certificated carriers of part of. their duly oe .

authority. The Board’s ‘‘Policy Statements” confirm the °

accuracy of this forecast by declaring that the opportunity

to offer reduced blocked-space rates would give the all-

cargo carriers ‘‘a needed source of financial strengthening,”

while implying that the combination carriers ‘‘can be. .

expected’? to suffer no reduction in the amount of air

freight they presently carry. Even if the Board has the

power to realign so drastically’ the competitive positions _

of carriers holding equal certificates, the Act as I read

it requires that the Board first hold an evidentiary hearing,

before it may make such a certificate amendment.

Ff

40a - | oa

APPENDIX B

Filed March 2, 1966

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

September Term, 1965.

No. 18,833 . ;

AMERICAN Arruines, Inc., Petitioner,

} v. sili

ahah ‘heieiees B3oarp, Respondent,

THE Suick CorPoRATION,

Arm Freight Forwarpers ASSOCIATION,

Tse Fiyine Tickr Line, Inc., Intervenors..

¢

No. 18,834 e

Trans Worip Arruines, Inc., Petitioner,

: v. :

: . an Arronavutics Boarp, Respondent,

Tue Suick Corporation,

Am FREIGHT ForwArpERs ASSOCIATION,

. THe FLy1ne TIGER Linz, Inc., Intervenors.

No. 18,840

Unrrep Ai Lines, Inc., Petitioner,

| yu |

Crvi. Axronavtics Boarp, Respondent,

Tue Suick CoRPORATION, |

Arr Freight Forwarpers. ASSOCIATION,

Tue Fiyiye Ticer Line, Inc., Intervenors.

ay 4

- .

@

_ 4ila

. On Petitions to Review an Order of the x |

Civil Aeronautics Board. : .

Before: Bazeton, Chief*Sudge, and Fany, Wasuinctox* ,

DananeER, Burcer, WRIGHT, McGowan, Tamm and

LEVENTHAL, Circuit Judges, sitting en bance.

". Judgment ~

- ‘These cases came on-to be reheard before the court en

banc on the record from the Civil Aeronautics Board, and

‘. were. reargued by counsel. ,

- On Consmeration “WHEREOF, it is ordered and adjudged

’ by this court en banc that the order of the Civil Aeronautics |

. Board \ on réview in these cases is affirmed.

: ‘Per Circuit J udge LEevENTHAL

Dated: March 2, 1966

Senior Circuit J udge Washington did not ee

in the decision of these cases.

Separate dissenting opinion by Circuit Judge Buréit, .

with whom Circuit J udges Danaher and Tamm join.

“ "8

a

P

; f

4 ° -

~/:

* Circuit J udge Washington became Senior Circuit Judge on |

Keven 10, 1965.

ae

2

APPENDIX C.

eo No! ‘E21170

. UNITED STATES OF AMERICA

. CIVIL Pose Sod BOARD

| WASHINGTON, D. ©.

‘Adopted by the Civil Aeronautics Board __ 4

_ at its office in Washington, D. C., |

on the.11fh day of August, 1964 -

Docket 15419.

Blocked-space. air freight. tariffs of |

AMERICAN Arumes, Inc.

Trans Wortp AIRLings, INc.

_ Unrrep Ar Lines, Inc.

Order

- The Board, iw Order E-21076; of July 17, 1964, suspended —

and instituted . an investigation of the proposed. block .

space tariffs of The Slick Corporation and Trans World

Airlines, Iné; Subsequently, by Orders E-21122 dated

July 27, 1964 and H-21167 dated August 10, 1964, the Board

took similar action with respect to the same type of tariffs’

_ filed-by American Airlines, Inc., and United -Air Lines,

Inc., respectively... On August 7, 1964,"the Board adopted

a Statement of General Policy, Amendment No..3 to Part

399 of the Board’s Regulations. In that regulation we

" determined that on the basis of policy considerations there-

in before us, the combination, passenger-cargo carriers

should not be permitted to offer blocked space service.

_ American, TWA and United: are combination carriers as

- contemplated in this regulation and without authority to

provide blocked nee Ore. It follows, in view of this

@

> 1Order E-21160 dated August 7, 1964 vacating the suspension

’ of the Slick tariff was stayed to and including August 17, 1964,

by. — E-21166 dated fciguat 7, 1964.

43a '

determination, that the tariffs of American, TWA, and’

United are inconsistent with the regulations of the Board

as well as with the provisions of se¢ction 403 of .the.

Federal Aviation Act of 1958. Consequently we will herein

reject the block space tariffs of American, TWA,.. and |

‘United as unauthorized by section 403 of the Act and

_- provisions ‘of the Board’ s regulations. .

The rejection herein. of the blocked apace’ | tariffs of

American, TWA, and United removes as an issue in this

7 proceeding the lawfulness of such tariff proposals and we *.

will accordingly dismiss the investigation previously

ordered in this docket as tothe blocked space tariffs of these

_ earriers.?- However, for the reasons heretofore stated in

Order E-21076 of July 17, 1964, the investigation of the

-lawfulness-of the Slick blocked space tariff. proposal is

necessary, and the processing of that ‘matter will continue

unaffected by -any action taken herein,

Accordingly, pursuant to the Federal “Aviation Act of ©

1958, and particularly sections 102, 204(a), and 403, thereof,

‘Ir 1s ORDERED TuHatT: i

1. The following tariffs and revised. pages are iad

rejected :

: (a) American Airlines, Ine. ‘Tariff C. cake: No. 166;

_ (b) Trans World Airlines, Inc. Tariff C.A.B. No. (125;

(e) Agent J. Aniello’s Tariff CA. B. No. 28; jaa

(d). 10th: and 11th’ Revised Pages 18 of — J.

_Aniello’ 8 7 ‘OAB. No. 13.

2 Under our statement of general policy of August 7, 1964,

blocked space services may be provided by all-cargo carriers and

the blocked spate tariff filed by Slick, an all-cargo carrier is prop-

erly fileable under section 403 of the act and the Board’s

regulations,

”

44a : :

2. The investigation ‘instituted by ordering paragraphs 1

‘of Orders E-21076, E-21122, and EY1167, insofar as they

are applicable to blocked spaced tariffs of American <Air-

lines, Inc., Trans World Airlines, Inc., and United Air

Lines, Ino, is dismissed.

ay * Copies of this order shall be filed with" the tariffs and

served upon all’ parties to this proceeding.

4. This order shall be effective August 11, 1964. - P

This order will be ‘published in the Federal Register.

By bad ota Aeronautics Board:

‘Harorp R. eiaiiiin

\ Secretary.

(sea)

Gurney and Gngaisamn, Membgrs, Dissenting:

We cannot agree for-the reasons stated in the dissent

attached to Order-E-21160, August 7, 1964 that the blocked-

space tariffs filed by the combination carriers be. rejected.

All of the blocked-space tariffs should be suspended and

investigated to determine their lawfulness. $s

’Furthermore, for the reasons ‘stated in the dissent at-

tached to-Rart 399, Amendment 3, August 7, 1964, we cannot

agree that the.Board can: legally. preclude the combination

carriers from offering competitive wee service.

_/38/ Caan Gurney

‘*/8/ Wuirney GILLILLAND

45a

@. Pat APPENDIX D

‘A. The'Fellowing Privisicus of ite Voteuti ivtetion Ret of’ 2002.

72 Stat. 731, as Amended, 49 — § 1301 et seq.. Are Principally

-Envolveds mi

- See. 101 (72 Stat. 737, as aaelied 49 U.S.C. § 1301).

Derrvirions

As ased in this diame unless the context otherwise

requires—

*

(3) ‘¢ Air carrier’’ means any citings of the United States

who .undertakes, whether directly or indirectly or by a

: -lease*or any other arrangement, to engagé.in air trans-

| portation : Provided, That the Board may by order relieve

air carriers who are not directly engaged in the operation

of airéraft in air transportation from the provisions of -

this chapter to the extent and an such periods as # may be i in

the public interest.. *

*. * ae

(10) ‘‘Air ucieciaauae means interstate, overseas,

or foreign air transportation or the transportation of mail

d aircraft. os 4

* * * ; ‘ ,

(219 “Interstate air transportation”, ‘overseas air

transportation’, and ‘*foreign air transportation”, respec-

tively, mean the carriage by aircraft of persons or property —

as a common carriér for compensacion or hire or the car-

tiage of mail by aircraft,’ in commerce ee respec-

-tively— .

(a) a place in any State of the United States, or the

District of Columbia, ‘and a place-in any other State

of the United States, or t istrict of Columbia; or.

. between places i in the samé State of the United States

‘ through the makati ‘over any ee outside thereof; _

-@

necessity:

‘6a,

or between places in the same Territory or possession

- of the United States, or the District of Columbia;

(b) a place in. any State of the United States, or

the District of Columbia, and any place in a Territory . >

. or possession of the United States; or between a place

in a Territory or possession of the United States, and

a place in any other eed or possession of the

United States; and

.(c) a place in the United States and any aes out- °

side thereof;

whether such eummeste moves wholly by aircraft or partly |

_ by aireraft and partly by other fornis of transportation. ~

Sec. 102 [72 Stat. 740, 49 U.S.C. §1302]. ~

ConsmpeRATIon or Marrters 1n Pvustiic “3

Interest By Boarp

In the exercise ‘and performance of its powers and

duties under this chapter, the Board shall consider the

‘ following, among other things, as being in the public in- —

terest, and in accordance with the public convenience and

(a) The encouragement and avuones 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 eatin, and of the national

defense ; ;

(b) The. regulation of air transportation i 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 im-.

prove the relations between, and coordinate transportation

by, air carriers;

‘

is)

sone eee 47a

(c) The promotion of gihectitin; economical, and efficient

” service by air carriers at reasonable charges, without unjust

discriminations, undue preferences or advantages, or unfair

or destructive compétitive 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.

_eommerce of the. United States, of the Postal Service, and

of the national defense ;

(e) Thé promotion.of safety in air commerce; and

(f) ‘The promotion, encouragement, and development of

civil aeronautics. aie

* * wor

Sec. 204 [72 Stat.'743, 49 U.S.C. § 1324].

GeneRAL Powers AND Duties OF THE BoarpD

_ (a). Performance of acts; conduet of investigations ;

orders, rules, regulations, and procedure.

\

The Board is empowered to perform such acts, to con- .

duet such investigations, to issue and amend such orders,

and to make and amend such general or special rules, regu-

lations, and procedure, pursuant to and consistent with the

provisions of this chapter, as it shall deem necessary to

carry out the provisions of, and to exercise and perform

its powers and duties under, this chapter.

* * a

Sec. 401 [72 Stat. 754, as amended, 49 US. - § 1371].

_ CERTIFICATE OF Punurc Comvanmace AND Necesstry.

“es Essentiality.

“No air carrier shall engage in any air transportation

unless there is in force a certificate issued by the Board ~

”

48a,

authorizing such air carrier to engage in porn transporta-

of

- tion.

;@ * .

(c) Notice of application; filing of protest. or memo-

randum; hearing. :

Upon the filing of any such application, the —_" 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 regu-

lation 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 applica-

tion shall be set for public hearing; and the Board shall

dispose of such application-as speedily as possible.

(d) Issuance. 4

(t) 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 chapter and the rules, regu-

latior s, and requirements: of the Board hereunder, and

that such transportation is required by the publie con-

venience and necessity ; otherwise such application shall be

‘. denied.

(2) In the case of an application for a certificate to en-

gage in temporary air transportation, the Board may issue

a certificate authorizing the whole or any part thereof for

such limited periods as may’ be required by the public

convenience and necessity, if it finds that the applicant i is

fit, willing» and able properly to: perform such transporta-

Gon and to conform to the provisions of this chapter and

the rules, regulations, and requirements of the Board here-

’ under.

49a

. (e) Terms, conditions, and limitations.

(1) Each certificate issued under this section Rall specify

the termirral points and intermediate points, if any, between

which the air carrier is authorized to engage in air trans- -

portation and the service to be rendered; and there shall —

be attached to the exercise of the privileges granted by the

certificate, or amendment thereto, such reasonable terms,

conditions, and limitations as the public interest may re-

quire.

°

e - © om ._ *

(4) No term, condition, or limitation of a certificate shall

restrict the right of an air carrier to add. to or change

schedules, equipment, accommodations, and facilities for.

performing the authorized transportation and service as

the development of the business and the demands of the’

public shall require; except that the Board may impose

’ such terms, conditions, or limitations in a certificate for

supplemental air: transportation-when required by subsec-

tion (d)(3) of this section. i: Si :

(6) Any air earrier, other than a supplemental air car-

rier, may perform charter trips or any other special service, -

without regard to the points named in its certificate, or the

- type of service provided therein, under regulations pre-

scribed by the Board. ~* ¢ . . -

(f ) Effective date and duration.

Kach certificate shall be effective from the date specified

therein, and shall continue in effect until suspended or re-.

voked as hereinafter provided, or until the Board shall

certify that operation thereunder has ceased, or, if issued.

for a limited period of time under subsection (d)(2) of this

section shall continue in effect until the expiration thereof,

unless, prior to the:date of expiration such certificate shall

be suspended or revoked as provided herein, or the Board

shall certify that operations thereunder have ceased:

50a

Provided, That if any service authorized by a: certificate —

is not inaugurated within such period, not less than ninety

days, after the date of the authorization as shall be fixed -

by thé Board, or if, for a period of ninety days or such -

other ‘period as may be designated by the Board any such

service is not operated, the Board may by order, entered

after notice and hearing, direct that such certificate shall

thereupon cease to be effective to the extent of such service.

Pg

. (g) Alteration, amendment, . modification, suspension, or:

revocation.

The Board upon petition or complaint or upén its own

initiative, after notice and hearings, ° may alter, amend,

modify, or suspend any such certificate, in whole or in -

- part, if the public convenience and necessity so require, or:

may revoke any such certificate, in whole or in part, for

intentional. failure to comply with any pfovision of this

sub-chapter or any ordér, rule, or regulation issued here- _

under or any term, condition, or limitation of such certifi-

eate: Provided, That no such certificate shall be revoked un-

less the holder thereof fails to comply, within a reasonable

time to be fixed by the Board, with an order of the Board

commanding obedience to the provision, or to the order

(other than an order issued in accordance with this pro-

viso); ‘rule, regulation, term, condition, or limitation found

by the Board. to have been violated.. Any interested per-

son may file with the Board a protest or memorandum in

support of. or in opposition to the alteration, amendment,

_. modification, suspension, or revocation of. the certificate.

_ * * ¥ : a

“Sec. 403 [72 Stat. 758, as amended, 49 U.S.C. § 1873].

a seis of Tartrrs or Ar CARRIERS . |

(a) Filing, posting, and publication; rejection of tariffs.

» Every air carrier and every foreign air carrier shall file:

with the Board, and print, and keep open to public in-.

&

5la

spection, tariffs showing all rates, fares, and charges for

air transportation between points served by it, and points

served by any other air carrier or foreign air carrier

when through service and through rates shall have been

established, and showing to the extent required by regula-

tions of the Board, all classifications, rules, regulations,

practices and services in connection with ‘such air transpor-

. tation: Tariffs shall be filed, posted, and published in such |

form and manner, and shall contain such information, as

‘the Board shall by: regulation prescribe; and the Board

is empowered to reject any tariff so filed which is not con-

sistent with this section and such regulations. .Any tariff

so rejected shall be void. The rates, fares, and charges

shown in atfy tariff shall be stated in. terms of lawful

money of ‘the United States, but such tariffs may also

state rates, fares, and charges in terms of currencies other

‘than lawful money of the United States, and may, in the |

ease of foreign air transportation, contain such information

as may be. required under the laws of any country in or

to which an air carrier or foreign air carrier is authorized

to. operate.

(b) Observance of tariffs; granting Pe ee

No air carrier or foreign air carrier shall charge or

demand or collect or receive a greater or less, or different

compensation for air transportation, or for any service in

connection. therewith, than the, rates, fares, and charges

specified in its currently oftecttye tariffs; and no air car-

rier or foreign air capzise shall, in any manner or by any

device, directly or ihdirectly, or through any agent or

broker, or otherwise, refund or remit any portion of the

rates, fares, or charges sO specified, or extend to any

_ person anypprivileges or facilities, wath respect to matters

required by the Board to be specified i in such tariffs, except .

“those specified therein. ‘Nothing in this chapter shall

prohibit such air carriers or foreign air carriers, under

such terms and conditions as the Board may preseribe,

; : ”

oo ; 62a ( yf i

from issuing or interchanging tickets or passes for free

or reduced-rate transportation -to their directors, officers, _

and employees (including’ retired directors, officers, and ~

employees who are receiving retirement benefits from any

air carrier or foreign air carrier), the ‘parents and im- —

mediate families of such officers and employees, and thé

immediate families of such. directors; widows, widowers,

and minor children of employees who:have died as a direct .

result of personal injury sustained while in the per-

formance of duty in the service of such air carrier or

foreign air carrier; witnesses and attorneys attending any

legal ‘investigation in which any such air carrier is in-

terested; persons injured in aircraft accidents and ° physi-

cians ana nurses attending such persons ; immediate fami-

+ lies, including parents, of persons injured or killed in air- —

craft accidents where the object is to transport such per-

sons in connection with such accident; and. any person or, .

property with the object of providing relief in cases of °

general epidemic, pestilence, or other calamitous visita-

tion; and, in' the case of overseas or foreign air transpor-

tation, to.such other persons and under such other circum-

stances as the Board may by regulations ‘prescribe. ‘Any

air carrier or foreign air carrier, under such terms and

conditions as the Board may prescribe, may grant reduced- _

rate transportation to ministers of religion on a space-

available basis. .

» (c) Notice of change in tariff.

No change shall be made in. any rate, fare, or charge, or ~

- any classification, rule, regulation, or practice affecting such

‘rate, fare, or charge, or the value of the service thereunder,

specified i in any effective tariff of any air carrier or foreign .

_ air carrier, except after thirty days’ notice of the proposed

change filed, posted, and published in aceordance with sub- |

section (a) of this section. Such notice shall plainly state .

the change proposed to be made and the time stich change

will take effect. The Board may in the public interest, by

ee

Ma"

ae

53a

regulation or otherwise, allow such change upon notice less

than that herein specified, or modify the,requirements of

this section with respect to filing and posting of tariffs,

either in particular instances or by ‘general order applica-

ble to special or peculiar circumstances or conditions. |

(a) Filing of divisions of rates and charges,

. Every air carrier or foreign air carrier shall keep-cur-_

rently om file with the Board, if the Board so requires, ©

the established divisions of “all joint rates, fares, and

foreign air earrier participates.

; . ; i? . . . .

charges for air transportation in which such alr carrier or

Sec. 404 [72 Stat. 760, 49 U.S.C. $1374].

Rates For CarRiaGeE or Persons anp Property; Duty To

Provipe Service, Rares, anp Divisions; DiscriMINAtIoNn.

fa) It shall be the duty of every air carrier to provide

and. furnish interstate and overseas air transportation, .

as authorized by its certificate, upon reasonable request

._ therefor and to provide reasonable through service in such

air transportation in connection with other air carrier’; to

provide safe and adequate service, equipnient, and facilities

in connection with~such transportation ;' to establish, ob-~

serve, and enforce-just and reasonable individual and joint

rates, fares, and. charges, and just and reasonable classifica-

tions, rules, regulations, and practices relating to such air

transportation ; and, in case of’ such joint rates, fares, and .

charges, to establish just, reasonable, and equitable divi-

sions thereof as between air carriers participating therein

which shall,not unduly prefer or prejudice any of such

participating air carriers. | -

(b) No tir carrier or foreign air carrier shall make,

give, or cause any undue’ or unreasonable preference or

advantage to any particular person,. port, locality, or de-

scription of traffic in air transportation in any respect.

whatsoever or subject any particular person, port, locality,

’

bda

_ or description of traffic in air transportation to any unjust

' discrimination or any undue or unreasonable. prejudice or

disadvantage in any respect whatsoever. .—

a mae EF | i ae 2

* See. 412 [72 Stat. 770, 49 U.S.C. § 1382].

* PooLING AND OrHER AGREEMENTS; Fine;

| _ APPROVAL BY Bodrb.

Q

(a) "Every | air carrier shall file with the Board a true

copy, or, if oral, a true and complete memorandum, of -

every contract or agreement (whether enforceable by pro-

visions for liquidated damages, penalties, bonds, or other-

wise) affecting air transportation and in force’ on the

effective date of this section or hereafter entered into, or

any modification or cancellation thereof, between such air

carrier and\ any other air carrier, foreign air carrier, or

‘ other carrier for pooling or apportioning earnings, losses,

traffic, service, or equipment, or relating to the establish-

~ ment of trandy ortation rates, fares, charges, or classifica-’

tions, or for preserving and improving safety, economy and

efficiency of. o, eration, or. for controlling, regulating,

preventing, or otherwise eliminating destructive, oppres-

sive, or wasteful competition, or for regulating stops,

-schedules, and character of service, or for other cooperative

_ working arrangements.

' (b) The Board shall by onder deeuiere: any any con-

tract or agreement, whether or not previously approved by

- it, that-it finds to be adverse to the public intérest, or in

' violation of this chapter, and shall by order approve any

such contract or agreement, or any modification or cancella-

tion thereof, that it does not find to be adverse to the public

‘interest,‘or in violation of this chapter; except. that.the

Board may not approve-any contract or agreement between

an air carrier not directly engaged in the operation of ait-

craft in air transportation and a common carrier subject

to the Interstate Commerce Act, as amended, tdesiane. 3

UE Le Me ARG RIE, a ee iSNS \ Os

. we a

50a

- the compensation to be received by such common carrier

for transportation services performed by it. \

* - * * ’

se 416 [72 Stat. 771, 49 U.S.C. § 1386).

oe AND EXEMPTION OF CARRIERS.

(a) The Board may from time to time. establish such

just and reasonable classifications or groups of air car- ~

riers for the purposes of this: subchapter as the nature

of the services performed by such air carriers Shall re-°

quire; and such just and reasonable rules and regulations,

pursuant to and consistent with the provisions of this sub-

chapter, to be observed by each such class or group, as the

Board finds necessary in’ the public interest. |

’ (b)(1) The Board, from time to time and ‘to rn extent

necessary, may (except as provided in paragraph (2) of

‘ this subsection) exempt from the requirements of this sub-

chapter or any ‘provision théreof, or any rule, regulation,

term, condition, or limitation prescribed thereunder, any

_ air carrier or class of air carriers, if it finds that. the en-

forcement of this subchapter or such provision, or such rule,

regulation, ‘term, condition, or limitation is or would be an

undue burden on such air carrier or class of air carriers by °

reason of the limited extent of, or unusual circumstances ©

affecting, the operations of such air carrier or-class of air

carriers and is not in the public interest. '

% * ‘*

Sec. 1002 [72 Stat, 788, 49° U.8.0. $1482].

_ CoMPLAINTS TO AND Inveistications BY THE

ADMINISTRATOR AND THE Boarp.

°

«

- * . *

(ce) Entry of orders for compliance-with chapter,

If the Kdeninistrator or the Board finds, ‘after notice.

| and hearing, in any or instituted upon com-

nr

6a , , Net

plaint or upon their own initiative, with respect to matters

within their jurisdiction, that any person has failed to

comply with any provision.of this chapter or any require-

‘ment established pursuant thereto, the Administrator or the

Board shall issue an appropriate order to compel such

" person to comply therewith.

(d) Power to prescribe. rates and pee of air car-

riers.

Whenever, ~ ae notice and hearing, upon complaint, or

‘abe its own initiative, the Board shall be of the opinio

that any individual or joint rate, fare, or charge demandéd,

charged, collected or received by any air carrier for ‘inter-

state or overseas air transportation, or any classification,

rule, regulation, or practice affecting such raté, fare, or .

charge, or the value of the service "thereunder, is or will

~ be unjust or unreasonable, or, unjustly discriminatory, or

unduly preferential, or unduly prejudicial, the Board shall

determine and. prescribe the lawful rate, fare; or charge

(or the maximum or minimum, or the maximum and mini-

mum: thereof) thereafter to. be’ demanded, charged, col-

lected, or received, or the lawful classifiéation, rule, regu-

lation, or practice thereafter to be made effective: Provided,

‘That as to rates, fares, and charges for overseas air trans-

_ portation, the Board shall détermine and prescribe only a

Just and. reasonable maximum or minimum, or maximum and

; mhinimum rate, fare, or charge. g

(e) ‘Rule of: rate making..*

In exercising ‘and performing its’ powers = duties with

respect.to the determination of rates for the carriage of per-

sons or property, the Board shall take into consideration,

among other factors— o.-

(1) The ‘effect of. such ‘rates upon the sieiridniiel of

traffic; ~ | ses a”

» (2) The need in the ae inthrest of. + cea and —

cfficient ar acanen SM persons and property by air

: "s “ “i

. " 3@#

F

en ee ee ee ee

ad

57a |

carriers at the lowest cost ‘consistent with the furnishing

of such service;

_

(3) Such standards respecting the character and quality -

- of service to be rendered by air carriers as may be pre-

scribed by or ‘pprsuant to law;

(4) The inherent advantages . of transportation by dle.

craft; and |

(5) The need of each air carrier for revenue sufficient to

enable such air carrierg, under honest, eeonomical; and

- efficient management, t6 provide adequate and efficient air

‘ carrier service.

* «© «6

(gz) Suspension of rates.

Whenever any air carrier shall file with the Board aYarift

stating a new individual or joint (between air carriers) rate,

fare, or charge for interstate or overseas air transportation

or any classification, rule, regulation, or practice affecting

such rate, fare, or charge, or the value of the service there-

_under, the Board is empowered, upon complaint or upon its

own initiative, at pnee, and, if it so orders, without answer

_ of other formal pleading by the air carrier; but upon rea-

sonable notice, to enter upon a hearing concerning-the law-

fulness of such rate, fare, or charge, or such classification, -

rule, regulation, or practice; and pending such hearing and

the decision thereon, the Board, by filing with such tariff,

_ and delivering to the air carrier affected thereby, a state-

ment in writing ‘of, its reasons for such suspension, may

suspend the operation of such tariff and*defer the use of.

' such rate, fare, or charge, or such classification, rule, regu-

lation, or practice, for a period of ninety days, and, if the

_ proceeding has not been conchided and a final order made

within such period, the Board may, from time to'time, éx- —

tend the period of suspension, but not for a longer period,

- in the aggregate than one hundred and eighty days beyond

the time when such, tariff would otherwise go into e' effect ;

“a

a

fa ”

4 wei

9

58a

and, after hearing, whether completed before or after the

rate, fare, charge, classification, rule, regulation,-or practice

_ goes into-effect, the Board may make such order with refer-

ence thereto as would be proper in a proceeding instituted

after such rate, fare, charge, classification, rule, regulation,

or practice had become effective. If the proceeding has not —

been coneluded and an order made within the period of

suspension, the proposed rate, fare, charge, classification,

rule, regulation, or practice shall go into effect at the\end of

such period: Provided, That this subsection shall no apply

to any initial tariff filed by any air carrier,

°

B. The Following Sustidens of Gio Gilmiinisteative Proceduce Act, 00°

Stat. 737 (1946), as Amended, 5 U.S.C. §1001 et seq. Are .

‘ Principally Involved: . -

Sec. 2 [60 Stat. 237, as amended, 5 U.S.C. § 1001].

Dertnirions: ms

As used in this chapter—

. ee

(ce) Rule and rule making.

‘*Rule’’ means the whole or any part of any agency state-

ment of general or particular applicability and future effect

_ designed to implement, interpret, or prescribe law or policy

or to deseribe the organization, procedure, or practice re- .

quirements of any agency and includes the approval or

prescription for the future of rates, wages, corporate or

financial structures or reorganizations thereof, prices, .

facilities, appliances, services or allowances therefor or of —

valuations, costs, or accounting, or practices bearing upon

‘any of the foregoing. ‘‘Rule making’’ means agency proc-

ess for the formulation, amendment, or repeal of a rule.

| iy 59a

(a): Order and adjudication.

‘ . “Order”? means the whole or any part of the final disposi-

tion (whether affirmative, negative, injunctive, or declara- .

tory in form) of any agency in any matter other than rule

_making bunt including licensing. ‘‘Adjudication’’ means .

agency process for the formulation of an: order.

(e) License’ and licensing.

‘‘License”’ includes the whole or part of any agency |

permit, certificate, approval, registration, charter, member-

ship, statutory exemption or other form of permission.

‘*Licensing’’ includes agency process respecting the grant,

renewal, denial, revocation, suspension, annulment, with-

drawal, limitation, amendrhent, modification, or oe.

ing of a license.

: . + ;

‘See. 4 [60 Stat. 238, 5 U.S.C. § 1003].

A . Rute Maxine

. Except to the extent that there is involved (1) -any

‘military, naval, or foreign affairs function of the United

States or (2) any matter relating to agency management

or personnel or to public ery: loans, grants, benefits,

or contracts—

( a) Notice; publication and contents. -

General notice of proposed rule making shall be published

*in the Federal Register (unless all persons subject thereto-

are named and either personally served or otherwise have

_ actual notice thereof in accordance with law) and shall

include (1) a statement of*the time, place, and nature of

public rule making proceedings; (2) reference to the

authority-under which the rule is proposed; and (3) either

the terms or substance of the proposed rule ‘or a description

‘of the subjects and issues involved. Except where notice

or hearing is required by statute, this subsection shall

60a

“not apply to interpretative rules, general statements of

policy, rules of agency organization, procedure, or practice,

or in any situation in which the agency for good cause finds

(and incorporates the finding and a brief statement of the

reasons therefor in the rules issued) that notice and public

procedure thereon are impracticable, unnecessary, or -con-

trary to the public interest,

(b) Procedures.

- After notice required by this section, the ¢ agency shall

afford interested persons an opportunity to participate in

the rule making through submission of written data, views,

or arguménts ‘with. or without opportunity to present the

same orally in any manner; and, after consideration. of all

' relevant matter presented, the agency shall incorporate. in ,

any rules adopted. a concise general statement of their basis

_ - and purpose. Where rules are required by statute to be

made on the record after opportunity for an agency hear-

ing, the requirements of sections 1006 and 1007 of this title

shall-apply in place of the aoe ‘of this” subsection.

ce of rules.

The required publication or service of any substantive

‘rule (other than.one granting or recognizing exemption or |

relieving restriction or interpretative rules and statements

of policy) shall be made not less than thirty days prior to

the effective date thereof'except as otherwise provided by |

the agency upon ante cause found and published with the ©

rale.

(¢) Time of publication or se

gg

(a) Petitions.

Every agency shall dceord any inhwwesiel person the right

_ to petition for the issuance, amendment, or repeal of.a—

rule.

6la ‘

ro Tile Board's Statement of General Policy on Blocked Space Service,

14 CFR. § 399.37, Reads as Follows:

§ 399.37 Blocked Space Service.

(a) As used in this’ statement:

(1) ‘‘All-eargo carrier’? means an air carrier holding a

certificate of public convenience and necessity issued pur-

. suant to Section 401(d)(1) or (2) of the Federal’Aviation

Act of 1958 which authorizes the carriage of property Snly

or of property. and mail only.

(2) ‘‘Blocked space service’’ means the carriage of prop-

erty in all-cargo aircraft at wholesale rates pursuant to an

effective tariff stating a rate applicable only when the user

_ reserves and agrées to pay for a specified amount of space

or lift on a regular recurring pants for a } ewes not less

than 60 days.

(3) ‘‘Combination carrier’’ means an air carrier holding

a‘certificate of public convenience and necessity issued pur-

suant. to Section 401 (d) (1) and (2) of the Act which au-’

thorizes the carriage of persons, property and mail or

persons and property only. !

(b) It is ‘the policy of the Board to permit all-cargo

carriers to provide blocked space service to (1) such com-

bination carriers as may choose to use it to provide service

over routes which are certificated to both the combination

and the all-cargo carrier involved; (2) air freight for-

warders; and (3) large volume. individual shippers.

(c) It is the policy of the Board not to permit combina-

tion.carriers to provide blocked space service.

o