Opposition Brief — ABC Air Freight Co. v. Civil Aeronautics Board

ee "ABO Am Famanr Conrawy, Ino. ; ADD Ainrezic

i E Soginlgrren stows oned , INo.; AmWAYS,

(*" Banwerr Am Cageo, Inc.; Pere: A, Bi 1, Ino. ;

~ Bruogmann & UORRACHEE, INO. ; Ivreenarionat, |

Me WARDERS TION, Petitioners 2

. - Civin Amponaurios Boamp

ra : - a 3

Cr Am FRmicur, Inc. ; Consouparep Pastor, Inc.; PLE.

Ar Famour FORWARDING, Ino. ; PAacirio OUNTAIN Eix-

and Garmway Aviation, Inc.,

On Petition for Writ of Certiorari to the United.

| _ BRIEF IN OPPOSITION FOR THE RESPONDENTS CF AIR

- . FREIGHT, INC. CONSOLIDATED FREIGHTWAYS, INC.

: . P.LE. AIR FREIGHT hn pre nh INC. ee PACIFIC

Jamis M. VERNER... Boe

Hugene T. Loprenr :

; JoHN H. WANNER :

ieee Verner, Lurrert, BERNHARD

Saas | & MoPuerson |

Te 3 ‘Suite 1100, 1660 L Street, NW.

ee tigi, oe ieee aN ee : Washington, D. €. 20086

ee :

~ INDEX TO BRIEF *

, 2 Page

. : : : : ry

Opinions BrLow .......°. akan tee ane ee. ea

JURISDICTION .. <0... Sin vawes eget Re ; pose eka: 2 :

Questions PRESENTED Re Sey ne 2

Sixrvwis Ineciven. 3... 08 2 *

STATEMENT ...... Ce de 5 REY we og PE LORNA 3 -

REASONS FOR DENYING THE WRIT :....... Se ee Ve

CONCLUSION ........... nite Soke ox he he eekbedns Aaah ‘6

* CITATIONS

CasEs: is

Air Freight Forwarder Case, 9 C.A.B. 473 ( 1948) ..4, 11,12

Air Freight Forwarder Case 7 nternational), 11 C.A.B.

Bee (3088) ose. roe Wie au en frterereses 12

' Air Freight Forwarder Investigation, 21'C.A.B. 536

CROGO? eo wsircs Vina ea Ke wae er Rees e ONG Mee eeEV ERS 12

Airfreight Forwarder Authority Case, 40 C.A.B. 763

CROMOR ewes cusvas veveuha ue. ares Sa BR Be 12

American Airlines, Ine. v. Civil Aeronautics Board,

178 F. 24.903 (C.A. 7, 1949) ..... Sesame Na aoe 11

American President Lines, et al. Petition, 7 C_A.B.- 799

CSTD saa ce bende a ph ane Sa COC C CREE Oe es tt eT 10 c

Americaw Trucking Ass’ng v. Atchison, Topeka, & S. Fe

Mey GOT. OM DOE cos Gao stone ore. 11

National Air Freight Forwarding Corporation Ww Civil

Aeronautics Board, 197 F.2d 384 (D.C. Cire., 1952). .10

Telstar Air Freight, Inc., CAB Order K-22479, July 27, :

i nee a a Eee. oaares aveeeee Rakha s tee ean 12

United Parcel Service, CAB Order K-7324, April 22,

b) + Be is vag bcseseeweneees Laden ease chp oer re es

il ; Index to Brief Continued

STATUTES

Federal Aviation.Act of 1958, 72 Stat. 731, as amended

49 U.S.C. 1301, et seq.:

Sectton 101(3) .........004. a eters. 10

OD BOE csv sh cs Kesauecocns eeeanebecsy es 10

Section 401(d) ...... UST TET COTTE ete 10

Section 408 .....ccsccede Pe BAe he eA WS eats Td 10

| ee ore frveeeeeens 10

POUEEN DHOIAD ss cvccci viredessoeekix. beaks 14

Administrative Procedure Act, 80 Stat. 387 (1966) 5

U.S.C. 557(c) (Supp. IV, 1969) ............... 14, 15

‘ a

Ru.es:

Economic Regulations of the Civil Aeronautics Board

Part 244, Am. No. 1, 34 Fed. Reg. 19341 (1969) 14°

Part 296, Am. No. 10, 34 Fed. Reg. 19342 (1969) 14

Part 297, Am, No. 10, 34 Fed. Reg. 19343 (1969) 14

Part.309, Am. No. 19, 34 Fed. Reg. 19344 (1969) 14

7 4 —<

MISCELLANEOUS:

H.R. 4181, 88th Cong. 1st Session (1963) ............ 13°

Hearings, Subcommittee on Small Business, 89th Cong.,

Ist Sess. 103-121, 129 (Vo]. 1, 1966) ..... bapaaee 13

H.R, 4859, 90th Cong., Ist Sess. (1967) .............. 13

e

we

Page

IN THE

Supreme Court of the United States

OcToBER TERM, 1969

No. 1105

ABC Air Freigut Company, INC.; ADD ArrRFREIGHT CORPORATION ;

. AIRBORNE FREIGHT CORPORATION ; AIR-LAND FREIGHT CONSOLI-

DATORS, INc. ; AIR-SEA FORWARDERS, INC.; AIRWAYS AIRFREIGHT ;

BARNETT Air Carao, INC.; PETER A. BERNACKI, INC.; HENSEL,

BRUCKMANN & LORBACHER, INC.; INTERNATIONAL CUSTOMS

Service, Inc.; H. G. OLLENDORFF, INC.; PANALPINA AIR-

FREIGHT INc.; WTC Atm FREIGHT, and Aim FREIGHT For-

WARDERS AssociaTION, Petitioners

against

Crvm AERONAUTICS BOARD

and

CF Am Freicut, Inc.; Consoviatep Freicntways, Inc.; P.1.72.

Air FREIGHT ForwarpinG, INc.; PActFic INTERMOUNTAIN X-

PRESs Co.; NAvAsJo FreiguHt Lines, Inc.; YELLOW FREIGHT

System, Inc.; GLopan Arr Cargo Lrp.; GaATEwAy TRANSPORTA-

TION Co., INc.;.and GATEWay AvIATION, INc., Respondents

On Petition for Writ of Certiorari to the United States Court

e ’ of Appeals for the Second Circuit

BRIEF IN OPPOSITION FOR THE RESPONDENTS CF AIR

FREIGHT, INC., CONSOLIDATED FREIGHTWAYS, INC.,

P.LE. AIR FREIGHT FORWARDING, INC., AND PACIFIC

INTERMOUNTAIN EXPRESS Co.

OPINIONS BELOW -

The opinion of the Court of Appeals (Appendix of

Petition, 1-14) is not yet reported. The earlier opinion

of the Court of Appeals (App. 91-116) is reported at

391 F. 2d 295. The findings and orders of the Civil

Aeronautics Board (App. 15-90 and 117-201) are not

yet reported. —

2

JURISDICTION

The judgment of the Court of Appeals was entered

on Octoher 24, 1969. The petition for a writ of cer-

tiorari was filed on January 22, 1970. The jurisdiction

of this Court is invoked under 28 U.S.C. 1254(1).

QUESTIONS PRESENTED

The questions presented are set forth in the Peti-

tion, as follows :°

‘1. Whether the Court’s decision allowing the Board

to authorize long-haul motor earriers as air freight

eculailiel cchated Congressional policy as evidenced

_ in the Federal Aviation Act of 1958 and elsewhere.

‘2. Whether the Court below deprived Petitioners

of their rights to judicial review of the Board’ Order

and Regulations, contrary to 49 U.S.C. § 1486.

‘*3. Whether the Court’s decision violated the Ad-

ministrative Procedure Act, 5 U.S.C. § 557(¢), by

allowing the Board to substitute a so-called ‘*experi-

ment”’ for the findings, conclusions and reasons re-

quired by the Act, or otherwise.”’

STATUTES INVOLVED

Pertinent provisions of the Federal Aviation Act of

1958, as amended (the ‘‘ Act’’), the Administrative Pro-

cedure Act, and the regulations of the Civil Aeronau-

tics Board are set forth in the Appendix to the Peti-

tion for Certiorari, at pages 202-212.

In addition, 49 U.S.C. 1371 (d) (1) (§ 401 (d) (1)

of the Act) provides:

(d) (1) The Board shall issue a certificate au-

thorizing the whole or any part of the transporta-

3

tion covered by the application, if it finds that the.

applicant is fit, willing and able to perform such .

transportation properly, and to conform to the pro-

visions of this Act and the rules, regulations, and

requirements of the Board hereunder, and that

such transportation is required by the public con-

venience and necessity ; otherwise such application

shall be denied.

STATEMENT

Administrative proceedings were instituted by the

Civil Aeronautics Board (the ‘‘Board’’) on January

12, 1966, by Order E-23117, consolidating for hearing

the pending applications filed by four long-haul motor

earriers for air forwarding licenses.” Although the

Board from time to time had previously authorized

numerous motor earriers and other surface carriers,

or affiliates thereof, to engage in air transportation as

air freight forwarders, the Board had never had ocea-

sion to consider applications for such authority from

long-haul truckers. The Board, therefore, included

in the proceeding a comprehensive investigation ‘‘to

fully explore the possible consequences of allowing

motor carriers, suck as applicants, to be air freight

forwarders * * *”’, The Board also later stated, in

its first opinion in the proceeding, that ‘‘Our purpose

in instituting this investigation was to determine

whether our traditional restrictions on surface car-

The Board’s order of investigation did not define long-haul

carriers. However, proposed regulations issued by the Board at

the conclusion of the proceeding define the term ‘‘long-haul motor

earrier’’ to mean ‘‘a motor carrier holding operating rights issued

by the Interstate Commerce Commission to haul general com-

modities between any pair of points which are over 500 air miles

apart, or an affiliate of such a earrier.’’ (App. 73).

' 4

riers have become outmoded for motor carriers like

the applicants.’’* (App. 122).

Although the Board’s first opinion and order in the

proceeding granted only four new air forwarder li-

censes, the opinion also contained findings, stemming

from the investigative phase of the proceeding, con-

cerning the entry of motor carriers generally into the

field of air freight forwarding. On review, therefore,

the Court of Appeals remanded the proceeding to the

- Board, finding that the ‘‘most serious deficiency’’ in

the first decision of the Board was its ambiguity as to

‘whether the Board has established a policy of entry

for all truckers who want to act as air freight for-

warders or has merely granted the four applications

that were before it, andthe inadequacy of its considera-

tion of effect on the existing forwarders if the former

is the right interpretation as we strongly suspect.’’

391 F, 2d 295, 298 (App. 97).

On remand the Board, after reargument and recon-

sideration, issued its opinion and order granting air

freight forwarder authorizations to three applicants,’

and making it clear that its action was so limited. The

Board’s opinion is explicit on this point:

‘‘Reviewing the record in the light of the Court’s

opinion, the Board believes that it can and should

*In the case of applicants other than surface carriers or avia-

tion enterprises, or their affiliates, the Board has always followed a

policy of ‘‘free entry’’ into air freight forwarding. Such other

applicants are not required to show public need for additional

service, but are granted operating authority if they can meet mini-

mum insurance and similar requirements. Air Freight Forwarder

Case, 9 C.A.B. 473 (1948), 500-501.

3 The application of D.C. International, Inc., the fourth appli-

cation embraced in the first decision, was dismissed by the Board

in its Order on the ground that intervening events had made the

application moot. (App. 42-43).

v0

grant authority to the three applicants who re-

ceived awards before (footnote omitted). In brief,

the Board finds that those applicants’ authoriza-

tions will result.in substantial public benefits, will

not result in conflicts of interest which will inter-

fere with the promotion of air cargo, and will not

reduce effective competition by the existing air

forwarding industry. se (App. 17).

Again, in order to underscore its holding, the Board

said:

‘‘The Board emphasizes, however, that it is grant-

ing only the applications before it and not passing

upon any others.’’ (App. 17).

With respect to the issues involved in the investiga-

tive phase of the pr ron the Board stated as

follows:

‘‘For other applicants, the Board tentatively con-

cludes only that it should not deem the size, geo-

graphical extent, or general commodity rights of

a trucker’s surface operations or authority—of

themselves—as factors showing that the trucker

should be barred: from the air freight forwarding

business. But long-haul truckers of general com-

modities will not be granted air forwarding licenses

routinely. Instead, each trucker applicant will be

required to show that it will conscientiously pro-

mote air cargo and that its operations, either alone

or in combination with others already licensed, will

be in the public interest. Tne Board will not be

satisfied with mere recitations; it will scrutinize

each application (and any objection) to insure that

these criteria are met. And the Board will main-

tain a close watch over the experiment through

new and more detailed reporting requirements. As

a final safeguard, the Board will reserve the power

to suspend the processing of new applications and, °

if necessary, even to terminate outstanding licenses.

6

This policy is being codified in proposed regula-

tions issued concurrently with this order. For

long-haul truckers who seek to become air for-

warders, the rule will not be free entry, but moni-

tored entry.’’ (App. 17-18).

Thus it is clear that the Board took two separate but

related actions. First, acting on the applications con-

solidated in the proceeding, the Board by order granted

three applications for forwarder authority. Second,

taking cognizance of the investigative phase of the

proceeding, it tentatively concluded that there should

be no absolute bar against long-haul truckers, and

issued & Notice of Proposed Rule-Making setting forth

proposed standards and procedures for the future grant

or denial of applications from such truckers. As a re-

sult, additional applications can and will be considered

by the Board.

As to the three applications it granted, the Board

concluded that the applicants had made a strong and

particularized showing that their entry into the air

freight forwarding business ‘‘is likely to produce im-

portant public benefits’? (App. 24). The Board, re-

viewing the relevant data, concluded that (1) the air

freight industry was lagging seriously and that there

was ‘‘a demonstrated need for new, able, and well-_

financed enterprises to enter the air forwarding busi-

ness’? (App. 25-27); that (2) experience had shown

that ‘“‘for many years, few large independents have

asked to become forwarders, so that ‘‘[i]f the Board

spurns the trucking-related applicants now, it wil) be

left with nothing better than the bare hope that other

applicants, equally qualified but without long-haul

surface connections, will emerge someday’’ (App. 27);

and that (3) the three applicants, in view of their

barn t 7

financial, managerial, and operational resources, ‘‘will

be a potent force in developing new air freight’’ both

in existing markets and also in the smaller, ‘‘less pro-

ductive cities’? where the applicants intend to establish

operations (App. 28-29). >

The Board also considered in detail the question of

impact of the three new authorizations upon the air

forwarder industry. . It concluded that, in view of the

demonstrated growth and ever-increasing potential of

“the air freight market, entry of these three applicants

would not undermine the overwhelming majority of

forwarders but rather ‘‘will stimulate so much new

freight that they wil] contribute to the existing for-

warders’ continued growth’’ (App. 36-39); that as to

those ‘‘small companies [which] have begun forward-

ing businesses which are ill-conceived, inadequately

financed, and poorly managed . . . it makes no differ-

ence whether competition comes from the applicauts

or from the many large independent forwarders”’

(App. 39-40) ; that, in short, the ‘case for protection

is far more speculative than the case for competition’

and that ‘‘competition is also the preferred statutory

goal’ (App. 40); and that there is ‘‘no reason to be-

lieve that air forwarding will be inundated by long-

haul truckers and railroads’? both because of the fact

that so few have applied and because the Board's

monitored-entry policy will be selective as to those

truckers who can qualify to become forwarders”’ (App.

40). Finally, on the question of conflicts of interest

with their surface operations, the Board found that

on the evidence of record the applicants had demon-

strated that the conflict of interest theory should not

be a bar because, in a variety of ways stated in detail

in the opinion, they would establish separate air freight

8 oe

operations devoted exclusively to that service, because

air freight is in large part small-package freight. and

such freight is not very attractive to motor carriers, .

because the experience of those surface carriers now

in air forwarding ‘‘teach[es] some skepticism’’ about

‘“‘whether the conflict of interest hypothesis has any

remaining vigor for truckers . . . like the three appli-

cants,’’ and because in any event the Board will closely

supervise this ‘‘eontrolled experiment.’’ The Board

concluded : : eres

‘The time has come, the Board believes, to test

the conflicts hypothesis in a controlled experiment.

Each applicant has given persuasive evidence of

its intention to promote air cargo. Each has’

offered a different organizational plan to guard

against conflicts in the related surface operation.

Only experience can verify or disprove the appli-

cants’ promise, or indicate whether one’s organi-

zational format is sounder than another’s. -Dur-

ing the experimentai period, the Board will receive

from the applicants special reports showing

whether the applicants are stimulating new off-

line business, increasing traffic from outside pres-

ent terminal areas, and receiving new traffic from °

their surface divisions or affiliates. That infor-

mation will enable the Board to answer the con-

flicts question on the basis of fact, not surtise.’’

(App. 35-36).

On review of the Board’s second opinion and order,

the Court below dismissed the petition for review inso-

far as it related to the Notice for Rule-Making. The

Court heid that review was premature, since the pro-

posed regulations had not yet been adopted, but that

even if they had been, Petitioners will be affected by

the regulations, and therefore have standing to chal-

f

;

i

“ 9

lenge them, ‘‘only when, as and if the Board grants

further authorizations to long-haul -truckers under

them.’”’ (App. 12).

The petition to review the three new air forwarder

authorizations was denied. The Court recognized that

the Board was granting only the three applications

before it, thus reselving the ambiguity found in the

Board’s first opinion. On the question of the policy

concerning surface carrier participation in air freight

forwarding, the Court held that ‘the Board did not

deny that it must consider the bearing of prospective

air freight forwarders’ involvement in surface trans-

portation, it said only that this should not constitute

abar.”” (App. 10). The Court, noting that the Board

had satisfied itself that a proper s wing. had been

made on this issue by the applic its; aecepted the

Board determination of this issue. (App. 10).

REASONS FOR DENYING THE WRIT

Petitioners do not claim, nor could they, that the

decision below conflicts with that of any other court.

Indeed, they do not even identify any statutory pro-

vision that they urge has been misconstrued. In the

end, their petition amounts simply to a plea that this

Court review the Board’s judgment as to issues of

transportation policy. Such a plea has no place in

any court, much less is it a basis for invocation of

this Court’s power of discretionary review.

1. Petitioners concede that the Board was not pre-

cluded by any statute from issuing freight forwarder

certificates to applicants. Licenses to engage in air

“transportation as air freight forwarders are issued by

~ the Board under familiar standards of public interest

10

as defined in section 102 of the Act.’ It is true, as

Petitioners point out, that in cases of acquisitions .by

common carriers of air carriers, section 408 imposes

requirements more stringent than the general public

interest and public convenience and necessity stand-

ards of section 102;* and that the Board ‘has, as a

matter of policy, applied those more stringent require-

ments even where surface carriers were applying

for air carrier certificates-rather than simply seeking

authority to acquire such a carrier. American Prési-

dent Lines, et al., Petition, 7 C.A.B._799-€1947) ; Na-

tional Air: Freight Forwarding Corp. v. CAB, 197

F. 2d 384 (D.C. Cire. 1952). Because of the limita-

tions of the second proviso of section 408(b), the conse-

quence hasbeen that as a practical matter surface

carriers have been unable to enter the field of air

transportation as direct air carriers operating aircraft.

At the same time, as petitioners acknowledge -( Pet.

p. 14), the Board has consistently and repeatedly held

that the second proviso of section 408(b) is not appli-

cable to applications under section 408 to acquire air

* Air freight forwarders do not themselves operate aircraft in air

transportation, but utilize the aircraft operated by other, ‘‘direct’’.

air carriers. Air freight forwarders in the terminology of the Act

are ‘‘indirect’’ air carriers, and have in fact been licensed exclu-

sively under the exemption provisions of section 101(3) of the

Act. ‘‘Direct’’ air carriers, on the other hand, have in most cases

been licensed under section 491(d) (1) of the Act.

5 A proposed acquisition must meet the requirement of ‘‘ public

interest’’ as defined in section 102 and the anti-monopoly test of

the ‘‘first proviso”’ of section 408(b). The most stringent require-

ment, however, is that of the ‘‘second proviso”’ of section 408(b),

which requires a surface carrier applicant under section 408 to

show that ‘‘the transaction proposed will promote the public in-

terest by enabling * * * [the surface carrier applicant] to use air-

craft to public advantage in its operation and will not restrain

competition. ”’

11

freight forwaraers, nor is that proviso applicable to

applications by surface carriers for licenses to en-

gage in air freight forwarding. Air Freight For-

warders Case, 9 C.A.B. 473 (1948), at 502-503. That

position was affirmed over 20 years ago by the Court

of Appeals for the Seventh Circuit, American Airlines

V. C.A.B., 178 F. 2d 903, 909 (7th Cir. 1949) ; was

reaffirmed ‘by the court below in the case at bar

(App. 7); has never been qrestioned by any other court:

in the intervening years; and is not questioned by

Petitioners in this case. oe

2. What» Petitioners contend is, not that the Board

or the lower court has misconstrued the statute, but

that the Board with the approval of the Court has

changed its policy. As Petitioners put it, the Board

has ‘‘for over twenty years ... applied a rigid policy

of exclusion against surface carrier invasion of air

freight forwarding’ (Pet. 14). Even were that so,

it would not matter. To make and to change policy

-with the march of events is what the Board is there

for, so long as it honors the statute and abides by

governing procedural requirements. As this Court

aptly said in American Trucling Ass’ns. v. Atchison,

Topeka & S. Fe RR, 387 U.S..997, 416 (1967) :

‘‘Regulatory agencies do not establish rules of con-

duct to last forever; they are supposed, within

the limits of the law and of fair and priudent ad-

ministration, to adapt their rules and practices to

the Nation’s needs in a volatile, changing economy. -

They are neither required nor supposed to regu-

late the present and the future within the inflexi-

ble limits of yesterday.”’ |

Beyond that, Petitioner’s view of past Board policy

is, to put it conservatively, greatly overdrawn. In

12

point of fact, under the Board’s standards—although -

stricter than those applied to ordinary applicants—

surface carriers, and particularly motor carriers, have

parti¢ipated in air freight forwarding to a substantial

extent. In 1948 in Air Freight Forwarder Case,

supra, nine surface forwarders, surface forwarder

affiliates, and motor carrier affiliates were licensed. A

year later, in the international phase of the proceeding,

additional surface forwarder and railroad affiliates

were licensed. Air Freight Forwarder Case (Inter-

national), 11 C.A.B, 182 (1949). In 1953, acting on

an individual application, the Board authorized United

Parcel Service, which owned 12 regional general com-

modity motor carriers operating in a number of states,

to aequire an air forwarder. Order E-7324, April 22,

1953. In Airfreight Forwarder Investigation, 21

C.A.B. 536 (1955), two railroad affiliates were licensed

for domestic air forwarding. In Airfreight Forwarder

Authority Case, 40 C.A.B. 673 (1964), eight long-haul

motor carriers of household goods (or affiliate) were

authorized to engage in air forwarding of household

goods. The latter case contains a succinct and precise

statement of the standard policy applied by the Board

in air forwarder cases, as follows:

“The Board has prohibited entry by surface ecar-

riers into the air freight forwarder field where it

appeared that such conflicts of interest would

arise between air and surface operations as to .

® Indeed, in more than twenty years since the first Forwarder

Case in 1948 the Board has denied only one application by a

trucker, or affiliate, for an air forwarder [icense. Telstar Air

Freight, Inc.; Order E-22479, issued under delegated authority

July 27, 1965. The order makes it clear that the staff considered

that the applicant failed to meet the conflicts standard applied

to surface carriers and quoted in this brief, infra, p. 12-13.

*

13

result in material diversion’ of traffic from air to °

surface transportation and deprive the applicants

of sufficient incentive to conscientiously promote

and develop airfreight forwarding.”’ (40 C.A.B.

at 765).

In sum, the Board’s policy concerning surface ear-

rier participation in air freight forwarding (1) has

not been the rigid policy of exclusion which has virtu-

ally foreclosed surface carrier participation in direct

air transportation, but (2) under the doctrine quoted

above from 40 C.A.B. at 765, has required an evalua-

-tion of ‘conflicts of interest’? and promotion of air

forwarding in the light of the facts of each case. Con-

trary to Petitioners’ contentions, therefore, the Board

did not act in a manner contrary to Congressional in-

tent‘ and long-standing administrative construction.

Rather, what the Board did was simply to conclude, on

the basis of ample evidence and thorough reflection,

that application of these principles should not auto-

matically bar long-haul motor carriers from the air

freight forwarding field, but that rather, on an experi-

mental basis, each application from such a carrier

should be judged on its own facts. As the Court below

correctly found, that was a reasonable exercise gt the |

Board’s licensing powers under the Act. *

3. Petitioners also contend that they were deprived

of a right to review of the Board’s regulations re-

specting future air forwarder applications by long-

haul motor carriers. The contention is frivolous.

* Indeed, Congress has been requested by the air freight for-

warders, but has declined to abolish the free entry system for air

forwarding. See H.R. 4859, 90th Cong., Ist Sess. (1967); H.R.

4181, 88th Cong., Ist Sess. ( 1963) ; Hearings before Subcommittee

on Small Business, 89th Cong., 1st Sess. 103-121, 129 (Vol. 1, 1966).

14

When review was sought, the regulations had not been

made effective. Rather, they had been circulated and

comments from interested parties had been invited.

As the court below said, ‘‘ Although comments on the

proposed regulations were due by May 23, 1969, the

Board has not yet acted upon them, and review would

.thus be premature’? (App. 12).°

4. Finally, Petitioners contend that the Board did

not make adequate findings under Section 8(b) of the

Administrative Procedure Act, 5 U.S.C. 557(¢). In

view of the comprehensive opinion of the Board, this

contention is not easy to understand. Evidently the

notion is that the Board resorted to ‘‘experimentation”’

in lieu of proper findings. But neither the Board nor

the lower court so much as hinted that the Board’s

‘‘experimental’’ approach to the problem at hand

obviated the need for adequate findings respecting the

applications that were granted, and in fact the findings

were detailed and exhaustive. Furthermore, the court

below has twice reviewed the findings of the Board,

8 The regulations were adopted on November 12, 1969, and be-

came effective January 5, 1970. 34 Federal Register 19340-6. It

is interesting to note that review was not sought within the stat-

utory period of sixty days after November 12, 1969. Section

1006(a) of the Act, 49 U.S.C. 1486(a). Had review been sought,

for reasons outlined by the court below, it would have heen un-

availing, for these regulations are not the sort of regulations that

are the appropriate subject of judicial review. As the Court below

pointed out, the regulations ‘‘do not compel petitioners to do any-

thing they have not previously done or to refrain from doing any-

thing they were previously permitted to do * * *.’’ (App. 12).

They are not faced with the dilemima of incurring injury through

eompliance, or, on the other hand, risking penalties for non-compli-

ance. Petitioners complain only of possible future,scompetition—

issues which can more appropriately be resolved after the general

criteria in the reguldtions have been applied by the Board to

further applications for air forwarder licenses.

15

and Petitioners have failed to show why the lower

court’s determination respecting the adequacy of the

findings should be considered further by this Court.

Petitioners also set forth certain ‘‘examples’”’ of

findings of the Board and the evidence or lack of

evidence supporting them, “‘merely to shed light on

the Board’s action, which the Court sanctioned, where-

by it * * * substituted ‘experimentation’ for findings,

reasons and evidence required by section 8(b) of the

Administrative Procedure Act.”® Petitioners se-

lected samples related to the evaluation of evidence,

and were or should have been presented to the Court

below. Moreover, the contentions in the Petition for

Certiorari do not correctly, fully or fairly explain the

nature of the Board’s findings, or the evidence sup-

porting them. No useful purpose would be served by

discussing these contentions in detail, but we comment

on them briefly in the margin.” |

® The ‘‘examples’’ are also said to “‘shed light’’ on the Board’s

refusal to apply the Congressional policy and on its resort to

‘‘artful devices to avoid review of the issue of competitive impact’’.

We submit that the examples are irrelevant to both issues and shed

no light on either of them.

'° The comments as numbered below correspond to the numbered

paragraphs of the Petition at pages 24 through 26:

1. Petitioners grossly misstate the Board’s findings concerning

overabundance of capacity. The Board considered both all-cargo

and passenger aircraft capacity, and found that ‘‘even without

considering the additional freight capacity of combination aircraft

[i.e., aircraft fitted out to carry passengers and freight], air cargo

must expand several times to fill the airlines’ pressing need for

more freight.’’ (App. 25). The precise and detailed findings

demanded by Petitioners are unnecessary in light of the tremendous

growth in capacity. ; \

2. Petitioners misstate the Board’s findings on secondary mar-

kets. The Board found only that the three successful applicants

have an exceptional ability to stimulate air freight in under-

16

CONCLUSION

For the foregoing reasons it is respectfully submitted ~

that the petition for a writ of certiorari should be

denied.

Respectfully submitted,

ca

JAMES M. VERNER

KuGeENE T. LiItprert

JoHN H. WANNER

Counsel for Respondents

CF Air Freight, Inc.,

Consolidated Freight-

ways, Inc., PLE. Air

Freight Forwarding, Inc.,

Pacific Intermountain

Express Co.

Of Counsel:

VERNER, LIIPFERT, BERNHARD

& McPHERSON

Suite 1100, 1660 L Street, N. W.

Washington, D. C. 20036

developed cities, and are the most likely candidates to provide

needed competition there, because of their financial strength and

their ability to utilize their surface facilities at such points. (App. ~

28-29). Moreover, Order E-25513 cited by Petitioners is not per-

tinent: the Board was deciding only which domestic points should

be consolidated for hearing in a U.S.-Europe air freight in-

vestigation.

3. Contrary to Petitioners’ contentions, the Board made exten-

sive findings on the issue of conflicts of interest, and reached con-

clusions which supported the authorization of experimental service.

(App. 31-36).

4. Petitioners’ point 4 is an astonishing blend of misstated find-

ings and tortured reasoning. A reading of the Board’s opinion

reveals that none of the findings of fact and reasoning is cor-

rectly stated, except the statement that most existing forwarders

concentrate services at major points. (App. 24-36).

fF

iss ee

CERTIFICATE OF ra

I hereby certify that on this 17th day of March,

1970, copies of the Brief in Opposition fo he ia

CF Air Freight, Inc., Consolidated Freightways, Ine.,

P.LE. Air Freight Forwarding, Inc., and Pacific In-

termountain Express Co., were mailed, postage pre-

paid, to the following: '

Solicitor General of the ~ Raymond J. Rasenberger

United States 888 - 17th Street

Department of Justice Washington, D. C. 20006

Washington, D. C. 20539 Homer S. Carpenter, Esq.

Joseph B. Goldman 618 Perpetual Building

General Counsel Washington, D. C. 20005

Civil Aeronautits Board

Washington, D. C. 20428 William J. Augello, Jr., Esq.

120 East 41st Street

Louis P. Haffer, Esq. Suite 801

1730 Rhode Island Avenue, N.W. New York, New York 10017

Washington, D. C. 20036

Paul Berger, Esq.

733 Third Avenue

New York, New York 10017

~ I further certify that all parties required to be

served have been served.

Eugene T. Liipfert

“ Counsel for Respondents CF

Air Freight, Inc., Consolidated

Freightways, Inc., P.I.E. Air

Freight Forwarding, Inc., and

Pactfie Intermountain Eooress

Co.

PAM aN A SOLES EERE BE OG 8 iii Sb ae ry yy nt SEEN AAG RAMEE Fine APE LAE ALES