# Petition for Writ of Certiorari — Ozark Air Lines, Inc. v. Civil Aeronautics Board > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385606_0220%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1972 - **Citation:** 404 U.S. 1039 ## Text td Oe Oe TR ee. ae re ne ae ah RY | 7 = rt, U pies! " ‘ - - curr oct 30 ROBERT SEAVER he IN THE SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1971 ree OZARK AIR LINES, INC., Petitioner, v. CIVIL AERONAUTICS BOARD. PETITION FOR A WRIT OF CERTIORARI To the United States Court of Appeals for the Eighth Circuit NEALE, NEWMAN, BRADSHAW & FREEMAN PAUL L. BRADSHAW 705 Woodruff Building Springfield, Missouri Counsel for Petitioner October 29, 1971 nal St. Louis Law Printing Co., Inc., 411-15 N. Eighth St. 63101 314-231-4477 Opinions Below ............. Pe er rere 2 EE x suds chnwncanidadekenencaneaune st re 2 SE das, Che Vt duadanes beaeaKenben 2 Constitutional Provisions Involved ................ 3 Statement of the Case .............ccceeeee weaken 5 Reasons for Granting the Writ .................05- 8 WEEE. SinesGachocmcesedadedaiyen seeeaubacnes 10 Ee ea RE ee RE re rT i eT A-1 A. Order determining subsidy refund ............ A-1 B. Opinion of United States Court of Appeals for Se Re GD oiiacdwdnnacataccccadankdbucus A-6 C. Petition for Rehearing to the Eighth Circuit ..A-13 Case Citations H.D.&D. Moving & Storage Co., Inc., et al. v. United States, et al, D. C. Hawaii, 298 F. Supp. 146, 751(4) 9 Miscellaneous Cited Se Se SEED oe hbehcbcceciedeiucctexsvccses 2 Federal Administrative Procedure Act SE SEE var dhatndesucbeswudecaecueres 8 Federal Administrative Procedure Act (5 U.S.C. 706) 3 Fifth Amendment of the United States Constitution... 8 Sec. 406, Federal Aviation Act of 1968 (49 U.S.C. PE. Ce ndeedesn bench iaseeseebshanediens bead 1, 4,5 IN THE SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1971 re OZARK AiR LINES, iNC., Petitioner, V. CIVIL AERONAUTICS BOARD. PETITION FOR A WRIT OF CERTIORARI To the United States Court of Appeals for the Eighth Circuit Fetitioner, Ozark Air Lines, Inc., prays that a writ of certiorari issue to review the judgmeat of the United States Court of Appeals for the Eighth Circuit entered May 5, 1971, affirming an order No. 70-5-107 (Appendix A-6) of the Civil Aeronautics Board made pursuant to rules promulgated under Sec. 406 of the Federal Aviation Act of 1968 (49 U.S.C. 1376(b)) as amended, ordering petitioner to repay $246,579 of subsidy received by Peti- tioner for Calendar Year 1966, and that on hearing the Court of Appeals’ judgment be reversed, a, ee OPINIONS BELOW The opinion or the Court of Appeals for the Eighth Cir- cuit (Appendix A-6) is reported at 441 F 2d 892. The opinion of the Civil Aeronautics Board is unre- ported and is printed here as Appendix A-1. JURISDICTION The judgment of the Court of Appeals (Appendix A-6) was entered on May 5, 1971. Timely Motion for Rehearing was filed and was denied on June 2, 1971 (Appendix A-13). On August 19, 1971, Associate Justice Harry A. Biack- mun signed an order extending the time for filing this petition for writ of certiorari to and including October 30, 1971. The jurisdiction of this Court is invoked under the pro- visions of 28 U.S.C.A., § 1254 (1). QUESTIONS PRESENTED 1. Whether the procedure adopted by Respondent for determination of subsidy refunds for 1966 was discrimi- natory in that the financial data which was utilized by the Respondent to determine Petitioner’s liability was not consistent among all the carriers in the class so that any cairier’s liability for subsidy refunds was solely depend- ent upon when a carrier’s final subsidy determination was made. 2. Whether Respondent abuse! its discretion in con- sidering losses reflected by pro forma tax returns filed by Petitioner in 1969, although Section III-E-1 of Class Rate Itl-A required that losses not reflected in tax returns ‘“‘Submitted to taxing authorities’’ not be considered in _— determining a refund of subsidy, inasmuch as Petitioner had not ‘‘submitted’’ tax returns to ‘‘taxing authorities.’’ 3. Whether Respondent discriminated between Peti- tioner and Frontier Airlines, Inc. by considering Peti- tioner’s 1969 losses in relation to its subsidy determina- tion for 1966, while not considering a similar loss suffered by Frontier for 1968, where losses for both carriers were known to Respondent at the time it made its respective determinations. CONSTITUTIONAL, STATUTORY AND RULES PROVISIONS INVOLVED The Fifth Amendment to the Constitution of the United States provides ‘n pertinent part as follows: ‘‘No person shall . . . be deprived of life, liberty, or property, without due process of law; .. .” The Federal Administrative Procedure Act (5 U.S.C. 706), provides in pertinent part as follows: ‘“‘To the extent necessary to decision and when presented, the reviewing court shall decide ail rel- evant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall— (2) hold unlawful and set aside agency action, findings, and conclusions found to be— (A) arbitrary, capricious, an abuse of discre- tion, or otherwise not in accordance with law; (B) contrary to constitutional right, power, privilege, or immunity; (C) in excess of statutory jurisdiction, author- ity, or limitations, or short of statutory right;’’ a on The Federal Aviation Act (49 U.S.C., § 1376(b)), pro- vides in pertinent part as follows: ‘*(b) In fixing and determining fair and reasonable rates of compensation under this section, the Board, considering the conditions peculiar to transportation by aircraft and to the particular air carrier or class of air carriers, may fix different rates for different air carriers or classes of air carriers, and different classes of service. In determining the rate in each case, the Board shall take into consideration, among other factors . . . (3) the need for each such air carrier . . . for compensation . . . sufficient to in- sure the performance of such service, and, togetser with all other revenue of the air carrier, to enabie such air carrier under honest, economical, and efficient management, to maintain and continue the cevelop- ment of air transportation to the extent and of the character and quality required for the commerce of the United States, the Postal Service, and the na- tional defense.’’ Section IIT-E of Civil Aeronautics Board Order E-23850, June 23, 1966, the Board Rules for determining the rate under the Federal Aviation Act (49 U.S.C., § 1376(b)) provides in pertinent part as follows: ‘**Federal and State income taxes shall be deter- mined on the basis of the carrier’s actual income taxes, including the reducing of taxes resulting from loss carrybacks and carryovers, as reported on its income tax returns submitted to taxing authorities for each year, with such amendments and revisions as may have been filed as of the final determin.tion or profit-sharing hereunder; Provided, however, that, for the purposes of this order, the carrier’s actual income taxes for a given review year will be adjusted to exclude taxes related to income which is not other- wise considered in the profit-sharing determination, hereunder, for that review year; Provided, further, that where a final profit-sharing determination for a p.ior period has been made and the tax basis relied upon in that final determination has been amended or revised subsequently, the effect of the change in taxes will be considcicd as income or expense for profit-sharing purposes in the year in which the change is made... .”’ STATEMENT OF THE CASE Petitioner is one of nine local service carriers which re- ceive federal subsidy under the Federal Aviation Act of 1968, as amended, 49 U.S.C., § 1376(b). Respondent admin- isters the subsidy program. The amount of subsidy paid to a carrier is based on such carriers’ ‘‘need’’ during a given year, that ‘‘need’’ being determined by a uniform class rate formula. In 1966, the class rate contained a ‘‘ profit-sharing’’ provision, requiring a carrier to refund to the Federal Government a portion of its profit for the year in question, as shown by the carrier’s income tax return. In 1966, the year in dispute here, the rate was known as Class Rate III-A. Section III-E-1 of Class Rate III-A provides that tax allowances shall be based upon ‘‘tax returns submitted to taxing authorities for each year, with such amendments and revisions as may have been filed as of the final de- termination of profit-sharing hereunder . . .”’ On May 11, 1967, the Respondent’s staff made an audit of Petitioner’s operations for 1966, based upon certain required forms filed by Petitioner. The staff determined Petitioner’s subsidy refurd to be $98,788.00, with which figure petitioner was in agreement. On July 22, 1969, the — staff increased this figure to $299,532.00 because of its interpretation of the method used in treating capital gains in computing petitioner’s 1968 net operation loss carry- back. Petitioner protested this determination, and on March 18, 1970, Respondent determined that the staff’s deter- mination was erroneous, and that its original figure (98,788.00) was correct. By this time, however, Peti- tioner’s losses for 1969 were evident. The respondent asked for and received, Petitioner’s pro forma tax return for 1969. and on the basis of the losses shown therein, the Respondent, in its Order 70-5-107, assessed Petitioner’s refund for 1966 at $246,579.00. At the time of Respond- ent’s final determination petitioner had not sabmitted its 1969 tax return to taxing authorities, having received an extension from the Internal Revenue Service. Therefore, the Respondent’s determination admittedly was not, and could not, have been based upon ‘‘tax returns submitted to taxing authorities’’ as provided for in Section III-E-1 of Class Rate III-A. Other carriers whose subsidy determinations for 1966 were processed earlier in point of time did not have 1969 losses taken into account by Respondent. For example, Respondent determined the ‘‘profit sharing’’ of Frontier Airlines on January 24, 1969. At that time Respondent had before it certain reports showing that Frontier suf- fered a loss in 1963, and that the loss would be carried back to offset Frontier’s 1966 profits. These losses were not considered by the Respondent in its determination of Frontier’s 1966 ‘‘profit sharing’’ and it was not required to submit pro forma tax returns for 1968 nor refund any 1966 subsidy. Petitioner petitioned Respondent to reconsider its order, and upon Respondent’s refusal to do so, appealed to the — aa United States Court of Appeals for the Eighth Circuit. The Court of Appeals affirmed the Respondent’s order. The opinion of that Court is set out in Appendix A-6. The Court of Appeals reasoned that to overturn the Board’s order would allow Petitioner to reap a windfall for 1966, noting that inasmuch as Petitioner did not di- rectly compete with the other eight carriers and that ‘‘gen- eral fairness’’ prevailed with respect to the Board’s treat- ment, there was no discrimination among the various carriers. The Court also noted that the Board was justified in ignoring the literal terms of Section III-E-1 inasmuch as, to do otherwise, would ‘‘ignore reality’’ since Petitioner’s pro forma tax return showed that a loss carryback would be claimed, notwithstanding the fact that no tax return had been filed with the Internal Revenue Service. Petitioner seeks review of the decision of the Court of Appeals, and a reversal of its judgment affirming the Re- spondent’s Order No. 70-5-107. = REASONS FOR GRANTING THE WRIT 1. The Respondent’s Order No. 70-5-107 is discrimina- tory and violates the Fifth Amendment of the United States Constitution and Section 10(E) of the Admiristra- tive Procedure Act. The Petitioner was required to re- fund subsidy for 1966 while other airlines similarly situ- ated were not so required. This resulted f1m the pro- cedure adopted by the Respondent for determining ‘‘ profit sharing,’’ since there obtained no consistency with respect to the data which would be utilized by the Board to deier- mine any liability to refund subsidy. The result was that the Respondent utilized 1969 losses in computing the 1966 subsidy for Petiticner, but did not do so for others. In Petitioner’s case, the Respondent had the 1969 losses before it only hecause of the delay result- ing from its staff’s error in determining Petitioner’s 1966 ‘*profit sharing’’ until after 1969 losses became ascertain- able. Thus Petitioner’s ultimate liability was the direct result of the order in which its case was processed, there being no uniform date as to when losses would no longer be considered for subsidy purposes. 2. Section II-E-1 of Class Rate III-A contemplates losses reflected by a carrier’s tax returns submitted to ‘‘taxing authorities.’’ At no time had Petitioner ‘‘sub- mitted’’ its 1969 tax returns to ‘‘taxing authorities’’ and the Respondent’s order was based upon a pro forma fed- eral tax return supplied by Petitioner at Respondent’s re- quest. With this data in hand, Respondent took the posi- tion—as reflected by its order—that by following the clear terms of its cwn rule, it would, insofar as Petitioner was concerned, ‘‘ignore reality.’’ The Respondent clearly abused its discretion wheu it disregarded the mandate of its own rule simply because it — did not agree with what the result would be if the unam- biguous terms of the rule were to be applied to Petitioner. This is not a case where an administrative agency inter- preted its rules. No question of interpretation is involved, as shown by Order No. 70-5-107, and the Respondent made its decision simply because it disapproved of the result that a literal interpretation would necessarily bring. 3. The respondent discriminated between Petitioner and Frontier Airlines in determining subsidy refunds for 1966. Frontier’s determination was made on January 27, 1969, and 1969 losses were neither available nor considered. Re- spondent did, however, know that Frontier had sustained losses in 1968 which would be carried back to offset 1966 profits. Despite its knowledge, Respondent did not take Frontier’s 1968 losses into consideration inasmuch as Frontier had not filed its tax return with federal ‘‘taxing authorities.’’ The Respondent did not require Frontier to submit pro forma tax returns for 1968, and although cer- tain other reports filed by Frontier indicated a 1968 loss, such loss was not computed in Frontier’s 1966 ‘‘profit sharing.’’ By ignoring the loss in Frontier’s case and including the loss in Petitioner’s case, Respondent discriminated against Petitioner, and Petitioner was denied the equal treatment required by the Fifth Amendment, inasmuch as there was no rational basis for the distinction. H.C.&D. Moving & Storage Co., Inc., et al. v. United States, et al, D. C. ‘Hawaii, 298 F. Supp. 746, 751 (4). 4. There is now pending before the United States Court of Appeals for the Fourth Circuit the case of Allegheny Airlines, Inc. v. Civil Aeronautics Board, No. 14,892, and there is pending before the United States Court of Ap- peals for the District of Columbia Circuit the case of Texas International Airlines, Inc. v. Civil Aeronautics —_— Board, No. 24459. The Allegheny case was heard before the Court of Appeais on June 9, 1971, and the Texas International case was heard before the Court of Appeals on September 17, 1971, but as of the filing of this Petition, no decision has been rendered in either case. Like Petitioner, both Allegheny and Texas International were required to refund a portion of the subsidy they had received for 1966, based on later year tax loss carrybacks. Their appeals now pending are, in almost every respect, identical with the appeal which the Court of Appeals for the Eighth Cireuit decided adversely to Petitioner and which occasions this Petition for Writ of Certiorari. CONCLUSION It is, therefore, entirely possible that the decision in the Allegheny or Texas International case, now pending before the respective Courts of Appeals will be in conflict with the decision rendered in the Eighth Circuit in the case of the Petitioner. Should such a conflict become apparent, Petitioner respectfully submits that Certiorari should be granted pursuant to Supreme Court Rule 19 (1) (b). Respectfully submitted NEALE, NEWMAN, BRADSHAW & FREEMAN PAUL L. BRADSHAW 705 Woodruff Building Springfield, Missouri Attorneys for Petitioner, Ozark Air Lines, Ine. as em APPENDIX A Order 10-5-107 UNITED STATES OF AMERICA CIVIL AERONAUTICS BOARD WASHINGTON, D. C. Adopted by the Civil Aeronautics Board at its office in Washington, D. C. on the 21st day of May, 1970 SIDY RATE (OZARK AIR LINES, INC. SUBSIDY RE- FUND—1966) Dockets 16750 LOCAL SERVICE CLASS SUB- | and 15359 ORDER DETERMINING SUBSIDY REFUND In this order the Board has determined, pursuant to the provisions of Class Rate ITI-A,! that Ozark Air Lines, Ine. shal) refund $246,579 of subsidy for calendar year 1966. Since $95,621 has already been withheld by the Board, the net refund required will be $150,958. The history, background and general nature of class rate profit-sharing determinations have been thoroughly canvassed and explained in numerous Board orders deter- mining subsidy refunds for local service carriers.2 For present purposes, it is sufficient to state that Class Rate 1 Orders E-23697, May 18, 1966, and E-23850, June 23, 1966. 2 See e.g., Ozark Air Lines, Inc. Subsidy Refund 1963-1964, Order E-25553, August 18, 1967, and Subsidy Refund 1965, Or- der 69-1-129, January 30, 1969, a * aan III-A, like most of the other class rates,? under certain conditions requires refunds of a portion of the subsidy paid; that the refunds are to be made in accordance with the detailed profit-sharing provisions of the rate formula; and that a specia: report, Form T-88, must be submitted by each local service carrier in order to. facilitate the profit-sharing and subsidy refund calculations. The ad- miuistration of profit-sharing and subsidy refunds does not involve rate-making determinations and the profit- suaring provisions of Class Rate III are final, are not open to contest retroactively, and are not in issue. On May 12, 1967, Ozark submitted Form T-88 in con- nection with the determination of prcfit-sharing for 1966. In accordance with established practice, the Form T-88 has been subjected to field audit by the Board’s staff at the site of the carrier’s operations, and a staff report of the audit findings has been made to the Board. Upon re- view of the audit report, the carrier’s Form 41 reports, the data contained in the carrier’s T-88 report, and the supplemental materials developed in communications and discussions between Ozark and the Board’s staff, we have concluded that under the terms of Class Rate IUI-A Ozark shall refund $246,579 in subsidy for calendar year 1966. The Form T-88 subizitted by the carrier for 1966 con- forms to, and is consistent with, the requirements of the class rate, except in the following respects: 1. Section III B 1 requires that expenses be consistent with the reporting requirements of the Federal Aviation Act and the Board’s regulations. Pursuant to this section, we have made the following adjustments: 3 Under Class Rate IV, Orders E-25162, May 17, 1967, and E-25231, June 1, .967, a revenue-growth adjustment reduction factor has replaced the profit-sharing provisions of prior class rates, —A-3— a. We have eliminated from expense a credit of $20,969 relating to an overaccrual of payroll taxes in 1965, which was reflected in the 1965 profit-sharing de- termination. b. Ozark amortized prepaid rent on leased aircraft and engines on the basis of a three-year lease, although, with option clauses granting the carrier the right to ex- tend the lease for a period of five years, the lease had a life of eight years. Consistent with Board regulations the carrier should have amortized the prepaid rent over the entire life of the lease. We have therefore adjusted the amortization period and disallowed $14,856 of amorti- zation. 2. Pursuant to section Lil B 4 various adjustments have been made to reflect the correct amortization of develop- mental and preoperating costs resulting in a net disallow- ance of $2,078 from the carrier’s claim. 3. Consistent with our actual tax policy, as reaffirmed in Order 70-3-92, March 18, 1970, and in accordance with the requirements of section III E, we have adjusted fed- eral income taxes for 1966, reported by Ozark on its Form T-88, to reflect, the carryback of 1969 net operating losses. As a result, no provision has been made for federal income taxes for 1966 profit-sharing. However, since the various state tax laws make no provision for operating loss carry- backs, we have provided for taxes as reported by Ozark on its state tax returns, adjusted to eliminate $5,028 of taxes applicable to capital gains on flight equipment ex- cluded from income for profit-sharing. 4. Pursuant to section III F, the Board has made appropriate adjustments to the carrier’s Form T-88 invest- ment to reflect the various revenue and expense adjust- ments set forth above. In addition, the following adjust- ments to investment have been made: ow A 4 a. Section III C 2 f requires that investment shall not include equipment purchase deposits, and specifica- tions in Schedule W of Form T-88 require that such de- posits be eliminated from investment on a pro rata basis. The carrier instead of eliminating $3,463,902 of special deposits from investment on a pro rata basis, excluded the entire amount from debt investment. We have there- fore adjusted the carrier’s T-88 by (1) increasing average debt investment by $2.467,337, (2) excluding $1,211,673 frem average convertible debenture investment, and (3) excluding $1,255,664 from average equity investment. We have also adjusted the carrier’s entry of $83,559 of average capitalized interest on special equipment de- posits by excluding that amount from investment on a pro rata basis, whereas the carrier eliminated this amount entirely from debt investment. The net effect of our ad- justment is that average debt investment is increased by $59,519 while average convertible debenture invest- ment and average equity investment are reduced by $29,- 229 and $30,290, respectively. The carrier did not exclude from investment the funds which had been recorded as a current asset but which more properly should have been recorded as a special deposit. Accordingly, pursuant to section III C 2 f we have eliminated $48,695 frem pro rata investment. b. Equity has been reduced by an average of $105,945 to reflect the portion of Ozark’s liability for 1964 and 1965 profit-sharing (after taxes) which was not reflected in the carrier’s reports for 1966. c. Investment has been decreased by an average of $5,334 reflecting costs incurred in unsuccessful route cases not eliminated from the carrier’s T-88 investment. d. Section III C 2 b requires nonoperating property to be eliminated from investment on a pro rata basis. —_ a The carrier did not exclude from investment the value of nine DC-3 aircraft, which had been taken out of serv- ice. We have therefore reduced average pro rata invest- ment by $32,653. e. Average equity investinent has been increased by $218,689 to reflect the carrier’s actual income tax liability for 1966, after giving effect to refunds resulting from the carryback of a 1967 investment tax credit and to reflect a carryback of net operating losses from 1969, With the revisions indicated above, and after reflect- ing the impact of such revisions in the related calcula- tions under the formula, the amount of subsidy refund due from Ozark Air Lines, Inc., for the calendar year 1966 is determined to be $246,579. Accordingly, It Is Ordered That: Ozark Air Lines, Inc. shall refund $246,579 to the Government for the calendar year 1966 pursuant to Class Rate III-A. By the Civil Aeronautics Board: Harry J. Zink Secretary (Seal) * In addition to the revisions and adjustments discussed above, other minor adjustments of a miscellaneous and routine nature have been made, but none of them are of sufficient con- ——- either individually or collectively to warrant discus- sion herein. nition APPENDIX B United States Court of Appeals FOR THE EIGHTH CIRCUIT No. 20,543 Ozark Air Lines, Inc., Petitioner, | On Petition for Re- v. view of Orders of the Civil Aeronau- Civil Aeronautics Board, ties Board. Respondent. _—< [May 5, 1971.] Before Aupricu,* Lay and Bricut, Ci: -uit Judges. Aupricu, Circuit Judge. This dispute between Ozark Air Lines, Inc. and the Civil Aeronautics Board can be reduced to a relatively simple basic issue. Ozark, and a number of other so-called local service airlines in other parts of the country, for years have required subsidization, determined by ‘‘need.’’ Federal Aviation Act of 1958, as amended, 49 U.S.C. § 1376(b). Prior to 1961 this was effected on an individual basis, but the resulting problems led to the adoption of a * Of the First Circuit, sitting by designation. = uniform rate structure. See Local-Service Class Subsidy Rate Investigation, 34 C.A.B. 416 (1961). This general formula was altered from time to time. For the year 1966 it was known as Class Rate III-A. Investigation of the Local Service Class Subsidy Rate, Orders E-23697, May 18, 1966, and E-23850, June 23, 1966. This required, if operations proved to be profitable after taxes, a partial repayment of the subsidy, to effect profit sharing between the airline and the government. Taxes were to be those reported, ‘‘with such amendments and revisions as may have been filed as of the final determination of profit sharing hereunder.’”” (Emphasis added.) Ozark made a profit in 1966, and incurred a tax. In 1969 it operated at a loss. This gave it a loss carry-back, which could be used to reduce its 1966 tax, and hence increase its 1966 profit as measured under the order. The Board, still in the process of determining the amount of profit-sharing for 1966 when the information for 1969 became available, calculated the tax adjustment to which Ozark was en- titled, and therefore required a larger profit-sharing re- fund to the government. Local Service Class Subsidy Rate, Subsidy Refunds, Order 70-3-92, March 18, 1970; Order Determining Subsidy Refund Order 70-5-107 May 21, 1970. Ozark objects. Ozark’s complaint is that the Board had no right to consider its potential tax reduction in 1966 resulting from the 1963 losses. Its first reason is that when the Board took March 18, 1970 as the final determination date for the refund due from 1966, Ozark’s tax return for 1969, showing a loss, had not in fact been filed, Ozark having obtained an extension of the March 15 filing date. Con- sequently, Ozark says, even if the Board could properly take March 18, 1970 as the date of final determination of 1 Investigation of tire Local Service Class Subsidy Rate, Or- der E-23850, June 23, 1966, § III-E-1 =, profit sharing, by considering a return that had not yet ‘‘been filed” it departed from the terms of the general order, quoted ante. To this the Board replies that all of the information it used had already been supplied in re- ports that Ozark had been obliged to file with it, including a ‘‘pro forma’’ tax return, the correctness of which Ozark concedes. These reports, the Board found, showed that the tax credit would in fact be claimed. Hence, for Ozark to escape the consequences of its known, actual tax credits by the simple process of obtaining the consent of the Internal Revenue Service not to file on time, even if done in good faith and for other purposes, would be to ‘‘ignore reality.’’ We cannot but agree. This is a case for the application of the rule that if literal use of lan- guage Jeads to ‘‘absurd results’’ in the light of a provi- sion’s obvious purpose, the purpose must control. United States v. American Trucking Ass’ns, Inc., 1940, 310 U.S. 534, 543-44. Ozark’s ‘‘need’’ of a subsidy is not to be determined by formalisms. Adternatively, Ozark contends that the Board improp- erly selected March 18, 1970 as the date of final determina- tion of the 1966 profit sharing, and that if an earlier settlement date had been selected its carryback loss would not have accrued and its net profit for 1966, in which the government was entitled to share, would not have been enhanced. More exactly, at an earlier date the parties would not have known that the profit was going to be enhanced by a tax reduction derived from net losses in 1969, and the Board, by closing the books, would have foreclosed the government’s right to share in the increased profits when in due course they utimately accrued. Ozark’s argument for ‘‘ignoring reality’’ in this respect is somewhat more sophisticated but, we believe, equally fallacious. It is true, as Ozark points out, that consistent with orderly procedure, the Board attempts to make a —* oo final determination with respect to each year—and each airline—as promptly as possible, and that benefits aceru- ing after the final determination need not then be shared with the government.2 With regard to 1966 a dispute arose between Ozark and the Board’s staff as to an un- related matter affecting the profit-sharing determination, which greatly postponed the settlement date. But for this dispute there would have been a final settlement before the 1969 losses occurred and generated the carryback, and Ozark would have been able to retain the entire in- crease. The difficulty with this argument is that while application of Class Rate III-A could result in windfalls, it adopted an ‘‘actual tax’’ policy? under which the Board computed the tax as accurately as possible on the basis of the facts as known at the time that all other disputes were resolved and the case was ready for closing. It looks to the true facts, in other words, in each case, so far as it is possible to determine them, without speculating, and without delaying longer than other circumstances require.‘ 2 This collows from the language of Class Rate III-A, as quoted ante. 3 Western Air Lines, Inc., and Inland Air Lines, Inc., Mail Rates, 14 C.A.B. 243, 251-55 (1951), aff'd in relevant part sub nom. Summerfield v. CAB, 207 F.2d 200, aff'd sub nom. Western Air Lines, Inc. v. CAB, 347 U.S. 67. * We can do no better than quote the Board. “The Board is here applying a policy it has consistently ap- plied to all carriers similarly situated. That policy is to predi- cate the tax allowances on the basis of the Carrier’s actual income tax liability so far as it is known at the time of the Board determination. The Board has always been aware of the fact that in the normal course of administration of tax laws, the carrier’s taxes for a given year are subject to after our determination has been made final. But it would be totally infeasible to attempt to hold open each case until all possibility of amendment to the carrier’s tax returns for *‘ ~ } that year had passed. Taxes can be affected by carryback credits, by voluntary amendments of returns by the taxpayers, and by deficiency assessment of the Internal Revenue Service, and were we to deter our final action on return and profit- — A-10— This practice not only seems reasonable, it costs the air- line nothing in terms of the true facts. All that Ozark can say is that had the formula provided for an earlier fixed date, or had there not been in this case another dispute, it would have received a windfall. We see nothing arbitrary about this loss. Nor does the circumstance that the Board ultimately overruled its staff, so that Ozark won the other dispute, call for a different result. There is no suggestion that the staff was acting other than in good faith.5 That the staff proved to be wrong no more calls for ignoring the then-known realities of Ozark’s tax position than does the fact that Ozark chose to delay the filing of its tax return. Finally, Ozark