Amicus Curiae Brief — Allegheny Airlines, Inc. v. Pennsylvania Public Utility Commission

Supreme Court brief1973

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TABLE OF CONTENTS

OPINIONS BELOW .

QUESTIONS PRESENTED .

THE INTEREST OF THE NARUC AS

owt

STATEMENT OF THE CASE... ....... 3

S81 SRN HAS PR oT OER ORIN

SUMMARY OF ARGUMENT .......... a

|. THE UNITED STATES COURT OF APPEALS

PROPERLY AFFIRMED, ON THE GROUNDS

OF EQUITABLE ABSTENTION, THE DISTRICT

COURT'S DISMISSAL OF ALLEGHENY’'S SUIT

TO ENJOIN THE PENNSYLVANIA PUC FROM

REQUIRING ALLEGHENY TO OBTAIN THE

PENNSYLVANIA PUC’S APPROVAL PRIOR

TO DISCONTINUING DIRECT SERVICE OVER

AN INTRASTATE ROUTE FOR WHICH AL-

LEGHENY HAD PREVIOUSLY OBTAINED

FROM THE PUC A CERTIFICATE OF PUBLIC

Ds «+6 s © » & © & 6 17

Geer 4

ll. THE FEDERAL AVIATION ACT OF 1958

DOES NOT PREVENT PENNSYLVANIA FROM

ADMINISTERING A REASONABLE REGULA-

TORY PROGRAM TO PROTECT THE PUBLIC

INTEREST OF TRAVELERS USING INTRA-

STATE AIR TRANSPORTATION. ... . . 35

Te 6 « « «6 «6 6 6 6 6 + 6 © « 53

i i ttn ad : ee ed —- — ie |

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TABLE OF AUTHORITIES

Judicial Decisions:

Alabama Public Service Commission v. Southern

Railway Company, 341 US. 341 (1951)

Allen-Bradley Local No. 1111, etc. v. Wisconsin

Employment Relations Board,

315 US. 740 (1942) .

A. F. of L. Metal Traders Dept. v. Watson,

327 US. 582 (1946) . a

Atlas Life Ins. Co. v. W. I. Southern, Inc.,

306 US. 563 (1939) . _

Atchison, Topeka, & Santa Fe Railway Company

v. Railroad Commission of the State of California,

283 US. 380 (1931) .

Braniff Airways, Inc. v. Nebraska State Board of

Equalization & Assessment,

347 US. 590 (1954) .

Buck v. California,

343 US. 99

California v. Thompson,

313 US. 109 (1941) .

California v. Zook,

336 US. 725 (1949) .

Capital Service, Inc. v. NLRB,

347 US. 501 (1954) .

Central Kentucky Natural Gas Co. v. Railroad

Commission, 290 U.S. 264 (1933)

(iti)

Chemical Specialties Manufacturers Assoc., Inc.

y. Lowery, 452 F.2d 431 (2d Cir. 1971) .

Gtties Service Gas Company v. Peerless Oil &

Gas Company, 340 US. 179 (1950) .

Gty of Chicago v. Atchison, Topeka & Santa Fe

Ry. Co., 357 US. 77 (1958) a

Gty of Chicago v. Fieldcrest Dairies,

316 US. 168 (1942) . ;

Colorado Anti-Discrimination Com v.

Continental Air Lines, Inc.,

372 US. 714 (1963) .

Di Giovanni v. Camden F..Ins. Asso.,

296 US. 64 (1935)

Dickinson v. Stiles,

246 US. 631 (1918) .

Endicott Johnson Corp. v. Perkins,

317 US. S01. <a

FPC v. Arkansas Power & Light Co.,

330 US. 802 (1947) .

FPC v. oe

365 US. 1 (1961) . ;

Florida Lime & Avocado Growers, Inc. v. Paul,

373 US. 132 (1963) .

Gilchrist v. Interborough Rapid Transit Co.,

279 US. 159 (1929) . tg

Gilvary v. Cuyahoga Valley catia ——

292 US. 57 (1934) .

42,49

(iv)

Grand Trunk Railway Company of Canada v.

Michigan Railroad Commission,

et i. ek se we ol

Halter v. Nebraska,

Tn. « « 2 -» 6 eee 6 6 6 «

Head v. New Mexico Board of Examiners in

Optometry, 374 US. 424 (1963). .....

Henderson Water Company v. Corporation Com-

mission of the State of North Carolina,

i... a eo ~ s « « @ «

Huron Portland Cement Co. v. Detroit,

EE ree

Illinois Commerce Commission v. Thomson,

I ao ns freee

Kelly v. Washington,

I Gas 6 oe 6a eee

Lake Carriers’ Assn. v. MacMullen,

CS eee

Lawrence v. St. Louis-San Francisco Railway

Company, 274 US. 588 (1927) . ......

Macauley v. Waterman S. S. Corp.,

Machine Co. v. State Corp. Commission of Va.,

ee Sele tele k «6 6 @ &

Matthews v. Rodgers,

en +. ws os 6s « « &*

Maurer v. Hamilton,

309 U.S. 598 (1940)

(v)

Page

L. & T.R. & S. S. Co. v. Louisiana,

118 US. 455 (1886) . 50

Natural Gas Pipeline Co. v. Slattery,

302 US. 300 (1937) . — 27

Northwest Airlines, Inc. v. Minnesota,

322 US. 292 (1944) . . 16, 51

Panhandle Eastern Pipe Line Company v.

Public Service Commission of Indiana,

332 US. 507 (1947) . — 42

Pennsylvania Gas Co. v. Public Service Commission,

252 US. 23 (1920) eke 42

Pennsylvania v. Williams,

294 US. 176 (1935) . 27

People v. Western Air Lines, Inc.,

42 Cal. 24 261 (1954) 15,51

Porter v. Investors Syndicate,

286 US. 461 (1931) . 27

Public Service Commission of Utah v. Wycoff,

344 US. 237 (1952) . . . . . .. . 9,10,18, 19, 26

Public Utilities Commission of the State of

California v. United Air Lines, Inc.,

346 US. 402 (1953) .

Public Utilities Commission v. Gas Co.,

317 US. 456 (1943) . 2

8,9, 11, 17, 18, 26, 28

IDET FY DES, MPL OT TEI HP RIS ae a

(vi)

Railroad Commission of Texas v. Pullman Co.,

312 US. 496 (1941) . me

Rochester Tel. Corp. v. United States,

307 US. 125 (1939) . ye

Savage v. Jones,

225 US. 501 (1912) .

Schwartz v. Texas,

344 US. 199 (1952) .

Shipman v. Du Pre,

339 US. 321 (1950) .

Sinnot v. Davenport,

22 How (US.) 227 (1859) .

Southern Pacific Company v. Arizona,

325 US. 761 (1945) . :

Spector Motor Service v. McLaughlin,

323 US. 101 (1944) . ‘

Re Squires,

114 Vt. 285, 44 A2d 133

St. Louis-San Francisco Railway Company v.

Alabama Public Service Commission,

279 US. 560 (1929) . ;

Texas Aeronautics Commission v. Braniff Airways,

Inc., 454 SW 2d 199, cert. den., 27 L. Ed. 2d

247, 91 S. Ct. 244 (1970) . :

Thompson v Magnolia Petroleum Co.,

309 US. 478 (1940) . .

United Air Lines, Inc. v. Public Utilities Com-

mission of the State of California,

342 US. 908 (1952) .

(vii)

Page

Watson v. Buck,

i cee ae sk ee ee 27

H. P. Welch Co. v. New Hampshire,

Se as Ce sk ee Se 49

Statutes:

Civil Aeronautics Act of 1938. . . . .. . . 15,17,51

Communications Act, 47 US.C.,

ef eee as 37, 45

Federal Aviation Act of 1958, 49 U.SC., 13, 14, 15,

eS Fe ee 16, 35, 36, 37, 51

Federal Motor Carrier Act . . . ........ 38

Federal Power Act, 16 U.SC.,

a} 5 re ah oat ae 36

Federal Railroad Safety Act of 1970. eos! 37

Interstate Commerce Act,

ee ee

Natural Gas Act, 15 U.S.C.,

>, % 2 See re MA ne 36, 42

Natural Gas Pipeline Safety Act of + 1968,

a es ee sw tt 36

Pennsylvania Public Utility Law ....... 10, 28, 33

Miscellaneous:

78th Congress, S. 246, H.R. 1012, H.R. 3420,

H.R. 4845, H.R. 4848. . . . .. Fase ee > 37

79th Congress, S. 541, H.R. 674, H.R. 3383. . . . . 37

We Sa a. ee tt 37

8st Congress, S. 423, S. 445,8. 2435. . . . 2... 37

1944-1950 NARUC Annual Convention Proceedings . . 37

TINA ROOT KE AERO ADE CIGA Tee IT or VES SCM a

Supreme Court of the Anited States

No. 72-855

ALLEGHENY AIRLINES, INC.,

Petitioner,

Vv.

PENNSYLVANIA PUBLIC UTILITY COMMISSION,

and its Chairman, GEORGE I. BLOOM, and

JAMES McGIRR KELLY, LOUIS J. SPARVERO,

and ROBERT K. BLOOM, members of the Commission,

Respondents.

Petition for a Writ of Certiorari

to the United States Court of

Appeals for the Third Circuit

BRIEF OF THE NATIONAL

ASSOCIATION OF REGULATORY UTILITY

COMMISSIONERS AS AMICUS CURIAE

SLES IOLA NORE ENN TG RE AE RE

eres

The National Association of Regulatory Utility Commis- }

sioners (NARUC) submits, as provided by Rule 42 of the

Rules of this Court, the following brief amicus curiae in

this case in opposition to the Petition for a Writ of Certi-

orari to the United States Court of Appeals for the Third

Circuit filed by Allegheny Airlines, Inc. (Allegheny).

Counsel for Allegheny, Petitioner, and counsel for the

Pennsylvania Public Utility Commission (Pennsylvania PUC)

and its members, Respondents, have consented to the

NARUC’s filing this brief.

OPINIONS BELOW

The opinion of the United States Court of Appeals for

the Third Circuit is reported at 465 F.2d 237 and reprint.

ed in Appendix A, pp. 13a-28a of the Petition for Writ of

Certiorari. The opinion of the United States District Court

for the Eastern District of Pennsylvania is reported at 319

F. Supp. 407 and is reprinted in Appendix A. pp. 1a-12a

of the Petition.

QUESTIONS PRESENTED

I. Whether the United States Court of Appeals Prop-

erly Affirmed, on the Grounds of Equitable Abstention, the

District Court’s Dismissal of Allegheny’s Suit to Enjoin the

Pennsylvania PUC from Requiring Allegheny to Obtain the

Pennylvania PUC’s Approval Prior to Discontinuing Direct

Service Over an Intrastate Route for which Allegheny had

Previously Sought and Obtained from the PUC a Certifi-

cate of Public Convenience?

Il. Whether the Federal Aviation Act of 1958 Prevents

Pennsylvania from Administering a Reasonable Regulatory

Program to Protect the Public Interest of Travelers Using

Intrastate Air Transportation?

THE INTEREST OF THE NARUC AS AMICUS CURIAE

The NARUC is a quasi-governmental nonprofit organiza-

tion founded in 1889. Within its membership are the gov-

ernmental bodies of the fifty States and of the District of

Columbia, Puerto Rico and the Virgin Islands engaged in

the regulation of carriers and utilities. The mission of the

NARUC is to improve the quality and effectiveness of pub-

lic regulation in America. More specifically, the NARUC

contains State officiais, including the Commissioners of the

Pennsylvania PUC, Respondents herein, charged with the

duty of regulating air transportation within their respec-

tive States and, as such, they have the obligation to assure

the establishment and maintenance of such air transporta-

tion and facilities as may be required by the public con-

venience and necessity, and the furnishing of service at

rates and charges that are just and reasonable.

The NARUC has actively participated in the court of

appeals and district court below as an amicus curiae, sub-

mitting amicus curiae briefs with the court of appeals on

April 12, 1971 and September 6, 1972, and with the dis-

trict court on June 20, 1972.

STATEMENT OF THE CASE

Allegheny seeks review of the dismissal of its suit to en-

join the Respondents, the Pennsylvania PUC and its mem-

bers, from enforcing Pennsylvania law which requires Alle-

gheny to eitner: provide direct service over an intrastate

route between Harrisburg and Williamsport, pursuant to

the PUC certificate held by Allegheny; or seek the approv-

al of the PUC to discontinue such service. Allegheny also

seeks to avoid having to obtain PUC approval for any

TEAM eee re

ese

other intrastate service changes it may desire to make, ip.

respective of what public interest considerations may be

involved.

Allegheny is the largest local service airline carrier in the

Nation (319 F. Supp. at 409, Allegheny’s Petition, App,

p. 2a; Stip. 2). Its present route structure covers seventer,

States, the District of Columbia and Canada. Jd. The ams

served is roughly defined by St. Louis/Chicago on the West,

Toronto on the North, Boston on the East, and Memphis/

Norfolk on the South. More than 50% of the Nation’s

population is contained in this area (Stip. 4).

Of the seventeen States served by Allegheny, it only

vides intrastate service in the followi nine: Connecticut,

Indiana, Michigan, New Jersey, New York, Ohio,

vania, Tennessee, and West Virginia (319 F. Supp. at 409,

Allegheny’s Petition, App., p. 2a; Stip. 10).

Pursuant to an application by Allegheny, the Pennsylvania

PUC first certificated it on August 19, 1941, to transport

Property by air in intrastate commerce within Pennsylvania

(319 F. Supp. at 409, Allegheny’s Petition, App., p. 2a;

Stip. 11). On January 11, 1949, Allegheny received a cer-

tificate from Civil Aeronautics Board (CAB) to provide in-

terstate passenger service over a route structure, designated

as “Route 97,” covering the District of Columbia and seven

States, including Pennsylvania (/d.; Stip. 1). On March 21,

1949, the Pennsylvania PUC approved Allegheny’s applica-

tion to transport persons and property by air in intrastate

commerce within the State (/d.; Stip. 11).

In the years since 1949, or more explicitly from January

29, 1951 to November 24, 1969, the Pennsylvania PUC

has issued thirteen orders which have granted every applica-

tion of Allegheny to abandon, suspend, substitute or extend

COPY BOUND TOO

ervice (Stip. 12-14). The Stipulation entered into by the

sarties does not reveal one instance where the Pennsylvania

UC has denied an application of Allegheny.

The Pennsylvania PUC in a certificate issued on Septem-

yer 11, 1967, redefined Allegheny’s authority to provide

service over several routes, number (5) of which provides

‘or service “Between Erie and Harrisburg via Bradford and

Viliamsport” (Complaint, Exh. A).

The Pennsylvania PUC on June 10, 1968, issued a rule

0 show cause, reciting that it had received information in-

icating that Allegheny had abandoned direct service be-

ween Harrisburg and Williamsport without PUC approval,

nd ordering Allegheny to show cause why its certificate

hould not be cancelled or other penalties imposed for

bandonment of such service contrary to Pennsylvania law

465 F.2d at 239, Allegheny’s Petition, App., p. 15a; Com-

aint, Exh. A).

Allegheny on August 1, 1968, responded to the rule to

how cause by answering: that direct, single-plane service

etween every city pair on a linear route served by a cer-

ificated air carrier is not required by the CAB and hence

hould not be required by the PUC; that such a require-

nent would “create a serious economic drain” on Allegheny

nd thereby “constitute an impermissible burden on inter-

tate commerce”; that Allegheny meets its basic certificate

bligation, both Federal and State, by providing service be-

ween Harrisburg and Williamsport via on-line connections

t Pittsburgh or Wilkes-Barre/Scranton; and that therefore

liegheny had not abandoned its Harrisburg-Williamsport

pute. Allegheny requested the PUC to vacate the rule to

how cause and to terminate the proceeding (/d. ; Complaint,

xh. B).

LOSE IN CENTER

The Pennsylvania PUC on September 19, 1968, held a

hearing on its rule to show cause and Allegheny’s answer.

In this hearing, Allegheny chose to offer no testimony and

no exhibits, but relied on statements for the record by its

counsel (/d.; Complaint, Exh. C, pp. 3, 5).

The Pennsylvania PUC on June 23, 1969, issued an or-

der imposing on Allegheny a penalty of $5,000 for failure

to seek Pennsylvania PUC approval for the abandonment

of direct service between Harrisburg and Williamsport, and

directing Allegheny to reinstitute such service or in lieu

thereof to file with the PUC a nunc pro tunc application

to abandon such service (465 F.2d at 239, Allegheny’s Pe-

tition, App., p. 16a; 319 F. Supp. at 410, Allegheny’s Pe-

tition, App., p. 4a; Complaint, Exh. C, p. 11).

Meanwhile, the Pennsylvania PUC on May 26, 1969, is.

sued another rule to show cause reciting that Allegheny

had abandoned certain other intrastate service and instituted

new intrastate service within Pennsylvania without the ap-

proval of the PUC. Accordingly, the PUC ordered Alle-

gheny to show cause why its certificate should not be can-

celled or other penalties imposed for the abandonment and

institution of services contrary to Pennsylvania law.

In September, 1969, Allegheny filed its complaint insti-

tuting Civil Action No. 69-2148 in the United States Dis-

trict Court for the Eastern District of Pennsylvania; to

void the PUC’s orders and rules to show cause, which are

placed in issue by the complaint, on the grounds that they

have been preempted by CAB regulation under the Federal

Aviation Act of 1958 and that they create an undue bur-

den on interstate commerce; and to enjoin the PUC from

seeking to regulate Allegheny’s intrastate service in the man-

ner challenged in the complaint.

_—

Allegheny made no effort to establish a factual record

before the PUC or to seek relief in State court or even to

exhaust its remedy before the Pennsylvania PUC with re-

spect to the order of May 26, 1969 (465 F.2d at 239,

Allegheny’s Petition, App., p. 15a; 319 F. Supp. at 410,

Allegheny’s Petition, App., p. 4a).

The Pennsylvania PUC answered the complaint and, there-

after, it and Allegheny signed a stipulation of facts and

each moved for summary judgment and filed supporting

briefs.

The CAB filed an amicus curiae brief supporting the is-

suance of an injunction against the PUC. However, it care-

fully avoided taking a “position with respect to procedural

issues or questions of judicial jurisdiction.” (CAB Brief,

p. 6).

The NARUC filed an amicus curiae brief supporting the

position of the Pennsylvania PUC.

Following oral argument, the District Court entered an

Order on November 10, 1970, dismissing the complaint

primarily on the ground that Allegheny had not attempted :

to exhaust adequate State remedies (319 F. Supp. 407,

Allegheny’s Petition, App., p. 1a). 4

On July 21, 1972, the United States Court of Appeals

for the Third Circuit, in an opinion written by Judge Rosenn, ;

affirmed the Federal District Court’s refusal to exercise y

jurisdiction in this case on the grounds of equitable absten- E

tion (465 F.2d 237, Allegheny’s Petition, App., p. 13a). :

In a Petition for Rehearing In Banc filed ca August 4,

1972, Allegheny challenged the Court’s application of the i

abstention doctrine in the instant case. The Petition for

Rehearing In Banc was denied on September 13, 1972,

in an 8 to 1 decision with Judge Gibbons dissenting (Alle

gheny’s Petition, App., p. 31a).

SUMMARY OF ARGUMENT

THE UNITED STATES COURT OF APPEALS PROPER.

LY AFFIRMED, ON THE GROUNDS OF EQUITABLE

ABSTENTION, THE DISTRICT COURT'S DISMISSAL

OF ALLEGHENY’S SUIT TO ENJOIN THE PENNSYL-

VANIA PUC FROM REQUIRING ALLEGHENY TO OB-

TAIN THE PENNSYLVANIA PUC’S APPROVAL PRIOR

TO DISCONTINUING DIRECT SERVICE OVER AN

INTRASTATE ROUTE FOR WHICH ALLEGHENY HAD

PREVIOUSLY OBTAINED FROM THE PUC A CERTI-

FICATE OF PUBLIC CONVENIENCE.

In cases of this nature, there exists a well established

principle of our Federal-State system of government which

requires the exhaustion of State administrative and judicial

processes prior to the exercise of jurisdiction by the Fed-

eral courts.

One of the leading cases is Public Utilities Commission

of the State of California v. United Air Lines, Inc., 346

U.S. 402, 98 L. Ed. 140, 74 S. Ct. 151 (1953), which in-

volved the issue of whether the California PUC or the

CAB has jurisdiction over the rates which United charges

for transportation between California mainland points and

Catalina Island. Since Catalina Island is part of California,

the PUC claimed jurisdiction.

The then Civil Aeronautics Act gave the CAB authority

over rates “between places in the same State of the United

States through air space over any place outside thereof.”

United and the CAB both claimed that flights from the

mainland to Catalina (a distance of 30 miles) are over the

“high seas” and therefore under the exclusive jurisdiction

of the CAB.

A three judge Federal district court upheld the conten-

tions of United and the CAB. 109 F. Supp. 13.

| On appeal, this Court in a per curiam order “reversed

on authority of Public Service Commission v. Wycoff,”’

344 U.S. 237, 97 L. Ed. 291, 73 S. Ct. 236 (1952). The

Supreme Court in effect held that neither declaratory nor

injunctive relief should be granted to an air carrier in an

action seeking to prevent, on the ground that the CAB

has exclusive jurisdiction, a State PUC from exercising its

claimed jurisdiction over rates charged by the carrier for

transportation between points in the same State but over

the high seas.

The California PUC case presents the strongest possible

application of the exhaustion doctrine since it presented

for decision a clear cut legal issue unencumbered by any

unresolved question of fact. In contrast, the case sub ju-

dice should ultimately turn on a factual record being de-

veloped as to whether it is reasonable to require direct

air service between Harrisburg and Williamsport.

In the Wycoff case, which is the one the Supreme Court

placed sole reliance on in the California PUC case, a motor

carrier sought in a Federal district court a declaratory judg-

ment that its transportation of motion picture film and

newsreels between points in Utah constituted an integral

part of interstate commerce, and an injunction against the

Utah Public Service Commission to prevent interference

with such transportation over routes authorized by the

Interstate Commerce Commission. The district court up-

held the Utah Commission and the court of appeals reversed.

On appeal, this Court reversed on the basis that federal

courts should not interfere with proceedings before State

administrative agencies.

Pennsylvania law provides adequate remedies. The Penn-

sylvania PUC is empowered to adopt regulations and Orders

and “to rescind or modify any such regulations or Orders,”

Public Utility Law, Sec. 902. See also Sec. 1007.

Accordingly, Allegheny may apply to the Pennsylvania

PUC to have the penalty rescinded and its certificate amend-

ed to reflect only economically viable operations.

Judicial review of PUC orders is provided by Article XI

of the Public Utility Law. The granting of supersedeas is

authorized pending review. Sec. 1103.

The delay and expense, which will occur to Allegheny

in the exhaustion of its well-defined State remedies, are of

its own making. It chose to ignore these remedies in the

face of a long line of cases applying the doctrine of ab-

stention in Federal-State relations.

Moreover, the doctrine of abstention is more than a the-

oretical exercise in promoting comity between the Federal

and State governments. It has a growing practical applica-

tion today in conserving the time and energy-of the Fed-

eral judiciary in its efforts to handle a rapidly growing

case load. Why should the over-burdened Federal courts

be called upon to expend valuable time in deciding a case

of this nature which may easily be resolved by the PUC

or the State courts?

Allegheny’s Petition for a Writ of Certiorari, in substance,

contends that the abstention doctrine does not apply to a

case involving a Federal preemption question.

_—-_

The distinction Allegheny attempts to draw in applying

the abstention doctrine between a Federal preemption ques-

tion and other Federal constitutional questions is a distinc-

tion without difference. The Federal preemption question

involves construction of a Federal statute whereas a Fede-

ral constitutional question involves construction of a Fed-

eral constitutional provision. Both involve alleged conflicts

with State statutes.

In addition, Allegheny ignores the most recent United

States Supreme Court case applying the abstention doc-

trine. In Lake Carriers’ Assn. v. MacMullen, 406 U.S. 498,

32 L. Ed. 2d 257, 40 U.S. Law Week 4569 (May 30, 1972),

the United States Supreme Court held that abstention was

proper in a case challenging the validity of the Michigan

Watercraft Pollution Control Act. Lake Carriers’ Assn. v.

MacMullen, supra, 32 L. Ed. 2d at 264, 40 U.S. Law Week

at 4571 (May 30, 1972) did involve a claim “. . . that the

Michigan statute conflicts with or is pre-empted by federal

law, primarily the Federal Water Pollution Control Act as

amended by the Water Quality Improvement Act of 1970,

and is therefore invalid under the Supremacy Clause.”

Allegheny also ignores the case of Public Utilities Com-

mission of the State of California v. United Air Lines, Inc., 3

supra, This case also clearly involved a preemption claim.

The case is extensively discussed in this brief, supra.

The cases relied upon by Allegheny in its Petition for

a Writ of Certiorari did all hold “‘no abstention” in a given

fact situation, but the instant case is distinguishable from

these cases. The factors relied upon by Judge Rosenn

were not present in those cases.

aa Ce a st 1 ek

One of the principal factors relied upon by Judge Rosenn

was the fact that Allegheny had on its own initiative sought

FIRE LE LEAMTS LEL LAIN OF tr eaten

—

and obtained from the Pennsylvania PUC “. . . a certifi.

cate of public convenience as an intrastate carrier to trans.

port passengers between certain cities in Pennsylvania, jn-

cluding Harrisburg and Williamsport.” (465 F.2d at 243,

Allegheny’s Petition, App., p. 24a.)

Clearly, a case such as the instant case, where the air-

line has sought and obtained a certificate of public con-

venience is distinguishable from cases where no such cer-

tificate was sought and obtained.

Additional factors relied upon by Judge Rosenn as re-

quiring abstention were:

(1) The State’s interests in local airline service are sig-

nificant. Airports, runways, and related facilities often re-

quire large expenditures at considerable community sacri-

fice and effort. In addition, the communities involved

may have come to depend on the direct air service, and

there is a presumption under Pennsylvania law that certif-

icated public utility service is needed and vital, until a

public utility proves otherwise (465 F.2d at 244, Allegheny’s

Petition, App., p. 25a).

(2) Allegheny presented no evidence suggesting that it

would have been harmed by having to resort to the Penn-

sylvania PUC or State courts before discontinuing the serv-

ice (/d.).

(3) Reliance by local communities upon the services

provided by Allegheny would be reasonable in light of

the airline’s action in obtaining from the Pennsylvania PUC

a certificate to transport persons and property between

points in Pennsylvania (465 F.2d at 244, 245, Allegheny’s

Petition, App., p. 26a).

(4) The danger of Federal-State friction is intensified

by Allegheny’s request for a perpetual injunction which

would enjoin the Pennsylvania PUC from “any action or

proceeding for any violation of the laws of . . . Pennsyl-

yania based upon action by Allegheny in changing its pat-

terns of service.” If this relief were granted, the airline,

while not being subject to State regulation, would main-

tain the benefits that accrue to holders of State public

utility certificates (465 F.2d at 245, Allegheny’s Petition,

App., p. 27a).

(5) There are no “. . . significant federal concerns

which would override the other factors mentioned above.

Even if it should be ultimately determined that the state

does not have power to regulate the actions which precip-

itated this suit, a temporary co-existence of federal-state

regulation will not frustrate any immediate goals or poli-

cies of the Federal Aviation Act.” (465 F.2d at 245,

Allegheny’s Petition, App., p. 28a.)

In addition to the factors relied upon by this Court

there is another factor supporting equitable abstention.

This factor is that the State law is unsettled in this case,

and a determination by State courts may make a deter-

mination on the Federal preemption issue unnecessary.

THE FEDERAL AVIATION ACT OF 1958 DOES NOT

PREVENT PENNSYLVANIA FROM ADMINISTERING

A REASONABLE REGULATORY PROGRAM TO PRO-

TECT THE PUBLIC INTEREST OF TRAVELERS

USING INTRASTATE AIR TRANSPORTATION.

Congress, in enacting the Federal Aviation Act of 1958,

clearly did not intend to completely preempt the regulation

Soe eae sores eT Ree or aes teatre tees ;

a ee hk es a a LETTE FE NET OPT, OE .

. SIRE ee ee i a a :

RES SAAR eres

of air transportation. CAB domestic jurisdiction in the

economic sense is primarily couched in terms of “inter.

state air commerce” and “interstate air transportation,”

Obviously, this is not the language of total Federal pre-

emption.

The Congressional propensity to divide the interstate

and intrastate characteristics of a national industry, and

to assign the former to Federal regulation and to reserve

the latter for State regulation, is consistently reflected in

the programs governing electric, gas, motor Catrier, rail-

road and telephone companies.

The Federal Aviation Act is the latest offspring in this

family of legislation and bears unmistakably the genetic

qualities of Federal-State regulatory alliance.

We believe Congress was wise in permitting the forma-

tion of this Federal-State alliance because its proper func-

tioning affords the American people the maximum bene-

fits from air transportation. Obviously, a State agency,

such as the Pennsylvania PUC, is far more concerned with

the adequcy of air transportation among the smaller com-

munities in the State than is the CAB. In contrast, the

CAB is far more concerned with the adequacy of a national

air transportation system than is any single State. In short,

the two regulatory interests form a partnership, comple-

menting each other in advancing the public welfare.

Out of interpretations of the above Federal statutes,

and out of other incidents of our Federalism, has evolved

a line of decisions defining the interface between Federal

and State jurisdiction. California v. Thompson, 313 USS.

109, 85 L. Ed. 1219 (1941); Head v. New Mexico Roard

of Examiners in Optometry, 374 U.S. 424, 10 L. Ed. 2d

983, 83 S. Ct. 1759 (1963).

The test of whether both Federal and State regulations

may operate or the State regulation must give way, is

whether both regulations can be enforced without impaii-

ing the Federal superintendence of the field, not whether

they are aimed at similar or different objectives. Federal

regulation of a field of commerce should not be deemed

preemptive of State regulatory power in the absence of

persuasive reasons either that the nature of the regulated

subject matter permits no other conclusion or that the

Congress has unmistakably so ordained. Congressional reg-

ulation of one end of the stream of commerce does not,

ipso facto, oust all State regulation at the other end.

When a dispute arises over whether a given transaction

is within the scope of Federal or State regulatory author-

ity, the problem should not be approached negatively,

thus raising the possibility that a “no man’s land” will be

created. FPC v. Transcontinental Gas Pipe Line Corp.,

365 U.S. 1, 19, 5 L. Ed. 2d 377, 390, 81 S. Ct. 435

(1961).

In People v. Western Air Lines, Inc., 42 Cal. 2d 261,

268 P. 2d 723 (1954), the court upheld the authority of

the California Public Utilities Commission to regulate pas-

senger rates for air coach service between Los Angeles and

San Francisco. The court in construing the Civil Aero-

nautics Act of 1938, which is comparable to the Federal

Aviation Act of 1958, held that “it seems clear that Con-

gress has not sought to extend the economic regulation

of the board (CAB) to intrastate transportation of persons

or property other than mail; nor has it attempted to oust

the states of control over such rates.” 268 P. 2d 736

(26). An appeal from this decision was dismissed by the

United States Supreme Court “for want of a substantial ;

Federal question.” 348 U.S. 859, 99 L. Ed. 677, 75 S.

Ct. 87 (1954).

The Supreme Court has also upheld the power of the

States to tax the instrumentalities of airlines used in inte.

state commerce. Braniff Airways, Inc. v. Nebraska State

Board of Equalization & Assessment, 347 US. 590, 98

L. Ed. 967, 74 S. Ct. 757 (1954); Northwesi Airlines, Ing

v. Minnesota, 322 U.S. 292, 88 L. Ed. 1283, 64 S. Ct.

950, 153 ALR 245 (1944).

As the Nation grows in population, the role of the State

commissions in protecting the public interest in the iocal

aspects of air transportation grows in importance. Obviously

the State is far more concerned than the CAB in seeing

that local communities receive adequate intrastate air trans-

portation to the extent economically feasible.

We readily admit national supremacy in air transporta-

tion and that the State role must not interfere with the

accomplishment of national objectives as determined by

the Federal Aviation Act.

We admit that the final determination of public need

for air service must ultimately rest in its use by the trav-

eling public.

We admit that an airline should be authorized to elimi-

nate certain cities as intermediate points on a route where

the cost of serving such points would be too great in rela-

tion to the small volume of traffic.

We merely contend that State commissions should con-

tinue to be entrusted with the making of initial decisions

regarding matters of intrastate air transportation. The na-

ture of Allegheny’s Federal certificate in this case, which

permits great freedom in abandoning routes within Penn-

sylvania, indicates that the CAB is only secondarily inter-

ested in intrastate service. This is understandable when

we consider its immense duties involving interstate service.

If State regulation is ousted, public protection will be

diminished. In the absence of Pennsylvania PUC regula-

tion, Allegheny coul¢ easily decide to concentrate its equip-

ment in serving the most remunerative segments and aban-

don other segments showing a lower margin of profit.

ARGUMENT

Q THE UNITED STATES COURT OF APPEALS PROPER-

LY AFFIRMED, ON THE GROUNDS OF EQUITABLE

ABSTENTION, THE DISTRICT COURT'S DISMISSAL

OF ALLBEGHENY’S SUIT TO ENJOIN THE PENNSYL-

VANIA PUC FROM REQUIRING ALLEGHENY TO OB-

TAIN THE PENNSYLVANIA PUC’S APPROVAL PRIOR

TO DISCONTINUING DIRECT SERVICE OVER AN IN- :

TRASTATE ROUTE FOK WHICH ALLEGHENY HAD i

PREVIOUSLY OBTAINED FROM THE PUC A CERTIFI- ;

CATE OF PUBLIC CONVENIENCE.

In cases of this nature, there exists a well established

principle of our Federal-State system of government which

requires the exhaustion of State administrative and judi-

cial processes prior to the exercise of jurisdiction by the

Federal courts.

One of the leading cases is Public Utilities Commission

of the State of California v. United Air Lines, Inc., 346

U.S. 402, 98 L. Ed. 140, 74 S. Ct. 151 (1953), which

involved the issue of whether the California PUC or the

CAB has jurisdiction over the rates which United charges

for transportation between California mainland points and

Catalina Island. Since Catalina Island is part of California,

the PUC claimed jurisdiction.

The then Civil Aeronautics Act, 52 Stat. 973, gave the

CAB authority over rates “between places in the same

en :

PO EP ee Rt we 7

State of the United States through air space over any

place outside thereof.” United and the CAB both claimed

that flights from the mainland to Catalina (a distance of

30 miles) are over the “high seas” and therefore under

the exclusive jurisdiction of the CAB.

A three judge Federal district court upheld the conten.

tions of United and the CAB. 109 F. Supp. 13.

On appeal, this Court in a per curiam order “reversed

on authority of Public Service Commission vy. Wycoff,”

344 US. 237, 97 L. Ed. 291, 73 S. Ct. 236 (1952). The

Supreme Court in effect held that neither declaratory nor

injunctive relief should be granted to an air carrier in an

action seeking to prevent, on the ground that the CAB

has exclusive jurisdiction, a State PUC from exercising its

claimed jurisdiction over rates charged by the carrier for

transportation between points in the same State but over

the high seas.

The California PUC case presents the strongest possible

authority for application of the exhaustion doctrine since

it presented for decision a clear cut legal issue unencum-

bered by any unresolved question of fact. In contrast, the

case sub judice should ultimately tum on a factual record

being developed as to whether it is reasonable to require

direct air service between Harrisburg and Williamsport.

In the Wycoff case, which is the one this Court placed

sole reliance on in the California PUC case, a motor car-

rier sought in a Federal district court a declaratory judg-

ment that its transportation of motion picture film and

newsreels between points in Utah constituted an integral

part of interstate commerce, and an injunction against the

Utah Public Service Commission to prevent interference

with such transportation over routes authorized by the

_—

held the Utah Commission, the court of appeals reversed,

and this Court granted certiorari.

In its opinion, this Court quickly decided the inappro-

of injunctive relief and devoted the remainder

of its opinion in reaching the same conclusion as to de-

daratory relief. The Court stated in part that (344 US.

246, 97 L. Ed. 297 (11)):

Even when there is no incipient federal-state

conflict, the declaratory judgment procedure will

not be used to preempt and prejudge issues that

are committed for initial decision to an admin-

istrative body or special tribunal any more than

it will be used as a substitute for statutory

methods of review. It would not be tolerable,

for example, that declaratory judgments estab-

lish that an enterprise is not in interstate com-

merce in order to forestall proceedings by the

National Labor Relations Board, the Interstate

Commerce Commission or many agencies that

are authorized to try and decide such an issue

in the first instance. Cf. Myers v. Bethlehem

Shipbuilding Corp., 303 U.S. 41, 82 L. Ed. 638,

58 S. Ct. 459; Eccles v. Peoples Bank, 333 US.

426, 92 L. Ed. 784, 68 S. Ct. 641. See Cole-

grove v. Green, 328 US. 549, 90 L. Ed. 1432,

66 S. Ct. 1198. Responsibility for effective

functioning of the administrative process cannot

be thus transferred from the bodies in which

Congress has placed it to the courts.

But, as the declaratory proceeding is here in-

voked, it is even less appropriate because, in ad-

dition to foreclosing an administrative body, it

‘

aii

A i aed a Lk oi 1a ih i ee eh neh tas

OEE AONE LLL SAO GT EENGT LRA GF A Ay tt

is incompatible with a proper federal-state rela-

tionship. The carrier, being in some disagree-

ment with the State Commission, rushed into

federal court to get a declaration which either

is intended in ways not disclosed to tie the

Commission’s hands before it can act or it has

no purpose at all.

Declaratory proceedings in the federal courts

against state officials must be decided with re-

gard for the implications of our federal system.

State administrative bodies have the initial right

to reduce the general policies of state regulatory

statutes into concrete orders and the primary

right to take evidence and make findings of fact.

It is the state courts which have the first and

the last word as to the meaning of state statutes

and whether a particular order is within the leg-

islative terms of reference so as to make it the

action of the State. We have disapproved antic-

ipatory declarations as to state regulatory statutes,

even where the case originated in and was enter-

tained by courts of the State affected. Alsbama

State Federation of Labor v. McAdory, 325 US.

450, 89 L. Ed. 1725, 65 S. Ct. 1384. Anticipa-

tory judgment by a federal court to frustrate ac-

tion by a state agency is even less tolerable to

our federalism. Is the declaration contemplated

here to be res judicata, so that the Commission

cannot hear evidence and decide any matter for

itself? If so, the federal court has virtually lifted

the case out of the State Commission before it

could be heard. If not, the federal judgment

serves no useful purpose as a final determination

of rights.

The procedures of review usually afford ample

protection to a carrier whose federal rights are

actually invaded, and there are remedies for

threatened irreparable injuries. State courts are

bound equally with the federal courts by the

Federal Constitution and laws. Ultimate recourse

may be had to this Court by certiorari if a state

court has allegedly denied a federal right.

In Alabama Public Service Commission v. Southern Rail-

way Company, 341 U.S. 341, 95 L. Ed. 1002, 71 S. Ct.

762 (1951), the railroad was denied authority by the Ala-

bama PSC to discontinue passenger train service on the

ground that there was a public need for the service although

it was being operated at a loss. Alleging that irreparable

loss would result from the continued operation of the serv-

ice, the railroad sought and obtained an injunction from

a three-judge Federal district court against the enforcement

of Alabama law.

On appeal, this Court held that, although there was a

basis for Federal jurisdiction, the exercise of such jurisdic-

tion should, on considerations of comity, be withheld on

the ground that the State law provided for review of the

PSC’s order in the State courts and for stay pending such

review. This Court reasoned that [341 U.S. 345, 95 L.

Ed. 1006(3)):

Appellee conducts an interstate business over

the same tracks and by means of the same trains

involved in this case, and such interstate activi-

ties are regulated by the Federal Interstate Com-

merce Commission. 49 U.S.C., Secs. 1, ef seq.

But, it has long been held that this interblend-

ing of the interstate and intrastate operations

ial Ds th oes

a RENIN Wat

Pee eetge pte

aren rem rime egy

does not deprive the states of their primary au-

thority over intrastate transportation in the ab-

sence of congressional action supplementing that

authority. Minnesota Rate Cases (Simpson vy.

Shepard), 230 U.S. 352, 57 L. Ed. 1511, 33 S.

Ct. 729, 48 LRA NS 1151, Ann Cas 1916A 18

(1913). And Congress has since provided:

“That nothing in (the Interstate Commerce

Act) shall impair or affect the right of a State,

in the exercise of its police power, to require

just and reasonable freight and passenger service

for intrastate business, except insofar as such

requirement is inconsistent with any lawful order

of the (Interstate Commerce Commission).” 49

U.S.C., Sec. 1(17)a).

This Court has held that regulation of intra-

State railroad service is “primarily the concern

of the state.” North Carolina v. United States,

325 U.S. 507, 511, 89 L. Ed. 1760, 1765, 65

S. Ct. 1260 (1945) (rates); Palmer v. Massachu-

setts, 308 U.S. 79, 84 L. Ed. 93, 60 S. Ct. 34

(1939) (discontinuance of local service).

State and federal regulatory agencies have ex-

pressed concern over the chronic deficit arising

out of passenger train operations as a threat to

the financial security of the American railroads

and have recommended drastic action to mini-

mize the deficit including the discontinuance of

unpatronized and unprofitable service. However,

our concern in this case is limited to the propri-

ety of a federal court injunction enjoining en-

forcement of a state regulatory order.

The court below justificd the exercise of its

jurisdiction with a finding that continued opera-

tion of trains Nos. 7 and 8 would result in con-

fiscation of appellee’s property in violation of

the Due Process Clause of the Fourteenth Amend-

ment. In pursuing the threshold inquiry whether

a federal court should exercise jurisdiction in

this case, we find it unnecessary to consider is-

sues relating to the merits of appellee’s case, is-

sues which appellants did not see fit to raise in

this Court either in their Statement of Jurisdic-

tion or in their briefs. We do note that in pass-

ing upon similar contentions in the past, this

Court has recognized that review of an order

requiring performance of a particular utility serv-

ice, even at a pecuniary loss, is subject to con-

siderations quite different from those involved

when the return on the entire intrastate opera-

tions of a utility is drawn into question. Atlan-

tic Coast Line R. Co. v. North Carolina Corp.

Com., 206 U.S. 1, 2427, 51 L. Ed. 933, 944,

945, 27 S. Ct. 585, 11 Ann Cas 398 (1907).

The problems raised by the discontinuance of

trains Nos. 7 and 8 cannot be resolved alone

by reference to appellee’s loss in their operation

but depend more upon the predominantly local

factor of public need for the service rendered.

Chesapeake & Ohio R. Co. v. Public Service

Comm. of West Virginia, 242 U.S. 603, 608,

61 L. Ed. 520, 523, 37 S. Ct. 234 (1917).

The Alabama Commission, after a hearing held

in the area served, found a public need for the

service. The court below, hearing evidence de

novo, found that no public necessity exists in

Pe:

Ham vs .

Ce od cel

——

view of the increased use and availability of mo-

tor transportation. We do not attempt to resolve

these inconsistent findings of fact. We take note,

however, of the fact that a federal court has been

asked to intervene in resolving the essentially local

problem of balancing the loss to the railroad from

continued operation of trains Nos. 7 and 8 with

the public need for that service in Tuscumbia,

Decatur, Huntsville, Scottsboro, and other Ala-

bama communities directly affected.

Not only has Alabama established its Public

Service Commission to pass upon a proposed dis-

continuance of intrastate transportation service,

but it has also provided for appeal from any final

order of the Commission to the circuit court of

Montgomery County as a matter of right. Ala.

Code, 1940, tit. 48, Sec. 79. That court, after

a hearing on the record certified by the Commis-

sion, is empowered to set aside any Commission

order found to be contrary to the substantial

weight of the evidence or erroneous as a matter

of law, id. Sec. 82, and ‘its decision may be ap-

pealed to the Alabama Supreme Court. /d., Sec.

90. Statutory appeal from an order of the Com-

mission is an integral part of the regulatory pro-

cess under the Alabama Code. Appeals, concen-

trated in one circuit court, are “supervisory in

character.” Avery Freight Lines, Inc. v. White,

245 Ala. 618, 622, 623, 18 So2d 394, 398,

154 ALR 732 (1944). The Supreme Court of

Alabama has held that it will review an order

of the Commission as if appealed directly to it,

Alabama Public Service Com. v. Nunis, 252 Ala.

30, 34, 39 So2d 409, 412 (1949), and that

judicial review calls for an independent judgment

as to both law and facts when a denial of due

process is asserted. Alabama Public Service Com.

y, Southern Bell Tel. & Tel. Co., 253 Ala. 1, 11,

12, 42 So2d 655, 662 (1949). ... Appellee

complains of irreparable injury resulting from

the Commission order pending judicial review,

but has not invoked the protective powers of

the Alabama courts to direct the stay or super-

sedeas of a Commission order pending appeal.

Ala. Code, 1940, tit. 48, Secs. 81, 84. Appel-

lee has not shown that the Alabama procedure

for review of Commission orders is in any way

inadequate to preserve for ultimate review in

this Court any federal questions arising out of

such orders.

As adequate state court review of an adminis-

trative order based upon predominantly local

factors is available to appellee, intervention of

a federal court is not necessary for the protec-

tion of federal rights. Equitable relief may be

granted only when the District Court, in its

sound discretion exercised with the “‘scrupulous

regard for the rightful independence of state

governments whic’ should at all times actuate

the federal courts,” is convinced that the as-

serted federal right cannot be preserved except

by granting the “extraordinary relief of an in-

junction in the federal courts.” Considering

that “(f)ew public interests have a higher claim

upon the discretion of a federal chancellor than

the avoidance of needless friction with State

policies,” the usual rule of comity must govern

the exercise of equitable jurisdiction by the

SDN AS ON RCT

SPAT

Ee ee eee I eI LT See Ee RIOR oe |

District Court in this case. Whatever rights appel-

lee may have are to be pursued through the state

courts. Burford v. Sun Oil Co., 319 U.S. 315, 87

L. Ed. 1424, 63 S. Ct. 1098 (1943); Railroad Com-

mission of Texas v. Rowan & Nichols Oil Co., 311

U.S. 570, 577, 85 L. Ed. 358, 362, 61 S. Ct. 343

(1941); Railroad Commission of Texas v. Rowan

& Nichols Oil Co., 310 U.S. 573, 84 L. Ed. 1368,

60 S. Ct. 1021, as amended, 311 U.S. 614, 615, 85

L. Ed. 390, 391, 61 S. Ct. 66 (1940)... ..

As this Court held in Great Lakes Dredge &

Dock Co. v. Huffman, 319 U.S. 293, 297, 298,

87 L. Ed. 1407, 1410, 1411, 63 S. Ct. 1070

(1943): ;

“This withholding of extraordinary relief by

courts having authority to give it is not a denial

of the jurisdiction which Congress has conferred

on the federal courts. ... On the contrary, it

is but a recognition . . . that a federal court of

equity . . . should stay its hand in the public

interest when it reasonably appears that private

interests will not suffer. . . .

“It is in the public interest that federal courts

of equity should exercise their discretionary

power to grant or withhold relief so as to avoid

needless obstruction of the domestic policy of

the states.”

The rationale of the California PUC, Wycoff and Ala-

bama PSC cases is also reflected in: Federal Power Com-

mission v. Arkansas Power & Light Co., 330 U.S. 802,

91 L. Ed. 1261, 67 S. Ct. 963; Endicott Johnson Corp.

v. Perkins, 317 U.S. 501, 87 L. Ed. 424, 63 S. Ct. 339;

Macauley v. Waterman S. S. Corp., 327 U.S. 540, 90 L.

es vn ae

Ed. 839, 66 S. Ct. 712; Rochester Tel. Corp. v. United

States, 307 U.S. 125, 83 L. Ed. 1147, 59 S. Ct. 754;

Matthews v. Rodgers, 284 U.S. 521, 525, 76 L. Ed. 447,

451, 52 S. Ct. 217 (1932); Pennsylvania v. Williams, 294

U.S. 176, 185, 79 L. Ed. 841, 847, 55 S. Ct. 380, 96

ALR 1166 (1935); Railroad Commission of Texas v. Pull-

man Co., 312 U.S. 496, 500, 85 L. Ed. 971, 974, 61 S.

Ct. 643 (1941); Natural Gas Pipeline Co. v. Slattery, 302

U.S. 300, 82 L. Ed. 276, 281 (4, 5), 58 S. Ct. 199 (1937);

Atlas Life Ins. Co. v. W. I. Southern, Inc., 306 U.S. 563,

83 L. Ed. 987, 59 S. Ct. 657; Shipman v. Du Pre, 339

U.S. 321, 94 L. Ed. 877, 70 S. Ct. 640; Watson v. Buck,

313 U.S. 387, 85 L. Ed. 1416, 61 S. Ct. 962, 136 ALR

1426 (1941); Chicago v. Fieldcrest Dairies, 316 U.S. 168,

86 L. Ed. 1355, 62 S. Ct. 986; A.F. of L. Metal Trades

Dept. v. Watson, 327 U.S. 582, 90 L. Ed. 873, 66 S. Ct.

761; Spector Motor Service v. McLaughlin, 323 U.S. 101,

89 L. Ed. 101, 65 S. Ct. 152; Illinois Commerce Commis-

sion v. Thomson, 318 U.S. 675, 686, 87 L. Ed. 1075,

1082(5) (1943); Gilchrist v. Interborough Rapid Transit

Co., 279 U.S. 159, 208, 209, 73 L. Ed. 652, 664, 665,

49 S. Ct. 282 (1929); Porter v. Investors Syndicate, 286

U.S. 461, 76 L. Ed. 1226, 52 S. Ct. 617, 287 U.S. 346,

717 L. Ed. 354, 53 S. Ct. 132 (1931); Central Kentucky

Natural Gas Co. v. Railroad Commission, 290 U.S. 264,

271, 78 L. Ed. 307, 312, 54 S. Ct. 154; Di Giovanni y.

Camden F. Ins. Asso., 296 U.S. 64, 80 L. Ed. 47, 56 S.

Ct. 1; Thompson v. Magnolia Petroleum Co., 309 U.S.

478, 84 L. Ed. 876, 60 S. Ct. 628; Henderson Water Com-

pany v. Corporation Commission of the State of North

Carolina, 269 U.S. 278, 70 L. Ed. 273, 46 S. Ct. 112

(1925); St. Louis-San Francisco Railway Company y. Ala-

bama Public Service Commission, 279 U.S. 560, 73 L. Ed.

843, 49 S. Ct. 383 (1929); Lawrence v. St. Louis-San

}

Francisco Railway Company, 274 U.S. 588, 71 L. Ed. 1219

(1927); Machine Company y. State Corporation Commis-

sion of Virginia, 236 U.S. 699, 59 L. Ed. 797 (1915);

Grand Trunk Railway Company of Canada y. Michigan

Railroad Commission, 231 U.S. 457, 58 L. Ed. 310, 34

S. Ct. 152 (1913).

Pennsylvania law provides adequate remedies.

The Pennsylvania PUC is empowered to adopt regula-

tions and orders and “to#éscind or modify any sict = gu-

lations or orders.” Public Utility Law, Sec. 902. See

also Sec. 1007. :

Accordingly, Allegheny may seek to have the penalty

rescinded and its certificate amended to reflect only eco-

nomically viable operations by applying to the Pennsyl-

vania PUC.

Judicial review of PUC orders is provided by Article XI

of the Public Utility Law. The granting of supersedeas is

authorized pending’ review. Sec. 1103.

The delay and expense, which will occur to Allegheny

in the exhaustion of its well-defined State remedies, are

of its own making. It chose to ignore these remedies in

the face of a long line of cases applying the doctrine of

abstention in Federal-State relations.

Allegheny stands here in the awkward posture of the

proverbial child who, having murdered his mother and

father, begs the court for mercy on the ground that he

is an orphan.

Allegheny’s Petition for a Writ of Certiorari, in substance

contends that the abstention doctrine does not apply to

a case involving a Federal preemption question.

’

The distinction Allegheny attempts to draw in applying the

abstention doctrine between a Federal preemption question

and other Federal constitutional questions is a distinction with-

out a difference. The Federal preemption question involves

construction of a Federal statute whereas a Federal constitu-

tional question involves construction of a Federal constitution-

al provision. Both involve alleged conflicts with State statutes.

In addition, Allegheny ignores the most recent United

States Supreme Court case applying the abstention doctrine.

In Lake Carriers’ Assn. v. MacMullen, 406 U.S. 498, 32 L.

Ed. 2d 257, 40 U.S. Law Week 4569 (May 30, 1972), the

United States Supreme Court held that abstention was prop-

er in a case Challenging the validity of the Michigan Water-

craft Pollution Control Act. Lake Carriers’ Assn. v. MacMul-

len, supra, 32 L. Ed. 2d at 264, 40 U.S. Law Week at 4571

(May 30, 1972) did involve a claim“. . . that the Michigan

statute conflicts with or is pre-empted by federal law, prima-

rily the Federal Water Pollution Control Act as amended

by the Water Quality Improvement Act of 1970, and is

therefore invalid under the Supremacy Clause.”

Allegheny also ignores the case of Public Utilities Com-

mission of the State of California v. United Air Lines, Inc.,

supra, This case also clearly involved a preemption claim.

The case is extensively discussed in this brief, supra.

The cases relied upon by Allegheny in its Petition for

a Writ of Certiorari are: Capital Service, Inc. v. NLRB,

347 U.S. 501, 98 L. Ed. 888 (1954); Public Utilities Com-

mission v. Gas Co., 317 U.S. 456, 87 L. Ed. 396 (1943);

City of Chicago v. Atchison, Topeka & Santa Fe Railway

Co., 357 U.S. 77 (1958); Chemical Specialties Manufac-

turers Assoc., Inc. v. Lowery, 452 F.2d 431 (2d Cir. 1971).

These cases did all hold “tno abstention” in a given fact

situation, but the instant case is distinguishable from these

cases. The factors relied upon by Judge Rosenn were not

present in these cases.

ub dhtind Gen Ge Geena - & certifi.

cate of public convenience as an intrastate carrier to trans

port passengers between certain cities in Pennsylvania, in-

cluding Harrisburg and Williamsport.” (465 F.2d at 243,

Allegheny’s Petition, App., p. 24a.) Judge Rosenn stated:

Stripped of the efforts to drape this case with

federal questions, the facts show that Allegheny,

without any attempt on the part of the PUC to

extend its regulatory powers over it, made a

written application to the PUC for a certificate

of public convenience as an intrastate carrier to

transport passengers between certain cities in Penn-

sylvania, including Harrisburg and Williamsport.

The service it offered to provide was found by

that Commission, after a hearing and an oppor-

tunity for affected parties to be heard, to be

necessary to the public interest. A certificate

of public convenience was granted and it is now

held by Allegheny. Under the rules of the Com-

mission, all or part of this service may be dis-

continued upon application by the carrier to the

PUC and that agency’s approval. Additionally,

matters such as this which go to the jurisdiction

of the PUC may be tested in special proceedings

before the Pennsylvania Commonwealth Court.

66 P.S. 1441. The thrust of these Pennsylvania

rules and laws is that, once certified, a carrier

must test these issues before service is discon-

tinued. (465 F.2d at 243, Allegheny’s Petition,

App., p. 24a.)

Clearly, a case such as the instant case, where the airline

has sought and obtained a certificate of public convenience

is distinguishable from cases where no such certificate was

sought and obtained.

Additional factors relied upon by Judge Rosenn as re-

quiring abstention were:

(1) The State’s interests in local airline service are sig-

nificant. Airports, runways, and related facilities often re-

quire large expenditures at considerable community sacri-

fice and effort. In addition, the communities involved

may have come to depend on the direct air service, and

there is a presumption under Pennsylvania law that certif-

icated public utility service is needed and vital, until a

public utility proves otherwise (465 F.2d at 244, Alle-

. gheny’s Petition, App., p. 25a).

(2) Allegheny presented no evidence suggesting that it

would have been harmed by having to resort to the Penn-

sylvania PUC or State courts before discontinuing the serv-

ice (/d.).

(3) Reliance by local communities upon the services

provided by Allegheny would be reasonable in light of the

airline’s action in obtaining from the Pennsylvania PUC a

certificate to transport persons and property between points

in Pennsylvania (465 F.2d at 244, 245, Allegheny’s Peti-

tion, App., p. 26a).

(4) The danger of Federal-State friction is intensified

by Allegheny’s request for a perpetual injunction which |

would enjoin the Pennsylvania PUC from “any action or

proceeding for any violation of the laws of . . . Pennsyl-

vania based upon action by Allegheny in changing its pat-

terns of service.” If this relief were granted, the airline,

while not being subject to State regulation, would main-

tain the benefits that accrue to holders of State public

utility certificates (465 F.2d at 245, Allegheny’s Petition,

App., p. 27a).

In addition to the factors relied upon by this Court

there is another factor supporting equitable abstention.

This factor is that the State law is unsettled in this case,

and a determination by State courts may make a deter-

mination on the Federal preemption issue unnecessary.

The NARUC is aware that the Court of Appeals in the

instant case stated:

In what was basically an alternative absten-

tion holding, the district court noted that “the

dispute involves an unsettled question of state

law, i.c., the extent of the PUC’s authority to

regulate intrastate air rights granted to an inter-

state air carrier.” Allegheny Airlines, Inc. y.

PUC, 319 F. Supp. 407, 413 (E.D. Pa. 1970).

Since we find that the district court was correct

in abstaining for the primary reasons it devel-

oped, we find it unnecessary to decide whether

it correctly concluded there existed unclear state

law. We note, however, that in our view, the

PUC’s authority to take the measures described

above seems clear. 66 P.S. Sec. 1122. (465

F.2d at 242, n. 3, Allegheny’s Petition, pp. 2la

& 22a, n. 3). (Emphasis supplied.)

The NARUC asserts that the State law is unsettled.

The Statute, 66 Pa. Code, Sec. 1122(b) provides:

Upon the application of any public utility

and the approval of such application by the

commission, evidenced by its certificate of pub-

lic convenience first had and obtained, and upon

compliance with existing laws, and not other-

wise, it shall be lawful:

(b) For any public utility to abandon or sur-

render, in whole or in part, any service: Provid-

ed, That the provisions of this paragraph shall

not apply to discontinuance of service to a pa-

tron for nonpayment of a bill, or upon request

of a patron.

The Pennsylvania courts have never passed upon the

construction of this Statute as it relates to intrastate air

transportation. As was stated by the District Court:

Second, the dispute involves an unsettled ques-

tion of state law, iLe., the extent of the PUC's

authority to regulate intrastate air rights granted

to an interstate air carrier. The parties have cited

no Pennsylvania authorities defining the limits of

the PUC’s authority over rights granted to such

carriers. Until the state courts speak to the ques-

tion we cannot know whether they will interpret

the PUC’s authority under the state act narrowly

or broadly. In making their determination as

to the scope of the PUC’s authority, the state

courts are bound, just as the federal courts are,

to interpret and apply the federal Constitution

Ree

and laws and all of the arguments which Alle-

gheny has sought to raise here under the inter-

state commerce and supremacy clauses of the

federal Constitution must be given full consider-

ation by the state courts... . (319 F. Supp.

at 413, Allegheny’s Petition, App. pp. 10a &

11a).

Certainly, the Pennsylvania courts should be permitted

to interpret the statute prior to a Federal court’s ruling

on the preemption question. This was made clear by this

Court in Lake Carriers’ Assn. y. MacMullen, supra, 32 1.

Ed. 2d at 270, 40 U.S. Law Week at 4573, as follows:

We do not know, of course, how far Michi-

gan courts will go in interpreting the require-

ments of the state Watercraft Pollution Control

Act in light of the federal Water Quality Im-

provement Act and the constraints of the United

States Constitution. But we are satisfied that

authoritative resolution of the ambiguities in the

Michigan law is sufficiently likely to avoid or

significantly modify the federal questions appel-

lants raise to warrant abstention, particularly in

view of the absence of countervailing considera-

tions that we have found compelling in prior

decisions. See, e.g, Harman y. Forssenius, supra,

at 537, 14 L. Ed. 2d at 56; Baggett vy. Bullitt,

377 U.S. 360, 378-379, 12 L. Ed. 2d 377, 389,

84 S. Ct. 1316 (1964).

Accordingly, the United States Court of Appeals proper-

ly affirmed, on the grounds of equitable abstention, the

Federal District Court’s dismissal of Allegheny’s suit.

THE FEDERAL AVIATION ACT OF 1958 DOES NOT

PREVENT PENNSYLVANIA FROM ADMINISTERING

A REASONABLE REGULATORY PROGRAM TO PRO-

TECT THE PUBLIC INTEREST OF TRAVELERS USING

INTRASTATE AIR TRANSPORTATION.

Allegheny asserts that, “For the purpose of judging the

propriety of abstention in this case, it must be assumed

that Congress intended to preempt state regulation of

scheduling by a federally certificated air carrier.” (Alle-

gheny’s Petition, p. 6.) No authority is cited for this as-

sertion and there is no authority for this assertion. Clear-

ly no such assumption can be made in the present case.

In addition, Allegheny asserts that “. . . there is a di-

rect conflict in federal and state regulatory authority.”

(Allegheny’s Petition, p. 10.) This assertion is contrary

to the findings of the Court of Appeals (465 F.2d at 245,

Allegheny’s Petition, App., pp. 27a and 28a) and is not

supported by the facts of this case.

Congress, in enacting the Federal Aviation Act of 1958

(49 U.S.C.A., Sec. 1301 et seg.), clearly did not intend

to completely preempt the regulation of air transportation.

CAB domestic jurisdiction in the economic sense is prima-

tily couched in terms of “interstate air commerce” and

“interstate air transportation.”! Moreover, the CAB is

149 US.C.A., Sec. 1301 (20), defining “interstate air commerce,”

and 49 US.C.A., Sec. 1301 (21), defining “interstate air transporta-

tion,” tie the definitions to the crossing of a State line. The defi-

nitions of “air transportation” [Sec. 1301(10)] and of “air com-

merce [Sec. 1301(4)] are both tied to interstate movement and the

transportation of mail, and the latter goes further to include opera-

tions “within the limits of any Federal airway” or “which directly ;

ge (Continued) ;

REET RY “ Serre meray

i ak

ee See oe

_ =a

expressly “empowered to confer with or to hold joint hear.

ings with any State aeronautical agency, or other State agen.

cy, in connection with any matter arising under this act

within its jurisdiction. .. .” 49 U.S.C.A., Sec. 1324(b)

Obviously, this is not the language of total Federal pre.

emption.

The Congressional Propensity to divide the interstate and

intrastate characteristics of a national industry, and to as.

sign the former to Federal regulation and to reserve the

latter for State regulation, is consistently reflected in many

other areas. More specifically, this regulatory dichotomy

is applied to electric companies under the Federal Power

Act, to gas companies under the Natural Gas Act, to

railroads and motor carriers under the Interstate Commence

commerce.” These definitions assume jurisdictional significance in

Sections 1302, 1371, 1373 and 1374 of 49 US.C.A., which concem

matters of “public interest,” certificates of public convenience and

necessity, tariffs, and rates, respectively.

216 US.CA., Sec. 791, et seq., with particular reference to Secs.

824(b\c), 824a(f), 8240(f), and 824h. In general, the Federal Power

ice, and the State commissions regulate retail rates and related facili

ties and service.

315 US.CA., Sec. 717, et seq., with particular reference to Secs.

717(bX(c), 717a(6,7), and 717p. In general, the Federal Power Com-

mission regulates “interstate” wholesale rates and related facilities

and service, and the State commissions regulate “intrastate” whole-

sale and all retail rates and related facilities and service. See also

Secs. 3, 4 and 5 of the Natural Gas Pipeline Safety Act of 1968

(49 US.CA., Secs. 1672-1674) which apply an analogous regulatory

split to the national gas safety program.

——

act,’ and to telephone and telegraph companies under the

Communications Act.

The Federal Aviation Act is the latest offspring in this

family of legislation and bears unmistakably the genetic

qualities of Federal-State regulatory alliance.

Legislative intent is further reflected by the failure of

Congress to enact bills proposing to extend Federal eco-

nomic regulation to include intrastate operations of air

carriers.

We believe Congress was wise in permitting the forma-

tion of this Federal-State alliance because its proper func-

tioning affords the American people the maximum benefits

449 US.C.A., Sec. 1, et seq., with particular reference to Secs.

1(2), 1(17Ma), 1(22), 13(23), 13a(2), 302(aXb), 303(10(20), and

305. In general, the State commissions regulate the intrastate busi-

ness of railroads and motor carriers. See also Secs. 205 and 206

of the Federal Railroad Safety Act of 1970 (Public Law 91-458)

which permits a State: to adopt more stringent safety regulations

than the Federal safety regulations “when necessary to eliminate or

reduce an essentially local safety hazard” created by interstate rail-

road operations; and to otherwise conduct a comprehensive safety

program covering substantially all interstate railroad operations with-

in the State.

547 US.C.A., Sec. 151 et seq., with particular reference to Secs.

152, 153(eMh), 214(aX{1-3), 221(b) and 410. The Federal Commun-

ications Commission regulates interstate message toll calls and local

exchange calls even in instances where the boundaries of the exchange

area overlap State lines.

o78th Congress, S. 246, H.R. 1012, H.R. 3420, H.R. 4845, H.R.

4848; 79th Congress, S. 541, H.R. 674, H.R. 3383; 80th Congress,

H.R. 2337; 8ist Congress, S. 423, S. 445, S. 2435. See also: 1944

NARUC Annual Convention Proceedings 221; 1945 id. 299; 1946

id. 210; 1947 id. 128; 1948 id. 69; 1949 id. 166; 1950 id. 106.

}

i an ee Bei

—

from air transportation. Obviously, a State agency, such

as the Pennsylvania PUC, is far more concerned with the

adequacy of air transportation among the smaller commun-

ities in the State than is the CAB. In contrast, the CAB

is far more concerned with the adequacy of a national air

transportation system than is any one State. In short, the

two regulatory interests form a partnership complementing

each other in advancing the public welfare.

Out of interpretations of the above Federal statutes,

and out of other incidents of our Federalism, has evolved

a line of decisions defining the interface between Federal

and State jurisdiction.

In California v. Thompson, 313 U.S. 109, 85 L. Ed.

1219 (1941), this Court held that a State license statute

regulating transportation agents engaged in negotiating for

the transportation of passengers in motor vehicles is not,

as applied to interstate passengers, a violation of the Com-

merce Clause where the Congress has not, either in the

Federal Motor Carrier Act or otherwise, undertaken to

exercise its power of regulation over such interstate activities,

A unanimous Court, speaking through Justice Harlan

Fiske Stone, outlined the broad limits of permissible State

action under the Commerce Clause in the following terms

(313 U.S. 113, 2d par., 85 L. Ed. 2d 1221 (2)):

As this Court has often had occasion to point

out, the Commerce Clause, in conferring on Con-

gress power to regulate commerce, did not whol-

ly withdraw from the states the power to regu-

late matters of local concern with respect to which

Congress has not exercised its power, even though

the regulation affects interstate commerce. Ever

since Wilson v. Black Bird Creek Marsh Co., 2 Pet

—

(US) 245, 7 L. Ed. 412, and Cooley v. Port

Wardens, 12 How (US) 299, 13 L. Ed. 996, it

has been recognized that there are matters of

local concern, the regulation of which unavoida-

bly involves some regulation of interstate com-

merce, but which because of their local charac-

ter and their number and diversity may never

be adequately dealt with by Congress. Because

of their local character, also, there is wide scope

of local regulation without impairing the uni-

formity of control of the national commerce in

matters of national concern and without mater- :

ially obstructing the free flow of commerce which

were the principal objects sought to be secured

by the Commerce Clause. Not withstanding the

Commerce Clause, such regulation in the absence

of Congressional action has, for the most part,

been left to the states by the decisions of this

Court, subject only to other applicable constitu-

tional restraints. See cases collected in Di Santo ;

v. Pennsylvania, supra (273 U.S. 40, 71 L. Ed. :

528, 47 S. Ct. 267). :

A state may license trainmen engaged in inter-

state commerce in order to insure their skill and

fitness. Smith v. Alabama, 124 U.S. 465, 31 L.

Ed. 508, 8 S. Ct. 564, 1 Inters. Com. Rep. 804;

Nashville, C. & St. L. R. Co. v. Alabama, 128

U.S. 96, 32 L. Ed. 352, 9 S. Ct. 28, 2 Inters.

Com. Rep. 238. It may define the size of crews

manning interstate trains. Chicago, R. I. & P.

R. Co. v. Arkansas, 219 U.S. 453, 55 L. Ed.

290, 31 S. Ct. 275; Missouri P. R. Co. v. Nor-

wood, 283 U.S. 249, 75 L. Ed. 1010, 51 S. Ct.

458, 30 NCCA 639, and prescribe regulations

—

for payment of their wages. Erie R. Co. v. Wik

liams, 233 U.S. 685, 58 L. Ed. 1155, 34S. Ct.

761, 51 LRA (NS) 1097. It may require inter-

State passenger cars to be heated and guard posts

to be placed on bridges of an interstate railroad.

New York, N. H. & H. R. Co. v. New York,

165 U.S. 628, 41 L. Ed. 853, 16 S. Ct. 418.

It may limit the speed of interstate trains within

city limits. Erb v. Morasch, 177 US. 584, 44

L. Ed. 897, 20 S. Ct. 819. It may require an

interstate railroad to eliminate grade crossings.

Erie R. Co. v. Puilic Utility Comrs., 254 U.S.

394, 409, 412, 65 L. Ed. 322, 333, 334, 41 S.

Ct. 169, PURI921C 143. It may pass local

quarantine laws applicable to merchandise mov-

ing in interstate commerce as a means of pro-

tecting local health. Morgans L. & T. R. &S.

S. Co. v. Louisiana, 118 U.S. 455, 30 L. Ed.

237, 6 S. Ct. 1114; Compagnie Francaise de Na-

vigation a Vapeur v. State Bd. of Health, 186

U.S. 380, 46 L. Ed. 1209, 22 S. Ct. 811. It

may regulate and protect the safe and conven-

ient use of its harbors and navigable waterways

unless there is conflict with some act of Con-

gress. Wilson v. Black Bird Creek Marsh Co.,

2 Pet. (U.S.) 245, 7 L. Ed. 412, supra; see Clyde

Mallory Lines v. Alabama, 296 U.S. 261, 267,

80 L. Ed. 215, 219, 56 S. Ct. 194. It may reg-

ulate pilots and pilotage in its harbors. Cooley

v. Port Wardens, 12 How. (U.S.) 299, 13 L. Ed.

996, supra. Where, as here, Congress has not

entered the field, a state may pass inspection

laws and regulations applicable to articles of in-

terstate commerce designed to safeguard the

inhabitants of the state from fraud, provided

only that the regulation neither discriminates

against nor substantially obstructs the commerce.

Turner v. Maryland, 107 U.S. 38, 27 L. Ed. 370,

2 S. Ct. 44; Plumley v. Massachusetts, 155 U.S.

461, 39 L. Ed. 223, 15 S. Ct. 154, 5 Inters.

Com. Rep. 590; Patapsco Guano Co. v. Board

of Agriculture, 171 U.S. 345, 357, 358, 43 L.

Ed. 191, 195-6, 18 S. Ct. 862; Savage v. Jones,

225 U.S. 501, 56 L. Ed. 1182, 32 S. Ct. 715;

see also Minnesota Rate Cases (Simpson v. She-

pard), 230 U.S. 352, 398, 412, 57 L. Ed. 1511,

1540, 1547, 33 S. Ct. 729, 48 LRA (NS) 1151,

Ann. Cas. 1916A 18, and cases cited; South Car-

olina State Highway Dept. v. Barnwell Bros.,

303 U.S. 177, 185, 191, 82 L. Ed. 734, 738,

742, 58 S. Ct. 510, and cases cited. ...

.. . It has uniformly held that in the absence

of pertinent Congressional legislation there is

constitutional power in the states to regulate

interstate commerce by motor vehicle wherever

it affects the safety of the public or the safety

and convenient use of its highways, provided

only that the regulation does not in any other

respect unnecessarily obstruct interstate com-

merce. Continental Baking Co. v. Woodring,

286 U.S. 352, 371, 76 L. Ed. 1155, 1166, 52

S. Ct. 595, 81 ALR 1402; Bradley v. Public

Utilities Commission, 289 U.S. 92, 95, 77 L.

Ed. 1053, 1056, 53 S. Ct. 577, 85 ALR 1131;

see South Carolina State Highway Dept. v. Barn-

well Bros., 303 U.S. 177, 82 L. Ed. 734, 58

S. Ct. 510, supra, and cases cited; H. P. Welch

Co. v. New Hampshire, 306 U.S. 79, 83,

SIENA UES OE TRE ENGIN NE ne MRCS Bir gy Ur Sata

83 L. Ed. 500, 504, 59 S. Ct. 438; Eichholz y.

Public Serv, Commission, 306 U.S. 268, 83 L.

Ed. 641, 59 S. Ct. 532; Maurer v. Hamilton,

309 U.S. 598, 603, 84 L. Ed. 969, 974, 60 §.

Ct. 726; and see Ziffrin, Inc. v. Reeves, 308

U.S. 132, 84 L. Ed. 128, 60 S. Ct. 163.

If there is authority in the state, in the exer-

cise of its police power, to adopt such regula-

tions affecting interstate transportation, it must

be deemed to possess the power to regulate the

negotiations for such transportation where they

affect matters of local concern which are in other

respects within state regulatory power, and where

the regulation does not infringe the national in-

terest in maintaining the free flow of commerce

and in preserving uniformity in the regulation

of the commerce in matters of national concern.

See Hartford Acci. & Indem. Co. v. Illinois, 298

U.S. 155, 80 L. Ed. 1099, 56 S. Ct. 685.

This Court held in Panhandle Eastern Pipe Line Com-

pany v. Public Service Commission of Indiana, 332 US.

507, 92 L. Ed. 128, 68 S. Ct. 190, that neither the Natur.

al Gas Act, nor the Commerce Clause of its own force,

precluded State regulation of rates for natural gas sold by

an interstate pipeline to local consumers. See also: Penn-

sylvania Gas Co. v. Public Service Commission, 252 US.

23, 64 L. Ed. 434, 40 S. Ct. 279 (1920).

In Cities Service Gas Company v. Peerless Oil & Gas

Company, 340 U.S. 179, 95 L. Ed. 190 (1950), which

upheld an order of the Oklahoma State Corporation Com-

mission fixing the minimum well-head price on gas enter-

ing interstate commerce, a unanimous Court observed that:

The Commerce Clause gives to the Congress a

power over interstate commerce which is both

paramount and broad in scope. But due regard

for state legislative functions has long required

that this power be treated as not exclusive. Cooley

vy. Port Wardens (U.S.) 12 How. 299, 13 L. Ed.

996 (1851). It is now well settied that a state

may regulate matters of local concern over which

federal authority has not been exercised, even

though the regulation has some impact on inter-

state commerce. Parker v. Brown, 317 U.S. 341,

87 L. Ed. 315, 63 S. Ct. 307 (1943); Milk Con-

trol Board v. Eisenberg Farm Products, 306 U.S.

346, 83 L. Ed. 752, 59 S. Ct. 528 (1939); South

Carolina Highway Dept. v. Barnwell Bros., 303

U.S. 177, 82 L. Ed. 734, 58 S. Ct. 510 (1938).

The only requirements consistently recognized

have been that the regulation does not discrimi-

nate against or place an embargo on interstate

commerce, that it safeguard an obvious state in-

terest, and that the local interest at stake out-

weigh whatever national interest there might be

in the prevention of state restrictions. Nor should

we lightly translate the quiescence of federal

power into an affirmation that the national in-

terest lies in complete freedom from regulation.

South Carolina Highway Dept. v. Barnwell Bros.,

(U.S.), supra. Compare Leisy v. Hardin, 135

U.S. 100, 34 L. Ed. 128 (1890), decided prior

to the Wilson Act (Aug. 8, 1890) 26 Stat. 313,

ch. 728, with Re Rahrer (Wilkerson v. Rahrer),

140 U.S. 545, 35 L. Ed. 572, 11 S. Ct. 865

(1891), decided thereafter.

FET Ue ee er en: LABEL RD ONTRR ee PROT soil

One of the leading cases in the field is Head ». New

Mexico Board of Examiners in Optometry (1963) 374 yg

424, 10 L. Ed. 24 983, 83 S. Ct. 1759. This case in-

volved a New Mexico statute which prohibits advertising

by the quotation of prices or terms for the sale of eye.

glasses. Acting under the statute, a trial court enjoined

@ newspaper and a radio station in Hobbs, New

serving an area much of which lies in Texas, from accept.

ing, publishing or broadcasting a Texas optometrist’s ad.

vertising which violated the New Mexico statute.

The New Mexico Supreme Court affirmed the lower

court's order on the grounds that the injunction did not

unlawfully burden interstate commerce and that the States

jurisdiction has not been ousted by Federal legislation.

70 NM 90, 370 P2d 811.

Justice Brennan wrote a concurring opinion reaching the

same conclusion as the majority. Justice Douglas concurred

in the result.

The radio station contended that the New Mexico stat-

ute constituted an undue burden on interstate commerce

and that the regulation of advertising by radio has been

preempted by the Communications Act of 1934. The ma-

jority opinion responded to these contentions by stating

that (374 U.S. 427, 10 L. Ed. 24 987):

Without doubt, the appellants’ radio station

and newspaper are engaged in interstate com-

merce, and the injunction in this case has u>-

questionably imposed some restraint upon that

commerce. But these facts alone do not add

up to an unconstitutional burden on interstate

commerce. As we said in Huron Portland Ce-

ment v. Detroit, 362 US 440, 4 L. Ed. 2d 852,

80 S. Ct. 813, 78 ALR2d 1294, upholding the

application of a Detroit smoke abatement ordi-

nance to ships engaged in interstate and inter-

national commerce: “In determining whether

the State has imposed an undue burden on in-

terstate commerce, it must be borne in mind

that the Constitution when ‘conferring upon

Congress the regulation of commerce, . . . never

intended to cut the States off from legislating

on all subjects relating to the health, life, and

safety of their citizens, though the legislation

might indirectly affect the commerce of the

country. Legislation, in a great variety of ways,

may affect commerce and persons engaged in

it without constituting a regulation of it, within

the meaning of the Constitution.’ Sheriock v.

Alling, 93 U.S. 99, 103; Austin v. Tennessee,

179 US. 343; Louisville & Nashville R. Co. ¥.

Kentucky, 183 U.S. 503; The Minnesota Rate

Cases, 230 U.S. 352; Boston & Maine R. Co. v.

Armburg, 285 U.S. 234; Collins v. American Bus

Lines, Inc., 350 U.S. 528.” 362 US., at 443, 444.

Like the smoke abatement ordinance in the

Huron case, the statute here involved is a meas-

ure directly addressed to protection of the pub-

lic health, and the statute thus falls within the

most traditional concept of what is compendi-

ously known as the police power. The legiti-

macy of State legislation in this precise area has

been expressly established. Williamson v. Lee

Optical of Okla, Inc., 348 US. 483, 99 L. Ea.

563, 75 S. Ct. 461. A State law may not be

struck down on the mere showing that its ad-

munistration affects interstate commerce in some

way. “State regulation, based on the police

power, which does not discriminate against inter-

state commerce or operate to disrupt its required

uniformity, may constitutionally stand.” Huron

Portland Cement Co y. Detroit, supra (362 US.

at 448).

It has not been suggested that the statute,

applicable alike to “any person” within the

State of New Mexico, discriminates against inter-

state commerce as such. Nor can we find that

the legislation impinges upon an area of inter-

state commerce which by its nature requires

uniformity of regulation. The appellants have

pointed to no regulations of other States impos

ing conflicting duties, nor can we readily imag-

ine any. Colorado Anti-Discrimination Com. y.

Continental Air Lines, Inc., 372 US. 714, 10

L. Ed. 2d 84, 83 S. Ct. 1022. We hold that the

New Mexico statutes as applied here to prevent

the publication in New Mexico of the proscribed

price advertising, does not impose a constitution-

ally prohibited burden upon interstate commerce.

In dealing with the contention that New Mex-

ico’s jurisdiction to regulate radio advertising has

been preempted by the Federal Communications

Act, we may begin by noting that the validity of

this claim cannot be judged by reference to broad

statements about the “comprehensive” nature of

Federal regulation under the Federal Communica-

tions Act. “The ‘question whether Congress and

its commissions acting under it have so far exer-

cised the exclusive jurisdiction that belongs to it

as to exclude the State, must be answered by a

judgment upon the particular case.” Statements

concerning the ‘exctusive jurisdiction’ of Congress

beg the only controversial question: whether Con-

gress intended to make its jurisdiction exclusive.”

California v. Zook, 336 US. 725, 93 L. Ed. 1005,

1010, 69 S. Ct. 841. Kelly v. Washington, 302

US. 1, 10-13, 82 L. Ed. 3, 10, 12, 58 S. Ct. 87.

In areas of the law not inherently requiring na-

tional uniformity, out decisions are clear im requir-

ing that State statutes, otherwise valid, must be

upheld unless there is found “such actual conflict

between the two schemes of regulation that both

cannot stand in the same area, (or) evidence of

a congressional design to preempt the field.”

Florida Lime & Avocado Growers, Inc. v. Paul,

373 US. 132, 141, 10 L. Ed. 24 248, 256, 83

S. Ct. 1210... .

Finally, there has been no showing of any con-

flict between this State law and the Federal regu-

latory system, or that the State law stands as an

obstacle to the full effectiveness of the Fe ral

Statute. No specific Federal regulations even re-

motely in conflict with the New Mexico law

have been called to our attention. The Com-

mission itself has apparently viewed State regu-

lation of advertising as complementing its regu-

latory function, rather than in any way conflict.

Com. v. Continental Air Lines, Inc., 372 US.

714, at 724, 10 L. Ed. 24 84, 91, 83 S. Ct.

1022, we are satisfied that the State statute “at

least so long as any power the (Commission)

may have remains ‘dormant and unexercised,”

will not frustrate any part of the purpose of

the Federal legislation.”

The test of whether both Federal and State regulations

may operate or the State regulation must give way, is

whether both regulations can be enforced without impair

ing the Federal superintendence of the field, not whether

they are aimed at similar or different objectives. Federal

regulation of a field of commerce should not be deemed

preemptive of State regulatory power in the absence of

Persuasive reasons, either that the nature of the regulated

subject matter permits no other conclusion or that the

Congress has unmistakably so ordained. Congressional reg.

ipso facto, oust all State regulation at the other end.

Florida Lime and Avocado Growers, Inc. v. Paul (1963),

373 U.S. 132, 142, 24 par, 145, 10 L. Ed. 2d 248, 256,

r. col., last par., 258, r. col, 83 S. Ct. 1210, reh. den.

374 U.S. 858, 10 L. Ed. 24 1082, 83 S. Ct. 1861. See

also: The Colorado Anti-Discrimination Commission y.

Continental Air Lines, Inc. (1963) 372 U.S. 714, 10 L.

Ed. 2d 84, 83 S. Ct. 1022; Huron Portland Cement Com-

pany v. Detroit (1960), 362 U.S. 440, 4 L. Ed. 2d 852,

g0 S. Ct. 813; Schwartz v. Texas (1952), 344 U.S. 199, 97

L.Ed. 231, 73 S. Ct. 232; Cities Service Gas Company v. Peer-

jess Oil & Gas Co. (1950), 340 U.S. 179, 95 L. Ed. 190, 71

§. Ct. 215; California v. Zook (1949), 336 U.S. 725, 93 L. Ed.

1005, 69 S.Ct. 841, reh den. 337 U.S. 921, 93 L. Ed. 1729,

69 S.Ct. 1152; Southern Pacific Company v. Arizona (1945),

325 U.S. 761. 89 L. Ed. 1915, 65 S. Ct. 1515; Allen-

Bradley Local No. 1111, etc. v. Wisconsin Employment

Relations Board (1942), 315 U.S. 740, 86 L. Ed. 1154,

62 S. Ct. 820; Maurer v. Hamilton (1940), 309 U.S. 598,

84 L. Ed. 969, 60 S. Ct. 726, 135 ALR 1347; H. P. Welch

Company v. New Hampshire (1939), 83 L. Ed. 500, 59

S. Ct. 438; Kelly v. Washington (1937), 302 U.S. 1, 82

L. Ed. 3, 58 S. Ct. 87; Gilvary v. Cuyahoga Valley Rail-

way Company (1934), 292 U.S. 57, 78 L. Ed. 1123, 54

§. Ct. 573; Mintz v. Baldwin (1933), 289 U.S. 346, 77

L. Ed. 1245, 53 S. Ct. 611; Atchison, Topeka, & Santa

Fe Railway Company v. Railroad Commission of the State

of California (1931), 283 U.S. 380, 75 L. Ed. 1128, 51

S. Ct. 553; and Sinnot v. Davenport (1859), 22 How.

(US.) 227, 16 L. Ed. 243.

An act of Congress may occupy only a limited portion

of the field of regulation of a particular subject matter,

keaving unimpaired the right of the several States to enact |

regulations covering other aspects of the subject? or mere-

ly supplement the Federal legislation in respect to local

conditions. Congressional regulation of a business or

"Dickinson v. Stiles (1918), 246 US. 631, 62 L. Ed. 908, 38

S. Ct. 415; Savage v. Jones (1912), 225 US. 501, 56 L. Ed. 1182, 32

S.Ct. 715; Re Squires, 114 Vt. 285, 44 A 24 133, 161 ALR 349.

SHuron Portland Cement Company v. Detroit (1960), 362 US.

440, 4 L. Ed. 2d 852, 80 S. Ct. 813, 79 ALR 2d 1294.

}

acacia atte al

activity does not nullify State regulation of the same busi

ness or activity if the Federal act does not cover the sam

field or is consistent with the State legislation, or if Con.

gress has seen fit to only partially regulate the

sce Congress has undoubted power to define the distrib

tion of power over interstate commerce. Buck

%. California, 343 US. 99, 96 L. Ed. 775, 72 S. Ct. 502

reh. den. 343 U.S. 932, 96 L. Ed. 1341, 72 S. Ct. 756,

Hartford Accident & Indemnity Company v. Illinois (193

298 U.S. 155, 80 L. Ed. 1099, 56 S. Ct. 685; Missouri

Pacific Railroad Company v. Norwood (1931), 283 U.S.

249, 75 L. Ed. 1010, 51 S. Ct. 458.

Where the subject matter upon which the power is to

be exercised is local and limited in its nature or sphere

of operations, the rule is well established that the seven!

States may prescribe regulations until Congress intervenes?

This is clearly the case where the regulations which should

govern may in many respects be different in different jo-

calities and for that reason better understood and more

wisely established by the local authorities. .

When a dispute arises over whether a given transaction

is within the scope of Federal or State regulatory author-

ity, the problem should not be approached negatively,

thus raising the possibility that a “no man’s land” will be

created. FPC y. Transcontinental Gas Pipe Line Corp.

(1961), 365 U.S. 1, at p. 19, 5 L. Ed. 24 377, at p. 390,

81 S. Ct. 435.

Halter y. Nebraska (1907) 205 US. 34, 51 L. Ed. 6%, 27S.

Ct. 419, aff 74 Neb. 757, 105 NW 298.

10sorgan’s Louisiana and Texas Railroad and Steamship Com-

pany v. Board of Health (1886), 118 US. 455, 30 L. Ed. 237, 6

S. Ct. 1114.

In People v. Western Air Lines, Inc., 42 Cal. 2d 261,

268 P. 2d 723 (1954), the court upheld the authority of

the California Public Utilities Commission to regulate pas-

senger rates for air coach service between Los Angeles and

San Francisco. The court in construing the Civil Aero-

nautics Act of 1938, which is comparable to the Federal

Aviation Act of 1958, held that “it seems clear that Con-

gress has not sought to extend the economic regulation of

the board (CAB) to intrastate transportation of persons or

property other than mail; nor has it attempted to oust the

states of control over such rates.” 268 P. 2d 736 (26). An

appeal from this decision was dismissed by this Court “for :

the want of a substantial Federal question.” 348 U.S. 859,

99 L. Ed. 677, 75 S. Ct. 87 (1954). See also United Air

Lines, Inc. v. Public Utilities Commission of the State of Cal-

ifornia, 342 U.S. 908, 96 L. Ed. 679, 72 S. Ct. 304 (1952).

This Court has also upheld the power of the States to

tax the instrumentalities of airlines used in interstate com-

merce. Braniff Airways, Inc. v. Nebraska State Board of

Equalization & Assessment, 347 U.S. 590, 98 L. Ed. 967,

74 S. Ct. 757 (1954); Northwest Airlines, Inc. v. Minne-

sota, 322 U.S. 292, 88 L. Ed. 1283, 64 S. Ct. 950, 153

ALR 245 (1944).

As the Nation grows in population, the role of the

State commissions in protecting the public interest in the

local aspects of air transportation grows in importance.

Obviously, the State is far more concerned than the CAB

in seeing that local communities receive adequate intrastate

air transportation to the extent economically feasible.

RACE VLOG IN FEL TL LIE OP Oe IMR OD. tae OTOL PLONE OTS RO Ie . o

We readily admit national supremacy in air transporta-

tion and that the State role must not interfere with the 3

accomplishment of national objectives as determined by 5

the Federal Aviation Act. ;

——

We admit that the final determination of public need

for air service must ultimately rest in its use by the tray.

eling public.

We admit that an airline should be authorized to elimi.

nate certain cities as intermediate points on a route wher

the cost of serving such points would be too great in rel

tion to the small volume of traffic.

We merely contend that State commissions should con-

tinue to be entrusted with the making of initial decisions

regarding matters of intrastate air transportation. The na

ture of Allegheny’s Federal certificate in this case, which

permits great freedom in abandoning routes within Penn-

sylvania, indicates that the CAB is only secondarily inter.

ested in intrastate service. This is understandable when

we consider its immense duties involving interstate service.

If State regulation is ousted, public protection will be

diminished. In the absence of PUC regulation, Allegheny

could easily decide to concentrate its equipment in sery-

ing the most remunerative segments and abandon other

segments showing a lower margin of profit.

Moreover, a similar argument to avoid loss of profits—

under the guise of the need for ubiquitous Federal regula-

tion of air transportation—was recently made by CAB cer-

tificated interstate airlines, serving intrastate segments in

Texas, in an effort to prevent competition from a Texas

certificated airline over the same intrastate segments. The

Texas Supreme Court affirmed the grant of the Texas cer-

tificate in Texas Aeronautics Commission v. Braniff Air-

ways, Inc., 454 S.W. 2d 199, and, on appeal, the United

States Supreme Court denied review. 27 L. Ed. 2d 247,

91 S. Ct. 244 (Dec. 7, 1970).

CONCLUSION

For the foregoing reasons, the NARUC submits that

Allegheny’s Petition for a Writ of Certiorari to the United

States Court of Appeals for the Third Circuit should be

denied since the decision is clearly in accord with prior

precedents of this Court.

Respectfully submitted,

PAUL RODGERS

General Counsel

RAY M. DRULEY

Deputy Assistant General Counsel

National Association of

Regulatory Utility Commissioners

1102 ICC Building

Post Office Box 684 E

Washington, D. C. 20044 f

(202) 628-7324 '

January 11, 1973.

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