Reply Brief for the Petitioner — Transcontinental & Western Air, Inc. v. Civil Aeronautics Board

Supreme Court brief1949

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_ Josern S. Isemax, |

Supreme Court of the United States

~ Ocroser Term 1948

° - No. 387. ose

TRANSCONTINENTAL & WESTERN AIR, INC,

' Petitioner, .

against |

CIVIL AERONAUTICS BOARD,

| Respondent.

- , & ‘ ‘ oe a Pe ey

On Wait or CERTIORARI TO THE UNITED States Court

- OF APPEALS FOR THE District or CoLuMBIA -

_> REPLY BRIEF FOR THE PETITIONER _

Pr - fe. :

— | Gerad B. Bropuy,

Attorney for. Petitioner.

Carters Pickett, |

of Counsel.

ets INDEX

: ~PAGE

I. The ‘imambiguous language of section 406. ve ; ee ae 2-

Of The we od “rates” eee ee ee | 6 Serge er ope

Be Be Le Oe arr oye Eee wortr. : eas v

-C. Other phrases,in §406............. ere AE a ene ea

1). The comrast between the “make effective” claffe and the :

Act's provisions relating to public utility rates ....... rae

Il. The false analogy to public utility rate statutes ... ATE fas 16

A. The language of the WR Races tec: eee

B. ‘The legislative ee, AEE Tees CTR ee ee aceon

III. The “legislative history” of the “make effective” clause... 26

A. The obligation to carry the mails ......... eee eee |

B. The broad disagreement as to the Commission's retro- .

spective power to-fix mail rates ............... rere 31

C. The “legislative history” after the 1937 hearings ...... 34

-IV. The Board's previous rulings ............ pi heans ace

V. The Board’s policy arguments 1.0... 06.60.cecscesehasee 37

A. The “waste: of.time” argument ...... TET COTE Pee ee |

B. The “finality” argument ’......... aS eererete s anaes! ae

C. The guaranteed profit argument ...........5...45. ae

DD "Fee Pebe Pemeciaes SOE 3 a ooo ike sd dcwa ances 46

E. The uniform rate argument .......... a cahe See aes hen ak

-F.. The Constitutional UE oo chs Sac nees eee Or yg +48

eee b cere PES ee ERT een TOR TO r ET

NOE 55 eas bic oa ears oie ce re ee wen 3

< y -

. ae) a

3 Me ne a3 ra | ne

. TABLE OF CAS8§_CFEED*

: i PAGE

Air Mail Compensation, 216 1. C 1885 tina es GOR

Air Mail Compensation, 227 1. C.- : Saree 6 tees " * 6,32

Air Mai} Rates for Route No "33, 216 TC. if Ree ee _—

Mabama Great Southern Rd. ‘y. United’ States, 25 C0 C1.

affd. 142 UL S. 615, 35 L. Ed. 1134, 12S. Ct. 306 Teeere ye ae

Nlaska Mirlines, Inc., Order No. E-1885 ( Aug. 13, 1948). 35; #44

. os e m4 *

All American Aviation, Ine.. Mati Rate tor woes No. 44, 4

oo" Fee ee a Bete 8

American Airhnes, «Ine. “Mail Rate. Breeding: ay a

one oc as'es Teg anewpTi ieee eee ree eee e888 8 8. we co at ee oe %. bad)

_ American Airlines, Ine., _— Rate ‘Peisendiie. WC. aA B. . on

American Airlines, Ine .. eta Mail Rates, 4 €. AWB. 90 2.0... 4

American Express Cov. South Dakota ex rel. Caldwell 244°

U2 S. 61%, 61 L. Ed. 352, 37 S. Cr. 656 2.2... cece el

Amefican versea Airlines, Inc., Mail gee + C. A.-B. 623 .. 3

Atchison, Topeka & Santa Fe “Ry. Co. Unned’ States, 225

‘UL S. 640, 56 L. ded. oe, ke Se De ree ae

Presta Colher ries Corp. v. United States, 93 L. Ed. ie Op.

od ccc PPPOE T IE TE Pe Cry EROS eee eT 11

Bothny vy. Cotamissioner of Internal Revenue, 326 U.S. 28%,

oa eereerare errr re euaea weD 6

Branit? Airways, Inc = Mail Rate Proceeding, 2.C. A. B. 555 ae

Braniff ° Aifways. Inc. Mail Rates for Koutes Nos. 9 15 and - -

50,°3 C. A. B.- mechan Peveier er ter eer ere Tee “a8

Caribbean-Atlantic Aitiimes, Ine.. Mail Rates; 7 CA. B. 945 2. ° 8

Central. Nat. Bank Vv. City of. “7 yon, 244 Mass 1. 156 N. E. 42 3

Chicago. Milwatthee & Ss Pvul Ry, Co. v “United States, 198.

US 2385, 481. Ed WN 8 OS Oe OR ei aun vo

Cincage & eae Vir Lines. Ine. - -Mai} Rates Yor Route Nos.

8 and 45, rey Pee PRR ore errs

Chicas + & a rn Aw Limes, Ine, Order No ” F-18225 ( luly

BAER Pree: rer eeren rs re re rere ihn tee eae s

“Chicago & Séathern Air Lines. Ine. vo Waterman Steamship °

Camp., 333 U. S. 108, 66 S°Ce. 401... 2. ec america

Coray v. Southern Pacific Co, 48 L. Ed. adv. op. . gre ret

Delaware, Lackawanna & Western Rd: Co. v. United States,

249 USS $85, 63 L. Ed. 659, 99 S. Ct. 348 ........... ee

* ball citations for decisions of this Court appear in this table: .in-

the bedy of the brief reterences are given only to the United States.

reports. : <<

; ; mi

ify | ; PAGE ’,

Eastern Rd. Co vo United States, i29 U. >. 31, 32 L.. Ed. 730,

, wS, Ct. seo revewida wa eeeees eee en's ghucaGqaaaae 4,10

. es Ine, Temporary M: ail Rate ’ \. B. 687 1, 13, 5%

be saneville X ‘Indian ayn hs Ra. Qo. y re nited States. Hc.

Se; ss berkew se Oren eee e fb ees Pree Te cr Tee eye ee Ek 5 °

Federal Power Ce “Mt \ i. yerXa tural Gas Co, 320-8, 591

ss L. ] dl. > wd - 89 wal an ; a i a >

Fecvral Powg? ¢ omit *¢. Natural Gus “Pipeline < On “3b UU: 2.

: ‘oe eh Oa sit OS OF. 208 2 co ecco cincaccecsss. MM

. 7 Federal Trade Comm. v. Bunte Brothers, Inc, 312 U.S, 34%,

om ae mera ® hal » 1. ol Fe , ios ar a o.oo Se ears. ee lt

. Francis v. Southern 1 i Co.. 333 U. S. 445. 68 S. Ct.-614 .. Th {ah arte

- a). ; Freeport \\ ater | a \ Fre Gpeort City, Iso L Ss as sy te L. Ed.

: OID, FU SrA SG on ces c ent eaes rere Tee

Gist v. Rackhife -OXgon Const. Co:, 224 Me. 3697 12355. W

4 DY cg Mikio ntrndessb eee enceeecas Sere a:

Ailton v. Sullivan: 344 S, ; 235, 3 eee eer 34

Interstate Consnerce CAntms v. inland Waterways Corp, 31

UL S. 6t1ost Lo bd Bi, 63.5. Cro ieee... Veseewguse ve

‘Jacksonville, Pe nsacola’ Mobile Ra. Co. .v. United States;

21 CoCh 155, atid. 1 ¥ SNe26, 30 1. Ed. 273, 7S. Ct

a : erceretcere | sis dake ates oo Cropro te Tere Let

Kihtherg v. United States, 97 U. ‘5, 348, 247 Fd. 1106 ......

Lculeville & Nashville Ral Cav Uv “yiited States, 46 C. €1.

Macon Dublin & favarinah Rd. Co. ¥. United States, 78 C. -

cE tater rarer eae ea ae ds ak a ee ee ik Be

Mail Divisor Cases, The, 251 U.S. 38 l Ed. 200, 40 S-

Ct.

in?

Mace Comtmens .\1 shinee .. Maal Ra’ es, 1C. A. A 46.0: .:.

~ “Minneapolis & 51 Loui 5 Ky. Co. v. United States, 24 C Ch 390,

4. . . . ae .

Missouri. Kansas & Texas Rv. Co. v., United States, 256 U. 5.

H1e, pig ed. 0096.41... Ce GO7 . 2. cee ee. oe,

National Labes Relations Board s t. ome Pubheations. Ine., 22

ES. or si. Rd. Lite, 8 oe oo)

New. York Centr: i Ré Conve & isa States, 65 C. CL 115, atte,

i Cntted States ¥ New York Central Rd, Co., 279 L: S. 33.

73. L. Ed. G19, 49'S, Ct. 260... 20 eee F

Northwest Airlines. Ine Foscaee Kates, Pe.

ae ‘

. et St i PAGE .

- Pacific Alaska Airways, Inc., et al., Alaska Mail Ratés, 6

GS Aa @ ...:. ra me Tividasnekcrinavoncrnaeeeatas 8, 35

Packard Motor Car sq v. National Labor Relations Board, 330

US. 485, 91. L. 1040, 67S. Ct. TRY 2... Lyeeeaseans 26, 49

an American cea Co. (of Delaware)—Mail Rates, 1

ae YE gers SJ iteaieuee aces ceriuen LF OT 19

Pan’ Ameéniean | \irways Company— “Temporary Certificate of

!? ubhe’ fonvernence and wecessty, 8 C..A. B. 47:.,........ 20

Pan American Airw ays, {ne., Alaska Mail Rates, 8 CA. B. 2448

Pan American Airways. Inc., Transatlantic Mai) Rates, 8.

Bere rr Sate roy eres vi ao 6,8 .

Pan American Airway s, Inc., Transpacific Mail Rates, & CZA. B.

Ee rn rrr en Ps er PE per hy SE Taye rT Te ES)

PanoAmericagy tacit Inec., Transpacific Mail Rate, 7C. A. B:

(EE ae cet ae ieak ates .. Scie wkd cea cae aa ee Oe kas Rea eae 13, 39

Pan American-Grace Airways, inc— Mat ‘Rates, 3 C. A. B.

EE PPR ey re ree ee ees See ee ere he twwae “47

Pennsylvania-Central Airlines Corp., Mail Rates, 4C: A. B: 22..° 13° —

Pioneer Air Lines, Inc., Mail Rates, 8 C. A. B. pine aeak 8

Railway-Mail Pay, 56 1. C. 5 Oe See Pisvasennsdvn se, 5

Southern Ry. Co. v. United States, 322 U.S: pits 8s. L. Ed 1144, .

64 &..€2. O69 . s.....04: ive ca dapedbadsecd assess canvanks ee

—_— & Pacific Ry. Co, v. Umited Seates, 28 C. rol yy eyPrrer 5

Texas & ’acific Ry. Co, v. United: States, 289 US. 627, 77 L.

- Ed. 1410, 53° 8. Ct. THR Rebs ovecatunubeua eat eihiedaca ves 11

‘Tews v. Eisner, 245 4. 8. 418, 62.1. Ed. 372, 38 S.Ct. 158. 3

| Transcontinental & al estern Air, Inc., Mail Rates, 6 C. A. B,

DE piece cencste ne a cererdut loins ere rere gaia 7,12

Transcontinental & Western Air, Inc., Transatlantic Mail Rate,

245 B. Bos ckcscs Pay eee Sr TPVOre Veaheus 13, 39, 41

United Air. Lings Seaagens Corp: Mail Rate Proceeding, 3

se eee eto as 4.4 iu eas Deka Roe eee ens eee ae z *

United States v.. American ‘Trucking Associations, Inc. SIOLLS

534, 84 L.. Ed. 1345, 60 S. Ct. _ MEEERT TEE eee rrTe yy T ree 3

. Unites! States v. American Unton Transport, See. 327 U.S. 437, :

90.L- Ed. 772, 6 S.Ct. 644... .. PEPE reper errs © F

inited States v’ Chicago, Milwaukee, St. Paul & Pacific R 2a.

2904 U.S. 499: 79-1. Ed. 1023. 55 S. Ct. 402 .. 00-2000... ae

United States ex rel Girard Trust Co. v. Helve ring, 301 US

540, 81 L. Ed. 1272, 57 S. Ce. 685 2.0.2.8... es ES

United States vo Griftn, 303 U.S 226, s2 . Ed 764, 38 S. Ct.

LO re per er eer Pee rN Peer Pe fae Pe ra

Ss ° x Oo ‘J : $

J - : ; . 5 . Vv | ; 2 \

; : \ PAGE

tnited Siaes v. Hlinois Central Rd. Ca. 263 U. S. 525,-68 L. -

Se ee ree Pree Err rier ere rere Age.

Untted Stau sv. New York Centr al Ra , 209 U. .S. 73, ‘3 a

Ed. 619,49 3 Ct on UTES OPES TA ee Ore 5, 31,48

United States v. Standard Oil Co., 332 UU. &. S. 301, Wi L. Ed. 2065 as

Oe es Ee os awk hea eek eee Chae ebikiwnawbans 45

United States v. Zazove, 334 U. S. 108, GR S.Ct. 1284 Se ire 30

tah Junk Cov. Porter, 2s U.S. 39, 90 L. Ed. ‘1071,.66 S.. ”

Cd hak deer cos eadekla cay caste ee reda es hee 37

Western Air Lines, Inc., irder No. E-2333 Dec 30, 148). .45, 46

eran Cemrat Rd. Co. v. United States, 27 C. Ch 440, aff,

7a J, o. see, 4) he AG, S00, FFD. 0 site cncsatenss )

_ STATUTES

Air Mail Act of June 12, 19: M4, ¢. 466 (48 Stat. och ) amended

by Act of August 1H, 1935, ¢. 530 (49 Stat. 614) \. . 6, 26-27 , 31-33 —

Civil Aeronautics Act of June 23, 1938, ¢, 601 2 Stat. { 7 ff.,

49 U. S.C. $$401-691) f ees |

| Section C00); Teaitems nies cocp dines dace ae ng igaa es

Section 401(a),. Certificate Required se eeeees oe mie St

Sectioni 401¢h), Authority to “Modify, Poe or Re-

eee Meer Tey eee eetreeeccsesecaseses see. 28,29

Section 401} k.), Application, for ‘Neaeclianeian at ee. ;

Section 401¢m), Requirementias to Carriage of Mail’ aceen : 28

Section.40Jin), Application for New Mail Service’. bea a 2

Section 115), Evidence of Performance of “Mail Service ‘28°

Section 106, Kates for Transportation of Mail .

(a) Authority to Fix Rates ........... = 3, 9-11, 14-15,

| aah es 26, 36, 39, 43, 49

(hb) Rate-making Elements-..... oo is 13, 14, 1%, 4?

Section 2) a}. € ‘riminal Pessttins—Ge BP eee | 28

“Section 1002, Compl: tints to arid Investigation by the Au-

aay -*.-7 ; ;

id) Power to Prescribe Rates and Practices of Air

GRE cos. sx Ssentng ae os (cin caneek we Tryercre 12

ie) Rule of Rate Mahing inees ree eee ee jee pvens ae

Railway Mail Pay Act ot July YR. ING oe, 261 C39 Stat. 425 ff, ey

20-45. S. C. GR504 GF.) ns he cece ess PTT eT Tees: err 24°

: ) -\

vi \

OTHER AUTHORITIES \,

| Be errr | Re: _ PAGE

81 Cong. Rec. 9908, 920¢ 0.28. Bagenececiesqeetceecya cs Ml, 88

Hearings before the © House Committee on Interstate and. For-

eign Commerce on A. R. 5234, 75th Cong., 1st Sess. ee ae

Hearings before'a Subcommittee of. Senate Interstate Commerte

‘Committee on S. 2 and S. 1760, 75th Cong., 1st Sess. \

19, 22-25, 27- 29; 33. :

a ‘Hearings oe the ai Committee on Interate and For- oe )

eign Gommerce on H. R. 9738, 75th Cong. 36 Sesss 000% oe

Conference Report’ on Civil Aeronauties Act ( H. R. Rep. No.

— a the President of the United States, H. Doc. N ° Jo. 1%,

81st: Cong--#t Sess. (Jan. DM), 1949), 95 Cong. Rec. .* ..... 20

Rhyne, Civil Aeronautics Act Annotated (1939). ae eye 16 a"

Subcommittee Hearings (see supra under Hearings before a

Subcommittee of Senate Interstate. Commerce Committee ‘on —

S. 2 and S$. 1760, 75th Cong., Ast Sess. )

. v ;

e \

2 \

2635, 75th Cong., 3d Sess.) ...... Phi Ae 34°

AA Ng OE A REY

gih®

Is iat | | 8

Supreme ‘Court of the United States

; OcroneR Term 1948 as ,

~ _. No. 387 a 7

TRaAySCONTINENTAL & WestTERN. Arr, INc.,

. Petitioner,

against © ;

Civin Agrronavutics Boarp,

. Respondent. .

On Writ or Certioraki TO THE UNITED States Court

or APPEALS FOR THE District oF CoLUMBIA.

REPLY BRIEF FOR THE PETITIONER

This case has been inflated, to undue proportions. It

comes down, to one concrete, practical issue. If TWA’s

‘mail ‘rate was unreasonably low, does the Board lack power

‘to say sO, fix a fair. rate and make it effective from. the

date that the rate. actually became too low!: aod

‘The Act ‘‘empowered’’ the Board, after. notice and

hearing, ‘‘to make such rates effective from such date as

"it shall determine to be proper.*’ All the Board’s ‘public

utility.” slogans, rare ‘fied poliey arguments and dialectical ,

subtleties CANNON obse ‘ure thiit simple fact. Like the Court

below, it wanders away from *what the Act says into the

realm of policy, with the net resultthat the ‘‘ make effective "’

- ments.

a -

clause ends by being twisted into.something that Congress

could have said but just did not say.

Congress could have used in §406 the same language

which is in the Act’s publie utility rate provisions, but it

_ did not. It could have given the Board a limited power

to make mail pay rates effective only for the futu e, or

only from the filing date of the proceeding, but it did-not.

' Congress did something entirely different. Revision of the

Act.is thé province of Congress. The Board is asking the

Court to rewrite the statute in the guise of interpreting it.

If the Board does fon like the **make effective’’ clause, it

should ask Congress to change it. If it does not feel that

it can be trusted to exercise, the broad power which Cong-’

ress gave it, it should ask Congress to revise the Act so-as.

ie language of the Act is perfectly plain, _

to tie its hands.

and. while its

ds it must be taken as it reads.

S not permit a reply’ to all the Board's argu:

any of them were considered fully in our main

brief. Certain other points will be noted heré.

L The Unambiguous cima of Section: 406.

The Board’ $ basic argument is that, if the power con-

ferred by §406(a)(1) “to make such rates effective from.

- such date as it shall determine to be proper’’ is construed:

to mean. just what it says, the ‘‘Act’s directions to “fix?

‘rates’, to take into consideration the serwice ‘to be ren-

dered’, and the need for compensation ‘to insure the per-

formance’ of such service, all become meaningless”? (Res.

Br., pp. 11-12).'. ‘*Many of the words and plirases used in

“brief as “Pet.-Br.,” and continue to use. the abbreviations in Pet. Br.,

p. t, note 1. Unless otherwise stated, all italics are ours.

'We shall re ‘fer to the Board’ s brief as “Res. Br.” and our main

’

Section 406 point to the necessity for interpreting the Act

as the Board, and the Court of Appeals did” — Br., p.

47).

As this Court recently said of another statute: ‘The

language selected by Congress . .,- is simple, and direct:

Consideration of its meaning by the introduction of dia-

lectical subleties can serve -no useful interpretative pur-

_pose.’** None of the ‘‘words and phrases’’-in $406 ne es-

sitates, or justifies, reading limitations into the .‘‘make

_ effective’? clause which Congress did not put there.

A. The Word “Rates.”

First the Board. suggests that.the word ‘‘rates’’ shows.

that Congress was referring to a ‘‘measure of payment for

future operations’? (Res, ‘Br., p. 48). ‘‘Rates’’ varies

3 like most words. In the field of mail

pay, it has no comotation at all of a ‘‘measure of payment

widely. in meaning"

for’ future operations.” * Nor. is.there anything “*“meaning-

less”’ about fixing a ‘‘rate of compensation”? for carrying

“the mails in the past. For generations mail pay ‘‘rates’’

have been fixed and revised for past periods (see Pet. Br.,

pp. 13-16, 32).

* Coray VpSauthors Pacific Co., 93 L. Ed. a Sas 243, es an.

3, 1949).

3“The word ‘rate’ in our statute, like most other pee has dif-

ferent meanings dependent upon the context and. the result intended

to be To Central Nat. Bank v. City of Lynn, 259 Mass.

* Es 12, 156 N. E. 47

: SN word is nota pen transparent and unchanged, it is the-

skin of a living tliought and may’ vary greatly in color and content

according to the: circumstances and the time in which it is used.”

Towne v. Eisner, 245 U.S. 418, 425. See also, United States v.

elinerican Trach img a clattons, "Tac. 310 U.S. 534, 545 ; National

Labot Relations Boar Hh arst Publications; Inc., 322°U. S. 111,

124. He tig arp :

“as well as for the future:

1. In former days the Postmaster General regularly .

fixed niail pay “rates’?. for past periods. Typical is- the

following ‘‘cireular notice of adjustment of pay’’ sent in

‘December, 1877, fixing a revised mail rate from July, 1877,

~ .

“The compel nsation for the transpottation of mails,

ete., on your road, route . between

and. - , has been fixed from July”

1, 1877, to por 30, 1881 eudods otherwise ordered),

under acts of March 3, 1873, July 12, 1876, upon re-~~

turns showing the amount and cha‘acter of the serv-

ice for thirty days, conimencing ‘April 16, 1877, at

the rate of | per annum, being $

per mile for . a

Similag. order sy fixing mail pay “srates”? for past. as wel

as fbr future services, were repeatedly made by the Post-

master. General.® , Neither’ he nor the courts thought that

e \

* Eastern Rd. €o. vy. United ‘States, 129 U. S..391, 393. ‘This was

a 10°; réduction from the. prior Kate. Later, on July 72, 1878, the

' - Postmaster Genera! decreased the Day again. “from July J, 187s, to

June 30, 1881, $558.19 per annum, leaving | the pay from the first-*,

named daté $13,233.55 per annum, being a reduction of five. per

centum from the rates fixed for weight ‘oh mails peal with”

a statute passed gn June 1578. See 129 U. Se at pl 394 “%

® For instance, ‘in Chicano, “Mili iaukee & =. Paul Ry. rome V:

United States, 198 U. S. 38 jy. the ‘first order, rhade December 1,

4890, provided that “compensation for the transportation of mails” °°

for an entire route “has been fixed from Sept. 23, 1890, to June

30, INL... at the rate of $35,022.37 per annum, being. $132 53

‘per mile. for 264.26 miles" (p. 387). The second’ order, “wade

| December 3, Vs, provided that “compensation for the transporm_

tation of majls” on only the extended portion of the route “has been _

fixed from Fefruary 24, 1890, -to June 30, 1891 \. . at the rate

of $117 I-per annum, being $152.53 per’ mile for 8.89: miles.

extension” (p. 38s). ; “ ‘

‘¢ P . at ee y ; ”

poo

~ there was anything meininglers about fixing a ‘trate’’ of

mail pay for past periods. ak

2. Nor did the Interstate Commierce Commission sup-

pose that it was meanineless to fix ‘*ratés’’ of railway mail

pay for past operations. [ts very first decision under the

Railway Mail Pay. Act, handed down in December, 1919,

preseribed in detail ‘*the fair and reasonable rates of pay-

ment -for transportation of mail matter as of November

“|, 1916, and to January 1, 1913.7 1 ikewise its order sus-

tained in United States v.. New York Central Ra. C 0., 249

U.S. 73 » made on December 8, 1925, ‘established’ certain.

‘rates nf pay as ‘the fair and reasonable rates for the,

period from Pebruar v 25, 19: 21, to Dee ember 13, 1923, with

respect to the said carriers

kor other cases’ seluing forth similar orders verbatim see, e.g»,

Jacksonville, Pensacola ¢ Mobile Rd, Co. vy. United States, oh ©. C4,

155, Lou-b62, affd. in 118 U.S. 626; Minneapolis cy Si. Louis Ry.

Co. v. Unifed States, 24. C. CL. 350, 851-554; Alabama,Great Southern

Rd. v. United States, 25 C..Cl. 30, 32-33, affd. in 142 U. S. 615;

Wisconsin Central Rd. Co. v. United States, 27 C, Cl. 440, 448-456,

-affd. in bid UL SMi90; Texas & Pacific Ry. Co. v. United: States,

28@. Ch. 379, 381-83; Evansville & Indianapolis Rd. Co. v. United

States, 2 c. ‘Cl. 555, 556-558; Louisville & Nashville Rd. Co. .v.

United ‘States, 46°C. Ci. yer." 2A e eae

* Railway-Mail Pay, 56 1, C. “0d 1, 17. “The fair and reasonable”

rates on and after -January 1, 1918,-are 25 per cbt additional to the

rates presc cribe das of November 1, 1916." [bid at p. 78. “Manifestly

this was “the fixing of a rate for-the past,” since “the order was’:

made ar two' years after the effective date.” New York Céniral -

big ‘Co. Vv. Uitited States, 65.C. Ct. 115, a affd. in &nited States

New , ort ( central Rd. Cw. 299 U. a ae

The order 1s not ¥et fortlr in tlie Bas opinions; but appears

Sat ?. 13 ofthe Tra: spript of the. Record. .

he o —

am ry

., a

3. Congress saw nothing meaningless in providing se

retroactive adjustment of air mail pay in terms of ‘trates.’

Nor did the Commission ev idence any embarrassment in

fixing ‘‘rates’’ for past periods, as well as prospectively,

under the Air Mail Acts (Pet. Br., pp.. 96-59). Even Com-

missioner Mahaftie, who found reasons for dissenting from:

every retrospective rate change, failed to discern anything

contradictory about fixing a ‘‘rate’”’ for Services already

rendered. 19

4: The Board itself has not found it meaningless, to fix,

“rates”? for past services. Repeatedly it has referred to

_“‘rdte proceedings involving the fixing of mail rates for.

past periods?" without the faintest intimation that there is

something peculiar about: fixiig a ‘‘rate’’ for the past.’?.

®The Air Mail Act of 1935, 49 Stat. 617, passed in August,

1935, provided thet “Compensation therefor, on and after March

1, 1935,-during such pertod of indefinite continuance, shall be paid

at the rate fixed by order of ‘the Commission.”” See Pet. Br., pp.

55-56, B10. ae oe

His dissenting opinions may’ be searched in vain for any in-

timation that. the word “rate” supported his ‘position. Air Mail

reo eey ss 216 1. C. C. 166, 191; Air Mail Rates for Kotte No

33, 216 1.C. C. 381, 403; Air atek Coinpe nsation, 222 1. C. C - 602,

610. ‘ :

_ It Pan) American Abiaaas, Inc., Transatlantic Mail Rates, 8

C. A. B, 267, 201, note 22. * :

\ Ct 6 Sina

"la° making this retroactive determination . . such nénpay

mail schedules should be taken into account in the fixing of a rate

of chaapensation on the mileage flown ‘on the pay mail schedules

Pare “this past pe riod.” “Northwest Air Lines, Inc.—-Mail Rates,

A. Ay 275, 283. “es cnwe find that the fair and reasonable

rate of compensation froth March L, 1941, to June Iz, 1941, was,

S} cents per mail pay mile flow n.” Chicaga & Southern Aw Lines,

What is more, repeatedly: it has fixed mail pay fo vast |

periods in terms of. ‘rates. 713 Many of its dhebbins

have in fact ies “dan upward adjustment of rates over

a past period.’

d. The argument is continuously made that ‘rates of

compensation’’ is-used in contrast to ‘amounts of com-

pensation, This quibble ignores the fact that in the final

—amalysis: the airline is entitled to ‘‘reasonable compensa-

’

tion,’ which is an amount reached by miuitiplying the

‘rate’? by the number of units of mail earried (Pet. Br.,.

pp. 28-29). Rates of compensation are expressed in

-amounts of money—4o¢ per airplane mite,..05¢ ‘per: pound |.

milé, and so on—and-every rate is fixed to provide the air-.

line with a certain amount of money. ‘Fhe amount of rea-

sonable compensation for past services can therefore be

: : .

Ine—-Mail Rates for Route Nos. 8 and 53,3 C. A. B. 161, 195.

“We will therefore’ adhere to our previously announced policy’

against fixing a rate which will result in recovery from ‘the carrier -

of substantial sums previously. received as mail compensation.”

Ainerican Airlines ne. Mail Rate dg eye 24. vw. B. TO, 176.

See also the decisions cited in Pet. Br., p. 43, note 48.

is Sonie at the dyecisions are i © 11) Pet, Br., pp 2a

(note 27), 42 (note 14), 44, 84-96, Typical is the order in Transcon- -

—tinental § Western stir, Iuc., Mail Rates, 6 C. ALB. 595, made on.

October 26, 11S: “2. on and after January 1, 145, the fair and

reasonable rate of compensation for the transportation of mail by

airerdit, the facies. used and useful therefor, afd the services con-

nected thiefewith oc. 1s hereby fired, determined, and published to be

cents por tamnnie. or traction theregt; of mail carried, computed

monthiv cm-cdircet ish somite AITpuott mileave Sen ip G05.)

Me of; erica Al tl . Lt - Mail Rist Proceeds ng a : ‘ H.

’ . ‘4 *

expressed in terms of a ‘trate.’’ In fact, the Board oftef®

expresses the ‘‘rate’’ for the past not as a per unit figure .

but simply as a ‘‘total amount."

In short, the word *‘rates’’ does not. mean a “measure

of payment for future operations.’? Nor does it become

‘‘meaningless’’ if the ‘‘make effective’’ clause is construed - -

as it reads. ‘*Rates’’ means just what it has always meant

in the field of mail pay-—a meanis of compating compensa-

tion for services, past or future. i)

15 For example, in Pan is rican Airways, Inc., Alaska Mail

Rates, 8 C. A. B. 244, the order made on July 9,.1947, provided chat

“the fair and réasonable rate‘of compensation . . . is hereby fixed,

determined, and published for the period» August 1, 1944,- “through —

December 31, 1945, to be a total amount of $2,572,000" (p. 260).

The Board’ added, in a footnote, “This amount is equivalent’ to

90.36 cents per revenue plane mile flown in Alaska operations, ex-

cluding charter services and services over the Fairbanks-Bethel

nonmail route.” For similar orders, see, e.g., Pan American Air-

ways, Inc., Transatlantic Maj] Rates, 8 C. A. B.°267,.292; Clricago

& Southern Air Lines, Inc., Order No. E-1825, p. 2 (July 28,

1948). 7

18 In Pioneer Air Lines, Inc., Mail eek 8C. A.B. 175, opera-

tions began on ‘August 1, 1945. The petition was filed on August.

21, 1945. The order, made on July 2, ‘194%, provided in. part ‘fp.

197):

°" “That the fair and reasonable rates of compensation to be

paid the petitioner for the transportation of mail by air-

craft, the facilities used and useful therefor and the’ services

connected therewith . . . are hereby fiaed, determined and

published to be as follows: |

“1. For the period August 1, 1945, through August 31,.

1946, a ‘total amount of $505,420."

The order did not include a footnote explaining that the “total

amount” was “eqaivalent to” or “equal to” a stated’ number of

cents per mile. For other like orders, sée, e.g. Pacific Alaska Air-

ways. dne., ef al., Alaska Mail Rates, 6 C. A. B. 61, 78; Pan Ameri-

can wtirways, Inc.. lranspacific- Mail Rates, 6 C. A. B. 8&3, 84;

Carthhean- Atlantic elirlines, Inc... Mai Rates. ri ee B. 943,. 956.

to]

B. The Word “Fix.”

Next the Board concentrates on the word ee ae “The

Welb understood meaning of ‘fix’ is ‘to settle’, ‘make: per-

manent’, ‘make certain.’ ... It is impossible to consider

arate as fixed if at wiy time thereafter it-can be revised.

It is clear, therefore, that ‘tix’ cannot be given its normal

mexning if. the ‘nike effective’? clause is given the’ mean-

ing which TWA asserts is plain’? (Res. Br. p. 49).

Like ‘trate,’ the word “fik’? has no unvarying ‘‘nor-

mal’? meaning. It ‘tis sometimes used in a broad sense and

sometimes in a narrow sense’? and ‘there is no charm about .

the word itself dominating the situation so that it may not |

be construed to make the statute comport with reason.’?7 |

‘Of course in this statute fix’ does not connote permanence

or. ceils a oe or )406(a)(1) expressly states that

the Board - -empowe ‘red “to fix and” determine from

17 Gist v. Rackliffe-Gibson Const. C6., 224 Mo. 369, 387, 123 S. W.

02%, 026-927, Earlter the Court said: .“ ‘Fix,’ as defined ‘by -lexi-

cographers, is used sometimes’ to accentuate the idea of - firmness,

stability, immobility, permahence, without~ variation—but in laws,

documents and, conversation it ts not always used in that. strong

way. It may mean {depending somewhat upon the. context and

sense of the thing) prescribe,-allow, designate, arrange, .leterimine,

decide.” 224 Mo., at p. 385. 123 5. W., at p. 926. co

I’ Even in a public utility rate statute, “fix” has no such conno-

tation. . In Freeport Water Co. v. Freeport City, 180 U. S. ost, an

ordinance authorized the city council to contract for. the’ aniain-

tenance of waterworks “at such rates as may be fixed by ordinance,

and for a pertod hot exceeding thirty years.” This Court refused

to hold that tie words should’ “be construed to’ mean by ofdinance

once for all'te endure during the whole period of thirty years.” sitice

tirat eye “would 34 tie the hands ofthe councii that the rates

could) not Let adjuste | as justice to both’ parties might require at ‘a

particular time” (p. 6Q0%, ae ae. :

‘ k ee 10

is .

time to timé”’... the fair and reasonable rates of compensa--

tion for the transportation of mail by aircraft.

ready mentioned show that mail pay rates have been Yor

decades, and still are, ‘‘fixed’’ for past periods.”

What ‘‘fix’’ means in $406 is perfectly evident. It is

used in the sense ‘of ‘‘set,’’ ‘‘specify,’’ ‘‘name.’*! The

19 In Eastern Rd. Co. “v. United States, 129 U.S. 391, ar-order

(quoted in full supra, p. 4). “fixed” a mail rate for July 1, 1877,

to June 30, 1881, “unless otherwise ordered.” A later order, made

on July 12, 1878,-reduced the rate 5% “from July 1, 1878, to June -

30, 1881.” This Court held that even if the first order constituted

a contract, “still, as, by the terms of both the order and the notice,

those rates were to govern, ‘unless otherwise ordered,’ there is no

ground or the company to complain of the subsequent reduction

of five per cent : . . It cannot-be said that the reduction of five

per cent was a violation of that contract “for, according to its terms,.

the parties agreed that the rates fixed at the latter date -were subject,

to such future orders as the Postmaster General might make” (p. 395).

To the same effect, see ae Milwaukee, & St. Paul Ry. Co. v.

Ufited States, 198:U. S. 385, 389; Delaware, Lackawanna & Western

Rd. Co. v. United States, 249 U.S. 385, 387-588; Missouri, Kansas &

Texas Ry. Ca. vy, United States, 256 U. 5, 610, 613-614.

*°Tn fact; the Board has no difficulty:in providing ine the same

order that a “fair and reasonable temporary rate . . . is hereby .

fixed, determiinéd and published” froni ‘a stated date and that “there |

shall hereafter be fixed and determined . . . ‘the final fair and rea-

sonable rate or rates of compensation . . . which rate or rates shall

be retroactively effective” from the same date. Essair, Inc., Tempo-

rary Mail Rate, 6 C. Az B. 687, 691-692. For other examples see Pet.

Br., Lg 42, notes 45 and 46. eee

Atchison, Topeka & Sense Fe Ry. Co. v. United States, 225

U. s 640, indicated the meaning of the word “fix” in mail pay

cases: “The statute defined ‘a car line, but did net fix the com-

pensation. It leff_that to be determined by the Postmaster -General,.

who could have nained any rate, not.to exceed the statutory maxi-

mum” (p. G44).

: Plainly

the Act itself considers ‘ta rate as fixed’’ although ‘tat any_

time thereafter it can be revised.’’ The authorities al-

Board ix empowered hot merely to ascertain or detertnine

fair and reasonable rates of compensation, but to put them

waite effect. P= ; |

There is neve or, however, one single rate whie h alone is

fair and reasonable. A whole ‘zone of reasonableness”

exists.’ All rates within that zone are reasonable. Thus,

the Boaral (distinguishes between a ‘need’? rate and a -

** service rate; the. ** ne neal ’ rate is Substantially higher,

The Act says “fix and deve rmine e,” At times it appears to use

the word’ interchangeably. Thus the first sentence of S4060b) says.

_that in “fixing and determimng fair and reasonable: rates of com

pensation” ‘the Board “may pix “different: rates “for “ ditferent air

carriers or classes of carriers.” The second sentence’ then begins,

“In determining the rate in each case . * The word “determine,”

standing alone, might hate given Tise to some question, since ocea-

sionally it is used to mean “find” or “ascertain * as distinguished from:

“put into effect.” (Cf. United States ex rel. Girard Trust Co. v-

Helvering, 301 U.S. 540, 542: “The, Board has net adaat 4

refund) It could ‘pot rightly do-so, for its jurisdiction is limited to

the determination of the amount of deficiency er ov erpayment . . *

Any possible doubt on that score was obviated ‘by saying “fix and

accel

22. Cf.. Kihlberg v. United States, 92 U.S. 398: “The parties,

however, concurred in designating a particul: ar person . . . with

power not simply to ascer fae, but to fix, the distances which should

govern in the*settleoment of the contracter's: accounts for transpor-_

tation” (p. 401); Fede ral Power Comm. v. Hope Natural Gas Go... +

220 U.S. 591: *But the Commissiori maintains that it has the

- power to make findings as to the law fulness of past rates even though

“jt ssa no- power to fir’ those nen (p. 618).

American E rpress Co. v. South Dakota ea rel. Caldwell, 244

U's S, ory 24; lonited- State $v. !Ilinets Central ae. Co., 243 U. S.

515, 524; United States v. Chic ago, Milwaukee, St. Paul & Pa: hic

R. Co., 294 U, S. 499, 508 Texas & Pacifie Ry. Co. v0 United States,

ws? US. 627, 665 Feadrad Power Comm: v. Nasuial Gus Pipeldin

Cv., 315 U. SOTA, 585-586; luterstate Commerce Corin. vo lk

land Waterways Corp., 819 U. Si 671, 685;. Ayrshire Collierivs

Corp. \ v. United States, ws L. om adv. op. 220, 228 + Jan. 3, Dd).

. *

but both are supposed to be reasonable.* In the case of re

mait pay, the Board does not merely define the zone of rea.

sonable rates, *by selec ‘ting ma Numer ane rnin) figures,

as it always may (and, in: sonie eaxes, mils <1) do in the Cast:

of public atility rites.-* 4 m the won it must speeify

the precise ninil rate- lame it, “*fix’’-it. ‘That is éxactly

what the Board does now when it revises aiail rates for

past pertods, and what it will still ‘do if the **make effee-

tive” clause ts given ‘its manifest meaning.

Next the Bourd isolates certain phrasis in -406(b).

which lists numerous factors to be taken into consideration

when mail rates are determined. gees coed thimes, the

Board shall consider ‘the need of eal such carrier for

compensation for the transportation of mail sufficient to.

insure the performance of such <Orvie e, and ... to enable

such air carrier... to maintain and continue’ the deyvelop-

ment. of air transportation ‘to the extent and.of the char-

4 «The ‘service’ as opposed to the ‘need’ mail rate is hot de-

signed to meet the financial need of the meivadual carrer but rather.

it is intended te be fair and reasonable “m-terms of both the quahty

of the service and the reasonable and- necessary costs under condi

tions of economical and efficient management.” Transcontinental

co Western . fir, Ine., MaiKRates, 6 C. A. B55, 599

* The Board's power over public utility rates Te - and.

cargo rates—-ts set forth in $1062) d) ‘of the Act. 48 U.S.C $421),

quoted in Pet. Br.. pp. B21-B22. When the Board st act there-

under, it ‘shall determine and prescribe the lawful rate, fare, or

‘charge oor the maxumum or minimum? or the maximum and mini-

mum. there!) except | that “as to rates; fares, and charges for

overseas air transpestation” it “shall determine and prescribe only

a *pepst und te yeomable MaXt mtn or “minuhum: er maximum and

minimum rate. fare, or charge :

or. Ps .

i ee ;

acter and quality required for the. commerce of | the siete

” Staite ~, the Postal Service, and the national defense.’ 6

Lhe Board asserts that mit these words are to be given

content they must limit or else comet with the asserted.

meduing of the “make btfretive: clause, for whal is to hap-

“pen in the future is Bardly a proper con side ration tor de-

- te rmining: the edtont of payments for past servic es"? (Rew.

Br. pp. 48-49). The-argiment “horders on the trivolous:,

It is like <aving | that, in determining how much medication

io give inhinediately to a starving mas, io ~ npensate for

past detier meies in tis dief, itis entire ly irre evant whet her

he is t6 be, built into a robust persemor kept barely alive,

as a walking ske de tonr Te be more specific, it means that

after smakinig’ a ate prophecy.for the future which turns

out to be disa-trous}s wrong, the Board. is merely permitted

to make abetines prophecy which may turn out-to be no bet-

ter t higrt its, prev Lous one. The evil which would result

from imposing propliecy ‘upon prophecy ix mace apparent

hy looking auainoatéthe mistake which the Board made in

1945 atfectin: TWA, American, United and -Eastern (see

Pet. Br. ] py. 12-13, note 4). ;

Actually, When the Board fixes a mail rate for the past,

: of course it Ponce the adverse effect of insufliient pay

c -

. on éhie wirdine s. Future. abilits lo operate” The obvious

vreason. is that, if tee ditthe: pay is given for past service,

the airline may te so weakened financially that it cannot

Properly pertorm the service ‘thereafter. ** The: evidence

hoe ay Pevasvileanta-Central Aivlines Corp. Atail Rates. 4

C -A. B. 22 i, | ‘“leertcan Avtation. dnc” Mal Rate ter. Rout

A AOA 2 ri BAR: Bscair, Inc. Ten porary Mail Rat

He OY BGS de: Te oniscontiGontal © Weitern tir Ine.. Trans-

antic Mink Rate, TC N BR, 425; Pan American. Amways, Tne.

Frans puc ific Ve ‘f k i rt \ B 615, H1o —

indicates that the carrier has continuously operated at

such annual deficits as to hamper its opetalions and the

maintenance and deve ‘lopment of its serviee."2? Palliatives

ope rating for the future may work too late ; indeed, failure

to adjust the rate for the -past may disable. the airline

completely Trom continuing ‘tperformance of — such.

" service.’ eo 2 .

D. The Sento Sica the “Make Effective” Clause and

the Act’s Provisions Relating to Public Utility Rates.

"Section 406 (a) (1) Quspowers the. Board ‘*to make such

rates effective from such date as it shall determine to. be_

proper.” “The Board says that the word *such’’*is **sig-

nificant” (Res. Br, p. 49). Of course ‘it is, “bugyt does not

have the fysterious significance which the Board seems to

attach to it.

The word *ssuch"* identifies those rates, and those rates

wlone, which the Board is to make effective “from such —

date as it shall determine to be proper.’’ The Board is not

given that power with respect ta ‘trates’ generally, as

“7 Mid-Continent AurlinesQinc., Mail Rates. 1 C. A. A. 45, 48

“Another factor mentioned in 3406(b) 1s “such standards re-

- specting the character ‘and: quafity of service to be ‘rendered by air

carriers as may be presenbed by or pursuant to law.” The Board

* Suggests that the phrase “to be rendered” also shows that the rates

must “apply to future operations” (Res. Br. p. 45).. Manifestly

all the language means is that tke Board shall take into account the

fact thatthe service for which the rate is détermined must satisfy

all preséribed: standards. Sub-standard s« rvices are not werth as

much ab services up to standard, and of course “the. Board can take

that into effect im fixing the rate for past periods. One could just

as well argue that $406:ai01) <hows ‘that rates can be fixed only

for the past because they must preside “compensation for the. trans-

partauion of mail by aircraft, the facthties used and useful therefor,”

mstead of “the facilities to ‘be used and useful therefor.”

tmalght ie contended if ttsuch’* had been omitted. It ha:

that powe Y Olly as to those rates ~pectignl | in “4061 a )—the|

‘rales of comipebsation f bor the trates portation of mail by |

Pesce the ‘Tacilities used wn usetul therefor, and the |

. hey services connected therewith.’ Thus Stsuch”’ makes it

‘doubly plains that tle Board has no such power over any:

other. kind of rates. |

. For the Boadrd dees not dix spate that the. ‘mde elfee-

. ‘tive’’ clause. is bitferent: from the provisions of the Act

dealing with passe uger and cargo rates. The airlines’

public utility rates May be changed only ‘prospectively.

Divisions of public utility rates may be ‘adjusted only”

‘from the date of filing the complaint-or entry of order of

=~ . or osuell other «lite subsequent thereto”?

(see Pet. Br. pp. 18-10, 35-36), No such limitations on the

Board's sible were written into the broad Janguage of

‘$06(a) (1). 3 ef | =

“The mo-t likely reason for the ditference between its

.- danguage [tv., the *make effective’ clause] and’ that of

other parts of the Act,” "the Board speculates, ‘is that they

were prepared by ditte rent draftsmen, the ‘make effective’

clause being engrafted ont a completed. bill’” (Res. ,Br.,

pp. 71-72). The speculation ignores the practical differ-

ences between mail pay adjustments and public utility, rate

changes which. explain the differentiation between them’

(Pet. Bry pp. 85-37). Ut attributes to the draftsman of the

“make cffective’’ clause; who discussed the entire 1937

_ bill at length, utter inability to distinguish - between ‘pal-

pabls different language, although in other respects he is.

granted @xtrenieiy conte powers of discrimination, - It

glossés over the fact that, after the 1037 bill died without

16.

coming to a vote, it was thoroughly studied and revised.” .

During its.scrutiny, the marked differences between the

mail pay -and public utikity rate provisions could hardly

have escaped. notice. - - § ;

. But, as the Board confesses, its speculation i is really

beside the point (Res. Br., p. 72). Most statutes are the:

handiwork of many draftsmen. Nonetheless, a, statute must

be construed as a whole. The breadth of the ‘‘make ef-

. fective’’ clause must be read in the light of, and gains added *

significance from, the restrictive wording of other | sae

" of the Act. ae tees ee, ee

IL. The False Analogy to Publie Utility Rate Statutes.

_ The Board’s appeal to this supposed analogy ignores

the fact that the Act’s mail pay provisions do not ‘‘embody

publie utility rate-fixing. concepts’’ (Res.. Br., p. 9). One

2° For a detailed summary of the steps taken during the period

from 1937 to: 1938, see Rhyne, Civil Aeronautics Act Annotated

(1939), pp. 51-65, 210-213, 215-220. As Representative Lea,

/ who sponsored the 1938 bill in the House, ‘put ae Anyone study-

ing the bill will find that this past bill [i.c.; the bill passed in 1938]

is a more, refined piece’ of legislation (than] the bill of last year

ji.e., the 1937 bill]. It has.gone more into detail, with more care.

Naturally, out of these. months of controversy and study that situa-

tion has developed.” Hearings before ‘the House Committee on

Interstate and: Foreign Commerce on .H. R. 9738, 75th Cong. 3d

Sess., p. 310. -

a6 Cf. United States Vv. Americon Union Transport, Ine. 327

U.S. 437,445: “In the face of such repeated demonstrations that”

Congress makes its purpose plain, when it actually intends to limit

“the coverage of others than carriers to affiliate or to persons per-

forming part of the transportation: sérvice, the conclusion hardly is

tenable that it means the same thing whén it employs more broadly. -

inclusive language and wholly omits all such limitations.” See also,

Southern Ry. Co. v. United States, 322.U. S.-72

Ey \ ‘

ba \ *,

roe fuch coticept, ‘und the: most relevant one tor present puy-

poses, ots that pub lic utility Pate s are changed only pros-\

_ pectively, bur coneededly 406 does not ‘embody "* it. On

the contrary it uses uniqie laiguage found in no publie -

“utility rate statute. White’? dees not mean *black,”’

especially where-Congress says ‘tblack’’ (when it means

it) in the very same statute. ey

A decade ago this Court rejected one attempt to analo- -

‘ gize procedure under public utility rate legislation to. mail

* QOuly last year, construing-this very Act, it

pay statutes,

repudiatéd the saime kind of analogy.** The detailed fal-

lacies in the analogy need not be explored again (Pet. Br.,

"pp. 27-44). A few of the Board’s ‘attempts fo convert white

into black, however, should be uoted.

A. ‘The Language of the Act. / : ps

1. Of course, paralle} objectives ‘are considered when»

fixing mail-pay aid reviewing the airlines’ public utility

tariffs (Res. Br., p. 26). Tt would be astonishing if it were

\otherwise. The different provisions of the Act «were not

' designed to Work at cross-purposes, but to promote the

same national ends, Those basic objectives underlie, many

Federal statutes. = . ‘

.- Notliing obliged Congress, however, always to use pre-

cisely the same row to reach its ultimate goal. It hada

wideehoice of alternatives between which to choose. In-

Sa) “a United States Vv. Grifiin, 303 U.S. 226, rejected ‘the argume nt

that the remedy under-the Urgent Deficiencies Acy should be«applic-

able to railway mail pay orders because it applied to-orders under

_priblic. utility statutes “Hing rates payable by cd, “.¢p. 257).

— §-Chicago ¢ South ern Air Lines, Inc. v. W aterman Steamship

2 Corp., 333 U.S. 103, 107-108 ¢Pet. Br., p. 44). ty RS

* zi , “

: /

ie a

deed, this very Act’ evidences a keen differentiation be-

_ tween changes in mail pay rates and changes in publie util-

ity rates, That differentiation was not whimsical. It was

based on excellent practical.and econemic reasons which .

the Board now ignores (Pet. Br., pp. 33-37).

2. The Board asserts that-‘*the Act embodies substan-

tially the Same’ rate-making method’? for determining.mail

pay and public utility (/.e., passenger and cargo) rates (Res.

Br,, p. 27). Actanny; the differences in the ‘‘method’’ are

legion.

Airlines do not set and cannot change their mail pay

-rates.. But they can and do set their public utility rates,

simply by filing tariffs which they can change at will. The

\ Board has only'a supervisory action over those rates. - It

cam suspend them and, when need ariscs, revise them. Even z

then it may always (and somietimies must) prescribe only °

maximum and minimum publie utilfty rates, whereas it

fixes specific mail pay rates. Most important, public utility

rates canbe changed only prospectively. Mail pay rate

changes can = made a and prospectively.

3. The Board says that ; “petitioner asserts that the

standards for determining ‘mail rates are so different from

‘those for determining rates for the car riage of persons and

property as to make. inapposite rules for the fixing of

typical public utility fates’? (Res. Br. p. 25). We said.

nothing of the sort. Had Congress. wished, to apply. to

niail pay the “‘ty pical publie utility rate’’ rule that changes

are made only forthe future) of course it could and would

have done ‘so, however different the “*<standards”’ used to

determine the rates. What we said, and repeat, is that. ~.

the difference in the standards is an additional fact point-

ing up the fallacy of analogizing $496 to public utility rate

statutes. 3 | a 3 |

The Board admits that the so- called ** subsidy ”’ pro-

_ Vision of, “406(b) differentiates -406 from such statutes

- (Res. Br. op. 27). “Thus, tari? rates are to be *‘at the lowest

cost consistent with the furnishing of such service,’’

1002 (e) (: 2), ‘and ‘‘to provide adequate and efficient .air

carrier service,’” $1002(e) (5). Mail pay, on the’ other

hand, is to be high enough, with all other revenue, to enable

the-airlines to maintain and dev elop a national. air ‘trans-—

portation system, $406(b). : |

The Board says that the reason why **the last clause of

Section 406(b) is sometimes called a ‘subsidy’ provision is °

that it relates to the fixing of mail rates, rates which are’

only applic: ible to a single customer, the United States’’

(Res. Br., p. 28, note 18). That is inecorrect:. Railroads

carfy mail for .the same single ‘customer. ‘‘In_ the

vase of the ratlroads,”’ however, ‘*there has been no hint

of subsidy in connection with mail payments.*** The rea}

reasan is quite different. | ae

Congress ‘‘knew that in ‘the’ present’ developmental

stage of the air transport industry the air carriers; in most’

instances, would be unable ‘to survive without’ revenues

from the transportation of mail’ sufficie ntly ‘large ‘to make

up for the deficiency i ine revenues. from passenger and ex-

— sources.” (Hopes that the airlines would become |

carl 5 :

33 See Hearings before a Subcommittee of Senate Interstate Com-’,

merce Committee on S. 2 and S. 1760¢75th Cong., 1st Sess. ‘here- -

inafter referred to as “Subcommittee Hearings’), p. 45. Q. alse,

infra, notes 39 and 40. * -

4 Pan American Airways Co (of Di laware )— Ma il mali S.0

C. A. A. 220), 255.) See aiso infra, note 39.

. ¢ Ps

feted ie az

self. oe ‘without ibe ral nyail pay have. still not ma-.

_teyialized.47) . Hence Con; tink prov ided that air mail pay -

should be ‘anit usation not ouly for earrving the mail

but for building up a system of air transportation which

will serve the nation’s commerce and security as well,’’ and

**the hhedium through which continuous financial support

necessary for the: alr riers to fulfill the purposes of the Act

in batendel, _— © for that reasonit is sometimes called a-

* subsidy.’ TE ere ee og hae,

Pat

Whatever the terminology used, \the 1 fact remains that,

as s the Tonal has: pointe “d- out time and again: ‘(see Pet. Br.,. .

PP. OT- 49), radic iil dlifferenc es exist between the Act’s mail

es. “the: Me; ssayfe of the Pre aoa of the Vitite d States, H. Se:

‘No. 17, “sist Cong: Ist “Sess.. on asin /10, 1949, referring , to. the

post: al det Hed. CID. Cong. Ree. 154-155) :

‘The re ‘maining deficit, would re resent. largely. the costs of.

steueidatin nt penalty mail, Fcealied mail, airline -subsidies, and |

‘ other costs not properly charge able to the users of the postal

service. Aside from’ such’ costs, postal Gperations should be

‘condutted on ‘a‘ self-sufficient basis, with rates’ maintained,

ata level adequate to accomplish that objective.

Shea, . “Aviation:, Commercial az ‘vation, the newest of our trans- :

fet portation sedistpige: is sell an a stage of dex paopment that |

requires subsidy assistance, ee:

Yrerican Airlines, Inc-—-Mail Rate Prececdiid: 3 Cc ae Bs

bap. 330, 335. “In determming mail rates, under section 406 of the

“Aet. allowarice is mace not only for the expenses and revenues in-

cident nite 2 operatialy of Schedules Fequired in the interests of the

Postat Se}vice, hut alsé for. the expenses and revenues incidént to:

the’ operatior! of fall addition: il schedules found to be required by. the

‘interests of cormerce or the national defense, er both.” Braniff

; Maal ‘Rate Proceeding, 2 C. A. B. 355, 3: 19, Indeed,

wear Tegauthorized: solely An the inte: ést# ot national de-

en bmerrcait, Aira ws’ ¢ ompany: — Temporary Certifi-

o Pee Coveenionce and Necessity, 3 C. A. B. 47%, 483 Chicago

Joo Souther tie tones, lnet~Mail Rates'for Rowte Nos. 8 and $3,

SEAM aes ae

» 4

; =< 32 ;

pay “standards” and those applic “ible to pubhe utility

rates, ‘Those differences furnish giddition aul proot that the

analogy: ‘to sy ulility rate statutes Is askew,

B. ‘ate aperea History.

~Until 1938, whe Ti the Act was passed, the air trans-

Pa industry: Was largely, unregul: ited... Only a-few

-vears be Lore, in 1934, Congress had’ re jected as premature

“acproposal for compre ‘hensive regulation of air transport.’ “al

Naturally, in providing for contol of passenger and cargo

rates, the Issuance of certificates of public convenience

“and necessity, and tlie like, Congress drew heavily on its

experience if, regulating. other. forms of transportation.

On those subjects; it had no-prior experience lil regulating

airlines. Hence man provisions of the Act “hear a strik-

ing similarity” * to statutes = other transportation

if activities (Res: Br., p. 24). E

~ . Because the industry was to be placed ander sweeping’

governmental control, like other industries, several people

commented on the fact. It-is very easy, therefore, to cull é

. general statements havi ing nothing whatever to do with

mail pay, and present them, out of context, as if they bore

on that subject or even on the specific problem here. in-

volved (e.9., Res. Br., pp. 22- 4, 32, 59).38 . |

¥ a + eae ;

87 Serjator MeCarri an’s 1934 bill, peterces to in’ Pet. Br eee

note 88, contained a comprehensive scheme. for regul: ation of the

entire industry. Ps

38 For instance, the Board gir out (Res. Br., p. 59). that

Senator Truman said of the 1937 bill: This bill is simply a regu-

‘latory measure which dees for “he wr carriers exactly what is don

for railroads and: for busses and trucks. | canmeot* too strengly

emphasize. that fact.” sa Cong. Rec. 9204. Plainly all he) meant ©

was that airlines, like railroads, busses and trucks, were to be com-

—_

. Actually at no, timesdid anybody state that the mail pay

provisions of ‘the Act—auuch less what is now the ‘tmake

effective’? clause of | 406 (4)(1)- cmbodied or were intended

to embody any “public utility doctrine. The reason is plain.

Congress had been regulating mail pay rates sinee 1792.

It had no need to look for guidance on’ that stibject to doe-

trines developed ia-the field of publie utility rate legislation.

The Act's mail pay provisions were. an evolution from —

C ongress’ abundant experierice with mail’ pay.

2, Then the soard notes that ‘the Act ‘does not provide

for direct, outright subsidies (Res. Br., pp. 28-29). Ad-

mittedly, however, it contains an indirect {‘subsidy’? provi--

sion. The veiled intitaation seems to be that. the only

alternative to a direct subsidy statute is a prospective pub-

lie utility rate-making system. The unsoundness: of that

"dilemma is too obvious fer discussion.

. vi - . ; Z f

ee Nekt'the Board says that in 1937 witnesses ‘* pointed

out the similarity between the problem of fixing mail com-

Penrose for air carriers and fixing railroad rates’? (Res.

Br., ‘p: 30) and the ‘tanalogy to rate-making for railroads”

pletely regulated “by the Conimission ; in other words,. that in addi-

tion to having “the power of fixing rates for: mail,” the Commission

would be empowered to “fix the rates, fer passengers, freight, and

express.” See his comment in Subcommittee Hearings, pp. 280-281,

Yet this innoquous generality is° prcced ‘together with: an earlier

generality. relating’ to air mail, which manifestly, called attention,

simply to the fagt that the 1437 bill was intended to change the.

» pecuiiar system ander the Air, Mail Acts (under which the Post-

‘master General and. the Commnussion had divided authority over mail

pay, with a Commission fined rate bei uy supe rimposed on a contract- .

fixed rate, subject fo a statutdry ceiling) teone under which all

authority ever air maul rates would bye repased in the Commission,

“just as mail on ratrdad’s 1p treaved.” 81 Cong. Ree. 9202.

7 /e

)

(lies, Br. po 1). i parently one ts. supposed: to infer that

the Witnesses thought that railroads aud airlines ocoupied

the Very, saosin gga therefore phat air teal pay

should be treated Tn exactly the same ways ds.‘ railroad:

rates," i.¢.; punenehier aan freight rates.

. No Witness aigevested any such thing. (in. the. con.

trary, the witnesses made it plain that railfoads and air.

lines occupied quite different’ situations, ever with respect

to nail transportation.” in det, the Board “quotes -bits

49 Tn Sihcopimiitte id leas nal Maiiseas hefore the Howse

Committee en luterstate dnd Foreign Conunere ¢, Fath Cong., Ist

_Yess., on Lf. “R. S234, p35, Comuniissivner Eastman pointed out one

profound difference between the situation of the atrhines and -that

of the railroads with respect to “nial pay. - He said ( Subcdmimuttee

‘Hearings, p05): PY | .

~ y 7

“In the cage of air carriers, however, the mail service is

afar more important factor than in the case of the railroads

The air lines claim, and probably up to the present ume tt

“has very largely heen true, that they were created for the pur-

pose of carrying mail, that, it is their primary and essential

function, aml af they are ‘to carry the mail effic tently and

successfully they argue that the compensation for: carry

thes pal: atl emiist make it possible for them .to. operate at a

profit. The result of following this argument to its logical

conclusion ts ime to the result of a direct Government -

subsidy, because the Government's payment: for carrying the

rial will then tasure profttabbe eperation--always asstimingy

efieatnft dnd coomeme management, of course, _ tae a .

Histo would lake tite, Comsideratian

“Whelher or netthrs eughtto be done ts a nh: wr ad 74 he v

for Congress to determmme. bo wish te pomt’ ur. diowevek

that. the tyescnt dal) [reo the ortgmal 1437 bill} 1 sho dh

that it oenems the door .te tats argument.” ;

M - dserre]] also riteaf Gut tl vy mail Was + sant the oan a

Af most airlines. - /f y $4 VTE is expressly provided that me

Commapsstot. will pict de Kamd to follow the method adopted Wes the

case of the réidroad&s watch las ’bee purely a space. me thoel, as

understand i ihe Commission must take tnte comsideratien the

conditions of acrcraft transportation.” /by. p. ant. See also his

, : ‘rage Pt ; . ;

testimiony ur Tea Ke Br »— it. note 59 ; : “ .

‘ ears»

2 . ee ‘

e ”» : \

ae ane ~

4 . e

. . s

of testimony intended to Wiuminate fFerenees between

thie 1937 ball canned the, Railway Mail Pay Act over the Use of

¢nail payeas a tsubsidv.! That testimony Was de signed

to dy mionstrate thal experionce showed that’ ne rates ¢ an

ever be fixed in a vae mane that if the airlines were

-fo.earn choad total revenue to keep going, but could not

derive a livelihood from: carrying passencers and fre ight,

mail rates would lnive to be fixed lish enough to make up

the difference." It pisses unde ‘Vat tending how this testi

"4 Some Of Cermiessioner Eastmans-testunony in this respect

was quieted in Pet. Br. po 73, mete 109. lieaddtion, he prefaced

that partof his tesungony from which disjointed? excerpts are quoted

in Res. Br. p. 30, hy saying’ + Supcommutge Heanitgs, porta):

“These bill eth &f-them, follow Pete largely the language

mi the present railway mal pay acts under which the Inter-

state Commerce Commission fixes compensation for carrying

ic ilway mail There are certain differences, however, which

‘were peinted out in the report which we have iiled on Sv and

which feuall endeavor to discuss a little: mere ef plicitly. at

this tune.” : . :

The “report whic liwe fre, the Commission} have filed on S. 2”

* + ' * ’ “ .

é@ the orginal fof. not tle substitute bill which we sill call the

“e -*8 Yi .

“pos DAL" as in our main brief) had yoened >. ly.the case of the

railnpad. there has ae meh int of: subsidy in cotnection with mail’

payments. Sabo ouaittee Hearimtys, po 45. At, the hearings, Com- -

avssioner Dastman developed the point-further. See supra, note 39,

and rire, note We . : ; : '

7 Tiss clears appears from the testimony of Commissioner -East-

man, quoted in truncaietl form in Res. Br. p.. 34. After the ‘state-

mient quoted ‘supra, rote 39, he said that “tm the substitu te [re., the

PST tall | oveuw aalb mote there is contimual emypdiisis upon Trans:

pertatton ef the mak” and ' ‘provisions adieating that rates must he |

po fixed t! it the warriers can «periate’ sues cessfully ths rates for’.

Carrymig passengers and property ther t! 2. ah" as Aoprac,

Heal. matter, be fied ata level winedr wall extable them to do their

sharé-in producme these re sits, then the Wurden guest. st wil he

tit 1 fall ua 4 PEE mm es Seer) tuo Hears 1: 75... He

widded: “Po am net.so sure. that that as-te be regarded as a subsidy”:

mony «ean be offered as remotely indicating that a limited

meanina should: in seiven to the ‘make effectivy: clause,

Which had hot evel been pape at the: time.

m4. OF cours esas the Board argues (Res, “— +» Pp. 36-37), .

i ‘ongwress cod lave disve warded the historical differentia

tion hetweei iad pay sad justine its and. public utility rate

changes, ignored the practical reasons underlying that dif-

ference, and tossed-into the discard gener itions of. experi-

ence in the fixing of mail compensation for the past as

well as the future. P resumably, howéver,.in a mai! pay:

provision Congress acted with regard to*the conditions

peculiar to mail pay and its past: ex ‘perience with that field.

Presumably it did not draw a false analogy to the alien

field of.publie utility rates. .

There’ is no need, however, to rely on presumptions.

Apt language to assimilate completely the fixing of mail

Ihid:; Then he proc ceded. to- develop this point by an analogy. “It is

a good deak like the situation with respect to the railroads. There

“the most important part of the’service is the freight service, and .

the railroads .*. .. have jrequently. argued to. the-Commissien that»

it is impossible for them to get a fair-return’on the passenger busi-

“ness, and, therefore the freight must carry that load, if they are ‘to

yet the fAir return; in other words, that the deficit from passenger

service must be fastened on the freight service. To some extent the °

~€ommission has accepted that argument.. I. say ‘to some extent’

hecause in the case of the carriage of livestock, for example, it

found that it Wa et an appropriate place to put that burden, and

that the ratfroads should: find, some ae place to carry that burden,

other thai the carriage of fivestock. The situation 7 nich the same

‘ e . iO hy : . am

here Of course 4) Govetiment wants the mail to be carned effi-,

cenithy and well7 Ef av should be the situation that for competitive snd

ther reasins the passenger part of the business cannot be made to pay

dis wav, then mo tollaws that the compames cannot operate success

folly aa a dinarecral Waly un less they Kary nough trom carrvings the.

tail te cower the deticieréy on pi assengers.” thd. > PR To- 76.

: Le ‘a, - ; “ ’ ;

\ 7y i ap ®B

. ~~

ff es

pay tu public utiliiy rate doctrines Jay at hand in thi

» Very statute, (Coneress could have chosen the saline ~tund

ards for fixing mail pay as for den aiuing public utility

rates. It‘did not. It could have provided that mail rates,

like pubic utiliiy rates, shomld be changed only prospee

tively. Tt did not, Oy the contrary, it used in.‘ 406 (a) Ob),

unique language vastly different from Hise of public utility —

rite statutes’ That language caimnot ‘be emasculated by

appealing toa false analogy which Congress did not follow

when draWine this.very Act. paint 7

i. ‘The “Legislative History” of the *Make Effective”

Clause. ;

The | Jourd te les to pare down 406(a) (1) by invoking its

“

legislative luistory. ‘Phere is, however, 0. ambiguity in

“this Act ti be ciwritied = resort to legislative history.’

Pac ie or Car CoN. National Labor Relations Board,

3300U'. S. 485, 402 gn ar gument, moreover, is fruitless.

What the legislative history shows. is that tlie “public

utility’ netion that mail pay rates should be changed only

. prospectively was vigorously advanced and rejected de-

cisively, lu-ftead Congress wrote into the Act a broad

erant of power with cut any arbitrary limitftions.

A. The Obligation to eis the Mails.

Claiming that the 19 7 hi Ils (and the Act) iniposed no

obligation oe the Board: persists in its basie .

weniee that the ttdisagreement in the Commission” over

I's power under the Air Mail ; Vet= to fix rates back’ to the.

Hates the ‘procetding was hegnu “would have heen pet

petaated bad the isczchitls Deen enacted into law wishes

the mel tition of the “inigke fective’ clause’ (Res. Br., p-

GS). -Itoadn nite at Commissiouer Mahaftie predicated his

_ dissenting vie W Wh ois on the argument that under the. Air

Maid Acts airline- were not required by Taw to carry the

mail. (Res. Br. p. 6a). 2

The Board’. clair i unsound, It is entirely imuna-

‘terial whether an air line cab legally operate withou earry-

ing mail.) The problem ‘whether “air Tnail rates ‘can be

fixed retrospectively or not can never arise with an airline

lacking authority fo carry mail, Yor it may not carry mail.

at all. No wirline thay carry mail unless, ~pecitically. au-,

thorized to do so by certificate. “

”

3 The 193% ill provided, in $$05¢g): “No certificate shall be

issued, and ne arr carnmer stiall hold, or operate under, any certificate,

except upon conditian that the carrier shall undertake to provide,

under suche rules and saints net imconsistent with the provi-

sions Of this part as tie Postmaster General. may prescribe, neces-

sary’ and adequate facilities and: service for the transportation of,

and .te transport, mail, whenever so authorized by such certificate

and so required hy the Postmaster General; and such carrier sha

‘be entitled te receave Compensation therefor aschereimafter provided,

.Subcommuttees Hearings, p. 3. Perhaps it might be inferentially

implied from gla, i)" which. referred to a certificate including

“authority ‘to transport’ such ‘classes of traffic, except mail, as, fay

be ap jiroved by the“Commtission,” that an-airline might be issued

a ceytificate authori ving it to operate although not obliging it to carry

mail. “For the corresponding provisions of the original 19°7" bill,

ye J {oni . :

see Subcomimetce Hearuigs, p. 4. ‘ ; ro ;

a3 The 1937 bill provided, in’ $303ea): “No air carrier shall en-

gage an inter stale, overseas, Or foreign air transportation OF 11 any

transportation ot mail by aire raft, unless there’ is’ in force a4 cer-

tificate issued hy the Commission authorizing such carrier so- to

engage,’ S Jxoutittce He artnas, Pp. ‘92. Th corsésponding pro,

visio of the Vets aed ai, 49. U.S.C. §481ia): “No air carrier

shall oie anv air Transpertanien ails ss there is in fofece a

certificate issued by the Qo ar authorizing such ai Carre: to envage

‘ - *

or osmeh transportation Lt the: Act “arr transportation” mean.

“interstate. Sovetseas or Yorelgn gtr transportation or the ‘Transpor-

urcrait.” $1110), 49 U, S.C S401; VW)

tation ol mia

. - 2

While Such a certificate is in existence, ‘the airlihe has.

yé choice about carving mail. ** Whenever so authorized

he ots cortilicate, ay air carrier shall provide neceseary

anid -aileqiat jacilities and services for the transportation

of-mati!, anal dell transport mail whenever pequirgd by the

i’ pstiniinter Cieneral, Such aie carrjer ‘shall byes entitled te

receive: reasonable compensation therefor as hereinafter

provided Tf it violates that duty, it is liable to a heavy

fine for each day of the violation.”® Once a certificate is

iestied, if cannot be voluntarily abandoned.”

After. an trie ae upie~ the status of a wail’ carrier,

thereforey it is compelled te carry mail, That the status

‘was nut forced on it originally ix beside the point. No-

Denly eit be lewally foreed inte the status of marriage, but

aman Who marries is vompelled to support his wife Whether

Section 40Lem) at the’ Act. 49 S.C, Stslim). The cor-

responding rowisigns of the 1957 Tall. are set vtt)supra, note 42.

“Air carriers transporting er handing Unity4 States mail shall

submit, under oath, when apd®in such form as rnvaty he re quired by

the ‘Postmaster Gencral, evidence of the performance -of mail serv-

we, SM pad LOS. CC. St8o 09). For corresponding provisions,

see S301¢f) of the origirial 1937 bil, Sdbcommittee Hearings, p.

tle and Oech) ob the ames ded 103% tall. aval. }. 29. “s

"For a first oflensc, the fine can be SAv0; ior ‘each subsequent

Hense, S000, “TP such wielafion is a continume one, each, day of

: - a” mu o .: .

welr violation shall comsritute ‘a separate offense,” S02 (a) of the

Vet, Po US. CL 8622 04a0.. For the pegal provisions of §3516)a)

: . N) 1

of the 157 balls: see Subcon mittee, Hearings, pp. 13-14, 21.°. -,

®eecton diteky oi the Act. 49 UL-S. C. Ststck), provides ;

"NO air carrey hall “bandon. any route, er part thereof. for whick

bcort ile | ae doby the Board, unless, apen the applica-*

thet aol sin hoa rt ey atte fothee ands Is ariay, the Hoard shall

find such abanjemiy jeche in che public mterest.” pinularly, a

riit 3 nmgte reveled’ pn ot der ‘willuk’ velanen: of law,

Mei hood i “@ "ea tod. bh.) . Phe.2ost bills eoitained no express :

rovistens reheat tig to wandorment of @ Gortific ite. i ee

he wants to or not. Moreover, tfiider ‘401(n) of the Act,

onee ar airline aceep its at certificate permitting it to carry

only pissengers or cargo or both, but net mail, it subjects

itself to the oblig ation of carrying mail if the Board sub-

aia finds that it is‘in the public interest.” _

’ No one had ang doubt that ander the 1937 bill, an air-

line authorized to earry mail .would-be compelled to act as

a mail carrier, Mr. Gorrell made that clear.“ He even

took the position that the airlines’ duty to carry mail was

broader than that of the railroads? aaa

Under Section 401(n), upon ‘certification by the “Postmaster

General that new air n ail service is needed, the. Board has. the power

to provide tor it by issying a new certificate “or by. amending an

existing certilic ate or certificates in ‘accordance with the provisions

of this section.’ ‘This section” [$401(h) )/provides that the Board,

on its*own initiative, may amend any ceftificate if the public cons

venience and nycessity so require. Consequently -once an_ airline

accepts any kind of .a certificate it immediately subjects itseif to

the obligation of carrying the mail if the Board Wishes to require it,

whether its original certificate provided for it or not.

28*Thus, when a carrier is authorized in his. certificate to carry

mail, he. assumes an absolute obligation to transport that mail as

and when directed by the Postmaster General, and under -rules and

regulations made by the Postmaster General.” Subcommittee Hear-

ings, p. 436. “Since the obligation placed upon the carriers by section

305.4) to furnish ‘adequate and necessary mail service is one of the

obligations imposed hy the act... . the crirhinal penalties for viola-

tims of the act gre hkewise applicable.” Jbid., p. 463.

# On the other hand, with respect to the mail service, section

BOA Cg) says specitic: ally that the carrier must transport the mail

‘whenever 20. °. requ red by the Postmaster General.’ Tt also’ pro-

vides that adeqyiate service. must be given under the. Postmaster

General's ruleand re; gulations. This is a power much greater than

that shi hohe. POssesses with, respect to the railroads. As to them

it ts provided merely that a railroad: company must transport, mail

when required “bé the Po stmaster General on any. train or trains

it yperates” That is taken from 3o U. S.C; Ak. section 439."

Subcommittee Hearings’ p. 442. eae ’

\ eyes eit

‘4

ja = —

Thus, even without the ‘make effective, clause,’’ the

WT bill co ple tely cut the ground from under Commis-

~ioner Ma alias -enting argument, The point on which

he disayfecd with the C omission could have arisen only

_ when Am airline was dawfully earrying mail. Under the

1937 bill, every such airline w as placed under a penal,

statutory duty te-carry mail. ; j

Not even Commissioner Mahaffie could have made tine

arguments against al] retrospective adjustments of mail

pay — anced in his dissent in Air Mad Compensation, 216

I. C. C..166, 192° -No longer could the have sontianed to

argue that ‘carriage of the mail by railroads is required

by law. Refusal-is punishable by a fine,”’ whereas ‘‘air

mail is carrigd by contractors. The air line is under no.

compulsion to. become a contractor. It niay, on 60 days’

notice, terminate its contract, and. end its undertaking to

‘arry niail.”’ ‘The 1937-bill abolished the whole system of |

“a voluntary contractual relationship. It substituted a

compulsory, bon-ter minable status relationship enforceable

by vriminat penaities. The Board's basic premise is com-

pletely unsound,”

It is unnecessary to explore the Board's attempt (Res. Br., ‘Dp.

64) to show that the 193% bills did not ‘climinate the “minutiae of ex-

pression... that Show Congress to -have been thinking of the

future” carried éver vito the Ai ir Mail Act-from the Railway Mail

Pay Act. They are apparent from a’comparison of the statutes

(Por Broepp. E51, S61). Indeed, reenactment of the: statute .

without chayGe would lave been an acceffance by Congréss of the

ConmiussiZ) «Settle construction “whéch had been so clearly brought

te its atteytion’ United Stales v. Zacove, S354 U.S. 602, 623; cf.

Feanéis v. Southern Pac fic Co... 3338 U.S: 445, 449-450.

| 6 k 3l ey ae

_B. The Broad Disagreement. as to the Commission's Retro-

spective Power to Fix Mail Rates. — ° ean

J 1. The Board thinks: that under the Air Mail ‘Acts the

only disagree ‘ment in the Commission’ was over ‘“‘the nar- |

row. question of whether’ the Commission had authority to...

fix mail rates back to the date vf the petition or whether

it was restricted to making such rates effective from the

date of issuance of an order’? (Res. Br., pp. 69-70). .There

are two errors in this position. eG oes |

. First; the Board does. not cite a single case to support

its intimation that, under the Air Mail Acts, the Commi--

sion held.or said that it could go back only to,the date of

the petition. Actually it went back even further.®

Second, in all thé,cases where the Commission did fix

rates back of the date of the petition, ‘Commissioner Ma-

_haffie dissented. He predicated his first dissent on the

broad ground that the Commission had’ ‘‘no authority in

— = . - -

ee = ri :

_-° 5! The Board dismisses certain decisions reviewed in Pet. Br.,

-p. 58, note 72, on two grounds. First, the retrospective “action was

oe by the Postm: ister General and not the Commission” (Res. Br.,

. Oe notc4iOa, The mechanics of° the retrospective adjustment

ie immaterial. The important thing is that under the statute the

.Commission had power to issue ‘orderseAvhich were made effective

far back of the start of the proceeding. ‘Had, the. Postmaster General: -

doubted the Commission's authority to make such orders, he would

have refused to pay thereon, as inthe New York Central case. Sec-—

ond, it. suggests, that the action was “appare ntly based on, Section

6(¢) of the Air’ Mail Act of 1934,-as amended.” Nothing in. that

section required that compensation under-a revised Commission-fixed

rate’ be adjusted. retrospectively as far back as‘March 1, 1935 (cf.

Pet. Br. p. 5%, note 71), and.the action taken. shows a liberal in-

seshuesiiion of the section standing in sharp contrast to the Board’s

present narrow view of $406(a)(1).

y, ° 7 -

the act for making the increases retroactive,’? and con

tinned that position throughout. In other words, ‘he took

the view that the Commission should fix rates only for the

future, just as under .public utility-rate statutes®* = *

2.. The Board’ concedes that disagreement was voiced.

by. ** witnesses and legislators “aad during the 1937 hearings

over the broad principle ‘whether the Commission had any

power to fix rates retrospectively, not over the narrow

quéstion here involved (Res. Br., pp. 70-71). It suggests *

that the argument somchow ‘‘became narrowed’’ and

then Mr. Gorrell ** resolved the issue.’’ The fact is that all

* Air Mail Coipensation, 216 1. C. GC. 166, 191. “By construc-

tron, the majority impért into the statute a power contrary, in my

opinion, lo tts express terms.” ‘[bid., p. 192.

*8 The discussion (Res. Br... pp. 68-69, pote 62) of sir Mail

Rates for Route’ No. 33, 2161. -C. C. 381, ignores the very first

sentence of the dissent: “As [pointed out in my separate expres-

‘sion in Air Mail Rocket No, 1, decided June 6, 1936 [he., Air Mail. .

Compensation, 216 b. C. C..166, 191, supra, note 52] 1 find nothing

in the law under which. we operate that authorizes us to prescribe

coi pensation retroactively” ps - 103). Perhaps Commissioner Ma- -

haftie Was Wrong in not agreeing with the Board thar the 1935 Act

“specifically conterred power to fix rates back to March 1, 1935,” ,

but that is what he th ought. The discussion ‘of. the dissent in Air

Mail Compensation, 222 1. C. C. 602, 610, puts words into Com-

‘missioner Mahafiie’ s mouth. He did .not refer at all- “to the date’

a petition was filed” (Res. Br., p. 69, note'62).° “The chief ques-

tion here is:whether, under: the terms of the act, we are. authorized

retroactively to change rates of compensation previously determined

by us.andpart by the Postmaster General, For the reasons stated »

-in my separate expression in 216 1c. C. 166,191, I am unable’to.

agree that we hiivg that power” (italics the Commissioner's). Nor

is there any reason to suppose that, because he did tiot dis¢uss the -

icrits of the change effected. by the retrospective addition, of ‘the -

proviso, he ignored that-phase of the majority's Holding.

"In dir Maw Compensation, 216 1. C. C. 166, 192, he. relied on

a case dealing with public utility rate changes. : :

33 /

he did was to concentrate, for ,tactical yeasons, on that

one ‘spect of the “general problem of retroaciivity””. on

which he. had a decision of this ‘Court to support him,

whereas on other phases he could*rely only on the generat =

reasoning which he also advanced (Pet. Br., p. 70, note

104). No person can unilaterally ‘‘resolve’’ a broad ques-

tion previously raised by others. -None of Mr. Gorrell’s

‘adversaries receded from or ‘‘narrowed’’ their broad posi-

tion. After he finished testifying, the debate remained, as

' before, one cver' the general principle of prospective vs.

retrospective rate-fixing. 3

So, too, the Board , simply wrong in saying that Mr.

_Gorrell “expressed an intention to grant the Commission

authority to make its mail orders effective as of the date

mail rate proceeding was initiated, dnd nothing more’

tes. Br., pp. 61-62). Neither he nor anyone else at these

hearings ever said that the Commission had or should have

only such limited power. _He expressly referred to author-

ity to fix “‘appropriately’’. the effective date-of its rate

decisions. For all that. appears, he had, in mind the fact

that, since the -1937 bill omitted the ‘specific provision

whereby rates were fixed.retrosptctively, to Mareh 1, 1935,

" aspast, date which Congress had ‘deemed appropriate, it

‘preserving like broad power to go back retrospectively to”

a past date which the Commission determined to be ap-

- propriate. 7

- If Mr. Gorrell had half ‘the keen powers of discrimina-

tion with which the Board credits him, it must have been

obvious to him that the power ‘‘to make such rates efec-

tive from such date as it shall determine to be ‘proper’? was

palpably broader than the limited intention. now foisted on’

oe hat it says.

34 +

“Shim. He did set idee to add, “this bestia ‘ge! means just

* But the point is not worth further diseus-

sions It is. a Sovel theory. indeed that the broad, clear

hanguaige of ‘a statute can be Vitlited by acr ibing to Con-

gress in 1938 a narrow “intention” derived i in turn by i im-

° puting it, bya process of. divination anid speculation, to a.

_ | private: witness who testified in 1937,0n a bill which-never

“even came to a vote. - eee

c. - The “Legislative History” After the 1937 Hearings. :

The Board says ‘that Mr. Gorrell ‘“is the only perso.

“who ever explained or even epmmenter deon the ‘niake effee-

‘tive! clause during the entire legislative consideration of the

| Act?® (Res. ‘By.,: Ds 62). _Notietheless’ it struggles to make

it appear: that its ‘interpretation of what he meant bra

un ofticiaf accolade, sub silentio, in 1937.~ To do this,

‘ tears out of context utter generalities caving nophiig to

do witli the ! ‘make effecdive e’’ clause (Res. Br., p. Mm. ™

fhen-the Board makes the fanciful argument that all

of Mr. Gorrell’s testimony was ‘‘ineorperated by refer-

ence”? t during the 1938 hearings (Res. Br., p. 63). While 2

- would not nlfike ahy difference if the fact were as stated,«

“ne ‘Nally alk he said in 19: 8 was that ‘he: would not cover, the’

“points COV ‘ered the prev ious year—which: comprised over

: .

ia,

200 pages ef varied comments. There is nothing to show

that any member of “Cougiess ever referred in. 1938 to the

1937 Gorre It testimony.” In short, ‘the Conference Report

«Pet. Br., p. 45) Nis the only expression by Congress

on <406(a). While i Board tries ti dismiss it as a

_ e : ———— =e « f

These generalities havé been noted before Pet. Br., p. 72,

mete, LOFT and LOS; supra, note 38). ° “ie '

~~ : .

ao -.7

| 7

deviating from its “Scene! ‘al policy

«st

; ° bd. : ee rae

so. - é -, ‘ -

‘

*croncera! lity,’ ** it ce tainty show's that the setion. Was ~ taken

at its full face value.

The legis lative history proves that the

clause means Just what it says

a WN. The Board's Previo ulings.

From a the outset the — has regularly fixed: mail rates

-for the past. , Ofteri it-has béen as occupied with fixthg

_ rates for past periods, frequently covering several years,

as im fixing future’ rates.

> Nev er before. did the Board dias that it had thé power

to fix rates back of the date of the proceeding. Even if

‘it had never exercised that power, its inaction. would not,

_show*that the powe r Was non- existent.* Actually, however,

it has invoKed that power repeatedly (Pet. Br., pp. 85-98).

That the Board did not say forthrightly that it was

is immaterfal. Actions

sjweak louder than words. Power is not wielded any the

: ; e eae ee oY : . sz

less Hecause its éxercise is*¢loaked by using magic words

like pemparaty,

_ gn [ as ; ‘ ; ‘ y .- > a

‘Authority .actually granted by Congress of cours ‘cannot

-. evaporate through lack of administrative exercise.’ "Federal Trade

Ota v. Bunte Brothers, Ine., 812 Le. 32 .@ : United States

American Union Piomank. Inc., 327 U.S SS note, a a8.

Cf The Mail Divisor Cases, 251 U.S, 326, 332-

"? This wag-the abracad: ire cides in Alaska Airlines, Inc.,

or ‘*provisional,’** or «+ §8tem,’”* or .

; Fs °

Fes No. E-Lds5 (-\ug. 13, 1948), mentioned in Ret. Br. p. 8G, note ”

There the Buard held it had power to go years back of the filing

date rof the petition to supe rsede a inate rate which had been in

effect all ae. 7 > ‘

a8 In Racific Alaska Air ways, he. ct ul, Alaska Mail Ratés, 6

“CC. AL B. 61. the Board found that since the airline hag received

“excess carmings” on its other routes “which greatly exceeded the

by resorting to polite fictions in *treopening’’ proecedings

and issuing ‘‘amended”’ or ‘*revised*’ orders, or deeming:

a petition filpd ‘nue pro func’? a-date earlier than’its

actual filing. be, ae th ck,

@. .

In ‘406 (a) (1) the Act confers. ¢ on the Board, in plain |

10 aglish, ample power to reach direetly all the results which

it now feels obliged to justify by fictions and charmed

words. When one looks to whet it has actually done, it is

perfectly: manifest that it has repeatedly exercised that

power. ‘It is hardly surprising that, — after this pro-

requirements .of the Alaska division,, _ respondent had no ‘need’ for

which if may be*Paid additional gempensation’?’ (p. 67). Nonethe-

less, becayse it decided not to Setfates for the new Alaska operations

on va “system” basis, it he at “we cannot refrain from fixing

the minimum compensafry rate in this proceeding on the gtdund

that such.earnings exist elsewhere” (p. 68). When the Board wishes

to fix rates on a “system” basis, however, it feels at liberty to give

the airline nothing for c&rrying mail on the new ‘route, when it thinks

it has earned too ‘much mail pay on the old routes. Sée Pet. Br.,

p- 4. etme ;

3° The Board stfuggles (Res. Bri, pp. 78-79) to explain away

its 1942 meinoranda (digcussed in -Pet. Br., pp. 87-88). Pre-

sumably. it pre ferred not toc

tion to its * policy” because it thought that, if it did so, airlines might

misinte rpret’ its action as encouragement to apply fuy retrospective

relief on baseless. grounds. No matter*why it favored indirection,

however, the fact ‘remains that ‘the Board invited airlines to file pe-

titions asking for. relief which it now says it could not lawfully

grant. he present “fair play” argument is. irrglevant to the question :

of power.’, “It is beyond ‘the judicial power to distort facts or to

disregard legislative intent in ceder to provide equitable relief in a

parheiilar” situation.” Poehm vy. Commissioner of Internal Revenue, .

326 U. S. 287,. 295... Administrative power 1s hardly greater than —

judicial power. Moreover, the Boar d's arguments have no- possible

application to eee liv Lines Transport Corp., Mail Rat» Pro-

cecding, 3 C. A, B. 289 (discussed in Pet. Br., p. 89), where the

same mwtc pro or device Was” employed, The ‘Board igngres that

decision. - a en,

y bluntly that it was makitig an excep-

‘

ceeding was begun the Bosrd's own Publie Counsel flatly

’ stated ‘the Board lias t le pawer & fix a rate to be effective

prior to the date of the ins stitution ofa mail rate oneal

Ping ed

ing’? (see: Pet. Br.,-p. 24); gel

YV. The Banta 6 Policy Arguments!

The Board's baie! is heaped with policy arguments de-

signede, to show that Congress should not have given it

~the broad power to make mail Spay rates “effective from

»such date as it shall determine to be proper’? after hearing

all the facts. ‘But in construing a definite procedural

provision we do well to.stick close to.the text and not im-

port argumenti ath qualifications trom broad, ‘unexpressed -

: claims of poiicy.”” Utah Junk Co. v. Porter, 328 U.S. 39,

44. Fundamentally the Board’s guarrel is with the policy

expressed in ‘406(a)(1y. “Butt is a policy adopted by

Congress, and ‘our responsibility is to interpret the Act,

not to overrule the Gongressional policy.’? Hilton, v.. Sulli-

van, 334 U.S. 323, 339. The policy arguments are, more-

over, untenable as well as irrelevant.

y _ A. ‘The “Waste of Time” Argument. .

* The Board asserts ‘that, unless the. ‘‘make effective’

clause is whittled down’as it proposes, the whole ‘“rate-

rhod :

making erdebed am would be completely eliminatell’””

(Res. Br. p.. 39). ° A contrary view, it protests,” would

“‘render meaningless the work of the Board in this field

for the past ten veprs”’ (Res. Br. + p. 17), for the Board

“hardly “would expend timre, effort, and money to fix future

rates’ ‘if the Act Aauited it ‘*to replace all such deter-

minations [t¢., its future rate propheci es} with the results

taken from iudits after the facts became known’? (Res.

Br., p. 82). Indeed, the ‘rate- necking proc ess would lose

: ‘all significance ’’* (Res. Br. + p 85). ayes ‘- .

‘nderlying this rhetoric are several glaring fallacies.

; e : Nae |

1, All the Board’s mail pay rate predictions need re-

vision. sooner or later. When they are revised, neceés- :

sarily the Board’ looks to the results of past operations.”

‘But it does not merely replace one rate propheey with

another, as a public utility rate-fixing body must do because

of practical exigencies. Tor the choice is not, as the Board

contends, between Jeaping from prophecy to prophecy and

gee abandoning gi entire effort to fix future'rates as a waste

. of time. ‘There is a middle ground betwee those,two ex~ ,

| trenies , and the Board oce upies it right now.

When a mail rate prophecy is superseded, it if not ‘‘re-

placed’? merely for the futnre. « ‘oncededly the L urd re-

‘places it for the past as well, by a ret rospective adjustment ae

of mail pay for the period baek to the start of the proceed-

ing. its determination is, of .course, based on. ‘‘the re-

sults taken from audits after the facets became known, ”?

~ . Yet ‘the’ rate-making process does not ‘zo up. in snioke,

or become a waste of ‘‘time, effort, and money.”’

In short, the dilemma propounded by the Board is false.

Rather the | issue is whether, when superse ding a prophecy

as of a past date, the Board’s hands are tied s6- that it is

. . limited to going back to the day. when the. proceeding |

-starts, or whether it.is free to go back to the ‘time when

. * °

~ . , ©

wo t

ln fixing a rate for the future; however, we must necessarily

. consider the results undgr existify rates during the.past, and whether

there be a deticicticy, a just profit, or an excess profit, we look at the

results for guidance in redétermining the rate.” : Braniff. Airways,

-. the rate actually became unreasonable. The -Board’s rhe-

e a e ee ° -

toric only obscures’ that issue.

2 i the Board's prophecies were always as wide of

the. ditrkeas the’rate inv olved, here (Bet. br., p. 12, note 4},

; Jit would. be enunently sensible to abafidon the entire effort

: ae set. future rates. But there are excellent reasons why

it is not a waste of time and money to fix rates for the

‘future. _ eA tal eS +e Se

| Airlines need mail pay to keep operatang. ‘ They are |

paid by the Postmaster General, and his only authority for

making payment appears in §406(a) (3), which provides

that ‘‘the rates so fixed and determined shall be paid by

’ the Postmaster: General from appropriations for ae

portation of mail by aircraft.’’* |

* Hence *‘under the Civil Acronianties Act, t the Post Office

‘Department cannot pay for mail service rendered. by* an

air earrigr except upon an order of the Board fixing and

deter mining ‘a rate of maibcompe nsatiori. r2 66 Ty the ab-

* sence of any mail pay the cost of the mail service necessarily

| dissipates the respondent’s available working capital.’’®

Manifestly it would not be a waste of the Board’s “time,

effort, and money,’’ thérefore, to fix a future mail rate, if:

‘the ‘‘make effective’’ clause ij taken, at its face value.

6149 U.S. C. $186(a), quoted in Pet. Br., p. “BO. This is the

only gene ‘ral mi: andate to the Postmaster, General.

62 Rissaie Inc., Temporary Maid Rate, 6 C. A..B. 687. 689... See

also American Overseas Atrlines, Inc., Mail Rate, 7 C: A. BY 623,

625, and the cases cited infra, note 63.. |

68 Transcontinental. > Western Air, Inc., Transatlantic Mail -

“Rates T COAX. BL ART AR, Pan American Airways,.dne., Transpacific

Il Rate, 7 C. A. B. 645, 619,

Mail Ka de B ol} 1,

. : . - ‘ *

ae (

Only by fixing such a rate could the airline get the mail

pay currently needed to cnable-it to perform the service :

which is to. » fulfill the’ Act's objectives. ‘ :

‘But the errors in the Bo: wd’ s argument go far deeper.

‘lf we “make effective’’ clause is given its plain’ meaning,

the ‘Board would not have to ** jeplace all Such determina-

>) “with the results taken

‘acts became known"? (Res.

" Bn, p.°82).- It would. have to do-that only if its propheties

were inv ariably wrong—in whi

tions’? -(2.¢., its. rate “propheci

from audits made after the

1-event it certainly would ‘

‘be absurd ‘to spend ‘much time formulating them. So long

as a rate prediction, remained Within the broad ‘‘zone of

res asvnableness, it would need no repli wement. Hence

there would be real-point in making il careful effort to fix av ¢

fair_future rate, instead of pieking a figure out of thin air. °

4. Another variant ef the Board’s argument is that. -

(lie Board’s future t rates would become “merely tentative’

or ‘‘tentative determinations” (Res. Br., pp. 41, 49). But

the Board ‘does not deny hat it has _power to. set. {*tem-

porary’’ rates for any and all airlines. Indeed, in 1942 it

proposed precisely that procedure for the e1itire industry.™

It did not think then that the ‘‘rate-making process’? would

thereby lose ‘tall signific ‘ance.”’ Nor does it lose its ‘*sig-

nific: ince’ or er ‘*mes iningless*? How, when many rates

64 Ly its.1942 memoranduni, yueted im Pet. Br., p. 99, it proposed

that “all. rates effective-on and after the date -of the change-over

to the new service pattern, should be tenaporary in character, and

should be subject to review and adjustment as to such pertod as

experience may show the necesstjv for aul yrastare nt after a reasonable

period of time.” ¢ : iy

are Se y goose 8 and revised retrospectively for

“many years SA or Sean

al rom it ‘Doli \ standpoint, a system of ' purely “‘tenta-

tive’? rates would be prete ‘rable in this industry to one of Ne

sacrosanct “tinal?” future rates, if choice had to. be. made oe

between sthose two extremes. Actually ap such choice is

"required. Once agai the Board is posing a fictitiots di- ~ ,

ae “temporary?” rate reflects a. quick, tentative Se

‘mate. No one- has to prove that it should be revised. It

_shows on its face that revision is’ expected... Even when -

évents reveal, when it is un.tor revision, that it came within

"the ‘*Zoné of reasonableness,"’ it is entitled to no weight.

Since it was a purely provisional guess, it. has no real pro-

bative significance. -Tience the ‘“temporary”’ rate need not ‘ .

-be .aecorded any: “respect, and the definitive rate may be

placed anywhere within the zone of reagonableness that the

Board determines proper. :

When a definitive rate is set, however, the -Board

* —anary iret qtite differently, It need-not-treatit-as-casualty

‘as a tentatiye estimate. It may, for example, accord it a_

pkesumption of fairness. It may impose on an -unduly

65 The “temporary” rate fixed on.October 18, 1946, in Trans-

continental & Western . dir, Inc., Transatlantic Mail Rate, %:C. A. B.

421. retrospectively as of February 5 , 1946, provided that the pro-

* ceeding would remain. open until the “Board fixed “a, final rate re-

troactive to February 5, 1946, which said final rate may be higher .

or lower than the temporary rate fixed herein” ¢p. 426},—Fhree————

. years have gone ‘by and no “final rate” has Keen. fixed. Admit-

tedly when the Board comes to fix that “fin al rate” it will have to

examute ali TW N's revenues from all its routes back to February 4,

1946 (Re—Br., !) . note 6S). Yet it maintains ‘that it is limited

to examination, as p ding the rates on the ‘domestic routes are —

concerned, and 1s powerless to adjust those rates in aceordance with o*

‘the results of its examination.

dilatory. petitioner the burden of proving the rate’s un-

fairness.

> zone & reasonableness, it may dew ‘litre to revise it, retfospee-

tively. Indeed, it may exercise its discretion that way even

If the facts show that. the rate was githin the.

though, if it were: fixing the rate for the first time; it would ’

choose a different figure | within that zone,

Thus it simply is not. true that the Board’s predictions

mast be regarded as Infallibly correct, up to the start of-a

new: pr oceeding, or else ‘become conipletely meaningless or

merely ‘tentative’ estimates. The time when.a rate be-

comes-unfair does not depend on the accident whether a-

_rate progeediny is pending when it ceases to be fair. If that

time falls while ’ a proceeding is pending, admittedly the

Board has power to adjust the rate back. to the date when.

it getually became ‘unfair. Congress decided that the

Board should have equal power ta make the same adjiust-

‘ment, as of the same date, whether er not a proceeding

‘?

chanced jo be pending then. The ‘‘make effective’? clause

confers precisely that power. ea

B. The “F inality” Argument. 2 aE

‘The Board says that its concededly retrospective rate

adjustments ‘‘do not ‘destroy he finality of previous orders,’

cover enly the limited cae wie to determine a new

ey — :

In Alaska Airlines, Inc., Order No. E-1885 (Aug. §3, 1948),

the Board held at had power: to fix a rate higher, than that provided

in a contraet-4#td make the inerease ettective back to Td; anuary 1, 1945,

althotigh the otthion was not filed suntil September 4, 1945. “But °

it. was not “unnindful of the narep _ the carrier waited such a

long time to tile its pe ition” and had nat “expressedyits dissatis-

‘factron” sooner. Necordnighy.at held that, "the ¢% irmier must shoulder

the burden of -coming torward with proot of the in adequacy of the

Compensation 0 as heen mecery ny te the thoe of its hhng. a pett-

mo? agd that “ad e Board ab owall s ristinite meticulvusly the evidence

with respect to th rt aed ole to the filing of the’ petition.” ¢

» °

rate, and are normally accompanied by’* a future rate

(Res. Br., p. 15) .

Tf the ttmake effective’ tigesati construsd ac cording

to its terms, the retrospective rate will “normally? ’ be.

accompanied by a future yr ate. The: Board’s refe ‘rence to

the ‘limited time nec essary to -determitie a new rate’’ can

hardly have been, ‘intended seriously Its retros' ective.,

adjustuients often are made fer two or three‘ years, and”

even longer. Moreov er, as already seen, the Boar¢ always

lod&s to the experience ‘of the past. The sole «

whether it is confined to looking at that part of the past

estion i. ad

on it in appropriate cases. : ee . Fad

As for the ‘*finality”’ point, little need be added to our

previous a Br., ip. 74-77)."" Whenever the ‘s

Board, supersedes a ‘vite retrospectively, it destroxs its

‘finality’? for the past pro tanto. Whether it is wiling to

‘face tlre fac. or not, it. does ibe aeniew SB sg perim ree

—

——

—————

** The Board makes-no effort.to support the feetitione. presump-

tion against “retroactivity” ‘rylied on below, but: suggests that the

Court was “simply drawing an analogy between the uncertainty cre-

ated by” a retroactive statute “and the uricertainty creatéd by~

TWA’s interpretation of ‘this statute” (Res. Br., p. 41, note 30).:

The. Gourt drew no: such an logy, and none exists. Interpreting

$406¢ayeL) cor rectly cates tio “uncertainty.” In this field, future

rates necessarily are extremely uncertain guesses. Had: Had: Congress _ anak

wished to conter on em a “fictitious infalibitity- it Tt would have’

irozenthettr-tor7 timmted time, like railway mail pay rates. °Cer-

tainly it would’ net have used .the broad language of the “make

- effective” clause.

The Board's “protective petition” discussion (Res. Br... pp.

- WO-93) complet ely musses the point. Whether such petitions have

“destre 'y Ms “hnality oh ‘ ?

heen, should be or wall be filed frequently has nothing to do with the

—Fndisputable fact that the Act permits them to be filed, showing | ‘

that no “tinahtw’ is accomled to future rates. Moreover, the Board

ignores the tact that hycteruang a rate “temporary.” it can always

hew rates on rates prev iously and finally fixed”? (Res. Rr., -:

p. 85). “Doubtless public utility rates have a kind of “final:

ity,’ in the sense ‘that they are not changed Tetrospectiv ely

(Res. Br., ps84). That is not because there ts some virtue

‘in inflexibility, but because of the necessity resulting from

2 ‘ ‘ ‘ P sot MB ° a*

the exigencies of the situation, which simply do not exist in

the case of mail pay (Pet. Br., pp. 33-36). Recognizing that

fact, this Act does not accord any such ‘‘finality’’ to air mail

rates. | i en io

C: The Guaranteed Profit. Argument.

Ostensibly to illustrate a policy argument, ‘the Ried

suggests that’ its 1945 rate erighen, formulated on. Fasy

guesses Of revenue, was very generous; the implication is

that it did not prove unreasonably low, although the peti- -

‘tion allegés the® contrary. It insinuates that since TWA

did not appeak it aceepted ‘the. theory of regulation which

“those ‘Fates embodied” (Res. Br. » Pp. 39), although there.

Was not the. slightest intimation in its 1945 opinion of the

Board’s present pos'tion, and TWA could not have ques?

- tioned a non-existent gratuitous dictum to that effect by

taking an. appeal. It implies that TWA should have sought -

relief earlier, although its 1945: opinion itself shows that.

WA was adjured not to complain even. though ‘‘on the

basis of repor ted results for selected short periods the rate

inay appear either unduly high or unduly low’? (Res. Br., .

p. 6). “Tt says that TWA is really asking that. the ‘*ground

should onee again be teas — Br., PR a8. 39), and

Os Cy Macon, Dublia & Sanna Rd. C. d, er nited’ States, ‘38

C. C1. 251 ¢ et. Br., pp. 9192); dlaska Airlines, Inc.. Order’ No.

F-tsss ¢ Aug. 15, 1948). supro, note 66; and the pew route cases

mm which the Porat [ granted retrespectivé rehed hack of The INStitAwON -

of the preceedings, although the airlines could. readily: have filed

petitions long before (Res. Br.. pp. 85- 86). Dae aia

? " “

‘the:

: , 5 et 4g’:

;* “oy ,

ne ®

. : a

| ¥ really secks"* a guaranteed profit, or 9 guararty against

losses, ou all its-past operations (Res. Br., pp. 19, 40, 44fo

x hes

eal issue. ° The sole question here is Whether, if the

Board hoteciatnas, after yan examination of the facts whtich

developed after the rate, prophecy was ‘made, that the

ciiabai turned out to Be false, it has power to adjust the,

rate in the ight of actualities to provide “* reasonable com.

If Congress’ decided that ‘the development of an air

transport system Was SO V ital-to the country *s security-and Fe

other national interests that mail_pay~ should be used to °

\ guara’ itee eflicient ar lines a profit or insure them against :

“teeeaas the wisdom of its conclusion would rot be review-.

able here. *‘Congress, not thia’C ourt or the other federal

courts, is the custodian of the Rea be.” nited

States v. Standard Oil Ca., 332 U..8.' 332-0. S301, 314.

But how TWA’s ‘‘reasonable IERIE “should be

compited, after the facts are examined, is notin issue

‘now. That: question will be for the Board to determi ein’

the fir first-instance, after a hearing on the. facts.. Jthis Couyt’.

is not being asked, and could not possibly decide, that pres-

ently hypothetical question. Tt is entirely irreley ant here

whether | aR adjusted reasonable rate would or would not.

entitle, TWA to’ a guaranteed profit or a guaranty against

lossés, either on all its operations er on its my ‘operations;

6 The Board's pretended horror at the “cost plus” spectre which |

it conjures up stands in ironical contrast to its statement in Western

Air Lines, Inc., Order No. E=2333 (Dec. 30, 1948), quoted in Res.

Br., p. 92, note 89. There the Board, proposing t6 punish the airline

“oe

for iccpihd a “protective petition” on. file by reducing its, mail pay

retrospectively back to 1044, said: “The effect of keeping the mail

Tate constantly in imue through the device of ‘protective’ petitiens,

is to place the Carrier ond cost plus hasis” ( p. 5). ae

“* ’ : Oe

. — innuendoes only dive rt attention from .

£>

note. -

or conceivably be some other rate which might fall within

the zone of reasonableness. The Board has he dd that it-

is powerless to make any adjustment in the rate_oven

_though it was unreasonably low... * .. —-—"

Nobody contends that “Congn ress 4 Save the. Board a.

. blank ‘check?’ {Res. Br, » Pe 44° it prescribed the, standards

-whitb the Board should consider in determining fair and —

reasonable’ rates of conipensation. Admitty -dly- the Board

applies those standards retrospectively. whet it revises an

avowedly ‘$temporary?” rate or adjusts’ mail rates back to.

the date when a proceeding was begun. All that TWA

‘really seeks’’ bs that the Board’ .ipply . the very same

standards, in the” very same way, back to the date when it.

claims the rate. became unreasonably low. The Board |

would not guarantee profit or underwr ite losses ‘any more

coal A

- 42

in one situation.than another. It: would not have to give ae

any more weight to an audit of proper costs than it ‘gives’ |

right now when making. its coneededly retrospective ad-

justments.. * The whole argument is “entirely ee

5 a

a ?

Wing “p. ‘The Kate Reducticn Argument.

1. ‘The Board says tliat the exercis@ of a power to re-"

duce rates would remove ‘‘all incentive toward managerial.

efficiency and the development of nonmail | revenues,” and

prevent airlines from planning for the future (Res. Br., p.

42). These avowals of solicitude may be contrasted with its

proposal, made ‘barely a month: ago, to punish aw airline

for keeping a ‘* protective petition’’. on file by reducing its

"1944 rate.” The Board said nothing at all about the. Te-

moval of ‘‘incentive’’ or the effect on. the airline’ s plans.

In Western Air Lines, Inc:, Order No. F-2333 (Dec. 30,

1948), the Board preposed to recapture “relatively high profits re-.

ecived” in. P94. (p. 4), for the reasons quoted in Res. Br., P. 92,

“Nothing i oe Act: ‘remotely segments that Congress

eteg sotvht to inspire airlines to'greater efficiency by assuring

‘them complete immunity against: recapture ‘of exorbitant

mail pay. The airlines have ample incentive. to eftic ieney

° -withonrt that. immunity, if only ‘because §406(b) of the Act-

. Spe weifieally provides that mail pay is based’ on the exercise

of. ‘honest, economical, and efficient. management. ” The

inducement held out to them was ‘reasonable compensar,,

tion,”’ ‘not exorbitant. compensation. F Se ee tag -

* ens

2. of course the Bogrd would not’ “have to recapture

excessiv @ prefits earned in. the past”’. if it determined after

a hearing that this would defeat the purposes. of the Act.

Later it admits tliis but argues that “the vice of the situa~

_tion lies in the existence of the power as much as in its

exercise, for its mere existence gives rise, to uncertainty?’

(Res. Br., p. 43). But the Board concededly now has, and

occasionally exercises, the power to reduce rates retro-

spectively back to thé date of the proceeding. Yet the ‘‘un-

certainty’’ suppdsed to be: engendered from the existence

of that pow er has: not served to reduce the airlines’ incent-

. dve to efficiency, OK prevented them from planning for the

future. -If the Board thinks otherwise, it should ask Con-

gress to depriv e it: of all’ poyer to reduce mail pay retro-,-°

spectively. oy Ne oo ty :

E. ‘The Uniform Rate Argument.

ay The 1 Board acserts that, if the ‘make effective’’ clause

is interprete “das iter eads, airlines would have no-*‘incentive

to live’? within a Lead rate “set, for several ‘‘carriers

Sea \\ - . . ¢

oT Seee.g., Pat Ameérican-GraceAirways, Inc—Mail. Rate 5, :

~€- “A, B. 550, 561; American Airlie S, Inc., ‘et al.: Mail ‘Rates,

C. A. B: 90,.92-93. : Che eae

ys 4 = f~

. 48

with similar chayacteristies" (Res. Br., p. 44). ‘Seetion *

~ $06(b) of the-Act does not require, but only permits, the

> Board to fissa Ghiform rate for a class of airlines.. Ifthe

Board's experience. with iform ¢lass rates 4s any cri-

terion (see Pet. BA, ppef13, note 4); their value is highly

bious. But the atgumient? i is “basically unsound, since

-an airline could never obtain ‘relief fPom the uniform

‘rate’’ if it df not try to live within it, for it would not bé

operatipg ‘‘under honest, economical, an@etlicient manage."

ment.’* Besides, when events operate entirely differently on

the members of a “class,” the preconceived pattern of

uniformity must yield to the logic of events. |

: ;

__F. The Constitutional Point. |

Whether dir mail carriers were placed under the same

‘‘abrupt legal compulsion imposed on the existing railroads

by the Raikway Mail Pay’ Act’’ (Res. Br., b- 96) is utterly

- immaterial. + Tlie controlling fact is that, as already seen, —

once an airline occupies the status of an authdrized mail

carrier, it is forced to-carry mail. Therefore its right to

compensation is defined by the Fifth Amendment.

In United States v. New York Central Rd. Co., 279 U.S.

73, the Court did not express ‘*the opinion that no consti-

tutional. right acerwed-until a petition challenging the rate

was filed’? (Res. Br., p. 94). That question was not at issue

there. The Court merely pointed out, for purposes of dis-.

cussion, that the situation before it was different from the

point arising here.” °

re "hi . 7 *

72 Doubtless constitutional rights cary be waived, but whether they |

have been waived raises a question of faet, »which.has not yet been

PS examined. C I. the specs cited supra, note 68._

The dixsimilgritt of the public utility Cases to- which

the Board re fers has already been: shown (Pet. Br., p. 3d,

_ note 119). No case cited by the, Bontd held that, when it

is practically feasible to. ‘adjust compensation for comptl-

“sory serviges rendered in the past, the C onstitution permits

it to be fictitiously frozen at. a unreasonable figure. The

Act should be ¢ oustrued to avoid the serious. constitutional

quéstioii/which arises under the Board’s construction.

/ Ss

a »*

_ Summary

2° The Board really asks thiseC ourt to sit as a super- Jegi:

slature, choose between the numerous policies which were

epen to. Congress, and rewrite the Act so.as to substitute

for the broad power of §406(a)(1) the words used in one

of the publie utility rate.provisions of the. statute. We

‘are not at liberty to be governed by those policy consider

ations ‘in deciding the naked question of law whether the

Board is now, in this case, acting within the terms of the

statute... However we might sppraise the force of these

| Sretments as a policy matter, we are not authorized to

. base decision of a question of law upon them. They concern

the wisdom of the legislation; they cannot alter the meaning:

of- otherwise plain provisions.’’ Packard Motor C ar Co. v.

National Labor Relations Board, 330 U.S. 485, 493. The

_ plain language of this Act gives the Board the power denied

it by the decision helow. By

eo *

‘

he Pet | Aad ra aie

CONCLUSION.

The Selanne of the Court of en shoul@_be re-

versed and the procee ding remanded to the Board. for a

heari ing on the merits.

‘

aS a Respectfully eG, .

ee B. Bropuy,

se _ Attorney for Petitioner:

(Hartes PICKETT,

Joseru S. Isewan,’ 3

of Counsel. .-~. ° hey

Dated 7 N ew York, N..Y., February 8, 1949.

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