Petition for Writ of Certiorari — CAB v. Delta Air Lines, Inc.

Vice Supitine VOUT, US.

LE Gee i ee

~

She em ot Wied ae

ov Amoxiong Boa, PENITIONER

CY.

“Dama ‘sm Lass Iwo.

yormmom aon WATY oY cERgWORARI 10 "THE ‘UNErED

5 oe 3 ; e . y

i 3% . td . wae

— = a f . .

. = "a

anereen

: . 'y ° “4 ‘J . ?

. cy ~~ + be . : 4

PP tk i,” ot? s 4 rwe s one :

—— Stes

. -

‘ 4 ¢ daly y : - : . ;

; ‘ af me. Faces te a» " “ i

Ys y 7 ~s ¥ ‘ i. $ , J

. " t >

A °

lo 4

* “a3

, * * be

; -

: et ‘

s N ry -

v F .

.e & é « rs

vv

: ‘ S-? es

; R

: ‘

a

; “e

a ‘.

‘Question presented... -......:.-..------------- ee

eos CITATIONS:

~ Cases: aes

. , Albertson:v. Federal Communications Commission, 182

Se i uihatie tite mermica inmate neers aud olaaae

American Trucking Assns. v. Frisco Co., 358 U.S. 133-

Ashbacker Radio Corp. v. Federal Communications Com hs

i SI Bl BE iinntedkecsceccesncnende ns

Braniff Airways. v. Civil. weiemsaaee Board, 147 F. 2d

Ae OS ROE IE Pa ep RH OR i th A

| Cincinnati-New York Additional Service, 8 CAB. 603.

Consolidated Flowers Shipments v. Civil Aeronautics

Board, 205 eR ree eee

F. 2d Oe

North Central Case, 8 C.A.B. 208....----.----------

Service to Phoeniz Case, Order E-12039___-_..._----

Smith Bros., Revocation of Certificate, 33 M.C.C. 465_. -

_ South Central Area Local Service Case, Order E-14219_ -

United States v. Rock Island Motor Transit Co., 340

United States v. . Weteon Bros. ‘Transportation Co., 350 -

. U.S. 927, affirming 132 F. Supp. 905._...-._.----

United-Western, Acquisition of Air Carrier Property,

EE ES Pata cbhnasedaeenanaebetisaacneens

568673—-60-——1 (1)

9,11

9,10

Cinto—Continaed

snag oa a v. ‘Dei denceieiites thank

-159 F. 2d 828, reversed, 333 U.S. 103__..-...----

Western Airlines, Inc. v. Civil Aéronautics poore, 194

PE cbcadancnbnieadanthatonie sracenntnnes

Statutes: ; ;

Federal! Aviation Act, 72 Stat. _ 731, et seg., 49 U.S.C.

1301 et seq.:

Section 204(a), 49 U.S.C. 1824(a).-.-...._-----=

Section 401(f),-49 U.S.C. 1371(f)...-...--2.----

Section 401(g), 49 U.S.C. 1371(g)..--------- . 2,7, 8,9

Section 1001, 49 U.S.C. 1481_-..--.-----.-----

_ Section 1005(d), 49 U.S.C. 1485(d)_.........---

Section 1006(a), 49 U.S.C. 1486(a)_....------.-

Civil Aeronautics Board Rules of Practice, 14 C.F R.

1956 Rev. Ed.: * |

I ares dtstnrinesisnci secu miiakemied

rad

»

Inthe Supreme dour the ited Baie

October Term, 1960—

No. —

Crvi. AERONAUTICS BoaRD, PETITIONER.

ae .

Detta Arm Lines, INC.

_*

=

PETITION FOR A WRIT OF CERTIORARI 10 THE UNITED

STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

ef

7@

The Solicitor General, on behalf of the Civil Aero-.

nautics Board, petitions for a writ of certiorari to re-

view the judgment of the United States Court of Ap-.

pears for the Second saint entered in this case on

‘July 21, 1960...

| OPINION BELOW

; The pore of the court of appeals (Appendix A,

infra, pp. 15-24) is reported at 280 F. 2d 43.

The judgment of the court’ of appeals was entered

on July 21, 1960 (Appendix B, infra, p. 25).; The

jurisdiction of this Court is invoked under.49 U. S.C.

1486(f) and 28 U.S.C. 1254(1).

i. foe os,

2

QUESTION PRESENTED é

Whether the Civil Aeronautics Board, once it has

entered an order permitting a certificate of publi¢

convenience and necessity to become effective, is with-

out powef thereafter, in the same proceeding, to

modify the’ certificate in response to a timely petition .

for reconsideration filed prior to the effective date,

- where the Board’s order expressly reserved the right 3

to make such modification.

STATUTE INVOLVED ~-

Sections 401 (f) and “(g) of the Federal Aviation

hha (72 Stat. 755-56, 49 U.S.C. 1371 (f) and (¢)) |

provide:

EFFECTIVE DATE AND DURATION OF CERTIFICATE _

Pay Ege: certificate shall be effective from.

te specified therein, and shall continue in

offest untii suspended or revoked as herein-

after provided, or until the Board shall certify

that operation thereunder has ceased, or, if is-

sued for a limited period of time under subsec-

tion (d)(2) of this seetion, shall continue in -

effect until the expiration thereof, unless, prior

to the date of expiration, such certificate shall

be suspended or revoked as provided herein, or

the Board shall eertify that operations. there-

under have ceased: Provided, That if any serv-

.ice authorized by a certificate is not inaugurated

within.such period, not less than ninety days,

after the date of the authorization as shall be

- fixed by the Board, or if, for a period of ninety |

days or such other period as may be designated

by the Board any such service is not operated,

—

° .

; 3

| 4 ,

-the Board may by order, entered after notice

and hearing, direct that such certificate shall

thereupon cease to be effective to the extent of

such service.

AU THORITY TO MODIFY, SUSPEND, OR REVOKE

(g) The Board upon petition or complaint or

upon its own initiative, after notice and hear-

ings, may alter, amend, modify, or suspend any

such certificate, in whole or in part, if the pub-

lic convenience and necessity so require, or may

revoke any such certificate, in whole or in part,

‘for intentional failure to comply with any pro- -

- vision of this title or any order, rule, or tegula-

tion issued hereunder or any term, condition, or

limitation of such certificate: Provided, That no

such certificate shall ‘be revoked unless the

holder thereof fails to comply, within a reason-

able time to be fixed by the Board, ith an order

of the Board commanding o 'e to the pro-

vision, or to the order (other than an order

', issued in accordance with this proviso), rule,

regulation, term, condition, or limitation found

. * by the Board to have been violated. Any in- .

~ \. ‘terested person may filé with the Board a pro-

test or memorandum in support of or in opposi-

- tion to the alteration, amendment, modification,

suspension, or revocation of the certificate. .

“STATEMENT 7

The present controversy arises out of the so-called

Great: Lakes-Southeast Service case, a proceeding in

which the Civil Aeronautics Board considered the

long-haul service needs for an area extending roughly

between the Great Lakes and Florida and a large num-

ber of applications by the trunkline carriers to serve |

4

these needs. In order to keep the administrative pro-

ceedings within manageable bounds, thé Board de-

clined to consolidate a number of applications which ~

* had been filed by local-service carriers to provide new

‘and improved short-haul service between certain in-

termediate cities in the area. Instead, it directed the .

‘institution of a separate proceeding . (Great Lakes,

Local Service Investigation, Docket No. 4251) on those

applications. However, in order to insure that this

the local-service carriers of their rights under Ash-

backer Radio Corp. v. Federal Communications Com-

mission, 326 U.S. 327, and té give these carriers ‘an

opportunity to show the effect of a grant upon their

existing operations, the Board permitted the local car- |

_ riers to intervene in the long-haul proceeding.

made a number of awards, including grants permit-

“ting the respondent, Delta Air Lines (Delta), to ex-

> tend an existing route northwest so as to provide

service from Detroit to Miami and to add Indian-

~ apolis ‘and Louisville as points on Delta’s: existing

Chicago to Miami route. Although the Board im-

_ posed restrictions on a number of the new awards to

rotect local service carriers’ it imposed no such _

trictions with respect to some ten pairs. of inter-

mediate points on the long-haul routes Delta was

-authorized to serve.

+ These ¥ These restiictions normally preclude so-called “turnaround?

- service between two points by requiring that service between

these’ points be. only on a flight aguates or terminated | in .

some distant city.”

The Board’s decision in the long-haul proceeding

separation of the two proceedings would not deprive _

ov

_ The Board’s pre and order in the Great Lakes-

Southeast Service (long-haul) casé was issued on

September 30, 1958 (J.A. 1373a)* and provided that

the certificates issued pursuant thereto were to be-

come effective on November 29, 1958, unless extended

by the Board ‘prior to that date (J.A. 1384a).

Within the 30 days then prescribed by the Board «.

rules (see § 302.37. of the Board Rules of Practice,

14 C.F.R. 302.37, 1956 Rev. ed.), Lake Central Air

Lines and Piedmont Aviation, local carriers which

had been permitted to intervene in the proceeding to

protect their interests (J.A. 78a; 82a, 83a), filed timely

petitions for reconsideration. These petitions sought

' to impose on Delta’s service to the ten,pairs of cities

referred to above a requirement that service to them

originate or terminate at some distant city (Add’1.

J.A. 1587a-1592a). Lake Central also asked that

- the effective date of Delta’s certificate be stayed pend-

ing a Board decision on the petitions for reconsider-

. ation (Td. at 1591a-1592a).

On November 28, 1958, one day prior to the. pro-

posed effective date of the certificates, the Board

issued a lengthy memorandum and order (E-13211)

in response to the numerous requests for stay which

had been filed in connection with the 16 petitions for

reconsidération of its September 30 decision. With

one exception not here relevant, these stays were de-

. ?“J.A.” refers-to the three-volume Joint Appendix filed in

Case: ‘Nos, 25,422, etc., in the court below and, by stipulation,

made part of the record in this case. “Add’l: J.A.” refers to

the blue-covered Additional Joint Appendix filed in the court

below i in the instant case, me. 25,852. |

nied, the Board concluding that ‘‘the parties have

not made a sufficient showing of probable legal error

or abuse of discretion in our decision” and that in

view of the advent ui the peak winter season the

‘*new services to Florida are immediately required’’,

a consideration the Board felt “clearly weights the

scale * * * in favor of -a denial of: the requested

stay” (J. A. 1471a). ‘But the Board made clear that

“‘because of the detailed matter’ raised in fhe peti-

tions for reconsideration, it will’ not be possible to_

finally dispose of them until after November 29”

(J.A. 1470a), and that denial of the stays “is in

no way prejudicial to the legal Tights of those parties

seeking reconsideration. Nothing in the present or-

der forecloses*the Board from full and complete

consideration of the pending petition’ for reconsidera-

tion on their merits’’ (J.A. 1496a).*. 7

_ On May 7, 1959, the Board issued an order (E-

-13835) disposing of the petitions on their merits (J.A.

1509a, 1517a). This order, which. gives rise to the

present cuntfoversy, granted .Lake Central’s and

Piedmont’s petitions and imposed restrictions on Del-

ta’s certificate to preclude operations between the ten —

pairs of cities unless the flights originated or termi-

nated at Atlanta or a point south thereof (J.A. 1511a,

+1512a, 1517a). In imposing -these- restrictions -the ~

Board _noted that “‘[i]f, after deciding the issues pre-

; sonted. in the Great Lakes Local Service Case, we eon-

a ©

*The awards actually became effective on December 5, 1958,

because of a temporary stay granted by the Board to enable

Cho court of appeats to consider & stay request edimend to %

(Add’l. J.A. 1593a-1595a).

‘

}

7 : ,

. &

. clude that the long-haul restrictions are not required,

we will have full freedom to remove them at that time’’

- (J.A. 151 2a). |

The court of apyeals reversed, -holding that the

. Board, once it permits a certificate to become effective,

is thereafter without power in the same proceeding

to add restrictions to the certificate, even in response

toa timely petition for reconsideration filed prior to

the effective date of the certificate (App. A,.infra, pp:

15-24). The court assumed that Delta was ‘‘on notice”’

that the Board might “‘modify the certificate on the

basis of matters set forth in the filed petitions for

reconsidération” (id. at 24), stating that its ‘“hold-

sing is not based upon the fact that, prior to the

date the certifieate was modified, Delta inaugurated

service authorized by. the certificate” (ibid.).* Its

view was that Sections-401(f) and (g) of the Federal

Aviation -Act require the conclusion that, in the

absence of fraud, misrepresentation or clerical error,

a certificate which the Board had permitted to become

effective can thereafter be@modified only in a new

proceeding satisfying the requirements of § 401(g)

on >: REASONS FOR GRANTING THE WRIT

The court. below, we submit, has misconstrued. the

Federal Aviation Act and has misapplied court and

agency decisions dealing with entirely discrete prob-

. lems. In consequence, it has seriously limited the

authority of the Civil Aeroriautics: Board to recon- |

*On January 1, 1959, Delta had inaugurated a local’ flight

including service between Chicago and Indianapolis, oné of the

ten pairs of cities to which the Lake Central and Piedmont

petition for reconsideration had been directed.

568673—60—__3 :

7)

sidae on timely petition decisions awarding certificates

_of public convenience and necessity. The holding that

~ the Board must either defer allowing-the certificates

to become effective or that it must finally resolve,

- prior to the efféative date, all of the complicated issues

which may be presented by- the multiple petitions for

reconsideration frequently filed in complex route cases

is one that cannot fail to impair the adrffinistrative —

-process. That holding, moreover, is inconsistegt with

the view expressed by this and other courts.

1. The court of appeals believed that its decision

was compelled by the language of Section 401(f) of

the Act, providing that ‘‘[e]Jach certificate shall be —

~ effective from the date specified therein, and shall con-_

tinue in effect until suspended or revoked as hereinafter

provided”. This it construed as meaning that an ef-

fective certificate could not be changed in any way eX-

cept after further notice sand hearing in accordance

“with the provisions of Section 401(g), which sets out the

procedure under which the Board may ‘‘alter, amend,

modify, or suspend’’ a certificate or may revoke it. But

nothing in either section purports to bar the Board from

-exercising its power to reconsider its decisions prior

to the time a certificate has. been finally granted and the

‘

4. “6 -

>

9

time for rehearing it has passed,’ and'the cases the court

below cites to support its decision are clearly inapposite.*

We believe that the procedures of Section 401(g) |

do not come into play until, as this Court has indi-

cated with respect to the comparable provisions of the

Motor Carrier Act, 49 U.S.C. 312, ‘‘the certificate [has

been] finally granted and ‘the time fixed. for rehearing

it has passed’’. United States v. Seatrain Lines, 329

U.S. 424, 432 (emphasis added). A similar view has.

- been expressed by the Court of Appeals for the Dis-

trict of Columbia Circuit with specific reference to

- the authority of the Civil Aeronautics Board, Fron-

tier Airlines, Inc. v. Civil Aeronautics Board, 259 F.

2d 808 (C.A.D.C.). There, the court rejected an argu-

_ ment that the Board’s order on reconsideration, which

‘included an amendment of an effective award, was ‘‘a

mulity because it was rendered ** * after the certifi- .

cates previously issued had become effective’ (td. at

nul See, also, Western Airlines, Ine. V. Civil Aero-

_ There is, of course, no iiiesitan of the Board’s power to

reconsider .pursuant to its Rules of Practice (§ 302.37). “The.

power to reconsider is inherent in the power to decidé.” Al-

* bertson v: Federal .Communications Commission, 182 F. 2d 397,

- 899 (C.A.D.C.). It also derives from Sections 204(a), 1001

and 1005(d) of the Federal Aviation Act (49 U.S.C. 1324(a),

1481 and 1485(d). See American Trucking Asons. v. Frisco Co.,

358 U.S. 133, 145. :

¢ Even under the court’s view of the law it wonia appear that

ndent received, i in substance, all of the protection afforded

Section 401 (g)- For “notice” of the proposed modification

was provided tS the petition for reconsideration, as well as the -

'. Board’s express reservation, in its onder. d@Jping a stay, of its

.“power to modify the certificate pn the basis of the matters set

_. forth in the filed petitions for reconsideration” (App. A, infra, .

p. 24). And any “hearings” relevant to the issue had already

10

- nautics Board, 194 F. 2d 211, 214 (C.A. 9)." Theessen- ,

tial function of Section 401(g), it seems clear, is to set

forth the procedures for making changes in operative

" certificates necessitated by conditions arising after the

completion of the initial licensing proceeding.

The cases relied on by the court of appeals—United

States v. Seatrain Lines, supra; United States v. W at-

son Bros. Transportation Co., 350 U.S. 927, affirming

132 F. Supp. 905 (D. Neb.) ; American Trucking Assns.

v. Fris@p Co., 358 U.S. 133, and. Smith Bros., Revoca-

tion of Certificate, 33 M.C.C. 465—are entirely con-

sistent with our view of the statutory scheme. All of

these cases relate to the question whether an adminis-

- trative agency may reopen a.closed proceeding, long

after disposition of any petition for reconsideration

that may have been filed, to modify or revoke an out-

_ standing certificate. Indeed, these tases.lend support

to the position which we urge here, for they emphasize

that even in such circumstanees there are occasions

when a new proceeding is not required. See,. ¢.g.,

American Trucking Assns. Vv. Frisco, supra, 358 U.S. at

145-146... In any event, the Board’s order here ex-

pressly left open the Question of modification. raised -

by the petition for reconsideration—the licensing pro-

been had since reconsideration was sought on the basis of the

record already made (see Addl J.A. 1587a-1592a).

*The Board has previously modified, upon reconsideration,

certificates which it had allowed-to become effective. See, ¢.g.,

North Central Case, 8 C.A.B. 208 (1947) ; Cincinnati-New York

Additional Service, 8 C.A.B. 603 (1947) ; United-Western, Ac- -

quisition of Air Carrier Property, 11 C.A.B. 701 (1950) ; Serv-

ice to Phoenia Case, Order. E-12039 (1957); South Central

Area Local .Service Case, Order E-14219 (1959).

il

ceeding was administratively still open, therefore, not

closed. | |

2. The decision below has important bearing on the

Board’s administration of its statutory responsibil-

ities. It disables the Board from authorizing needed

| services while | petitions for reconsideration are pend-

ing. It affects ‘not only the Board’s power to add re-

strictions; it applies equally to alterations sought by

the grantee, such as the addition of néw points or the

removal of restrictions préviously imposed.*. The con- —

sequence may be either unduly hasty decision on re- —

quests for reconsideration raising complex problems

or the postponement of the effective dates of certifi-

cates with an attendant loss of needed publie services

and carrier revenues.” ’

*A further consequence of the dneleton below is 4o create

uncertainty with respect to the time for filing an appeal from

the Board’s order. .The majority rule of. the courts of appeals

is that the timely filing of a ‘petition for reconsideration tolls

" the’ time for seeking judicial review, which then runs from the

date of Board action on the petition. See ¢.g., Braniff Airways

- v. Civil Aeronautics Board, 147 F. 2d 152, 153 (C.A.D.C.) ;

Frontier Airlines v. Civil Aeronautics Board, supra; Waterman

Steamship Corp. v. Civil ‘Aeronautics Board; 159 F. 2d 828,

829, (C.A. 5), reversed on other grounds, 333 U.S. 103. But

cf. Consolidated Flowers Shipments v. Civil Aeronautics Board,

- 205 F. 2d 449 (C.A. 9). If, however, permitting the certificate

« to become effective ousted the Board from jurisdiction, it

would appear that as a precautionary measure appeals would

have to be filed unless the Commission had acted on the peti-

tion within the 60-day period from the original Board order

(see 49 U.S.C. 1486(a)), or had previously indicated its intent —

-to stay the effective date.

*Had the Board postponed the effective dates of wertificates’

> until May 7, 1959, when the reconsideration requests were de-

cided, the peak Florida winter season travel would have been

lost to the three newly certificated carriers, en Delta.

12

The opinion below suggests (App. A, infra, p. 24)

that the Board might, for the future, ‘‘investigate the

possibility of issuing some form of temporary authori- .

-gation.” ” . Since we believe that the Board, like other

administrative agencies performing licensing func-_

tions, already has the power to deal with the practical —

problems involved by ordinary rehearing procedures,

we urge that it should not be remitted to the necessity

of investigating the possibility of pursuing other and .

less direct means of achieving‘a similar result. More- °

over, if the court below is right in its holding that the

traditional method of proceeding is not available to

the Board, it may fairly be presumed that the adop-

tion of other-and oblique methods of accomplishing

the same results would be open to serious challenge

and would be productive of extensive new litigation.

Tt can well be argued that a “temporary authorization” was.

in substance all that respondent received (at the time its certifi-

cate became effective) since it was subject to such changes as

a “full and complete consideration of the pending petitions for

reconsideration” might. warrant (J.A. 1496a). Cf. United

. States v. Rock Island Motor Transit Co., 340 U.S. 419, 444-448.

13 :

CONCLUSION

The decision below raises an important question of

administrative procedure which bears directhy upon -

the ability of the Civil Aeronauties. Board to perform

its licensing functions effectively and expeditiously.

We believe that the decision isin error and that it-

conflicts with views expressed by this Court and by

other courts of appeals. The petition for certiorari

should be granted. - -

Respectfully submitted. .

J. LEE RANKIN,

Solicitor General.

_ Rosert A. Bicks,

Assistant Attorney General.

Ricuarp A. SoLOoMON,

Irwin A. SEIBEL,

oe Attorneys.

- FRANKLIN M. STONE,

General Counsel,

JoHN H. WANNER,

Deputy General Counsel,

O. D. OzMENT,.

Associate General. Counsel,

Morris CHERTKOV,

Attorney, .

Civil Aeronautics Board.

‘OCTOBER 1960.

___—— + APPENDIX A”

Unrrep Srares Court or APPEALS FOR THE. SECOND

P i CracuitT

No. 248—October Term, 1959

Docket No. 25852

Devra Am Lrves, INC. PETITIONER, v. Ovi, Ame

NaUTICS BOARD, RESPONDENT; Lake CENTRAL AIR-

Lints, INc., ET AL., INTERVENORS

Before: WaTeRMAN and Moore,’ Cirewtt J = and

SMITH, District Judge. . 3

WarTeRMAN, Circuit Judge: , |

' Petitioner is a certificated trunk-line air carrier pos-

sessing routes that, in the main, run from the mid-

west to -the southeast quarter of the country. . The

present controversy arises out of the Board’s area

proceeding known as the “Great Lakes-Southeast

_. Service Case.”’ Other aspects of this same area pro-

ceeding, were recently before this court in Hastern

Air Limes v. CAB, 271 F. 24 752 (2 Cir. 1959), cert.

, denied, 362 U.S. 970. For a general description of .

this “area proceeding” and for a statement of the air —

transportation the Board: had under consideration in

' the “Great Lakes-Southeast Service Case” we refer to -

our opinion in Kastern Air Lines v.CAB, supra. _

- In its decision and order in the above area proceed-

ing, Order No. E-13024 of September 30, 1958, the _

Board added six cities to Delta’s pre-existing Route

54, which prior to that time served Chicago and Miami

with certain intermediate points, but bypessed ind

(15)

16 .

‘anapolis. The addition to Delta’s authority ef the

three cities of Columbus, Toledo, and Detroit per-

mitted Delta for the first time to offer service between

‘Miami and Detroit, and for that reason this authority

extension was important to the issues presented to

_ this court in Eastern Ait Lines v. CAB, supra, but it

has no bearing on the question now before us. The

addition of the three cities of Dayton, Louisville, and

Indianapolis permitted Delta for the first time to

offer service between these cities and the other cities

. which lay on its Route 54. Since Indianapolis already

was an authorized intermediate pbint on Delta’s Route

8 between New Orleans and Detroit, the inclusion of

Indianapolis as an intermediate point on Route 54 had

the additional effect, which the Board recognized and

approved, of permitting Delta on the same flight, pro- «

vided that the flight stopped at Indianapolis, to serve

cities on both of these routes.’ By. the Board’s Sep-

tember 30 order Delta’s new certificate, incorporating

. this additional authority, was to become effective on

November 29, with the proviso that prior thereto the

Board might extend that effective date upon its own |

- initiative or upon a petition for reconsideration of the:

Board’s September 30 order. The new certificates of ~

other carriers who had ‘received new authorizations

“ under the “Great Lakes-Southeast Service” decision -

had -the same effective date and were subject to the.

game proviso. ?

Numerou: petitions for reconsideration were indeed |

filed. Sr geiemnenente Coit agian mr venaeate demnare

? Unless the Board imposes “restrictions” a carrier may op-

erate flights between any combination of authorized points on

a given linear route: Similarly, absent restrictions, when two

- routes of = carrier have a common point, the carrier may

operate flights between any combination of —s on the two

routes via the common point.

- ©

17 :

Central Airlines, Inc., and Piedmont Aviation, Inc., two

local service carriers. The new route applications of

=

all local service carriers had been excluded by the .

Board from the “Great Lakes-Sautheast Service Case,”

the Board stating that it would consider them later in a

separate proceeding. . The local service carriers, how-

ever, were permitted to intervene to present evidence as

to the effect that an award to a trunkline carrier might

have upon the local service carriers’ present or con-

templated operations. In their petitions for reconsid-

eration Lake Central and Piedmont sought, inter. alia,

to have restrictions imposed on -Delta’s.service between

ten’ pairs of cities’ which, as.a result of the addition

of Indianapolis, Louisville and Dayton to Route 54,

Delta would: be able to serve without restriction under

the certificate authorized by the Board’s September

30 decision. Lake Central’s petition contained a re-

quest to stay the effective date of Delta’s certificate. .

Agee

By order No. E-13190, dated November 21, the Board _

stayed the effectiveness of Delta’s certificate for the

period to and including December 6 for the con-

. venience of this court in.considering Eastern’s request

for a judicial stay. ‘Two other certificates were also

stayed for'this reason. On November 28, 1958, the -

Board issued Order No. E-13211, which, with one

exception,’ refused to stay the effective date of any

* The ten pairs of cities are: ‘Indianapolis, Ind.-Chicago, III: ;

Indianapolis, Ind.-Cincinnati, Ohio; Indianapolis, Ind. Seis.

ville, Ky.; Indianapolis, Ind.-Lexington, Ky.; Indianapolis,

Ind.-Asheyille,. N.C.; Dayton, Ohio-Lexington, Ky:; Dayton,

Ohio-Asheville, N.C.; Cincinnati, Ohio-Louisville, Ky.; Louis-

ville, Ky. Lexington, Ky.;. Louisville, Ky.-Asheville, N.C.

*The exception was he certificate of Eastern “Air Lines.

Piédmont, in its petition for reconsideration, in addition to

seeking to have restrictions imposed on Delta’s service between

the pairs of cities set forth in footnote 2, supra, sought to pre-

vent the extension of Eastern’s Route 6 from Charleston, W. Va.

18

new certificate beyond December 7. The Board as-

signed two interrelated reasons for its refusal to grant

further stays. First, the Board found that the various

reconsideration petitions did not make sufficient show-

ings of probable legal error or abuse of discretion.

Second, the Board wished to have the new services

inaugurated in time for the peake period of ‘wiriter

travel.. The Buard’s opinion in .Order No. E-13211

closed with the -statement that the erder was not a

. disposition of the several petitions for a 7

on their merits.‘

~ On December 4 this court denied Eastern’ 8 sinisdait

for a-judi¢ial stay, and, in recognition thereof, on

December 5 the Board by Order No. E-13245 dissolved

the stay imposed by Order No. E-13190. Accordingly,

on December 5, 1958, Delta’s certificate became effec-

tive. On January 1, 1959, pursuant to schedules filed

with the Board, Delta inaugurated service between .

- Chicago and Indianapolis, with flights continuing be- .

'- yond Indianapolis southward to Evansville, Indiana,

a city Delta was authorized to service on its ee

established Route 8.

On May- 7,°1959, the Board issued the order here

complained of, Order No. E-13835.° This order con-|

anne .

to Chicago. In its opinion accompanying Order No. E-13211,

the Board held that Piedmont’s objections to Eastern’s addi-

tional authorization raised serious questions; and accordingly

it stayed the effective date of Eastern’s new certificate until

further action by the Board. |

* The opinion stated: “Nothing in the present order forecloses

the Board from full and complete consideration of the pend- °

ing petitions for reconsideration on their merits.”

5 Delta’s petition also encompasses Order No. E-14044 deny-

ing Deita’s motion for a partial stay in order to permit the

continuance of the Evansville-Indianapolis-Chicago service, and _

Order No. E-14224 denying Delta’s petition for a stay pending

ens review.

\

-.on Delta’s service between the ten pairs of cities set.

19

stituted the Board’s formal disposition of the various

petitions for its reconsideration of the September 30

‘decision. -This order modified. the former decision.

One modifieation was that restrictions were imposed

_ forth in footnote 2, supra, so that a Delta flight serv-

ing any. of the pairs of cities was required to originate.

‘ at Atlanta or at a point on Route 54 south thereof."

One effect of the restrictions:was to forbid the service

Delta had inaugurated between Evansville and Chi-

cago via Indianapolis unless that flight began: at At-

lanta and proceeded on a circuitous routing through |

Memphis. |

The issue here is ‘wether: on the ‘above facts, the

- Board had power to alter Delta’s certificate without

_ resort to a modification proceeding -under Section 401

' (g). of the Act, 49 U.S.C. 1371(g).’ It is the Board’s

contention that-it may modify a certificate subsequent

to the effective date of the certificate in the course

of passing upon timely filed petitions for reconsidera-

\

tion of the ‘award contained therein; and that the pro-

ceedings provided for in Section 401(g) only need

to’ be followed after they Board has finally disposed

of these petitions for reconsideration. We disagree.

Section 401(f), relating to the effective date and

duration of an air carrier’s certificate of public con-°

venience and ey. provides as follows: “Each

¢The Board indicated that the advisability of these stiles

tions would be considered anew in the later local service carrier

area proceeding.

* Between the time of the Board’s initial action and the modi-

fication on reconsideration, the Civil Aeronautics Act (52 Stat.

973; 49 U.S.C. 401) was supplanted by the Federal Aviation

Act, (72 Stat, 731; 49 U.S.C.. 1301). The provisions of the

| former Act here involved were re-etiacted without change, and

there is admittedly no issue here stemming from the supplanta-

tion of the Civil Aeronautica Act. oe os

- 20

certificate shall be effective from. the date specified

therein, and shall continue in effect until suspended

or revoked as heromafter- provided * **”* (Ttalics

supplied.) The phrase “as hereinafter provided” .

would appear to require our rejection of the Board’s

argument that it has some form of implied power

to alter the authority conferred in an effective cer-

tificate; Section. 401(g) is the only section of the Act

expressly dealing with the modification of certificates.

The Board maintains that Leigate tererg Flea

tive certificate can be found in Section 204(a), 49

U.S.C. 1824(a), but this argument is almost identi-

cal to the position taken by the Interstate Commerce

Commission in United States v. Seatrain Lines, 329

U.S. 424 (1947), and there rejected by the Supreme

Court, supra, at pp, - 432-33. This holding of the Su-

preme Court in Seatrain is likewise fully dispositive -

of any Board reliance upon Section 1005(d), 49 U.S.C.

1485(d) as express statutory-support for its position.

Save for the exceptions in Section 401(f) set forth

in footnote 8, supra, Sections 401(f) and 401(g) are

_ patterned very closely upon Section 212(a) of ‘Part IT

of the Interstate Commerce Act, 49 U.8.C. § 312(a).

In Smith Bros., Revocation of Certificate, 33 MCC

465, 472 (1942), the Interstate Commerce Commission

in construing Section 212(a) announced the following

principle: “We may issue decision upon decision, and

order upon order, on an application for a certificate so

* Section 401(f) states tlree exceptions, none here applicable,

to the above rule. A certificate conferring temporary suthor-

ity ceases to be effective upon the expiration of its term; s

certificate will cease to be efféctive if the Board certifies that

operations under the certificate have ceased; and if the carrier

fails to inaugurate service authorized by a certificate within

ninety days of the date of authorization, the Board upon notice

and hearing may revoke the unused authority.

oot 21

long as sufficient reason therefor appears and until.all

controversy is determined, but once a certificate, duly’

and regularly issued, becomes effective, our authority

to terminate it is expressly marked off and limited.”

The Board makes a futile effort to distinguish the

Smith Bros. case on the ground that a revocation of

a certificate is more closely circumscribed by statute

than a certificate’s modification. Unuer both Sections

912(a) of Part II of the Interstate Commerce Act

and Section 401(g) of the Federal Aviation Act modi-

fication differs from revocation only as to the matters —

- the Commission or Board must demonstrate once g

oper proceeding has been instituted: The statutory

Tequirement to institute a proceeding is. the same

er the certificate is to be modified or revoked. —

The Smith Bros. case has been frequently cited with

apparent approval in the Supreme Court and other

federal courts. We'follow it, believing its principle

to be as applicable to the Federal Aviation Act as to

Part II of the Interstate Commerce Act:

It is true that in cases involving motor carriers un-

der Part II of the Interstate Commerce Act the Su-

_ preme Court has held that, under certain closely-de-

fined circumstances, an effective certificate may be

modified by the Commission without resort to a formal

proceeding under Section 212(a). For instance, in

American Trucking Ass’n v. Frisco Transp. Co., 358

U.S. 133, 146 (1958) the Supreme Court held that

‘the Commission may so rectify “inadvertent mini-

sterial errors.” In the present case there is no sug-

gestion that Delta’s certificate inadvertently contained

greater authority than the Board intended to confer

by its September 30 order. Moreover, it is affirma-

‘tively clear that when the Board refused on Novem-

ber 28, 1958 to stay the effective date of Delta’s cer-

tificate it was fully aware of the arguments which

22

subsequently led it on May 7, 1959 to impose the re-

strictions here complained of. Indeed, for this rea-

son, the present case is similar to Watson Bros.

“Transp. Co. v. United, States, 132 F. Supp: 905 (D._

Neb. 1955), aff’d,@350 U.S. 927 (1956), where. the

three-judge ‘distriet court concluded on thé facts

* present there that the modification of a motor carrier’s .

certificate had resulted from a change in administra-

tive policy, and therefore held that the change was

beyond ‘the Interstate Commerce Commission’s power.

In any event, the present case is clearly distinguish-

able from the case of United States v. Rock Island

Motor Transit Co., 340 U.S. 419 (71 S. Ct. 382)

(1951), rehearing denied, 341 U.S. 906, where the

Supreme Court held that the Commission had e

apart from a proceeding under Section 212(a), to

“impose specific restrictions to implement’an already

existing but somewhp$ generally-phrased restriction,

on the type of service the carrier was certificated to

perform. We are of the opinion that the imposition

of a restriction on service under.a certificate that

previously had authorized the service without any

restriction presents an entirely different matter than

that before the Court in Rock Island Motor Transit.

The «Board, seeking to justify “its act here.on the

basis of past performance, informs us that, in the

past, upon a petition for rehearing, it has modified a

certificate it had allowed.to become effectiye.” How-.

ever, on at least one other occasion it expiticed grave

‘doubt as to its statutory’ power to do so. Kansas

City-Memphis-Florida Case, 9 ,CAB~ 401, 408-09

(1948). Moreover, the Board has represented to at

_ * See footnote 8, supra.

1° Cincinnati- Neto York Additional Service, 8 CAR, 603, 604

(1947) seems to be the clearest-example. /

ve 4 : - yo

23 Ropieae

. bmn.

z : a - Au

~ Jeast one court that it has been its ptactice to stay

the effective date of a certifieate in order to permit.

it time to consider the merits of reconsideration peti-

tions. Southwest Airways v. CAB, 196 F. 2d 937, 938

(9 Cir. 1952)." We do not find that the Board in

thjs particular can rely upon a consistent administra-

_ tive interpretation of its statutory. powers similar to

the consistent interpretation ‘found in United States

y. Leslie Salt Co., 350 U.S. 383, 396 (1956).

Finally, the Board argues that unless we. uphold its

position that resort to 401(g) of the Act is unneces-

sary it will be confronted with a dilemma in the man-

agement of its large-scale area proceedings. In its

brief the Board states: “Moreovér, Delta’s concept, if

adopted, would be prejudicial both to the traveling

C

public and the carriers, for in some cases it could only

result either in a hasty and targely meaningless pass-

ing on reconsideration requ ts of a highly technical ~

economic nature, or the further postponement of the

" Western Air Lines v. CAB, 194 F. 2d 211 (9 Cir. 1952) in-

volved a Board procedure entirely different from that.in the

present case. In Western Air. Limes the Board, subsequent to

the effective date of its order approving the transfer of a cer-

tificate, imposed labor protective conditions upon the transfer. —

The Board’s power. relative to the transfer of certificates is

governed by Sectjon 401(h), 49 U.S.C. § 1371(h) rather than

— Sections 401(f) apd 401(g). Under Part Ii of the Interstate —

Commerce Act, the Supreme Court: has stated that the Com-

mission’s power to amend an order approving the transfer of

a certificate is more flexible than its power to amend a certifi-

cate. United States v. Rock Island Motor Transit. Co., 840 .

US. 419, 445-46 (1951), rehearing denied, 341. US. 906. In

addition, Western Air Lines involved misrepresentation in’ testi-

mony before the Board. There is language in Smith Brog.,

Revocation of Certificate, 33 MCC 465 (1942). indicating that:

if a certificate has been obtained .as a result of misrepresenta-

tish it may be revoked without a formal wie under -

. Section 212(a), 49 USC. § 812(a). ee

: 24

effective dines of: certificates with the attendant rm

/privation of needed public service and additional

carrier revenues, on the small chance that a further

review will result in a change of the original de-

.tision.””. We admit the Board’s dilemma is real”*

but we. find that this dilemma is inherent in the statu-

tory scheme of Sections, 401(f) and 401(g). It is our

view that once a certificate has become ‘effective, the

Act, requires that the Board resort to more formal—

even though possibly more time-consuming—pro-

cedures to modify such ‘a certificate,. irrespective of

whether the modification is entirely in the public

interest.

Our holding is not based upon the fact that, prior

to. the date on- which the certificate was modified,

Delta inaugurated: service authorized by the certifi- .

cate. Furthermore, we have accepted, arguendo, the

Board’s argument that the language in the order

quoted in footnote 4, supra, put Delta on notice that

the Board purported. to reserve to itself power to

modify the certificate on the basis of matters set forth

"in the filed petitions for reconsideration. E

We hold that under Sections:401(f) and 401(g) of

*the Federal Aviation Act, absent fraud, misrepre-

- sentation or clerical error ‘in the. original issuance of

the certificate, it is only in a proceeding satisfying.

the requirements of Section 401(g) that an effective

certificate authorizing unrestricted service may be

modified by subsequently imposed restrictions.

Orders No. E-13835, E-14044, and E-14224 are set.

_aside to the extent that they impose restrictions on the .

cettificate of Delta Air- Lines, Inec., which became

effective on December 5, 1958.

2 We suggest, however, that the Board investigate the possi-

bility of issuing some form of aa neh authorization.

3.

()

APPENDIX B

Untrep States Court or APPEALS FOR THE SECOND

Circuit

- October Term, 1959

No. 248 .

’ DELTA AR LInzs, INC., PETITIONER

VU. -p

Cv. ‘Aiiiadiatitn BoakD, RESPONDENT

Lake CenTRAL AIRLINES, INC., ET AL., INTERVENORS

JUDGMENT AND DECREE |

This cause having come on for hearing on the tran-

script. of the record from the Civil Aeronautics Board,

and the Court, upon consideration of the- record,

briefs and arguments of Counsel, having filed its

opinion herein on June 29, 1960, itis *

ORDERED, ADJUDGED AND DECREED that the orders of

othe Civil Aeronautics Board of which review is sought

in this case be, and they hereby are, set aside to the

extent that they impose restrictions on the certificate

of Delta Air Lines, Inec., which became effective on

December 5, 1958,

Sterry R. ‘Wieninas

LEONARD P. Moore, . Ever

U.S. Circuit Judges.

J. JosePH SMITH, .

: a — US. District Judge.

Dated: July 21, 1960.

A true copy, Mesa :

A. Dante. Fusaro,

Clerk.

By: Nraut F’ O’Donenry, ‘

Chief Deputy Clerk.

U.S. GOVERNMENT PRINTING OFriceE: idee

ws (25) °