Brief for the Civil Aeronautics Board — CAB v. Delta Air Lines, Inc.

Supreme Court brief1961

Ask Donna

What actually matters in this document.

Text

Oifice-Supreme Court, U.S.

pe Pia, BG::

1 MAR 20 196]

JAME3 &. BROWNING, Ciork

| Sue Supreme ot of he ited ses —

OCTOBER TERM, 1960 Alar

Cv “Amoxavmics Bodup, PErrnioner

| v.

. 8 on ars LINES, Inc.

‘ON WRIT OF CBRTIORARI TO THE “UNITED STATES COURT OF

APPEALS FOR THE SECOND OIRGUIT |

BRIEY YOR THE CIVIL ARRONAUTIOS BOARD

Sis On + Department of Justice, Washington 25, D.O. .

JOHN H, WANNER, ; .

General Counacl,

0. D. OZMENT, |

P Associate Genera} Cownseh, ° .

MORRIS CHERTEOV, | a

Attorney, ; pe

Gill Leronoites Boord, Webhington B,D 0. g ey

INDEX

I nace cdepackban ae

Jurisdiction. ___ 2. ---- (ade pi td odek eee

EE PO cnn ccndgunesckanvepeschenes

Statute and regulations involyed_..__-__._2_._--

(EN SE IE OAL Ce AGS

Summary of argument Paden a nsth amet ake Gikeaaee

Argument: ,

The Board’s authority to ‘act on timely’ peti-

tions for reconsideration of an order granting

a certificate is not terminated because it

permits the certificate to beeome effeetive

587785—61—_1

while the petitions are pending - - - - ------

Eos caecencdet saudesoausennney wes

CITATIONS

- Cases: : :

Albertson v. Federal Communicationh Commis-

ates, 100 F. D0 BB ain oi wien doccicenenes

American Trucking Agsns. v. Frisco Co., 358

U.S. 133_---- OE ARE GN, Lae

Ashbacker Radio Corp. v. Federal Communica-

—— tions Commission, 326 U.S. 327-.--_-.------

Black River Valley Broadcasts v. McNinch, 101

DB aie ctieee ete eeeeeeas

Braniff Airways v. Civil pee eniees Board,

147 F. 2d 162....----. PERE ee” Fee

Butterfield, W. S., Theatres v. Federal ain:

nications Coumntiaten, 237 -F. 2d 552__.___-

-. Callanan Road Co. v. United im, 345 US.

ME dcictcdnedcnenteueeee cae

Cincinnati-New York Additional Serrice, §

GAD, Gi aicse iwccknckhakeass ace

Cases—Continued

| ‘Consolidated Flowers Shipments v. Civil Aero-

nautics Board, 205 F. 2d 449._......-----

Denver-Chicago Trucking Co. Common Carrier

Application, 27 M.C.C. 343... ---------

Eastern Air Lines v. Civil snenge ‘Board,

Eastern Air Lines v. Civil ‘diame Board,

, 271 F. 2d 752, certiorari denied, 362 U. s.

Enterprise Company v. ‘Federal Commumniiations

Commission, 231 F. 2d 708, certiorari denied,

sub nom. Beaumont. Broadcasting Corp.. v.

Enterprise Company et al., 351 U.S. 920..--

Federal Communications Commission v. Na-

tional Broadcasting C'o., 319 U.S. 239__-__--

Frontier Airlines, Inc. v. Cuwil en :

Board, 259 F. 2d 808_..._.__.---+_----

Fuller-Poponce Truck Co. v. Public pares

Commission, 96 P. 2d 722...---.--------

Hazard-Hyden Bus Co. v. Black, 293 Ky. 379,

MR AM... 05-22-52 -6----- ‘

Levers v. Anderson, 326 U. S, RGSS

North Central-Case, 8 C.A.B. 208 (1947): .._- ,

Outland v. Civil Aeronautics Beare, 284 F. 2d |

Service to Phoeniz - Case, _Order E_12089

ESE Ses Re ee ema.” eee ae

' Smith Bros., Revocation of Certificate, 33 M.C. C.

South Central Area Local Service Casé, Order

E-14219 itigeare amir immed AO eae |

. .Cases—Continued

United States v. Rock Island Motor Transit Co.,

ee te

a Page.

' 25

United States v. Seatrain Lines, 329U.S. 424. 9, 18, 21

United States v: Watson Bros. Transportation,

Co., 350. U.S. 927, affirming 132 F. Supp.

United-Western, Acquisition of Air Canvier

Property, 11 C.A.B. 701 -(1950)__._~__.._-

Waterman Steamship Corp. v. Civil Aeronau-

tics Board, 159 F. 2d 828, ee, 333 U. S.

° Western Airlines, ies v. Civil Aeronautics

Board, 194 > | Nps at pe

Statutes: 4

Civil Aeronautics Act of 1938, 52 Stat. 973:

eetie SNOD. 65 oc cs once nce w ccna see

Section 401(h)_—.-_- Oe ger eny oor: 2

Federal Aviation Act, 72 Stat. 731, 49 U.S.C.

1301, et seq.:

Section 204(a), 49 U.S.C. 1324(a)______- ;

Section 401(d), 49 U.S.C. °1371(d) ___--

Section 401(f), 49 U.S.C. 1371(f)_2, 9, 12, 14,15

Section 401(g), 49 U.S.C. 1371(g)______-

a, «

- 9, 12, 15, 16, 19, 24, 26

Section 1001, 49 US.C. ae

Section 1005(4), 49 U.S.C. 1485(d)_____-

' Section 1006(e), 49 U.S.C. 1486(e)_____-

Motor Garrier Act of 1935, 49 Stat. 543:

Section 204(e)_2__-___-_-_--_-------___--

Section 212(a)_...---- ieaeeue caanws me

| 47 U.S.C. 312_.---2-- ee ce o's

47 U S.C. 316. ...-.-.-.-- gene eekanuee

~ Miscellaneous: © — ic3 :

Civil Aeronautics Board Orders:

(E-13835)—May 7, 1959.......

_ (E-13211)—November 28, 1958______ _-

I v . al

Miscellaneous—-Continued _

Civil. Aeronautics Board Rules of Practice: Page

14 C.F.R. 302.37 (1956 Rev. ed.)%._.-. 3, 6, 13

14 C.F.R. 302.37 (1960 Supp.) ----- - —- 13.

Confidential Committee Print, May 1, 1937, on

S. 2, 75th Cong., Ist Seas. .....---:.----- 17

ee ne

o€

2 6

Gn the Supreme Gourt of the United Piates

OcTosErR TERM, 1960

No. 492

Civit AERONAUTICS Boarp, PETITIONER

v. :

Detta Arr: Lines, Inc.

* ON WRIT OF CERTIORARI TO THE UNITED! STATES COURT OF

APPEALS FOR THE SECOND. CIRCUIT

BRIEF FOR THE CIVIL AERONAUTICS BOARD

OPINION BELOW

The opinion of the court of appeals (R. 98-107) is

reported at 280 F.2d 43. @ .

JURISDICTION .

The judgment of the court of appeals was entered

on July 21, 1960 (R. 107). The petition for a writ of

_ certiorari, filed on October 19, 1960, was granted on

December 12, 1960 (364 U.S. 917; R.. 108)... The

_ Jurisdiction of this Court is invoked under 49 U.S.C.

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

QUESTION PRESENTED

Whether the Civil Aeronautics Board, once it’ has

entered an order permitting a certificate of public

(1)

rH ‘

" ‘

2 ™~ “

—_

= ol 2 ee

oo”

2 | a ©

convenience and necessity to beeome effectiv e, is with-

out power thereafter, in the same proceeding, to

modify the certificate in response to a timely petition

for reconsideration filed prior to the effective date —

of the certificate. :

prarers ‘AND REGULATIONS INVOLVED

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

Aet (72 Stat. 755-756, 49 U.S.C. 1371 (f£) and - ‘(g)) -

provide:

EFFECTIVE DATE AND DURATION OF CERTIFIC4 TE

(f) Each: certificate shall be effective from

the-date specified therein, and shal] continue

in effect until sttspended .or revoked “as herein-

after provided, or until the Board, shall certify

that operiition thereunder has ceased, or, if

issued for a limited period of time under sub-

section (d)(2) of. this section, shall continué

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 certify that opera-

tions thereunder have ceased; Provided, That if

any service 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 serv-

ice is not operated, 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. |

sisi

: ate

“

AUTHORITY TO MODIFY, SUSPEND, OR REVOKE

(g). The Board upon petition or complaint

or upon its own initiative, after notice: and

hearings, may alter, amend, modify, or suspend

any such certificate, in‘whole or in part, if the

_ public convenience and necessity so require, or

may revoke any such certificate, in whole or in

part, for intentional ‘failure to comply with any

provision of this title or any order, rule, or .

regulation issued hereunder or any term, con-

dition, or limitation of such certificate: Pro-

‘vided, That no such certificate shall be revoked

unless the holder thereof fails to comply, within

a reasonable time.to be fixed by the Board,

with an order of the Board commanding obedi-

ence to the provision, or to the order (other

than. an order issued ‘in accordance with this

proviso), rule, regulation, term, condition, or —

limitation foind by the Board to have ‘been

- Violated. Any interested person may file with

the Board a protest or memorandum in sup-

_. port of or in opposition to the alteration,

Sect

. amendment, modification, suspension, or revo-

cation of the certificate. .

ion 302.37 of the Rules of Practice of the Civil

" Aeronautics Board, 14 C.F.R. 302.37 (1956 Rev. ed.),

provides: ?

§ 302.37 Petition fore reconsidergtion—(a)

Time for filing. .A petition for reconsidera-

ie tion, rehearing or reargument may be filed by.

any party to a proceeding within thirty (30)

days after the date of service of a final order

by the Board in such proceeding unless the

1 The

rule was amended on February .14, 1959, in respects

§ not here relevant. See note 7, p. 13, infra.

time is shortened or enlarged by the Board,

except that such petition may not be filed with. |

respect to an initial decision which has become

final through failure to file exceptions thereto.

However, neither the filing nor the granting

‘of such a petition shall operate as a stay of

-. guch final order unless specifically so ordered

by the. Board. . After the expiration of the

period for filing a petition, a motion for leave

- to file such petition may be filed; but no such

motion shall be granted except gn a showing

of unusual and exceptional circumstances, con-

_ .stituting good cause for failure to make timely

~ filing. Within tew (10) days after a petition

‘for reconsideration, rehearing, or reargument

is filed, any party to the proceeding may file’

an answer in support | of or in opposition to

. the petition.

_ (b) Contents of petition—aA petition fof re-

consideration, rehearing, or reargument shall

state, briefly and specifically, the matters of

record alleged to ‘have been erroneously de-

cided, and the ground relied upon, and the

relief sought. If the -petition is based, in

whole or in part, on allegations as to the™

consequenices which would result from the

Board’ s order, the basis of such allegations

shall be set forth. If the petition is based,

in whole or in part, on new matter, ‘such new

‘matter shall be set forth, accompanied by a

statement to the effect that petitioner, with

due diligence, could not have known or dis-

covered such new matter prior to the date the

case was submitted for décision.

tion for rehearing, reargument, or reconsidera-

)

tion filed by the same party or parties, and

upon substantially the same ground as a for-

mer petition which has been considered or

denied by the Board, will. not be entertained.

STATEMENT

- The present controversy arises out of the so-called

Great Lakes-Southeast Service case, a procéeding in

which the Civil Aeronautics Board considered the

teng-haul service needs of an area extending roughly

between the Great Lakes and Florida and the appli-

cations of numerous trunkline carriers seeking to

serve these needs. In order to keep the administra-

tive proceedings within manageable bounds, the Board

declined to consolidate a number of applications

which had been filed by various carriers to pro-

vide new and: improved short-haul service between

__ certain intermediate cities in the area, (R. 5). In-

stead, it directed ‘the institution of a separate pro-

/ ceeding (Great Lakes Local Service Investigation,

_ Docket No. 4251) on those applications. In order to

insure that the separation of the two proceedings

-_ would not deprive the existing local-service carriers of

their rights under Ashbacker Radio Corp. v. Federal

Communications Commission, 326 U.S. 327, and to give

those carriers an opportunity to show the effect of

a grant upon their existing operations, the Board

permitted the local carriers to’ intervené in the long-

haul proceeding (R..5-6). — |

The Board’s-decision in the long-haul proceeding

(R. 11-53) made a number of awards, including. one

permitting the respondent, Delta Air Lines Be eciaaee

: 2

(1) to extend an existing route northwest so as to

provide service from Detroit to Miami and (2) to

add Indianapolis and ‘Louisville as intermediate

points on its existing Chicago-to-Miami route. Al-

though the Board. imposed certain restrictions on a

- number of the new awards (including the authoriza-

tion to Delta, R..51) so as to protect local service car-

riers,’ it did not impose such restrictions with respect —

‘to a number of intermediate points on the long-haul

routes Delta was authorized to serve. ,

The Board’s decision and order in the. long-haul

Great Lakes-Sontheast Service case was issued on .

September 30, 1958 (R. 11), and provided that the

certificates issued pursuant thereto were to become

effective on November 29, 1958, unless postponed by

the Board prior to that date (R. 56). Within the

thirty 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., supra, pp. 3-5), Lake Central Air-

lines and Piedmont Aviation, local carriers which —

had ‘been permitted to intervene in the long-haul pro-

ceeding. to protect their interests (R. 3, 5-6), filed

- timely. petitions for reconsideration. ‘These petitions —

sought to impose on Delta’s service to some ten pairs

of cities* a requirement that service .to those points

"S ttaas inieibtlins normally preclude so-called “turnaround”

service between two points by requiring that service between

these points be only on a flight originated or. terminated in

some distant city. (See, e. 9+ R. 51).

* The ten pairs of cities in issue were: Indianapolis-Chicago;

Indianapolis-Louisville; Indianapolis-Cincinnati; Indianapolis-

Lexington; Indianapolis-Asheville; Dayton-Lexington; Dayton-

Asheville; Cincinnati-Louisville;. Louisville-Lexington; and

Louisville-Asheville.

4 ee

ee ‘ti

originate or terminate at some distant city (R . 88-93).

- Lake Central also asked that the effective date of

Delta’s certificate be stayed pending a Board decision

on the petitid&s .for reconsideration (td..at 92-93).

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

, posed effective date of the certificates, the Board is-

sued a lengthy memorandum and order (E-13211, R. .

57-80) in response to numerous requests for stay

which had been filed in connection with sixteen peti-

tions for reconsideration addressed to its September

30 decision (R. 57-58, note 1). With one exception,‘

these stays were denied, 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 of the peak |

winter season the ‘‘new services to Florida are imme-

diately required’’, a consideration which the Board

felt ‘clearly weights the scale * * * in favor of a

_ denial of the requested stay’? (R. 58-59). But the

‘Board made clear that “because. of the detailed mat- .

-ters raised in the petitions for reconsideration, it will

not be possible to finally dispose of them until after

November 29” (R.'58). It stated further that denial

of the stays ‘“‘is in no way prejudicial to the legal

rights of those parties seeking reconsideration. Noth-

ing in the present order forecloses the Board from

full and complete consideration. of the pending peti-

” 4 The exception was with respect to a certificate abarded to

Eastern Air Lines. This certificate was’ stayed because of the

serious questions raised by the petition for reconsideration and,

also, “bécause of a strike * * * Easterti in any event is pres-

. —_ unable to inaugurate service-*-*-*"-{R.-78).°

“

tions for reconsideration on their merits’? (R. 80).

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

_ 13835) -disposing of the petitions on their merits

(R. 81-87). This order, which gives rise to the pres-

_ent controversy, granted the petitions of: Lake Central

and Piedmont and imposed * restrictions on Delta’s —

certific ‘ate which preclude operations between the. ten

* designated pairs of cities unless the flights originate

cor. terminate at Atlanta or a point south thereof (id.

at. 83-84, 87). In imposing these restrictions, the

3oard noted that ‘‘[i]f, after deciding the issues pre-

sented in Great Lakes Local Service Case, we conclude

that the long-haul restrictions are not required, we |

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

- (id. at 83).

The court. of appeals reversed, holding that the

. Board, once it permits a certificate to become effec-

tive, is thereafter without power, in the same proceed-

ing, to add restrictions to the certificate, even “in

response to a timely petition for reconsideration filed

prior to the effective date of the: certificate (R. 98- _

107). The-eourt assumed that Delta was ‘‘on notice”

_ that the Board might ‘modify the eertificate on. the

basis of matters: set forth in the filed petitions for

reconsideration” (id. at 106), stating that its “hold-

ing is not based upon the fact that, prior to the date

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

because of a temporary stay granted by the Board (R. 94-95)

to enable the court of appeals to consider a stay request

addressed to it by Eastern Air Lines i in its unsuccessful efforts

to challenge the basic awards in the proceeding. See Fast-

‘enn Air Lines v. Civil Aeronautics Board, 271 F. 2d 752 ( CAL

2), certiorari denied, 362 U-.S.. 970.

9°

the certificate was moditied, 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 has .permitted to. become effective

ean thereafter be modified nly in a new proceeding °

‘Satisfying the requitements of Seetion 401(g) (thid.).

SUMMARY OF ARGUMENT

. The: changes in a certificate of public convenience

and necessity to which the procedures prescribed in

Section 401(g) apply are those occasioned by con- .

ditions arising after completion of the proceeding in

which the certific ‘ate Was issued. The section has- no

“application until the dec ‘ision-making process ‘in the

original certification proceeding has come to an end.

And the event which **marks the end of: that proceed-

ing *-* *” is when the certificate is ‘finally granted

and the time fixed for rehearing it has passed * * *,”

United States v. Seatrain Lines, 329 U.S. 424, 432.

Section 401(f), like Section 401(g¢), implic itly assumes

that the proceeding in which the -certificate has been

issued has come to an end, and therefore its provision

that a certificate ‘‘shall continue -in effect until sus-

pended or revoked as hereinafter provided” does not

preclude the Board from acting upon a timely petition

for reconsideration where it permits the certificate

_ to become effective pending rehearing. |

“On January 1, 1959, Delta had inaugurated a local flight

including service between Chicago and Indianapolis, one of the

ten pairs of tities to which the Lake C entral and Piedmont

_ Petitions for reconsideration had been directed (R. 101).

Both in the civil aeronautics field and in namerous

related areas, the courts “have coricluded that the

decision-making process remains alive while a timely

petition for reconsideration is pending-and that there-_

fore the administrative agency retains authority to

change its initial order during that period. Accord-

ingly, the Board’s power was not cut off by permit-

ting respondent’s certificate to become effective while

timely petitions for reconsideration were pending in

order to allow needed services to be provided immedi-

ately. a

An’ operation: which is permitted to go forward

while petitions for reconsideration of the’ grant°are

pending may be deemed temporary or conditienal;

i.e., subject to defeasance to the extent that elements

of the grant are involved in the rehearing pro-

cedures. It is ‘immaterial that Delta did not apply

fer temporary authority as such, since it proceeded

with full knowledge that the certification was not in

all respects final. We stress that Delta resisted a

stay of the effective date of the certificate so that it

might earn revenues during the pendency of the

applications for reconsideration and that the Board

gave explicit notice that the denial of. stay would

not foreclose ‘full and complete consideration of

the pending petitions.’’ Respondent “cannot blow

hot and cold and take -now a position contrary to

that taken in the proceedings it invoked to’ obtain ‘

the [Board’s]- approval,”’ Callanan Road Co. v.

United States, 345 U.S. 507, 513. © |

As a result of the decision below, as the court of

appeals acknowledges, ‘‘the Board’s dilemma is real.”

- ©

ie .

* =

1 ©

(R. 106,) The Board either must make unduly hasty i

' _-decisions on requests for reconsideration raising com-

plex problems or it must postpone the effective dates

of certificates—a course which deprives the public

of needed services and tle carrier of revenues. The

-¢aseg upon which the court below relied are clearly

inapposite since all of them related to the question

whether an agency may reopen a closed proceeding:

and modify. an outstanding certificate long after dis-

position of any petition for reconsideration «hich

may have been filed.. Those cases, in short, were

within the class to which the provisions of Section

401(g) clearly apply. They cast no doubt upon the

distinetion between a case in which a modification is

sought after the administrative process has been com- .

_ pleted and one in which the grant is still the Subject

of consideration in the initial proceeding as the re-

sult of a timely: and proper invocation of ordinary

rehearing procedures.

| “

ARGUMENT

THE BOARD’S AUTHORITY TO ACT ON TIMELY PETITIONS

_ FOR RECONSIDERATION OF AN ORDER GRANTING A- CER-

TIFICATE IS NOT TERMINATED BECAUSE IT PERMITS THE

CERTIFICATE TO BECOME EFFECTIVE WHILE THE PETI-

TIONS. ARE PENDING

The court below held that, once the Delta certificate -

had been allowed to become effective, the Board lost

power to act upon pending petitioris for reconsidera-

tion of the basie Board -order granting the certificate.

This conclusion was not based ‘on any ¢ ‘termination

that the result was compelled either as a matter of

due process.or fairness to Delta. Indeed, the court

assumed that Delta was adequately put on notice, as

of the time. the Board made the certificate effective,

that this action’ was ‘without prejudice to any action

which might subsequently be taken on the pending

petitions... Nor did the ‘court believe that its holding

was essential, or even advantageous, to the. proper

performance of the Board’s functions; on the con- _

trary, it frankly acknowledged that the ‘‘dilemma’”’

‘in which its decision placed the Board was’ “real”?

(R. 106). The court’ s rationale is that the result ‘is

dictated by Section 401(f) of the Federal Aviation

Act, 49 U.S.C. 1371(f), which’ states that ‘“[e]ach

certificate shall be effective from the date specified

therein, and shall continue in effect until suspended

or revoked as hereinafter provided * * *.”" This

language it construed to mean that no effective cer-

tificate could be changed in any manner, except after

further notice and hearing in accordance with the

provisions of Section 401(g) of the Act, 49 U.S.C.

1371(g).

_ We shall urge that this vebeleates inter psibusion

its not required by the statute or by the relevant de-

cisions. In our view, a Board order remains subject

to modification or rescission in response to a timely

petition: for reconsideration, without regard _ to

whether the Board has authorized the commencement

of aperations. This is so, we believe, because the pro-

visions of the Act requiring the institution of formal

new proceedings to amend or modify certificates may

- reasonably be read as applicable to closed proceedings

13 5 : :

rather than to the situation presented here, where

rehearing procedures had not been completed. |

A. We note, at the outset, that no question has been

raised as to the: Board’s authority to adopt Section

302.37 of its Rules of Practice (14 C.F.R. 302.37

(1956 Rev: ed.) )' governing réconsideration. Al-

though the Federal Aviation Act, unlike various other

federal statutes establishing regulatory commissions,

does not expressly. ‘provide for reconsideration of

Board orders, ‘*[t]he power to retonsider is inherent

in the power to decide.” Albertson y. Federal Com-

" munications Commission, 182 F. 2d 397, 399

(C.A.D.C.). The Board’s pow€ér 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 Assns. v. Frisco Co., 358 U.S.

133, 145.°

7 By a recent revision of the rules, the time within which a

petition for reconsideration in a certification (“economic”) pro-

ceéding may be filed, without special order of the Board, has

been reduced from thirty to’ twenty days. See 14 C.F.R.

302.37 (1960 Supp.).»

- § Section 204(a) empowers the Board to “perform such acts,

* * * and to make and amend such general or special rules,

Tegulations, and procedure, pursuant to and consistent with

the provisions of this Act, as it shall deem necessary to carry

out the provisions” thereof. Section 1001 authorizes the Board

“subject to the provisions .of this Act'and the Administrative

Procedure Act”, to conduct. its proceedings “in such manner

as will be conducive to the proper dispatch of business and’

to the ends of justice.” Section 1005(d) provides ~that

- “[e]xcept as otherwise provided in this Act, * * * the Board

is empowered t6 suspend or modify [its} orders upon such

notice.and ip such manner as [it] shall deem proper.”

*The provisions of Section 1006(e) of the. Act, 49. U.S.C.

1486(e), precluding judicial review of any objection to a

Nor is it contended that the Board rule governing:

reconsideration, providing for the filing of a petition . -

within thirty days of the issuance of the order (a pe-

riod well within the sixty. days upon which certifi-

cates are ordinarily made effective), was in any

respect improper. The question is solely whether

Section 401(f) of the Act precludes the*Board from

acting on such a petition if it has not done so before

the effective date specified in the certificate.

a certificate, onee effective, is to ‘ ‘continge I

—untif® suspended or revoked as_ hereinafter

vided * * *.”” The defect of this view is that it

ignores the fact that Section 401(f), in setting out the

circumstances under which an effective certificate.

may be altered” or terminated, obviously contem-

Board order not first “urged before the Board” would appear

to requiré a petition for reconsideration as a prerequisite to

obtaining court review of matters not fairly in issue during

the agency proceeding. Compare Levers v. Anderson, 326 U.S.

219, with Peoria Braumeister Co. v. Yellowley, 123 F. 2d 637

(C.A. 7).

_ It should be noted that Section 401(f) does not, in terms,

purport to govern the specific situation presented by this case

of a minor amendment to a much more comprehensive certifi-

cate.. It provides only that. a certificate “shall continue in

effect” until suspended or revoked “as hereinafter provided”

(or until the Board certifies that operations have ceased).

Nothing is said about the terms of operation under the certifi-

cate, “and specifically there is no reference to the Board’s

authority to alter, amend or modify the certificate once it

becomes effeetive. Thus, even if the court of appeals’ inter-

pretation of. the section was otherwise correct, it need not

be read as if it provided that a certificate shall “continue in

effect without change until altered, amended, modified, sus-

pended or revoked as hertinatter provided.”

—

plates the situation which prevails after the under-

, lying Board proceeding has been finally .coneluded. ‘

The question -when the Board’s decision becomes

final is not answered simply by referring to the date’

that the carrier is permitted to commence operations.

Thus, it is clear that a certificate, effective in the ~ -

sense that carrier operation thereunder would be —

legal, would nonetheléss be terminated, without going

through the procedures specified in Section 401(g)

of the Act, if the Board oftler making the award

_were set aside upon judicial review. The situation is

- essentially the same with respect to reconsideration

pursuant to a valid Board rule. See Federal Com-

munications Commission v. National: Broagicasting

Co., 319 U.S. 239, 245.

This is not to say that the Board has unlimited powers

to keep a proceeding ‘alive through the exercise of its

rule-making authority, or that Section 401(f) ‘of the

Act is without function beyond specifying the date

on which a certificate first becomes effective. Ob-

viously, the Board has a duty to dispose of petitions

‘for reconsideration within a reasonable time. Also;

Section 401(f) may well preclude entertaining . an

out-of-time petition for reconsideration filed after a

certificate has gone into effect. For present purposes,

it suffices to say that when a certificate becomes

effective at a time when: one or more valid petitions

for reconsideration are already pending, it does no

violence to the letter or spirit “ of Section 401(f) to

“Tt would appear that Delta received, in substance, all of

the protection afforded by Section 401(g), even assuming the

court of appeals’ view of the law to be correct. For “notice”

16 i

recognize that the certificate is subject to defeasance

in whole or part should the, petition for reconsidera- _

tion be granted. We submit that, at the least, this

should bé the’ rule where, as here, the Board,

permitting the certificate to hecome operative, bas

expressly conditioned its approval upon the outcome

of the pendins: petitions for reconsideration.

The. question . whether Section 401(g) should be

-read as applicabfe only to certificate changes which

, take place after the initial licensing proceeding has ‘

. been fully completed must be. resolved, as indicated

above, by a consideration: of the logic and sense of

the statute. In this process, one must give weight to .

the presumption that Congress was fully aware of

the normal incidents of the administrative process,

‘including ‘the precept that the power to decide in-

cludes the power to reconsider. ‘Legislative history,

however, is of little aid in this case. There was no _

” specific’ reference to the question now before the Court

when Congress congigered the Federal “Aviation Act

of 1958, the predecessor Civil Aeronautics Act of

1938, or the Motor Carrier Act of 1935, on which the

Civil Aeronautics Act was patterned. However, this:

of the proposed modification of the certificate was provided by

the petitions for reconsideration, as well as by the Board’s

express reservation, in ‘its. order denying a stay, of its “power

to modify the certificate on the basis of the matters set forth

in the. filed petitions for reconsideration” (R. 106), And any

“hearings” relevant to the issue had already been had since

reconsideration was souglit gn the basis of the record already

made (R. 88-93). ~“Thus,.even if the Board aétion on recon-

sideration were deemed a modification requiring proceedings in

compliance with Section 401 (g); ‘there was compliance with

the requirements of that section in everything but name.

atta 17

“much may be said. Sections 401 (g) and (h) of the ~

Civil Aeronautics Act (which are identical to Sections

401 (f) and (g) of the Federal Aviation Act) were:

modeled after Section 212(a) of the Motor Warrier |

Act of 1935, 49 Stat: 555. Sectién 212(a) of the

latter sfatute was certaiMly not designed to’. pre-

clude the modification of an effective certificate in re-

_ sponse to a timely petition for reconsideration. _In-

deed, the original Motor Carrier Act, -having provided

in Sectidn 212(a) that certificates shall be ‘effective

from the date specified therein” and ‘‘remain in effect

until terminated .as herein provided,’ contained an-

other provision (Section 204(e), 49 Stat..547) which

declared that the Commission may reconsider any .

“decision, order, or requirement,” that an application

for reconsideration shall not~constitute a stay ‘of the

Commission’s action,-and that on rehearing the Corfh-~ ,

‘ mission might reverse, change, or modify its ‘original

‘decision, order, or requirément.” Thus, there was na.

‘ question that .the Interstate Commerce Commission

was empowered to modify an. effective: certificate

award in response to a timely petition for reconsider-

ation. See Denver-Chicago Trucking Co. Common —

Carrier A pplication, 27 M.C.C. 343, 345. There is no ©

“Tt appears clearly that Segtion 401 (g) and (h) of the

Civil Aeronautics Act. were taken directly from Section 212(a)

of the Motor @arrier Act. of 1935. See Confidential Cagmnittes

Print, May 1,-1937, on S. 2, 75th Cong., Ist. Sess., pp. 42-43,

. Although the Civil Aeronautics Act did not have special

statutory provisions dealing with applications for reconsidera-

tion, it is scarcely to be doubted that the power.,to reconsider

is inherent and does not a Specific authorization. See

supra, P. 13.

18 ©

indication that Congress, in enacting the Civil ‘Aero-

nautics Act or any other amas statute, has pro-

posed to, do otherwise.

_ B. The case aw which bears on: the subject is

completely consistent with the view that procedures .

of the kind prescribed in Section 401(g) of the Act

were not intended to come into play until the ‘certifi-

- cate [has been] finally granted and the time fixed

for rehearing it has passed.’’ United ‘States v. Sea-

train Lines, 329 U.S. 424, 432. The precise question

appears to have been raised in only one previous

case involving the Board, Frontier Atrlinesy Inc. v.

Civil Aeronautics Board, 259 F. 2d 808 (C.A.D.C.).

There, a contention was made that the -Board’s order

on reconsideration, which. included an amendment: to

an. effective award, was “a nullity because it was

rendered * * * after the certificate previously issued

had become effective’ (id. at 810). But the court of ;

appeals rejected the’ argument without discussion.

In Western Airlines, Ine. v. Civil Aeronautics Board,

294 F. 2d 211, 214 (C.A. 9), a similar result was

_ reached where the problem’ was whether the Board

could, impose conditions upon a ‘certificate: transfer,

in response to a timely petition for reconsideration,

_ notwithstanding the fact -that ” transfer had al-

ready beeome effective." goths

_ *The Board has selinualieg modified, upon reconsideration,

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

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

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

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

‘ Service to Phoenix Case, Order E-12039 (1957); South Cen-

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

In a number of cases, a question has been raised as

to whether the time for filing an appeal runs from

the Board’s original order or its order on reconsider- .

ation. In these instances, the courts of appeals have

recognized that the order on reeonsideration is but

another step in the decision-making process in the —

original proceeding and that until that order is

entered the Board has the continuing power to modify

its original order. Outland v.. Civil Aeronautics

_ Board, 284 F. 2d 224, 226-228 (C.A.D.C.); Water-

man Steamship Corp. v. Wil Aeronautics Board, 159

F, 2d 828, 829 (C.A. 5), reversed on other grounds,

333 U.S. 103; Brantff Airways v. Civil Aeronautics

Board, 147 F. 2d 152, 153 °(C.A.D.C.) But ef. Con-

solidated Flowers Shipments v. Civil Aeronautics

Board, 205, F. 2d 449 (C.A. 9). ‘Where a motion for

rehearing is in fact filed there is no final action until

the rehearing is denied’’ because, as the court stated

in the Outland case, “there is always a possibility that.

the order complained of will be modified in a way

which renders judicial review unnecessary’’ (284 F.

2d at 227). In the Waterman decision, the filing of a

- “grave doubt as to its statutory power to do so” (R. 105)

said to have been expyessed by the Board in Kansas City-

Memphis-Flerida Case,“9 C.A.B. 401, was a doubt shared by

‘only three. members of the Board and did not serve as the

basis for their decision, since the initial award was affirmed

‘on its merits. Moreover, the question was as to the power -

to revoke, not the power to add restrictions of the kind here

involved, a distinction which might have been considered sig-

nifieght in view of the different standards which have to be

met for revocation, as contrasted with amendment, under

Section 401(g). In later cases, as noted above, the Board -

has ordered modifications.

petition for reconsideration was held to have “oper-—

_ ated to retain the Board’s wai oyer the order”

(159 F. 2d at 829).” 5 |

The courts have reached similar decisions. in the |

communications ate in which, as’ here, there are

statutory provisions ' * requiring a new hearing pre-

liminary: to revocation or modification of license.

- Black River Valley Broadcasts v. McNinch, 101 F. 2d

235. (€.A.D.C.); Albertson v. Federal Communica-

‘tions Commission, 182 F. 2d 397, 399 (C.A.D.C.) ;

Enterprise Company v. , Federal Communications

Commission, 231 F. 2d 708 (C.A.D.C.), certiorari

denied, sub nom. Beaumont Broadcasting Corp. v. En-~

terprise Company et al., 351 U.S. 920; W. S: Butterfield

Theatres y. Federal Communications Commission, 237 &

F.2d 552 (C. A:D.C.). Inthe Black River case, the court

held that a radio construction permit could be with-

~drawn upon reconsideration of the application, not-

withstanding the fact that the licensee had virtually

completed construction following the effective date of

the permit. This was held to be so because, until the

agency acted on the petition for rehearing, ‘there was

- no final grant of a permit or license to plaintiff [and]

The decision below would create a problem with respect to

judicial review of Board orders. For, if the effectiveness ‘of

the certificate controls whether the Board can act on a petition

for reconsideration, a party to a Board proceeding wishing to

seek court review of the order will either have to forego a

petition for reconsideration altogether (but see note 9, supra,

p. 13), or, with the approach of either the date upon which

«the certificate would normally become effective or the date by

which a petition for review of the original Board order would

have to be filed, will be required to file a “protective” review

petition to avoid the possibility of losing its appeal —

** See 47 U.S.C, 312,316.

21 .

_it went forward with its project at its peril’. (101

F. 2d at 242; emphasis added.)”

The Interstate Commerce Commission. cases relied

on by the court of appeals—United States v. Seatrain

Lines, 329 U.S. 424; United, States -v. Watson Bros.

Transportation Co., 350 U.S. 927, affirming 132 F.

Supp. 905 (D. Neb.) ; American Trucking Assns. v.

Frisco Co., 358 U.S. 133, and Smith Bros., Revocation.

of Certificate, 33 M.C.C: 465—are nowise inconsistent

with our view of the statutory scheme. All of these

cases relate to the question whether an administrative

- agency may reopen a closed proceeding. to modify

or revoke an outstanding: certificate long after dis-

position of any petition for reconsideration that may

have. been filed. In the Seatrain case, for example,

Ahe Commission sought to modify a certificate a year

and a half after the certificate had been finally

granted and the time fixed for rehearing had passed.

In the Watson case, the period was four years after

the proceeding had terminated. These were cases

which involved “the reopening”’ of a clesed proceed-

ing. American Trucking Assn8. v. Frisco Co., supra,

358 U.S. at 146. If anything, these decisions lend

some stipport to the position which we urge here, for

poh indicate that even in such circumstances there

occasions when a new proceeding is not required.

Sed e.g., American Trucking Assns. v. Frisco, supra

"3 See, also, Fuller-Toponce Truck Co. v. Public Service Com-

mission, 96 P. 2d 722, 724-725 (S. Ct. Utah); Hazard-Hyden

Bus Co. v. Black, 293 Ky. 379 (Ct. App.), 169 S.W. 2d 21.”

*The Smith Bros. case, supra, was also one in which the

certificate had long been in effect; the question was whether

—s 22

'C. The ‘fact that the Board ordinarily is able to

dispose of petitions for reconsideration before the

effective date of: a certificate, as the court below noted

(R. 105-106), is searcely an indication of a lack of |

power to modify a certificate on reconsideration where |

it has. been unable to resolve the question before

that date. Nor does it suffice to say, as does Delta,

that the decision below need not result in unduly

hasty decisions since ‘‘the [Board] can always write

a longer grace period * * * into a new certificate

when it is granted’’ or, if the period proves to be

inadequate, .“‘all the Board has to do * * * is to

extend the effective date of new certificates’ until ite

finishes its.job of reconsideration” (Br. in Op. 22). ~

‘This procedure may be useful in some circumstances.

But it is not an answer where, as in the’ &tuation.

faced by the Board in this ease, there is a piping

need for the inauguration of the newly auth@gized

services. Had ‘the Board postponed the effeetive

dates of the. certificates until May 7, 1959, when.

the reconsideration requests were decided, the peak

Florida winter season travel would have been lost to

the three newly certificated carriers (including Delta)

whose direct Detroit-Florida grant was in no way

affected by the later reconsideration.” |

, Such certificate could be revoked by the device of a self-

exécuting forfeiture provision contained in the certificate.

*The fact that the Board did extend the effective date of

. Eastern’s certificate (Br. in Op. 23) is of no help to Delta .

if, for no other reason than that one ground for the Board’s

action was thé inability of Eastern a of a.strike) to

rr (R. 78).

‘ aah

Having been permitted to inaugurate the newly au-

thorized service in time for the peak winter traffic

and having Atself resisted efforts by others to defer the .

start of this: service (see Eastern Air Lines v. Civil

Aeronautics Board, 261 F. 2d 830 (C.A. 2)), Delta~

is searecly in a position to argue now that an addi- - ,

tional delay-to permit reconsideration would not have

been “crucial”’ (Br. in Op. 23). Moreover, it is.the

responsibility of the Board to 0 pass judgment upon -

_- need for immédiate service. z

Nor is there merit to Delta’s contention that the |

Joard “éan stay only a portion of a. new award,, if.

it desires to put uncontested portions into effect while

<iving more thought to those parts concerning which

reconsideration has been sought.” (Ibid.) For,

apart from the practical administrative problems. such

a procedure would entail in a compicx’ proceeding :

like the instant one, there are frequently no portions

of an award which are uncontested. And even where

sume parts of an order are not challenged on.recon-

sideration, the Board may well conclude that contested

portions should be permitted to. become - effective

pending resolution of reconsideration ‘requests which,

on a preliminary en do not appear likely to -

be granted.

As a matter of fact, Delta itself has jeseniniond that

2 new proceeding is not always required to modify

an effective certificate. (Delta’s Reply to Reply of

Petitioner in No. 493, dated December 1, 1960, pp. 3-

5.) Delta acknowledges that, in connection, with its _

own pefition for reconsideration, it urged that its cer-

tificate could ke modified, notwithstanding the fact

“24

that it had already become effective. Its explanation

for this apparent inconsistency is that its petition re-

, quested- the Board to add authority (through the re-

moval of a restriction), whereas the Board sought to

withdraw authority (through the imposition of a re-

striction). No such distinction, however, can be jus-

tified either by any. policy considerations of which we

are aware or hy the language of Section 401(g) which,

when applicable, requires a new proceeding, to “alter,

amend, modify, or suspend any such certificate

* * ®*? regardless of the nature of the modification. #

heveutibelen the dilemma which its decision created

for the Board, the court below suggested (R. 106, n.

12) that the Board might, for the future, “‘investigate _

the possibility of issuing some form of temporary

authorization.”’ But temporary authorization was in ~

substance all that Delta received at thé time its certifi-

_ cate became effective, since it was expressly made -

_ subject to such changes as a. ‘‘full and complete con-:

sideration of the pending petitions for reconsidera-

tion’? might wayrant (R. 80). Perhaps the court of .

_appeals was reluctant to view the matter in this light

because it thought that the temporary certificates ex-

: pressly provided for by Section 401(d) of the Act, 49

U.S.C. 1371 (a), can only be granted upon “application of

2° That section a as follows’

(1) The Board shall issue a certificate authorizing the

‘whole of any part of the transportation covered by the

application, if it finds that the apy licant is fit, willing,

and able to perform such transportation properly, and

to conform to the provisions of this chapter and-the rules, _

regulations, and requirements of the Board hereunder,’

and that such transportation is reqyired by the public

25°

therefor.” But this is not an obstacle. Taking into

acéount (a) that Delta opposed a stay of authorization -

as sought by the applicants for reconsideration and (b)

that it proceeded to operate with full notice that the

Board, which had not yet completed the proceeding,

proposed to do so, we submit that it must be takén to

have acquiesced in the conditions which were im-

plicitly attached to the Board’s approval. See Calla-

nan Road Co. v. United States; 345 U.S. 507, holding

‘that a ‘transferee of a water carrier permit, having

invoked the power of the Interstate Commerce Com-

mission to approve the transfer of an amended per-

mit to it, could not thereafter challenge the

procedures by which. the Commission had. amended

the permit while it was in the transferor’s hands.

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

U.S. 419, 435, holding that the Interstate Commerce

Commissi6n, in approving the acquisition of two motor

carriers by a railroad affiliate, could reserve the power

to impose future limitations upon the certificates in

order to insure that the activities of the new sub-

‘sidiaries would remain auxiliary and supplemental

_ to rail operations, without offending a statutory pro- .

convenience and ett otherwise such. —pmain shall

be denied.

(2) In the case of an application for a certificate to

engage in temporary air transportation, the Board may

issue a certificate authorizing the whole or any part

thereof for such limited periods as may be required by

the public convenience and necessity, if it finds thar the

applicant is fit, willing, and able properly to perform such

transportation and to conform to the provisions of this

chapter and the rules, regulations, and requirements of the

Board reeen

. 26

vision stating that a certificate shall remain in effect

_ until suspended or terminated.

Since the court of appeals refused to consider the

authorization in this case as one inherently limited,

~ albeit Delta was unmistakably aware of the Board’s_

declared purpose to reserve final decision on the.

matters’ presented for its reconsideration, it .is. diffi-

cult to see how the court’s invitation to consider other

possibilities leaves the Board any appreciable room -

for improvisation. The only satisfactory answer to -

the practical probfem,.we believe, is that the Board,

liké similar agencies -performing licensing funetions,

should be deemed empowered to adopt and implement

ordinary... rehearing procedures. If. Section 401(g)

is viewed, as we think it should be, as a provision ad-

dressed only to modifications, siispensions and rev-

ocations subsequent to the completion of the initial

licensing proévedirig, the Board will be able to pro-

ceed in customary and orderly fashion.

CONCLUSION.

‘The judgment below should be reversed and the

cause remanded with instructions to. dismiss the pe-

tition for review.

Respectfully submitted. _

| ARCHIBALD Cox,

Solicitor General.

- LEE LoeEvINGER,

Assistant Attorney General.

‘Ricuarp A. Sovomon,

Irwin A. SEIBEL,.

-O Attorneys.

JoHN H. Wanner,

General Counsel. &

O. D. OzMeEnt,

' Associate General Counsel,

- Morris CHERTKov,

: Attorney, |

Civil Aeronautics Board..

_ Marcw 1961.

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