Petition for Writ of Certiorari — Seaboard & Western Airlines, Inc. v. Civil Aeronautics Board

MAR 25 1950

CHARLES ELMCH-

SUPREME COURT OF THE UNITED TES |

OCTOBER TERM, 1949

No. 702

SEABOARD & WESTERN AIRLINES, INC.,

site Petitioner,

CIVIL AERONAUTICS BOARD, ET AL.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA AND SUPPORTING

BRIEF.

d Harpy K. Mactay,

917 15th Street, N. W..,

Washington, D. C.,

Attorney for Seaboard &

Western Airlines, Inc.,

Petitioner.

Of Counsel:

Lanpis, Gewrrtz & Macuay,

917 15th Street, N. W.,

Washington, D.C.

Doveias M. AMMan,

FENNELLY, LOWENSTEIN,

EnGeLHarD & PITCHER,

25 Broad Street,

New York 4, New York.

_

Petition for Writ of Certiorari....................

Statement of the Matter Involved... ree

Ne itn. Os i a a

B. Mail Rate Proceedings Before Respond-

EN re te ete Gr Cae og sss

INDEX

Jurisdictional Statement................... Sik

ye |

Reasons for the Allowance of Writ................

Brief in Support of Petition for Certiorari.........

Opinion of the Court Below...................

SS RE eo

Goectiontion of Mrrere.......................

The Importance of This Case.................

I. Temporary Mail Rate Orders and Inter-

UE NO os ks new eae en.

II. The Extent of Intervention in the Per-

manent Mail Rate Proceedings. ..__.

GS, gels Sco de tees ns c5oe bs

TABLE OF AUTHORITIES

Cases:

Alabama Power Co. v. Ickes, 302 U. S. 464, 58 S.

| Ct. 300, 82 L. Eid. 374 (1988)................

American Airlines, Inc., Mail Rate Proceeding,

| eM IE cS gel Cee eects

American Airlines, Inc., Mail Rate Proceeding,

Mc UIE oo 5 koko sce ana paedaes

Eastern Air Lines, Inc., Mail Rate Proceeding,

ye IS Bk Sy wv kek sk keen ce kaen.

Essair, Inc., Temporary Mail Rate, 6 C.A.B. 687

Ce re ee ie etry 24 is eet aes

Federal Communications Commission v. Sanders

Bros. Radio Station, 309 U. S. 470, 60 S. Ct.

693, 84 L. Ed. 869 (1940)...................

—7376

Page

Pom mOoamuont

es

bo

tpt

co on

ii INDEX

Flymg Tiger Line, Inc. v. Atcheson, T. & S. F.

Ry. Co., 75 F. Supp. 188 (S.D. Calif. 1947) .... 12

North Atlantic Route Case, 6 C.A.B. 319 (1945) . 13

Pan American Airways, Inc., et al., Latin-Ameri-

can Rate Case, 3 C.A.B. 657 (1942).......... 15

Pan American-Grace Airways, Inc.—Mail Rates,

Cae CS 35 aio Riv seks Cn eeavic, 15

Transcontinental & Western Air, Inc. v. Civil

Aeronautics Board, 336 U. S. 601, 69 S. Ct.

Pe I eae eee ate Uk cocker 11,12

Statutes:

Civil Aeronautics Act of June 23, 1938, c. 601

(52 Stat. 977 ff., 49 U.S.C., See. 401-691) :

Section 406 (52 Stat. 998, 49 U.S.C. 486).... 2,12

Section 1006 (52 Stat. 1024, 49 U.S.C. 646) 5, 14, 15

62 Stat. 928; 28 U.S.C. 1254 (1948).......... 5

Miscellaneous:

Hearings before Committee on Interstate and

Foreign Commerce on S. Res. 50, 81st Cong.,

Ist Sess. 126 (1949)................. .. . 11,13, 15

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1949

No. 702

SEABOARD & WESTERN AIRLINES, INC.,

Petitioner

vs.

CIVIL AERONAUTICS BOARD,

Respondent,

AMERICAN OVERSEAS AIRLINES, INC.,

Intervenor,

PAN AMERICAN AIRWAYS, INC.,

Intervenor

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

To the Honorable Fred M. Vinson, Chief Justice of the

United States and the Associate Justices of the Supreme

Court of the United States:

The petitioner, Seaboard & Western Airlines, Ine., re-

spectively shows to this Court:

Statement of the Matter Involved

A. Background

Petitioner is an air carrier engaging in international air

transportation of property on an irregular or non-scheduled

2

basis. It is operating under the authority of a Letter of

Registration issued by respondent, Civil Aeronautics Board,

pursuant to its economic regulations. There is pending

before respondent a proceeding in which petitioner is ap-

plicant for a certificate of public convenience and necessity

authorizing it to conduct international air transportation

of property without limitation of frequency or regularity.

Transcontinental & Western Air, Inc., American Over.

seas Airlines, Inc., and Pan American Airways, Inc. are

air carriers engaging in international air transportation

of persons, property and mail under certificates of public

convenience and necessity. These carriers, as mail cer-

tificated carriers, are entitled to and are receiving mail pay

pursuant to Section 406 of the Civil Aeronautics Act of

1938, as amended (52 Stat. 998, 49 U. S. C. 486). Peti-

tioner receives no mail pay or subsidy of any kind, and

depends entirely upon its commercial revenues for sur-

vival.

Petitioner and the above named carriers transport prop-

erty between points in the United States and points in

Europe, and elsewhere. Petitioner transports property

over many of the same routes as the above named carriers,

and is, therefore, in direct competition with them.

B. Mail Rate Proceedings Before Respondent

Section 406 of the Civil Aeronautics Act (52 Stat. 998,

49 U.S.C. 486) empowers and directs respondent to fix and

determine, after notice and hearing, the fair and reasonable

rates of compensation for the transportation of mail by

air carriers holding certificates authorizing them to trans-

port mail. Among the elements to be considered by re-

spondent in fixing a rate is the need of the air carrier for

mail pay sufficient to enable it, under honest, economical,

and efficient management, ‘‘to maintain and continue the

, ee

3

development of air transportation to the extent and of the

character and quality required for the commerce of the

United States, the Postal Service, and the national de-

fense.”’

In 1946 respondent instituted proceedings to fix mail rates

for Transcontinental & Western Air, American Overseas

Airlines, and Pan American Airways. At the same time so-

called ‘‘temporary’’ rates for these carriers were set, such

temporary rates to be paid them pending the adoption of

permanent rates. In 1947 and again in 1948 retroactive

increases in these temporary rates were awarded by re-

spondent. Upon the initial fixing of or subsequent increase

in a temporary rate for a past period, a lump sum is immedi-

ately paid to the carrier. Such payments are in fact pay-

ments on account, there having been no determination of

the actual amount to which the carrier will later be found

entitled. The amount paid under temporary rate orders

may be greater or less than the amount later authorized

in a permanent rate order.

On December 7, 1948, respondent on its own initiative

proposed a third increase in the temporary mail rate of

Transcontinental & Western Air (80). On December 10,

petitioner petitioned for leave to intervene in this proceed-

ing (82). The petition alleged that petitioner had a sub-

stantial property and financial interest in the subject mat-

ter of the proceeding, that its interest would not be ade-

quately represented by existing parties, and that inter-

vention would not unduly broaden or delay the proceeding.

On December 16, respondent denied this petition for leave

to intervene (86). On December 22 a pro forma hearing

was held (89) and on the same day respondent issued an

order establishing a new increased temporary mail rate

for Transcontinental & Western Air (96). Petitioner in-

stituted proceedings in the United States Court of Appeals

+

for the District of Columbia to review respondent’s order

denying petitioner the right to intervene (2).

Petitioner on January 6, 1949, in the case of American

Overseas Airlines (124), and on Decemher 10, 1948, in the

case of Pan American Airways (198), petitioned for leave

to intervene in the rate proceedings of each. Each petition

alleged that petitioner had a substantial interest in the

subject matter of the proceeding, that its interests would

not be adequately represented by existing parties, and that

its intervention would not unduly broaden the issues or

delay the proceedings. On April 19, 1949, respondent,

on its own initiative, proposed a further increase in the

rates of both these carriers for the past period January

1, 1946 to December 31, 1948, and proposed to make such

increased rates the permanent rates for that period

(181, 263). At the same time, respondent directed Pan

American Airways and American Overseas Airlines to show

cause why these proposed permanent rates should not be

immediately adopted as the temporary rate for each (182,

264). Respondent, at the same time, denied petitioner’s

petitions for intervention so far as each ‘‘requests inter-

vention in the temporary mail rates,’’ but granted inter-

vention ‘‘as a matter of discretion . . . limited to the

final mail rate determination, and then only to such issues

as relate to cargo operations and the extent, if any, to which

such cargo operations should be underwritten with ‘need’

mail pay.’? (185, 266) On April 29, respondent issued

orders fixing the proposed increased rates as the tempo-

rary rates (193, 277).

Petitioner instituted an action in the United States Court

of Appeals for the District of Columbia to review respond-

ent’s orders denying it the right to intervene in the tempo-

rary rate proceedings and granting only limited interven-

tion in the permanent mail rate proceedings (98). Peti-

—

4)

tioner subsequently amended its petition to include a review

of the orders fixing temporary rates, alleging that respond-

ent committed several errors in determining said rates

(286).

C. Action of the Court Below

The petition to review the action of respondent in the

Transcontinental & Western Air proceeding and the peti-

tion to review the action of respondent in the American

Overseas Airlines and Pan American Airways proceedings

were consolidated for hearing and decision.

On December 27, 1949, the United States Court of Appeals

for the District of Columbia affirmed in part and dismissed

in part the orders of respondent which had been challenged

by petitioner (290). It was held that temporary rate orders

were not reviewable because not final, that the orders deny-

ing intervention in the temporary rate proceedings were

not reviewable for the same reason, and that the award of

only limited intervention in the final mail rate proceedings

was proper (289).

Jurisdictional Statement

This Court has jurisdiction to review the judgment and

decree of the United States Court of Appeals for the Dis-

trict of Columbia by virtue of the following statutory pro-

visions: 28 U.S.C. 41254 (62 Stat. 928), and § 1006 (f)

of the Civil Aeronautics Act of 1938 (52 Stat. 1024; 49

U.S.C. 646).

The petition is timely, the United States Court of Appeals

for the District of Columbia having rendered its decision

on December 27, 1949 and this petition having been filed on

March 25, 1950.

The Questions Presented

1. Whether orders of the Civil Aeronautics Board fixing

temporary rates of compensation for an air carrier for

mane URE

6

transportation of the mail pursuant to which United States

funds are actually paid to that carrier are appealable?

2. Whether orders denying an air carrier the right to

intervene in the temporary mail rate proceedings of a com-

petitor are appealable?

3. Whether an air carrier is entitled to intervene in the

temporary mail rate proceedings of a competitor?

4. Whether petitioner’s status as an air carrier of cargo

is such as to entitle it to intervene in the permanent mail

rate proceedings of a competitor and to raise therein

any questions and present evidence upon any issue relating

to the propriety or amount of mail pay to be awarded to

such carrier?

3. Whether the Board imposed an undue and improper

limitation upon the intervention of petitioner in the mail

rate proceedings of other air carriers by limiting its par-

ticipation to such issues as relate to cargo operations and

the extent to which such operations should be underwritten

with ‘‘need’’ mail pay?

Reasons for the Allowance of the Writ

1. The United States Court of Appeals for the District

of Columbia has decided questions of general importance

which have not been, but should be, settled by this Court.

2. The United States Court of Appeals for the District

of Columbia has decided questions of substance relating

to the construction and application of a statute of the United

States which has not been, but should be, settled by this

Court.

3. The United States Court of Appeals for the District

of Columbia has failed to give proper effect to several ap-

plicable decisions of this Court.

7

These reasons are discussed in petitioner’s attached brief.

Wuenrerore your petitioner prays that a writ of certiorari

issue under the seal of this Court, directed to the United

States Court of Appeals for the District of Columbia, com-

manding said Court to certify and send to this Court a full

and complete transcript of the record and of the pro-

ceedings of the said Court of Appeals had in the cases

numbered and entitled: Seaboard & Western Airlines,

Inc., Petitioner v. Civil Aeronautics Board, Respondent,

Docket No. 10086; and Seaboard & Western Airlines, Inc.,

Petitioner v. Civil Aeronautics Board, Respondent, Docket

No. 10242, to the end that these causes may be reviewed

and determined by this Court as provided for by the stat-

utes of the United States; and that the orders herein of

the said United States Court of Appeals for the District

of Columbia be reversed by this Court and for such other,

further or different relief as to this Court may seem proper.

Dated, Washington, D. C., March 25, 1950.

Harpy K. Mactay,

Counsel for Seaboard &

Western Airlines, Inc.,

Petitioner.

Lanpis, Gewirtz & Macuay,

Dove tas M. AMMAN,

Frenne.ity, LOWENSTEIN,

Encetuarp & PircHer,

Of Counsel.

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1949

No. 702

SEABOARD & WESTERN AIRLINES, INC.,

Petitioner,

vs.

CIVIL AERONAUTICS BOARD,

Respondent,

AMERICAN OVERSEAS AIRLINES, INC.,

Intervenor,

PAN AMERICAN AIRWAYS, INC.,

Intervenor

BRIEF IN SUPPORT OF PETITION FOR CERTIORARI

Opinion of the Court Below

The opinion of the United States Court of Appeals for

the District of Columbia appears in the certified copy of the

Transcript of Record (284-289). It has not as yet been

officially reported.

Jurisdiction

Reference is made to the jurisdictional statement in the

petition (supra, p. 5).

Specification of Errors

1. The Court of Appeals erred in deciding that orders

establishing temporary mail rates are not appealable.

10

2. The Court of Appeals erred in deciding that orders

denying intervention in temporary mail rate proceedings

are not appealable despite the fact that petitioner dis-

closed a ‘‘substantial interest’’ in the proceedings.

3. The Court of Appeals erred in deciding that orders

denying intervention in temporary mail rate proceedings

are not appealable despite the fact that the petitioner

was concededly entitled to intervene in the permanent

mail rate proceedings.

4. The Court of Appeals erred in deciding that peti-

tioner, although he had established a ‘‘substantial interest,’’

could not participate fully in the permanent mail rate pro-

ceeding and could not present evidence on all issues bearing

upon the public interest but was to be limited to “such

issues as relate to cargo operations and the extent, if any,

to which such cargo operations should be underwritten

with ‘need’ mail pay.’’

5. The Court of Appeals erred in failing to hold that the

Civil Aeronautics Board erred in denying petitioner the

right to intervene in the temporary mail rate proceedings

of its competitors.

6. The Court of Appeals erred in holding that since the

Postmaster General is a party to mail rate proceedings, it

is unnecessary and the Civil Aeronautics Act does not

require that a person having a substantial interest be

allowed to present evidence and argument protecting the

public interest.

7. The Court of Appeals erred in affirming the orders

of the Civil Aeronautics Board granting petitioner the right

of culy limited intervention in the permanent mail rate pro-

ceedings of Pan American Airways and American Over-

seas Airlinex.

ie.

11

8. The Court of Appeals erred in dismissing the appeal

from the orders of the Civil Aeronautics Board fixing tem-

porary rates for Pan American Airways and American

Overseas Airlines.

9. The Court of Appeals erred in dismissing the appeal

from the orders of the Civil Aeronautics Board denying

intervention to Petitioner in the temporary mail rate pro-

ceedings of Transcontinental & Western Air, American

Overseas Airlines, and Pan American Airways.

The Importance of This Case

The resolution of the issues raised in this case is of great

importance to the Civil Aeronautics Board in its adminis-

tration of the Civil Aeronautics Act, to the aviation indus-

try, and to the American public generally.

Mail pay to certificated air carriers involves an expendi-

ture by this Government of many millions of dollars each

year.’ Without it, a major portion of the aviation indus-

try, as it operates today, might not be able to survive.

There is also inherent in mail pay support for one segment

of the industry the power to destroy another large segment

of the industry which receives no mail pay but nevertheless

operates in direct competition with carriers which do.

The importance of questions involving the extent of the

power to administer mail pay has already been recognized

by this Court when it granted certiorari in the case of

Transcontinental & Western Air, Inc. v. Civil Aeronautics

Board, 336 U. S. 601 (1949) ‘‘because of the importance

1 “Last year (1948) the air mail bill for our domestic trunk, feeder, and

international carriers amounted to approximately $102,000,000. This

figure is subject to upward adjustment. In the current year the bill will

be higher, perhaps as high as $125,000,000.” Hearings before Committee

on Interstate and Foreign Commerce on S. Res. 50, 81st Cong., Ist Sess.

126 (1949).

12

of the question to the carriers and the public alike.’’ Iq.

at 603.

I. Temporary Mail Rate Orders and Intervention Therein

The Court of Appeals has here decided that temporary

rate orders themselves and orders denying intervention

therein are not reviewable. Insofar as petitioner can deter-

mine, this is the first case in which an air carrier has sought

judicial review of such orders of the Civil Aeronauties

Board.

The effect of the decision below is to confer upon the

Board a degree of discretion not contemplated by the Civil

Aeronautics Act, to allow the Board to authorize disburse-

ment of Government funds without adherence to statutory

safeguards or standards imposed by Congress, and to

preclude persons having a substantial interest in the pro-

ceedings from protecting themselves or raising for judicial

review questions of public importance.

The Civil Aeronautics Act clearly contemplates develop-

ment of the aviation industry in the direction of a self-sup-

porting non-subsidized air transport system. Cf. Trans-

continental & Western Air, Inc. v. Civil Aeronautics Board,

336 U. S. 601, 606 (1949). It contemplates also the coexist-

ence of subsidized and non-subsidized carriers. Cf. Flying

Tiger Line, Inc. v. Atcheson T. & S. F. Ry. Co., 75 F. Supp.

188 (S.D. Calif. 1947). It is, of course, to the interest of

the subsidized carrier to secure the maximum possible

amount of mail pay. It is equally to his non-subsidized com-

petitor’s interest and to the interest of the public that such

mail pay shall be no more than is essential to enable the

subsidized carrier properly to conduct its operations to the

extent such operations are found desirable and proper by

the Civil Aeronautics Board.

Section 406 of the Civil Aeronautics Act (52 Stat. 998,

a

13

49 U.S.C. 486) is the only provision in the Act dealing with

the authority and method for fixing rates for the trans-

portation of mail. It provides that the Board is to set the

fair and reasonable rate of compensation only after notice

and hearing. Among the factors to be considered by the

Board is ‘‘the need of each such air carrier for compensa-

tion for the transportation of mail sufficient to insure the

performance of such service, and, together with all other

revenue of the air carrier, to enable such air carrier under

honest, economical, and efficient management, to maintain

and continue the development of air transportation to the

extent and of the character and quality required for the

commerce of the United States, the Postal Service, and the

national defense.’’

Ever since the air transportation pattern for the North

Atlantic was established some four years ago (North At-

lantic Route Case, 6 C.A.B. 319 (1945)) American Overseas

Airlines, Pan American Airways, and Transcontinental

& Western Air have been operating these routes under

so-called ‘‘temporary’”’ rates. To date more than $50,000,-

000 has been paid to these three carriers pursuant to tem-

porary rate orders of the Board (96, 197, 281). As yet no

permanent rates for these carriers beyond 1945 have been

established.

Nor is the practice of using temporary rates (rates fixed

pending a determination of permanent rates which are

subject to retroactive adjustments) limited to the interna-

tional field. Since the practice was first adopted in 1946

(Essair, Inc., Temporary Mail Rate, 6 C.A.B. 687 (1946)),

it has been in general use in the entire industry. H earings

before Committee on Interstate and Foreign Commerce

on S. Res. 50, 81st Cong., 1st Sess., 130 (1949).

The Court of Appeals, on the premise that all temporary

rates are subject to retroactive adjustment when a perma-

14

nent rate is fixed (289), held that temporary rate orders

and orders denying intervention therein are not final for

purposes of judicial review. Such a theory fails to give

proper weight to the fact that under such orders funds are

in fact disbursed from the public treasury to private parties

for their use and benefit.

If rates in excess of those to which a carrier is entitled

under Section 406 are paid to such carrier, his non-sub-

sidized competitors will in all probability be placed at a

competitive disadvantage. The subsidized carrier may

engage in a program to eliminate his non-subsidized com-

petitor and recover the costs of so doing in the form of

temporary mail pay. The fact that several years later

the Board, when it fixes a permanent rate, or the courts,

when the permanent rate order is appealed, may decide

that too much mail pay or mail pay for uneconomical or

unauthorized operations was paid is of no help to the non-

subsidized competitor. By that time he may have been

forced out of business or been placed in such a poor com-

petitive position that he cannot regain his old position.

Nor is this merely damnum absque injuria as in the case of

Alabama Power Co. v. Ickes, 302 U. 8. 464 (1938). Section

406 prescribes the standards under which mail rate orders

shall be formulated and Section 1006 (52 Stat. 1024, 49

U. S. C. 646) confers upon any person disclosing a ‘‘sub-

stantial interest’’ the right to seek judicial review from

Board orders. Cf. Federal Communcations Commission v.

Sanders Bros. Radio Station, 309 U. S. 470 (1940).

But the permanent effects of these *‘temporary’’ rate

orders are not limited to competitors. The American

public may also suffer directly from them. Although it

may be subsequently determined that excessive temporary

mail pay has been disbursed by the Government, recovery

of such excess may as a practical matter be impossible.

By the time the permanent rate is fixed, the carrier may be

a

15

out of business or on the verge of bankruptcy. Or perhaps

the financial position and other factors concerning the car-

rier will be such that to recover the excessive amounts paid

in the past will so jeopardize the operations of the carrier

that the Board will conclude that it is not in the public in-

terest to recover these amounts.” In at least four different

mail rate proceedings the Board has found that excessive

amounts were paid to carriers, but, despite its ability to do

so, it refused to recapture the excessive amounts paid.*

Il. The Extent of Intervention in the Permanent Mail Rate

Proceedings

As has already been indicated, Section 1006 of the Civil

2The following remarks of Chairman O’Connell are directly here in

point:

“In many of the eases which are now being processed by the Board’s

staff, the mail rates are being set for the past 2, 3, or even 4 years.

This makes the process of effecting disallowances extremely difficult.

The facts themselves surrounding the need of a carrier tend to be-

come blurred with the passage of time. Furthermore, the manage-

ment of a carrier is obviously in a much more favorable position to

defend its past action than the staff of the Board is to attack them.

“Finally, substantial disallowances from the costs which have al-

ready been incurred tend to defeat the purpose of the act in that

they may so weaken the carrier financially that it is no longer in a posi-

tion to develop routes and services in the soundest and most expe-

ditious manner.” Hearings before Committee on Interstate and For-

eign Commerce on S. Res. 50, 81st Cong., Ist Sess., 136 (1949).

3 At first the Board was of the opinion that any excessive payments

during the pendency of a rate proceeding should be recaptured. <Ameri-

can Airlines, Inc.—Mail Rate Proceeding, 3 C.A.B. 323, 325-333 (1942).

This policy was soon abandoned, however. In Pan American-Grace Air-

ways, Inc.—Mail Rates, 3 C.A.B. 550, 561-562 (1942), the Board found

that although over $1,300,000 of excessive mail pay had been paid to the

carrier, it would not be in the public interest to recapture this amount.

The same decision was reached in Pan American Airways, Inc., et al.,

Latin-American Rate Case, 3 C.A.B. 657, 668-669 (1942) where the

excessive amounts paid were over $4,350,000. The Board followed this

practice in Eastern Air Lines, Inc., Mail Rate Proceeding, 3 C.A.B. 733,

742-743 (1942); and in American Airlines, Inc., Mail Rate Proceeding,

3 C.A.B. 770, 776-777 (1942), it vacated its prior order with respect to

American’s excessive earnings and permitted it to retain the excessive

payments already made.

ee

Meer a Oe cee) ye, fe nt

16

Aeronautics Act confers upon any person disclosing a ‘‘sub-

stantial interest’? the necessary standing to seek judicial

review of orders of the Civil Aeronautics Board.

The Court of Appeals correctly stated that: ‘‘It is not

disputed that one who may appeal may intervene. The

Board’s Regulations provide for intervention by a person

having ‘a substantial interest’, and in its brief before

us the Board states that it has no quarrel with the view

that one who may appeal is entitled to participate in the

proceeding below.’’ (287)

The Civil Aeronautics Board found that petitioner did

not have a substantial interest in the mail rate proceedings

of American Overseas Airlines (185) and of Pan Amer-

ican Airways (266), but nevertheless granted petitioner

the limited right to intervene in order to participate in

those issues concerned with the award of mail pay to

support cargo operations (185, 186, 266, 267). The Court

of Appeals decided that petitioner, since it was in compe-

tition with these carriers for the carriage of freight, did

have a substantial interest but that the limited interven-

tion granted was proper (289).

The issue presented to this Court, which, it is submitted,

is of sufficient importance for this Court to consider, is

this: conceding that a person has disclosed a substantial

interest in a mail rate proceeding before the Civil Aero-

nautics Board, to what extent should he then be permitted

to participate in that proceeding.

The question is of importance in the administration of the

Civil Aeronautics Act, has not been previously considered

by this Court, and the answer given by the Court of Ap-

peals is, it is submitted, in conflict with decisions of this

Court.

The coexistence of competing subsidized and non-sub-

sidized air carriers which the Civil Aeronautics Act con-

ee yn

17

templates creates a novel situation in the air carrier in-

dustry, especially in the international field in which pas-

senger and cargo rates are not subject to direct regulation

by the Civil Aeronautics Board. It is apparent that Gov-

ernment subsidy may enable subsidized carriers to elimi-

nate every competing non-subsidized carrier from the

industry. The extent to which the losses of subsidized

carriers can properly be covered under the Civil Aeronautics

Act by mail pay is of vital concern to the non-subsidized

carrier. To the extent to which mail pay may be excessive

the subsidized carrier is receiving Government funds to

which it is not entitled and which enable it to operate on

an uneconomical and inefficient basis and to incur losses

in conducting its operations which it could not otherwise

afford.

Moreover, the mail payments to a subsidized carrier are

not earmarked for specific purposes. Consequently, the

non-subsidized competitor has a very real concern in the

entire mail rate proceeding, not merely in the issues arising

‘n the field in which he may be directly competitive. Using

this case as an illustration, although petitioner competes

with Pan American only in the carriage of cargo, peti-

tioner is directly affected by the amount of mail pay re-

ceived by Pan American regardless of the reasons for

which it is given. The end result and hence petitioner’s

interest would be precisely the same whether respondent

might award Pap American $10,000,000 to underwrite pas-

senger operations and $2,000,000 to underwrite cargo op-

erations or $12,000,000 to underwrite passenger operations

and nothing to underwrite cargo operations.

Underlying the grant to a person with a ‘‘substantial in-

terest’? of the right to attack or participate in the formula-

tion of orders is the desire to protect the public interest.

Federal Communications Commission v. Sanders Bros.

aa

18

Radio Station, 309 U. S. 642 (1940). Having established

such a substantial interest, a person should therefore be

permitted to raise any issue which the agency is required

to consider and which will affect the public interest. In the

Sanders Bros. case, supra, although the economic effects

upon an existing radio station were not a proper considera-

tion in deciding whether or not to license a new station,

this Court allowed the existing station ‘‘to appeal and to

raise . . . any relevant question of law in respect of the

order of the Commission.’’ Id. at 477. (Emphasis sup-

plied).

It is submitted that the decision of the Court of Appeals

in this case is in conflict with this statement of the Court.

By sustaining the Board in granting only limited interven-

tion, petitioner has been precluded from raising all rele-

vant questions regarding the amount of mail pay to be

awarded.

19

Conclusion

The petition for a writ of certiorari should be granted

so that this Court may consider the important issues herein

presented.

Respectfully submitted,

Harpy K. Mactay,

Attorney for Petitioner,

917 Fifteenth Street, N. W.,

Washington 5, D.C.

Lanpis, Gewrrtz and Macway,

917 Fifteenth Street, N. We

Washington 5, D. C.

Dovetas M. Aman,

FrennE.L_y, LOWENSTEIN,

Ence Harp & PITCHER,

25 Broad Street,

New York 4, New York.

Of Counsel.

Dated, Washington, D. C., March 25, 1950.

(7376)