Petition for Writ of Certiorari — Dragna v. California

Supreme Court brief1953

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SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1952

AIR TRANSPORT ASSOCIATES, INC.,

Petitioner,

vs.

CIVIL AERONAUTICS BOARD,

Respondent

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT.

Warren FE. Miiuer,

Counsel for Petitioner,

910 17th St., N. W..

Washington 6, D. C.

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INDEX

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

Opinions Below .............. waste ees eeu

UII oo) oc os Since seas ee Sa ee

Questions Presented ................. ee ee

Statutes and Regulations Involved

Summary of the Matter Involved | vr er

Specification of Errors to be Urged Pa eae

Reasons for Granting the Writ... sss

Conclusion ............. ee eee

TABLE or Cases CITED

American Air Transport, et al. v. Civil Aeronautics

Board, et al., 98 F. Supp 660 .....0... 008... 19

Brady Transfer & Storage Co. v. United States, 80

F. Supp. 110 (affirmed in 335 U.S. 875, 93 L. Ed.

Me as MOR EE Ah oss ee eh ee ee 9

Columbia Broadcasting Co. v. United States, 316 U.S.

ot Ea yiar A AS Sw co Fey i aaa Sed 13

Gibson Wine Co. v. Snyder, 194 F. 2d 329. 25

Illinois C. R. Co. v. McKendree, 203 U.S. 514, 51 L.

We es Oe rs Oe eee ee 27

In re Carter, 85 App. D. C. 224, 177 F. 2475... 13

Interstate Commerce Commission v. Raskioilis ¢

N. R. Co., 227 U.S. 88, 93... ... I OR en a ah Perse 13

Panama Refining Co. v. Ryan, 238 U.S. 338, 79 L.

cg § Y Ye Ree ee ea ase ney i 27

Standard Airlines vy. Civil Aeronautics Board, 85

Bie. De. Cig Be 008 Oe Be os eee. 13

United States v. Cohen, 255 U.S. 81, 89, 65 L. Ed. 516,

WO ee heres OLN oe ee 27

United States v. Reese, > 92 U. S. 214, 219, 220, 23 L. Ea.

ne ee AN Ol Us, a Meek CR 28

Utah Power & Light Co. v. United States, 243 U. S.

S00, Gi i, Bd. 781, 37 B. CL ST... ............... 27

W ichita R. & Light Co. v. Public Utilities Commis-

sion, 260 U.S. 48, 67 L. Ed. 124, 43 S. Ct. 51 . 27

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ii INDEX

Inpex oF APPENDIX

Pertinent Statutes and Regulations ...............

(a) Administrative Procedure Act:

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Section 1003(a) ........ Maas aaa a «

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(b) Civil Aeronautics Act of 1938, as amended:

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Regulations Section 292.1, Civil Aeronautics Board,

Adopted May 5, 1947..................---.5-5+-

Interpretation No. 1 to Section 292.1, Civil Aeronau-

tics Board Adopted December 10, 1948...........

Section 291 of Civil Aeronautics Board, Economic

Regulations, July 1, 1949 .....................-

i : a : —

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1952

No.

AIR TRANSPORT ASSOCIATES, INC.,

Petitioner,

vs.

CIVIL AERONAUTICS BOARD,

Respondent

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT.

To the Honorable the Chief Justice and Associate Justices

of the Supreme Court of the United States:

Air Transport Associates, Inc., petitioner, prays that

a writ of certiorari issue to review the order of the United

States Court of Appeals for the District of Columbia Cir-

cuit entered in the above-entitled cause on July 10, 1952

(R. 1110), which order affirmed an order of the Civil Aero-

nautics Board’ revoking petitioner’s license as an air car-

rier and prohibiting it from continuing to engage in air

transportation.

1 Hereinafter referred to as “the Board.”

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Opinions Below

The opinion (R. 15-25) of the Board is partially reported

at 1A Avi. L. R., 21,406 (CCH). The dissenting opinion

by Adams, Member, Civil Aeronauties Board (R. 25-26)

is not reported. The opinion of the United States Court of

Appeals for the District of Columbia Cireuit (R. 1101-1110),

is not yet reported.

Jurisdiction

The order of the United States Court of Appeals for the

District of Columbia Circuit was entered on July 10, 1952

(R. 1110), and petitioner’s Motion to Hold in Abeyance

pending decision by this court of questions involving the

validity of respondent’s regulation, which had been certified

to the court,? and for a Rehearing, were denied on October 3,

1952 (R. 1143).

2The opinion of this Court, entered October 20, 1952, in C.A.B. v.

American Air Transport, ease No. 126, October Term, 1952, stated:

“Per Curiam,

“The certifieate is dismissed. Labor Board v. White Swan Co., 313

U.S. 23 (1941) ; Lowden v. Northwestern National Bank & Trust Co.,

298 U. S. 160 (1936) ; White v. Johnson, 282 U.S. 367 (1931) ; United

States v. Union Pacific R. Co., 168 U.S. 505 (1897).

“The Civil Aeronautics Board has applied to this Court for an

order requiring the Court of Appeals to send up the entire reeord.

To grant such an applicatian would bring ‘the entire matter in con-

troversy’ before the Court for decision, 28 U.S.C. see. 1254(3).

“Since the certifieate must be dismissed, the Court should not

exercise its discretionary power to bring up “the entire matter in

controversy’ for review. See Cleveland-Cliffs Iron Co. v. Arctic

Iron Co., 248 U.S. 178 (1918). Perhaps the Court of Appeals may

now wish to hear this ease en banc to resolve the deadlock indicated

in the certificate and give full review to the entire case. This Court

does not normally review orders of administrative agencies in the first

instance; and the Court does not desire to take any action at this

time which might foreclose the possibility of such review in the Court

of Appeals.

“For these reasons the Board’s application is denied.

“Mr. Justice DouG.as dissents.”

kh ON PA tt LT

. OI A CREA A PILI

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The jurisdiction of this court is invoked under 28 U.S.C.

) 1254(1), and Section 1006(f) of the Civil Aeronautics Act,

as amended, 52 Stat. 1025, 49 U.S.C. 646(f).

Questions Presented

1. Where a license granting operating authority is issued

, by the Board to an air carrier, which acquires property and

business while operating thereunder, may the Board there-

after issue and lawfully enforce a new regulation which

amends the carrier’s license and substantially injures and

destroys its property interests and business by diminish-

, ing and curtailing its operating authority, in the absence

of an adjudicatory hearing upon the regulation prior to

its issuance as prescribed by the Administrative Procedure

Act?

2. Under the foregoing circumstances, in which no ques-

tion of safety is involved, could the court below properly

conclude that the amended regulation (which imposes a

crippling restriction upon the permissible number of flights

] of petitioner, and thus substantially injures and in large

part destroys petitioner’s existing property and business)

is a reasonable or proper definition of the terms ‘‘regularly

or with a reasonable degree of regularity’’* as previously

* Section 292.1 of the Board's Economie Regulations effective July

15, 1948, and in force when letter was written petitioner transmitting its

authority to commence business (R. 343) provided:

“e * © (b) Classification. There is hereby established a clas-

sification of non-certificated air carriers to be designated as ‘Irregular

] Air Carriers’. The term ‘irregular air carrier’ means any air carrier

which (1) directly engages in air transportation, (2) which does not

hold a certificate of public convenience and necessity under section 401

of the Civil Aeronautics Act of 1938, as amended, or (3) does not

operate or hold out to the public, expressly or by course of conduet

that it operates, one or more aircraft between designated points, or

within a designated point, regularly or with a reasonable degree of

regularity upon which aicraft it aceepts for transportation, for eom-

pensation or for hire, such members of the public as apply therefor or

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prescribed for the original license, in the absence of evi-

dence and studies of actual operations of regular and ir-

regular carriers?

3. Where a license is granted pursuant to a regulation

adopted through proper rule-making procedure, which reg-

ulation defines permissible operations in general terms

(i.e., ‘does not hold out a regular service’’), and a licensee

commences operations and makes a business investment in

reliance upon such regulation, may the agency thereafter

lawfully issue a document called an ‘‘interpretation’’ but

having the force of a regulation, which document substan-

tially curtails and restricts the prior definition of permissi-

ble operations without complying with the rule-making

procedures set forth in the Administrative Procedure Act? *

4. In eases involving the revocation of irregular air car-

riers’ licenses because of frequency of operations, may the

Board reject and refuse to consider evidence of the ‘‘de-

velopment of its business and the demands of the public’’®

for such transportation and evidence of the extent to which

a carrier served the public demands and public interest in

the operations upon which the complaint was brought?

5. If the Board believed petitioner’s operations violated

the so-called ‘‘interpretation”’ of the regulation, should not

such property as the public offers. No air carrier shall be deemed to

be an Irregular Air Carrier unless the air transportation services

offered and performed by it are of such infrequeney as preclude an

implication of a uniform pattern or normal consistency of operation

between, or within, such designated points. * * * Within the

meaning of this definition a ‘point’ shall mean any airport or place

where aircraft may be landed or taken-off, including the area within

a 25-mile radius of such airport or place.”

45 U.S.C. 1008(b).

5 See. 401(f) Civil Aeronautics Act, 49 U.S.C. 481(f) provides in part:

“| . No term, condition, or limitation of a certificate shall

restrict the right of an air carrier to add to or change schedules,

equipment, accommodations, and facilities for performing the author-

ized transportation and service as the development of the business and

the demands of the public shall require, =

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the agency have followed, in the words of Member Adams

who dissented below,

‘‘the more orderly procedure of issuing a cease and de-

sist order prior to considering revocation’’? (R. 25)

6. Unless a cease and desist order or other document is

issuedfff the name of, and by authority of, the agency,®

calling the attention of the licensee to conduct which would

warrant revocation, may the agency lawfully revoke the

license in view of the provisions of the Civil Aeronautics

Act‘? and the Administrative Procedure Act? ®

7. Where there was a dispute between petitioner and the

chief of one of the subordinate offices of an agency with

respect to the legality and interpretation of a regulation not

involving safety, may the agency resolve the dispute against

the carrier, at the same time declare its conduct to constitute

*‘willfulness’’ and then, without issuing an order command-

ing obedience and giving petitioner an opportunity to first

achieve compliance, lawfully issue an order which:

(1) declares petitioner to be in ‘‘willful’’ violation,

(2) orders it to ‘‘cease and desist’’ from operating

in violation of the Board’s interpretation of the regula-

tion, and

(3) simultaneously revokes its license?

Statutes and Regulations Involved

The pertinent sections of the Civil Aeronautics Act and

the Administrative Procedure Act here involved are set

forth in the Appendix to this petition.

Summary of the Matter Involved

Petitioner, Air Transport Associates, Inc., is a large ir-

regular carrier, engaging in the air transportation of per-

6 All italies in this petition supplied unless otherwise indicated.

7 See. 401(h) Civil Aeronauties Act, 49 U.S.C. 481.

85 U.S.C. 1008(b).

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sons and property. Petitioner commenced its operations in

July, 1948. At that time the Board had in effect a regulation

which permitted a large irregular air carrier to engage in

air transportation without a certificate of public convenience

and necessity (R. 352-364). <A ‘‘large irregular’’ carrier

was defined as an air carrier ‘‘which does not hold out to

the public, expressly or by a course of conduct, that it oper-

ates one or more aircraft between designated points

regularly . . .’’? (R.358). The regulation further required

an irregular air carrier to apply for and obtain a Letter of

Registration. Petitioner acquired such a Letter of Regis-

tration and provided a new and specialized type of air

service, particularly a low cost air coach service for pas-

sengers and a low cost air freight service. Petitioner was

able to provide an air coach service between these places at

substantially lower charges than other airlines charged for

their de luxe services. The charges were established by

tariffs duly filed with the Board. Petitioner’s low cost

operations are in the public interest and serve the little

people who make up the bulk of Americans—the working

people, the housewives, the soldiers, the sailors and the

family groups.

After petitioner acquired its license, the Board, on De-

cember 10, 1948, announced, without notice or hearing? a

so-called ‘‘ Interpretation Number 1°? (R. 57-63) of its regu-

lations governing lager irregular air carriers. This inter-

pretation contained a series of examples of permissible and

nonpermissible operations, each of which considerably

altered and changed the extent of the service which peti-

tioner was permitted to perform under the previous regula-

tion. Specifically, the interpretation adopted, without fol-

®And not complying with either rule-making or adjudieatory pro-

cedures prescribed by §§4(a) and 5(b) of the Administrative Procedure

Act. 5 U.S.C. 1003(a) and 1004(b)

lowing either rule-making or adjudicatory procedures, al-

tered petitioner’s license in the following respects:

1. For the first time, ‘‘breaks’’ in service were re-

quired, and such breaks were stated to be in terms of

weeks, whereas theretofore there was no requirement

that a carrier suspend for any period of time the opera-

tions between any two cities;

2. The interpretation was so written that trips on more

days: per month would have to be considered in excess of

the limit permitted irregular carriers.

The Board also adopted other regulations without any

adjudicatory hearings, each of which placed new and addi-

tional interpretations upon the extent to which large irregu-

lar carriers could provide a public service. On May 20, 1949,

the Board terminated the blanket exemption for large irreg-

ular carriers and provided for the termination of the Letters

of Registration unless individual application for a special

exemption order was seasonably filed. Petitioner complied

with this requirement, but its application for exemption has

not yet been finally determined by the Board.

After petitioner had been operating its low cost service

for 18 months, respondent, on December 28, 1949, directed

petitioner to show cause (R. 71-73) why its Letter of Regis-

tration should not be revoked.

No question of public safety is involved in the instant ease.

No question of improper treatment of any passenger or

shipper is involved. The only part of petitioner’s opera-

tions involved in this proceeding is the number of trips upon

which petitioner provided low cost air service between the

United States and Alaska.

After hearing, the Board issued an Opinion and Order (R.

15-30) which revoked petitioner's Letter of Registration and

directed petitioner to cease and desist from engaging either

directly or indirectly in air transportation. Member Adams

dissented from the decision to summarily stop petitioner’s

operations (R. 25). The sole reason assigned by the Board

for its order is that petitioner operated more frequently and

regularly than the Board considered permissible under its

regulations.

Petitioner filed a petition for review (R. 1-63) of the

Board’s action in the United States Court of Appeals for

the District of Columbia Circuit. That court affirmed the

order of the Board (R. 1100-1110), but stayed the effective

date of the order pending the filing of this petition for

certiorari (R. 1150-1151).

Specification of Errors to Be Urged

The Court of Appeals erred:

1. In holding that the regulation used by the Board as

a basis for revoking petitioner’s license, adopted December

10, 1948 (R. 57-63), was lawful and properly applicable to

petitioner when that regulation, which amended petitioner's

license and substantially injured and destroyed its prop-

erty and business by diminishing and curtailing its pre-

existing operating authority, was not adopted as a result

of either a rule-making or adjudicatory procedure (R.

1108).

2. In holding that the ‘‘interpretation’’ and the subse-

quent regulations issued without adjudicatory hearings,

even if such regulations were lawfully promulgated, did

not establish new eriteria for determining whether flights

were frequent and regular (R. 1108), because such regula-

tions did adopt new and different standards and thereby

destroyed petitioner’s property and business rights by im-

posing a crippling restriction upon the permissible number

of flights.

3. In affirming the Board’s decision in the absence of

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evidence as to whether the regulation sought to be enforced

against petitioner was a reasonable definition of the pre-

viously undefined term ‘regularly or with a reasonable

degree of regularity,’’ because without this evidence, the

decision of the court below conflicts with the applicable de-

cision of this court in the case of Brady Transfer and Stor-

age Co, v. United States, 80 Fed. Supp. 110, affirmed in

335 U.S. 875, 93 L. Ed. 418, 69 S. Ct. 239,

4. In holding that the Board complied with the require-

ments of law" that the agency call the attention of the

licensee to facts or conduct which might warrant a with-

drawal of the license, before instituting proceedings there-

for, and providing petitioner with an opportunity to achieve

compliance before its license was revoked.

5. In holding that it was not necessary for the Board to

take into consideration the nature of the services performed

by irregular air carriers operating between the United

States and Alaska when it attempts to apply to petitioner

the new regulations ineluding the ‘‘interpretation’’ adopted

December 10, 1948 without any kind of notice or hearing.

6. In failing to pass upon petitioner’s contention that the

Board improperly rejected evidence of the development of

petitioner’s business, the ‘‘demands of the publie’’ for such

transportation, and the extent to which petitioner served

the ‘‘publie interest’’ in the operations against which the

complaint is made.

7. In affirming the Board’s decision, when the Board’s

regulation upon which its decision was based, erroneously

applied standards designed for domestie air transportation

to petitioner’s operations between the United States and

Alaska, where different economic conditions exist.

———_—.

1 5 U.S.C. 1008(b); Section 401(h), Civil Aeronauties Act, 49 U.S.C.

481(h).

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8. (a) In affirming the Board’s holding that flights to

Paine Field and Boeing Field, which are 26 miles apart,

were flights to the same point.”

(b) In holding that petitioner ‘‘held out a regular Seattle

service by means of Paine flights.”’

9. In holding that the interpretation or amendment to the

regulation adopted December 10, 1948, was not a ‘‘just and

reasonable regulation’’ as required by Section 416 of the

Civil Aeronautics Act (49 U.S.C. 496).

Reasons for Granting the Writ

This case presents a question of public importance relat-

ing to the application of the Civil Aeronautics Act with re-

spect to the impact upon the irregular carrier segment of

the air transportation industry, of a regulation limiting the

frequency and regularity of operations of such air carriers.

This regulation is presently being enforced against many

air carriers in proceedings now pending before the Board

and proceedings under judicial review. Its validity is

challenged here and in these other proceedings. This is the

first time this question is before this court for decision,

although the court below filed with this court a statement on

June 12, 1952 (No. 126, October Term, 1952), certifying

four questions to this court for determination, two of which

are presented in the instant case. In certifying questions to

this court, because of three conflicting views by the Circuit

judges, the Court of Appeals stated in their certificate to

this court that it was their unanimous opinion that these

questions were ‘‘of far reaching and fundamental impor-

tance in the field of administrative law.”’ While this

11 Part 291.1(b) of the Economie Regulations of the Board, effective

July 1, 1949, provides:

“s The term ‘point’ as used in this part shall mean any

airport or place where aireraft may be landed or taken of, including

the area within a 25-mile radius of such airport or place.”

5 eta ON TELE AAR Pty EMS AP EPO IE BO AT Bn

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court dismissed the certificate, this court recognized the

importance of the issues by suggesting that the Court of

Appeals may wish to hear the case en banc.” The same

fundamental issue is here involved. Unless the court takes

jurisdiction of this case and decides this important question

in the field of administrative law, the validity of the Board

regulation and similar regulations adopted in the same way

by other governmental agencies without complying with

the requirements of the Administrative Procedure Act will

remain unsettled.

A decision by this court now will be helpful to not only

petitioner and every other irregular air carrier of which

55 transported more than 55 million passenger and cargo

miles (R. 637), for the period July, 1949 through June 1950,

but should likewise be helpful to and weleomed by respond-

ent in its duty in administering the Civil Aeronautics Act.

As was pointed out by the Senate Committee which in-

vestigated the status of the carriers in the class to which

petitioner belongs “ the operations of these irregular car-

riers, sometimes termed ‘‘nonscheduled’’ carriers, required

a bare minimum of 14 to 15 flights a month between the

same points as economically necessary to justify their con-

tinued operations. The regulation in question, if valid,

jeopardizes the economie strength of these carriers to such

an extent that they cannot continue their operations and

meet their operating expenses. Petitioner, as well as the

other members of this important industry—small business-

men—respectfully urges this court to recognize their pre-

dicament by taking jurisdiction in the instant case and

granting the relief to which they believe they are justly en-

titled under the law.

12 Instead the Court of Appeals remanded the case for taking evidence

of actual operations of regular and irregular carriers.

13 Senate Select Committee on Small Business, Senate Report No. 540,

2nd Congress, First Session.

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As was pointed out by the Senate Committee, the regula-

tion of irregular carriers involves not merely the legitimate

right of citizens to engage in a competitive enterprise, but

also ‘‘involves a broader public interest—that of determin-

ing the kind of civil aviation which America is to have in

the future * and ‘‘it is the opinion of the Committee that

the nonscheduled air carriers constitute an asset that the

Nation ought not to lose.’’

Petitioner, as well as the 54 other irregular carriers,”

many of whom are involved in enforcement proceedings in-

volving this same regulation, are vitally concerned in the

issue of whether this regulation was lawfully promulgated.

Petitioner here urges that the regulation was not adopted

through procedures which comply with the Administrative

Procedure Act."

If this regulation is valid, it will have the effect of prac-

tically eliminating this important segment of our air trans-

portation industry, which brings low cost transportation

within range of the working man, the housewife, the soldier,

the sailor—the middle income group of working Americans.

The regulations adopted December 10, 1948 and July 1,

1949 violate the due process clause of the Fifth Amend-

ment in that they were invalid for uncertainty and were

discriminatory because they imposed a classification with

accompanying restrictions upon irregular carriers without

any reasonable relation to the purpose of the Civil Aero-

nautics Act.

The new regulations amend petitioner’s license in fact,

by prescribing more restrictive rules; this action deprived

petitioner of the utilization of its property in a lawful

business.

14 Page 18 of above report.

15 Page 19 of above report.

16 Section 9(b), 5 U.S.C. 1008(b) and Sections 4(a) and (b}, 5 U.S.C,

1003(a) and (b),

Petitioner was granted an authorization to operate and

was engaged in business. Petitioner made the necessary

investment and began his operations; he has a license.

Standard Airlines v. Civil Aeronautics Board, 85 App.

D.C. 29, 177 F’. 2d, 18.

As was said in re: Carter 177 F. 2d 75:

“Once granted, the license becomes a right and due

process of law must be followed to achieve depriva-

tion. This is true, even though the license is a se-

verely qualified one, such as a radio license.” .. . the

deprivation of that right, once granted, is a judicial

act, requiring due process of law.’’

The regulation of December 10, 1948 deprived petitioner

of property rights and to be valid must be the result of an

adjudicatory hearing. In no other way can there be due

process of law. Columbia Broadcasting Company v. United

States, 316 U.S. 407; Interstate Commerce Commission v.

Louisville and N, R. Company, 227 U.S. 88, 93. It follows,

therefore, that the amended regulation formed no basis

upon which to measure the legality of petitioner’s conduct.

This case presents an important issue in the field of ad-

ministrative law which this Court should pass upon. The

court below apparently did not realize the full significance

of the arguments which petitioner advanced. There are

here involved two regulations, one of which, it is submitted,

is void for failure on the part of the Board to comply with

rule-making requirements. The other may not be lawfully

applied to petitioner unless adjudicatory hearings are first

held.

17 Citing National Broadcasting Co. v. Federal Communications Com-

mission, 319 U.S, 239, and Ashbacher Radio Co. v. Federal Communications

Commission, 326 U.S. 327.

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The December 10, 1948 Regulation

The Board adopted a general regulation permitting the

air carriers to operate on a nonscheduled or irregular basis.

The Board defined an irregular carrier as one ‘‘which does

not hold out to the public, expressly or by a course of con-

duct, that it operates one or more aircraft between desig-

nated points regularly.’”’ After petitioner had secured its

operating rights under this general regulation and had made

an investment relying upon such regulation, the Board

issued, on December 10, 1948, an ‘‘interpretation’’ of the

meaning of the previously undefined terms ‘‘regularly’’ or

‘‘with a reasonable degree of regularity.’’ This ‘‘inter-

pretation’? was not adopted in accordance with the rule-

making provisions of the Administrative Procedure Act.

No notice was given and no opportunity was given peti-

tioner or anyone else to participate in making the defini-

tion. Petitioner has demonstrated that the new interpre-

tation and definition substantially curtails and injures pe-

titioner’s business. Petitioner sought to show in the pro-

ceeding before the Board that the definitions contained in

the new interpretation should not be applicable to opera-

tions between the United States and Alaska. The Board

refused to accept this evidence. Without complying with

the Administrative Procedure Act, the Board issued its

‘‘Interpretation’”’ on December 10, 1948 (see appendixh7 )

which is in effect a new regulation. An analysis of the

standards fixed by the new regulation shows clearly that

for the first time it required an irregular carrier to have

‘‘breaks in service.”’ While nonsecheduled operations under

the old regulation were partly of a nonrecurring nature, it

was never believed by the industry that operations be-

tween the same two points for two weeks would necessarily

have to be followed by a complete cessation of all flying

between the same points for a similar period of two weeks.

Irregular carriers believed that they could provide non-

scheduled service over substantially longer periods of time.

For example, some operated between New York and Miami

during the winter season which lasts for several months.

Petitioner and others operated most of their flights to

Alaska during the summer season when the migratory fish-

ermen and cannery workers demanded additional air sery-

ices. The ‘‘Interpretation’’, however, has limited seasonal

service to periods of weeks instead of to periods of months.

The 1949 Regulation

The old (1947) regulation provided that a carrier could

operate on a nonscheduled basis if it did not hold out to

the public that it would operate a regular service between

designated points. There was no limitation upon the num-

ber of trips to be operated. The 1949 regulation states

that an irregular carrier may not operate or hold out a

regular service. This is a real change in the nature and

character of the nonscheduled business. Under the 1949

regulation, as under the December 10, 1948 regulation or

‘*Interpretation’’, a carrier can no longer operate an un-

limited number of trips. The 1948 and 1949 regulations thus

constituted a new and severe restriction on petitioner’s

business and a drastic alteration of petitioner’s license.

The court below failed to recognize that there was a dis-

tinction between the 1947 and the later Dee. 10, 1948-July

1, 1949 * regulations. It is these later regulations which are

of paramount importance to irregular air carriers. Ob-

viously, they are not the same as the 1947 regulation.

The Board should have considered petitioner’s evidence

with respect to the difference between operations within

the United States and operations to Alaska either at the

time the Board announced its interpretation or at the time

18 See appendix for these 3 regulations.

{

A elated eg 1 nd Sa ie RN TH 4

“3

the Board attempted to force petitioner to comply with

this interpretation. The Court below fell into basic error

by not recognizing this point. The Administrative Pro-

cedure Act was expressly designed for the purpose of

permitting licensees operating under Federal regulatory

authority to participate in the formulation of regulations.

That is the purpose of Section 4 of that Act (5 U.S. C.

1003).

There exist basic, inherent, deep and fundamental dif-

ferences in the type and character of air transportation

services performed by petitioner between Seattle and An-

chorage and Fairbanks, Alaska, and those customarily per-

formed by other large irregular air carriers within the

continental United States. These differences must be

recognized in order for the Board to properly regulate

this service in the interest of the people of Alaska and to

afford just regulation of petitioner’s activities.

The first and most important of Alaska’s air transpor-

tation needs is for adequate, low-cost cargo service. The

evidence presented in the Alaska Service Case (C.A.B.

Docket No. 3286, et al.) indicated that Alaska uses 15 times

the amount of passenger air transportation per capita as

does the continental United States, confirming that air

transportation is used by all income levels in the absence

of alternative forms of transportation; and that Alaskans

use 114 times more air cargo transportation per capita,

proving that air cargo transportation is needed more than

passenger transportation.

While cargo service in the continental United States is

principally expedited packages, much of the cargo trans-

ported to Alaska constitutes the necessities of everyday

life, chiefly airborne perishables. These commodities are

the produce, fruits, fresh eggs, meat and fresh milk that

reach most Anchorage and Fairbanks households. Lack

of these commodities would seriously affect the standard

of living of Alaskans, who do not have the alternative rail,

bus and motor freight services which are available in the

States, whereas lack of air cargo service in the United

States would, at most, be only an inconvenience.

Unlike large irregular air carrier service within the

United States, which is handled almost solely in all-pas-

senger loads at a higher profit margin, petitioner in its

U. §.-Alaska operations must do a volume operation on

combination eargo-passenger service at a low profit margin.

Its necessary frequency or volume of service, therefore,

has been the cause of the Board’s enforcement action. The

economic conditions giving rise to the enforcement action

were peculiar to the Alaska-U. S. service and hence the

regulations applicable to domestic transportation between

the States are inapplicable, although the Board in its en-

forcement order has applied regulations governing domes-

tie flights to overseas flights between Seattle and Alaska.

This is an erroneous application of the regulation which

does not recognize the underlying economic principles. To

apply the domestic regulations to overseas Alaskan oper-

ations is fundamentally and basically wrong because of

the surrounding circumstances.

An Alaskan Task Force, appointed by the United States

Senate, in its seventh report to the Senate of the Pre-

paredness Subcommittee of the Committee on Armed Serv-

ices, under the authority of S. Res. 18, 82nd Congress,

First Session, gave the results of its study of Alaska from

the standpoint of national defense. The Chairman of that

Committee, in his Letter of Transmittal of the Report,

dated February 13, 1951, stated:

**At the outset of the Preparedness Subecommittee’s

work, we agreed that no outpost of America’s defenses

was of greater strategic importance than Alaska. To

ascertain the state of our defenses in Alaska, three-

| 7

member task foree—Senator Hunt, chairman; Sena-

tors Morse and Saltonstall—undertook an on-the-site

investigation. The investigation has been supple-

mented by extensive studies and inquiries here in

Washington. The result of their painstaking, diligent,

and vigorous labors is the attached report.

‘A strong Alaska is essential to our security. Our

continental defenses can be no stronger than our

Alaskan defenses. The security of every American

home begins in the snows of Alaska.’’

In this report (at page 54) it was stated:

‘‘Vast distances and rugged terrain have made the

airplane the accepted medium of transportation in

Alaska. The percentage of freight and passengers

transported by air is 30 times higher in Alaska than

in the United States. In addition, air travel has done

much to promote the growing Alaskan tourist in-

dustry.”’

The conclusions of this Committee mentioned the fact

that (at page 38):

‘« | . Regulations that are designed to meet the

requirements of commercial flying in interstate com-

merce in the United States should not be applied

within Alaska unless local conditions indicate that they

are desirable.’’

The Board, to a limited degree, has recognized the neces-

sity for greater frequency of flights between the States

and Alaska because conditions peculiar to the Territory of

Alaska would make such a limitation unduly restrictive

over that permitted in domestic service (R. 759). Peti-

tioner, realizing that its service was in a peculiar or dif-

ferent class as recognized by the Board than the domestic

transportation permitted by Part 291.16 of the Board’s

Economie Regulations, believed the Board would define

permissible frequency and regularity by a cease and desist

order (R. 760) if its final decision was that petitioner’s

operations were in excess of those permitted, and pro-

ceeded on the premise that the Board would allow a greater

latitude of frequency and regularity to Alaska than else-

where because of the different economic conditions there

and would, by its cease and desist order, indicate such per-

missive regularity and frequency. This was the action

the dissenting Board member felt should be taken in this

case (R. 25-26) as had been followed in other cases han-

dled by the Board in dealing with this problem. However,

instead of issuing such an order, the Board revoked peti-

tioner’s license for knowingly and willfully violating the

regulations without giving petitioner an opportunity to

achieve compliance.

The failure in this case to give adequate notice and op-

portunity for compliance is just as much a ‘‘hacking away’”’

at the Administrative Procedure Act as the Board’s action

in attempting to limit irregular carriers to 3 and 8 trips

per month, which action was recently held to be invalid by

Judge Bastian in American Air Transport, et al. v. Ciwil

Acronautics Board, et al., 98 F. Supp. 660, which was cer-

tified to this Court. (See footnote 2.)

The Examiner’s conclusion as set forth at the top of

page 19 of his report (R. 547) that

* .). anything less than revocation of the existing

authority of the carrier will be unsuccessful in obtain-

ing compliance by this carrier with the provisions of

the Civil Aeronautics Act and the rules and regulations

issued thereunder * * *”’

is illogical and a conclusion clearly erroneous because it is

obvious that if petitioner’s Letter of Registration is

revoked, it will be in no position to comply with any rule

or regulation issued under the Civil Aeronautics Act.

Set ME SEO DERE ISDE EB AEP SARC AAR Eel Op mae AE ek

waa eaiiat

Biittecceei

Therefore, the very purpose of proposing sanctions upon

this petitioner is defeated by the sanction imposed.

THE COURT ERRED IN FAILING TO PASS UPON PETI-

TIONER’S CONTENTION THAT THE BOARD IMPROPERLY RE-

JECTED EVIDENCE OF THE DEVELOPMENT OF ITS BUSI-

NESS, AND THE “DEMANDS OF THE PUBLIC” FOR SUCH

TRANSPORTATION TO THE EXTENT TO WHICH PETITIONER

SERVED THE “PUBLIC INTEREST” IN THE OPERATIONS

AGAINST WHICH THE COMPLAINT IS BASED.

As petitioner, after being issued a license to operate, is

entitled to the same protection as if he had a certificate as

mentioned in Section 401 of the Civil Aeronauties Act (see

argument in Point 4 above), he is likewise entitled to the

protection afforded by Section 401(f) of the Civil Aero-

nauties Act which, when given effect, nullifies the action of

the Board in revoking petitioner’s license.

It has been the long standing policy of this Government

to refrain from ‘‘freezing’’ the development of the coun-

try’s transportation business in accordance with the de-

mands of the public. That principle is written in Section

401(f) of the Civil Aeronautics Act. That language, it will

be observed, is, in part, identical with the language con-

tained in the Motor Carrier Act." Therefore, the develop-

ment of the business and the demands of the publie end the

public interest is a cloak of protection thrown around

1849 U.S.C. 481(f) provides “* * * No term, condition, or

limitation of a certificate shall restrict the right of an air earrier to

add to or change schedules, equipment, accommodations, and facilities

for performing the authorized transportation and service as the develop-

ment of the business and the demands of the public shall require.”

49 U.S.C. 308(a) provides:

“e * * Provided, however, That no terms, conditions, or limita-

tions (in the certificate) shall restrict the right of the carrier to add

to his or its equipment and facilities over the routes, between the

termini, or within the territory specified in the certificate, as the

development of the business and the demands of the public shall

require.”

Jes Ss OE Si POE AT ME NLP BROCE OE OD LILA BPE ALE LAP AMIGO iP

petitioner here, ef which he has been stripped by the action

of the court below in approving the decision of the Board,

which body rejected and refused to consider evidence estab-

lishing the demands of the public and the public interest

which petitioner served so well in meeting the public de-

mand and public interest that the Board revoked its license.

THE COURT ERRED IN HOLDING THAT THE CIVIL AERO-

NAUTICS BOARD COMPLIED WITH THE REQUIREMENTS OF

LAW THAT THE AGENCY CALL THE ATTENTION OF THE

LICENSEE TO FACTS OR CONDUCT WHICH MIGHT WARRANT

A WITHDRAWAL OF THE LICENSE, BEFORE INSTITUTING

PROCEEDINGS THEREFOR, IN ORDER THAT PETITIONER

HAVE OPPORTUNITY TO ACHIEVE COMPLIANCE BEFORE ITS

LICENSE WAS REVOKED.

Member Adams of the Civil Aeronautics Board directly

raised this issue by his dissenting opinion. He said (R.

25-26) :

‘*T dissent, however, from the decision to revoke the

Letter of Registration of Air Transport Associates,

summarily stopping its operation, without first issuing

an order to the carrier to ‘cease and desist’ from con-

tinuing violations of the Board’s regulations. The

more orderly procedure of issuing a cease and desist

order, prior to considering revocation of a Letter of

Registration, has been followed in a majority of the

cases handled by this Board in dealing with the prob-

lem of irregular carriers. I find no justification for

taking a short cut in this case.’’

The court below (R. 1109) held that Section 401(h) of

the Civil Aeronauties Act, requiring that the Board shall

fix, by its order, a reasonable time within which to achieve

compliance with any rule claimed to be violated, relates to

public convenience and necessity and has no application

here.

Section 401(a) of the Civil Aeronauties Act states that

no carrier shall engage in air transportation without a cer-

Ee AO Ch

tificate. This provision of law contradicts the conclusion

of the court below. The mere fact that the Civil Aeronau-

ties Board issued what it termed a ‘‘Letter of Registra-

tion’’ instead of terming this a ‘‘certifieate’’ indicates that

within the meaning of Section 401(a), such letter certainly

is the equivalent of a certificate. No one can doubt that it

was eet the intention of the Board to issue a permit for

petitioner to engage in air transportation. Certainly the

fundamental protection given by the Civil Aeronautics Act

cannot be brushed aside upon the mere technicality of

words, as was attempted by the court below. Letters of

Registration and certificates are both licenses and, as such,

are equally entitled to the protection granted by the Civil

Aeronauties Act.

This license or ‘‘Letter of Registration’? was issued to

encourage small operators to invest their capital and serv-

ices in the development of air transportation, and the letter

issued to petitioner achieved that result in this case. To

hold that petitioner’s investment is deprived of the pro-

tection afforded by the Act merely because the Board did

not see fit to use the word ‘‘certifieate’? when it issued peti-

tioner’s license is no valid reason for depriving petitioner

of the benefits afforded by the Act.

Consequently, petitioner is entitled to have a cease and

desist order issued before its license is revoked. Such order

must show in writing what violations are claimed and

designate when compliance must be achieved. No such

order having been issued in the instant case, it follows that

the Board’s order of revocation was unlawful.

This case presents an important question of due process

of law. After an administrative agency adopts a regula-

tion, pursuant to rate-making procedures, and a licensee

relying on the regulation engages in business thereunder

and aequires property and a business in so doing, the

agency promulgated a new regulation which, in facet, sub-

stantially injures or in large part destroys the licensee's

property interests and business, without following the rule-

making procedures, such action is void as to that licensee,

unless an adjudicatory hearing is held because it is on its

fact an amendment of the license. Under the same cirenn-

stances, does the validity of such new regulation as to the

license depend upon a finding of fact that it does or does

not in face vary the terms of the license?

On November 20, 1952, the court below remanded the ease

of Civil Acronautics Board, et al. vy. American Air Trans-

port, lne., et al. (United States Court of Appeals No. 11,115

and No. 136 in this court) to the District Court for further

proceedings in accordance with the opinion dated June 12,

1952, of the judge who previously voted to remand the ease.

That opinion was as follows:

‘One judge is of opinion (1) that the decisive ques-

tion is whether the specific prescriptions of the new

Regulation are or are not a proper, or reasonable, defi-

nition of the undefined terms (‘regularly or with a

reasonable degree of regularity’) of the original

licenses and (2) that that question is a question of fact

which must be determined upon factual criteria, de-

vised from studies of actual operations of regular

carriers and of irregular carriers, similar toe the eri-

teria utilized by the three-judge court in Brady Traus-

fer & Storage Co. v. United States for like purposes

under the Motor Carrier Aet, and similar to the data

which the Board says it used in formulating the Regu

lation here involved. Since the present recerd econ

tains no evidence of that sort, this judes wewkd reound

the case to the trial court for the receopt ef smh ec)

dence and a finding of basic fact~ ant an wht mete fed

ing therefrom as to whether the mee Becuher em de

180 F. Supp. 110 (S. D. lows 1948) of ¢ BRL eT om fit ail

69 S. Ct. 239 (1948).

;

ne Oh

hi Fele Swat A ae

Bcreatec ni: ease)

or does not in fact change the terms of the existing

licenses.’’

In the course of the proceeding before the Board, peti-

tioner submitted evidence to show that in the absence of the

operation of irregular services, such as petitioner had previ-

ously conducted, the regular carriers were unable to meet

an existing public demand. The Board rejected such evi-

dence and refused to consider it (R. 733). In the case of

CAB et al. v. American Air Transport, Inc., et al., supra,

the court below held that in order to determine whether the

prescriptions of a new regulation issued by the Board are

proper that such a determination must be made ‘‘upon fae-

tual criteria devised from studies to regular carriers and of

irregular carriers.’’? In the instant case the Board refused

to consider such evidence.

In affirming the decision of the Board, the Court below

necessarily holds that such factual criteria are not necessary

in the instant ease although the court below specifically

remanded, on November 20, 1952 *° an analogous case for the

purpose of a hearing to develop such factual criteria. That

action, taken later than its action in the instant case, shows

an inconsistency of action that calls for an exercise in the

instant case of this Court’s power of supervision.

The Court below failed to pass upon a major issue, i.e.,

whether the Board@orrectlyexcluded evidence of the publie

interest. When the Board issued petitioner its Letter of

Registration, it found that petitioner’s operation was in the

public interest. There has been no finding that the continu-

ance of this Letter of Registration will not be in the public

interest, and absent such finding by the Board, the revoea-

tion was without authority of law.

20 No. 11,115, U. S. Cireuit Court of App. D. C., opinion November 20,

1952, as yet unpublished.

Petitioner sought to introduce evidence with respect to the

public interest and the publie convenience and necessity of

petitioner’s operations between Seattle and Alaska, but the

Examiner and the Board refused to receive or consider such

evidence, thereby thwarting the very public interest which

supports the regulation claimed to be violated. That evi-

dence should have been admitted, and, if it were considered,

a different conclusion would probably have been reached.

Somewhere in the course of this type of litigation, evi-

dence with respect to the propriety of the administrative

ruling should be admitted and considered. See Gibson Wine

Company v. Snyder, U.S. App. D. C., 194 F. 2d 329. In the

cited case, the Court was divided on the issue of whether the

ageney or the Distriet Judge should consider the evidence,

but the Court made it clear that the evidence was proper,

and a majority of the Court relied upon this type of evidence

for decision. In the instant case, the ageney unlawfully

rejected such evidence.

The Board has declared by official action that 88.9% of the

transportation performed by large irregular air carriers

Was assertedly performed illegally; that only .8% of the

transportation performed by large irregular air carriers

Was transportation legally performed: but it has expressed

no opinion on only 10.3% of the transportation performed

by large irregular air earriers (R. 637). Only an insignifi-

cant fraction of the Large Irregular Air Carriers could exist

within such regulations.

If a regulation is just and reasonable, the majority will

comply and only the minority will be violators. However,

the unjustness and unreasonableness of this regulation is

attested to by the fact that only the amazingly low per-

centage of 8/10 of 1% of the carriers show operations in

accordance with the regulations as determined by the Board

(R. 631-637).

& Rieti)

The analysis of the operations performed by the carriers

approved as operating properly under the regulation (R.

653-660) shows that not even one of the carriers approved

by the Board was dependent upon air transportation for the

greater part of their revenues. This, therefore, clearly

demonstrates the unjustness and unreasonableness of Regu-

lation 291 as applied to Large Irregular Air Carriers. The

small fraction of transportation performed by the carriers

approved as operating properly under the regulation could

be performed only because such carriers were not dependent

upon air transportation to provide revenues to sustain them.

The Board adopted and applied to Large Irregular Air Car-

riers, including petitioner, and revoked petitioner’s license

upon the basis of, a regulation which was in fact ‘‘unjust

and unreasonable”’’ (R. 631-637), and contrary to Section

416 of the Civil Aeronauties Act (49 U.S.C. 496).

On August 13, 1947, Chairman Landis of the Civil Aero-

nautics Board wrote to Senator Magnuson, as follows:

‘*As you indicate, strict application of the terms of

this regulation would appear to require, in the case of a

tariff specifiying an infinite number of charges appli-

cable between all conceivable combinations of points.

Actually our studies indicate that carriers operating the

larger transport types of aircraft (the carriers operat-

ing aircraft grossing less than 10,000 poands each do not

file tariffs) tend to confine the bulk of their operations

to a relatively few points. Such practice is not incon-

sistent with the concept of irregular operations set

forth in section 292.1.’’ (Italics supplied.) (Hearings

before a Subcommittee of the Select Small Business

Committee, U. S. Senate, 82d Congress 1st Sess., on Role

of Irregular Airlines in U. S. Air Transportation In-

dustry, Apr. 23, 24, 25, 27, 30, May 1 and 5, 1951, page

148.)

Regulations are valid only as subordinate rules and when

found to be within the framework of the policy which the

ee ote

a TF aN!

ee ee nd en awe “i

legislature has sufficiently defined. See Panama Refining

Co. v. Ryan, 293 U. S. 388, 79 L. Ed. 446, 55 S. Ct. 241;

Wichita R. & Light Co. v. Public Utilities Commission, 260

U.S. 48, 67 L. Ed. 124, 43 S. Ct.51. It is a wholesome and

necessary principle that an administrative agency must

pursue the procedure and rules enjoined upon it by the

statute creating it, and show a substantial compliance

therewith, to give validity to its action. See Panama Re-

fining Co. v. Ryan, supra. Administrative regulations

which go beyond what the legislature has authorized have

been said to be void and may be disregarded. See Utah

Power & Light Co. v. United States, 243 U. S. 389, 61 L.

Ed. 791, 37 S. Ct. 387; Illinois C. R. Co. v. McKendree, 203

U. S. 514, 51 L. Ed. 298, 27 S. Ct. 153.

The Board held, in its formal opinion, that the regula-

tion concerned was clear, unambiguous, and susceptible of

understanding. Yet, the Board, in order to give this reg-

ulation the specificity which petitioner has challenged and

the Board has denied, has found it necessary to attempt to

interpret this regulation in terms of specific numbers of

flights per calendar month. However, even this numerical

norm has not been constant. At one time, 12 flights per

calendar month, was ‘‘irregular’’ and ‘‘infrequent.’’ Later

it was 10 flights, and in the Opinion of May 25, 1950, it was

eight flights as between some pairs of points, and only three

flights as between other pairs of points. This shows that

the term ‘‘regularity’’ and ‘‘frequency’’ as expressed in

See. 291.1, falls short of the standards of clarity and pre-

cision required for rules and regulations having the force

and effect of Law.

This position is firmly sustained by a long line of cases

which are cited in UV. S. v. Cohen, 255 U. S. 81, 89, 65 L. Ed.

516, 520. This court in that ease said:

‘“‘The sole remaining inquiry, therefore, is the cer-

tainty or uncertainty of the text in question; that is,

GRAS pid we ACD BAR ARRON LN

Pry Phe viedivedeete iy WL

OBL A Ott

whether the words, ‘That it is hereby made unlawful

for any person wilfully . . . to make any unjust or

unreasonable rate or charge in handling or dealing in

or with any necessaries,’ constituted a fixing by Con-

gress of an ascertainable standard of guilt, and are ade-

quate to inform persons accused of violation thereof of

the nature and cause of the accusation against them.

That they are not, we are of opinion so clearly results

from their mere statement as to render elaboration on

the subject wholly unnecessary. Observe that the see-

tion forbids no specific or defiuite act. It confines the

subject-matter of the investigation which it authorizes

to no element essentially inhering in the transaction

as to which it provides. It leaves open, therefore, the

widest conceivable inquiry, the scope of which no one

ean foresee, and the result of which no one can fore-

shadow or adequately guard against. In fact we see

no reason to doubt the soundness of the observation of

the court below in its opinion to the effect that, to at-

tempt to enforce the section would be the exact equiva-

lent of an effort to carry out a statute which in terms

merely penalized and punished all acts detrimental to

the public interest when unjust and unreasonable in

the estimation of the court and jury. And that this is

not a mere abstraction finds abundant demonstration

in the cases now before us; since in the briefs in these

eases the conflicting results which have arisen from the

painstaking attempts of enlightened judges in seek-

ing to carry out the statute in cases brought before

them are vividly portrayed. * * * And again, this con-

dition would be additionally obvious if we stopped to

recur to the persistent efforts which, the records dis-

close, were made by administrative officers, doubtless

inspired by a zealous effort to discharge their duty, to

establish a standard of their own to be used as a basis

to render the section possible of execution.

“That it results from the consideration which we

have stated that the section before us was void, for

repugnancy to the Constitution, is not open to ques-

tion. United States v. Reese, 92 U.S. 214, 219, 220, 23

L. ed. 563, 565; * * #9)

ooereneraey >

ERT

Conclusion

As the court below has decided an important question

of Federal law, has decided a Federal question in a way

probably in conflict with an applicable decision of this court,

has misinterpreted important statutes of the United States,

decided questions of substance relating to the application

of the Constitution, and has not given proper effect to an

applicable decision of this court, it is respectfully submitted

that this petition for a writ of certiorari should be granted.

Respectfully submitted,

Warren E. MIbter,

Attorney for Petitioner.

. . ree ANOS MAILE SPOT LOLS A EAM AP Fe EAL ED en

| :

4 APPENDIX

: Pertinent Statutes and Regulations

i Administrative Procedure Act (5 U.S. C.):

: ‘*See. 1001(e). ‘License’ includes the whole or part of

any agency permit, certificate, approval, registration, char-

ter membership, statutory exemption or other form of

3 permission. ‘Licensing’ includes agency process respecting

; the grant, renewal, denial, revocation, suspension, annul-

; ment, withdrawal, limitation amendment, modification, or

¥ conditioning of a license.’’

‘‘See. 1003(a). General notice of proposed rule making

shall be published in the Federal Register (unless all per-

sons subject thereto are named and either personally served

or otherwise have actual notice thereof in accordance with

law) and shall include (1) a statement of the time, place,

and nature of public rule making proceedings; (2) refer-

ence to the authority under which the rule is proposed; and

(3) either the terms or substance of the proposed rule or

a description of the subjects and issues involved. Except

where notice or hearing is required by statute, this sub-

section shall not apply to interpretative rules, general state-

3 ments of policy, rules of agency organization, procedure,

ia or practice, or in any situation in which the agency for

A good cause finds (and incorporates the finding and a brief

18 statement of the reasons therefor in the rules issued) that

i notice and public procedure thereon are impracticable, un-

q necessary, or contrary to the public interest.”’

é **See. 1004. Adjudications

4 * * * e ° oe *

i ‘*Procedure

? . .

i ‘*(b) The agency shall afford all interested parties op-

+ portunity for (1) the submission and consideration of facts

4 arguments, offers of settlement, or proposals of adjust-

ment where time, the nature of the proceeding, and the

public interest permit, and (2) to the extent that the parties

are unable so to determine any controversy by consent,

hearing, and decision upon notice and in conformity with

sections 1006 and 1007 of this title.’’

‘‘See. 1008. Imposition of sanctions; determination of

applications for licenses; suspension, revocation, and ex-

piration of licenses.

‘‘In the exercise of any power or authority—

‘‘(a) No sanction shall be imposed or substantive rule

or order be issued except within jurisdiction delegated to

the agency and as authorized by law.

‘*(b) ... Except in cases of willfulness or those in

which public health, interest, or safety requires otherwise,

no withdrawal suspension, revocation, or annulment of

any license shall be lawful unless, prior to the institution of

ageucy proceedings therefor, facts or conduct which may

warrant such action shall have been called to the attention

of the licensee by the agency in writing and the licensee shall

have been accorded opportunity to demonstrate or achieve

compliance with all lawful requirements. . . .”’

Civiz Agronavtics Act or 1938, as AMENDED:

‘*See. 401 [52 Stat. 987, 49 U. S. C. 481] (a) No air

earrier shall engage in any air transportation unless

there is in foree a certificate issued by the Authority

authorizing such air carrier to engage in such trans-

portation: Provided, That if an air carrier is engaged

in such transportation on the date of the enactment of

this Act, such air carrier may continue so to engage

between the same terminal and intermediate points for

one hundred and twenty days after said date, and there-

after until such time as the Authority shall pass upon

an application for a certificate for such transportation

if within said one hundred and twenty days such air

earrier files such application as provided herein.”’

‘See. 401(ce) [52 Stat. 987, 49 U.S. C. 481]

‘*(e) Upon the filing of any such application, the

Authority shall give due notice thereof to the public by

posting a notice of such application in the office of the

secretary of the Authority and to such other persons as

the Authority may by regulation determine. Any in-

ER PPI SE NO et LE NE Nak Et

ee a re te

terested person may file with the Authority a protest

or memorandum of opposition to or in support of the

issuance of a certificate. Such application shall be set

for public hearing, and the Authority shall dispose of

such application as speedily as possible.’’

“*Terms and Conditions of Certificate

‘*See. 401(f) [52 Stat. 987, 49 U. S.C. 481]...

‘*(f) Each certificate issued under this section shall

specify the terminal points and intermediate points,

if any, between which the air carrier is authorized to

engage in air transportation and the service to be

rendered; and there shall be attached to the exercise

of the privileges granted by the certificate, or amend-

ment therto, such reasonable terms, conditions, and

limitations as the public interest may require. A cer-

tificate issued under this section to engage in foreien

air transportation shall, insofar as the operation is to

take place without the United States, designate the

terminal and intermediate points only insofar as the

Authority shall deem practicable; and otherwise shall

designate only the general route or routes to be fol-

lowed. Any air carrier holding a certificate for foreign

air transportation shall be authorized to handle and

transport mail of countries other than the United

States. No term, condition, or limitation of a certifi-

cate shall restrict the right of an air carrier to add to

or change schedules, equipment, accommodations, and

facilities for performing the authorized transportation

and service as the development of the business and the

demands of the public shall require. No air carrier

shall be deemed to have violated any term, condition,

or limitation of its certificate by landing or taking off

during an emergency at a point not named in its cer-

tificate or by operating in an emergency, under regula-

tions which may be prescribed by the Authority, be-

tween terminal and intermediate points other than

those specified in its certificate. Any air carrier may

make charter trips or perform any other special serv-

~~ oe

13)

ice, without regard to the points named in its certificate,

under regulations prescribed by the Authority.”’

‘See. 401 [52 Stat. 987, 49 U. S. C. 481]

(h) The Authority [Board], upon petition or com-

plaint or upon its own initiative, after notice and hear-

ing, 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 cer-

tificate, 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: Provided, That

no such certificate shall be revoked unless the holder

thereof fails to comply, within a reasonable time to be

fixed by the Authority [Board], with an order of the

Authority commanding obedience to the provision, or

to the order (other than an order issued in accordance

with this proviso), rule, regulation, term, condition, or

limitation found by the Authority to have been violated.

Any interested person may file with the Authority a

protest or memorandum in support of or in opposition

to the alteration, amendment, modification, suspension,

or revocation of a certificate.”’

‘“‘See, 416 [52 Stat. 1004, 49 U.S. C. 496]

‘‘(a) The Authority [Board] may from time to time

establish such just and reasonable classifications or

groups of air carriers for the purposes of this title as

the nature of the services performed by such air car-

riers shall require; and such just and reasonable rules,

and regulations, pursuant to and consistent with the

provisions of this title, to be observed by each such

class or group, as the Authority [Board] finds neces-

sary in the public interest.’’

‘¢Exemptions

‘“(b) (1) TheAuthority, from time to time and to the

extent necessary, n extept as provided in para-

graph (2) of this Subsection) exempt from the require-

oto sal

Sa Bide Ne EEN TIAA SEAT AN CELE A REE ER AA aie LORS ea i

ments of this title or any provision thereof, or any rule,

regulation, term, condition, or limitation prescribed

thereunder, any air carrier or class of air eoreiers, of if

» pro-—~

vision, or such << regulation, em pone or

: “Timitation is or would be an undue jurden on such air

carrier or class of air ¢: riers by peasan of the lunited

exten

“and_ig not 5 the public interest.

**(2) e Authority shall not exempt any air car-

; rier from any provision of subsection (1) of section 401

é of this title, except that (A) any air carrier not engaged

{ _in scheduled air transporta: tation, and (BY To the extent

that the operations of such air carrier are conducted

during daylight hours, any air carrier engaged in

scheduled air transportation, may be exempted from

the provisions of paragraphs (1) and (2) of such sub-

section if the Authority finds, after notice and hearing,

that, by reason of the limited extent of, or unusual

circumstances affecting, the operations of any such air

earrier, the enforcement of such paragraphs is or would

be such an undue burden on such air carrier as to

obstruct its development and prevent it from beginning

or continuing operations, and that the exemption of

such air earrier from such paragraphs would not ad-

versely affect the public interest: Provided, That

nothing in this subsection shall be deemed to authorize

: the Authority to exempt any air carrier from any re-

quirement of this title, or any provision thereof, or any

: rule, regulation, term, condition, or limitation pre-

seribed thereunder whieh provides for maximum flying

hours for pilots or copilots.”’

p4sd Wy

2 ie hep tePt ride mF

3 39

) ‘¢JupiciaL Review or AuTuority’s Orvers

“Orders of Authority Subject to Review

“See. 1006 [52 Stat. 1024, 49 U.S .C. 646]

* * * * * * *

“Certification or Certiorart

“(f) The judgment and decree of the court affirm-

ing, modifying, or setting aside any such order of the

Authority shall be subject only to review by the Su-

preme Court of the United States upon certification or

certiorari as provided in sections 239 and 240 of the

Judicial Code.’’

Recunations Serra NUMBER 388

Aporrep BY THE Civi, AgRoNnaUtTiICcS Boarp

Ar Its Orrice in Wasuixeron, D.C. oN THE OTH Day

or May, 1947

The Civil Aeronauties Board, having held a hearing and

issued its opinion in the Investigation of Non-Scheduled

Air Service, Docket No. 1501, relating to non-certificated air

carriers, having circulated for comment a draft and there-

after a revised draft of proposed regulation relating toe non-

certificated air carriers, having considered written com-

ments and oral argument thereon in Docket No. 2742, and

having also considered other data and information * avail-

able to the Board, finds as follows:

21 As used herein the term “non-certificated air carriers” refers to air

carriers engaging in air transportation which do not hold certificates of

public convenience and necessity issued by the Board, and the term “eer-

tifieated air carriers” refers to air carriers whieh do hold such certificates.

22 Such data and information include, among other things, the reports

heretofore filed with the Board pursuant to Section 292.1 of the Economie

Regulations, data obtained in investigations made by the enforcement

staff of the Board, financial Forms 41, 2380 and 2780, and other reports

filed with the Board by the certificated air carriers, informal complaints

filed against non-certifieated air carriers, and applications for air ear-

rier operating certificates filed with the Civil Aeronautics Administration

pursuant to Part 42 of the Civil Air Regulations.

1. Since 1938 there has been in effect an exemption regula-

tion adopted by the Board which exempts non-certificated

air carriers from all provisions of Title IV of the Civil

Acronauties Act (other than sections 401(1) and 407(a),

and, since June, 1946, section 411) so long as they engage

only in irregular services as defined in such regulation. At

the time such regulation was originally adopted the Board

believed it was undesirable to provide for the detailed eco-

nomie regulation of the operations of such carriers without

further study. Since that time and particularly foliowing

the close of the war, the Board has aceumulated information

and data which indicate that the aggregate operations of

such carriers have increased in seope and importance, and

that operations by individual carriers are frequently exten-

sive. Some such operations have been conducted with little

regard to the responsibility and duty owed to the publie

by a common carrier with respect to service, and have

resulted in numerous complaints to the Board concerning

tariff and operating practices, including but not limited

to failure of such carriers to perform the service agreed

upon, great variations in the fares and rates charged by

the same carrier for comparable service, failure to make

refunds to passengers and shippers for transportation not

performed, misrepresentation of equipment, facilities and

services, and use of inadequate and makeshift equipment

and facilities. Both the protection of the publie from im-

proper practices by such non-certifieated air earriers and

protection of the certificated carriers against unregulated

competition require that additional regulatory provisions

of the Civil Aeronautics Act be now made applicable to

such non-certifieated air carriers.

2. In addition to the publie demand and need for air

transportation services furnished by the certificated air

carriers on regularly scheduled operations, there is public

demand and need at the present time for air serviees on

an irregular basis both to certificated and non-certifieated

points. Such irregular services vary greatly with respect

to type of service, and fill a need which, because of fluctua-

tions in the demand and the impossibility of determining

where and when the demand will arise, by its very nature

a someen

cannot be fulfilled economically by carriers operating on

regular schedules and routes. Such services can be per-

formed by non-certificated air carriers, and because of their

knowledge of local conditions or willingness to perform

specialized types of services such services can frequently

be performed by them more adequately, economically and

quickly than by certificated carriers. To require the cer-

tification of such carriers at the present time would be im-

practicable because it would be necessary to issue a certifi-

cate of public convenience and necessity which would

either impose no substantial limitations upon operations

or which would substantially reduce the flexibility and use-

fulness of the operations of such carriers. Certification,

in the ease of many small seale operations, would be un-

economical and would tend to prevent or retard the develop-

ment of new types of services designed to meet special

conditions. Because of the fact that irregular services meet

a different need and must be infrequent and irregular, such

services, if properly regulated under provisions of the Act

other than those relating to certificates of public con-

venience and necessity, will not under present conditions

have adverse competitive effect upon the services per-

formed by the certificated air carriers,

3. In view of the considerations mentioned in paragraphs

1 and 2 hereof, and in order to insure the flexibility in the

conduct of irregular services which is implicit in exemp-

tion of non-certificated air carriers from certification,

Irregular Air Carriers, as defined in Section 202.1 below,

should continue to be exempted from the requirements of

section 401 of the Act other than subsection (1). Protee-

tion of the public and the orderly development of the air

transportation system in accordance with the objectives

of section 2 of the Act, however, require that certain pro-

visions of the Act which are not directly related to the eer-

tification provisions of the Act should be made applicable

to the Irregular Air Carriers utilizing equipment of sub-

stantial size. Such carriers are now subject to sections

401(1), 407(a) and 411, and these requirements should he

continued, In addition, such carriers should now be made

subject to sections 4038, 404(b), 407(b), 407(c), 407(d),

38 |

407 (e), 409(b), 410, 415 and 416; and to the requirements of

section 404(a), relating to safe service, equipment and

facilities. In addition, such carriers should be made sub-

ject to the provisions of sections 408, 409(a), 412, 413 and

414, except to the extent, as more fully set forth in para-

graph (c) of Section 292.1 below, that such provisions in-

volve other Irregular Air Carriers.

4. A portion of the irregular air service now being per-

formed is performed by small air carriers operating a

limited number of planes of small size. From reports sub-

mitted to the Board it appears that non-certificated air

carriers operating one or more aireraft having a gross

take-off weight in excess of 10,000 pounds constituted less

than 20 percent of the total number of non-certificated air

carriers, but flew approximately 30 percent of the total

revenue passenger miles flown by all such carriers. It

would thus appear that Irregular Air Carriers operating

aireraft under 10,000 pounds may be subjected to a much

lesser degree of economic regulation without materially

affecting the over-all air transportation system. Sueh

operations are limited in scope, do not represent a serious

threat to certificated operations, and extensive regulation

thereof at this time would be unduly burdensome and costly

to such carriers, would tend to increase the cost and impair

the value of such services to the public, and would impose

unnecessary additional administrative burden upon the

Board. Accordingly, such Irregular Air Carriers should

not be made subject to sections 403, 404(b), 407(b), 407(c),

408, 409(a), 410 and 412, but should be made subject to all

other provisions of the Act to which the Irregular Air

Carriers utilizing equipment of substantial size are subject.

In drawing the line between the Irregular Air Carriers

utilizing equipment of substantial size and the Irregular Air

Carriers which utilize only smaller equipment, the Board

finds that the use of a single aireraft unit having an allow-

able gross take-off weight in excess of 10,000 pounds would

involve an operation of substantial size in relation to the

service offered to the publie and the competitive effect

upon other air carriers; and that the use of aircraft units

having an allowable gross take-off weight between 6,000 and

ain OF me ARE ORL ORT at Pe ET a

10,000 pounds and an aggregate gross take-off weight in

excess of 25,000 pounds would likewise involve a substantial

operation.

5. Section 292.1 of the Economie Regulations as revised

herein, unlike the exemption heretofore in effect does not

provide for exemption from the Act with respect to the ear-

riage of persons in foreign air transportation. The Board

finds that notwithstanding the findings in paragraphs 2 and

3 hereof the continuation of the exemption with respect to

such transportation is no longer justified in view of the re-

cent substantial extension of our international air transpor-

tation system, as well as the recent award of foreign air

earrier permits, and in view of the smaller traffic potential

which the Board finds to exist in the field of international

air transportation as compared with interstate and overseas

air transportation.

6. As a condition to the grant of the exemptions pro-

vided for in Section 292.1 below, such section will provide

for letters of registration to be issued to Irregular Air Car-

riers, for quarterly operation reports, and for special re-

ports on the institution of service with large aircraft by such

carriers theretofore utilizing only small aircraft. These

requirements are deemed necessary in order that the Board

may maintain adequate supervision and obtain information

with respect to exempted operations.

7. Unless specifie provision were made herein the officers

and directors of Irregular Air Carriers otherwise would be

subject to the interlocking relationships provisions of see-

tion 409 of the Act, even though the Irregular Air Carriers

in which they hold the positions are wholly or partially

exempted from such provisions by the terms of Section 292.1

below. The Board’s statutory powers to grant exemptions

from provisions of Title IV of the Act extend only to air

carriers and not to individuals or persons other than air

carriers. Certain interlocking relationships as specified in

section 409 oceupied by such persons are lawful only if ap-

proved by the Board upon due showing, in the form and

manner prescribed by the Board, that the public interest will

not be adversely affected thereby. The Board has deter-

mined in this regard that since it is granting exemption to

a ee ORE LE IDLE AIOE BAO Sy " soi

certain Irregular Air Carriers from the requirements of

section 409 with respect to certain relationships, a due show-

ing within the meaning of the statute to justify approval of

an interlockitig relationship, upon application filed by an

officer or director of an Irregular Air Carrier, would be

made by a showing that such carrier itself had been granted

an exemption from the necessity of obtaining approval. To

require each such officer or director to file such an applica-

tion and make sueh a showing, however, would appear to

impose a useless administrative burden upon the Board and

would not be conducive to the proper dispatch of business

and to the ends of justice. The Board has determined, there-

fore, that such showing by all such officers and directors

individually shall be presumed to have been made, and upon

the basis thereof has granted blanket approval of such inter-

locking relationships in Section 292.1 below.

8. In view of the foregoing considerations, the present

enforcement of the provisions of Title IV, except to the ex-

tent required in Section 292.1 below, would be an undue

burden on Irregular Air Carriers by reason of the limited

extent of, and the unusual circumstances affecting the opera-

tions of such carriers, and would not be in the public interest.

On the basis of the foregoing findings and pursuant to the

Civil Aeronautics Act of 1938, as amended, particularly

sections 205(a) and 416(b) thereof, and for the purpose of

providing for the economic regulation of services conducted

on an irregular basis by non-certifieated air carriers, the

Civil Aeronauties Board hereby amends Section 292.1 of the

Keonomie Regulations in its entirety to read as follows

effective June 10, 1947:

Section 292.1 or THE Economic Recuiations IrreGuLar Aim

CARRIERS

(a) Applicability —This section shall not apply to any

air carrier authorized by a certificate of public convenience

and necessity to engage in air transportation, to Alaskan

Air Carriers, to operations within Alaska, or to any non-

certificated air carrier engaged in air transportation pursu-

ant to special or individual exemption by the Board or pur-

kU ay PRS

———

suant to exemption created by any other section of the

Economic Regulations.

(b) Classification —There is hereby established a classi-

fication of non-certificated air carriers to be designated as

‘Irregular Air Carriers’’. An Irregular Air Carrier shall

be defined Totem aie air earrier (1) which does not hold

a certificate of public convenience and necessity under sec-

tion 401 of the Civil Aeronautics Act of 1938, as amended,

(2) which directly engages in interstate or overseas air

transportation of persons and property or foreign air trans-

portation of property only, and (3) which does not.hold out

ic, expressly or by a course of conduct, that_it

0 more aire ween designated points, or

ithi designated point, regilarly or with a reasonable

degree of regularity upon which aircraft it accepts for

transportation, Tor compensation or hire, such members of

the public as apply therefor or such property as the publie

offers. No air carrier shall be deemed to be an Irregular

Air Carrier unless the air transportation services offered —

1 perf. s infrequeney as to preclude

a unifor consistency

ecu, or within, such designated pojuts —

Within the meaning of this defimition a “point”? shall mean

any airport or place where aireraft may be landed or taken-

off, including the area with a 25-mile radius of such airport

or place.

‘

(1) General.—Except as otherwise provided in this see-

tion, Irregular Air Carriers shall be exempt from all pro-

visions of Title IV of the Civil Aeronauties Act of 1938, as

amended, other than the following:

(i) Subsection 401(1) (Compliance with Labor Legisla-

tion) ;

(ii) Section 403 (Tariffs) ;

(iii) Subsection 404(a) (Carrier’s Duty to Provide Serv-

ice, ete.), only in so far as said subsection requires air ecar-

riers to provide safe service, equipment, and facilities in

connection with air transportation;

(iv) Subsection 404(b) (Discrimination) :

“4

a eee

Se etaaal ot im bE? SE ka cas

Let tn ot ba

(v) Subsection 407(a) (Filing of Reports): Provided,

That no provision of any rule, regulation, term, condition

or limitation prescribed pursuant to said subsection 407 (a)

shall be applicable to Irregular Air Carriers unless such

rule, regulation, term, condition or limitation expressly so

provides ;

(vi) Subsection 407(b) (Disclosure of Stock Ownership) ;

(vii) Subsection 407(c) (Disclosure of Stock Ownership

by Officers or Directors) ;

(viii) Subsection 407(d) (Form of Accounts): Provided,

That no provision of any rule, regulation, term, condition

or limitation prescribed pursuant to said subsection 407 (d)

shall be applicable to Irregular Air Carriers unless such

rule, regulation, term, condition or limitation expressly so

provides;

(ix) Subsection 407(e) (Inspection of Accounts and

Property) ;

(x) Section 408 (Consolidation, Merger, and Acquisition

of Control): Prorided, That Irregular Air Carriers shall

be exempt from section 408 in so far as said section would

make it unlawful, without prior approval by the Board, (a)

for any Irregular Air Carrier or any person controlling any

such carrier to purchase, lease, or contract to operate the

properties, or any substantial part thereof, of another Ir-

regular Air Carrier, (b) for any Irregular Air Carrier to

consolidate or merge with another Irregular Air Carrier,

and (¢c) for any Irregular Air Carrier or any person con-

trolling any such air carrier to aequire control of another

Irregular Air Carrier; Provided further, That any Irregu-

lar Air Carrier which consolidates or merges with another

Irregular Air Carrier and any Irregular Air Carrier or any

person controlling any such carrier that acquires control

of, or purchases, leases, or contracts to operate the prop-

erties, or any substantial part thereof, of another Irregular

Air Carrier pursuant to the exemption granting herein,

shall submit to the Board, not more than 30 days following

the consummation of the transaction, a report indicating

in reasonable detail the nature and result of the transaction.

(xi) Subsection 409(a) (Interlocking relationships) :

Provided, That if an application by any Irregular Air Car-

oe pa = eg

BS. 4) On ee

rier for approval of an interlocking relationship in exist-

ence on the effective date of this section is filed with the

Board prior to a date 30 days after the effective date of

this section, such air carrier may retain the officer, direc-

tor, member, or stockholder involved in such relationship

pending final disposition by the Board of said application :

Provided further, That Irregular Air Carriers shall be

exempt from subsection 409(a) in so far as said subsection

would make it unlawful, without prior approval by the

Board, (a) for any Irregular Air Carrier to have and re-

tain an officer or director who is an officer, director, or

member, or who as a stockholder holds a controlling inter-

est, in another Irregular Air Carrier, (b) for any Irregu-

lar Air Carrier, knowingly and willfully, to have and re-

tain an officer or director who has a representative or nomi-

nee who represents such officer or director as an officer, di-

rector, or member, or as a stockholder holding a control-

ling interest, in another Irregular Air Carrier;

(xii) Subsection 409(b) (Profit from Transfer of Se-

curities) ;

(xiii) Section 410 (Loans and Financial Aid) ;

(xiv) Section 411 (Methods of Competition) ;

(xv) Section 412 (Pooling and Other Agreements) : Pro-

vided, That Irregular Air Carriers shall be exempt from

section 412 until 60 days after the effective date of this

section: Provided further, That Irregular Air Carriers

shall be exempt from section 412 in so far as said section

would require any Irregular Air Carrier to file with the

Board a copy or a memorandum of certain contracts or

agreements (other than contracts or agreements for pool-

ing or apportioning earnings, losses, traffic, service or fly-

ing equipment), or of modifications or cancellations thereof,

between such carrier and any other Irregular Air Carrier;

(xvi) Section 413 (Form of Control) ;

(xvii) Section 414 (Legal Restraints) ;

(xviii) Seetion 415 (Inquiry into Air-Carrier Manage-

ment);

(xix) Section 416 (Classification and Exemption of Car-

riers).

Iii Pciiew Da ali eee

Db AR SRO GEA, &

(2) Additional Exemptions for Irregular Air Carriers

Utilizing Small Aircraft——Subdivisions (ii), (iv), (vi),

(vii), (x), (xi), (xiii) and (xv) of subparagraph (1) of this

paragraph shall not apply to any Irregular Air Carrier

which does not utilize in its air transportation services any

single aircraft unit having an allowable gross take-off

weight in excess of 10,000 pounds, or three or more aircraft

units (not ineluding any aircraft unit having an allowable

gross take-off weight of less than 6,000 pounds) having an

aggregate allowable gross take-off weight in excess of 25,000

pounds.

(3) Additional Temporary Exemptions in Foreign Air

Transportation—Notwithstanding any other provisions of

this section, Irregular Air Carriers for a period of three

months after the effective date of this section, shall, with

respect to foreign air transportation of persons, be exempt

from all provisions of sections 401 (except subsection

401(1)) and 403 of the Civil Aeronautics Act of 1938, as

amended, only, however, to the extent that such foreign

air transportation of persons is confined to operations of

the type exempted under section 292.1 prior to this revision

of such section.

(4) Approval of Certain Interlocking Relationships.—

To the extent that any officer or director of an Irregular

Air Carrier would, without prior approval by the Board, be

in violation of any provision of subsection 409(a) (3) of

the Civil Aeronautics Act of 1938, as amended, by reason

of any interlocking relationship with another Irregular

Air Carrier, such relationship is hereby approved.

(5) Effect on Other Statutes—The exemptions herein-

above granted from certain provisions and requirements

of sections 408, 409, and 412 shall not constitute an order

made under such sections, within the meaning of section

414, and shall not confer any immunity or relief from op-

eration of the ‘‘antitrust laws,’’ or any other statute (ex-

cept the Civil Aeronautics Act of 1938, as amended), with

respect to any transaction, interlocking relationship or

agreement otherwise within the purview of such section.

(5) Operational Reports by Irrequar Air Carriers.—

On or before July 20, 1947, and thereafter on or before

the 20th day of every October, January, April and July,

each Irregular Air Carrier, except those Irregular Air Car-

riers utilizing only small aireraft, as specified in subpara-

graph (2) of this paragraph, shall file with the Board a

quarterly operational report covering the period of the

three preceding calendar months, showing all flights oper-

ated in air transportation during such period, and stating,

with respect to each such flight, the dates of departures and

arrivals and the origin, destination and intermediate points

served. Whenever any Irregular Air Carrier theretofore

utilizing only small aireraft, as specified in subparagraph

(2) of this paragraph, undertakes to utilize in its air trans-

portation services any single aireraft unit having an allow-

able gross take-off weight in excess of 10,000 pounds, or

three or more aireraft units (not including any aircraft unit

having an allowable gross take-off weight of less than 6,000

pounds) having an aggregate allowable gross take-off

weight in excess of 25,000 pounds, such Irregular Air Car-

rier shall notify the Board in writing within not more

than ten days after the actual commencement of such utili-

zation.

(d) Registration for Exemption.

(1) Letter of Registration Required—From and after

60 days after the effective date of this section no Irregular

Air Carrier may engage in any form of air transportation

unless there is then outstanding and in effect with respect

to such air carrier a Letter of Registration issued by the

Board: Provided, That if any Irregular Air Carrier, other-

wise authorized to engage in air transportation pursuant

to this section, shall file with the Board within 60 days after

the effective date of this section, an application for a Letter

of Registration, such applicant may engage in such air

transportation until such Letter has been issued, or such

applicant has been notified that it appears to the Board

that such applicant is not entitled to the issuance of such

Letter.

(2) Issuance of Letter of Registration—Upon the fil-

ing of proper application therefor, the Board shall issue, to

any Irregular Air Carrier, a Letter of Registration which,

SWS a eltconse

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a Rael ated Ed Sind Ma BS OM

unless otherwise sooner rendered ineffective, shall expire

and be of no further force and effect, upon a finding by the

Board that enforcement of the provisions of section 401

(from which exemption is provided in this section) would

be in the publie interest and would no longer be an undue

burden on such Irregular Air Carrier or Class of Irregu-

lar Air Carriers. Such application shall be certified to by

a responsible official of such carrier as being correct, and

shall contain the following information: (i) date; (ii) name

of carrier; (iii) mailing address; (iv) location of principal

operating base; (v) if a corporation, the place of incorpora-

tion, the name and citizenship of officers and directors and

a statement that at least 75 per centum of the voting in-

terest is owned or controlled by persons who are citizens

of the United States or of one of its possessions; (vi) if

an individual or partnership, the name and citizenship of

owners or partners; (vii) the types and numbers of each

type of aircraft utilized in air transportation. Such ap-

plication shall be submitted in duplicate in letter form or

on C.A.B. Form No. 2789 which is available on request for

the convenience of applicants.

(3) Non-transferabil:ity of Letter of Registration.—A

Letter of Registration shall be nontransferable and shall

be effective only with respect to the person named therein.

(4) Suspension of Letter of Registration.—Letters of

Registration shall be subject to immediate suspension when,

in the opinion of the Board, such action is required in the

publie interest.

(5) Revocation of Letter of Registration—tLetters of

Registration shall be subject _to_revocation, dl

an ri for knowing and willful violation of any

provision of the Civil Aeronauties Act of 1938, as amended,

or of any order, rule or regulation issued under any such

provision, or of any term, condition or limitation of any

authority issued under said Act or regulations.

(e) Separability—If any provision of this section or

the application thereof to any air transportation, person,

class of persons, or circumstance is held invalid, the re-

mainder of the section and the application of such pro-

visions to other air transportation, persons, classes of

—— SEAN ED OR”

= eaRertba Thesstinhad 0 ut

persons, or circumstances shall not be affected thereby.

(52 Stat. 984 and 1004, as amended; 49 U. S. (C. 425a and

496b).

Note: The record-keeping and reporting requirements

of this section have been approved by the Bureau of the

Budget in accordance with the Federal Reports Act of

1942.

By the Civil Aeronautics Board:

(S.) M. C. Mututcan,

Secretary.

(SEAL. )

Regulations

Serial Number ER-136

JINITED STATES OF AMERICA

CIVIL AERONAUTICS BOARD

Washington 25, D. C.

Economie Regulations

Interpretation No. 1 to §292.1

Adopted: December 10, 1948

Irrecuntar Arr CARRIERS

The following interpretation of the Economic Regula-

tions §292.1, in the form of illustrative examples of ‘‘irreg-

ular”’ air transportation as therein defined, is being promul-

gated pursuant to section 205(a) of the Civil Aeronautics

Act and See. 3(a) of the Administrative Procedure Act.

It is adopted as part of the regulations. Its purpose is to

assist irregular air carriers to conduct their operations in

conformity with the Act and §292.1 of the Economic Regu-

lations.

In consideration of the foregoing, the Civil Aeronautics

Board hereby issues the following interpretation of §292.1:

Examples of Irregular Air Transportation within

the Meaning of Section 292.1

For the guidance of Irregular Air Carriers and other

interested parties the Board here sets forth a number of

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illustrative examples of irregular and regular service. All

Irregular Air Carriers should study these examples, for

the Board expects to use them as standards to apply to the

operations of such Carriers.

It should be noted that all of the illustrations included

here refer only to actual operations. Such operations indi-

cate a course of conduct constituting the holding out of

regular or irregular service, as the case may be. The

holding out of regular service may also be brought about

by means other than actual operations—for example, al-

though its services are operated irregularly, a carrier may

be holding out regular service by reason of the nature and

extent of its advertising and traffic solicitation efforts. In

other words, an Irregular Air Carrier is not immune from

enforcement action if its actual operations are irregular

but all the circumstances surrounding its business show

that the carrier is holding out regular service.

The illustrations included represent application of the

principles announced in Page Airways, Inc., Investigation,

6 C.A.B. 1061, Trans-Marine Airways, Inc., Investigation

of Activities, 6 C.A.B. 1071, and Investigation of Non Schea-

uled Services, 6 C.A.B. 1049, and more particularly of the

cease and desist order entered in the Matter of the Noncer-

tificated Operations of Trans Caribbean Air Cargo Lines,

Inc., Order Serial No. E-370, adopted March 14, 1947. This

is emphasized because the Board is not attempting by re-

vision of section 292.1 either to enlarge or contract the

scope of operations permitted by the regulation.

(1) An Irregular Air Carrier operates between points

A and B, in one direction, on the days of the month which

are encircled on the following caiendar table:

Ss M T W = F Ss

(1) 2 3 4 5 6 7

(8) 9 10 11 12 13 14

(15) 16 17 18 19 20 21

(22) 23 24 25 26 27 28

(29) 30 31

Since these flights are conducted on the same day of each

week, the service is not irregular within the meaning of

a re pee One fee ee ee

’ the regulation. Moreover, if over a period of weeks an

occasional Sunday flight is omitted, or is operated on some

other day of the week, such minor variations in the general

pattern of regularity would not cause the service to become

an irregular service.

(2) An Irregular Air Carrier operates between points

A and B, in one direction, on the days of the month which

are encircled on the following calendar table:

Ss M T W T F Ss

— 1 (2) 3 (4) 5 6

7 8 (9) 10 (11) 12 13

) 14 15 (16) 17 (18) 19 20

21 22 (23) 24 (25) 26 27

28 29 (30)

These flights are conducted regularly, twice a week, with-

out frequent and extended definite breaks in service and

are obviously not irregular within the meaning of the regu-

lation. Moreover, if over a period of weeks an occasional

flight is omitted, or is operated on some other day of the

week, such minor variations in the general pattern of regu-

larity would not cause the service to become an irregular

service. :

(3) An Irregular Air Carrier operates between points

A and B, in one direction, on the days of the month which

are encircled on the following calendar table:

S M T W T F S

sk _ “ (1) 2 3 4

5 6 (7) 8 9 10 1

12 (13) 4 15 16 17 (18)

19 20 3 @ 3s 24 25

(26) 27 28 29 (30)

These flights are conducted at regularly recurring

periods, or substantially regular periods (every 4, 5 or 6

days), and therefore do not achieve infrequency and irregu-

larity of service through frequent and extended definite

breaks in service. Such service is not irregular within the

meaning of the regulation.

(4) An Irregular Air Carrier operates between points A

and B, in one direction, on the days of the two successive

months which are encircled on the following calendar table:

S M = W T F S

~— _ _ — _ 1 2

3 4 (5) 6 (7) 8 9

10 (11) (12) 13 14 15 16

17 18 (19) (20) 21 22 23

24 (25) 26 (27) 28 29 30

_ l (2) 3 (4) 5 6

7 8 9 (10) 11 12 (13)

I4 15 16 17 18 19 20

21 (22) 23 24 (25) 26 27

(28) 29 30 (31)

These flights are conducted twice a week in succeeding

weeks without the intervention of other weeks or similar

periods at irregular but frequent intervals during which no

flights are operated. Such service is not irregular within

the meaning of the regulation.

(5) An Irregular Air Carrier eperates between points

A and B, in one direction, on the days of the two successive

months which are encircled on the following calendar table:

S M T W T F S

_ ~ — — — (1) 2

(3) (4) 5 (6) 7 (8) 9

10 ir (12) (13) 14 15 16

24 25 26 27 28 29 30

(31)

s M T W T F S

— (1) 2 (3) 4 5 (6)

7 8 (9) (10) i 12 13

(14) 15 (16) 17 = (18) (19) 0

21 22 23 24 25 26 27

(28) (29) 30

In this pattern, unlike the preceding example, two breaks

of at least a week occur within a two-month period. How-

ever, operations in the other weeks oceur with such fre-

quency that the breaks in service are not of sufficient fre-

quency and extent to compensate for the substantial number

of flights conducted with frequency over a substantial

period, The flights are not irregular within the meaning of

the regulation.

(6) An Irregular Air Carrier operates between points

A and B, in one direction, on the days of the two successive

months which are encircled on the following calendar table:

SS) M ¥ W T F Ss

_ _ —_ l 2 (3) 4

5 6 (7) 8 9 (10) 11

12 13 14 15 16 17 18

19 20 (21) 22 23 (24) 25

26 27 (28) (29) 30 31

— _ _ — _ — 1

2 3 (4) 5 6 (7) 8

9 10 11 12 13 14 (15)

16 17 (18) 19 20 (21) 22

23 24 (25) 26 27 (28) 29

30 31

The flights do not exceed two per week and the two-

month period includes two definite breaks in service. How-

ever, in view of the frequent rendition of service on Tues-

days and Fridays the breaks in service and comparatively

small number of flights operated are not sufficient to de-

stroy the pattern of regularity. The service is not irregu-

lar within the meaning of the regulation.

(7) An Irregular Air Carrier operates between points

A and B in one direction, on the days of the two successive

months which are encircled on the following calendar table:

s M T W T F 8

_— I (2) 3 (4) 5 (6)

7 (8) 9 (10) 1 (12) 13

14 15 16 17 18 19 (20)

21 (22) 23 (24) 25 (26) 27

(28) 29 (30) 31

- —- —- = @® 2 @

4 5 6 7 8 9 10

(11) 12 (13) 14 (15) 16 (17)

18 (19) 20 (21) 22 (23) 24

25 26 27 28 29 30 (31)

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These flights are operated every other day except for

infrequent breaks. Such service is not irregular within the

meaning of the regulation.

(8) Four Large Irregular Air Carriers agree to utilize

the services of a single ticket agency, XYZ Ticket Agency,

Ine., with respect to service between points A and B, and

to furnish to the agent the dates upon which each will oper-

ate between A and B. If the flights, considered in com-

bination, of such carriers between A and B reveal a pattern

of operations similar to those shown in examples (1)

through (7) above, the combination of flights constitute

regular air transportation and each such carrier is deemed

to be conducting regular operations between A and B.

(9) An Irregular Air Carrier operates between points

A and B, in one direction, on the days of the month which

are encircled on the following calendar table:

s M T Ww T F s

a oh (1) 2 3 4 5

6 7 8 (9) 10 ll 12

13 14 15 16 (17) 18 19

20 21 22 23 24 25 = (26)

27 (28) 29 30 31

These flights are conducted on a different day of each

week, and are operated only after frequent and definite

breaks in service. Although two flights (on the 26th and

28th) were operated within one period of less than one week,

this frequency was compensated for by the breaks of at

least a week between the other flights. The flights are there-

fore irregular within the meaning of the regulation.

(10) An Irregular Air Carrier operates between points

A and B, in one direction, on the days of the two successive

months which are encireled on the following calendar table

(numerals above and to the right of encircled dates indi-

cate the number of flights operated on those dates) :

8 M T W T F S

_ 1 2 3 4 5 6

7 8 (9) (10) 11 12 13

14 15 16 17 18 19 20

21 22 23 24 25 26 27

(28) 29 30

— _ —_ 1 2 3 7

(5) (6)? (7)3 (8)? 9 10 11

12 13 14 15 16 17 18

19 20 21 22 23 24 25

26 27 28 (29) (30) ? 31

These flights are conducted in such manner that f requent,

extended and definite breaks in service occur at irregular

intervals and therefore the service is irregular within the

meaning of the regulation.

By the Civil Aeronautics Board:

(S.) M. C. Mvuurcan,

[sEaL] Secretary.

Crviz Agronavtics Boarp, Ecoxomic Reeuations, Jury 1,

1949

(Amended by ER-151 and ER-154)

Part 291—Classification and Exemption of Irregular Air

Carriers

Note: The following interpretation of Part 291 was

adopted by Regulation Serial No. ER-136, 13 F. R. 7769.

Examples of irregular air transportation within the

meaning of Part 291. For the guidance of irregular air

carriers and other interested parties the Board here sets

forth a number of illustrative examples of irregular and

regular service. All irregular air carriers should study

these examples, for the Board expects to use them as stand-

ards to apply to the operations of such carriers.

It should be noted that all of the illustrations included

here refer only to actual operations. Such operations indi-

cate a course of conduct constituting the holding out of regu-

lar or irregular service, as the ease may be. The holding

out of regular service may also be brought about by means

‘

other than actual operations—for example, although its

services are operated irregularly, a carrier may be holding

out regular service by reason of the nature and extent of its

advertising and traffic solicitation efforts. In other words,

an irregular air carrier is not immune from enforcement

action if its actual operations are irregular but all the cir-

cumstances surrounding its business show that the carrier

is holding out regular service.

The illustrations included represent application of the

principles announced in Page Airways, Inc., Investigation,

6 CAB 1061, Trans-Marine Airways, Inc., Investigation of

Activities, 6 CAB 1071, and Investigation of Nonscheduled

Services, 6 CAB 1049, and more particularly of the cease

and desist order entered in the Matter of the Noncertifi-

cated Operations of Trans Caribbean Air Cargo Lines, Inc.,

Order Serial No. E-370, adopted March 14, 1947. This is

emphasized because the Board is not attempting by revision

of Part 291 either to enlarge or contract the scope of opera-

tions permitted by the regulation.

(1) An irregular air carrier operates between points A

and B, in one direction, on the days of the month which

appear in brackets on the following calendar table:

s M T Ww T F Ss

[1] 2 3 4 5 6 7

[8] 9 10 11 12 13 14

[15] 16 17 18 19 20 21

[22] 23 24 25 26 27 28

[29] 30 31

Since these flights are conducted on the same day of each

week, the service is not irregular within the meaning of

Part 291. Moreover, if over a period of weeks an occasional

Sunday flight is omitted, or is operated on some other day

of the week, such minor variations in the general pattern of

regularity would not cause the service to become an irregu-

lar service.

(2) An irregular air carrier operates between points

A and B, in one direction, on the days of the month which

appear in brackets on the following calendar table:

s M 5 T F s

— 1 [2] 3 [4] 5 6

7 8 [9] 10 {11] 12 13

14 15 [16] 17 [18] 19 20

21 22 [23] 24 [25] 26 27

28 29 [30]

These flights are conducted regularly, twice a week, with-

out frequent and extended definite breaks in service and are

obviously not irregular within the meaning of Part 291.

Moreover, if over a period of weeks an occasional flight is

omitted, or is operated on some other day of the week, such

minor variations in the general pattern of regularity would

not cause the service to become an irregular service.

(3) An irregular air carrier operates between points A

and B, in one direction, on the days of the month which ap-

pear in brackets on the following calendar table:

s M T W T F S

— _ _— {1] 2 3 4

5 6 [7] 8 9 10 11

12 [13] 14 15 16 17 [18]

19 20 21 [22] 23 24 25

[26] 27 28 29 [30]

These flights are conducted at regularly recurring pe-

riods, or substantially regular periods (every 4, 5 or 6

days), and therefore do not achieve infrequeney and irregu-

larity of service through frequent and extended definite

breaks in service. Such service is not irreeular within the

meaning of Part 291.

(4) An irregular air carrier operates between points A

and B in one direction, on the days of the two successive

months which appear in brackets on the following calendar

table:

Ss M T W T F Ss

_ _ — _ — [1] 2

3 4 [5] 6 [7] 8 9

10 (11) 12} 13 14 15 16

17 18 [19] [20] 21 22 23

24 [25] 26 [27] 28 29 30

~ 1 [2] 3 [4] 5 6

7 8 [10] ll 12 [13]

14 15 16 17 18 19 20

21 [22] 23 24 25] 26 27

;

‘

NS eae ee Ben ee eae» Cee ee en eee

ee ape re

These flights are conducted twice a week in succeeding

weeks without the intervention of other weeks or similar

periods at irregular but frequent intervals during which no,

flights are operated. Such service is not irregular within

the meaning of Part 291.

(5) An irregular air carrier operates between points A

and B, in one direction, on the days of the two successive

months which appear in brackets on the following calendar

table:

s M T Ww T F s

an -_ _ _ _ [1] 2

[3] [4] 5 [6] 7 [8] 9

10 ll (12) [13] 14 15 16

17 [18] 19 [20] 21 [22] 23

24 25 26 27 28 30

[31]

_ (1) 2 [3] 4 5 [6]

7 8 9] ~—- [10] 11 12 13

[14] 15 [16] 17 [18] [19] 20

21 22 23 24 25 26 27

[28] — [29] 30

In this pattern, unlike the preceding example, two breaks

of at least a week occur within a 2-month period. However,

operations in the other weeks occur with such frequency

that the breaks in service are not of sufficient frequency and

extent to compensate for the substantial number of flights

conducted with frequency over a substantial period. The

flights are not irregular within the meaning of Part 291.

(6) An irregular air carrier operates between points A

and B, in one direction, on the days of the two successive

months which appear in brackets on the following calendar

table:

S8scon |

T F )

2 [3] 4

9 [10] 11

16 17 18

23 [24] 25

30 31

— — 1

6 [7] 8

13 14 [15]

20 [21] 22

27 [28] 29

The flights do not exceed two per week and the 2-month

period includes two definite breaks in service. However,

in view of the frequent rendition of service on Tuesdays and

Fridays the breaks in service and comparatively small num-

ber of flights operated are not sufficient to destroy the pat-

tern of regularity. The service is not irregular within the

meaning of Part 291.

(7) An irregular air carrier operates between points A

and B, in one direction, on the days of the two successive

months which appear in brackets on the following calendar

table:

[28]

(11)

[19]

[2]

[30]

[13]

[21]

T F S

4] 5 [6]

11 [12] 13

18 19 [20]

(1) 2 [3]

[15] 16 [17]

22 [23] 24

29 30 [31]

These flights are operated every other day except for

infrequent breaks. Such service is not irregular within the

meaning of Part 291.

a Veet ns: 33

LIN AP Mest in sed PLS REGO Te NT NTO TN WTA ol Mail

(8) Four large irregular air carriers agree to utilize the

services of a single ticket agency, XYZ Ticket Agency, Inc.,

with respect to service between points A and B, and to fur-

nish to the agent the dates upon which each will operate

between A and B. If the flights, considered in combination,

of such carriers between A and B reveal a pattern of opera-

tions similar to those shown in examples (1) through (7)

above, the combination of flights constitute regular air

transportation and each such carrier is deemed to be con-

ducting regular operations between A and B.

(9) An irregular air carrier operates between points A

and B, in one direction, on the days of the month which

appear in brackets on the following calendar table:

Ss M T W T F s

_ _ {1] 2 3 4 5

6 7 8 [9] 10 11 12

13 14 15 16 [17] 18 19

20 21 22 23 24 25 [26]

27 [28] 29 30 31

These flights are conducted on a different day of each

week, and are operated only after frequent and definite

breaks in service. Although two flights (on the 26th and

28) were operated within one period of less than one week,

this frequency was compensated for by the breaks of at

least a week between the other flights. The flights are there-

fore irregular within the meaning of Part 291.

(10) An irregular air carrier operates between points A

and B, in one direction, on the days of the two SUCCESSIVE

months which appear in brackets on the following calendar

table (numerals above and to the left of dates appearing in

brackets indicate the number of flights operated on those

dates) :

GR eS

S M ‘3 W T F S

_ 1 2 3 4 5) 6

7 8 {9] [10] 11 12 13

14 15 16 17 18 19 20

21 22 23 24 25 26 27

[28] 29 30

_ — — 1 2 3 4

[5] [? 6] [5 7] [? 8] 9 10 11

12 13 14 15 16 17 18

19 20 21 22 23 24 25

26 27 28 [29] [? 30] 31

These flights are conducted in such manner that frequent,

extended and definite breaks in service occur at irregular

intervals and therefore the service is irregular within the

meaning of Part 291.

§ 291.1. Definitions—(a) Irregular air carrier. The term

irregular air carrier means any air carrier which (1) di-

rectly engages in air transportation, (2) does not hold a

certificate of public convenience and necessity under sec-

tion 401 of the Civil Aeronautics Act of 1938, as amended,

and (3) does not operate, or hold out to the public expressly

or by course of conduct that it operates, one or more air-

craft between designated points, or within a designated

point, regularly or with a reasonable degree of regularity,

upon which aircraft it accepts for transportation, for com-

pensation or hire, such members of the publie as apply

therefor or such property as the public offers. No air ear-

rier shall be deemed to be an irregular air carrier unless the

air transportation services offered and performed by it are

of such infrequeney as to preclude an implication of a uni-

form pattern or normal consistency of operation between,

or within, such designated points.

(b) Point. The term ‘‘point’’ as used in this part shall

mean any airport or place where aircraft may be landed or

taken off, including the area within a 25-mile radius of such

airport or place.

(5016)

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.