Petition for Writ of Certiorari — Civil Aeronautics Board v. Alaska Airlines, Inc.

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Text

. , - a : Offias-Supreme Court, U.S.

RE COPY | apts

| ‘SEP 17 1958

JAMES R. BROWNING, Clerk |

. " ‘ oe :

BSR ere -.875 3

a — — ¥

: a the Supreme se of the Britd States ‘ “

ny - Ooroper TERM, 1958 Act

Civit AERONAUTICS BOARD, PETITIONER sit

‘ ; | - v | ; . ‘ Vv. ‘ e | *S ’

KA AIRLINES, INC., AMERICAN AIRLINES, INC.,.£T AL.

Po ateshbogd FOR A WRIT OF CERTIORARI TO TAB UNITED STATES

» COURT OF APPEALS FOR THH DISTRICT OF COLUMBIA OIROUIT

fa.

J. LEE RANKIN,

Solicitor General,

ja VICTOR BR. HANSEN,

ae Assistant Attorney General,

+ oe CHARLES H. WESTON,

Py ies! Attorney,

‘De rtment of Justice, Washington 25, D. C.

> 4

tant Genéral Counsel,

INDEX

; Page

Opinions below... ........-.-.--- . 1

Jurisdiction... ----.-- sopeaainienanaaaisa Aas jos

SE IIB nant okanancicness.-c0.9-----.- ©

Es cccancekabiessecnncun oP [eee aaron e

PUMRIIRORE,. 25 c cccccccccnwocncgeeccccsecansss-------- 2

Reasons for granting the writ..........--..-.......__.: 5

ci bdcceheeretiadehagedednsdcass-.s---- “ 12

Appendix A... --- adessenat WEeNEAthgianenwnenees.. ‘“O

sta dmcinnndmnendbewwe — <<. CO

Appendix C-* --.,--------------------------- er een - 19

Appendix D_-----.-.-------------------------------+ >; 20

CITATIONS

Cases: ;

_ Cornell Steamboat Co. v. United States, 321 U.S. 634._ - 8,9

' Kansas City Southern Ry. v. United States, 231 U.S ;

he 5, 7,8

Norwegian Nitrogen Products Co. ¥. United ed States,

‘288 U_S.-294.....- 2. _ £9 ER, OR FR 11

" Scripps-Howard Radio v. Federal diaiesitinnant ;

Commission, 316 BS. 4. Bisaaisoas Mardis dinsealc cate ce

Statute:

Air Mail Act a ji e 12, 1934, as ame nded, 49 9 S18

618, section 10__.. —__- uae oir 9

- Civil Aeronautics “Act, as neuied “49 U. S.C. 401,

et seq.:

ae ae ey ae

Section 407... _....2.- NR Se ee aay ae 2

Section 407 (a). ........--.-- DN ASOT ee ie

Section 407 (b)- ee. 4 we Me, |

Section 407 (e)... --.----- 3 ow. ee

ENN TE WD Ne cnccccncicss & 4.7; 8, 9, 11, 21

Miscellaneous:

1955 Annual Report*of the Civil Aeronautics Board... ° . 6

Comptroller General's October 1955 Audit Report to

- «the Congress of the United States, Civil Aeronautics

es ke So es, ee

(1)

479432—58——_-1

a a aoe ‘ i , }

d x

Miscellaneous —Continued . on")

3F.R. 2474 00°. } POE PCE Pa WI

Pe tee skins ne ‘sanp skarnweee ouh el oka Os

20 F. R. 7111. 3 ee a Geace a 105

21 F. R. 4466..-: =-: Seaver i=

21 F. R. 4444444660 _. eee rer aay

H. Rep. 2635, 75th Cong., 3d Sess., p. 73.52. --

H. Rep: 2360, 85th Cong., 2d Sess., pp. 10-11_° Jn?

HH. Rep. 2556, 85th Cong., 2d Sess., p.. 90. —- '

Scharfman, The Interstate Commerce Commission,

Or ne ee

Sen. Rep. 1811, 85th Cong., 2d Sess., p. ee meee

Uniform System of Accounts prese ribed by the Post

Office Department for Domestic, Air Mail Citrriers,

effective July 1, 1937:

Section 38 (c)-(e), (h), and’ Be 29

Section 39. Ey Lebuserecacegeuete tunes 9

ral

a the Supreme Cour of the United ptates

- OCTOBE R T ERM, 1958 e

No, ——s_

Civin, AERONAUTICS BOARD, RETITIONER

x, : . Ue \

ALASKA AIRLINES, INc., AMERICAN AIRLINES, INc., ET AL. °

; “6 a \ ek y i ae

~~ PETITION FOR A WRIT OF CERTIORARI TO THE UNITED/STATES

COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

The Solicitor General, on behalf of: ‘tlie Civil ‘ieee:

seatle s Board, prays that a writ of certiorari issue to |

review the judgment entered by the United States °

Court of Appeals for the District of Columbia Circuit ©

~ on June 20, 1958, in this case. . mi .

OPINIONS BELOW

The opinion of the Court of Appeals (Appendix A, |

infra, pp. 13-16) and the opinion of the United States |

District Court for the District of Columbia (Ap-

pendix C, infra, p. 19) are not Fe re por ted. |

J URISDICTION f =

The judgment ‘of ‘the Ceurt of Appeals (higasenitias

+B, infra, pp. 17-18) was entered on June 20, 1958.

The jurisdiction of this Court is invoked under 28

U.S. C. 1254 (1).

| ae

)

QUESTION PRESENTED

Whether the Civil Agronauties Act of 1938 an.

thorizes the Civil Aeronautics Board to preseribe the

depreciation practices, and in particular the classes

of property which may be depreciated, of air carriers

subject to the Board’s jurisdiction.

STATUTE INVOLVED ©

The weitinant provisions of the Civil Aeronautics

Act of 1938 are set yale inl Appendix D, a

Pp. 20-21. .

STATEMENT

‘Section 407 (d) of the Civil Aeronautics Act (infra, -

p. 21) empowers the Civil Aeronautics Board to “pre-

scribe the forms of any and all peer records, and

> memoranda to ‘be kept by air carriers.” The -section |

further declares that it shall -be unlawful for air ear-

riers to keep ally. ‘accounts, records, or memoranda

‘other, than , thos’ prescribed or. approved by the

; , Board”, subject, to the. DTOV pe ta air carrier may

keep "additional secounts-*if they do not impair the

- integrity of the accounts” preseribed or approved by

the Board.’ Pi irsuant to. these provisions, the Board

*Section 407 was sesnaited ‘withost change in the recent

Federal. Aviation Act of 1958. The primary purpose of this

‘legislation was to achiéve greater safety in air. traffic. As‘s

matter of simplicity in draftsmanship, the Civil Aeronautics

Act was reenacted, rather than amended; obsolete provisions

and terminology, however, were eliminated. Congress did not

intend “to either adopt or reject administrative interpret: ations =

or practices, or judicial decisions under-the prese&t law.” and <

reenactment of existing provisions was to be considered “as an

absolute neutral factor in any question of interpretation ‘which

~ may.arise in the future.” H. Rep.\23860, 85th Cong., 2d Sess.

sthee passage of the Act in 1938 has. preseribed a Uni-

_ form System of Accounts for air earriers, and in the

varying. revisions has specified general categories, but

not precise subclassifications, of depreciable ind non-

depreciable property. j ;

The present case involves certain accounting re-

quirements which the Board adopted on April - 30,

196. Yo become effective January 1, 1957, following

a notice of. proposed rule-making to revise comprehen-

‘sively the Board’s existing accounting and reporting:

requirements (R. 34).* This notice Was published in

the Federal Register and circulated to the industry in.

July 1954, and in September 1955 a further notice of

. proposed rule-making containing modifications of the -

previously proposed regulations was published in, the:

Federal Register and circulated to the industry

(ibid.). ee

Although the revised accounting regulations pro-

vided that on a proper showing the Board might

waive any of its*provisions for any carrier or group

of carriers,’ a majority of, the certificated air carriers,

pp. 10-11" See, to the same effect, Sen. Rep. 1811, 85th Cong.,

wd Sess., p. 22: H. Rep. 25567 85th Cong. 2d Sess., p.-90. |

*We use the designation “R.” to refer to the joint ‘appendix

filed in the court below. a", ‘

_ ‘Section 241.122 of the Board's Economic Regulations pro-

Vides (21 F..R. 4444): .

~**A waiver from. any ‘provision of this system.of accounts

or reports may be made by the Civil Aeronautics-Board upon

its own initiative or upon the submission of written request

therefor from any air carrier, or group of air carriers, pro-

vided that. such a waiver is in the publie interest and each |

request for waiver expressly demonstrates that: existing pe-

enliarities or“mmusual cireumstances warrant a departure from

4 procedure or technique prescribed herein; a Specifieally de-.

. fa . .

‘“

4 me) : . : a

prior to the effective date .of the new regulations, |

challenged the validity of certain. requirement: |

through the medium of a declaratory judgment. pro-

ceeding against the Board and its members (R. 1-6).

The requirements thus challenged were that spar |

parts for aircraft be classified as‘either ‘Sexpendables’

(parts used only once) or “rotables’’ (parts repaired

and reused), with depreciation. permissible only or

the latter, and that a maintenance reserve, to bb

treated. as a. valuation reserve, be established for

major overhauls of airframes. The complaint averred

that the challenged regulations- prescribe the “classes

of property’? which may be depreciated, and ‘“‘pre-—

seribe and affect the rate at which”’ aircraft may be

depreciated, and that Congress has “deliberately with-

held’’ such authority from the Board, (R. 45).

The District Court granted summary judgment for

the Board.. As grounds for its decision, the District

Court held: (1) that the provisions of Section 407

(d) are “‘pr actically in pari materia’ with those of

the Interstate Commerce Aet which this, Cowrt, in|

fined alternative procedure « or elites will result in a sub-_

taintially equivalent or more accurate portrayal of operating

results or financial condition, consistent with the principle:

‘embodied .in the provisions of this system of accounts and

reports; and the application of ‘such alternative procedure

will maintain or improve uniformity in substaritive results as —

between air carriers.’ ' .

“Subsequently the Board sialic regulations preserib:

ing specitic rates of depreciation for certain t¥pes of aircraft.

The industry has challenged these regulations (American Aor.

lines v. CA. B.D. C.D. C., No. 3123-573 Trans W orld Aislin

C. A. B., Dz C. D.C, No. 3136-57), and ultimate disposition:

of these cases is likely to governed by the final action ir the prey

ent proceeding. ae

Kansas City Southern Ry. v. United States, 231 US.

423, had construed as‘ conferring power to prescribe

the substance as well as the form of accounts; and

(2) that the Board’s power to regulate depreciation

s is ‘inherent and implicit” both in the language of ‘the

pen and its i ‘all purposes (infra, p. 19)". The |

Court of Appeals reversed, primarily upon the

vround that, since ‘sCongress has er pressly authorize?

one. regulatory agency after another to control depre-

@ation practices,” the absence of a like express grant

in the Civil Aeronauties Act indicates Congress’ pur- :

pose to deny such authority to the Board, notwith-

standing the Kansas C ity Southern decision (infra,.

- pp. 141 5).

REASONS FOR GRANTING THE WRIT:

1. This case . presetits a quéstion of large importance

in the administration: of the Civil Aeronautics: Act.

Resolution of the question, by this.Court is in the in-

terest of both the Board and the industry affected.

In carrving out its regulatory duties,* the Board.

has found it necessary that air carriers keep their,

accounts under a. uniform system which will provide

>The District Caurt also denied American Airlines’ motion

fo amend and supplement the. complaint to allege arbitrary

action by the Board-as to’ American in relation ‘to the ‘chal-

lenged requirements (R. 29-33). Consequently, American took

A séparate appeal from the judgment of the Distriet Court,

but the Court of Appeals, in view -of ifs disposition: of the

-ease, did not reach the question of whether the District Court

had erred-in denying ‘American's moti

“These duties include fixing of carMer rates, determining

_ the subsidy -needs of: individual carriers, and p&sing pon ap-

plications for new route authority, remoy: al of diseriminations,

and proposed cousolid: ‘ut ions ‘ind mer gers. z

‘ ‘ a | | | .

Bb e Ph

readily available and relinble information respecting

the ineame and assets. of individual carriers and

evroups of ¢arriers, “The Board has emphasized that

the air carriers’ accounts, records, and statistical re-

ports “are among the principal sources of imfornma-—

tion avathaible for use in-the economie regulation of

‘the civikair transport industry.” 1955: Annual Re

‘port of the Civil Aeronautics Board, p- 9, The Comp:

troller Gener: il has likewise stressed. ‘the importance’

of control by the Board of ¢arrier depreciation prac-

aul tices, Comptroller General’s October 1955 Audit Re-

«> port to the Congress of the United States, Cieil

. Aeronautics ‘Board, pp. 78-80.’ As to effective. ads,

ministration of a somew hat similar regulatory statute,

it has been authoritatively stated: “Without complete

control of’ accounting practices * * *, the extensive

system of regulation which now prevails would be -

‘virtually - ‘mpossible.”, Scharfman, The Interstate

Commerce Commission, Vol. III-A; p. 69.

In the instant case, there is nothing in the opinion

of the court below to suggest that it interpreted the”

statute as withholding from the Civil Aeronauties

Board all power to prescribe substantive accountitz:

reqnirements—an interpretation which would invali-

date practically all of the Uniform System of Ac

counts prescribed by the Board (see 21 F. R. 4444-

*The report states (ébid.) that absence of such control re

sults in “variances in depreciation rates and residual values”

among carriers utilizing similar types. of aireraft, occasional

overpayment of subsidy by the United States, and publication

by the Board of overall air industry statisties which do not .

reflect adjustment in book figures on depreciation made by the

Board for tate- making pee. a, " ©

. |

. or

. P)

r . - a EN

ow 7 a

4466). But! the court did construe the authority con-

ferred by Section 407 (d) ‘as not including accounts

dealing with depreciation, notwithstanding the ex-_

: plicitness of the language defining the section’s cover-

age, namely “any and all accounts: to be kept by ear-. -

riers’ (emphasis, added). ~The. deci ‘igion, by reading

into the statute an implied exception as to deprecia-

gion, leaves individual air. carrie rs free to deter-

mine what property. they will depreci: ite and the rate

of depreciation. Such uncontrolled discretion renders

carrier accourits virtually meaningless from thé stahd-

‘point of disclosing true ‘net - ‘ating income AY

capital: assets. © ~.

The need for exercise of more extensiv e éontrol ver

~ deprediation has become more acute now that’ trunk=~

- line carriers’ have largely attained economic self-suffi-

_clency, Board no longer has the same checkrein

over depreciation practices that it had when most of

the,carriers were receiving. subsidy and. their depre-.

ation practices were under the soard’s constant '

-serutiny in subsidy rate proceedings. d°

2. Kansas City Southern Ry. ¥ a i wited States, 23]

GS. : 423, held that the. authority given the: Inter-

tate Commerce Commission by Section 20 of te

Interstate Commerce Act to “prescribe the forms of

_ accounts, revords, and memoranda to be kept by the

arriers”” empowered the Commission te regulate both

‘the substance and form of railroad accounts. The

Court said (p. 440):

We do not, however, think that any such. dis-

479432582

tinction between the form and the substance

“#- is admissible * * *, ‘The Very object of a sys Qe

tem of accounts is to display the pertinent

financial operations of the company, and throw

¥ light upon its present condition, If they are

ato truly do this, the form must correspond with

"9 the substance P

And the Court, in sustaining the validity of one of the

accounting requirements under attack, observed that

the railroad’s contention “in ‘effect ignores deprecia-

tion—an inevitable fet which no system of accents

ean properly ignore.” 231 U.S. at 448,

—. The Civil Aefonanuties Act, whieh in’ large mea-

sure was modeled on the Interstate Commerce Act.

similarly authorizes the -Board to “preseribe thir

forms of any and all accounts, records, and metue-

randa to begkept by air cArriers:* * *,°" This pro-

Vision in Section 407 (d), as the District Court neter

(infra, p. 19), is “pti actically mn pari materia” with

the Interstate Commerce Act provision invelved in

Kaysas City Southern, Thus, when © ongress enacted

the Civil Acronauties Act, it not Oly used language

Which is broad enough te inelude the authority te

regulate depreciation practices Mut it also used the

precise language ‘which this Court had) interpreted

as having that effect. In these eire tmistances, it must

+ presumed that the two statutes were to be eoti- .

tats alike, Corucll Stetmboat Co. v. 1d nited States,

B21 US. 634, 640-0412 ;

ania ety ;

*The court beloW referred to Senator Truman's objections to

yp. 9 Prov, ision of the Senate bill specifically dealing with regula

tion of depreciation and to the elimination of this provision bs

the gonferees, and said that legislative history. “tead~ te cot

firm: the court’. Interpretation of 407 cabb Chafee, }'}- ]-j

But the Senate prov isign thus eliminated © imposed upon the

® +.

Eee error. ¥

* Not only does Seétion 407 (d) contain the precise

language Which was construed by this Court to confer

authority te regulate depreciation accounting prae-

tiees of carriers, but the Board, moreover, has con-

‘ tinnously exercised such authority almost from the

date of enactment of the Civil Aeronauties Act inie

1938." The court below appears to have concluded

—_ - ws

Board the specifiy mandate to prescribe, “as soon as practi-

sable", classes of depreciable property and applicable deprecia-

tion rates, Neither Senator Traman’s objection toé this specific

mandate nor its elimination in conference 'shows any purpose to’

withhold from the Board regulatory authority as to deprécia-

tion accounting. See TL Rept. 2635, Toth Cong. 3d Sess.. p. 73.

The legislative history relied upon for a restrictive ‘reading of

#7 (d) parallels, but is even less persuasive than, the Jegis-

iative history which in Carn!) Steamboat was found ‘not. to ~

warrant a restrictive reading of Thiggietatute there jguvolved. See

J21 US. OM, fine S. at 641-642. dissenting opinion at 646.

*The Board's predecessor, the Civil Aeronautics’ Authorite:

promulgated on October 12,198. as one of its first official acts,

Regulation 407° D1. 3 FAR. 2474.) This regulation, issued un-

der Section’ 402 (dj of the Ag required every air-carrier en-

gaged in sogilltety -cheduled interstate transportatidn. to keep

its accounts In aecordance with the Uniform System of Xecounts ”

previeusly preseribed for air mail carriers by the’ Post, oe

Iepartment. The Uniform System of Accounts which afcet

riers were thus requirtal to ob-erve defined, the types of prop-

etty to be classified as Fsubject te depreciation” and the types to

te classified as “not subject to depreciation’ : specified the man-__

ner of determinéng the pPoperty base and rate ofgelepreciation

Jn cowputing the depreciation to bescredited to “accrued de-

preciation”™” accounts: specflied pagt charges for depreciation

“hall not exceed Ce diffegfoce MétGoen the ledger value of prop-

tty and its residual value: and provided that, with the ap-

proval of t Font Office Department: air carriers may create

reserves “to ide for majer overhauls of.aireraft.” Seetion

8 (c)-(e), (h¥R®i) and Section 39 of Uniforin System of Ac-

‘ounts prescribed by the Post” Offices gepartment for Domestic

Air Mail Carriers effective July 1.937 (isued under authority

of Section 10 of the Air Mail Act of June 12. 1934. as amended,

49 Stat. 618). 2 | ae

10 .

that this long-standing and consistent administrative

construction was to be disregarded because the Comp-

‘troller General, in. a letter submitted to a Senate

“Subcommittee in April 1955, stated that the Board

has not preseribed letailed regulations governing de-

preciation “beeause it is of the view that ‘authority

to do so is not specifically contained in the Civil Aero-

nauties Act” (infra, p. 16).° But only the Board

or a duly delegated spokesman can authoritatively.

declare its interpretation of the statute. Moreover,

both hefore.and shortly after the. Comptroller Gen-

eral’s statement, ‘the Board had officially «asserted |

pee of statutory authority to eontrol air care

riers’ depreciation practices.”

As previously stated (supra, p. 5), the provisions

incorpor ated im certain other federal regulatory stat:

utes which expressly authorize control of depree iation

accounting were viewed by ‘the. court below as imdica-

- 4° While the Comptroller Geneva recomended amending the

act. to grant, the Board “specific statutory authority” to control

depreciation accounting, his consistent view, as expressed ear-

lier to Congress,. was that the statute already conferred ‘on the

Boartl authority ‘to exercise’ such control, but that grant ef |

specific authority was desirable to “clarify the: situation’,

Comptroller General's: October 1956 Audit Report to the Con-

gress of the United States, Civil Aeronautics Board, p. 80.

"In July 1954 the Board issued a notice of proposed rule:

niaking whieh embraced additional requirements as to deprecia

tion (19 F. R.%4200), and in September 1955 it issued 4 further

‘notice of proposed rule-maling ‘involving prescription of pre

‘cisely the depreciation accounting requirements which are here

in issue (20 F. R.. 7111). See also R. 34, 39-50. ;

‘

oe 1]

tive of Congressional istent to withhold grant of such

authority to the Civil Avronauties Board. This Court,

‘however, has been hesitant to attach ASighificance to

the omission from a_ statutory provision’ of explicit

language. incorporated in another section of the stat-

uteror in a related. statute. @f: Seripps-Howard

Radio v. Federal Comm unications Com mission, 316

U.S. 4,11. In the statutes in which regulation of

depreciation accounting was expressly authorized, the

purpose appears. tochave. been cither te eliminate all

ambiguity respecting power to exercise this control or

to impose on the regulatory ageney-a mandate to ex-

ercise such coytrol forthwith.

| There. is no pattern of legislation sufficiently clear,

We believe, to overcome the presumption that Con-

eress, When it wrote into Section 407 (d) the very

language which this Court in Aansas City Southern

had construed as conferring withority to impose. sub-

stantive accounting requirements (including ‘account-

ing for depreciation), intended. the section to have

the same scope and meaning. And any doubt con-

verning this would seem to be removed by the regula-

ory ageney’s long-standing” and consistent construe-

tion of the statute, whieh is not to be overturned

“except for very cogent reasons.” Vorwegian Nitro-

wn Products Co. v. United States, 288 ULS, 294, 315,

12 .

CONCLUSION

For the foregoing reasons, it is respectfully a.

mitted that this petition fer a writ of certionin

should be ¢ ranted,

. J. Lee RANKIN,

Solicitor General.

Victor, R. Hasse,

Assistant Atforne 7] (reneral.

: , | : Charnes HH. Westes,

Aflorne 9.

Prax knin, MONTONE, : 3

(re ie ral Conusel,

1), O“Men’,

Assistaul Cheusral Counsel,

* Civil Aevonautios Boards .- ;

SuPTEM BER 1958,

APPENDIX A: * \

. Umted States Court of Appeats for the Bisttict of

_ Columbia Cireuit

7 A412

ALASKAS AIRLINES, ENG ET OAV APPEEANTS

. Xe, ‘ % 5

CIVIL ABRONAE THOS Boake nr an. Trennirns

Noo L938

~ Se AMERICAN: Aintiwes, Eve Appin at

+i = a 7

Civin, AERONAUTICS Bowne pp yy » APPELEAGS

APPEALS FROM THE UNITED STATES Gistiier CotEr. i

FOR THE DISTR TP of Cont MUTA

‘Pteided June 20, 1s ° sa

Before Enarniox, Chi: ( Sadge. and Bazeiosx and

; -Paany Cine wel Aachen x

Eat eton, Chie Audge: The Civik Neconautien

beard 's revised] “oU nrifecnnn Ms \ ste lit «et Nee Ihids ging

Reports for Air Carriers’

sleVerniny ; this “Witte

yipmient for whielr deprecdatierns Hie be tater. re-

(Ures “reserves Foor” pence jeor overdantis eg git rans ‘,

inl Petites. eaost ooh ove tbeatin tes de

factiuled ft: Vie

ae of adreraft. 2) Fed. Rew.

PES, Nate stant ak ,

atriers filed in the District Court a eomincnt chal.

neti these pewnlations one the orecund that. th

en | lias bee” otitheorits Yeo Perggiilietar” af pe chien

hates, except by sel jn-tine oe ie Mowine th Ineoar

“ate-toakine, ; : . | ha: .

i e :

5, °

' :

ae, a ee ae

Section 407 Cd) of, the ‘Civil Aeronautics «Act, 52

ies 1000, 49 UL S.C. 8 487 Cd), requires the Board

ye preseribe the forms of any: and all accounts, ree-

pee and Inemoranda to he ke pt by" air carriers, in-

chiding the accounts, records, and memoranda oP the

movement of traffic, as well as the receipts and ex:

penditures oT money, and the length of time such ae- .

ae records, anil memoranda shall be preserved:

and it shall-be unlawful for air carriers to keep any

accounts, records, or memoranda other than thos:

preseribed or approved’ by the Board.

The District. Court) rendered SuMnaAry judement

for the Board. The court sie Katsas C ity So, Ry.

United States, PB U.S. 423 (1913), which held

that simikar statutory ae over the form of ac

counts and te carried with it some: control over

their substange. We think it does not follow: fron’,

‘that deeision, a ‘red over 44 vears ago, that the

Civil Aeronautics Board? now has the authority it

claims. The question is what intention should now be’

attributed to Congress. Congress has erpress/y ai

thorized one regulatory ageney after-another to con

trol depreeration — It has done so in th

Federal Power Aet. the Natural ey Act? and the

Interstate Commerce re Part » dei wing with

motor carriers, The —— ane af be of the Motor

Carrier Net) provides: °° The Commission may pre-

seribe for motor carriers the classes of property ter

Whirh deprecation charges may properly be included

under operating expenses, and the rate or rates of de-

pregiation which shall be charged with, respect to each

‘of Such Classes of property’ * * * Tn the Inter:

—_— se * ry , ‘

40 States 16 Us. CLs sha Gad.

S48

*oeStat. Sve 1S US. CL 71th ca).

D4 Stat. #7. do TLS. Cl gs 320 ce), The original Tesh Net

covering, dnoter cenimiers, 99 Stat. S63. contamed. a venera:

books and-records chiuse but no specific depreciation aut herit)

‘ e

state Commerce Act,-.Parts T and II], dealing. with

railroads and water earricrs,' and. the Federal’ Com- -

mypications, Act,’ Congress expressly required the

ageney to preseribe depreciation practices, We con-

dude: that when Congress wishes to confer such au-

thority, it says so. |’, ee 7 |

The legislative history .of the Civil Aerouatties Act

tends-to confirm the view that Congress has not eon-

lerred. this ‘authority on the Buard. When the Senate.

was considering Senate Bill Ne. 3845 and alse a subs

stitute offered by Senator Truman, he said... “Phe

hill [S. R. 3845]-contains a section (sec. 408 .(b). p.

W, line 6) whieh expressly empowers the authority

to prescribe rates of depreciation for the property of |

; y carriers, The substitute contains no express pro-

sion on this subject, but the authority in fixing the

rates for a particular air carrier could’ inquire into

the rates of depreciation charged off by the carrier,

and if it found them too high, could disallow the « x- 7

pense, The substitute certainly is preferable in this

cise because the imposition of this requirement upon

the authority will only inerease the administrative

burden of the authority and will not inerease the ef-

lectiveness ofits regulation. While it is possible to

forecast the rate at which a railroad car will depreci-

ate, It is utterly impossible to do so in the case of air-

cralt, for aireraft are developing. so rapidly that they

are obsolete and cannot be used in competition long

‘ before they are worn out.’ 83 Cong. Ree. 6727-28.

The bill as it passed the Senate contained express

‘41 Stat. 493, 49 UL S.C. $20.(4): 54 Stat. 945, 49 TLS

S15 (d). ;

“The Commission shall, as soon as practicable, prescribe for

“ich carriers the classes of property for which depreciation

liarges maybe properly included under operating expenses

"8 4S Stat. 1078, 47 US. C. $220 (b).

authorify over rates of depreciation, but the House

bill (H. R. 9738) and the law as finally enacted did

snot mention depreciation. Moreover, only two days

before it passed the Civil Aeronauties Act, Congres

included in the Natural Gas Act not only a section

‘dealing with accowits but also, a seetion. authorizing

the “Power Commission to. regulate depree lation

charges..

The Board camtends it has long exercised contro!

over depreciation practices. It cites a regulation .

adopted in 1938, 3. Fed. Reg. 2474, requiring air

carriers to keep their accounts in accordance with

systems prescribed by the Post -Office Departiient

which the Board says require these ¢arriers to ¢las-

sify property as “subject to depreciation’ or “not

subject to: depreciation’’.” But. in recommending te

Congress, in 1955, that the Civil Aeronautics Act be

amended to give the Board control over depreeiation.

the Comptroller Gener al said:: “** * * the Board has

not preseribed- any overall depreciation policies, rates

of depreciation or residual values for. air carriers

flight equipment or other property primarily Hecatise

it is of the Wew that authority to do so js not apee iti

cally contained in the Civil Aeronauties Act.’

Whether the Board should have the contro! over

deprec lation ‘that Congress:has given to other agen-

cies is a problem for Congress, not the courts. Ser

Border Pipeline ‘Co. X. Federal Power Conemission,

84 U.S. App. D. C. 142, 171 F. 2d. 149, .

. zi Reversed.

“ferstate and Foreign Commerce on Amendments to the Civil

Aeronautics Act, S4th Cong... Ist. Sess.; pp. 179-PS0 (1955).

APPENDIX B

United States Court of Appeals for the Distriet « of

Columbia Cireuit

April Term, joss

Cy A, 363856

No. 14192

. ALASKA Amuines, I NC., ET Al., ‘APPELLANTS

‘ U. .

CiviIL AERONAUTICS Boarp, Er AL., APPELLEES

April Term, 1958

C. A. 3638-566

-. oS te!” Nos 2gnes - ae i

AMERICAN AIRLINES, INC., APPELLANT .

CIvIL AERONAUTICS Boarb, ET AL., APPELLEES

APPEALS FROM THE UNITED STATES DISTRICT COU RT FOR

THE DISTRICT sah COLU MBIA

Betore Epérrto, Chief Judi ye, and BazrLon and

Fany, Circuit Judges

J udgme nt «4

United States Court of Appeals for the District of

Columbia Cirenit. - Filed June 20, 1958. Joseph, W.

Stewart, Clerk.

These cases came on to be heard on the record from

the United States District Court. for the District of

Columbia, and were argued by counsel,

(17)

18.

On consideration whereof, it: is ordered and ad-

judged by this Court that tie judgment of the said

District Court appealed from jn these cases. be, and ~

it is hereby, reversed, and that these cases be, and

they are hereby, remanded t6 thé District. Court for>

_ further proceedings not ineonsistert with the opinion —

of this Court...

Dated: ome 20, 1958.

Per Chief Judge Evcertoy.

| -APPENIAX © ie

United States: District Court’ for the District. of

ee ne pe

Civil’No. 3638-56

‘ALASKA AIRLINES, INC., ET AL., PLAINTIFFS

. 3g 4 -

Vv.

_ CIVIL ‘hieeuar TICS Boakb, ET AL, , DEFENDANTS .

-Me ida um -

'» Filed June 25, 1957. Harry M. Hull, Clerk, |

‘The defendants’. motion’ for summary judgment is

Ss See Kansas City So. Ry. v. United States,

- 31 U. S. 423 (1913). In that. case-the Court was’

rae with the-interpretation of the I. C. C. Act

.of June 29, 1906, 34 Stat. 584, known as the Hepburn

' Act. This Act, as. far as substance is concerned, is

practically in pari materia with that with which we

are concerned. True, the Act as finally. passed con-

tained no provision dealing with the problem of de- |

_ preciation; nonetheless it can not be concluded in the

} circumstances that by virtue of that fact the power

is not inherent and implicit in‘ the very language. of

|. the Act itself and the over-all purposes for which it -

was designed.. The Court concludes that it is.

The motion of American Airlines to amend and sup-

plement the’ complaint is denied for two reasons.

-First of all, the complaint is a corisolidated one to

which American Airlines seeks to add by virtue of

its alleged subsequent relation with the’ ‘Board -_

two, it is premature. -

Order ac cordingly.

“(sy -Matthew F. McGuir.,

Bee MATTHEW F. McGe IRE,

United States District Judge.

Jeng 25, 1957. ! 2

* 13

in,

-* APPENDIX D

- 'The rélevant: provisions of the Civil Aeronautics Act

of 1938, 52 Stat. 973, as amended, 49 U.S.C, 401,

fet seq., are: a aan,

Sec. 205.-(a) The. Authority [Board] is, n-

- powered to perform, such acts, to conduct such iftves-

) air

tigations, to ‘issue and- ‘amend such orders; and “to

make and amend such general or. special rules, regu:

lations,. and procedure, pursuant to and consistent

with the provisions of the Act. [chapter], as it shall

deem necessary to carry out such provisions and to

exercise and perfotm its powers and duties under this

Act [chapter]. [49 U.S. &: 425 (a)] :

i ;

* *

Sec. 407. (a) The. cies [ Board] is empowered —

to require amfual, monthly, periodical, and special re-

ports-from: any air carrier; to prescribe the malities

and form in which such reports shall be made} and to

require. from. any air, carrier specific answers to dll

questions upon which the Authority [Board] may

deem information to be necessary... Such reports shall

under oath whenever the Authority [Board] So Te-

TT e® THe Authority [Beard] may also require any

¢tarrier to file with it’a true copy of each or any

contract, agree ment, undeystanding, or arrangement,

between, such-air carrier and any other carrier or per

son, in relation to any traffic affected by the provisions

of this Act [chapter]. [49 U.S. C. 487,(a) ]

(b) ach air.carrier shall submit annually, and at

such other times as the Authority [Board] shall r-

“quire, a Kst showing the nanies of each: of <its_stock-

holders or members holding more thar 5 per centum

(20) °

of sthe entire capital stock or ‘apitalaas the case may

be, of such air carrier, together withthe name of any

_ person for whose aceount, if otlier than the holder,

such stock is eld; and @-report setting forth ‘a de-

scription of the shares of stock, or other interests,

held by such air carrier,-or for its accounh in persons

other fim itself. [49 U.S. C487 (b)]

(«) Each offieer and @rector of an ay carrier shall

annually and at such other ‘times as the Authority

[Board] shall require “transmit to the Authority

[Board] a report describing the shares of stock or

other interests held by him in any ai carrier, any

person engaged in any phase of aeronautics, or any .

common carrier, and in any person whose principal

business, in purpose or in fact, is the holding of stock _

In, or control of, air carriers, other persons engaged

ui any phase of aeronauties, or common ‘arriers. [49

U.S. C.487 (¢)] a

(d) The Authority [Board] shall’ prescribe the

forms of any and all accounts, records, atid memo-. -

randa to be kept by air arriers, including ‘the ac-

‘counts, records, and afemoranda of the movement of

traffie, as well as of the receipts and expenditures of

oney, and the length of time. such accounts, records,

and memoranda shall be preserved; and it shall be

lawful for air carriers to keep any accounts, ree-

ords, or memoranda other than those prescribed or

approved by the Authority « Board]: Provided, That.

any air carrier may keep additional accounts, revords,

‘tmemoranda if they do not impair the integrity of

the accounts, reeords, or memoranda prescribed. or

‘pproved bythe Authority [Board] and do not con-

stitute an windue financial burden on such air carrier,

(9 U.S. C. 487 (d)]

‘

U. 8. GOVERNMENT Printing OFFice toue

“s

ary “i

| 5 SR

Supreme Court vf the United States

2 Che peo: a lee he an ]{o.0s .

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’ i ' Vetere (ss Jie \ /

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\} \ \ is, | \ x } |

BRIEF IN OPPOSITION .

a is

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INDEX

: Page

Opinions Below ...... Dt een sone ases ee ee 1

Jurisdiction ith cae eaecnaac i p08 8S e000 6 2

Question Presented ........ a Gis x 9.0 0.> « Be Sad i 2

Seca a decccccccaccces ¢ Mat sa kas 4 a0 . 2

Reasons for Denying the Writ ...............-..5---2 2, 4

TUE Cad edaacasccscaccss.ssssccssees ieee 13

CITATIONS

Cases: ,

County of Marin v. United States, |g Ea err 11

Kansas City Sduthern Radway ¥ Tone ied States, 2: 1 U.S.

DCT cede ame banecece Pees ogc os 3.6.9

United States Vv. Missouri Pacific K rr ov. 278 US. 269 200...2 Ue

Ssatutes:

Civil Aeronautics Act, as amended, 49 U.S.C. 401, et seq. :

Nee ee nn case ct ee ese tees eee a Pe

Section #W7(d) 2... 600.6666 -- ay 12.282, 4,6, 7,3, 2,33

Federal Communivations Act?

48 Stat. 1078, 47 1.8.C. §220(r) .........--. errr x, 10

Feleral Power Act: -

$9 Stat. 855, 16 U.S.C. § S25ala) .. ee ee 7,10

luterstate Commerce Act: /

41 Stat. 493, 49 USC) € 2004). 54 Stat. 945, 49 EOS

S91 Cd) A re MS tk as ad wes 8

Motor Carrier Act : "

4 Stat 927, 49 USC. § Be) hase os x are:

Natural Gias Act: / :

B2 Stat. 826-15 USC. §T1Thia) ............. Latase es by 8, 10

Water Carrier Act : : .

ween oem een wee 8 MEB(a) ...............:.- r.e-e JO

Miscellaneous: | °

re ize. i, ae ?

Comptroller Generab’s Audit Report to the Congress of the

United? State s, Cied Aeronautics Board, October 1955, }). x) 12

“3 Cong. Ree, 6727-8 (Tiber... .. ee ee -..4,10

Hearings of Subcommittee of the Senate Committee on [nter-

ate and Foreign Commerce on Amendment to the Civil

Avronauties Act. s4th Cong. Ist Sess pp) 179-1800 (1955) 12

ve inal

IN THE

Supreme Court of the ited Sites

OcToBER TERM, 1958.

No. 375

Civi, Agronavtics Boarp, Petitioner

Vv.

- ALASKA AIRLINES, INC., AMERICAN AIRLINES, INC., et al.

ON PETITION FOR. A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR.THE DISTRICT OF

COLUMBIA CIRCUIT

BRIEF IN OPPOSITION

OPINIONS BELOW

| - The opinion of the Court of Appeals (Appendix A,

pp. 13-16)" is reported at 257 F.2d 229.) The opiniorr

of the United States District Court. for the District of

Columbia (Appendix (, p. 19) is not reported.

7_—_ooO

‘Appendix and page references are to the Petition. .

— Civil Aeronautics Board ‘prescribe the forms off any

JURISDICTION

The ila nt of the Court. of Appeals (Appendix.

B, pp. 17-18) was entered on June 20, 1958.) The

jurixdiction of this Court is invoked under 28 US.

1254(1). ;

QUESTION PRESENTED

Whether Section 407(d) of the Civil Aeronautics

Act of 1958 authorizes the Civil Aeronautics Board

to prescribe the depreciation practices toche followed

by air carriers in keeping their accounts and in mak:

- ing reports. ie

STATEMENT —

— Pursuant te the’ requirement contained in. Section

wT of the Civil Aeronauties Act of 1938 that the

and “all ateounts, records, and, memoranda to be kept

by air carriers,’ the Board has for many years pre-

seribed’a Uniform System of Accounts and > Report:

for Air Carriers. On April 30.) 1956. the Board

adapted Regulation No. ER-210 which revised the Uni-

‘form System of Accounts effective: January 1, 1957.

(I4-C.F, Ro241) > Asa part of that revision, the Board

for the first time asserted it had power\under Section

107 (ad) of the Act to determine the depreciation prac-

tices to he. folfowed by air carriers and adopite “dl regula-

tions’ prescribing such “practices. These. regulations *

, provide (1) that only those aircraft. parts and sas-em-

hlies may be depreciated which are capatile of ‘being

repaired and reused; (2) that the cost of. major over-

hauls,of airframes be depreciated through a charge te

iv maintenance reserve and not be taken as a current \

éxpense; and (3) that both the residual value of air °

frames and cost of an overhaul be eliminated in deter-

mining the remaining values subjeet to depreciation.

Respondents challenged these regulations. in the

United States District Court for the District of Colum-

hia on the ground that Scetion 407(d)* of. the Civil’:

Aeronauties Act did net empower the Board to pre-

wribe depreciation practices. It was and is respond-

ents’ position that the ‘authority of.the Board over

depreciation practices was deliberately limited bv Con-

gress to the -ddjustment or disallowance of an air.

carrier's. depreciation charges in ratemaking or other

appropriate proceedings under the Civil Acronauties

Act. The District Court granted summary judgment

for the Board onthe authority of Aausas City South-.

cen Railway Vv. United States, 231 US. 423. which

invelved the authority of the Lnterstate Commerce

Commission under the Hepburn Act of 1906,

On appeal, the Court of Appeals for the District of

Columbia Girenit reversed in a unanimous decision,

Chief Judge Edgerton speaking for himself and_

Judges Bazelon and Fahy. The Court of Appeals

found the reliance placed by the Distriet Court on the

Kouses City Southern case to be unwarranted because

the gloss which that decision placed upon a section of

the Hepburn Act was of ne help in determining the

intention to be attributed te Coneress invenacting the

Vivil Aetonauties Act of 1938. The court noted that in

all other regulatory statutes in which Congress had au

thorized an administrative ageney to prescribe depre-

elation practices it had done so with express and ‘spe-

rifle language. Moreover, in all other statutes specific

withority. with respect to depreciation practices had

heen considered necessary notwithstanding the same

chant of authority to prescribe accounts and records:

wt Which the Board relies. for its asserted power over,

lepreciation. practices, In addition, the eourt found

‘at while the bill which became the Civil Aeronautics

Act was: under consideration, a spec ifie provision ‘ie.

_ powering the Board to regulate depreciation practices

had beer deleted before the statute was-enacted. The

‘Court of Appeals accordingly held that the authority

of the Board to prescribe “accounts, records, and

memoranda”? under Section 407(d) doés not include

the power to determine and: prescribe deprec lation

practices of air carriers and that the Congress has wit)-

held such authority from the Board.

REASONS FOR DENYING THE WRIT

1, The question presented. ix of limited Importance

in the adniinistration of the Civil Aeronautics Act and

of no importance in the administration of any other

act.

Petitioner has undertaken tay implication and over-

statement to broaden the narrow issue involved. First

and foremost, the decision below does not in any way

affect the authority of the Board, exercised in, com-

mercial rate-making and subsidy determination pre-

ceedings under the Civil Aeronauties Act, to adjust

or disallow depreciation charges found to be un.

reasonable. The Board’s power in these significant

respects is not Questioned. For these — purposes.

therefore, the decision below: does not leave “‘in-

dividual air carriers free to determine what property

they will depreciate and the rate of depreciation”

(p. 7). It leaves the Board in complete possession

of the-same ‘checkrein over depreciation poate

it-has exercised in-the past (p. 7). As the Court e-

Appeals below explic itly recognized (App., p. 13), and

as the parties have until now agreed, the question here -

involved is much narrower.

It concerns only .the power asserted by the. Board te

prescribe the depreciation practices to be used; by ait

carriers for official record-keeping purposes. ~The

questioned regulations are naturally of concern to the

responcents; they would impose depreciation practices

which the carriers and their independent publie ac-

countants regard as unsound, and they would require

that financial data be reported to shareholders and lend-

ing institutions in accordance with such practices.

However, the disputed authority is by no means

essential to the Board’s undisputed power to modify

or disallow depreciation charges in the exercise of any

of its important statutory duties described in the peti-

tion (p. 5, n. 6). “Convincing proof of the Board’s |

complete ability to perform its statutory duties with-

out this asserted power is seen in the fact that it has

carried on for almost twenty years without it.

Nor does the decision below question the Board's

clear authority to require from the air carriers regu-

lar, complete, and detailed information as to their

depreciation .practices. It does: not authorize with-

holding from the Board an iota of information bearing

ona carrier's ‘depreciation practices; it does not deny

the Board the right to demand: all manner of: depre-

cation data by way, of regular or special reporting re-

quirements. Thus.\the decision does not render var-

rier aceounts “virtually meaningless”? or deprive the

Board of any information necessary to a determina-

tion of ‘true net operating income and capital assets”’

‘}. 7). The assertions in the petition to the con-

trary are simply inaceurate. .

The single and narrow issue presented is whether

Congress has given the Board the authority to pre-

ibe in advance ‘which assets may be pga ee

ind. which factors, such as maintenance and overhaul

reserves, must enter into. depreciation charges. The

¥ . ‘

court below held only that this specific authority was

withheld from the Board by Congress. The studied

attempts in the petition to broaden the scope of the

controversy are thus highly misleading.

2: Not only.is the question presented of limited im-

portance. to the effective execution of the Board's

statutory duties, but’ the decision of the Court of

Appeals is clearly correct. If the Board believes it.

* needs the authority it has asserted, its recourse is-to

the Congress, which denied it that authority. .

The decision below rests on a careful examination

of the legislative history of the Civil Aeronautics Act

itself and the language Tised by Congress in establish-,

ing the other federal regulatory agencies. — Rather

- than face this examination, petitioner continues to con-

struct ‘its argument on the decision of this Court in .

the Kansas City Southe ri ease. By reading this der-

sion to mean that language used by Congress in 1906

authorized the Interstate Commerce Commission to

regulate railroad depreciation practices, petitioner

argues that Congress in 1938 had its 1906 language and

this Court’s 1913 decision in mind, and must have in-

tended to grant authority’ over depreciation practices

when it enaeted Section 407(d) of the Civil Aero

nauties Act in similar language. But this argiment

,proves too much: if the events ‘of 1906 and 1913 wer

remembered by Congress when it enacted the Civil

~ Aerohauties Act, why were they forgotten on so many”

other occasions when Congress used explic it language

to grant other federal regulatory agencies authority.

prescribe depreciation practices? 7

The C ourt of Appeals placed the — City South-

ern case in its proper context by examinmg the many

ee — a

Bing. ; 7

q. .

regulatory statutes that have been enacted by Con-

gress since that decisign, declaring pointedly (App.,

p. 14): |

““We think it does not.follow from that decision,

rendered over 44 years ago, that the Civil Aero-

nautics Board now has the authority it claims.

* The question is what intention should now be at-

tributed to Congress.”’ | Q"

The court went on to set forth the reasoning which

compels the holding that the. “accounts, records, and

“memoranda’’ language of ‘Section 407(d) does not

grant the Board power over, depreciation practices:

(App., p. 14-15):

“Congress has expressly authorized one regula-

tory agency after another to control depreciation

practices. It has done so in the Federal Power

Act’ the Natural Gas Act,* and the Interstate

Commerce Act, Part ‘II, dealing with motor car-

riers. The 1940 amendment of the Motor Carrier

for motor carriers the classes of property: for

Which depreciation charges may properly. be *in-

cluded under operating expenses, and the rate or

rates, Of depreciation which shall be charged with

respect to each of such classes of property ....”

the Interstate Commerce Att, Parts I-and TIT,

dealing with railroads and water carricrs,® and the

*49 Stat. 855, 16 U.S.C. § 825a(a).

"52 Stat..826, 15 U.S.C. § 717h (a) ..

*d4 Stat. 927, 49 U.S.C. § 320(¢). The original 1935 ‘Act cover-

ing motor carriers, 49 Stat. 563, contained a general. books-and-

records clause but no specific depreciation authority.

as :

AL Sit. 493, 49 ULS2C. § 20(4) ; 54 Stat. 945, 49 U.S.C. § 913.(d),

Federal Communications Act,* Congress expressly

required the agency to prescribe depreciation

practices, We conclude that when Congress wishes

to confer such authority, it says so.’ [ Footnotes

and emphasis are those of the court. | ;

The fact is, therefore, that year after: year, andsn

statute after statute, when Congress has wished to

» empower an administrative agency ‘to regulate depre-

ciation, it has said so in explicit fashion. In each in-

stance, moreover, Congress has expressly dealt with

authority over depreciation practices even though each

~—*statute also granted authority to prescribe “account:

and records’. Thus, as the court .below noted, only

two days before the.approval of the Civil Aeronautics

Act, the Natfiral Gas Act was approved in which Con-

gress had included not, only a provision granting the

Power Commission authority to preseribe accounts

and records but alsu a section specifically empowering

the Commission to regulate depreciation charges.’ It

must be concluded, therefore, that Congress itself does

not view the language relied upon by the Board as

granting any authority over depreciation” practices.,

Otherwise, it wowd have been useless for it to. have

granted specifically the express authority, to regulate

depreciation practices in other statutes. .

Petitioner's only answer to this revealing course of .

congressional enactments is to urge that the **legisla-

tive pattern” is not “‘sufficiently clear’? to ‘overcome

the presumption’’ that Congress in 1938 intended the

***The Commission shall, as soon as practicable, preseribe fit

such carriers the classes of property for which depreciation charg

may be properly included under operating expenses ...°" 45 Stat

1078, 47 U.S.C. § 220(b).

* Natural Gas Act, 52 Stat. 826,15 U.S.C. §717h (a).

language of Section 407(d) to mean what this Court

in 1948 had said similar language meant in the Kansas

City Southern ease. A rational basis for such a pre-

sumption is nowhere advanced. Nor is it made clear

why the inteation of Congress in 1938-should be de-

“rived from what this Court said in 1913, rather than

from what Congress itself said in later years.

Morvover, the “presumption’’ which petitioner has:

created runs afoul of the legislative history of the

Civil Acronanties Aet itself. Many of the -bills

concerning the regulation of air carriers introduced

in beth houses contained a. provision similar to that

eustomarily used hy Congress to give an agency power

to regulate depreciation practices. H.R: 9738, which .

was finally passed by the House, did not contain such

a provision, while the final Senate bill, S. 3845, did.

In conference this provision of the Senate bill was

deleted. In the Senate, then Senator Truman who

had opposed ineluding the questioned provision in the

first place, explained the provision and his objections

to its inelusion. The deleted provision according: to

Senator Truman ; s

“expressly empowered the authority ‘to prescribe

rates of depreciation for the property of air ear-

riers. “The substitute contains no express provi-

sions on this subject, but the authority in fixing

the rates for a particular air carrier could

inquire into the rates of depreciation charged off

by the carrier, and if it found them too high, eould

disallow the expense. The sibstitute eertainly is:

preferable in this case because the imposition of

this requirement upon the authority. will only

increase the. administrative burden of the author-

ity and will not inerease the effectiveness of its

regulation. While it is possible to foreeast. the

rate at which a railroad car will depreciate, it is

™ 3

eo °F aa 8

‘ 10

utterly impossible. js a so in the case of aireraft, ¢

for aireraft are developing sO ‘apidly. that they.

are obsolete and cannot be used in ccnmetiiing

long before they are worn out.”’? (83 Cong. Ree,

6727-8 ( 1938)). ) A

Petitioner atteniinte to avoid the thrust of Senator

Truman’s explanation on the ground that the rejected

provision Was a ‘specific mandate: to prese ribo de.

preciation’ prac tices (p. 8, n. 8). Petitioner's argu-

ment apparently is: that no conclusion can be drawn as

to the attitude of € ongress with respect toa Provision

that. would merely have’ authorized, rather than r-

quired, regulation of depreciation practices: _ Con-

gress, however, was thoroughly familiar with the tech

nique of: granting an agency discretion to prescribe

depreciation practices rather than requiring such pre-

scription.” It is significant, therefore, that, in re-

sponse to Senator Truman's cogent arguments wg

depreciation determination by administrative: fiat, i

Was not even suggested that there be enacted a-grant of

discretionary authority. Nor does it aid the Board's

argument in the least to assume that Congres: -

intended merely to withheld from it ai “specific

mandate to preseribe’? depreciation practices’ sine

Ser tion 407(d) upon which the Board relies for

‘its power is just such a specifie mandate—it pre-

vides that the Board. ‘‘shall-preseribe”’ and leaves ne

~The various statutes which authorize regulation of deprecia-

.tion practices by different agencies use such phrases as ‘* may pre

scribe’? (Motor Carrier Act, 54 Stat. 927, 49 U.S.C. §820f6)

_ shall, as’ seon as practicable, preseribe”’ henahpml Commerc?

Act (1920 Amendment), 41 Stat. 493, 49 U.S.C, § 20 (4); Water

Carrier Act, 54 Stat. 945, 49 U.S.C. §913(d); F een Commun:

cations Act, 48 Stat. 1078, 47 U.S.C. § 2200b)3, and ‘tmay, after

hearing, require * (Fede ral Power Act, 49 Stat. 855, 16 ToS

"S$ 825a(a) ; Natural Gas Act, 52 Stat: 826, 15 U.S.C. § T1thia

room for discretion. ‘Accordingly, the Board would

have this Court) hold that Congress inadvertently

granted the same “specific mandate to prescribe’? de-

preciation practices which the legislative history of tlie

" Act, by the Board's own admission, shows that Congress

desired to withhold from the Board.

Finally, petitioner invokes, the principle that an

agency's “long-standing and consistent” adminis-

trative construction is not to. be overturned except

for cogent reasons.” (p. 11). To the extent. this’

principle has-application here, it requires the eonclu-

sion that the Board lacks the power it is now asserting

for the first time in twenty yaars. The Comptroller

(iencral, after a ‘‘comprehensive audit of the Civil

Aeronauties Board”? reported to Congress in 1956 that

the Board’had not: preseribed any overall depreciation

policies, rates of depreciation or residual value on air

carriers’ flight equipment. On the contrary, the Ré-

pert concluded that the determination “has been left

to the discretion of the individual carrier manage.

ment." This Report, in which the Board concurred, °

persuaded the Court below that the Board had never

exercised authority to prescribe depreciation prac-

tives, (App. p. 16)

Indeed, any suggestion that there has been a ‘‘long-

standing and consistent’? exercise of the power the

Board here asserts is negatived by the fact? that Con-

gress has, only recently been- requested to grant the.

*The intérpretation given a statute by those charged: with its

administration naturally gives rise to litigation, but it hardly is con-

clusive as to the.meaning of the statute. County of Marin vy. United

_ Mates, 356 U8, 412, 420; United States ¥. Missouri Pacific R. Co.,

278 FS. 269, 280,

"Comptroller General’s Audit Report to the, Congress of the:

. United States, Civil Acronautics Board, October 1955, pp. 79, &

submitted April 9, 1956 ) ‘s

2° n

Board wale to exercise that very power. The

Comptroller General on two different occasions has

recommended to Congress that the Act be amended «

as to permit the Board to prescribe depreciation prac-

tices. On April 28, 1955, the Comptroller General

recommended that the Civil Aeronauties Act be

amended so as to give the Board the specific authority

to regulate depreciation policies that Congress had

given other regulatory agencies.

“T]he Board has not preseribed any overall .

depreciation policies, rates of depreciation

residual values for air earriers’ flight equip.

ment . . . beeause it) is of the view that au

thority to do so is not specifically: contained i:

the Civil Aeronauties Act."

A year later on April 9, 195 16, the Comptroller General

again recommended “that the Congress granu! the

‘Board specific statutory authority to establish depreei ia-

tion rates... in keeping with similar powers presently

vested in other regulatory -bodies.’""™" As the Cour

below found, the relevance of the @omptroller General’:

recommendations to this case is that Congress re Fusgt

—— a

'! Hearings of Subcommittee of the Senate Committee on Inter

state and Foreign Commerce on Amendment to the Civil Aer

nauties Act, 84th-Cong., Ist- Sess., pp. VW. 180 (1955).

ss Comptroller General’s ‘Audit Report to the Congress of th

United States, Civil Acronauties Board, October 1955, p. “0. The,

petition mistakenly refers to this later statement of the Comptrdlle

General as being his ‘‘earlier’’ and ‘‘vonsistent”” view (p. If!

10; In making this second recommendation and after noting th’

Comptroller ienerat angie the possibility that ‘*sufficient in

plied powers’? might be conferred by the Aet. In looking fer»

provision of the Act from which to ‘imply’? the power sought !

the Board, the Comptroller General did not mention Séetion WF ¢

to amend the. Civil Aerotiauties Act so as to grant the

requested pawer. Petitioner's implication that this -

refusal must mean that Congress had-intended to grant

the power is novel to say the least. |

CONCLUSION ,

The question presented is of limited importance and

the decision below is clearly correct. Accordingly, the

- petitian should be denied.

Respectfully submitted,

JoHN BL Sternen ‘

1000 Connecticut A venue, NOW,

Washington 6, D.C. |

Daniet M. Grissox :

701 Union Trust Building

Washinyton 5, D.C.

Counsel for Respondents

Ropert L. RANDALL

(itonck LAPHAM

* ALVIN Priepwan

* Of Counsel »

(kh ToBER, 1958

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.