# Petition for Writ of Certiorari — Civil Aeronautics Board v. Alaska Airlines, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386419_0528%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1958 - **Citation:** 358 U.S. 881 ## 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. 4 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, i 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 — ; 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 vy er 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 or 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. | e- 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 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 o 8 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. ; ‘ EL 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 di 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 15 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- pa lerred. this ‘authority on the Buard. When the Senate. was considering Senate Bill Ne. 3845 and alse a subs ry 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). 16 . 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. © Hearings of Subcommittee of the Senate Committee on In- “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 . G. 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, s (17) fs 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 . e -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 (7 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 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 . o a er ’ i ' Vetere (ss Jie \ / id ‘ \} \ \ is, | \ x } | BRIEF IN OPPOSITION . a is ] ees f ; a an T ee , yd Se ee / i, / Wow , ee ( r ' ‘a ; ', \ AY 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 2 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. ag = ae 3 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 J 4 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 a D. 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 6 ¥ . ‘ 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 Act provides: © ‘The Commission may ‘prescribe 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), 8 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 oe 2 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’ the Civil Aeronauties Act ‘‘ecutains no such «provision © 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 ¢ 2 13 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 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386419_0528%3A2. Public record. Not legal advice.