Civil Aeronautics Board v. State Airlines State Airlines/Opinion of the Court

by Hugo Black

United States Supreme Court

338 U.S. 572

Civil Aeronautics Board  v.  State Airlines State Airlines

 Argued: Dec. 12, 1949. --- Decided: Feb 6, 1950

Acting under the Civil Aeronautics Act of 1938, ^[1] the Civil Aeronautics Board (C.A.B.) consolidated some 45 route applications of 25 airlines into one area proceeding, styled the 'Southeastern States Case.' After hearings, it made findings of fact as to what new routes should be established and which of the applicants could best serve these routes. It then entered orders authorizing certificates of convenience and necessity for several new routes in the area. Piedmont Aviation, Inc., was authorized to engage in air transportation of persons, property, and mail along certain of these routes. State Airlines, Inc., was denied authority to act as a carrier on any of them. ^[2] State filed a petition in the United States Court of Appeals for the District of Columbia Circuit asking that court to reverse the orders and remand the case to the Board with directions to grant carrier certificates to State instead of Piedmont. ^[3] The court reversed insofar as the orders awarded certificates to Piedmont but held that it was without power to direct the Board to certify State. ^[4] A crucial ground of the court's reversal was its finding that Piedmont had never filed an application for the particular routes certified, an indispensable prerequisite to certification as the Court of Appeals interpreted the Civil Aeronautics Act. A second ground for reversal was that since Piedmont had filed no application for the particular routes certified, State failed to have sufficient notice that the Board might consider Piedmont as a competing applicant, and thus was deprived of a fair opportunity to discredit Piedmont's fitness and ability to serve those routes. A third ground was that the Board's findings that Piedmont was fit and able to serve the routes 'were, in the legal sense, arbitrary and capricious and lacked the support of substantial evidence.' Both Piedmont and the Board petitioned for review of the court's reversal, while State cross-petitioned for review of the court's refusal to direct certification of State. ^[5] We granted certiorari because a final determination of the questions involved, particularly those involving interpretation of the Act, is of importance for future guidance of the Board in carrying out its congressionally imposed functions. 338 U.S. 812, 70 S.Ct. 67.

Fitst. We hold that Piedmont's applications were sufficient to permti certification of Piedmont for the routes awarded. The contrary holding of the Court of Appeals rested primarily on its interpretation of § 401(d)(1) and (2) of the Civil Aeronautics Act. The particular language most relied on by the court was that which empowers the Board to issue certificates 'authorizing the whole or any part of the transportation covered by the application, if it finds that the applicant is fit, willing, and able to perform such transportation properly * * *.' (Italics used by the Court of Appeals.) ^[6] The Court of Appeals read this language as showing a congressional purpose to bar the Board from granting any certificates in which the routes awarded deviate more than slightly from the precise routes defined in the application. We think that such a narrow interpretation is not compelled by the language of § 401(d) and that the Act as a whole refutes any intent to freeze the Board's procedures in so rigid a mold.

The language of § 401[d][1] and (2) unqualifiedly gives the Board power, after application and appropriate findings, to issue certificates for the whole or any part of transportation covered in an application. This manifests a purpose generally to gear the award of certificates to an application procedure. But Congress made no attempt in (1) and (2) of § 401(d) to define the full reach or contents of an application. These subsections do not even require an applicant to designate the terminal cities or the intermediate points a proposed route would serve. A different provision, § 401(b), contains the only requirements directly imposed by Congress-that an application must be in writing and verified. ^[7] With this one exception, § 401(b) provides that an application 'shall be in such form and contain such information * * * as the Board shall by regulation require.' And in § 1001 Congress granted the Board authority to 'conduct its proceedings in such manner as will be conducive to the proper dispatch of buiness and to the ends of justice.' Thus, except for the statutory requirement of written and verified applications, Congress plainly intended to leave the Board free to work out application procedures reasonably adapted to fair and orderly administration of its complex responsibilities.

Here the Board decided that the policies of the Act could best be served by a consolidated area proceeding. In doing so it did not exceed its procedural discretion. Only through such joint hearings could the Board expeditiously decide what new routes should be established, if any, and which of the numerous applicants should be selected as appropriate carriers for different routes. And in such a proceeding, as the Board has found, limiting all applications to the precise routes they describe would destroy necessary flexibility. For the Board's decision as to what new routes are actually available is not reached until long after the applications are filed. Recognizing this, Piedmont, like other airlines, inserted a so-called 'catchall clause' in its applications, broadly requesting authority to transport on 'the routes detailed herein, or such modification of such routes as the Board may find public necessity and convenience require.' It also included a general prayer 'for such other and further relief, general and specific, under Section 401 of the * * * Act * * * as the Board may deem appropriate, and to which the applicant may be entitled in any proceeding in which the application may be heard in part or in its entirety.'

We are convinced that the Board, in awarding routes varying from those specifically detailed in Piedmont's application, has not departed from the congressional policy hinging certification generally on application procedures. While the routes sought by Piedmont did differ markedly from those awarded, ^[8] they were all in the general area covered by the consolidated hearings. All twenty-five applicants had asked for routes somewhere in the area, and many of these routes overlapped. In such an area proceeding it would exalt imaginery procedural rights above the public interest to hold that the Board is hamstrung by the lack of foresight or skill of a draftsman in describing routes. The flexible requirements set by the Board were reasonable. They accorded with the policies of the Act. The Board in well-considered opinions held that Piedmont's application met these requirements. That application also met the congressional requirements of writing and verification. So far as § 401(d)(1) and (2) are concerned, the Board acted within its power in entering the orders.

Second. The Court of Appeals recognized that full hearings were held in the area proceedings after due notice to all interested parties. But that court nevertheless held that State was without adequate notice that the Board might consider Piedmont as an applicant for routes encroaching on those sought by State. This contention largely rests on the statutory interpretation we have rejected. State argues, however, that since it never considered Piedmont as a possible applicant for the routes awarded, it failed to produce available evidence and arguments to convince the Board that Piedmont was not fit and able to serve as a carrier on the routes.

This challenge is substantial. The Board's major standard is the public interest in having convenient routes served by fit and able carriers. These questions are to be determined in hearings after notice. The prime purpose of allowing interested persons to offer evidence is to give the Board the advantage of all available information as a basis for its selection of the applicant best qualified to serve the public interest. Cf. Federal Communications Commission v. Sanders Bros. Radio Station, 309 U.S. 470, 477, 642, 60 S.Ct. 693, 698, 84 L.Ed. 869, 1037. If the Board had neglected this purpose, State could rightly complain.

Here, however, we find that the Board fully appreciated its responsibility in this respect. It seems plain to us from the entire record that State did fully recognize that Piedmont was a potential competitive applicant in the consolidated proceedings. Their applications in large part sought certificates in the same general area. Each argued against the other before the Board.

Moreover, after issuance of the order, the Board granted State a limited rehearing to show, if it could, that the proceeding should be reopened to enable State to offer new evidence against Piedmont's fitness and ability. In the rehearing argument, State's main contention was that the Board lacked jurisdiction because of the limited nature of Piedmont's application, a contention we have already rejected. But State also contended that had it known Piedmont to be an actual competitor, State would have made diligent efforts by cross-examination and otherwise to prevent the Board's finding that Piedmont's qualifications were superior to State's. The record reveals that the Board gave most careful consideration to all the contentions made by State's counsel. The Board in an opinion discussed each of those contentions. 8 C.A.B. 716. With particular reference to the general contention that in reopened proceedings State could offer evidence to refute the Board's findings of Piedmont's superior qualifications, the Board said: 'Although in the course of subsequent argument State asserted that had it been aware of the situation it might have presented additional or different evidence and would have enlarged upon its inquiries into Piedmont's case, it did not in the course of the argument or in its petition for reconsideration, specify what the nature of such additional evidence or inquiries would have been.' ^[9] Id., at 721. It was in this setting that the Board held State's showing inadequate to justify new hearings concerning the respective qualifications of State and Piedmont. In reaffirming its previous holding of Piedmont's superior qualifications, the Board said: 'The only practical approach that can be taken in cases of this type is to consider the applications, not with a view as to how an individual proposal would benefit the applicant, or whether a particular proposed route is required precisely as set forth in an application, but rather to consider the entire case with the objective of establishing a sound transportation pattern in the area involved.' ^[10] 8 C.A.B. at 722.

We think the standard adopted by the Board under which the public interest is given a paramount consideration is a correct standard. And since the Board's conclusion that the proceeding should not be reopened represents its informed judgment after a searching inquiry, we accept its conclusion. Because of the foregoing and other circumstances disclosed by the record we think there is no ground for State's contention that it failed to have a fair hearing. See Chicago, St. Paul, Minneapolis & Omaha R. Co. v. United States, 322 U.S. 1, 3, 64 S.Ct. 842, 843, 88 L.Ed. 1093.

Third. During the rehearing argument, counsel for State was asked by a member of the Board whether State took the position that Piedmont was 'not capable of running the route that was awarded.' He replied: 'We are taking the position that both State and Piedmont are fit and able, it's a question of which has demonstrated in this record to be more fit, willing and able.' State nevertheless contends here, and the Court of Appeals held, that there was no sufficient evidence to support the Board's finding of Piedmont's fitness and ability. This contention, like others, rests almost wholly on the argument that Piedmont had not applied for the particular routes awarded and thus could not have evidenced its ability to handle those routes. The Court of Appeals also emphasized the fact that the routes awarded required Piedmont to transport over mountains, whereas the detailed passenger routes for which it had applied would not have crossed the mountains; it contrasted this with State's applications, which had specifically shown routes crossing the mountains. Precisely what added skills, if any, are required for flights across mountains is a matter of proof. In the extensive hearings held in this area proceeding, each applicant was required to and did offer evidence concerning fitness and ability. Much of this evidence concerned the financial condition and experience in aviation of both Piedmont and State. The Board's opinions show the painstaking consideration given this evidence. The Board found both airlines fit and able, but found the evidence of qualifications as between the two weighted on Piedmont's side. We hold that the conclusion was supported by substantial evidence.

In view of our conclusion we need not consider the allegations of State's cross-petition in No. 158 and that case is therefore dismissed. In Nos. 157 and 159 the judgment of the Court of Appeals is reversed. It is so ordered.

Mr. Justice DOUGLAS took no part in the consideration or decision of this case.

Mr. Justice REED, with whom Mr. Justice FRANKFURTER joins, dissenting.

Notes

1. 52 Stat. 973, 49 U.S.C. § 401 et seq., 49 U.S.C.A. § 401 et seq.
2. The several opinions of the Board are reported. 7 C.A.B. 863; 8 C.A.B. 585 and 716.
3. Authority for judicial review is given by § 1006 of the Act, 52 Stat. 1024, 49 U.S.C. § 646, 49 U.S.C.A. § 646.
4. 84 U.S.App.D.C. 374, 174 F.2d 510.
5. The Board's petition is our Docket No. 157; Piedmont's is No. 159; State's cross-petition is No. 158.
6. There are slight but immaterial variants in the relevant language as it appears in (1) and (2) of § 401(d). Those subsections, as italicized by the Court of Appeals, read:
7. 'Application for a certificate shall be made in writing to the Board and shall be so verified, shall be in such form and contain such information, and shall be accompanied by such proof of service upon such interested persons, as the Board shall be regulation require.' Civil Aeronautics Act of 1938, as amended, § 401(b).
8. The Court of Appeals placed in its opinion two maps charting the passenger routes applied for by Piedmont and State and indicating that the routes awarded Piedmont far more nearly approximated those sought by State. The Board and State take the position that these maps do not show all of the points and routes applied for by either airline, and the Court of Appeals said as much with reference to the maps. But the view we take makes it unnecessary to elaborate the different views as to the precise routes for which Piedmont and State applied.
9. The record does show a statement by State's counsel, made near the end of the rehearing argument, that 'had State known that Piedmont was an applicant for these routes' it could have proven in the original hearings that Piedmont did not have 'facilities for all types of overhaul.' It may be that this general suggestion can be considered as a request by State to reopen the proceedings for proof on this particular single point. If so considered, it is sufficient to point out that the Board found that Piedmont had adequate financing to obtain all necessary equipment, which is a major cousideration in determining the comparative fitness and ability as between applicants who propose to operate newly established routes. See the case cited in the Board's opinion, American Export Airlines, Inc., Trans-Atlantic Service, 2 C.A.B. 16, 38 (1940).
10. In this Court a suggestion is made that two sentences by one member of the Board during the rehearing argument indicate that the Board acted on a wrong standard of public interest: 'Yes, but apart from all these legalisms, isn't the real issue whether or not we made a mistake and picked a carrier who cannot run this route? If we really get down and try to find what is the public interest, isn't that the real point?' It is said that this statement departs from the standard of 'public interest, convenience, and necessity.' But in the statement itself the Board member pointed out that the proper standard was 'the public interest.' Moreover, he went on to say that 'the important thing is not whether you win or Piedmont wins but whether the people of North Carolina and Kentucky and Virginia and that area in there get the kind of service that they should.'