Advanced Micro Devices v. C.A.B., s. 83-1265
| Decision Date | 07 September 1984 |
| Docket Number | 83-1939,Nos. 83-1265,s. 83-1265 |
| Citation | 742 F.2d 1520 |
| Parties | ADVANCED MICRO DEVICES, Data General Corporation, Electronic Memories & Magnetics Corporation, Hewlett-Packard Co., Intel Corporation, Mostek Corporation, National Semiconductor Corporation, RCA Corporation, Rockwell International and Signetics Corporation, Petitioners, v. CIVIL AERONAUTICS BOARD, Respondent, Flying Tiger Line, Inc., Intervenor. ADVANCED MICRO DEVICES, Data General Corporation, Electronic Memories & Magnetics Corporation, Hewlett-Packard Co., Intel Corporation, Mostek Corporation, National Semiconductor Corporation, RCA Corporation, Rockwell International and Signetics Corporation, Petitioners, v. CIVIL AERONAUTICS BOARD, Respondent, Flying Tiger Line, Inc., Intervenor. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Petitions for Review of an Order of the Civil Aeronautics board.
John W. Simpson, Washington, D.C., for petitioners in Nos. 83-1265 and 83-1939.
Mark W. Frisbie, Atty., C.A.B., Washington, D.C., with whom Ivars V. Mellups, Acting Gen. Counsel, C.A.B., Robert B. Nicholson and Marion L. Jetton, Attys., Dept. of Justice, Washington, D.C., were on the brief, for respondent in Nos. 83-1265 and 83-1939. David Schaffer, Atty., C.A.B., Washington, D.C., also entered an appearance for respondent.
David R. Murchison, Washington, D.C., was on the brief for amicus curiae, Air Transport Association of America in No. 83-1265, urging affirmance.
Joel Stephen Burton, Washington, D.C., entered an appearance for intervenor, Flying Tiger Line, Inc. in No. 83-1265.
Alfred J. Eichenlaub, Washington, D.C., with whom Joel Stephen, Burton and Robert L. Deitz, Washington, D.C., were on the brief for intervenor, Flying Tiger Line, Inc. in No. 83-1939.
Before WILKEY and WALD, Circuit Judges, and McGOWAN, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge McGOWAN.
A group of manufacturers who regularly ship electronics products via air cargo ("Electronics Shippers") petition for review of two proceedings before the Civil Aeronautics Board ("CAB" or "Board"). Because the two proceedings are related, we have consolidated them for purposes of decision. In one, the Board issued policy regulations regarding the circumstances under which it would not suspend an international cargo rate. In the other, the Board approved and gave antitrust immunity to an international cargo rate agreement of the International Air Transport Association ("IATA"). We do not disturb the Board's no-suspension policy, but we vacate and remand its approval of the IATA agreement.
Comprehensive federal regulation of aviation began in 1926 with the Air Commerce Act, which was superseded by the Civil Aeronautics Act of 1938. Present regulation takes place under the Federal Aviation Act of 1958, Pub.L. No. 85-726, 72 Stat. 731 (), as amended, which is a revision and recodification of the 1938 act. See generally G. DOUGLAS & J. MILLER, ECONOMIC REGULATION OF DOMESTIC AIR TRANSPORT 187-92 (1974).
Commercial air transportation encompasses at least four distinct businesses: domestic passenger, domestic cargo, international passenger, and international cargo. The Federal Aviation Act, as had its predecessors, originally granted the CAB vast powers over all four of these businesses. The Board could limit entry to the industry, allocate routes and impose conditions on the uses of the routes assigned, prevent carriers from abandoning routes previously assigned to them, regulate mergers and methods of competition, and police intercarrier agreements. See generally id. at 197-202. Most important for purposes of these cases, the Act charged the Board with the prevention of unjust, unreasonable, unjustly discriminatory, or unduly preferential or prejudicial rates, fares, or charges. The Board was empowered to suspend the operation of any rate it suspected of violating one of those standards; and following investigation and upon a determination that a rate was unlawful, the Board could set the rate aside and mandate a change. 1 See 49 U.S.C. Sec. 1482(d), (g), (j) (1976) (current version at 49 U.S.C. Sec. 1482(d), (g), (j) (Supp. V 1981)).
In the late 1970's Congress quite clearly reduced CAB control over domestic and international passenger service and over domestic cargo service. Its actions with respect to the fourth category, international cargo carriage, were more ambiguous, and that ambiguity underlies both of these lawsuits.
Airline deregulation began essentially with the domestic cargo industry in 1977, when Congress, seeking to rely more heavily on competitive market forces, virtually eliminated CAB control over entry to the industry, over rates, and over places served. See National Small Shipments Traffic Conference, Inc. v. CAB, 618 F.2d 819, 823 (D.C.Cir.1980). Next came the Airline Deregulation Act of 1978, Pub.L. No. 95-504, 92 Stat. 1705, which provided for gradual CAB withdrawal from controlling domestic passenger service, culminating with the elimination of the CAB as of January 1, 1985. Finally, the International Air Transportation Competition Act of 1979 ("IATCA"), Pub.L. No. 96-192, 94 Stat. 35 (1980), introduced greater rate flexibility for international passenger business, and it directed the Board, while exercising its international duties under the Federal Aviation Act, to seek, inter alia, to place "maximum reliance on competitive market forces and on actual and potential competition." Id. Sec. 2, 49 U.S.C. Sec. 1302(a)(4) (Supp. V 1981).
Each of these enactments affected the way in which the CAB could regulate rates. The Federal Aviation Act previously had empowered the Board to set aside rates it found to be unlawful and allowed the Board to suspend the implementation of rates likely to be unlawful. The 1977 amendments to the Act terminated immediately the Board's authority to set aside domestic cargo rates as unjust or unreasonable. See Small Shipments, 618 F.2d at 823. The Deregulation Act of 1978 set a January 1, 1983, termination date for the Board's control over the economic reasonableness of domestic passenger fares; in the interim, the Board was foreclosed from finding any such fare unjust or unreasonable, provided the fare was neither more than five percent higher nor less than fifty percent lower than a standard industry fare level. Finally, IATCA introduced a similar "zone of reasonableness" for international passenger fares, precluding finding any fare unjust or unreasonable if the fare is not more than five percent higher or less than fifty percent lower than a standard foreign fare level.
None of the deregulating statutes purported to set such precise limits on the Board's ratemaking functions regarding international cargo. While IATCA was pending in House-Senate Conference, however, legislation was introduced to do so, either by amending IATCA or independently. The bill, H.R. 5882, 96th Cong., 1st Sess. (1979), reprinted in Competition in International Air Cargo Transportation: Hearing Before the Subcomm. on Aviation of the House Comm. on Public Works and Transportation, 96th Cong., 1st Sess. 2 (1980) [hereinafter cited as Hearing ], would have created a zone of reasonableness for international cargo rates similar to that provided for domestic and international passenger rates.
The CAB opposed the House bill, principally because of problems it foresaw in administering the proposed new rate structure. The problems derived from the fact that unlike passenger service, for which each carrier has only a few fares for each destination, cargo service involves a multitude of rates for each route, because carriers have developed different rates for different types of commodities. See Hearing, supra, at 5-6 (prepared statement of CAB Member Bailey). Also, in the past the Board generally considered rate increases as they affected the overall return to the carrier; that is, the Board did not generally look to see whether each individual rate provided a reasonable return on investment to the carrier, but, rather, it considered the return generated by the entire package of rates. Thus it was conceivable, though unlikely, that some individual rate was unreasonable and therefore would be an improper referent for a zone of reasonableness. See id. at 9-10 (Bailey testimony). The Board was somewhat more concerned that, even if every individual rate were reasonable, the same rate increase would not be reasonable for each rate. The House bill, however, provided for a uniform permissible rate increase, and the Board felt that it would be too difficult to undertake the economic analyses necessary for the obvious alternative, which is to calculate an appropriate upward zone of flexibility for each rate separately. See id. at 15-17 (Bailey testimony). The Board suggested that it might be more practical to allow it to develop its own system of rate flexibility, because the Board could experiment with different systems more easily through regulations than Congress could through statutes. Id. at 18 (letter from CAB Chairman Marvin S. Cohen).
Whether due to CAB opposition or for other reasons, H.R. 5882 never made it out of committee, and IATCA was enacted without introducing a zone of reasonableness for international cargo rates. As it had suggested it would, however, the CAB set out to develop such a zone administratively.
In January of 1980, just two months after the hearings on H.R. 5882 at which the CAB opposed the bill, the Board proposed to allow carriers to increase international cargo rates up to five percent above a standard foreign rate level and to decrease them without limit. The Board not only would not suspend any rate in the zone, but would, without further investigation, conclusively...
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