Air New Zealand Ltd. v. C.A.B.
| Citation | 726 F.2d 832 |
| Decision Date | 03 February 1984 |
| Docket Number | No. 82-2165,82-2165 |
| Parties | AIR NEW ZEALAND LIMITED, Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent, Pan American World Airways, Inc., Intervenor. |
| Court | United States Courts of Appeals. United States Court of Appeals (District of Columbia) |
Petition for Review of an Order of the Civil Aeronautics Board.
William C. Clarke, New York City, with whom James D. Tussing, New York City, was on the brief, for petitioner.
David Schaffer, Atty., C.A.B., Washington, D.C., with whom Ivars V. Mellups, Acting Gen. Counsel, and Thomas L. Ray, Acting Associate Gen. Counsel, C.A.B., John J. Powers, III, and Frederic Freilicher, Attys., Dept. of Justice, Washington, D.C., were on brief, for respondent. Robert B. Nicholson, Atty. Dept. of Justice, Washington, D.C., also entered an appearance for respondent.
Jerry W. Ryan, Washington, D.C., was on brief, for intervenor.
Before WRIGHT and SCALIA, Circuit Judges, and WEIGEL, * Senior District Judge for the United States District Court for the Northern District of California.
Opinion for the Court filed by Circuit Judge SCALIA.
Air New Zealand, Limited ("ANZ") petitions under 49 U.S.C. Sec. 1486 (1976) for review of an order of the Civil Aeronautics Board granting it exemption authority to carry persons, property, and mail between Los Angeles and London on flights originating or terminating in New Zealand. The object of its challenge is a condition in the order which recites that the exemption authority will automatically terminate should the aviation regulatory authorities of New Zealand fail to approve an authorized United States carrier's fares equal to ANZ's fares for travel between the same points. This condition evidently operates even where the ANZ fares are limited to through-flights, without transfer or stop-over privileges, and the United States carrier's fares are not. ANZ contends that for this reason the condition violates international obligations, and that in any event the automatic termination of its operating authority without further Board action would be procedurally invalid. The main question presented is the ripeness of this matter for our review.
The governments of the United States and New Zealand are parties to an air transport agreement which gives route authority in each country to those carriers designated by the other and contains provisions covering other aspects of air service, including fares. United States-New Zealand Air Transport Agreement, entered into force June 24, 1964, 15 U.S.T. 1362, T.I.A.S. No. 5605, as amended November 25, 1980, T.I.A.S. No. 9956. The United States has designated Continental Airlines and Pan American World Airways, and New Zealand has designated Air New Zealand, to provide air service between the two countries. The air transport agreement provides (Article 3) that designated carriers must receive operating authority from the regulatory authorities of both nations. In the United States, foreign carriers must receive a permit from the CAB. 49 U.S.C. Sec. 1372 (1976 & Supp. V 1981). The Board may grant an exemption from this requirement when it finds that would be in the public interest. 49 U.S.C. Sec. 1386(b) (1976 & Supp. V 1981).
In June 1982 ANZ simultaneously applied for an amendment to its permit to allow New Zealand-London service via Los Angeles, and for an exemption to allow it to initiate and continue to operate that service for up to one year, pending Board action on its permit application. In anticipation of this new service, ANZ received the permission of the United Kingdom and New Zealand aviation authorities to offer two reduced fares on its New Zealand-Los Angeles-London flights: one a temporary introductory fare, the other a 5% discount from the advance purchase excursion fare otherwise available. The two reduced fares were only available on through-plane service which did not allow passenger stopovers en route.
On July 9, 1982, Pan American filed new tariffs with the New Zealand aviation authorities seeking to match ANZ's reduced fares, but without the through-plane limitation. On July 27, 1982, Continental filed a joint fare (i.e., a fare to be shared with another airline), matching the discount for passengers using its New Zealand-Los Angeles service who would connect with another carrier to continue travel to London. (Trans World Airlines later advised the New Zealand authorities that it would provide service under these joint fares on the Los Angeles-London segment.) The United States-New Zealand air transport agreement (Article 11, p 5) forbids the signatories to prevent or inhibit designated airlines from matching a fare offered by any other designated airline for flights to third nations. Nevertheless, New Zealand refused to approve the Pan American and Continental fares. It took the position that because the reduced ANZ fare was justified by the cost-savings inherent in through-plane service, a limitation the United States carriers did not propose to impose, the Pan American and Continental fares were not genuinely "matching." Ultimately, the United States carriers withdrew their fare approval requests.
The CAB regarded New Zealand's refusal to approve the American carriers' fares as a violation of the air transport agreement's fare-matching clause. Relying on Article 4 of the agreement, which permits either party to withhold operating authority where the other is not in compliance with the agreement, the Board refused to grant ANZ's exemption authority request. New Zealand later withdrew its approval of ANZ's reduced fares, 1 whereupon the Board granted ANZ's exemption authority 2 and ANZ initiated its New Zealand-Los Angeles-London service. The exemption authority was limited, however, by the condition that is the subject of the present suit:
This exemption authority is contingent upon the New Zealand authorities approving any U.S. carrier fare (including interline and intraline fares) that matches any price charged for transportation by Air New Zealand Limited over the route, and will terminate automatically without further Order of the Board upon New Zealand's failure to approve any U.S. carrier fare (including interline and intraline fares) set at the same amount as that charged by a New Zealand carrier for travel between the same origin and destination points.
Air New Zealand, Limited, Docket No. 40753, slip op. at 3 (Aug. 20, 1982) (order granting exemption).
In this petition for review ANZ contends that because the condition violates the United States-New Zealand air transport agreement it is invalid under Sec. 1102(a) of the Federal Aviation Act, which requires the Board to exercise its powers and duties consistent with international obligations. 49 U.S.C. Sec. 1502(a) (Supp. V 1981). The petitioner also contends that the automatic termination feature is invalid because Sec. 1005(f) of the Federal Aviation Act, 49 U.S.C. Sec. 1485(f) (1976), requires a factfinding proceeding (subject to judicial review) before a substantive action such as termination of operating authority can be taken.
The doctrine of ripeness is an important element of our judicial tradition, and indeed--in some applications at least--of the requirement of the Constitution itself. Regional Rail Reorganization Act Cases, 419 U.S. 102, 138, 95 S.Ct. 335, 355, 42 L.Ed.2d 320 (1974). See generally G. GUNTHER, CASES AND MATERIALS ON CONSTITUTIONAL LAW 1655-66 (10th ed. 1980). In the specific context of reviewing administrative action, the purpose of the doctrine is, according to the Supreme Court's opinion in Abbott Laboratories v. Gardner, 387 U.S. 136, 148-49, 87 S.Ct. 1507, 1515, 18 L.Ed.2d 681 (1967), to "prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties." We think that doctrine has strong application here.
Abbott Laboratories and its two companion cases set forth with considerable clarity the criteria for application of the doctrine of ripeness to the review of agency action. Abbott Laboratories itself involved a challenge by prescription drug manufacturers to regulations issued by the Secretary of Health, Education, and Welfare requiring the established name of a drug to be printed prominently on all labels and printed material accompanying the drug. In finding that the case was ripe, the Court noted that ripeness depends on "both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." 387 U.S. at 149, 87 S.Ct. at 1515. In the case before it, the Court found that the legal issues presented were fit for judicial review since, although "the justification for [the] rule might vary with different circumstances, ... both sides have approached [the] case as one purely of congressional intent." Id. And the stark choice imposed upon the manufacturers if review were withheld (the high cost of compliance, on the one hand, and the risk of severe sanction for noncompliance, on the other) would constitute a significant hardship.
Application of the Abbott Laboratories test was clarified in two other cases decided the same day. In Toilet Goods Association, Inc. v. Gardner, 387 U.S. 158, 87 S.Ct. 1520, 18 L.Ed.2d 697 (1967), a group of cosmetic manufacturers challenged an FDA regulation which allowed the Commissioner of Food and Drugs to suspend the certification of any person refusing FDA employees free access to the facilities, processes, and formulae used in the manufacture of color additives. The Court held the regulation not ripe for review. Since suspension of certification was discretionary under the rule, the Court believed that "judicial appraisal of [the relevant] factors is...
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