Civil Aeronautics Board v. State Airlines State Airlines v. Civil Aeronautics Board Piedmont Aviation v. State Airlines 159

• Decision Date: 06 February 1950
• Docket Number: Nos. 157,s. 157
• Citation: 338 U.S. 572,70 S.Ct. 379,94 L.Ed. 353
• Parties: CIVIL AERONAUTICS BOARD v. STATE AIRLINES, Inc. STATE AIRLINES, Inc. v. CIVIL AERONAUTICS BOARD et al. PIEDMONT AVIATION, Inc. v. STATE AIRLINES, Inc. to 159
• Court: U.S. Supreme Court

338 U.S. 572

70 S.Ct. 379

94 L.Ed. 353

CIVIL AERONAUTICS BOARD

v STATE AIRLINES, Inc.

STATE AIRLINES, Inc.

v. CIVIL AERONAUTICS BOARD et al.

PIEDMONT AVIATION, Inc.

v. STATE AIRLINES, Inc.

Nos. 157 to 159.

Argued Dec. 12, 1949.

Decided Feb. 6, 1950.

Mr. Frederick W. P. Lorenzen, New York City, for State Airlines, Inc., for respondent.

Mr. Emory T. Nunneley, Jr., Washington, D.C., for Civil Aeronautics Board.

Mr. Charles H. Murchison, Jacksonville, Fla., for Piedmont Aviation, Inc.

Certiorari dismissed: judgment reversed.

Mr. Justice BLACK delivered the opinion of the Court.

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 certifi- cates 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...