Island Airlines, Incorporated v. CAB

• Decision Date: 08 July 1966
• Docket Number: No. 20552.,20552.
• Citation: 363 F.2d 120
• Parties: ISLAND AIRLINES, INCORPORATED, Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

363 F.2d 120 (1966)

ISLAND AIRLINES, INCORPORATED, Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent.

No. 20552.

United States Court of Appeals Ninth Circuit.

July 8, 1966.

George F. Galland, G. Nathan Calkins, Amy Scupi, Galland, Kharasch, Calkins & Lippman, Washington, D. C., for petitioner.

Donald F. Turner, Asst. Atty. Gen., Howard E. Shapiro, Atty., Dept. of Justice, Washington, D. C., Joseph B. Goldman, Gen. Counsel, O. D. Ozment, Deputy Gen. Counsel, Robert L. Toomey, Acting Associate Gen. Counsel, Litigation and Legislation, Tyll Van Geel, Atty., C.A.B., Washington, D. C., for respondent.

J. Russell Cades, Wm. M. Swope, Honolulu, Hawaii, for amicus curiae Aloha Airlines.

Bert. T. Kobayashi, Atty. Gen. of Hawaii, Arthur S. K. Fong, Deputy Atty. Gen., Honolulu, Hawaii, for amicus curiae State of Hawaii.

Allen M. Stack, Pratt, Moore, Bortz & Vitousek, Honolulu, Hawaii, for amicus curiae Hawaiian Airlines, Inc.

Before CHAMBERS, BARNES and MERRILL, Circuit Judges.

BARNES, Circuit Judge:

This is a petition to review an order of the Civil Aeronautics Board (hereinafter "CAB"), denying an exemption.

The CAB had jurisdiction to entertain Island Airlines' (hereinafter "Island") petition for exemption from economic regulation pursuant to section 416(b) of the Federal Aviation Act, 49 U.S.C. § 1386(b). This court has jurisdiction to review the order of the CAB refusing the exemption pursuant to section 1006 of the Federal Aviation Act, 49 U.S.C. § 1486.

This is the third time that Island has appeared before this court in connection with its continuing controversy with the CAB concerning the right of Island to carry on inter-island flights among the islands comprising the State of Hawaii. Island first appeared here in 1964 on appeal from a permanent injunction issued by the district court for the District of Hawaii which enjoined Island from continuing inter-island flights authorized by the State of Hawaii without first having obtained a federal certificate of convenience and necessity from the CAB. This court remanded the proceedings to the district court to determine whether the intervening open seas between the various Hawaiian Islands were within the territorial boundaries of Hawaii. 331 F.2d 207 (9th Cir. 1964). On remand, the district court found that the channels between the islands were not within the boundaries of the State, that flights between the islands were in interstate air commerce through airspace over places outside the State of Hawaii, that the CAB had jurisdiction of such flights, and again granted a permanent injunction against Island. 235 F.Supp. 990 (D.Hawaii 1964). Island again appealed from the injunction and this court affirmed the district court. 352 F.2d 735 (9th Cir. 1965).

On May 26, 1965, while the appeal from the district court's second injunction was still pending before this court, Island filed a petition with the CAB requesting that Island and all others similarly situated be granted an exemption from economic regulation under the Federal Aviation Act. Such an exemption would eliminate the need for Island and others similarly situated to apply for certification by the CAB. The CAB correctly states that "Island's proposal was that the Board surrender jurisdiction to the State of Hawaii to license and regulate those carriers engaged in the transportation of persons and property between the islands." (Respondent's Brief, pp. 1-2.) The Hawaii State Senate, Hawaii State House of Representatives, and Maui County Board of Supervisors each submitted resolutions to the CAB in support of Island's exemption application. On July 7, 1965, answers in opposition to Island's application were filed by Hawaiian Airlines, Inc. and Aloha Airlines, Inc., the two carriers presently serving the State under certification and subsidy from the CAB. Island filed no response to this opposition and did not request a hearing. On October 11, 1965 the CAB filed an order denying the exemption requested. Island now seeks review of this CAB order and requests the court either to require the CAB to provide a hearing, or to grant an exemption to Island without remand to the CAB. In these proceedings now before this court, the State of Hawaii, Aloha Airlines and Hawaiian Airlines have been permitted to file briefs as amici curiae.

I. Does Denial of the Exemption Deprive Hawaii of "Equal Footing" in the Federal Union?

Island devotes a good deal of its efforts to an argument based on the premise that since all other states have control of intrastate air transportation and only Hawaii of all fifty states does not because of an accident of geography, Hawaii will be denied "equal footing" in the federal union unless the CAB relinquishes control and turns the whole control of intrastate flight over to Hawaiian State regulation. This argument is without merit for two reasons.

First, the legislative history makes it clear that Congress, in passing the Hawaiian Statehood Act admitting Hawaii to the federal union, did so with the knowledge and intent that federal control over intrastate air transportation would remain in effect. For example, Senate Report No. 80 on S. 50 (the Hawaiian Statehood bill), 86th Congress, 1st session, reproduced in U.S.Code Congressional and Administrative News, 86th Cong., 1st Sess., pp. 1346, 1348-1349, contains the following pertinent observations:

"Aviation matters

Hawaii presents a unique situation with respect to the impact of statehood on the Federal regulation of air transportation between the main islands. This is because of the geographical structure of the Territory, the land areas being separated by substantial expanses of ocean which are not included in the territorial limits of Hawaii. Hence, most, if not all, of the interisland air transportation passes through airspace not a part of the Territory. Under the provisions of the Federal Aviation Act of 1958 and other applicable Federal legislation, the Civil Aeronautics Board exercises economic regulatory jurisdiction over carriers engaged in interstate air transportation, which is defined to include not only transportation between a place in a State and a place in any other State, but also transportation between places in the same State through the airspace over any place outside thereof. Consequently, with the admission of Hawaii as a State, interisland air transportation will remain subject to the economic controls provided by the Federal Aviation Act including other applicable Federal legislation, because that transportation, or most of it, while between places in the same State, will pass through airspace outside the State. In the other States, air transportation of this kind passing through airspace outside the State is of slight volume in comparison with air transportation merely between places in the same State. In the case of Hawaii, the reverse would be true. The committee wishes to make it clear that it believes the application of the provisions of the Federal Aviation Act and other applicable Federal legislation to the State of Hawaii should continue in accordance with the definition of interstate air transportation as contained in that act."

Second, this very same assertion was previously made by Island in the injunction proceedings, and answered adversely to Island by both the district court and this court. This court's holding was that the continued regulation of inter-island flight by the CAB did not constitute "invidious discrimination" against the State of Hawaii (352 F.2d 735, 744), citing United States v. State of Louisiana, 363 U.S. 1, 77, 80 S.Ct. 961, 4 L.Ed.2d 1025 (1960). That case refers to "equal footing," but it is clear that in both the district court's opinion and in our previous opinion, the terms "invidious discrimination" and "equal footing" were synonymous. Other cases also establish that federal regulation which is otherwise valid is not a violation of the "equal-footing" doctrine merely because its impact may differ between various states because of geographic or economic reasons. State of Alabama v. State of Texas, 347 U.S. 272, 74 S.Ct. 481, 98 L.Ed. 689 (1954); United States v. Texas, 339 U.S. 707, 70 S.Ct. 918, 94 L.Ed. 1221 (1950). The earlier decision of this court that CAB regulation did not constitute "invidious discrimination" is binding precedent in this related proceeding.

II. Procedural Irregularities.

Island's contention under this heading is summarized in this quotation from its opening brief (Petitioner's Brief, p. 34):

"The CAB did not deny the petition for legal insufficiency of its own allegations. It received answering pleadings (R. 38-157) from the interveners which contested the petition and alleged new facts. Without affording any procedure for testing either the truth or legal sufficiency of the answers, the Board summarily denied (1) the Island petition; and (on the basis of such denial) (2) the supporting state and county petitions — in reliance on material alleged in the answers and uncritically accepted as true, without proof. This was error, involving a denial of constitutional due process and a failure to find the requisite facts. It was also prejudicial error because Island would have contested the material facts as alleged by interveners and the contest would have been more than formal. * * *"

We have carefully reviewed Island's procedural contentions and find them to be without merit for the following reasons:

Island contends that the CAB erred in accepting as true the unproved contentions of Aloha and Hawaiian and ignoring those of Island. Island then turns around and asks this court to grant the exemption on the similarly unproved contentions of Island. Overlooking the inconsistency of this approach, we cannot agree that the CAB's order denying exemption was based on the acceptance of the Aloha and Hawaiian contentions. Rather, we think the order makes it clear that the primary basis for the denial was the insufficiency...