Japan Air Lines Co., Ltd. v. Dole, 84-1502
| Decision Date | 19 September 1986 |
| Docket Number | No. 84-1502,84-1502 |
| Parties | JAPAN AIR LINES COMPANY, LTD., Lufthansa German Airlines, and Swissair, Swiss Air Transport Company, Ltd., Petitioners, v. Elizabeth Hanford DOLE, Secretary of Transportation, Respondent. Pan American World Airways, Inc., Trans World Airlines, Inc., Northwest Airlines, Inc., British Airways, Plc., Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Laurence A. Short, with whom David E. Short and Marc A. Bernstein, Washington, D.C., were on brief, for petitioners.
Barry L. Molar, Dept. of Transp., with whom J. Paul McGrath, Asst. Atty. Gen., Dept. of Justice, Kenneth N. Weinstein, Deputy Asst. General Counsel for Litigation, Dept. of Transp., Catherine G. O'Sullivan and Margaret G. Halpern, Dept. of Justice, Washington, D.C., were on brief, for respondent.
Michael J. Roberts, entered an appearance for intervenor, Pan American World Airways, Inc.
William C. Clarke, and James D. Tussing, New York City, entered an appearance for intervenor, British Airways Plc.
Edmund E. Harvey, Washington, D.C., entered an appearance for intervenor, Trans World Airlines, Inc.
Ronald D. Eastman and Barry S. Spector, Washington, D.C. entered appearances for intervenor, Northwest Airlines, Inc.
Before ROBINSON and STARR, Circuit Judges, and McGOWAN, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge McGOWAN.
Petitioners, several foreign air carriers, challenge a Civil Aeronautics Board ("CAB" or "Board") order 1 governing certain fares and a particular rate implemented by competing carriers with the Board's approval. We cannot say that the Board has departed from its statutory mandate in this matter. We therefore affirm the Board's order.
On October 27, 1980, petitioners, Japan Air Lines Company, Ltd. ("JAL"), Lufthansa German Airlines ("Lufthansa") and Swissair, Swiss Air Transport Company, Ltd. ("Swissair"), joined by two companies not party to this petition for review, filed a complaint against the marketing of "Visit U.S.A." or "VUSA" fares by several domestic air carriers. VUSA fares generally permit a passenger visiting the United On May 4, 1981, JAL filed an additional complaint against Northwest Airlines, Inc. ("Northwest") challenging Northwest's "Export Inland Contract Rate" ("ExIn rate"). The ExIn rate applied to freight carriage between Chicago-O'Hare and Seattle. The ExIn rate provided a discount for the Chicago-Seattle leg so long as the shipments were ultimately destined for Hong Kong, Japan, South Korea, the Philippines, or Taiwan. Shipment from Seattle to the Far East could be on any United States or foreign air carrier, or by ocean vessel, at any international tariff rate.
States from a foreign country to travel to various points within this country at a discount. The particular VUSA fares challenged in this litigation are "restricted," which means that they are available only to passengers who travel to and from the United States on the carrier offering the VUSA fare. Other VUSA fares are "unrestricted"; a passenger may choose one carrier for the trip from the foreign country to the United States and another carrier for travel within the United States.
Petitioners challenged the VUSA fares and ExIn rate on the theory that they involved foreign air transportation, and thus that the carriers were required to file them in their international tariffs. In addition, the complaints alleged that the fares and rate were contrary to the provisions of the applicable Civil Air Transport Agreements, which guarantee foreign carriers a fair and equal opportunity to compete. Finally, the complaints alleged that the fares and rate were unjustly discriminatory, as that term is used in the Federal Aviation Act of 1958.
The complaints were consolidated. Various domestic air carriers intervened in the proceedings. In September, 1982, an Administrative Law Judge ("ALJ") conducted a hearing on the complaints. The ALJ issued his initial decision on June 3, 1983. The ALJ found that the fares and rate involved foreign air transportation (thus requiring filing in international tariffs). The ALJ also held, however, that the fares and rate did not deny the foreign carriers a fair and equal opportunity to compete and were not unjustly discriminatory. Joint Appendix ("J.A.") at 169-231 (initial decision).
Both foreign and domestic carriers petitioned the CAB to take discretionary review of the initial decision. The Board granted those petitions and, on August 10, 1984, issued its decision. The Board upheld the ALJ's finding that the VUSA fares involved foreign air transportation, but found that the ExIn rate concerned domestic carriage. The Board also affirmed the ALJ's finding that the fares and rate did not deny the foreign carriers a fair and equal opportunity to compete, and the finding that the fares and rate were not unjustly discriminatory. J.A. at 2-49 (CAB decision).
In their petition for review to this court, petitioners did not challenge the Board's finding that the VUSA fares involved foreign air transportation. Br. of Petitioners at 3-4. Petitioners launch an omnibus challenge to the remainder of the Board decision. We treat their objections in the sequence followed in the Board decision.
The CAB held that the ExIn rate did not involve foreign air transportation because it was not restricted to combination with any particular carrier on the foreign portion of any shipment. J.A. at 30. The Board reasoned that if such a rate were available on equal terms, it would be economically independent of the international travel to which it is tied for marketing purposes:
A carrier simply will not price such a fare below its cost, because it has no interest in subsidizing the services of other carriers. Without the ability to restrict participation in the international travel to particular carriers, the offering carrier will have no leverage to require that profits from the international travel subsidize its domestic service. And without a carrier restriction, its fares prima Id.
facie will be competitively evenhanded in international service.
Petitioners object to the application of this test on the ground that it is inconsistent with the "flow of commerce" test for differentiating foreign travel from domestic. Under the "flow of commerce" test, according to petitioners, the distinction must be drawn by considering the "essential character of the movement." This, in turn, is determined largely by reference to the intent of the passenger or shipper, i.e., whether he intended at the outset to engage in a through journey. See Br. of Petitioners at 9. The rate at issue in this case, according to petitioners, involves foreign air transportation because the intent of any shipper who uses the rate is to transport from Chicago ultimately to a foreign destination. Petitioners' essential complaint is that the CAB has previously applied the "flow of commerce" test in these circumstances and that the rejection of that test and the adoption of the "carrier-restriction" test is unaccompanied by an adequate explanation.
It is by now a familiar rule that a court owes some deference to an agency's interpretation of its organic statutes. "[I]f the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute." Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843 (1984). Despite this requirement of deference, we cannot countenance arbitrariness. Indeed, there exists a presumption against unexplained changes in agency interpretations. See Motor Vehicle Mfrs. Assoc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 41-42, 103 S.Ct. 2856, 2865, 2866, 77 L.Ed.2d 443 (1983). In particular, we have cautioned that "an agency changing its course must supply a reasoned analysis indicating that prior policies and standards are being deliberately changed, not casually ignored, and if an agency glosses over or swerves from prior precedents without discussion it may cross the line from tolerably terse to intolerably mute." Airmark Corp. v. FAA, 758 F.2d 685, 692 (D.C.Cir.1985) (quoting Greater Boston Television Corp. v. FCC, 444 F.2d 841, 852 (D.C.Cir.1970), cert. denied, 403 U.S. 923, 91 S.Ct. 2229, 29 L.Ed.2d 125 (1971). We hold that the CAB adoption of the "carrier-restricted" test in this case was not a significant change from prior interpretations. We cannot say, therefore, that the agency has violated its obligation to interpret consistently the statutes under which it operates.
Our analysis of the issue begins with a review of the statute. The Federal Aviation Act of 1958 explicitly distinguishes between "interstate air transportation," "overseas air transportation," and "foreign air transportation." In particular, " 'foreign air transportation' ... mean[s] the carriage by aircraft of persons or property as a common carrier for compensation or hire or the carriage of mail by aircraft, in commerce between ... (c) a place in the United States and any place outside thereof[.]" 49 U.S.C. Sec. 1301(24) (1982).
On its face, the statute does not require that "foreign air transportation" be defined by a "flow of commerce" test. Petitioners insist, however, that CAB interpretation of the term has embodied this test. We must reject that argument. It is apparent that the CAB has never stated that the "flow of commerce" test is the sole test for determining whether air transportation is foreign. We have carefully reviewed the CAB cases cited by petitioners and find that they do not support such an absolute view. 2
In addition, as the Board noted in this case, ...
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