Nebraska Department of Aeronautics v. CAB

• Decision Date: 04 January 1962
• Docket Number: No. 16589,16590.,16589
• Citation: 298 F.2d 286
• Parties: NEBRASKA DEPARTMENT OF AERONAUTICS et al., Petitioners, v. CIVIL AERONAUTICS BOARD, Respondent. Frontier Airlines, Inc., Intervenor.
• Court: U.S. Court of Appeals — Eighth Circuit

298 F.2d 286 (1962)

NEBRASKA DEPARTMENT OF AERONAUTICS et al., Petitioners, v. CIVIL AERONAUTICS BOARD, Respondent Frontier Airlines, Inc., Intervenor.

Nos. 16589, 16590.

United States Court of Appeals Eighth Circuit.

January 4, 1962.

William C. Burt, Washington, D.C., Robert M. Beckman, Koteen & Burt, Washington, D. C., Clarence A. Davis, Washington, D. C., and Rush C. Clarke, North Platte, Neb., on the brief, for petitioners.

O.D. Ozment, Associate General Counsel, Litigation and Research, Civil Aeronautics Board, Washington, D. C., Franklin M. Stone, General Counsel, Civil Aeronautics Board, Washington, D. C., Robert A. Bicks, Asst. Atty. Gen., Washington, D. C., John H. Wanner, Deputy General Counsel, Washington, D. C., Richard A. Solomon and Henry Geller, Attorneys, Dept. of Justice, Washington, D. C., on the brief, for respondent.

Herbert Elish, Washington, D. C., Raymond J. Rasenberg, Bowen & Rasenberger, Washington, D. C., William A. Nelson, Frontier Airlines, Inc., Stapleton Airfield, Denver, Colo., Marti, O'Gara, Dalton & Sheldon, Lincoln, Neb., on the brief, for intervenor, Frontier Airlines, Inc.

Before VOGEL and BLACKMUN, Circuit Judges, and BECK, District Judge.

BLACKMUN, Circuit Judge.

The petitioners,¹ which we shall collectively call "Nebraska", seek review here² of two orders of the Civil Aeronautics Board. In their brief they state:

"This case involves the power of the Civil Aeronautics Board * * * to authorize without a hearing, on the basis of unverified pleadings, the cessation of all air service on segment 13 of route 73 which Frontier Airlines, Inc. * * * was given the sole certificate responsibility to serve."

The segment referred to is the northern Nebraska route between Omaha, Nebraska, and Casper, Wyoming, via the intermediate points of Lincoln, Columbus, Norfolk, Ainsworth, Valentine, and Chadron, Nebraska, and Lusk and Douglas, Wyoming.

The first order,³ issued without a hearing, authorized Frontier temporarily to suspend service over segment 13.⁴ At the same time and by the same order, the Board, on its own initiative,⁵ instituted an investigation to determine whether the public convenience and necessity required the deletion of segment 13 from Frontier's certificate. The authorization for temporary suspension ran "until ninety days after final decision" in the investigation so ordered by the Board.⁶ Our No. 16,589 is the appeal from this order.

The second order⁷ dismissed, also without a hearing, Nebraska's cross-petition for an investigation into the adequacy of Frontier's total service in Nebraska and the substitution of another carrier for Frontier in that state. Our No. 16,590 is the appeal from this order.

The controversy has its origin in the Seven States Area Investigation, CAB Docket 7454, et al., the final decision in which was issued December 8, 1958. Frontier, by Board order⁸ and contrary to the recommendation of its hearing examiner, was then granted authority, inter alia, to provide exclusive subsidized service on segment 13.⁹ Although the examiner had concluded that the segment should not be authorized because the subsidization costs would be out of line with the service involved and would be primarily for the cities of Ainsworth and Valentine, the Board awarded the route in view of the isolation of the area and the discontinuance of passenger rail service. The award, however, was for an "experimental period" of 5 years and was subject to an announced "use it or lose it" policy.¹⁰

This policy, as embraced in Seven States, was to the effect that the Board was willing, on an experimental basis, to offer local air service to smaller communities with unknown or marginal traffic potential "a chance to demonstrate whether they will use and can afford local air service". Three factors were specified: (1) unless a city enplaned an average of 5 passengers daily for the 12 months following the initial 6 months of service, the Board, in the absence of unusual circumstances, itself would institute a formal investigation to determine whether the city should lose its air service; (2) unless a route segment averaged a stated passenger minimum during the same period, a similar step would be taken; and (3) the obligation of management to come forward promptly with suggested route modifications, and

"In particular, where a community or segment fails to make adequate use of a subsidized service, the carrier is free to seek a voluntary suspension of service even in advance of a proceeding to terminate the certification. Indeed if a carrier fails to exercise adequate vigilance in this regard, it may reflect upon the economy and efficiency of management in subsidy mail pay proceedings under section 406 of the Act.¹¹"

On February 8, 1960, after 16 months of service, Frontier filed with the Board its application for temporary suspension of service on segment 13 "until such time — not less than a year hence, that the traffic warrants the resumption of such service". Detailed exhibits accompanied the application. Amendments were filed with further data so that the Board had before it Frontier's stated results of operations on the segment for more than 18 months. In general, this material contained the history of the operation in terms of schedules provided, traffic results by cities and over the entire segment, and alternate available air facilities. The primary conclusory allegations submitted by Frontier were that the traffic failed to meet the "use it or lose it" standard; that a subsidy of $239,213 annually (estimated on the basis of one round trip daily) was excessive in the light of the actual utilization of the service; that it would be neither economical nor efficient management for Frontier to continue the service; and that alternate air service for nearly half the present traffic was adequate.

Nebraska combined its answer with the cross-petition referred to above. These, too, were accompanied by supporting material in the form of affidavits, newspaper editorials and the like. In general, Nebraska took the position that Frontier's service throughout the state was unrealistic in operation and grossly inadequate; that this was the major factor in the lack of traffic response; that there was no prospect for improvement under Frontier's management; that the test period had not been an adequate one; that the stated subsidy was greatly overestimated; that suspension of service would not be temporary but would actually amount to abandonment; that a hearing was required as a matter of law; and that Frontier should be replaced.

Frontier then moved for a decision on the pleadings.

The Board did not hold a hearing on either application. With respect to the proceeding instituted by Frontier the Board found that the standards prescribed in Seven States "have not been met by most of the cities on segment 13 or by the segment as a whole"; that "despite any resultant isolation of the cities in northern Nebraska the traffic response does not indicate a strong need for air service"; that suspension would deprive only Ainsworth and Valentine of all air service; that these cities originated insufficient passengers to warrant service; that the subsidy required to support these two cities and the entire segment was "excessive in relation to the use made of the service"; that "on balance, continuance of the operation would not be in the best interests of the public"; and that the operation would involve a subsidy cost far outweighing the inconvenience to the areas affected.

With respect to the proceeding instituted by Nebraska's petition the Board found that Frontier had demonstrated that it had provided "a reasonable quantity of service and that the quality of that service * * * has also been reasonable when viewed in the light of the traffic response"; that there is "no doubt that there have been deficiencies in that service"; that "We are satisfied that Frontier is aware of the deficiencies that have existed and that it is striving to eliminate the flaws in its services"; that Frontier's performance was not such as to constitute inadequate service within the meaning of § 404 of the Act, 49 U.S. C.A. § 1374; and that "existing circumstances" did not "warrant setting the matter for hearing".

Although both appeals emerge from the same factual foundation, each presents a different question of statutory interpretation and application. We therefore consider them separately.

No. 16,589

In this appeal from the order authorizing the temporary suspension of service the question of mootness, though not specifically suggested by counsel, presents itself. Because 90 days have not yet elapsed from the issuance of the final decision on October 19, 1961 (footnote 6), or from the effective date of the amended certificate issued pursuant thereto (which can be extended in the interim by the Board itself or by the filing of any petition for reconsideration), we necessarily conclude that this appeal is not yet moot.

Involved here are subsections (j) and (g) of § 401 of the Act, 49 U.S.C.A. § 1371(j) and (g). The filing of Frontier's petition and the Board's action thereon were purportedly pursuant to § 401(j) which reads:

"No air carrier shall abandon any route, or part thereof, for which a certificate has been issued by the Board, unless, upon the application of such air carrier, after notice and hearing, the Board shall find such abandonment to be in the public interest. Any interested person may file with the Board a protest or memorandum of opposition to or in support of any such abandonment. The Board may, by regulations or otherwise, authorize such temporary suspension of service as may be in the public interest".

and to § 205.5 of the Board's Economic Regulations, 14 C.F.R. 205, first promulgated July 1, 1949, which reads in part:

"The Board will grant such application if it finds that such temporary suspension of service is in the public interest. * * * "

but prescribes nothing...