494 F.2d 1118 | D.C. Cir. | 1974
In these consolidated cases the Air Lines Pilots Association, International seeks review of three orders of the Civil Aeronautics Board authorizing temporary suspensions of service between specified points by certain certificated
I
The authorizations of the temporary suspensions challenged here were all granted by the Board in response to the problem posed by short-haul, low-density routes in certificated carrier systems. At least partially because of certificated carriers’ shift to larger, technologically advanced equipment, these markets, which were never more than marginally profitable, have become an increasing economic burden on the carriers. As a result, the certificated carriers have been cutting back their short-haul operations to the minimum level of adequacy permitted by their certificates and have been receiving substantial amounts of subsidy from the federal treasury. In addition the CAB has permitted the carriers to delete some of their especially burdensome routes from their certificates. No one—not the small communities served by these markets, not the certificated carriers, not the taxpayers —has been benefitted by these developments.
Another development in the air carrier industry has provided the Board with a means to address the short-haul market problem. That development has been the proliferation of “air taxi operators,” a class of carriers exempt from most of the Federal Aviation Act’s regulatory provisions, including the certification requirement, by virtue of the relatively small size of the aircraft which they employ.
The Board decided that substitution of air taxi for certificated service would
On September 12, 1972, in response to this court’s remand, the Board issued an order to show cause setting forth tentative findings concerning the three previously challenged suspensions and two other theretofore unreviewed suspension agreements.
ALPA filed objections to finalization of the show cause order, arguing that the Board’s general position on the exemption was incorrect, that an evidentiary hearing should in any case be held on this issue, and that the Board’s proposed disposition should have at least imposed provisions protective of the certificated carrier employees affected by the suspensions. On January 2, 1973, however, the Board issued an order" mak
II
ALPA’s primary challenge is directed toward the Board’s finding that the carriers providing the air taxi replacement service should continue to be exempt from most of the economic regulatory provisions of the Act. At the outset we note that ALPA is foreclosed from arguing on this appeal that, regardless of its rationale or evidentiary basis, the CAB is restricted by the Act from permitting an exempted carrier to provide service over a particular route in place of a certificated carrier. We held in ALPA 1 that the CAB was to reconsider a replacement carrier exemption when it substantially took over a route of a certificated carrier. It is a necessary corollary of this holding that the CAB can legally make findings which, in some circumstances at least, justify permitting such a replacement carrier to continue its exempt status. If the ALPA I court had thought that continuing the exemption for a replacement carrier was prohibited by the Act and .consequently beyond the discretion of the CAB, it would have decided the case without a remand. Therefore, all that ALPA I leaves for us to determine on this issue is whether the Board’s decision to continue to exempt the replacement carriers here was a rational one
We turn to this task. Inasmuch as ALPA attacks only the Board’s general position that air taxi operators which participate in suspension-substitution
A.
The Board’s findings on the “undue burden” issue were based primarily on its recent opinion in Part 298 Weight Limitation Investigation, CAB Order 72-7-61 (July 18, 1972), which we upheld in Hughes Air Corp. v. CAB, 160 U.S.App.D.C. 301, 492 F.2d 567 (1973). Order 72-7-61 resulted in promulgation of an amendment to the CAB regulation which provides air taxi operators with their general exemption. The amendment increases the size of the aircraft the air taxi operators can employ without losing their exempt status. In consideration of the amendment, the Board concluded that regardless of increased aircraft size “certification requirements would be an undue burden on air taxis, as a class, by reason of the limited extent of, and unusual circumstances affecting, their operations.”
We upheld these findings in Hughes-, we think they offer adequate support for the Board’s resolution of the undue burden issue in the order we review today. The Part 298 findings are not less significant for this case because of any change in air taxi operations contemplated by the order under review. The short-haul, low-density, at least relatively unprofitable routes on which the air taxi operators provide replacement service under this order constitute the precise unusual circumstances which the Board found in the Part 298 case would make certification an undue burden. Nor is there any indication that the replacement service here challenged will enable the exempt carriers to increase appreciably the limited extent in terms of size and profitableness of their operations. If certification would have been a financial strain on a commuter carrier before it entered into a suspension-substitution arrangement, it is certainly rational to conclude that it would impose a strain after such an arrangement. It is true, as ALPA points out, that the ALPA I court stated: “It is unlikely that service which is the- subject of certification can be service of a 'limited extent’ within the meaning of the statute.”
If an air taxi operator providing replacement service becomes sufficiently large and economically viable and free of the general uncertainties of short-haul, low-density markets, the Board can always determine that its exemption from certification is no longer necessary. Indeed, the Board’s order recognizes “that the certification of former air taxis may well be desirable in individual circumstances” and cites two eases in which it has required certification of air taxis.
B.
Though the Board considered the “public interest” issue first, its public interest findings rested in an important respect upon its undue burden analysis. In finding exemption to be in the public interest, the Board reasoned that the suspension-substitution arrangements provide small communities, the federal treasury, and certificated carriers with important benefits and that these arrangements would be jeopardized by requiring the replacement carriers to obtain certification. The Board quoted from the Hughes-affirmed Part 298 case in support of its view that the air taxi operators, “[functioning at a relatively high financial risk,” must have “the maximum possible operational flexibility” and thus cannot and should not be burdened by certification.
We held in Hughes that it was at least a rational inference for the Board to conclude from its findings on the burden of certification that if the air taxi operators had to choose between using larger, more efficient aircraft and exemption, they would choose the latter.
We further do not find merit in ALPA’s contention that the Board failed adequately to deal with three alleged disadvantages of exemption in its consideration of the “public interest.”
The Board’s statement of its general position on exemption of replacement carriers did not address ALPA’s third alleged disadvantage of exemption—that the service of the air taxis is not as safe as that of the certificated carriers. Instead in its individualized consideration of each of the suspensions the Board noted that it had determined from inquiries at the Federal Aviation Administration that the replacement carrier had conducted its operation in accordance with the applicable FAA safety regulations and concluded that, given the FAA’s ongoing regulation of airline safety, there were no safety considerations which warranted finding the arrangement contrary to the public interest. This treatment of the safety issue was not an abuse of the CAB’s responsibility. The Federal Aviation Act of 1958 relieved the Board of primary responsibility for safety regulation, placing that responsibility instead upon the FAA, see 49 U.S.C. §§ 1421, 1341 (1970). The FAA has fulfilled the responsibility by imposing detailed safety regulations upon air taxi operators as well as certificated carriers. See 14 C.F.R. Part 135 (January 1, 1973). At least where, as here, there is no evidence to contravene the FAA’s opinion that a replacement carrier has operated safely within the regulations,
In sum, we conclude that the Board’s findings that the replacement air taxi operators should continue to be exempted under the Part 298 regulations were rational and well within the Board’s discretion to implement the Act. We therefore uphold the Board’s authorization of the temporary suspensions of certificated service conditioned on provision of substitute service by exempt carriers.
Ill
ALPA contends, however, that even if the air taxi exemptions and the conditional suspensions are proper, the Board should have included in its order provisions protective of the certificated carriers’ employees, or at least should have held full evidentiary hearings to determine the need for such provisions. In arguing that the Board should have held full hearings, ALPA relies principally on a statement in our ALPA I decision “that if the Board concludes * * * that the exemptions of the non-certificated carriers remain valid * * *, it
A.
A mere reading of the above quoted language might well lead us to agree with ALPA that the Board misinterpreted our prior opinion. However, considering that language in the context of the entire opinion and the further proceedings in this case enables us to approve the Board’s position that it was not required to hold full-scale hearings.
We first note, as did the Board in deciding not to employ full-scale hearing procedures,
To be sure, ALPA’s principal argument is not that full-scale hearings on labor protective provisions must be held in every exemption or suspension case, but that such hearings were required in this particular case because our prior opinion specifically so directed. -However, the ALPA I court’s stated reason for finding the case before it somewhat special with respect to this issue suggests that it did not intend to carve out an exception to the general law. The court asserted that since “[t]he agreements have been in effect for a substantial period prior to the issuance of this opinion, * * * there should be hard evidence on which to make a determination” on the labor protective issue.
We also cannot ignore the fact that the Board gave notice of its liberal interpretation of the hearing requirement in a petition to the ALPA I court to clarify its opinion on this point.
B.
We turn next to the Board’s actual consideration of whether labor protective provisions should be imposed on the suspensions. We must determine whether the Board resolved this issue within its discretion after employing fair procedures which, in accordance with our prior opinion’s directive, gave ALPA an opportunity “to demonstrate that a need for protective conditions exists.” In order to make this determination, it is necessary to set forth the legal basis for the Board’s discretion to impose these provisions and the manner in which the Board has exercised this discretion in the past.
The Board first conditioned its approval of a change in a carrier’s certificate on the carrier’s agreeing to provide some protection to adversely affected employees in United-Western, Acquisition of Air Carrier Property, 11 CAB 701 (1950). The Board in United-Western acknowledged that it had no express statutory authority to impose such conditions, but nonetheless found implicit in the Act a completely discretionary power to “impose conditions for the benefit of adversely affected employees in cases involving route transfers, acquisitions, and mergers * *
The Board has exercised its labor protective discretion almost exclusively in cases which, like United-Western, involved route transfers, acquisitions, or mergers with a clear impact on a certificated carrier’s entire system. In these cases the Board has presumed, even in the absence of any definite evidence, that there will be sufficient impact on employees to impose protective provisions.
Having made this determination, it merely remains for us to review whether the Board’s refusal to exercise its labor protective power in this case was consistent with its rationally developed policy
Under its interpretation of our prior opinion, the Board, as stated above, decided to commence the proceedings on remand by publication of a show cause order setting forth its tentative findings on the exemption and labor protective provision issues. Any interested parties having objections to making the tentative findings final were directed by the order to submit a “statement of objections together with such statistical data, and other materials and evidence relied upon to support the stated objections.”
ALPA apparently argued in its response to the show cause order that the Board should impose labor protective provisions on the basis of statistics which showed a decline in the number of pilots employed by the two carriers— Mohawk Airlines and Northeast Airlines
The Board found no evidentiary support in ALPA’s response for any finding that the Northeast suspensions approved in the orders on review here caused the “substantial employee dislocation” upon which imposition of protective provisions in Seven States was based. In the absence of any analysis from ALPA as to how it could prove at a full evidentiary hearing some “substantial employee dislocation” from the challenged limited suspension orders, the Board declined to hold such a hearing. In its show cause order the Board acknowledged that the challenged Northeast suspensions were part of a general pattern of suspensions of service by that carrier in New England, but pointed to the evidentiary hearing in New England Service Investigation, wherein the Board is undertaking a complete review of small community service in New England, as an appropriate forum to consider any cumulative labor impact of past and planned Northeast reductions. The Board cited ALPA’s failure in the New England hearing to make any showing of substantial impact, and indeed ALPA’s failure to even enter an oral appearance, as support for its view of the futility of evidentiary hearings on the limited particular suspensions being reviewed.
ALPA makes the same arguments for imposition of labor protective provisions, based on the same general evidence, before this court as it made before the Board. It does not suggest to us what more it would attempt to prove at an evidentiary hearing; indeed it asks us on the basis of its assertions to order imposition of labor provisions without a full hearing. In some cases a full evidentiary hearing before the Board on the labor protective provision issue would no doubt be necessary, but we cannot say that in this case the Board’s decision to make its tentative findings on the labor protection issue final without an evidentiary hearing was unreasonable. The suspensions in Seven States involved a basic transformation in a certificated system; it was rational for the Board to conclude that no showing was made or could be made at an evidentiary hearing that the suspensions here involved resulted in the same substantial employee dislocation.
Affirmed.
. 49 U.S.C. § 1371(a) (1970) states :
No air carrier shall engage in any air transportation unless there is in force a certificate issued by the Board authorizing such air carrier to engage in such transportation.
. 49 U.S.C. § 1371 (j) (1970) provides, in pertinent part:
* * * The Board may, by regulations or otherwise, authorize such temporary suspension of service as may be in the public interest.
. 49 U.S.C. § 1386(b)(1) (1970) provides, in pertinent part:
The Board, from time to time and to the extent necessary, may * * * exempt from the requirements of this subchapter or any provision thereof * * * any air carrier or class of air carriers, if it finds that the enforcement of this subchapter or such provision * * * is or would be an undue burden on such air carrier or class of air carriers by reason of the limited extent of, or unusual circumstances affecting, the operations of such air carrier or class of air carriers and is not in the public interest.
. We have jurisdiction by virtue of § 1006(a) of the Federal Aviation Act of 1958, 49 TJ.S.O. § 1486(a) (1970).
. See note 14 infra.
. See 14 C.F.R. Part 298 (Jan. 1, 1973).
. The air taxi operator exemption . was amended by the Board in 1972 to permit air taxis to use somewhat larger aircraft. Part 298 Weight Limitation Investigation, CAB Order 72-7-61 (July 18, 1972). This court recently upheld that amendment in Hughes Air Corp. v. CAB, 160 U.S.App.D.C. 301, 492 F.2d 567 (1973).
. GAB Order 72-9-39, Sept. 12, 1972, Joint Appendix at 25.
. 148 U.S.App.D.C. at 27, 458 F.2d at 849.
. CAB Order 72-9-39, supra note 8, JA at 20. With respect to one of these unreviewed agreements, the Board did not actually accept ALPA’s position that ALPA I required reconsideration of the air taxi exemption. Under this agreement a certificated carrier, Texas International Airlines, agreed to provide ground service for a fee to an exempt carrier, Metroflight Airlines. Texas International also reduced its own flight service to one round trip daily, the minimum allowed under its certificate. The Board reviewed Metroflight’s exemption, but only assumed arguendo the applicability of ALPA I to such an agreement.
. CAB Order 73-1-3, Jan. 2, 1973, JA at 1.
. Id. at 5.
. Id. at 8.
. The appeal in No. 73-1069 is taken from the Board’s denial of ALPA’s motion to reopen 26 CAB cases in which, before our ALPA I decision, certificated carriers were authorized to suspend service on the basis of substitute-service arrangements with air taxi operators. CAB Order 73-1-49, Jan. 15, 1973, JA at 65. The Board’s order denying ALPA’s motion rested primarily on the show cause order and final order challenged in No. 73-1068 and on ALPA’s failure to focus upon any disputed factual issues in any of these cases which would require an evidentiary hearing. Id. at 67.
In No. 73-1173 ALPA appeals from a Board authorization of a certificated carrier’s temporary suspension of service, conditioned on provision of a minimum level of service by an air taxi operator. This authorization, resulting from finalization of a show cause order, was made subsequent to the Board’s order in No. 73-1068, and the Board thus was able to apply its general position on the exemption issues as set forth in the 73-1068 orders to the specific facts of this suspension.
. Since the exemption was within the OAB’s discretion, the standard of our review is, of course, the traditional one of reasonableness.
* * * It is the task of this court to determine whether the Board acted within its power and authority in granting the exemption. We must be convinced that upon the record before it the Board acted reasonably. * * * Furthermore, it is not the prerogative of this court to substitute its judgment for that of the Board’s on issues the Board has resolved in a rational manner.
World Airways, Inc. v. CAB, 145 U.S.App.D.C. 3, 6, 447 F.2d 377, 380 (1971). See also North Central Airlines, Inc. v. CAB, 105 U.S.App.D.C. 207, 210-211, 265 F.2d 581, 584-585, cert. denied, 360 U.S. 903, 79 S.Ct. 1285, 3 L.Ed.2d 1254 (1959); American Airlines, Inc. v. CAB, 98 U.S.App.D.C. 348, 354, 235 F.2d 845, 851 (1956), cert. denied, 353 U.S. 905, 77 S.Ct. 668, 1 L.Ed.2d 666 (1957). See generally Frontier Airlines, Inc. v. CAB, 142 U.S.App.D.C. 124, 131, 439 F.2d 634, 641 (1971).
. Hughes Air Corp. v. CAB, supra note 7, 160 U.S.App.D.C. at 304, 492 F.2d at 570.
. CAB Order 72-7-61, supra note 7, at 33.
. 148 U.S.App.D.O. at 28-29, 458 F.2d at 850-851.
. CAB Order 72-9-39, supra note 8, JA at 35.
. Ibid. Bee Reopened TAG-Wriglit Case, CAB Order 72-2-52 (Feb. 14, 1972) ; Aspen Airways, Inc., CAB Order 71—1—98 (Jan. 20, 1971). The Board can also consider the cumulative impact of several suspensions-substitutions on the extent of a particular air taxi’s operations in a probe like that of New England Service Investigation, Docket 22973, into the route structure of an entire geographic region. Indeed, the Board stated it would consider the question of commuter certification in New England Investigation. CAB Order 72-9-39, supra note 8, JA at 35.
. CAB Order 72-9-39, supra note 8, JA at 28.
. 160 U.S.App.D.C. at 312, 492 F.2d at 578.
. There surely is nothing especially financially enticing about the routes on which the certificated carriers want to suspend service. Even if the CAB provided air taxis with subsidies after certification, thus eliminating one of the advantages of the substitution arrangements, the air taxis might well decline
. 148 U.S.App.D.C. at 27, 458 F.2d at 849.
. 160 U.S.App.D.C. at 305, 492 F.2d at 571.
. We also note that removal of an economic burden from a certificated carrier may well ultimately redound through relatively lower rates to the benefit of the average passenger of that carrier. In exercising its rate-making responsibilities the CAB is directed by the Act to take into consideration, inter alia, the need of each air carrier to obtain sufficient revenue to provide efficient service. 49 Ü.S.C. § 1482(e)(5) (1970). If carrier revenues were not depleted by unprofitable short-haul routes, the Board should at least be more likely to disapprove rate increases on longer-haul profitable routes.
. The Board gave additional reasons why certification would not be in the public interest which did not turn on its conclusion that air taxis might not provide the replacement service without exemption. The Board stated that if air taxis were certificated the Board would no longer be able to limit, through the threat of certification, the size of replacement carrier aircraft and thereby encourage high frequency of air taxi service. The Board also noted that the minimum level of replacement carrier service on which certificated carrier suspensions are conditioned is normally greater than the “adequate” level of service which the Board requires of a certificated carrier. And it found that after a replacement carrier was certificated the Board would not as a practical matter expect the suspended certificated airline to step back into the market if the replacement carrier’s service proved deficient though legally adequate. To do so, the Board stated, “would be to place two certificated carriers in a market unable to support even one.” CAB Order 72-9-39, supra note 8, JA at 29. Though we might question the Board’s reasoning on the above findings, it is -not necessary for us to address them given our determination that it was reasonable for the Board to conclude that the suspension-substitution arrangements would be endangered by requiring certification.
.ALPA cites Kodiak Airways, Inc. v. CAB, 144 U.S.App.D.C. 371, 380, 447 F.2d 341, 350 (1971), wherein we stated :
* * * [A] grant [of exemption authority] is not necessarily in the public interest merely because it would bring about a marginal increase in the quantity or quality of air service. It must also be shown that the improved service outweighs any detrimental effects resulting from the grant. * * *
. OAB Order 73-1-3, supra note 11, JA at 4.
. Id. at 6 n. 7.
. See note 26 supra.
. ALPA’s citation to National Transportation Safety Board, Air Taxi Safety Study (Sept. 27, 1972), does not constitute such evidence. Though the report criticizes the general safety record of carriers exempted under the Part 298 regulation, it concludes that “[a]vailable data do not provide the means for meaningful comparison of the rel-active safety levels in air taxi/commercial operations with other general aviation and certificated air carrier operations.” Id. at 12-13. More importantly, the report does not discuss the safety records of specific commuters at all.
.The opinion should consist of a written safety evaluation of the air taxi’s operations which could be made a matter of public record in the suspension proceeding. See Air Taxi Safety Study, supra note 32, at 16. We are not satisfied with the CAB’s present policy of making undocumented inquiries at the FAA. In order to support its finding in this case, the Board should obtain from the FAA a written report on the safety of the operations of each exempt carrier providing replacement service.
. CAB Order 72-9-39, supra note 8, JA at 23.
. Eastern Airlines, Inc. v. CAB, 87 U.S.App.D.C. 331, 185 P.2d 426 (1950), dismissed as moot, 341 U.S. 901, 71 S.Ct. 613, 95 L.Ed. 1341 (1951).
. Springfield Airport Authority v. CAB, 109 U.S.App.D.C. 197, 285 E.2d 277 (1960). See also Nebraska Dept. of Aeronautics v. CAB, 8 Cir., 298 F.2d 286, 290-293 (1962).
. National Air Carrier Assn. v. CAB, 141 U.S.App.D.C. 31, 40, 436 F.2d 185, 194 (1970).
. See, e.g., Trans World Airlines, Inc., CAB Order 71-8-91 (Aug. 19, 1971); Slick Airways, Suspension of Service, 26 CAB 779, 782 (1958).
. 148 U.S.App.D.C. at 30, 458 F.2d at 852.
. Ibid.
. The Board stated it assumed that the court, rather than requiring the Board to hold full-scale evidentiary hearings, intended the Board to follow those fair procedures which it deemed appropriate for resolution of the remanded issues. Included as one “fair procedure” which it might find appropriate was the show cause order used on remand here. OAB petition for rehearing in ALPA I at 13-14.
. We do not suggest that as a general rule a court’s refusal to correct an interpretation of its opinion contained in a petition for clarification or rehearing constitutes an approbation of that interpretation. But where an administrative agency expresses in a petition for clarification a good faith interpretation of an opinion remanding a proceeding to it for further consideration, a court’s decision not to clarify the opinion should be relevant to a later court’s review of the agency’s compliance with the remanding opinion.
. United-Western, Acquisition of Air Carrier Property, 11 CAB 701, 707-708 (1950).
. Id. at 708.
. See, e.g., West Coast-Empire Merger Case, 15 CAB 971, 975 (1952).
. Southwest Renewal-United Suspension Case, 15 CAB 61, 76 (1952). See also Slick Airways, Suspension of Service, supra note 38, 26 CAB at 782; Frontier Certificate Renewal Case, 14 CAB 519, 556 (1951).
. Seven States Area Investigation, 30 CAB 473, 475 (1960).
. Frontier Airlines, Inc., CAB Order 72-1-100 at 10-11 (Jan. 28, 1972).
. Id. at 11. See also Slick Airways, Suspension of Service, supra note 38, 26 CAB at 782.
. Even an administrative agency’s discretionary power must, of course, be employed consistently. See Norwegian Nitrogen Products Co. v. United States, 288 U.S. 294, 315, 53 S.Ct. 350, 77 L.Ed. 796 (1933).
. CAB Order 72-9-39, supra note 8, JA at 57-58.
. Id. at 58.
. Subsequent to our ALPA I decision, but prior to the Board’s issuance of this show cause order, Mohawk was merged into Alie
. As indicated above, there were two other theretofore unreviewed suspensions tentatively approved in the show cause order. One of these suspensions involved Texas International rather than Mohawk or Northeast, see note 10 supra, hut ALPA does not even attempt to make any specific showing why labor protective provisions should be imposed against Texas International.
. CAB Order 73-1-3, supra note 11, JA at 9-10 & n.15.
. Id. at 9 n.12.
.The Board’s conclusion that a full evidentiary hearing on the labor protective provision issue would be futile might have led us to accept the CAB’s procedure for consideration of this issue even if we had determined that our previous opinion used “hearing” to refer to the full-scale hearing required by the Administrative Procedure Act for cases which a statute commands are “to be determined on the record after opportunity for an agency hearing.” 5 U.S.C. § 554. The Supreme Court only last term reaffirmed that an administrative agency, with rules providing for adequate summary procedures, need not hold adjudicatory hearings
