Under the Civil Aeronautics Act of 1938, the Civil Aeronautics
Board consolidated 45 route applications of 25 air lines into one
area proceeding. 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 entered orders authorizing
certificates of convenience and necessity for several new routes in
the area. One applicant was authorized to engage in air
transportation along certain of these routes which were different
from those described in its applications. Its applications
requested authority to transport on "the routes detailed herein, or
such modification of such routes as the Board may find public
necessity and convenience require," and also contained prayers for
general relief.
Held:
1. On the record in this case, the applications were sufficient
to permit certification of this applicant for the routes awarded.
Pp.
338 U. S.
575-578.
(a) 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. P.
338 U. S.
576.
(b) In deciding that the policies of the Act could best be
served in this case by a consolidated area proceeding, the Board
did not exceed its procedural discretion. Pp.
338 U. S.
576-577.
(c) In awarding routes varying from those specifically detailed
in the applications in this case, the Board did not depart from
congressional policy hinging certification generally on application
procedures. Pp.
338 U. S.
577-578.
(d) The standard adopted by the Board under which the public
interest is given paramount consideration is a correct standard.
Pp.
338 U. S.
580-581.
Page 338 U. S. 573
2. On the record in this case, an unsuccessful applicant was not
denied a fair hearing in the proceedings before the Board. Pp.
338 U. S.
578-581.
3. On the record in this case, the Board's finding that the
successful applicant was fit and able to perform the services
authorized and was better qualified to do so than the unsuccessful
applicant was supported by substantial evidence, and is sustained.
Pp.
338 U. S.
581-582.
84 U.S.App.D.C. 374, 174 F.2d 510, reversed.
The Court of Appeals reversed an order of the Civil Aeronautics
Board granting certificates of convenience and necessity for the
operation of certain new airline routes. 84 U.S.App.D.C. 374, 174
F.2d 510. This Court granted certiorari. 338 U.S. 812. No. 158
dismissed; Nos. 157 and 159
reversed, p.
338 U. S.
582.
MR. JUSTICE BLACK delivered the opinion of the Court.
Acting under the Civil Aeronautics Act of 1938, [
Footnote 1] the Civil Aeronautics Board (CAB)
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 certificates
Page 338 U. S. 574
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. [
Footnote
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. [
Footnote 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. [
Footnote 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. [
Footnote
5] We
Page 338 U. S. 575
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.
First. We hold that Piedmont's applications were
sufficient to permit 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.) [
Footnote 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
Page 338 U. S. 576
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. [
Footnote 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 business 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.
Page 338 U. S. 577
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
"catch-all 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, [
Footnote 8] they were all in the general area
covered by the consolidated hearings. All
Page 338 U. S. 578
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 imaginary 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,
309 U. S. 477.
If the Board had neglected this purpose, State could rightly
complain.
Page 338 U. S. 579
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 those contentions. 8 CAB 716. With
particular reference to the general contention that, in reopened
proceedings, State could offer evidence to refute the Board's
findings of Piedmont's superior qualifications, the Board said:
"Although, in the course of subsequent argument, State asserted
that, had it been aware of the situation, it might have presented
additional or different evidence, and would have enlarged upon its
inquiries into Piedmont's case, it did not, in the course of the
argument or in its petition for reconsideration, specify what the
nature of such additional evidence or inquiries would have been.
[
Footnote 9]"
Id. at 721. It was in this setting
Page 338 U. S. 580
that the Board held State's showing inadequate to justify new
hearings concerning the respective qualifications of State and
Piedmont. In reaffirming its previous holding of Piedmont's
superior qualifications, the Board said:
"The only practical approach that can be taken in cases of this
type is to consider the applications not with a view as to how an
individual proposal would benefit the applicant, or whether a
particular proposed route is required precisely as set forth in an
application, but rather to consider the entire case with the
objective of establishing a sound transportation pattern in the
area involved. [
Footnote
10]"
8 C.A.B. at 722.
We think the standard adopted by the Board under which the
public interest is given a paramount consideration is a correct
standard. And, since the Board's conclusion
Page 338 U. S. 581
that the proceeding should not be reopened represents its
informed judgment after a searching inquiry, we accept its
conclusion. Because of the foregoing and other circumstances
disclosed by the record, we think there is no ground for State's
contention that it failed to have a fair hearing.
See Chicago,
St. Paul, Minneapolis & Omaha R. Co. v. United States,
322 U. S. 1,
322 U. S. 3.
Third. During the rehearing argument, counsel for State
was asked by a member of the Board whether State took the position
that Piedmont was "not capable of running the route that was
awarded." He replied:
"We are taking the position that both State and Piedmont are fit
and able; it's a question of which has demonstrated in this record
to be more fit, willing, and able."
State nevertheless contends here, and the Court of Appeals held,
that there was no sufficient evidence to support the Board's
finding of Piedmont's fitness and ability. This contention, like
others, rests almost wholly on the argument that Piedmont had not
applied for the particular routes awarded, and thus could not have
evidenced its ability to handle those routes. The Court of Appeals
also emphasized the fact that the routes awarded required Piedmont
to transport over mountains, whereas the detailed passenger routes
for which it had applied would not have crossed the mountains; it
contrasted this with State's applications, which had specifically
shown routes crossing the mountains. Precisely what added skills,
if any, are required for flights across mountains is a matter of
proof. In the extensive hearings held in this area proceeding, each
applicant was required to and did offer evidence concerning fitness
and ability. Much of this evidence concerned the financial
condition and experience in aviation of both Piedmont and State.
The Board's opinions show the painstaking consideration given this
evidence. The Board found both airlines fit and able, but found the
evidence of qualifications
Page 338 U. S. 582
as between the two weighted on Piedmont's side. We hold that the
conclusion was supported by substantial evidence.
In view of our conclusion, we need not consider the allegations
of State's cross-petition in No. 158, and that case is therefore
dismissed. In Nos. 157 and 159, the judgment of the Court of
Appeals is reversed.
It is so ordered.
MR. JUSTICE DOUGLAS took no part in the consideration or
decision of this case.
* Together with No. 158,
State Airlines, Inc. v. Civil
Aeronautics Board et al., and No. 159,
Piedmont Aviation,
Inc. v. State Airlines, Inc., also on certiorari to the same
court.
[
Footnote 1]
52 Stat. 973, 49 U.S.C. § 401
et seq.
[
Footnote 2]
The several opinions of the Board are reported. 7 C.A.B. 863; 8
C.A.B. 585 and 716.
[
Footnote 3]
Authority for judicial review is given by § 1006 of the Act, 52
Stat. 1024, 49 U.S.C. § 646.
[
Footnote 4]
84 U.S.App.D.C. 374, 174 F.2d 510.
[
Footnote 5]
The Board's petition is our Docket No. 157; Piedmont's is No.
159; State's cross-petition is No. 158.
[
Footnote 6]
There are slight but immaterial variants in the relevant
language as it appears in (1) and (2) of § 401(d). Those
subsections, as italicized by the Court of Appeals, read:
"(1) The Board shall issue a certificate
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, and to conform to
the provisions of this chapter [originally, 'this Act'] and the
rules, regulations, and requirements of the Board hereunder, and
that such transportation is required by the public convenience and
necessity; otherwise, such application shall be denied."
"(2) In the case of an application for a certificate to engage
in temporary air transportation, the Board may issue a certificate
authorizing the whole or any part thereof for such limited
periods as may be required by the public convenience and necessity
if it finds that
the applicant is fit, willing, and able
properly to perform such transportation and to conform to the
provisions of this chapter and the rules, regulations, and
requirements of the Board hereunder."
[
Footnote 7]
"Application for a certificate shall be made in writing to the
Board, and shall be so verified, shall be in such form and contain
such information, and shall be accompanied by such proof of service
upon such interested persons as the Board shall by regulation
require."
Civil Aeronautics Act of 1938, as amended, § 401(b).
[
Footnote 8]
The Court of Appeals placed in its opinion two maps charting the
passenger routes applied for by Piedmont and State and indicating
that the routes awarded Piedmont far more nearly approximated those
sought by State. The Board and State take the position that these
maps do not show all of the points and routes applied for by either
airline, and the Court of Appeals said as much with reference to
the maps. But the view we take makes it unnecessary to elaborate
the different views as to the precise routes for which Piedmont and
State applied.
[
Footnote 9]
The record does show a statement by State's counsel, made near
the end of the rehearing argument, that, "had State known that
Piedmont was an applicant for these routes," it could have proven
in the original hearings that Piedmont did not have "facilities for
all types of overhaul." It may be that this general suggestion can
be considered as a request by State to reopen the proceedings for
proof on this particular single point. If so considered, it is
sufficient to point out that the Board found that Piedmont had
adequate financing to obtain all necessary equipment, which is a
major consideration in determining the comparative fitness and
ability as between applicants who propose to operate newly
established routes.
See the case cited in the Board's
opinion,
American Export Airlines, Inc., Trans-Atlantic
Service, 2 C.A.B. 16, 38 (1940).
[
Footnote 10]
In this Court, a suggestion is made that two sentences by one
member of the Board during the rehearing argument indicate that the
Board acted on a wrong standard of public interest:
"Yes, but apart from all these legalisms, isn't the real issue
whether or not we made a mistake and picked a carrier who cannot
run this route? If we really get down and try to find what is the
public interest, isn't that the real point?"
It is said that this statement departs from the standard of
"public interest, convenience, and necessity." But, in the
statement itself, the Board member pointed out that the proper
standard was "the public interest." Moreover, he went on to say
that
"the important thing is not whether you win or Piedmont wins,
but whether the people of North Carolina and Kentucky and Virginia
and that area in there get the kind of service that they
should."
MR. JUSTICE REED, with whom MR. JUSTICE FRANKFURTER joins,
dissenting.
The Civil Aeronautics Board has been authorized by Congress to
award certificates of convenience and necessity to applicants for
air routes. The Board may give to one applicant, and deny to
others, the exclusive privilege of serving an air route to the
applicant's private profit. A determination by the Board, however,
involves more than a choice among competing individuals; the Board
has been made the guardian of the national interest, and the
arbiter of the conflicting concerns of various communities. The
interests to be protected are so important that Congress has
legislated to insure that those seeking this unique public
privilege be not insulated from challenge and competition. The
Civil Aeronautics Act provides, 52 Stat. 987, § 401:
"
Application for Certificate"
"
* * * *"
"(b) Application for a certificate shall be made in writing to
the Authority, and shall be so verified, shall be in such form and
contain such information, and shall be accompanied by such proof of
service upon such interested persons, as the Authority shall be
regulation require. "
Page 338 U. S. 583
"
Notice of Application"
"
* * * *"
"(c) Upon the filing of any such application, the Authority
shall give due notice thereof to the public by posting a notice of
such application in the office of the secretary of the Authority
and to such other persons as the Authority may by regulation
determine. Any interested person may file with the Authority a
protest or memorandum of opposition to or in support of the
issuance of a certificate. Such application shall be set for public
hearing, and the Authority shall dispose of such application as
speedily as possible."
I
ssuance of Certificate
"
* * * *"
"(d)(1) The Authority shall issue a certificate 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, and to conform to the provisions of
this Act and the rules, regulations, and requirements of the
Authority hereunder, and that such transportation is required by
the public convenience and necessity; otherwise, such application
shall be denied."
The procedures so defined by Congress provide the frame within
which the Board's discretion may freely move. So long as that
discretion is exercised within the frame, the courts should not
interfere. But, because the responsibility placed in the Board by
Congress is great, and because the damage a Board error in awarding
a certificate may cause to other carriers and the public is
irreparable, the courts should insist that the procedures be
strictly followed.
They were not followed here. In 1945, the Civil Aeronautics
Board consolidated for a common hearing the
Page 338 U. S. 584
applications, particularized as required by the statute and
regulations, of twenty-five airline companies which had filed
documents seeking certificates for forty-five specific routes,
varying considerably, but all within an area that extends roughly
from Maryland to Florida, Virginia to Missouri. After settling upon
the few routes to be awarded, the Commission, without further
notice to anyone, selected for one of these Piedmont, which had
asked for a quite different route. How much the route granted
differed from that applied for may be seen readily by a glance at
the maps in 84 U.S.App.D.C. 374, 377, 174 F.2d 510 at 513. This
Court says it differed "markedly."
An administrative body must follow carefully the specific
requirements laid down by Congress to protect the public from
administrative absolutism. To insist that the statute be followed
is not mere search for precision. The fact that State knew of the
award of the route to Piedmont in time to apply for a rehearing
does not justify the failure of the Board to give not only State,
but others, as well, an opportunity to contest fairly for the
selected route before the Board's opinions crystalized.
Since the error of the Board lay in its failure to follow
required procedure, it should be enough to call for a new
determination if, on additional evidence from State or the public,
or on a different manner of presentation, the Board might have made
its award to a carrier other than Piedmont. That it is not fanciful
to assume it might have done so may be inferred from the statement
of the Board in its first opinion that, even then, the choice
between State and Piedmont was "a close and difficult question." 7
C.A.B. 863, 901. Moreover, when the limited rehearing was granted,
the issue, at least in the mind of one member of the Commission,
may have shifted. At one point, this member said:
"Yes, but, apart from all these legalisms, isn't the real issue
whether or not we made a mistake and picked a carrier who
cannot
Page 338 U. S. 585
run this route? If we really get down and try to find what is
the public interest, isn't that the real point?"
This is quite different from the question of which carrier can
best serve the public interest, convenience, and necessity.
I see no objection to a proceeding in which applications for
separately defined routes in a single large region are considered
together. But, within the framework of an "area proceeding," the
procedure for notice required by the statute should have been
followed. After deciding on the routes for the "area," the Board
should have permitted applicants to amend their applications to
conform with the selected routes. Such material changes as Piedmont
would have had to make would have required public notice under §
401(c) of the statute, and thus the attention of competing air
lines and interested municipalities would have been directed to the
controlling question of which air line would best serve the public
interest on the selected route. This would have been the "proper
dispatch" of business that the statute requires.
It is true that a remand might well result in the issuance again
of a certificate to Piedmont. That award, however, would be on an
amended application and on proper notice, and at least the public
and Piedmont's possible competitors would have an opportunity to be
heard after preparation and in regular course.
The judgment of the Court of Appeals should be affirmed.