# Civil Aeronautics Board v. Delta Air Lines, Inc./Opinion of the Court

* Court Documents
* Case Syllabus
* Opinion of the Court
* Dissenting Opinion Whittaker
United States Supreme Court
367 U.S. 316
Civil Aeronautics Board v. Delta Air Lines, Inc.
Argued: April 27, 1961. --- Decided: June 12, 1961
This case concerns the power of the Civil Aeronautics Board to alter a certificate of public convenience and necessity, granted to respondent Delta Air Lines, after that certificate had become effective under § 401(f) of the Federal Aviation Act of 1958. 72 Stat. 731, 755, 49 U.S.C. § 1371(f), 49 U.S.C.A. § 1371(f). The administrative proceedings from which the present dispute arises date back to May 1955, and involve consideration by the Board of a number of applications for new service between cities located in an area extending from the Great Lakes to Florida. The Board divided the proceedings into two general categories, consolidating the applications for long-haul service in the Great Lakes-Southeast Service Case and those for short-haul flights in the Great Lakes Local Service Investigation Case. In order to protect fully the interests of local service carriers, the Board allowed these carriers, including petitioner Lake Central Airlines, to intervene in the hearings on the long-haul applications.
At the conclusion of the Great Lakes-Southeast Service Case a number of awards were made, including one permitting Delta to extend an existing route northwest so as to provide service from Miami to Detroit and to add Indianapolis and Louisville as intermediate points on its existing Chicago-to-Miami route. Certain restrictions for the protection of local carriers were imposed on many of the awards, these restrictions generally providing that flights between specified intermediate cities had to originate at or beyond given distant points. The stated purpose of these restrictions was to prevent the long-haul carrier from duplicating so-called 'turn-around' service already provided by existn g local carriers. One such restriction was applied to Delta's run between Detroit and various locations in Ohio but, by and large, Delta's award was free of protective limitations.
The Board's order issued on September 30, 1958, and it specified that Delta's certificate was to become effective on November 29, 1958, unless postponed by the Board prior to that date. Shortly thereafter, within time limits set by the Board, numerous petitions for reconsideration were filed, including one by Lake Central protecting the breadth of Delta's certificate. Lake Central requested that, if the Board should be unable to decide its petition for reconsideration before November 29, the effective date of the certificate be put off. On November 28, one day before Delta's certificate was to become effective, the Board issued a lengthy memorandum and order, which stated in substance that the requests for stays, with one immaterial exception, were denied, but that judgment on the merits of the petitions for reconsideration would be reserved. The Board explained that the parties had not made a sufficient showing of error to justify postponements and that, in view of the advent of the peak winter season, further delay would be particularly inappropriate; the Board then said:
'To the extent that we have considered the petitions for reconsideration in the present order we have done so only for the purposes of assessing the probability of error in our original decision. We feel that such action is necessary to a fair consideration of the stay requests, and is in no way prejudicial to the legal rights of those parties seeking reconsideration. Nothing in the present order forecloses the Board from full and complete consideration of the pending petitions for reconsideration on their merits.' For reasons not presently pertinent, Delta's certificate became effective on December 5, rather than November 29, 1958, and Delta commenced its newly authorized operations shortly thereafter. On May 7, 1959, the Board issued a new order disposing of the still-pending petitions for reconsideration. By this order, the Board amended Delta's certificate in response to the restrictions proposed by Lake Central. Specifically, the Board barred Delta's operations between ten pairs of intermediate cities unless the flights initiated at Atlanta or points farther south; the effect of this order was to bar certain flights Delta was then operating. Even then, the Board's action was not final; the Board reserved the power to lift these restrictions pending the outcome of the Great Lakes Local Service Case. The Board's disposition of the petitions was taken summarily, without formal notice to the parties or the opportunity for a hearing prior to decision.
Delta sought review of this order before the Board, challenging the Board's power to change the terms of its certificate after the effective date thereof without notice or hearing. The Board overruled Delta's objection, stating that: '(W)e believe we have such power, and we have exercised it in the past. Moreover, there is no showing, and we are unable to conclude, that any significant adverse effect will result to either Delta or the public from observance of the conditions here involved.' On review in the Court of Appeals for the Second Circuit, however, the Board's order was overturned, the court reasoning that Congress had made notice and hearing a prerequisite to the exercise of the Board's power to change an existing certificate. Delta Air Lines, Inc., v. Civil Aeronautics Board, 280 F.2d 43.
The issue in this case is narrow and can be stated briefly: Has Congress authorized the Board to alter, without formal notice or hearing, a certificate of public convenience and necessity once that certificate has gone into effect? If not, should it make any difference that the Board has purported to reserve jurisdiction prior to certification to make summary modifications pursuant to petitions for reconsideration? We think that both these questions must be answered in the negative.
Whenever a question concerning administrative, or judicial, reconsideration arises, two opposing policies immediately demand recognition: the desirability of finality, on the one hand, and the public interest in reaching that, ultimately, appears to be the right result on the other. Since these policies are in tension, it is necessary to reach a compromise in each case and petitioners have argued at length that the Board's present procedure is a happy resolution of conflicting interests. However, the fact is that the Board is entirely a creature of Congress and the determinative question is not what the Board thinks it should do but what Congress has said it can do. See United States v. Seatrain Lines, 329 U.S. 424, 433, 67 S.Ct. 435, 439, 91 L.Ed. 396. Cf. Delta Air Lines v. Summerfield, 347 U.S. 74, 79-80, 74 S.Ct. 350, 353-354, 98 L.Ed. 513. This proposition becomes clear beyond question when it is noted that Congress has been anything but inattentive to this issue in the acts governing the various administrative agencies. A review of these statutes reveals a wide variety of detailed provisions concerning reconsideration, each one enacted in an attempt to tailor the agency's discretion to the particular problems in the area. In this respect, the Federal Aviation Act is no exception since, in § 401(f) and (g) of the Act, Congress has stated the limits of the Board's power to reconsider in unequivocal terms. Section 401(f) provides that 'Each certificate shall be effective from the date specified therein, and shall continue in effect until suspended or revoked as hereinafter provided.' The phrase 'as hereinafter provided' refers to § 401(g), which states:
'Authority to Modify, Suspend, or Revoke
'(g) The Board upon petition or complaint or upon its own initiative, after notice and hearings, may alter, amend, modify, or suspend any such certificate, in whole or in part, if the public convenience and necessity so require, or may revoke any such certificate, in whole or in part, for intentional failure to comply with any provision of this title or any order, rule, or regulation issued hereunder or any term, condition, or limitation of such certificate: Provided, That no such certificate shall be revoked unless the holder thereof fails to comply, within a reasonable time to be fixed by the Board, with an order of the Board commanding obedience to the provision, or to the order (other than an order issued in accordance with this proviso), rule, regulation, term, condition, or limitation found by the Board to have been violated. Any interested person may file with the Board a protest or memorandum in support of or in opposition to the alteration, amendment, modification, suspension, or revocation of the certificate.' (Emphasis added.)
This language represents to us an attempt by Congress to give the Board comprehensive instructions to meet all contingencies and the Board's duty is to follow these instructions, particularly in light of the fact that obedience thereto raises no substantial obstacles. It is true, of course, that statutory language necessarily derives much of its meaning from the surrounding circumstances. However, we think that, while there is no legislative history directly on point, the background of the Aviation Act strongly supports what we believe to be the plain meaning of § 401(f) and (g). It is clear from the statements of the supporters of the predecessor of the Aviation Act-the Civil Aeronautics Act of 1938-that Congress was vitally concerned with what has been called 'security of route'-i.e., providing assurance to the carrier that its investment in operations would be protected insofar as reasonably possible. And there is no other explanation but that Congress delimited the Board's power to reconsider its awards with precisely this factor in mind; hence the language that a certificate 'shall be effective * * * until suspended or revoked as hereinafter provided' (emphasis supplied), language which is absent from several of the Acts to wi ch reference has been made. Thus, the structure of the statute, when considered in light of the factor persuading Congress, indicates to us that the critical date in the mind of Congress was the date on which the carrier commenced operations, with the concomitant investment in facilities and personnel, not the date that abstract legal analysis might indicate as the 'final' date. In other words, it seems clear to us that Congress was relatively indifferent to the fluctuations an award might undergo prior to the time it affected practical relationships, but that Congress was vitally concerned with its security after the wheels had been set in motion. In light of this, we think the result we reach follows naturally: to the extent there are uncertainties over the Board's power to alter effective certificates, there is an identifiable congressional intent that these uncertainties be resolved in favor of the certificated carrier and that the specific instructions set out in the statute should not be modified by resort to such generalities as 'administrative flexibility' and 'implied powers.' We do not quarrel with those who would grant the Board great discretion to conjure with certificates prior to effectuation. But, we feel that we would be paying less than adequate deference to the intent of Congress were we not to hold that, after a certificate has gone into effect, the instructions set out in the statute are to be followed scrupulously.
However, petitioners argue that there is an implied exception to the statutory mandate when the Board, pursuant to a petition for reconsideration field before the certificate's effective date, makes a statement that the certificate is subject to later amendment after further deliberation upon the petition. Petitioners admit that there is no express statutory authority for the Board to entertain petitions for reconsideration even prior to the effective date of the certificate, but they assert, and we assume arguendo they are correct, that the Boar has implied power to accept such petitions. This being the case, petitioners claim that the existence of an outstanding petition for reconsideration gives a double meaning to the term 'effective' as used in the Act: certificates are 'effective on the date specified therein for the purpose of allowing the certificated carrier to commence operations, but they are not 'effective' as the term is used in § 401(f) so as to preclude modification outside the procedures specified in § 401(g).
The appeal of this argument comes, in the main, from the general notion that an administrative order is not 'final,' for the purposes of judicial review, until outstanding petitions for reconsideration have been disposed of. See, e.g., Outland v. Civil Aeronautics Board, 109 U.S.App.D.C. 90, 284 F.2d 224; Braniff Airways Inc., v. Civil Aeronautics Board, 79 U.S.App.D.C. 341, 147 F.2d 152. Once it is established that the certificate is not 'final' for one purpose, the argument runs, then it is logical to assume that the certificate lacks 'finality' for another. The difficulties with this line of reasoning, however, are many. First, insofar as it is bottomed on cases such as Outland and Braniff, the argument relies on holdings that were never made. The Courts of Appeals in these cases decided only that petitions for review were timely if filed in time from the date on which the Board disposed of pending petitions for reconsideration; the question whether the Board's action on the petitions for reconsideration should have been taken after notice and hearing did not arise. Furthermore, petitioners' argument skips an important logical step; it assumes, without explanation, that questions of administrative finality present the same problems, and therefore deserve the same solutions, as questions concerning the timeliness of an appeal. In point of fact, this assertion is not only unsupported but erroneous. The pertinent statutory language is not similar in the two instances and the other points under analysis are different. Thus, a court considering the timeliness of a litigant's appeal is concerned with the wisdom of exercising its own power to act, and the result depends on such factors as fairness to the appellant and the intent of Congress in passing a general statute-s 10(c) of the Administrative Procedure Act-which applies equally to almost all administrative agencies. There is no call, as Outland and similar cases illustrate by their omissions, for considering either the sections of a particular act which are not concerned with appellate review or the problem-which at that point is of historical interest only-whether the petition for reconsideration should have been decided summarily or after notice and hearing. One might argue, of course, that the question is similar in both instances because, if the Board's action on the petition for reconsideration is too late, then an appeal which is timely only from the Board's action on reconsideration is also too late. However, this line of reasoning overlooks the confines of the result we are reaching in this case. We are not saying that the Board cannot entertain petitions for reconsideration after effective certification, nor are we holding that such petitions cannot be denied summarily; all we hold is that the petitions cannot be granted and the certificated carrier's operations curtailed without notice or hearing. Therefore, since the cases such as Outland concerned the denial of a petition for reconsideration, there is no conflict, express or implied, between those decisions and this one. In this connection, the statement of a leading commentator seems particularly pertinent:
'The tendency to assume that a word which appears in two or more legal rules, and so in connection with more than one purpose, has, and should have precisely the same scope in all of them runs all through legal discussions. It has all the tenacity of original sin and must constantly be guarded against.' Cook, The Logical and Legal Bases of the Conflict of Laws, 159.
Thirdly, were we to adopt the position urged by petitioners, we would have to hold that, in the words of a former chairman of the Board, the power to reconsider a case may be the lever for 'nullify(ing) an express provision of the Act.' Ryan, The Revocation of an Airline Certificate of Public Convenience and Necessity, 15 J.Air L. & Comm. 377, 384. As Commissioner Ryan indicated, the power the Board asks for in this case seems nothing more or less than the power to do indirectly what it cannot do directly. Parenthetically, it should be noted that, for purposes of this dispute, it is difficult to draw a distinction between a petition for reconsideration filed by a party and one initiated by the Board sua sponte. Sprague v. Woll, 7 Cir., 122 F.2d 128. This being the case, it is all the more significant that the Court in United States v. Seatrain Lines, 329 U.S. 424, 67 S.Ct. 435, 436, 91 L.Ed. 396, while overruling the Interstate Commerce Commission's contention that it had inherent power to reconsider effective certificates, paid no attention to the fact that the Commission had made the original certificate effective, subject 'to such terms, conditions, and limitations as are now or may hereafter be, attached to the exercise of such authority by the Commission.'
Although we feel that the language and background of the statute are sufficiently clear so that affirmance can rest solely on that basis, it seems appropriate, in light of petitioners' vigorous assertion that policy reasons compel their result, to discuss some of the ramifications of our decision. In the first place, it bears repetition that we are not deciding that the Board is barred from reconsidering its initial decision. All we hold is that, if the Board wishes to do so, it must proceed in the manner authorized by statute. Thus, for example, the Board may reconsider an effective certificate at any time if it affords the certificated carrier notice and hearing prior to decision; or, if it feels uncertain about the decision prior to its effective date, it may postpone the effective date until all differences have been resolved; and, if neither of these procedures seem practical in a given case, the Board may issue a temporary certificate set to expire on the date the Board prescribes for re-examination. Indeed, with all these weapons at its command, it is difficult to follow the argument that the Board should be allowed to improvise on the powers granted by Congress in order to preserve administrative flexibility.
Furthermore, it would seem that any realistic appraisal of the relative hardships involved in this case cuts in favor of the respondent. To be sure, the Board may be able to act quicker under the rule it espouses and, by eliminating the necessity of a new hearing, Lake Central will be spared the expense of preparing a new record. However, were the Board correct, respondent would be subjected to the loss of valuable routes, routes it had already begun to operate after considerable initial investment, without being heard in opposition. The Board points out that respondent had notice that the Board had reserved the right to amend the certificate. But it is not clear what comfort respondent could take from such notice; respondent could not hedge, since § 401(f) of the Act provides that a certificated carrier may lose the right to conduct any service it does not initiate within 90 days of certification. Concededly, the fact of notice gives considerable surface appeal to petitioners' assertions; they can and do argue that respondent knew what it was getting into and should not be heard to complain when the gamble turns out unfavorable. However, it must be remembered that the problem is not presented to us in the abstract; we are dealing with it in the context of this particular statute. And, as stated above, a major purpose behind the enactment of the Aviation Act was to eliminate the element of risk from a carrier's operations. With Congress on record as affirmatively desiring to eliminate the necessity of gambling, we do not feel that the 'assumption of the risk' argument carries much weight. The Board also argues that respondent 'in substance' enjoyed the hearing contemplated by § 401(g) because the matters impelling the Board to change its mind were matters that had been thrashed out during the hearings on the original certificate. However, this contention assumes a fact that we do not have before us-that a hearing would not have disclosed any further evidence or, perhaps more importantly, any post-certification events weighty enough to alter the Board's thinking.
In short, our conclusion is that Congress wanted certificated carriers to enjoy 'security of route' so that they might invest the considerable sums required to support their operations; and, to this end, Congress provided certain minimum protections before a certificated operation could be cancelled. We do not think it too much to ask that the Board furnish these minimum protections as a matter of course, whether or not the Board in a given case might think them meaningless. It might be added that some authorities have felt strongly enough about the practical significance of these protections to suggest that their presence may be required by the Fifth Amendment. See Seatrain Lines v. United States, D.C., 64 F.Supp. 156, 161; Handlon v. Town of Belleville, 4 N.J. 99, 71 A.2d 624, 16 A.L.R.2d 1118; see also 63 Harv.L.Rev. 1437, 1439.
Petitioners' final argument is that their position is supported by consistent administrative construction and analogous case authority. The administrative construction argument appears less than substantial in light of the fact that, on the last and, it appears, only occasion when the present question was expressly considered, the Board said in dictum that it had 'grave doubts' about proceeding in the manner followed in this case. Kansas City-Memphis-Florida Case, 9 C.A.B. 401; cf. Smith Bros., Revocation of Certificate, 33 M.C.C. 465. See generally Ryan, supra, where Commissioner Ryan went to great lengths to expose what he felt were the fallacies in the contentions now advanced by petitioners. With respect to prior cases, petitioners again are unable to cite any holdings on point. Petitioners rely heavily on Frontier Airlines, Inc. v. Civil Aeronautics Board, 104 U.S.App.D.C. 78, 259 F.2d 808, 810, but the dispute here involved was not raised in that case. The closest analogy in Frontier is to the argument put forward by a party whose petition for reconsideration had been denied; and the Court of Appeals reported this argument and the reasons for overruling it as follows:
'(T)he order on reconsideration is a nullity because it was rendered after the petition for judicial review had been filed and after the certificates previously issued had become effective; and, if that order is a nullity, the basic order is also a nullity because it fails to cover certain points.
'We do not find the order denying reconsideration invalid because rendered after this petition was filed. No harm was done. Had the Board been of a mind to grant reconsideration, it could have so indicated and a motion to remand would have been in order.'
Perhaps more favorable to petitioners is this Court's decision in United States v. Rock Island Motor Transport Co., 340 U.S. 419, 71 S.Ct. 382, 95 L.Ed. 391, where it was held that the Interstate Commerce Commission could modify a motor carrier's effective certificate pursuant to a reservation in the initial order. However, two important distinctions between that case and this are apparent: (1) the Motor Carrier Act makes express provision for summary modifications after certification, 49 U.S.C. § 308, 49 U.S.C.A. § 308, and (2) the Court in Rock Island was never carefl to limit its holding to the particular modification made in that case. Finally, the decision which is analytically most relevant to this case, United States v. Seatrain Lines, supra, furnishes support for respondent, rather than petitioners. While Seatrain may be distinguishable on its facts, the Court spoke in general terms of the rule that supervising agencies desiring to change existing certificates must follow the procedures 'specifically authorized' by Congress and cannot rely on their own notions of implied powers in the enabling act. In short, we do not find that prior authority clearly favors either side; however, to the extent that a broad observation is permissible, we think that both administrative and judicial feelings have been opposed to the proposition that the agencies may expand their powers of reconsideration without a solid foundation in the language of the statute. Therefore, since the language and background of the statute are against, rather than for, the Board, the judgment of the Court of Appeals must be affirmed.
Affirmed.
Mr. Justice WHITTAKER, with whom Mr. Justice FRANKFURTER and Mr. Justice HARLAN join, dissenting.

## Notes

* ↑ This section provides:
* ↑ The Board's regulations concerning petitions for reconsideration 14 CFR § 302.37, provide in part that:
* ↑ A temporary stay was granted from November 29 to December 5 to enable the Court of Appeals to consider a request by Eastern Air Lines for a judicial stay of certain awards made in the original proceeding. Eastern did not get its stay nor was its challenge on the merits upheld. Eastern Air Lines v. Civil Aeronautics Board, 2 Cir., 271 F.2d 752.
* ↑ We are informed that this case has now been completed but no further action has been taken on Delta's restrictions.
* ↑ See Tobias, Administrative Reconsideration: Some Recent Developments in New York, 28 N.Y.U.L.Rev. 1262, where the author observed:
* ↑ Generally speaking, the less interested Congress has been in what has been called 'security of certificate,' the wider the scope of reconsideration Congress has allowed to the supervising agency. See generally Davis, Res Judicata in Administrative Law, 25 Texas L.Rev. 199. It cannot be doubted that Congress was powerfully interested in 'security of certificate' when it passed the Aviation Act. See 83 Cong.Rec. 6407.
* ↑ No one contends that the changes made upon reconsideration constituted the correction of inadvertent errors. See American Trucking Ass'ns Inc., v. Frisco Transportation Co., 358 U.S. 133, 79 S.Ct. 170, 3 L.Ed.2d 172.
* ↑ Speaking on behalf of the bill which became the predecessor of the Federal Aviation Act-the Civil Aeronautics Act of 1938-Congressman Lea, Chairman of the Committee on Interstate and Foreign Commerce which reported the bill, said:
* ↑ The 'finality' of an order for purposes of judicial review depends on § 10(c) of the Administrative Procedure Act, 60 Stat. 243, 5 U.S.C. § 1009(c), 5 U.S.C.A. § 1009(c). See 6 Stan.L.Rev. 531.
* ↑ In addition to the reasons mentioned in the text, those cases involving orders, rather than certificates-see Western Air Lines v. Civl Aeronautics Board, 9 Cir., 194 F.2d 211-are distinguishable for the reasons stated in Seatrain, supra, 329 U.S. at page 432, 67 S.Ct. at page 439. Similarly, the cases involving certificates under the Federal Communications Act are distinguishable for the reasons stated by Commissioner Ryan. See Ryan, The Revocation of an Airline Certificate of Public Convenience and Necessity, 15 J.Air L. & Comm. 377, 384-385.
* ↑ See also Hancock, Fallacy of the Transplanted Category, 37 Can.B.Rev. 535. One might argue, of course, that judicial review and administrative reconsideration are the same since both threaten a reversal of the prior award. However, Congress has shown no intent to preclude reconsideration, either judicial or administrative, after notice and hearing.
* ↑ Although the Board did not purport to issue a temporary certificate as prescribed in § 401(d)(2), petitioners now argue that the Board's action was 'equivalent' to a temporary certification. However, we do not find this proposition persuasive. As stated in the text, supra, we think that the Board must bow to the statutory procedue and cannot take short cuts. See note 15, infra. Moreover, the most natural reading of § 401(d)(2)-which says that temporary certificates may be issued for 'limited periods'-is that Congress was authorizing the Board to issue certificates running until a specified date. One reasons for this construction is obvious; if a temporary certificate had unlimited duration, only subject to immediate revocation when the Board got around to considering various objections, it might play havoc with the ability of the carrier to accept advance reservations. Just such a contention was made by Delta before the Board in its petition for a stay of the Board's May 7, 1959, order on reconsideration. Delta pointed out:
* ↑ It appears clear, and the Board does not disagree, that the 'hearing' specified in § 401(g) means a 'hearing' prior to decision. And, the Board does not contend that this requirement could have been satisfied by the allowance of a hearing after the decision on reconsideration was handed down. This course of action seems wise since (1) it is generally accepted on both principle and authority that a hearing after decision, although permissible in special circumstances, is not the equivalent of a predetermination hearing, see, e.g., Gelhorn and Byse, Administrative Law, 774; (2) it is not entirely clear that Delta could have procured a hearing after the Board's decision. Delta sought a stay of the Board's May 7 order until after the Great Lakes Local Service Investigation Case was decided, presumably witha view to introducing further evidence on the present point in that case; the request for a stay was denied.
* ↑ Since Kansas City, the Board has reconsidered considered an effective award on three occasions. United Western, Acquisition of Air Carrier Property, 11 C.A.B. 701; Service to Phoenix Case, Order E-12039 (1957); South Central Area Local Service Case, Order E-14219 (1959). United Western did not involve a certificate of public convenience and necessity and, thus, has no relevance. See note 10, supra. Service to Phoenix involved a denial of reconsideration except on one point, which might arguably be termed the correction of inadvertent error. See note 7, supra. South Central did involve the alteration of a certificated carrier's rights. As stated, the present point was not raised in any of these three cases.
* ↑ The potentially distinguishing feature about Seatrain is that the Court's holding may rest on an alternate ground-viz.: that the Commission had no power to impose the conditions it did in the first instance. However, Seatrain cannot be distinguished on the grounds that the Court said 'the certificate, when finally granted, and the time fixed for rehearing has passed, is not subject to revocation in whole or in part except as specifically authorized * * *.' The point is that, under the Water Carrier Act, the Commission had express authority to entertain petitions for reconsideration at any time. See 49 U.S.C. § 916(a), 49 U.S.C.A. § 916(a), incorporating 49 U.S.C. § 17(6) and (7), 49 U.S.C.A. § 17(6, 7). Therefore, it is clear that the Commission in Seatrain could have reached with impunity the result it wanted to reach by following the procedures set out by Congress. The force of the Seatrain decision is, then, that the commissions and boards must follow scrupulously the statutory procedures before they can alter existing operations and that arguments to the effect that 'this is just another way of doing it' will not prevail.
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