Source: https://openjurist.org/280/f2d/636
Timestamp: 2019-04-24 22:26:44+00:00

Document:
Petition for Rehearing Denied July 13, 1960.
Mr. James F. Bell, Washington, D. C., with whom Messrs. R. S. Maurer, Atlanta, Ga., George C. Neal, Washington, D. C., and Calvin Davison, Washington, D. C., were on the brief, for petitioner.
Mr. Morris Chertkov, Attorney, Civil Aeronautics Board, with whom Messrs. Franklin M. Stone, General Counsel, Civil Aeronautics Board, John H. Wanner, Deputy General Counsel, Civil Aeronautics Board, O. D. Ozment, Associate General Counsel, Litigation and Research, Civil Aeronautics Board, and Richard A. Solomon, Attorney, Department of Justice, were on the brief, for respondent.
Before PRETTYMAN, Chief Judge, and WILBUR K. MILLER, and BAZELON, Circuit Judges.
This is the second appeal involving efforts of the Civil Aeronautics Board to fix mail-pay rates for the international operations of Chicago & Southern Airline ("C & S"), subsequently merged with Delta Air Lines ("Delta"), petitioner here.
On remand, hearings were held to determine the amount of excess profits on the domestic division to be offset against the international mail rate. After hearings before the Examiner and shortly before oral argument to the Board, the Board sua sponte raised the additional question of whether the international rate itself, against which the set-off was to be applied, should be recomputed on a past-period basis. By that time, the international rate period commencing December 16, 1950 had been closed as of July 31, 1952, and complete figures based upon actual operating experience were thus available for the full period. These figures disclosed a 36 percent rate of return — 26 percent more than was estimated. The Board decided, over sharp dissent, that under our remand its inquiry was not limited to the question appealed and that it was free, if not required, to redetermine the proper rate on the basis of actual operating results. Delta brought the present petition to review this action.
Petitioner challenges the Board's power to reopen the entire rate question, and further contents that, even if the Board had the power, its exercise in this case was arbitrary and an abuse of discretion.
Underlying these contentions is Delta's assertion that its merger with C & S, while the former appeal was pending, proceeded upon the assumption that the C & S international rate was final, subject only to a possible set-off; and that it is unfair for the Board to retroactively alter a situation upon which its stockholders, suppliers, financiers and the stock-purchasing public relied.
More specifically, the Board is said to have exceeded its power because (1) the issue of excess profits under the new international rate could have been, but was not, raised and tested upon the prior review, and (2) the mandate of this court, directing the Board "to determine and fix the rate in accordance with this opinion," precluded the Board from considering, de novo, questions not dealt with in our opinion.
With respect to the first argument, it is true that by the time the international rate, effective as of December 16, 1950, was entered in October of 1951, the Board and the Postmaster had available operating figures for at least part of the already elapsed ten-month period of operation under this new rate.7 But at the time the Postmaster filed his petition for review (March 1952), the international rate was still in effect for an indefinite period. Even if the early operating experience showed an excessive return, the Postmaster could have refrained from challenging the basic rate on the reasonable assumption that further operating experience might be less profitable, thus rendering the average rate for a longer period fair and reasonable.
Moreover we agree with the Board that, even if the Postmaster could, as a practical matter, have challenged the rate level upon the prior review, his failure to do so did not, by itself, estop or foreclose the Board from reconsidering the matter on remand in the light of subsequent events. See St. Joseph Stock Yards Co. v. United States, 1935, 298 U.S. 38, 62-64, 56 S.Ct. 720, 80 L.Ed. 1033; Panhandle Eastern Pipe Line Co. v. Federal Power Comm., 3 Cir., 1956, 236 F.2d 289. See generally, 2 Davis, Administrative Law § 18 (1958).
Delta's second argument, that our mandate denied the Board power to reconsider questions not raised on the first appeal, relies upon cases which hold that questions not raised upon appeal are foreclosed upon remand to a lower court;8 and, in particular, upon Arizona Grocery Co. v. Atchison, T. & S. F. Ry. Co., 1932, 284 U.S. 370, 52 S.Ct. 183, 76 L.Ed. 348, which holds that the Interstate Commerce Commission cannot reopen a final rate determination and retroactively apply a lower rate.
The Board rejected these arguments on the authority of Federal Communications Comm. v. Pottsville Broadcasting Co., 1940, 309 U.S. 134, 60 S.Ct. 437, 84 L.Ed. 656. In that case, Pottsville appealed to this court from the Commission's denial of its license application. We reversed on the ground that the Commission had misinterpreted state law, and remanded for reconsideration in light of the applicable legal principles. While judicial review was pending, however, the Commission had received and processed two rival applications for the same facility. After our remand, the Commission consolidated the other applications and Pottsville's for oral argument, to determine which of the three would best serve the public interest. Pottsville then obtained a writ of mandamus from this court requiring the Commission to follow the mandate by determining Pottsville's qualifications on the original record, and not on a comparative basis. The Supreme Court reversed, holding that the institutional characteristics of administrative agencies charged with protecting the public interest "at all times" require far greater flexibility and discretion upon remand than is the case with lower courts. The Court recognized that this rule might work hardship in individual cases, but concluded that Congress had largely confined to the agency the job of weighing such hardships against the requirements of the public interest.
We do not suggest that Delta and its associates did not in fact rely upon the finality of the international rate. Like Pottsville, Delta may well be in a worse position than it would have been if the Board had not erred in the first place. See Pottsville Broadcasting Co. v. Federal Communications Comm., 1939, 70 App.D.C. 157, 162, 105 F.2d 36, 41. But the Supreme Court, recognizing that hardship can result from the Pottsville doctrine, nevertheless concluded that the agency is the primary tribunal to balance these hardships against the demands of the public interest. Federal Communications Comm. v. Pottsville Broadcasting Co., 1940, 309 U.S. 134, 146, 60 S.Ct. 437, 84 L.Ed. 656. It has done so here.
One question remains for our consideration. The Board decided that, in recomputing the proper mail-pay rates for the period December 16, 1950 to July 31, 1952 on a past-period basis, it would adhere to its former determination that a 10 percent return is all that C & S needed, even though the return was recomputed on a past-period basis. Delta now attacks the Board's original findings that 10 percent is a proper return on the grounds that this ultimate determination is not supported by subsidiary findings which rationally support the conclusion. We have carefully considered these contentions and find no basis for disturbing the Board's findings. Its thorough and well-reasoned opinion on this phase of the case renders further discussion by us unnecessary.
The Supreme Court pointed out that the governing provision of the statute concerns the "need of each such air carrier for compensation" and that the need of the carrier as "measured by the entirety of its operations" is "therefore a limiting factor in the sense that the subsidy may not exceed it." 347 U.S. at page 79, 74 S.Ct. at page 353.
The majority held in Transcontinental & Western that mail subsidy rateswere to be likened to utility rates for the purpose of determining whether a final rate could be reopened. But we do not think that it is inconsistent with that holding to recognize the distinctions described by Mr. Justice Jackson for the purpose of determining whether the Pottsville doctrine applies to a non-final mail rate.

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