Opinion ID: 246742
Heading Depth: 1
Heading Rank: 2

Heading: — Validity of the Exemption.

Text: 9 Section 416(b) of the Act 5 permits the Board to exempt an air carrier from the certificate requirements of § 401 if, but only if it first finds that enforcement of those requirements would have certain specified results because of the existence of certain specified conditions. The Board must find that the operations of the air carrier seeking the exemption are either (1) of limited extent or (2) affected by unusual circumstances. Aside from finding that one of these conditions is present, the Board must also find that that condition causes enforcement of the certificate requirements to work an undue burden on the carrier. Finally, the Board must find that enforcement of the requirements is not in the public interest. In the absence of any one of these findings the Board is not authorized to suspend the normal statutory requirements of notice, hearing and requisite findings for issuance of a certificate of public convenience and necessity. 10 Nor may these findings be merely a recital of § 416(b). The Board must find what the statute requires it to find, not in conclusory fashion in the statutory language but in such fashion that a reviewing court can test the validity of the finding. American Airlines, Inc. v. Civil Aeronautics Board, 1956, 98 U.S. App.D.C. 348, 356, 235 F.2d 845, 853. 11 The Board's findings in this case are short and somewhat cursory, consisting of but three paragraphs. It found that Seaboard's financial situation is acute, and that Seaboard's existence is in jeopardy. With no further preliminaries it found that 12 To deprive the carrier of the opportunity to earn these revenues [from mail carriage] pending decision on its certificate application would impose an undue burden on it and would not be in the public interest. 13 It found that the diversion of mail revenues from Pan American and TWA would be slight but that the benefit to Seaboard will be relatively substantial. From these premises the Board concluded that the authority conferred by exemption is limited in extent and in the public interest. 6 Finally the Board's order recited the language of § 416(b) in concluding that the exemption should be granted. 14 Without considering the problem of whether these findings are supported by the record, we hold them inadequate to meet the statutory requirements. The undue burden the Board has found is deprivation of revenues during the course of certification proceedings. This burden is found to be undue because of the financial straits in which Seaboard finds itself. Obviously, any carrier not granted an exemption will be deprived of an opportunity to earn revenues from a particular carriage until it is awarded a certificate therefor. The Board has found only one circumstance here that is not present in every certification proceeding: Seaboard's financial distress. This is insufficient. If Congress had wanted to exclude economically marginal carriers from certification requirements, it would have done so in more explicit terms than those of § 416(b). 7 Of course, an unusual circumstance which causes final distress may be such a circumstance as to warrant relief under this exemption provision. But financial distress in and of itself, unrelated to circumstances which would render the carrier eligible, is not enough. 15 In the Surface Mail Experiment Case 8 we upheld an exemption grant, but even there the decision was close under circumstances far more compelling than those here. That exemption permitted certain all-cargo air carriers to participate in a Post Office experiment to determine whether it would be economical and feasible to send some surface mail by air. It was found that certification proceedings, even on an interim basis, could not be completed in time to enable the exempted carriers to participate in the experiment. The court plainly relied heavily on this finding, and Judge Prettyman in concurring said: In such event denial of an exemption would be a total and final deprivation of participation. That is not the case in the usual application for exemption. 9 16 Additionally, in the Surface Mail Experiment Case the Post Office recommended an exemption, reasoning that (a) additional mail volume was anticipated; (b) the cargo carriers would provide protection against service interruptions; and (c) by participation in the experiment the carriers would gain valuable experience. In the present case the Post Office has taken a position that at best might be called neutral. It has said that there is more capacity than currently needed for the transportation of airmail from the New York Gateway to European points and consequently there is not the peculiar need for exemption which existed because of the airlift experiment   . These comments by the Post Office Department tend to weaken the Board's conclusory finding in this case that enforcement of the certificate requirements would not be in the public interest. It is not necessary to hold, however, that this finding has no rational basis. We hold only that financial distress is not a circumstance which, standing alone, meets the requirements of § 416(b). Accordingly, we set aside the order granting an exemption to Seaboard. 17 Order set aside.