Court Opinion

ID: 8912532
Source: CourtListenerOpinion
Date Created: 2022-11-27 03:38:05.216733+00
Date Added: 2024-06-11T17:08:39.747886
License: Public Domain

MANSFIELD, Circuit Judge
(Concurring in part and dissenting in part):
Except as noted below, I concur in Judge Mulligan’s thorough and carefully reasoned opinion.
I agree that our role is limited to determining whether the CAB, in fixing rates under the Federal Aviation Act, 49 U.S.C. § 1376(a), fairly took into consideration, as required by § 4 of the Fair Competitive Practices Act of 1974, 49 U.S.C. § 1376(hX3), current UPU rates, all UPU rate-making elements, and any competitive disadvantage suffered by American carriers by reason of the payment of UPU rates to foreign carriers. However, I believe that where, as here, Congress obviously intended the CAB to give sympathetic consideration to these matters, the burden should be on the CAB to demonstrate that such consideration was given rather than rely simply on a showing that there was supporting evidence and an absence of arbitrariness. As the majority correctly notes, the Congress clearly intended and expected that the CAB would increase the American carriers’ rates. Otherwise the enactment of § 4 would amount to a pointless exercise.
The CAB has demonstrated that it carefully considered all the matters and rate-making elements referred to in § 4 except for the UPU rate of return on investment, which converts to 15.58% as compared with the 12% figure adopted by the CAB in the present case. In my view the record fails to support the 12% figure as against the higher UPU figure other than to show reliance by the CAB upon a stipulated rate (as distinguished from one determined after evidentiary hearing) of 12% used in the earlier, outdated Domestic Passenger Fare Investigation 71-4-58, April 9, 1971. Against this we find that the ALJ, recognizing Congress’ intent, recommended a rate of 13.5% as fair and reasonable. Moreover, only two months after its Order on Reconsideration in the present case, which adopted the 12% figure, the CAB used a 15% figure in another international rate case, Order 79-9-75, Sept. 4,1979, thus demonstrating that there is nothing sacred about the 12% figure and that a higher figure may be fair and reasonable. The later case cannot be distinguished on the ground that it fixed a rate of return on passenger traffic as distinguished from mail traffic, since the 12% figure relied on by the CAB originated in an old domestic passenger case.
In contrast to the CAB’s lack of evidentiary support for its 12% figure, the American carriers adduced substantial evidence1 that international service (i. e., joint carriage of passengers and mail) faced greater risks than those encountered in domestic service, including severe currency devalua*77tions, foreign government restrictions, foreign work stoppages and foreign civil unrest, terrorist bombings and sabotage. In addition there was evidence, of which we could now probably take judicial notice, that the cost of debt would sharply increase. Indeed, according to newspaper accounts over the last few years, this cost has skyrocketed.
The CAB’s attempted but unsupported cost distinction between foreign passenger and mail service (which are principally joint), its payment of mere lip service to uncontroverted proof by the petitioners of need for a higher rate of return, and its adoption of a 15% rate in another case, leave me with the distinct impression that the CAB has not only failed to give appropriate and sympathetic consideration to the UPU 15.58% “rate of return” factor as mandated by § 4, but has also disregarded affirmative proof in support of a figure higher than 12%, which might approximate the UPU figure.
For these reasons I would remand the case to the CAB for further consideration of the rate of return factor in light of the evidence offered by petitioners, the intervening sharply increased cost of debt, and the Board’s use of a 15% rate elsewhere.

. Witnesses who testified to these matters included Steven G. Rothmeier, Manager of Economic Analysis for Northwest Airlines, Inc., Eli C. Hecht, Vice President of Audits and Taxes for Seaboard Airlines, Harry Kimbriel, expert witness called by the U.S. Postal Service, and Kenneth J. Holden, Director of Transportation Analysis for the U.S. Postal Service.