Court Opinion

ID: 5159890
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:37:36.566099+00
Date Added: 2024-06-11T08:25:34.745465
License: Public Domain

COMPTON, Justice,
dissenting.
This court has frequently stated that cases involving complex subject matter or fundamental policy formulations are the type that require deference to an agency’s expertise and, hence, review by the reasonable basis standard. Hammond v. North Slope Borough, 645 P.2d 750, 758 (Alaska 1982); Weaver Bros., Inc. v. Alaska Transportation Commission, 588 P.2d 819, 821 (Alaska 1978); Kelly v. Zamarello, 486 P.2d 906, 917 (Alaska 1971). One of the most important functions the Alaska Transportation Commission performs pursuant to its power to regulate the transportation industry is the certification of carriers. It is difficult to imagine a better example of agency action that requires application of an agency’s expertise.
Although the court acknowledges that a reasonable basis standard of review is appropriate here, it has in fact substituted its judgment for that of the agency on every issue. In my view, a fair application of a reasonable basis test would require that we uphold the agency’s determination that Center’s operations would be economically unfeasible and not in the public interest.
A determination as to whether a given operation is economically feasible or in the public interest requires detailed understanding of the way regulated industries in general, and the transportation industry in particular, function. Similarly, determinations as to the desirability of a business *922practice or structure in such an industry involve questions of the public interest which are “almost entirely ... policy decision^].” Hammond, 645 P.2d at 758 (Alaska 1982); see also Weaver Brothers, 588 P.2d at 821 (Alaska 1978); cf. Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 293-4, 95 S.Ct. 438, 445-46, 42 L.Ed.2d 447, 460 (1974) (finding that determinations of public convenience and necessity under federal law are judgments entrusted to agency expertise).
The majority attacks the Commission’s conclusion that the proposed service would not be economically feasible, citing a lack of evidence that Center would be unable to provide air taxi service for a substantial period of time, or that leasing is an unorthodox business practice. Tarbox v. State, 687 P.2d at 920 (Alaska 1984). This approach demonstrates the majority’s failure to grasp the basis for the Commission’s decision, as set out in its order. An operation is “economically feasible,” according to the Commission, when it is capable of generating “sufficient local transportation business and revenue to offset the true costs of providing such services.” (Emphasis added). Thus, the Commission evaluates feasibility “on the basis of the economics of the air taxi operation standing alone and not as an adjunct to other business ventures in which an applicant may be engaged.” This approach, the Commission explains, is responsive to the legislative policy expressed in AS 02.05.010 of providing for “safe, efficient, and continuous air service,” AS 02.05.010(4), and promoting “adequate, economical and efficient service by air carriers ... without unjust discrimi-nations, undue preferences or advantages, and unfair or destructive competitive practices; ...” AS 02.05.010(3).
There is no question that the proposed scheme does not reflect the true costs of the air charter operation standing apart from other business ventures of the applicants. The owners of the aircraft are to bear all major costs of operating the planes, in return for non-compensatory lease rates and tax advantages. The proposed scheme thus fails totally to satisfy the Commission’s definition of economic feasibility.
I believe that both the Commission’s interpretation of the term “economically feasible” and its conclusion that the Tarboxes’ proposed operation fails to satisfy that definition have a reasonable basis. It is clearly appropriate for the Commission to look at the purposes and policy behind the Alaska Air Commerce Act in interpreting the Act’s provisions. Since the principal goal of regulating air carriers is to provide efficient and reliable service, a definition of economic feasibility that seeks to ensure continuity of service has a reasonable basis in law. Further, in view of the same public interest in dependable service, it makes sense to require that an operation’s economic feasibility be evaluated in terms of the carrier industry alone, where the factors affecting a carrier’s probability of economic success are to some extent known, rather than in terms of other businesses divorced from the industry, the success of which could depend on any number of variables outside the realm of the Commission’s expertise.
The majority’s discussion of the public interest issue also demonstrates a failure to understand the basis for the Commission’s decision. See Tarbox v. State, 687 P.2d at 920-921. The Commission’s conclusion in that regard is clearly based on the uncontroverted fact that the proposed operation involved non-compensatory leasing. There is a reasonable basis for concluding that allowing use of such leases in the air charter industry is contrary to the public interest.
The public’s interest, as noted above, is in reliable and continuous service. To that end competition in the air industry is regulated and destructive competitive practices and economically unfeasible operations are prohibited. The public has an interest in continuous service over a substantial period of time from all the operators in the industry, not simply the one applying for authority. Practices that have the poten*923tial for disrupting the service provided by other carriers can be detrimental to the public interest.
There are a number of ways in which the leasing practices described here could have such a deleterious effect. The most obvious is that the lower rates made possible by the use of non-compensatory leasing could allow one participant to drive all the others from a market, only to re-establish prices at a higher level once its competitors have been destroyed. In such an event, the public interest is harmed two ways — by reduction in the number of carriers and, hence, in the amount of competition, and by the disappearance of services on which the public had come to rely.
These concerns are not fully articulated in the Commission’s order denying the Tar-boxes’ application, although to some extent they may be derived from the Commission’s attention to its duties to prevent unfair competitive practices and to ensure continuous service. However, it is not necessary to know the precise reasoning behind the Commission’s finding that the grant of operating authority in this case would not be in the public interest. “[I]t is sufficient for our purposes to note that there are reasonable bases to support such a [finding].” Kelly v. Zamarello, 486 P.2d 906, 918 (Alaska 1971).
Because I believe that the majority improperly substituted its judgment for that of the Alaska Transportation Commission in this matter, and because I conclude that each of the Commission’s determinations meets the requirements of the “reasonable basis” test, I dissent from the majority’s decision in this case.