ABC Air Freight Co. v. Civil Aeronautic Board

419 F.2d 154
CourtCourt of Appeals for the Second Circuit
DecidedOctober 24, 1969
DocketNo. 254, Docket 33623
StatusPublished
Cited by2 cases

This text of 419 F.2d 154 (ABC Air Freight Co. v. Civil Aeronautic Board) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
ABC Air Freight Co. v. Civil Aeronautic Board, 419 F.2d 154 (2d Cir. 1969).

Opinion

FRIENDLY, Circuit Judge:

In A. B. C. Air Freight Company v. C. A. B., 391 F.2d 295 (1968), this court vacated an order of the Civil Aeronautics Board dealing with applications of motor carriers to operate as freight forwarders. The Board, with Vice Chairman Murphy dissenting, had granted applications of three long-distance truckers or their subsidiaries to act as air freight forwarders, along with related applications for approval of acquisitions of control, and had indicated an intention similarly to grant a fourth. We remanded the cause for further consistent proeeed-ings. Having invited the parties to file briefs directed to the action it should take and having heard oral argument, the Board, with Vice Chairman Murphy again dissenting, rejected petitioners’ contention that it should dismiss the proceeding or hold another evidentiary hearing. On the basis of further findings it granted the applications of CF Air Freight, Inc., and Navajo Freight Lines, Inc., to act as domestic and international air freight forwarders and of P. I. E. Air Freight Forwarding, Inc. to act as a domestic air freight forwarder for a period of five years; the Board also granted related applications with respect to acquisitions of control. The authorizations and approvals were made subject to numerous conditions which are set out in the margin.1 The Board [157]*157denied the motions of seven other motor carriers or their affiliates to intervene and have their applications consolidated. Instead it instituted a rule-making proceeding with respect to the handling of applications from these and other motor carriers and to the making of reports, of which more hereafter. Petitioners ask us to set aside the authorizations and to terminate the rule-making proceeding as contrary to our mandate and otherwise unlawful.

The “most serious deficiency” we found in the Board’s original order was “the ambiguity whether the Board has established a policy of entry for all truckers who want to act as air freight forwarders or has merely granted the four applications that were before it, and the inadequacy of its consideration of effect on the existing forwarders if the former is the right interpretation as we strongly suspect.” 391 F.2d at 298. In addition, after citing the Board’s previous policy of granting air forwarding authority to surface carriers “only after study of the particularized situation convinced it that the carrier’s conflict of interest would not ‘result in material diversion of traffic from air to surface transportation and deprive the applicants of sufficient incentive to conscientiously promote and develop airfreight forwarding,’ ” Air Freight Forwarder Authority Case, Order E-21056, July 10, 1964 (mimeo, p. 4), we expressed concern that the Board had not adequately explicated what we considered to be a significant departure from that policy, 391 F.2d at 301-305. While we pointed out what seemed to be still other weaknesses in the Board’s opinion, 391 F.2d at 305-307, which reinforced our conclusion that further consideration was desirable, we nevertheless recognized that even the present record might "be sufficient for the Board to initiate a properly controlled experiment in the authorization of truckers as air freight forwarders, with the limitation on numbers and the reporting and other requirements an experiment would be expected to entail,” 391 F.2d at 307.

The opinion on remand, Motor Carrier-Air Freight Forwarder Investigation, No. 69-4-100, April 21, 1969, attempted to deal with these objections. With respect to the number of authorizations, the Board emphasized “that it is granting only the applications before it and not passing upon any others,” save for a declaration that it “should not'deem the size, geographical extent, or general commodity rights of a trucker’s surface operations or authority — of themselves— as factors showing that the trucker should be barred from the air freight forwarding business.” Id. (mimeo, pp. 3-4). The Board made clear, however, that this declaration meant just what it said and no more:

But long-haul truckers of general commodities will not be granted air forwarding licenses routinely. Instead, each trucker applicant will be required to show that it will conscientiously promote air cargo and that its operations, either alone or in combination with others already licensed, will be in the public interest. The Board will not be satisfied with mere recitations; it will scrutinize each application (and any objection) to insure that these criteria are met. And the Board will maintain a close watch over the experiment through new and more detailed reporting requirements. As a final safeguard, the Board will reserve the power to suspend the processing of new applications and, if necessary, even to terminate outstanding licenses. This policy is being codified in proposed regulations issued concurrently with [158]*158this order. For long-haul truckers who seek to become air forwarders, the rule will not be free entry, but monitored entry.

Turning to the matter of surface carrier participation, the Board reiterated its position that the second proviso to § 408 (b) of the Federal Aviation Act, 49 U.S.C. § 1378(b) (1964), was inapplicable to air freight forwarding, not merely in precise terms as we had agreed, 391 F.2d at 302, but at all.2 However, noting our recognition that “the Board might conclude, after studying the proposals of a particular surface carrier, that despite its conflicts of interest the applicant will conscientiously promote air transport,” 391 F.2d at 304, it found, after detailed examination of the record, that “[t]he three successful applicants have clearly met that test” and concluded that “[t]he time has come * * * to test the conflicts hypothesis in a controlled experiment.” This was to be made possible by the detailed reporting requirements imposed on the three successful applicants, similar requirements proposed for imposition on other successful trucking aspirants, and new reporting requirements proposed for the independents.

The rule-making proceeding initiated simultaneously with the order fell into two main parts. One part concerned applications of long-haul motor carriers of general commodities for air freight forwarding authority or for approval of control of air freight forwarders. The proposed regulations provide that such authority or approval may be granted,

on an individual application basis, with or without hearing, upon a showing that (1) the applicant is capable of performing the proposed air transportation and of conforming to the Act and the regulations thereunder; (2) the applicant will conscientiously promote air cargo and will benefit air transportation; and (3) the applicant’s operations, alone or together with those of other similar carriers granted air forwarding authority, will not result in creating a monopoly or monopolies and thereby restrain competition, or jeopardize another air carrier and will not otherwise be inconsistent with the public interest * * *.

Any applicant must show:

(a) A plan to conscientiously promote air cargo. This showing shall include, inter alia:

(1) A statement as to whether the long-haul motor carrier plans to solicit existing surface customers for air cargo and, if so, the extent of such plans;

(2) A traffic estimate showing what traffic is newly-generated or presently shipped by surface means;

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Bluebook (online)
419 F.2d 154, Counsel Stack Legal Research, https://law.counselstack.com/opinion/abc-air-freight-co-v-civil-aeronautic-board-ca2-1969.