Continental Airlines, Inc. v. U.S. Department of Transportation

856 F.2d 209, 272 U.S. App. D.C. 255, 1988 U.S. App. LEXIS 11697
CourtCourt of Appeals for the D.C. Circuit
DecidedAugust 26, 1988
DocketNo. 87-1497
StatusPublished
Cited by1 cases

This text of 856 F.2d 209 (Continental Airlines, Inc. v. U.S. Department of Transportation) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Continental Airlines, Inc. v. U.S. Department of Transportation, 856 F.2d 209, 272 U.S. App. D.C. 255, 1988 U.S. App. LEXIS 11697 (D.C. Cir. 1988).

Opinions

BUCKLEY, Circuit Judge:

Continental Airlines petitions for review of a final order of the Department of Transportation dismissing Continental’s application for route authority. In an earlier proceeding, the Department had approved United Airlines’ acquisition of certain routes from Pan American World Airways. This approval was conditioned on United’s agreement to relinquish its Seattle/Portland to Japan route if the Department, in a subsequent proceeding, determined that another carrier would better serve the public interest. In that subsequent proceeding, Continental and American Airlines applied for United’s route. The Department and the parties thought these applications had to be processed within rigid statutory deadlines.

As the case was proceeding through the Department, however, a key decisionmaker (who had been directed to revise his assessment of an Administrative Law Judge’s recommendation that the route be awarded to Continental) found it necessary to disqualify himself. The Department concluded that it could not complete its review within the statutory time limit. Although the Department then professed to believe that the deadline did not apply, it nevertheless dismissed the applications and ordered the case restarted. Continental argues that when the Department became unable [257]*257to complete its review, the statute required it to forward the Administrative Law Judge’s decision as its own. We agree and grant the petition for review.

I. Background

A. Legal Background

Three statutory provisions bear on the case. First, section 408 of the Federal Aviation Act (“Act”) permits the Department of Transportation (“DOT”) to review mergers or purchases involving airlines. This authority, first granted to the Civil Aeronautics Board (“CAB”) and later transferred to the DOT, 49 U.S.C.App. § 1551(b)(1)(C) (1982), includes the power to impose conditions upon an airline’s transfer of authority to serve certain routes. See 49 U.S.C.App. § 1378 (1982).

Second, under section 401(g) of the Act, the DOT may “alter, amend, modify, or suspend any such certificate [authorizing air service], in whole or in part, if the public convenience and necessity so require.” 49 U.S.C.App. § 1371(g)(1) (1982). Apart from its power to withdraw part of an airline’s authority, the DOT also may revoke a certificate altogether “for intentional failure to comply” with any applicable statutory or regulatory provision or any “term, condition, or limitation of such certificate.” Id. The DOT may order a hearing on its proposal to alter or revoke a certificate, and it must hold a hearing if the certificate holder requests one. Id.

Third, under section 401(c) of the Act, an application for a certificate authorizing air service must he processed according to rigid statutory deadlines. Once the application is filed, the DOT must choose between three options within ninety days: full hearing, simplified procedures, or dismissal “on the merits.” 49 U.S.C.App. § 1371(c)(1) (1982). If the application is set for hearing (as in this case), the “initial or recommended decision [of the AU] shall be issued not later than one hundred and fifty days” after the application is set for hearing. 49 U.S.C.App. § 1371(c)(2) (1982). Within ninety days after the ALJ’s decision, the DOT “shall make its final order with respect to such application.” Id. If it fails to do so, “the initial or recommended decision shall be transmitted to the President — ” 49 U.S.C.App. § 1371(c)(2)(B) (1982).

B. Factual Background

In the Pacific Division Transfer Case (“PDT”), 2 Av.L.Rep. (CCH) ¶ 22,382 (Oct. 31, 1985), the Secretary of Transportation approved with conditions the application of United Airlines, Inc. (“United”) to acquire the Pacific routes of Pan American World Airways, Inc. (“Pan Am”). The Secretary was concerned, however, because the purchase would reduce the number of U.S. carriers serving Japan from three to two. Although she considered requiring United to spin off its Seattle/Portland to Japan route, Secretary Dole concluded that there was insufficient information concerning the ability of other carriers to provide adequate service to reach a final decision on this alternative. The Secretary decided that "it would be preferable to compare various carriers’ abilities to provide service, and weigh the quality of service each, including United, would provide against the desirability of maintaining the current market structure.” Id., ¶ 22,382, at 14,495. She concluded that a “comparative selection case is the best means of developing a sound record on which to decide these issues.” Id. Secretary Dole therefore approved the acquisition subject to the following condition:

My approval is subject to the condition that, should the Department determine in a future proceeding that the public interest would be served by authorizing another U.S. flag carrier to provide service ..., United will surrender its authority to provide such service within 60 days of an order directing it to do so —

Id. at 14,502. Pending the completion of the comparative selection proceeding, United was permitted to continue service from Seattle to Japan.

The DOT subsequently initiated the Seattle/Portland-Japan Service Review Case “to compare the carriers’ abilities to provide service, and to weigh the quality of service offered by each carrier, including [258]*258United____” Order Instituting Investigation (“Instituting Order”), Order No. 86-9-92 (Sept. 30, 1986), Joint Appendix (“J.A.”) at 37. Continental Airlines, Inc. (“Continental”) and American Airlines, Inc. (“American”) applied for the Seattle-Japan route. Following a hearing, the Administrative Law Judge (“ALJ”) recommended that Continental be chosen to replace United. Recommended Decision (“ALJ recommendation”), J.A. at 69. The AU treated the proceeding as a comparative route case and declined to give United an incumbent’s preference, that is, the presumption in favor of renewal of existing route authority.

The parties filed exceptions, and the ALJ’s decision was reviewed by the senior career officer (“SCO”) in the Office of the Assistant Secretary for Policy and International Affairs (in this case, the Deputy Assistant Secretary), as required by 14 C.F.R. § 302.22a(b) (1988). On August 10, 1987, the SCO reversed the ALJ and recommended that United be permitted to retain the route. Opinion and Order (“SCO Opinion”), 2 Av.L.Rep. (CCH) ¶ 22,420, at 14,-721. Pursuant to 14 C.F.R. § 302.22a (1988), the SCO transmitted his opinion to the Assistant Secretary for Policy and International Affairs, who remanded the opinion to the SCO to correct various deficiencies in his recommended decision. Notice of Review and Order of Remand (“Notice of Review”), 2 Av.L.Rep. (CCH) 1122,420, at 14,718 (Aug. 21, 1987). The Assistant Secretary noted that the “statutory deadline in this proceeding is September 17, 1987” and ordered the SCO to complete his revisions by September 10, 1987 so that the DOT could meet the statutory deadline. Id. at 14,721.

The SCO then revealed that he had accepted employment with the Flying Tiger Line, Inc., an intervenor that had supported United. In an Order to Show Cause, Order No. 87-9-11 (Sept.

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856 F.2d 209, 272 U.S. App. D.C. 255, 1988 U.S. App. LEXIS 11697, Counsel Stack Legal Research, https://law.counselstack.com/opinion/continental-airlines-inc-v-us-department-of-transportation-cadc-1988.