Continental Southern Lines, Inc. v. Civil Aeronautics Board (Two Cases)

197 F.2d 397, 90 U.S. App. D.C. 352, 1952 U.S. App. LEXIS 4050
CourtCourt of Appeals for the D.C. Circuit
DecidedApril 17, 1952
Docket10812_1
StatusPublished
Cited by5 cases

This text of 197 F.2d 397 (Continental Southern Lines, Inc. v. Civil Aeronautics Board (Two Cases)) 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 Southern Lines, Inc. v. Civil Aeronautics Board (Two Cases), 197 F.2d 397, 90 U.S. App. D.C. 352, 1952 U.S. App. LEXIS 4050 (D.C. Cir. 1952).

Opinions

BAZELON, Circuit Judge.

For nearly six years, the Civil Aeronautics Board has been trying to establish feeder air service in two important areas of the United States. These appeals mark the [399]*399most recent skirmish, in what has been a protracted administrative and judicial struggle. The order under attack in No. 10811, the Parks Investigation Case,1 awarded routes lying generally within an area bounded by Tulsa, Memphis, Indianapolis, Chicago and Kansas City. No. 10812, the Reopened Mississippi Valley and Southeastern States Cases,2 involves routes lying generally between Memphis and New Orleans.

Background of the Parks Case

As long ago as 1946, the Board found that some of the routes involved in the Parks case were required by the public convenience and necessity.3 Parks was awarded a certificate in 1948.4 5A year later, Parks had not yet succeeded in establishing service.3 After an additional 102 day trial period, the Board called for further hearings to determine whether the public interest required that Parks' certificate cease to be effective and that the routes be awarded to another applicant.6 During these proceedings, Parks made several representations that it had become financially able and willing to initiate service over the entire route pattern.7 The Board found, however, that Parks had had ample opportunity to activate the routes, that it was unconvinced by Parks’ new offerings on the matter, and that further hearings would be necessary before a determination could be made as to whether Parks actually had sufficient available capital.8 Stressing the long delays which had already occurred, the need for early service and the large investments which communities and state and federal agencies had made for airports,9 the Board ordered that the Parks’ certificate “cease to be effective” and selected another carrier to operate the routes involved in this appeal.10

Background of the Reopened Valley Case

Although the delays in the Reopened Valley case are of a different origin, they are no less exasperating from the point of view of the public need for immediate air service. Routes in the Reopened Valley area were originally involved in two separate cases before the Board.11 When the Board learned in the first of these cases that routes in Mississippi, Alabama and Georgia were also sought in the second case, it deferred decision on these routes until the second case had been heard. The applicant ultimately selected by the Board in the second case had not actually applied for all of the routes which it was awarded. As a result, to avoid any prejudice to other applicants, the Board ordered the two cases consolidated for reconsideration in the Reopened Valley case.12 As the Board pointed out in the opinion issued on reconsideration, the delays had been unavoidable.13 Nevertheless, it felt that they could not be ignored sincé even the opinion in the second of the two consolidated cases was three years old before the routes were finally awarded to the present operator.14

Continental's Surface Carrier Relationships

Thus, under the circumstances of a pressing need for immediate service in both areas, the Board had to select applicants who could inaugurate air service with dispatch. From the opinions and examiners’ reports in the Reopened Valley and Parks [400]*400cases, it appears that Continental Southern Lines, Inc.,15 petitioner herein, was the only applicant who was also a surface carrier. This fact alone would have prevented the Board from certificating Continental unless there was a reasonable likelihood that Continental would be able to comply with the special standards which Congress has- said are to govern surface carrier participation in air transportation.16

Moreover, while these proceedings were under way, Continental took a step which ultimately raised even greater obstacles to its certification. On December 22, 1948, well before the 'hearings in either the Reopened Valley or Parks cases, Continental made a contract which obligated Transcontinental Bus System, Inc.,17 an operating and holding company, to purchase all of Continental’s stock.18 With the approval of this agreement by the Interstate Commerce Commission on August 19, 1949, Continental became part of a great surface transportation empire whose affiliated routes stretch from Portland, Oregon to Los Angeles and Chicago. This stock purchase, in the CAB’s view, was an acquisition of an air carrier by a surface carrier and therefore was illegal unless approved by the Board under § 408 of the Civil Aeronautics Act. We have recently held this to be a sound interpretation of the Act, since an applicant for a certificate (Continental here) is considered an air carrier.19

The § 408 Problem

The pertinent portions of § 408(b) of the Civil Aeronautics Act forbid the Board to approve acquisitions of control prohibited in § 408(a) unless the Board “finds that the transaction proposed will promote the public interest by enabling such carrier other than an air carrier to use aircraft to public advantage in its operation and will not restrain competition.” Although it would not have been necessary for the Board to issue an order under § 408 approving the control relationship before it issued a certificate of public convenience and necessity,20 it does not follow that the Board would have had to certificate Continental in the face of a finding that it was unlikely that it could satisfy the subsequent § 408 procedure. This is true because “all the policies of a regulatory statute become elements of the public interest to be weighed in a certification proceeding.”21

Continental does argue, however, that even if a § 408 order is ultimately necessary, it has made a showing of probable compliance with that section and therefore the Board should have certificated it under § 401, 49 U.S.C.A. § 481, pending the outcome of § 408 proceedings.22 We must turn, then, to an examination of the record in order to ascertain if it supports the Board’s contrary findings that “it is apparent on the face of the situation that the § 408 proceeding would involve substantial questions and that there is serious doubt as to whether or not the control of Continental Southern by Transcontinental could legally be approved.”23

The record, in our view, sustains the Board’s findings. Even though one were to regard the record as adequate to show compliance with § 408 so long as only Continental itself was in the picture,24 an entirely [401]*401new case of major proportions was presented by the entrance of Transcontinental.

With respect to that case — 'Continental owned entirely by Transcontinental — the applicant failed to make a record upon which the Board could either decide the § 408 issue or determine whether there was a reasonable likelihood that its standards could be met.

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Bluebook (online)
197 F.2d 397, 90 U.S. App. D.C. 352, 1952 U.S. App. LEXIS 4050, Counsel Stack Legal Research, https://law.counselstack.com/opinion/continental-southern-lines-inc-v-civil-aeronautics-board-two-cases-cadc-1952.