CIVIL AERONAUTICS BOARD

MEMORANDUM

To: The Board.

From: The General Counsel.

Subject: Tabulation of matters handled by the Board according to certain criteria.

Pursuant to the Board's request, there is attached in tabular form various matters which come before the Board, with the following indications pertaining to each: (1) whether it involves rulemaking [R.], or adjudication [A.], or both [R.&A.]; (2) whether or not it requires a hearing; and (3) whether or not adversary interests are present. Bureau counsel has not been considered an "adversary" party for purposes here.

The classification of matters as to hearing requirements is based on the provisions (or lack of provisions) in our act. It should be noted, however, that there are matters as to which our act does not in terms provide for a hearing but where "due process" would call for one. In the case of revocation of exemptions, for example, court decisions indicate the necessity for a hearing where a substantial business has been built on such exemptions. It should be further noted that despite any indication of a hearing requirement in our act, the Board frequently orders hearings where the issues are substantial and essential evidence is seriously controverted. Such hearings have been held with respect to certain agreements filed under section 412, applications for exemptions, and applications for approval of interlocking relationships under section 409. FRANKLIN M. STONE.

Matters requiring hearing

Presence of adversary parties

Issuance, amendment, suspension, revocation, or abandonment of PCN certificates in interstate, oversea, and foreign air transportation, under sec. 401 (c), (f), (g), (j). [A]

Yes.

Issuance, amendment, suspension, or revocation of foreign air carrier permits, under sec. 402 (d), (f). [A.]

Fixing compensatory and/or subsidy mail rates under sec. 406 (a), (b), (c), (d). [R. & A.]

Approval or disapproval of mergers or acquisitions of control under sec. 408(b). Determining unfair methods of competition and prohibiting same, under sec. [A]

Yes.

Review of denial of airman's certificate under sec. 602(b). [A.].-
Exemptions of indirect air carriers under sec. 101(3). [Á.].......
Exemptions under sec. 416(b). [A.].

Yes.

Sometimes.

Frequently.

Foreign permits for non-common-carriage under sec. 1108(b). [A.].

Sometimes.

Foreign and oversea free or reduced-rate transportation under sec. 403(b). [R. & A.]-
Suspension of tariffs under sec. 1002(g). [R. & A.]-

No.

Yes.

Rejection of tariffs under sec. 403(a). [R. & A.].

Sometimes.

Tariff changes on less than 30 days' notice under sec. 403(c). [R. & A.]
Temporary service suspensions under sec. 401(j). [A.]--

Review of amendment, suspension, or revocation of various air safety certificates issued by the Administrator under sec. 609. [A.]

Do.

Frequently.

Yes.

Orders requiring compliance with the act, under sec. 1002(c). [A.]...

Prescription of reasonable and/or nondiscriminatory commercia. rates and practices, under sec. 1002(d), (f), (g). [R. &A.]

Yes.]
Yes.

Prescription of through or joint rates and divisions thereof, both between air carriers and air carriers and other common carriers, under sec. 1002(h), (i) and sec. 1003(d). [R. & A.

Approval or disapproval of agreements under sec. 412(b). [A.}.

Approval or disapproval of interlocking relationships under sec. 409(a). [A.].
Government loans and guarantees under sec. 410 and Loan Guaranty Act.

Withholding filed documents from public disclosure under sec. 1104. [A.]
Various orders under sec. 204(a) in aid of Board's broad rulemaking investigatory, and
procedural powers. [R. & A.]

Review of Postmaster General's orders regarding mai! schedules under sec. 405(b). [A]

Yes.

Rarely.
Frequently.

Classification of carriers for rulemaking purposes under sec. 416(a). [R.].
Matters of internal administration under title II. IR. & A.]...

Yes.

Change of operating points during emergencies, under sec. 401(e). [A.].

Hon. OREN HARRIS,

CIVIL AERONAUTICS BOARD,
Washington, July 16, 1959.

Chairman, Committee on Interstate and Foreign Commerce,
House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: This is in response to your request of June 16, 1959, during the recent panel discussions before the Special Subcommittee on Legislative Oversight, that the Board answer certain questions relating to the powers of the President in international route cases.

By section 801 of the Federal Aviation Act, the Congress has required that the issuance, amendment, or transfer by the Board of a certificate authorizing an air carrier to engage in overseas or foreign air transportation, or any permit issuable to any foreign air carrier, shall be subject to the approval of the President.

In stating the questions, you asked us to "*** assume *** that the President should have the power to approve international routes and that he should be entitled for matters affecting our security, or diplomacy, to keep secret his reasons for the route selection." Subject to this assumption, you asked the following four questions:

1. Is it necessary that the President not state his reasons for the selection of the carrier when such selection does not involve either security or diplomacy?

2. Should the President have some record procedure showing why one carrier is selected rather than another when security and diplomacy are not involved?

3. What good reason is there why competing carriers for international routes should not be permitted to know and to meet the case presented by their opponents at the White House?

4. Is there as much need for a rule of law to be followed by the Executive in such matters as the legislative or anyone else?

First, I wish to point out that the remarks of former CAB Chairman Landis before the subcommittee on November 19, 1958, that were the predicate for your questions were also discussed in the Board's appearance before your subcommittee last fall, on November 25, 1958 (Mimeo. TR. 171-181), although we have still not reviewed the remarks in detail since the transcript has not yet been printed. At that time the following exchange took place between your Chief counsel, Mr. Lishman, and myself:

"Mr. LISHMAN. Mr. Chairman, Mr. Landis then said as soon as it becomes known the entire effort of the applicants becomes concentrated on the White House, and then he said, and I am quoting: 'No one then knows who sees whom on the White House staff or what defense is presented.' And in effect, the case is tried all over again, apparently, before some personnel at the White House. Does that correctly reflect what is going on?

"Mr. DURFEE. Not as far as I know, Mr. Lishman. I have no knowledge as to that."

I went on to point out that the President has approved every decision of the Board submitted for his approval under section 801 in the time that I have been with the Board. At that time, the total number of such cases was 58; today that total is 75. At the November 25 hearing I expressed the opinion that, in light of the record as I know it, any effort that private parties may have made at the White House "has not been very effective."

Since I assume that your questions relate only to cases where the President reverses a Board decision and since the President has approved every Board decision during my tenure, the questions are purely hypothetical so far as my experience is concerned and I can see no need for any legislative action based on my own experience.

The records of the Board show that as to decisions of the Board rendered during the tenure of the present five Board members (somewhat over 8 years), Presidential directives affecting the Board's disposition of a case have been issued in only eight cases. A summary of those actions is attached.

A review of this summary shows that in one case, the President's decision was based on foreign policy considerations. In four cases, the Presidential action directed further Board hearings and decisions; in each such case the

results of the Board's ultimate decisions, which were in no way affected by Presidential directives, were approved by the President. In a sixth, the President reversed the Board's approval of a merger; after further hearings, the case was resubmitted and the decision approved by the President. In a seventh case, the President ordered a relatively minor enhancement in the rights awarded by the Board's decision. In the remaining case (a route case), the President reconsidered the disapproval of a Board decision before his action became effective, approved the certifiation of the carrier selected by the Board and directed the certification of an additional carrier already serving the market in question to maintain the status quo for further review at a later date. In all of these instances, the President sent letters to the Board, which were made public, announcing reasons for his actions. That further review, incidentally, is currently underway in a renewal proceeding now pending before an examiner of the Board.

In the Board's opinion, the Presidential practice during the 8 years covered by terms of present Board members does not establish any need for procedural reform. On the contrary, we believe that the Presidential practice of returning cases to the Board for further consideration with a public letter stating his reasons, where he has reservations about a Board decision involving serious adversary interests, is by far the preferable practice.

We wish to point out that in none of the eight instances referred to, except the one in which the President promptly reconsidered his own action, did the Presidential action involve the reversal of the Board's selection of a carrier for an international route in favor of a different carrier. In three of the instances the President's action contemplated further Board hearings on applications of a second carrier in addition to the one selected by the Board. In one the President wanted the record brought up to date, in view of the lapse of time during the changeover of Presidents. In the three remaining cases the action had nothing to do with selection of carrier.

Turning to the specific questions in light of the foregoing background, our answers would be as follows:

Question 1: First, we can see no need whatever to suggest that the President should state reasons when he approves a Board decision, and we assume the question is limited to cases of disapproval. Secondly, as we have pointed out, there have been no cases during the tenure of the present members of the Board in which the President has finally reversed a Board decision on a selection of carrier issue, so that the question is largely hypothetical to the Board as presently composed. Third, it has been the Presidential practice to publicly state reasons for reversing or withholding approval of Board decisions in most instances. Consequently, while we know of no necessity that would preclude the President from stating reasons for reversing a Board decision on selection of carrier where security or foreign-policy reasons are not involved, we consider the question to be purely academic in the light of our experience in the past 8 years.

Question 2: Again we would say that we cannot see any need for questioning present practice as to cases in which the President approves a Board decision. We would also repeat that our experience does not suggest a need for a requirement that the President should employ a "record" procedure. We prefer the practice of having cases returned to the Board by the President for further hearing by the Board, where the President has reservations about a Board decision, so that the President may have the expert advice of the Board, after hearings on a record, before he makes a final decision. We would oppose the creation of a new record on hearing process that would duplicate the Board's process and would deprive the President of the Board's expert advice on evidence adduced on a record developed after a case is submitted to the President.

Question 3: Our answer to question 2 covers this question as well. We believe the President's practice of returning cases to the Board for further hearing is the preferable practice where a "case" is to be presented to the President beyond that presented to the Board.

Question 4: As a matter of general principle, the Board would, of course, answer your question in the affirmative. However, our experience does not establish that there is any need for a change in present legislation in this respect in cases falling under section 801.

In providing these answers the Board is not taking a position on the desirability of a change in the law as recommended by your subcommittee in its report

to the 85th Congress (H. Rept. 2711, 85th Cong., 2d sess., Jan. 3, 1959), page 12, paragraph B(2)1. The question of the need for Presidential participation in international route cases (except as to defense or foreign-policy considerations) is an entirely different one from the questions we are answering in this letter. The Board's comments on this proposal will be submitted at a later date.

Sincerely yours,

JAMES R. DURFEE, Chairman.

CASES IN WHICH THE PRESIDENT HAS REVERSED, MODIFIED, REFUSED TO APPROVE, OR DEFERRED JUDGMENT UPON A BOARD DETERMINATION-JUNE 1952-JULY 14, 1959

CASE

1. North Atlantic Certificate Renewal case, docket 5065, et al.

REMARKS

President on June 28, 1952 approved the Board's decision, but in a letter of

Date of Board's decision: June 16, the same date stated that since he had 1952.

Board's recommendation: Renewal, with modifications, of certificates of Pan American World Airways and Trans World Airlines; denial of application of European American Airlines.

recently approved a Board order reopening the United States-EuropeanMiddle East Cargo Service case for further consideration of the applications of Seaboard & Western and Transocean, European American should be afforded an equal opportunity, if it so desires. He therefore requested Board to take appropriate action to give European American Airlines an opportunity for further hearing.

The Board, on June 30, 1952, issued an order reopening the North Atlantic Certificate Renewal case for rehearing and reconsideration if sought by European American. (Order No. E-6566.) The President's letter cited in order.

2. New York-Balboa through service President, by letter dated January 17, proceeding, docket 4882, et al. 1953, returned decision stating "I have Date of Board's decision: June 23, concluded that I would take no action 1952.

3. Eastern-Colonial, Acquisition of Assets, docket 5666

on this case. Consequently, I am returning the case to the Board in order that the Board may be free to submit it to the incoming President with such recommendations as the Board deems

proper."

Decision of June 23, 1952, transmitted to incoming President who returned it without approval or disapproval, stating that the hearing in the case was held some time ago and he believed it would be desirable to obtain more current information than that contained in the record.

Board on May 18, 1953, reopened the record for the receipt of evidence as to facts and circumstances arising subsequent to the close of the hearings. (Order No. E-7391.) President's letter referred to in order.

President by letter dated February 26, 1954, returned case without apDate of Board's decision: January proval and directed the Board to sub29, 1954. mit a decision disapproving the acquisition.

Board's recommendation: Approval of the acquisition of Colonial Airlines, Inc., by Eastern Air Lines, Inc.

Board on February 26, 1954, adopted an opinion and order disapproving the acquisition and this was approved by the President on February 27, 1954. President's letter cited in Board's opinion. (Order No. E-8136).

45253-59--7

CASES IN WHICH THE PRESIDENT HAS REVERSED, MODIFIED, REFUSED TO APPROVE, OR DEFERRED JUDGMENT UPON A BOARD DETERMINATION-JUNE 1952-JULY 14, 1959-Continued

Date of Board's decision: November not approve the Board's recommenda26, 1954.