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foreign country. United States v. Pacific & Arctic Railway Co., 228 U. S. 87.

It has been held that an agreement between foreign steamship lines and an American steamship line that restricted competition in passenger traffic between the United States and Europe is subject to the Sherman Act. United States v. Hamburg-Amerikanische PacketFahrt-Actien-Gesellschaft, 200 Fed. 806 (C. C. S. D. N. Y. 1911); 216 Fed. 971 (Dist. Ct. S. D. N. Y. 1914) (later dismissed without prejudice by the Supreme Court on the ground that the European war rendered the controversy moot, 239 U. S. 466). In that case the court said (200 Fed. at p. 807):

"The prohibitions of the anti-trust statute apply broadly to contracts in restraint of trade or commerce with foreign nations. This contract directly and materially affects such commerce and if it unlawfully restrains it, it comes within the statute. We see nothing to warrant the contention that the act should be narrowly interpreted as prohibiting only contracts which are to be performed wholly within the territorial jurisdiction of the United States nor-if it were for us to consider any reason for concluding that a broader construction would lead to international complications.

"As the contract directly and materially affects the foreign commerce of this country by being put into effect here, it is immaterial where it was entered into or by what vessels it was to be, or has been, performed. Citizens of foreign countries are not free to restrain or monopolize the foreign commerce of this country by entering into combinations abroad nor by employing foreign vessels to effect their purpose. Such combinations are to be tested by the same standard as similar combinations entered into here by citizens of this country. The vital question in all cases is the same: Is the combination to so operate in this country as to directly and materially affect our foreign commerce?"

Similarly in Thomsen v. Cayser, 243 U. S. 66, the Supreme Court held that a combination consisting solely of foreign steamship lines operating between the United States and foreign countries was illegal under the Sherman Act, saying, at p. 85, "The defendants were common carriers and it was their duty to compete, not combine The court dismissed as irrelevant the fact that the combination had been formed in a foreign country.

* * * "9

The Shipping Act of 1916, 39 Stat. 728, 46 U. S. C., 801, provides a procedure whereby steamship companies may obtain exemption from the antitrust laws for agreements limiting competition. In the absence, however, of strict compliance with the procedure prescribed in this act, agreements that limit competition between steamship lines are subject to the provisions of the Sherman Act.

The rules of law laid down in the decisions that have been cited are applicable to the question asked by your letter. Except to the extent that Congress has specifically provided exemptions, agreements entered into between United States air carriers, or between United States air carriers and foreign air carriers, that are designed to control or to prevent competition in air transportation between the United States and foreign countries, are subject to the provisions of the antitrust laws to the same degree as are similar agreements between domestic air carriers. Furthermore, agreements of foreign air carriers, in which no United States air carrier is involved, are subject to the anti

trust laws if those agreements affect the foreign commerce of the United States.

Section 412 of the Civil Aeronautics Act, 52 Stat. 973, 49 U. S. C. 492, provides that certain agreements between air carriers may be approved by the Civil Aeronautics Board subject to the standards prescribed by Congress in the Act. Section 414 of the Act provides that if the agreements are so approved by the Board, they are exempted from the application of the antitrust laws. This exemption, however, must be secured in the precise manner and method prescribed by Congress. United States v. Socony-Vacuum Oil Company, 310 U. S. 150, 226. I call your attention to the fact that the exemption provided by the Civil Aeronautics Act is limited to agreements to which a United States air carrier is a party. No procedure is provided for giving immunity to agreements made by foreign air carriers among themselves.

Sincerely yours,

FRANCIS BIDDLE.

AIR CARRIER OPERATING CERTIFICATES

[40 Op. A. G. #95]

JUNE 27, 1945.

THE SECRETARY OF COMMERCE. MY DEAR MR. SECRETARY: In your letter dated April 19, 1945, you requested my opinion on the question whether the Administrator of Civil Aeronautics may legally issue an air carrier operating certificate authorizing an air carrier to operate between two points in the United States when no civil airway has been designated between such points, assuming that the applicant for the certificate is otherwise properly qualified.

Under the Civil Aeronautics Act of 1938 (approved June 23, 1938, c. 601, 52 Stat. 973) the Administrator of Civil Aeronautics is empowered to issue air carrier operating certificates, and the Civil Aeronautics Board is authorized to establish minimum safety standards for the operation of the air carrier to whom any such certificate is issued. The term "air carrier" is defined by the statute to mean any citizen of the United States who engages in air transportation (sec. 1 (2); 49 U. S. C. 401 (2)). Air transportation includes interstate air transportation (sec. 1(10); 49 U. Š. C. 401 (10)). "Interstate air transportation" is defined to mean the carriage by aircraft of persons or property as a common carrier for compensation or hire or the carriage of mail by aircraft, in commerce between places which include a place in a State of the United States and a place in any other State of the United States (sec. 1 (21); 49 U. S. C. 401 (21)).

Section 302 (a) of the statue authorizes the Administrator to designate and establish civil airways. The term "civil airway" is defined

as

1 Reorganization Plan No. III (§ 7, 54 Stat. 1231, 1233) made certain changes in the respective functions of the Civil Aeronautics Authority and of the Administrator, and changed the title "Administrator" to "Administrator of Civil Aeronautics." Reorganization Plan No. IV (8 7, 54 Stat. 1235) provided that the Civil Aeronautics Authority should be known as the "Civil Aeronautics Board," and that the Civil Aeronautics Board and the Administrator of Civil Aeronautics should constitute the Civil Aeronautics Authority. Both Plans became effective June 30, 1940 (act of June 4, 1940, c. 231, §4, 54 Stat. 230, 231).

"a path through the navigable air space of the United States, identified by an area on the surface of the earth, designated or approved by the Administrator of Civil Aeronautics as suitable for interstate, overseas, or foreign air commerce." (Sec. 1 (16); 49 U. S. C. 401 (16).) Section 302 (b) provides (49 U. S. C. 452 (b));

"The Administrator shall insofar as practicable designate and establish civil airways with relation to visual, mechanical, electrical, radio, or other like aids along the ground for air navigation, and in such manner that not more than one airway shall embrace the same air space, except to the extent necessary for intersection of airways at landing areas or elsewhere, or except when such action is necessary in the interest of safety or efficient operation of aircraft, or when the operation of aircraft over one airway will not interfere with the operation of aircraft over another airway embracing the same air space: Provided, That nothing herein shall be construed to affect the promulgation or enforcement of any rules and regulations under this Act for the control of traffic."

Section 604 (b) of the statute provides (49 U. S. C.554 (b)):

"Any person desiring to operate as an air carrier may file with the Administrator [Authority] an application for an air carrier operating certificate. If the Administrator [Authority] finds, after investigation, that such person is properly and adequately equipped and able to conduct a safe operation in accordance with the requirements of this Act and the rules, regulations, and standards prescribed thereunder, he [it] shall issue an air carrier operating certificate to such person. Each air carrier operating certificate shall prescribe such terms, conditions, and limitations as are reasonably necessary to assure safety in air transportation, and shall specify the points to and from which, and the civil airways over which, such person is authorized to operate as an air carrier under an air carrier operating certificate."

The second sentence of subsection (b) of section 604 authorizes the Administrator to issue an air carrier operating certificate to any person when he finds, among other things, that such person is able to conduct a safe operation in accordance with the requirements of the statute and the rules, regulations, and standards prescribed thereunder. This provision, standing alone, would empower the Administrator to restrict operations to civil airways. On the other hand, it would also permit him to authorize an operation outside of a civil airway whenever he finds that such an operation would be a "safe operation" in accordance with the statute and the rules, regulations, and standards prescribed thereunder.

The statute having thus conferred upon the Administrator discretionary power, within limitations, with respect to the issuance of air carrier operating certificates, then provides in the third sentence of subsection (b) that each certificate shall prescribe such terms, conditions, and limitations as are reasonably necessary to assure safety in air transportation, and shall specify the civil airways over which the air carrier is authorized to operate. Because both the second sentence. and the first part of the third sentence give the Administrator power, in the interest of safety, to restrict air carrier operations to civil airways or to permit such operations outside of such airways, it might be suggested that the last part of the third sentence stating that the certificate shall specify the civil airways over which the person is

authorized to operate as an air carrier was intended to limit the Administrator's discretion and to require him to confine each air carrier's operations to duly designated or approved airways, whether or not he regarded "off-airway" operations as safe.

On the other hand, the provision in the third sentence of subsection (b) with respect to the specification of civil airways in certificates is also susceptible of the construction that it was not intended as a restriction upon the general power of the Administrator to prescribe safety terms, conditions, and limitations, and that its purpose is simply to require the statement in each certificate of those civil airways, if any, over which the air carrier is authorized to operate. Under this construction of section 604 the Administrator could restrict all air carrier operations to duly designated or approved airways, if in his judgment reasonably exercised such action was deemed necessary in order to assure safe operation. But the Administrator would not be compelled by the statute to impose such a restriction upon all air carriers. He would be empowered (assuming the applicant for the certificate to be otherwise properly qualified) to issue a certificate authorizing the applicant to operate as an air carrier outside of a civil airway in any case where he finds that the applicant is able to conduct a safe operation in accordance with requirements of the act and the rules, regulations, and standards prescribed thereunder. This construction of the statute, which I think is the proper one, is supported by the fact that the term "air carrier" is not limited by the statute to scheduled air carriers or to scheduled air transportation, and it is further supported by the administrative practice.

In the conduct of air transportation some air carriers operate on schedules. Other air carriers, having no special route or regular schedule, are referred to as nonscheduled air carriers. These differences in operations existed prior to the adoption of the Civil Aeronautics Act of 1938 and have continued to the present time. They were brought to the attention of the Congress at the time that it was considering the civil aviation bills. (See Hearings before the House Committee on Interstate and Foreign Commerce, 75th Cong., 1st sess., on H. R. 5234 and H. R. 4652, pp. 25–26, 341; Hearings before the same committee, 75th Cong., 3rd sess., on H. R. 9738, pp 153-160; Hearings before a Subcommittee of the Senate Committee on Interstate Commerce, 75th Cong., 1st sess., on S. 2 and S. 1760, pp. 43, 500.) Some of the civil aviation bills that were considered by the Congress dealt only with the subject of promoting the safety of scheduled air transportation. Other bills contained separate and different provisions for the regulation of other forms of civil aviation. As finally adopted, the safety provisions of the statute make no express distinction between scheduled air transportation and nonscheduled air transportation. The statute does not exclude nonscheduled air transportation. On the contrary, the statutory definitions of "air carrier” and "air transportation" which are applicable to those terms as used in section 604 include all carriage by aircraft of persons or property as a common carrier for compensation or hire in interstate commerce. Thus, the provisions of section 604 are applicable to all forms of "air transportation," including nonscheduled air carriers who have no

special route or regular schedule. The provisions of section 604 and its legislative history make it reasonable to conclude that if the statutory requirement that air carriers operate with the highest possible degree of safety is satisfied, the provisions of section 604 were intended. to allow flexibility in the issuance of air carrier operating certificates. My attention has been called to the fact that certain civil air traffic rules require filing of flight plans for certain types of operation, maintenance of prescribed flight altitudes, and maintenance of radio contact with the ground. (See Civil Air Regulations, Part 60, particularly sections 60.343, 60.44, 60.471, 60.53, 60.532, 60.573, 60.58, and 60.586.) These rules are not presently applicable to air transportation outside of the civil airways, and it has been suggested, therefore, that such transportation would be more hazardous than air transportation over the civil airways which is subject to civil airway traffic control. It is true, as I have pointed out, that the Civil Aeronautics Act of 1938 stresses the necessity for safe operations on the part of all air carriers. It appears, however, that the statute leaves the matter principally for administrative determination. The question of what safety rules and standards should be made applicable to air carriers or to particular air carriers seems to be a function of establishing minimum safety standards for the operation of the air carrier to whom any air carrier certificate is issued. The statute and the Reorganization Plans vest this function in the Civil Aeronautics Board. (See also Civil Air Regulations, sec. 61.0.)

Thus, at the present time a regulation of the Civil Aeronautics Board (Civil Air Regulations, sec. 61.200) pertaining to the operations of scheduled air carriers engaged in interstate air transportation within the continental limits of the United States permits off-route operation under certain conditions where such procedure is not specifically forbidden by the Administrator, and authorizes the offroute flight to be made outside of a civil airway where the aircraft is equipped with a fully functioning automatic radio direction finder. Other administrative practice supports the view that the statute does not compel the designation or approval by the Administrator of a civil airway for every air carrier operating certificate. I am informed that since the enactment of the Civil Aeronautics Act of 1938, scheduled operations of air carriers over routes or portions of routes not on a civil airway have been approved by the Administrator, and that a number of air carrier operating certificates authorizing such operations have been issued. This practice is very persuasive. (See 39 Op. A. G. 132, 136; id. 232, 237.)

For the reasons that I have given, it is my opinion that the Administrator of Civil Aeronautics is authorized by the Civil Aeronautics Act of 1938 to issue an air carrier operating certificate authorizing an air carrier to operate between two points in the United States outside of the boundaries of a civil airway whenever he finds, after investigation, that the applicant for the certificate is properly and adequately equipped and is able to conduct a safe operation in accordance with the requirements of the statute and the rules, regulations, and standards prescribed thereunder.

Sincerely yours,

FRANCIS BIDDLE.

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