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T.W.A. V. CIVIL AERONAUTICS BOARD, 336 U.S. 601 


NO. 387.  ARGUED FEBRUARY 8-9, 1949.  - DECIDED APRIL 18, 1949.  - 83
U.S. APP. D.C. 358, 169 F.2D 893, AFFIRMED. 


1.  THE CIVIL AERONAUTICS BOARD IS WITHOUT AUTHORITY, UNDER THE CIVIL
AERONAUTICS ACT OF 1938 AS AMENDED, TO FIX A NEW MAIL RATE FOR AIR
CARRIERS AND TO MAKE IT RETROACTIVE FOR A PERIOD IN WHICH A FINAL RATE
PREVIOUSLY FIXED BY THE BOARD WAS IN EFFECT AND UNCHALLENGED BY THE
INITIATION OF THE MAIL RATE PROCEEDING.  PP. 602-608. 

2.  SECTION 406(A) OF THE ACT, WHICH EMPOWERS THE BOARD TO FIX RATES
FOR THE TRANSPORTATION OF MAIL BY AIRCRAFT AND "TO MAKE SUCH RATES
EFFECTIVE FROM SUCH DATE AS IT SHALL DETERMINE TO BE PROPER," IS NOT TO
BE CONSTRUED AS AUTHORIZING THE BOARD TO MAKE A RATE RETROACTIVE TO A
DATE EARLIER THAN THE DATE OF THE COMMENCEMENT OF THE RATE PROCEEDING. 
PP. 604-607. 

TRANSCONTINENTAL & WESTERN AIR, INC. V. CIVIL AERONAUTICS BOARD. 

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF
COLUMBIA CIRCUIT. 

A PETITION TO THE CIVIL AERONAUTICS BOARD BY AN AIR TRANSPORT COMPANY
TO FIX A NEW RATE FOR THE TRANSPORTATION OF MAIL WAS DISMISSED INSOFAR
AS THE PETITION SOUGHT TO HAVE THE NEW RATE MADE RETROACTIVE TO A DATE
EARLIER THAN THE DATE OF THE PETITION.  8 C.A.B. 685.  THE COURT OF
APPEALS AFFIRMED.  83 U.S. APP. D.C. 358, 169 F.2D 893.  THIS COURT
GRANTED CERTIORARI.  335 U.S. 884.  AFFIRMED, P. 608. 

MR. JUSTICE DOUGLAS DELIVERED THE OPINION OF THE COURT. 

THE QUESTION IN THIS CASE IS WHETHER THE CIVIL AERONAUTICS BOARD HAS
AUTHORITY TO FIX A NEW MAIL RATE FOR AIR CARRIERS AND TO MAKE IT
RETROACTIVE FOR A PERIOD IN WHICH A FINAL RATE PREVIOUSLY FIXED BY THE
BOARD WAS IN EFFECT AND UNCHALLENGED BY THE INITIATION OF A MAIL RATE
PROCEEDING.  THE ANSWER TURNS PRIMARILY ON THE MEANING OF SEC. 406(A)
OF THE CIVIL AERONAUTICS ACT OF 1938 AS AMENDED, 52 STAT. 998, 49
U.S.C. SEC. 486(A), WHICH EMPOWERS THE BOARD TO FIX AND DETERMINE THE
FAIR AND REASONABLE RATES OF COMPENSATION FOR THE TRANSPORTATION OF
MAIL BY AIRCRAFT AND "TO MAKE SUCH RATES EFFECTIVE FROM SUCH DATE AS IT
SHALL DETERMINE TO BE PROPER  ...  "  FN1 

THE BOARD IN AN ORDER DATED OCTOBER 26, 1945, FIXED A MAIL RATE OF 45
CENTS PER MAIL TON-MILE FOR PETITIONER.  FN2  FROM THAT DATE UNTIL
MARCH 14, 1947, PETITIONER WAS PAID AT THAT RATE FOR ITS AIR CARRIER
SERVICES.  DURING THAT TIME NO ACTION WAS TAKEN BY PETITIONER OR BY THE
GOVERNMENT TO INITIATE A CHANGE IN THAT RATE.  ON MARCH 14, 1947,
PETITIONER FILED A PETITION WITH THE BOARD ALLEGING THAT ITS MAIL RATE
HAD NOT BEEN FAIR AND REASONABLE SINCE JANUARY 1, 1946, AND REQUESTING
THE BOARD TO FIX A FAIR AND REASONABLE RATE "FROM AND AFTER JANUARY 1,
1946."  AFTER HEARING, THE BOARD BY A DIVIDED VOTE RULED THAT IT HAD NO
AUTHORITY TO FIX A MAIL RATE FOR A PERIOD PRIOR TO MARCH 14, 1947, AND
DISMISSED THE PETITION INSOFAR AS IT SOUGHT THAT RELIEF.  8 C.A.B.
685.  THE COURT OF APPEALS AFFIRMED THE ORDER OF THE BOARD.  83 U.S.
APP. D.C. 358, 169 F.2D 893.  THE CASE IS HERE ON A PETITION FOR A WRIT
OF CERTIORARI WHICH WE GRANTED BECAUSE OF THE IMPORTANCE OF THE
QUESTION TO THE CARRIERS AND PUBLIC ALIKE. 

THE LANGUAGE OF SEC. 406(A), WHICH EMPOWERS THE BOARD TO "FIX AND
DETERMINE" AFTER NOTICE AND HEARING "THE FAIR AND REASONABLE RATES OF
COMPENSATION" FOR THE TRANSPORTATION OF MAIL BY AIRCRAFT,  FN3  READS
LIKE A TYPICAL PUBLIC UTILITY RATE-MAKING AUTHORITY.  BOTH SUBDIVISIONS
(A) AND (B) OF SEC. 406, TO BE SURE, REFLECT SOME CHARACTERISTICS OF
RATE-MAKING WHICH ARE PECULIAR TO AIR CARRIERS.  THAT IS TRUE OF THE
METHODS SPECIFIED IN SEC. 406(A) FOR ASCERTAINING THE RATES OF
COMPENSATION - "AIRCRAFT-MILE, POUND-MILE, WEIGHT, SPACE, OR ANY
COMBINATION THEREOF, OR OTHERWISE  ... "  SPECIAL STANDARDS FOR RATE
MAKING ARE ALSO PRESCRIBED.  THE BOARD IS AUTHORIZED TO CONSIDER "THE
CONDITIONS PECULIAR TO TRANSPORTATION BY AIRCRAFT AND TO THE PARTICULAR
AIR CARRIER OR CLASS OF AIR CARRIERS" IN FIXING DIFFERENT RATES FOR
DIFFERENT AIR CARRIERS OR CLASSES OF AIR CARRIERS AND DIFFERENT CLASSES
OF SERVICE.  SEC. 406(B).  AND THE BOARD IN DETERMINING THE RATE IS
AUTHORIZED AND DIRECTED TO CONSIDER "THE NEED OF EACH SUCH AIR CARRIER
FOR COMPENSATION FOR THE TRANSPORTATION OF MAIL SUFFICIENT TO INSURE
THE PERFORMANCE OF SUCH SERVICE, AND, TOGETHER WITH ALL OTHER REVENUE
OF THE AIR CARRIER, TO ENABLE SUCH AIR CARRIER UNDER HONEST,
ECONOMICAL, AND EFFICIENT MANAGEMENT, TO MAINTAIN AND CONTINUE THE
DEVELOPMENT OF AIR TRANSPORTATION TO THE EXTENT AND OF THE CHARACTER
AND QUALITY REQUIRED FOR THE COMMERCE OF THE UNITED STATES, THE POSTAL
SERVICE, AND THE NATIONAL DEFENSE."  SEC. 406(B). 

CONSIDERABLE RELIANCE IS PLACED ON THIS LAST PROVISION FOR THE VIEW
THAT THE BOARD HAS AUTHORITY UNDER THE "MAKE EFFECTIVE" CLAUSE TO ORDER
SUCH RETROACTIVE ADJUSTMENTS OF RATES AS THE "NEED" OF THE AIR CARRIER
MAKES APPROPRIATE.  BUT SUCH A STANDARD HAS ITS COUNTERPARTS IN OTHER
LEGISLATION DEALING WITH RATE-MAKING  FN4  AND DOES NOT NECESSARILY
MARK A DEPARTURE FROM THE CUSTOMARY PATTERN OF FIXING RATES
PROSPECTIVELY.  YET, UNLESS WE FOUND A CONGRESSIONAL PURPOSE TO MAKE A
RADICAL BREAK WITH TRADITION, WE WOULD BE MOST RELUCTANT TO GIVE THE
"MAKE EFFECTIVE" CLAUSE THE BROAD MEANING WHICH PETITIONER URGES.  FOR
THE RATES OF CARRIERS AND OTHER UTILITIES FIXED BY PUBLIC AUTHORITIES,
WHILE USUALLY PROSPECTIVE, ARE SOMETIMES MADE RETROACTIVE TO THE DATE
OF THE COMMENCEMENT OF THE RATE-MAKING PROCEEDING.  SEE UNITED STATES
V. NEW YORK CENTRAL R. CO., 279 U.S. 73.  BUT, SO FAR AS WE ARE AWARE,
THEY HAVE NEVER BEEN RETROACTIVE TO AN EARLIER DATE. 

THE LANGUAGE OF THE ACT DOES NOT SUGGEST THAT CONGRESS INTENDED TO
BREAK WITH THESE TRADITIONS OF RATE-MAKING N5.  MOREOVER, THE
LEGISLATIVE HISTORY INDICATES THAT THE "MAKE EFFECTIVE" CLAUSE WAS
INSERTED ONLY TO MAKE CLEAR THAT THE RATES COULD BE MADE RETROACTIVE TO
THE DATE OF THE APPLICATION.  FN6  FINALLY THE SCHEME OF THE ACT AND
ITS UNDERLYING POLICY SEEM TO US TO PRECLUDE THE MORE EXPANSIVE READING
OF THE CLAUSE URGED ON US BY PETITIONER. 

PETITIONER'S READING OF THE ACT WOULD IN PRACTICAL EFFECT HAVE THE
TENDENCY TO TRANSFORM IT INTO A COST-PLUS SYSTEM OF REGULATION, A
CONSTRUCTION WHICH WOULD NOT HARMONIZE WITH THE APPARENT DESIGN OF THE
ACT.  THUS SEC. 406(B) AUTHORIZES THE BOARD TO FIX RATES FOR "CLASSES
OF AIR CARRIERS."  N7  IT IS PLAIN THAT THE UNIFORM RATE FOR THE CLASS
IS AN IMPORTANT REGULATORY DEVICE.  FOR SEC. 2(D) OF THE ACT LOOKS TO
THE SOUND DEVELOPMENT OF AN AIR TRANSPORTATION SYSTEM THROUGH
COMPETITION.  FN8  A UNIFORM RATE FORCES CARRIERS WITHIN A GIVEN CLASS
TO COMPETE IN SECURING REVENUE AND IN REDUCING OR CONTROLLING COSTS. 
IF THE BOARD HAD AUTHORITY ON THE BASIS OF THE CARRIER'S NEEDS TO MAKE
RATES RETROACTIVE TO ANY POINT OF TIME, THERE WOULD BE A POWERFUL
INCENTIVE TO SEEK RELIEF FROM THE UNIFORM RATE, NOT TO LIVE WITHIN IT. 

IN SUM A CONSTRUCTION WHICH WOULD MAKE IT POSSIBLE TO REVISE RATES
RETROACTIVELY TO ANY POINT OF TIME WOULD BE A REAL INNOVATION WHICH
SHOULD HAVE A MORE SOLID BASIS THAN OUR OWN PREDILECTIONS.  WE CANNOT
BUT FEEL THAT IF THE RATE-MAKING POWER WERE TO BE PUT TO SUCH A NOVEL
USE, THE PURPOSE WOULD HAVE BEEN MADE CLEAR.  IT IS TOO UNPRECEDENTED A
DEPARTURE FROM THE CONVENTIONS OF RATE-MAKING TO REST ON MERE
INFERENCE. 

IT IS POINTED OUT THAT THE BOARD APPARENTLY CONSIDERS PAST OPERATING
LOSSES IN FIXING RATES  FN9 AND THAT THEREFORE IT IS A MATTER OF NO
GREAT CONSEQUENCE IF THE RATES ARE MADE RETROACTIVE TO ONE DATE RATHER
THAN ANOTHER.  BUT THE POWER TO FIX RATES TO RECOUP PAST LOSSES IS A
DISTINCT QUESTION NOT BEFORE US.  AFFIRMED. 

FN1  SECTION 406 PROVIDES: 

"(A)  THE AUTHORITY IS EMPOWERED AND DIRECTED, UPON ITS OWN
INITIATIVE OR UPON PETITION OF THE POSTMASTER GENERAL OR AN AIR
CARRIER, (1) TO FIX AND DETERMINE FROM TIME TO TIME, AFTER NOTICE AND
HEARING, THE FAIR AND REASONABLE RATES OF COMPENSATION FOR THE
TRANSPORTATION OF MAIL BY AIRCRAFT, THE FACILITIES USED AND USEFUL
THEREFOR, AND THE SERVICES CONNECTED THEREWITH (INCLUDING THE
TRANSPORTATION OF MAIL BY AN AIR CARRIER BY OTHER MEANS THAN AIRCRAFT
WHENEVER SUCH TRANSPORTATION IS INCIDENTAL TO THE TRANSPORTATION OF
MAIL BY AIRCRAFT OR IS MADE NECESSARY BY CONDITIONS OF EMERGENCY
ARISING FROM AIRCRAFT OPERATION), BY EACH HOLDER OF A CERTIFICATE
AUTHORIZING THE TRANSPORTATION OF MAIL BY AIRCRAFT, AND TO MAKE SUCH
RATES EFFECTIVE FROM SUCH DATE AS IT SHALL DETERMINE TO BE PROPER; (2)
TO PRESCRIBE THE METHOD OR METHODS, BY AIRCRAFT-MILE, POUND-MILE,
WEIGHT, SPACE, OR ANY COMBINATION THEREOF, OR OTHERWISE, FOR
ASCERTAINING SUCH RATES OF COMPENSATION FOR EACH AIR CARRIER OR CLASS
OF AIR CARRIERS; AND (3) TO PUBLISH THE SAME; AND THE RATES SO FIXED
AND DETERMINED SHALL BE PAID BY THE POSTMASTER GENERAL FROM
APPROPRIATIONS FOR THE TRANSPORTATION OF MAIL BY AIRCRAFT. 

     .         .         .         . . 

"(B)  IN FIXING AND DETERMINING FAIR AND REASONABLE RATES OF
COMPENSATION UNDER THIS SECTION, THE AUTHORITY, CONSIDERING THE
CONDITIONS PECULIAR TO TRANSPORTATION BY AIRCRAFT AND TO THE PARTICULAR
AIR CARRIER OR CLASS OF AIR CARRIERS, MAY FIX DIFFERENT RATES FOR
DIFFERENT AIR CARRIERS OR CLASSES OF AIR CARRIERS, AND DIFFERENT
CLASSES OF SERVICE.  IN DETERMINING THE RATE IN EACH CASE, THE
AUTHORITY SHALL TAKE INTO CONSIDERATION, AMONG OTHER FACTORS, THE
CONDITION THAT SUCH AIR CARRIERS MAY HOLD AND OPERATE UNDER
CERTIFICATES AUTHORIZING THE CARRIAGE OF MAIL ONLY BY PROVIDING
NECESSARY AND ADEQUATE FACILITIES AND SERVICE FOR THE TRANSPORTATION OF
MAIL; SUCH STANDARDS RESPECTING THE CHARACTER AND QUALITY OF SERVICE TO
BE RENDERED BY AIR CARRIERS AS MAY BE PRESCRIBED BY OR PURSUANT TO LAW;
AND THE NEED OF EACH SUCH AIR CARRIER FOR COMPENSATION FOR THE
TRANSPORTATION OF MAIL SUFFICIENT TO INSURE THE PERFORMANCE OF SUCH
SERVICE, AND, TOGETHER WITH ALL OTHER REVENUE OF THE AIR CARRIER, TO
ENABLE SUCH AIR CARRIER UNDER HONEST, ECONOMICAL, AND EFFICIENT
MANAGEMENT, TO MAINTAIN AND CONTINUE THE DEVELOPMENT OF AIR
TRANSPORTATION TO THE EXTENT AND OF THE CHARACTER AND QUALITY REQUIRED
FOR THE COMMERCE OF THE UNITED STATES, THE POSTAL SERVICE, AND THE
NATIONAL DEFENSE." 

THE CIVIL AERONAUTICS BOARD TOOK THE PLACE OF THE AUTHORITY ON JUNE
30, 1940.  SEE 54 STAT. 1235. 

FN2  SEE 6 C.A.B. 595. 

FN3  SEE NOTE 1, SUPRA. 

FN4  SEE SEC. 1 OF TITLE I OF THE TRANSPORTATION ACT OF 1940, 54
STAT. 899, 49 U.S.C., NOTE PRIOR TO SEC. 1:  "IT IS HEREBY DECLARED TO
BE THE NATIONAL TRANSPORTATION POLICY OF THE CONGRESS TO PROVIDE FOR
FAIR AND IMPARTIAL REGULATION OF ALL MODES OF TRANSPORTATION SUBJECT TO
THE PROVISIONS OF THIS ACT  ...  TO  ... FOSTER SOUND ECONOMIC
CONDITIONS IN TRANSPORTATION AND AMONG THE SEVERAL CARRIERS; ...  ALL
TO THE END OF DEVELOPING, COORDINATING, AND PRESERVING A NATIONAL
TRANSPORTATION SYSTEM BY WATER, HIGHWAY, AND RAIL, AS WELL AS OTHER
MEANS, ADEQUATE TO MEET THE NEEDS OF THE COMMERCE OF THE UNITED STATES,
OF THE POSTAL SERVICE, AND OF THE NATIONAL DEFENSE.  ALL OF THE
PROVISIONS OF THIS ACT SHALL BE ADMINISTERED AND ENFORCED WITH A VIEW
TO CARRYING OUT THE ABOVE DECLARATION OF POLICY." 

FN5  THE OTHER RATE-MAKING PROVISIONS OF THE ACT LIKEWISE FOLLOW THE
CONVENTIONAL PATTERN.  SEE SEC. 1002(D) AND (E). 

FN6  THE INTERSTATE COMMERCE COMMISSION IN ITS ADMINISTRATION OF THE
AIR MAIL ACT OF 1934 AS AMENDED, 48 STAT. 933, 935, 49 STAT. 614, 616,
HAD ASSERTED THE POWER TO MAKE ITS ORDERS EFFECTIVE AS OF THE DATE OF
INITIATION OF THE PROCEEDING.  BUT THERE WAS A SHARP DIVERGENCE OF
VIEWS WITHIN THE COMMISSION OVER ITS AUTHORITY TO DO SO.  SEE AIR MAIL
COMPENSATION, 216 I.C.C. 166, 222 I.C.C. 602.  THE CONGRESSIONAL
COMMITTEES SEEMED PRIMARILY CONCERNED WITH THAT PROBLEM IN THEIR
CONSIDERATION OF THE "MAKE EFFECTIVE" CLAUSE IN THE BILLS WHICH
PRECEDED THE ONES RESULTING IN THE ACT.  SEE SENATE HEARINGS, COMMITTEE
ON INTERSTATE COMMERCE, ON S. 2 AND S. 1760, 75TH CONG., 1ST SESS. 179,
180, 239, 291, 343, 483-485, 523.  AND SEE H.R. HEARINGS, COMMITTEE ON
INTERSTATE AND FOREIGN COMMERCE, ON H.R. 5234 AND H.R. 4652, 75TH
CONG., 1ST SESS. 325-327.  THE POLICY OF ADHERING TO CONVENTIONAL RATE
MAKING IS SUGGESTED BY H.R. REP. NO. 911, 75TH CONG., 1ST SESS. 18, AND
BY THE STATEMENTS OF SENATOR TRUMAN WHO WAS IN CHARGE OF THE BILL IN
THE SENATE.  81 CONG. REC. 9202, 9203, 9204. 

THIS HISTORY IS RELEVANT TO OUR PROBLEM, FOR THOUGH IT RELATES TO THE
1937 BILL WHICH WAS NOT PASSED, THE "MAKE EFFECTIVE" CLAUSE
CRYSTALLIZED AT THAT TIME AND APPEARED IN THE 1938 BILL WHICH WAS
ENACTED.  THE CONFERENCE REPORT ON THE LATTER BILL IS SILENT ON THE
"MAKE EFFECTIVE" CLAUSE, THOUGH THE FOLLOWING PASSAGE FROM IT, H.R.
REP. NO. 2635, 75TH CONG., 3D SESS. 71-72, BY ITS BRIEF EXPOSITION OF
THE POWER CONFERRED SUGGESTS THAT CONGRESS DID NOT DEPART FROM THE
CONVENTIONAL PATTERN OF RATE-MAKING WHEN IT ENACTED THE MEASURE: 

"THIS SECTION (SEC. 406) EMPOWERS THE AUTHORITY TO FIX MAIL RATES AND
SETS FORTH THE CONGRESSIONAL POLICY TO GUIDE THE AUTHORITY IN FIXING
SUCH RATES AND ENABLES THE AUTHORITY TO ADJUST RATES SO THAT THE POLICY
OF CONGRESS MAY BE PROPERLY CARRIED OUT IN THE CASE OF EACH CARRIER OR
CLASS OF CARRIERS ACCORDING TO THE NEEDS OF THE PARTICULAR CASE." 

FN7  SEC. 406(B) SUPRA, NOTE 1. 

FN8  SECTION 2 PROVIDES: 

"IN THE EXERCISE AND PERFORMANCE OF ITS POWERS AND DUTIES UNDER THIS
ACT, THE (BOARD) SHALL CONSIDER THE FOLLOWING, AMONG OTHER THINGS, AS
BEING IN THE PUBLIC INTEREST, AND IN ACCORDANCE WITH THE PUBLIC
CONVENIENCE AND NECESSITY - 

     .  .         .         .         . 

"(D)  COMPETITION TO THE EXTENT NECESSARY TO ASSURE THE SOUND
DEVELOPMENT OF AN AIR-TRANSPORTATION SYSTEM PROPERLY ADAPTED TO THE
NEEDS OF THE FOREIGN AND DOMESTIC COMMERCE OF THE UNITED STATES, OF THE
POSTAL SERVICE, AND OF THE NATIONAL DEFENSE  ...  " 

FN9  AFTER THE PRESENT CASE WAS ARGUED IN THIS COURT, THE CIVIL
AERONAUTICS BOARD, ON FEBRUARY 21, 1949, AWARDED A TEMPORARY MAIL RATE
INCREASE TO TWA EFFECTIVE MARCH 14, 1947, TO COMPENSATE IT FOR LOSSES
SUSTAINED PRIOR THERETO AS THE RESULT OF GROUNDING THE CONSTELLATION
AIRCRAFT.  AMERICAN AIRLINES, INC., ET AL., MAIL RATE INCREASES, C.A.B.
DOCKET NO. 2849, SERIAL NO. E-2484(FEB.  21, 1949).  THAT ACTION DOES
NOT RENDER THE PRESENT CASE MOOT, FOR THE NEW TEMPORARY MAIL RATE
COVERS ONLY A PART OF THE LOSSES ON THE BASIS OF WHICH A RATE INCREASE
WAS SOUGHT HERE.  NOR DO WE HAVE IN THIS CASE ANY QUESTION CONCERNING
THE POWER OF THE BOARD OVER TEMPORARY, AS DISTINGUISHED FROM FINAL,
MAIL RATES.  SEE ESSAIR, INC., TEMPORARY MAIL RATE, 6 C.A.B. 687, 690
691; IN THE MATTER OF NATIONAL AIRLINES, INC., C.A.B. DOCKET NO. 3037,
SERIAL NO. E-1271, MARCH 5, 1948. 

MR. JUSTICE REED TOOK NO PART IN THE CONSIDERATION OR DECISION OF
THIS CASE. 

MR. JUSTICE JACKSON, DISSENTING. 

THE CIVIL AERONAUTICS BOARD ASKS US TO HOLD THAT IT IS DENIED BY ITS
ORGANIC ACT ANY POWER RETROACTIVELY TO FIX RATES FOR CARRYING AIR
MAIL.  IT HAS NOT CONVINCED ME THAT IT HAS NO POWER, WHATEVER IT SHOULD
WISELY DO WITH IT AS MATTER OF POLICY. 

THE FUNDAMENTAL PREMISE OF THE COURT'S OPINION IS THAT THE FUNCTION
OF THE BOARD IN FIXING THE AIR-MAIL RATE IS ANALOGOUS TO RATE-MAKING
FOR A RAILROAD OR A PUBLIC UTILITY.  THE TWO TYPES OF RATES ARE NOT
COMPARABLE.  "RATE" AS APPLIED TO THE GOVERNMENT'S AIR-MAIL PAYMENTS IS
AN EUPHEMISM TO EMBRACE A SUBSIDY AS WELL AS COMPENSATION.  THE STATUTE
REQUIRES THE BOARD, IN FIXING THE "RATE" FOR TRANSPORTATION OF MAIL, TO
TAKE INTO CONSIDERATION THE "NEED OF EACH SUCH AIR CARRIER FOR
COMPENSATION  ...  TO INSURE THE PERFORMANCE OF SUCH SERVICE,  ...  AND
TO ENABLE SUCH AIR CARRIER  ...  TO MAINTAIN AND CONTINUE THE
DEVELOPMENT OF AIR TRANSPORTATION TO THE EXTENT AND OF THE CHARACTER
AND QUALITY REQUIRED FOR THE COMMERCE OF THE UNITED STATES, THE POSTAL
SERVICE, AND THE NATIONAL DEFENSE."  SEC. 406(B).  THESE CONSIDERATIONS
ARE INAPPROPRIATE IN APPLYING ORDINARY UTILITY RATE-MAKING PRINCIPLES. 
MOREOVER, UTILITY RATES APPLY TO A MULTITUDE OF CUSTOMERS; THE AIR-MAIL
RATE IS PAID BY ONLY ONE - THE GOVERNMENT.  UTILITY SERVICES MUST BE
PAID FOR CURRENTLY; AIR-MAIL PAYMENTS CAN BE AND ARE BEING PAID IN LUMP
SUMS ON ACCOUNT OF ITEMS LONG PAST. 

CONGRESS, IN THE ACT BEFORE US, SET UP A SCHEME FOR DEALING WITH EACH
ACCORDING TO ITS SEPARATE NATURE.  THE RATE FOR PUBLIC CARRIAGE OF
PASSENGERS AND GOODS BY AIR LINES, OF COURSE, CANNOT BE FIXED
RETROACTIVELY ON THE BASIS OF EXPERIENCE, FOR THE PUBLIC MUST KNOW AT
THE TIME THEY TAKE SERVICE WHAT THEY ARE TO PAY FOR IT AND THE CARRIER
MUST COLLECT THEN OR NEVER.  THE ACT RECOGNIZES THIS NECESSITY WITH
RESPECT TO PASSENGERS AND CARGO.  RATES FOR TRANSPORTING THEM ARE
REQUIRED BY SEC. 403 TO BE EMBODIED IN FILED AND PUBLISHED TARIFFS,
WHICH MAY BE ALTERED ONLY AFTER HEARING AND NOTICE AND ONLY
PROSPECTIVELY.  SECTION 1002 PROVIDES THAT THE BOARD MAY INSTITUTE
PROCEEDINGS TO MODIFY THESE RATES AND MAY, AFTER PRESCRIBED PROCEDURES,
SET THE RATES THEREAFTER TO BE CHARGED.  THUS, WHEN CONGRESS WAS
DEALING WITH UTILITY RATES FOR PASSENGERS AND SHIPPERS, IT PERMITTED
ONLY PROSPECTIVE CHANGES, AND SAID SO. 

BUT CONGRESS BELIEVED THAT, IN THE INTEREST OF THE NATIONAL DEFENSE
AND COMMERCIAL AVIATION, IT HAD TO SUBSIDIZE PIONEERING AIR LINES AND
UNDERWRITE REVENUES ABOVE THOSE TO BE REALIZED FROM PASSENGER AND CARGO
CARRIAGE.  A FEASIBLE WAY TO DO IT WAS THROUGH AIR-MAIL PAYMENTS.  ITS
PLAN TO THAT EFFECT WAS DETAILED IN SEC. 406.  BUT AS TO THIS SUBSIDY
RATE, IT ENACTED NO PROHIBITION AGAINST RETROACTIVITY AND, IF IT HAD,
IT IS DIFFICULT TO SEE HOW THE BOARD WOULD HAVE AUTHORITY TO GO BACK
EVEN TO THE DATE OF THE PETITION.  ON THE CONTRARY, HOWEVER, SEC.
406(A) EMPOWERS AND DIRECTS THE BOARD TO DETERMINE THE AIR-MAIL RATE
AND "TO MAKE SUCH RATES EFFECTIVE FROM SUCH DATE AS IT SHALL DETERMINE
TO BE PROPER."  I SEE NO JUSTIFICATION FOR HOLDING THAT THIS LANGUAGE
MEANS ANYTHING LESS THAN JUST WHAT IT SAYS, OR FOR HOLDING THAT TWO
SUCH OPPOSITE KINDS OF PAYMENTS MUST BE GOVERNED BY IDENTICAL RULES. 

THE CIVIL AERONAUTICS BOARD, HOWEVER, ASKS US TO HOLD THAT THE SAME
RULES AS TO RETROSPECTIVE RATES ARE "APPLICABLE EQUALLY TO MAIL,
PASSENGER AND PROPERTY RATES UNDER THE ACT."  IT URGES THAT ITS
PROVISIONS DO NOT "CONVERT THE BOARD'S PRIMARY FUNCTION OF FIXING RATES
OF COMPENSATION FOR THE FUTURE INTO A DUTY TO AWARD AMOUNTS OF
COMPENSATION FOR THE PAST" AND THAT, IF IT SETS TOO LOW A RATE, "THE
CARRIER HAS NO REDRESS SAVE A NEW HEARING AND THE FIXING OF A MORE
ADEQUATE RATE FOR THE FUTURE."  IT CONTENDS FOR APPLICATION OF
DECISIONS BY WHICH THIS COURT "HAS REFUSED TO REQUIRE THE
CAPITALIZATION OF PAST LOSSES IN THE RATE BASE FOR THE PURPOSE OF
FIXING FUTURE RATES" OR TO ALLOW "CURRENT REIMBURSEMENT OUT OF NEW
RATES OF DEFICIENCIES ARISING FROM A FAILURE TO EARN A REASONABLE
RETURN IN PAST YEARS, OR THE CAPITALIZATION OF COSTS OF MAINTAINING
EXCESS CAPACITY DURING THE EARLY PERIOD OF OPERATION."  AND THE BOARD
ARGUED THAT IT HAS ADHERED TO SUCH RULES AND ADVANCES POLICY REASONS
WHY WE SHOULD HOLD THAT IT IS WITHOUT POWER TO DO OTHERWISE. 

I HAVE NOT BEEN ABLE TO RECONCILE THE POSITION WHICH THE BOARD TOOK
BEFORE THIS COURT AT ITS ARGUMENT ON FEBRUARY 8 AND 9 WITH WHAT APPEARS
TO BE ITS ALMOST CONTEMPORANEOUS ACTION.  ON FEBRUARY 21, 1949, THE
BOARD HANDED DOWN AN ORDER IN WHICH IT ALLOWED TO THIS VERY PETITIONER,
IN A LUMP SUM, $2,748,000 FOR THE PERIOD JULY 14, 1947, TO DECEMBER 31,
1948, AND $33,333 IN A LUMP SUM EACH MONTH THEREAFTER.  IT SAID, "THE
ABOVE PAYMENTS FOR EACH OF THESE CARRIERS ARE IN ADDITION TO, AND NOT
INCLUSIVE OF, THE MAIL RATES PROVIDED FOR IN PREVIOUS TEMPORARY OR
FINAL MAIL RATE ORDERS, FOR THE RESPECTIVE PERIODS STATED."  THE TWA
LUMP SUM OF $2,748,000 WAS TO MAKE THEM WHOLE FOR THE YEAR 1948 AND
ALSO TO PAY THEIR "GROUNDING LOSSES" FOR 1946, A YEAR PRIOR TO THE
FILING OF ITS PETITION, WHICH THE BOARD ASKS US TO HOLD AS THE LIMIT OF
BACKWARD OPERATION OF RATES.  THE BOARD SAID: 

"IN 1946, TWA INCURRED SUBSTANTIAL COSTS BECAUSE OF THE GROUNDING OF
THE CONSTELLATION AIRCRAFT.  SIMILAR COSTS WERE INCURRED BY UNITED AND
AMERICAN IN 1947 AND 1948 WHEN THE DC-6 WAS GROUNDED.  THESE COSTS ARE
MERELY ANOTHER FORM OF DEVELOPMENTAL COSTS ATTRIBUTABLE TO THE
INTRODUCTION OF A NEW AIRCRAFT TYPE.  IT IS CLEAR THAT THEY ARE, IN
THESE CASES, OF SUCH MAGNITUDE AS TO IMPOSE A FINANCIAL BURDEN UPON THE
CARRIERS OF SUCH SEVERITY AS TO OBSTRUCT THEIR CURRENT DEVELOPMENT. 
UNDER OUR STATUTORY MANDATE TO DEVELOP AIR TRANSPORTATION WE SHOULD
UNDERWRITE SUCH COSTS IN SOME APPROPRIATE MANNER." 

AT THE SAME TIME THE BOARD ISSUED A STATEMENT OF POLICY.  AS TO THE
GROUNDING COSTS WHICH THE BOARD HAD ARGUED TO THIS COURT IT HAD NO
POWER TO REIMBURSE RETROACTIVELY, IT SAID THAT IT HAD ORIGINALLY FELT
THEY WOULD NOT BE HIGH ENOUGH TO REQUIRE SPECIAL MAIL-PAY ALLOWANCE FOR
THEIR "REIMBURSEMENT."  BUT IT CONTINUED: "EXPERIENCE HAS NOT SUPPORTED
THIS VIEW" AND IT IS "DESIRABLE TO MAKE SPECIAL MAIL-RATE PROVISION FOR
ESTABLISHED LOSSES OF THIS CHARACTER."  IT ANNOUNCED THAT THIS
PETITIONER, AMONG OTHERS, IS BEING PAID FOR GROUNDING LOSSES.  "IN
ADDITION, IN VIEW OF ITS OBLIGATIONS UNDER SECTION 406(B) OF THE ACT,
DISCUSSED ABOVE, THE BOARD HAS CONCLUDED THAT THE TEMPORARY MAIL RATES
FOR UNITED AND TWA SHOULD BE INCREASED TO AN EXTENT SUFFICIENT TO MEET
THE REMAINDER OF THEIR APPROXIMATE BREAKEVEN NEEDS FOR THE YEAR 1948. 
WITH RESPECT TO THE ENTIRE RETROACTIVE PERIOD AND THE FUTURE, THE BOARD
WILL DETERMINE FINAL RATES AFTER FORMAL PROCEEDINGS WHICH WILL GIVE
CONSIDERATION TO THE FULL REASONABLE REQUIREMENTS OF THESE TWO
CARRIERS." 

WHAT I GET FROM THE BOARD'S ORDERS AND STATEMENTS IS THAT IT IS
ACTING IN A SPIRIT COMPLETELY CONTRARY TO ITS ARGUMENT TO THIS COURT
AND TO THIS COURT'S OPINION, EVEN IF THERE MAY BE A TECHNICAL
CONSISTENCY, WHICH I DOUBT.  IT APPEARS TO HAVE AUTHORIZED
CAPITALIZATION OF LOSSES FOR PERIODS BEFORE ANY RATE PETITION WAS FILED
AND THE AMORTIZATION OF THOSE LOSSES FROM SUBSIDY PAYMENTS AFTERWARD. 
I FIND FAR LESS STATUTORY AUTHORIZATION FOR SUCH A DEVICE FOR CARRYING
LOSSES FORWARD INTO CURRENT RATES THAN FOR FORTHRIGHT FIXING OF
EFFECTIVE RATES FROM SUCH PRIOR DATE AS SHALL BE PROPER.  IF THE NEED
FOR RETROACTIVITY IS SO IMPERATIVE THAT IT MUST BE MET BY EVASION, THE
POLICY ARGUMENTS OF THE BOARD AGAINST CONSTRUING THE STATUTE TO PERMIT
RETROACTIVITY FAIL.  I DO NOT KNOW THAT THESE MATTERS OF POLICY SHOULD
INFLUENCE THE COURT IN ANY EVENT, BUT IF THEY DO, MY OWN PREDILECTIONS,
UNLIKE THE COURT'S, FAVOR FIXING THE SUBSIDY ON EXPERIENCE RATHER THAN
ON PROPHECY.  IN THE LIGHT OF WHAT APPEARS TO BE THE PRACTICE, I SEE NO
REASON WHY THE STATUTE SHOULD NOT BE APPLIED SO AS TO CARRY OUT WHAT
ITS LANGUAGE CONVEYS AND WHY THE SUBSIDY RATES SHOULD NOT BE REGARDED
AS ALWAYS TENTATIVE AND SUBJECT TO REVISION EITHER TO MEET UNFORESEEN
CONTINGENCIES OR TO RECAPTURE EXCESSIVE PAYMENTS.  THE COMMISSION WOULD
NO MORE BE BOUND TO REIMBURSE EXTRAVAGANT MANAGEMENT OR IMPROVIDENT
OUTLAY AFTER IT HAS OCCURRED THAN TO ALLOW FOR IT IN ADVANCE.  IN FACT,
EXCESSIVE EXPENSE WOULD PROBABLY BE EASIER TO DETECT IN ACTUAL
STATEMENTS OF OPERATIONS THAN IN ESTIMATES. 

BUT IF I WERE TO CONSIDER ACCEPTING THE BOARD'S ARGUMENT, I WOULD AT
LEAST SET THIS CASE FOR REARGUMENT AND REQUIRE A CANDID EXPLANATION OF
WHAT APPEARS TO BE A MATERIAL DISCREPANCY BETWEEN WHAT THE BOARD HAS
LED THIS COURT TO HOLD AND THE PREMISES ON WHICH IT SEEMS ACTUALLY TO
BE PROCEEDING. 

MR. JUSTICE FRANKFURTER JOINS IN THIS OPINION.