author: J. SKELLY WRIGHT, Circuit Judge:

text:
    BOROUGH OF LANSDALE, PENNSYLVANIA, Petitioner v. FEDERAL POWER COMMISSION, Respondent Philadelphia Electric Company, Intervenor
    Nos. 73-1031 and 73-1649.
    United States Court of Appeals, District of Columbia Circuit.
    Argued Jan. 15, 1974.
    Decided March 15, 1974.
    Rehearing Denied April 15, 1974.

      Charles F. Wheatley, Jr., Washington, D. C., with whom Jerome C. Muys, Washington, D. C., was on the brief, for petitioner.

      William M. Sawyer, Atty., Federal Power Commission, with whom Leo E. Forquer, Gen. Counsel, and George W. McHenry, Jr., Acting Sol., Federal Power Commission, were on the brief, for respondent.
    Ernest R. von Starck, Philadelphia, Pa., of the bar of the Supreme Court of Pennsylvania, pro hac vice, by special leave of court, with whom Abraham R. Spalter, Washington, D. C., was on the brief, for intervenor.
    Before WRIGHT and McGOWAN, Circuit Judges, and WYZANSKI, Senior District Judge.

       Chief Judge Bazelon was a member of the panel which heard argument in these cases, but he later withdrew from participation in their consideration. Circuit Judge McGowan, Chief Judge Bazelon’s replacement, has considered the cases on the briefs and tape recordings.

       Of the United States District Court for the District of Massachusetts, sitting by designation pursuant to 28 U.S.C. § 294(d) (1970).

   J. SKELLY WRIGHT, Circuit Judge:

The Borough of Lansdale seeks review of several orders, issued without an evidentiary hearing, by which the Federal Power Commission authorized the Philadelphia Electric Company (intervenor here) to charge Lansdale higher rates for electric power than those set in an outstanding fixed-rate contract between the Borough and the company. Specifically, the orders summarily accepted the company’s filing of the higher rates, set a hearing to determine their reasonableness, and provided that the fixed-rate contract would be “immaterial” to the determination because the contract is “presumptively not in the public interest.” The Borough relies on FPC v. Sierra Pacific Power Co., 350 U.S. 348, 76 S.Ct. 368, 100 L.Ed. 388 (1956), and United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332, 76 S.Ct. 373, 100 L.Ed. 373 (1956), which held that the Commission may not sanction rate increases inconsistent with a fixed-rate contract, over objection of one of the parties, unless and until an evidentiary hearing has shown the contract rates to be lower than the “public interest” requires.

The Commission and the company urge before us two grounds for excepting the instant case from the Sierra-Mobile doctrine, both turning on the fact that a prior, unappealed order of the Commission had declined to accept the fixed-rate contract involved in this case: (1) It is contended that the Sierra-Mobile doctrine applies only to contracts previously accepted as lawful by the Commission. (2) It is contended that the prior “rejection” of the contract is res judicata, precluding Lansdale from raising the contract as an objection to the company’s filed rate increase. We have concluded that the first argument misstates the law and that the second misconstrues the prior order. Accordingly, we in part modify, and otherwise set aside, the orders under review.

I. THE PROCEEDINGS

A. The 1971 Contract and the Unap-pealed Order of August SI, 197S\

From 1956 to 1964 Lansdale generated most of its own power but purchased some electricity from Philadelphia Electric. On March 20, 1964 the Borough and the company signed a fixed-rate contract, subsequently accepted for filing by the Commission, for a monthly supply of not more than 8,000 kilowatts of electric power; the agreement was for a term of three years, and year-to-year thereafter. In 1967 the Borough began to investigate the terms and conditions on which various utility companies, including Philadelphia Electric, would supply all of the Borough’s electricity needs. These explorations culminated on November 12, 1971 in a new agreement between Lansdale and Philadelphia Electric. This contract superseded the 1964 agreement and promised the Borough a monthly electric supply of 29,000 kilowatts for a five-year period “in accordance with the terms hereof, including the rate schedule attached hereto and made a part hereof.” The attached schedule prescribed fixed rates identical with those set in the 1964 contract. The 1971 agreement incorporated a separate contract, signed the same day, obligating Lansdale to build certain new facilities to carry the increased power supplies from the company.

By a letter dated December 27, 1971, Philadelphia Electric sent the new contract to the FPC, attaching the facilities agreement as an appendix. Noting that the new contract superseded the 1964 agreement and that the 1964 rates were continued unchanged under the new contract, the letter asked the Commission to “permit this new agreement to become effective November 12, 1971 [so that] * * * the changes in present facilities can proceed without delay.” The Commission deferred docketing and awaited “comments from Philadelphia with respect to the prematurity of such filing.” (Apparently the Commission thought filing should not precede by more than 90 days the point when monthly service to Lansdale was to exceed the 8,000 kilowatts specified in the 1964 contract.') Meanwhile, pursuant to the 1971 facilities agreement Lansdale proceeded with the construction necessary to carry the additional service, completing this on July 26, 1972 at a cost of about $350,000 to the Borough.

While Lansdale was laboring to fulfill its obligations under the 1971 agreements, Philadelphia Electric apparently decided to breach the agreements. Without notice to the Borough, the company withdrew from the Commission the letter filing of the agreements and, on May 1, 1972, the company proffered a new filing which proposed rates substantially higher than those set in the 1971 contract. Lansdale asked the Commission to reject the new filing summarily as a unilateral attempt to abrogate the 1971 contract in violation of the Sierra-Mobile doctrine. Philadelphia Electric answered that it would suffer a loss on its service to Lansdale under the 1971 contract and that parol evidence would show that the Borough had understood that the 1971 contract rates could be altered unilaterally.

On August 31, 1972 the Commission issued an “Order Rejecting Proposed Rate Agreement” which was appealed by neither party and is no longer subject to judicial review. The order found that the 1971 contract unambiguously prescribed fixed rates for electric service so that “there is no need to consider the parol evidence advanced by Philadelphia nor to invoke the parol evidence rule.” The order also granted Lansdale’s motion to reject summarily the proposed rate increases on Sierra-Mobile grounds:

The Commission * * * concludes that Philadelphia’s proposed increase in rates to Lansdale is in violation of the principle enunicated [sic] by the United States Supreme Court in F.P.C. v. Sierra Pacific Power Company, 350 U.S. 348 [76 S.Ct. 368, 100 L.Ed. 388] (1956) and in United Gas Pipe Line Company v. Mobile Gas Service Corporation, 350 U.S. 332 [76 S.Ct. 373, 100 L.Ed. 373] (1956) and should accordingly be rejected. The Sierra-Mobile rule provides that a public utility cannot file a unilateral change in rates under a “fixed rate” contract with a customer.

But the Commission expressed discontent with the rule:

We recognize that we are bound by the current state of the law as interpreted in Mobile, Sierra and Memphis [United Gas Pipe Line Co. v. Memphis Light, Gas & Water Div., 358 U.S. 103 [79 S.Ct. 194, 3 L.Ed.2d 153] (1958)] and we will continue to be governed by the principles set forth therein. However, it is our intention in future cases involving new fixed rate contracts to scrutinize the provisions of each such contract in order to determine whether it is in the public interest.

Several paragraphs later, without further explanation, the Commission stated:

In rejecting the proposed change in rate schedule for service to Lansdale we shall not accept the agreement providing for full requirements service to Lansdale by Philadelphia.

In summarizing its order the Commission stated that the company’s filed rate increase was “rejected and not allowed to become effective,” and that “Philadelphia’s agreement with Lansdale for full requirements service is not allowed to become effective.

B. The Orders Under Review

The August 31, 1972 order left the 1964 contract as the only document physically on file with the Commission covering the company’s service to Lansdale. But that contract provided for only 8,000 kilowatts per month, and service in excess of 8,000 kilowatts began September 1, 1972 and has continued since, as the 1971 contract contemplated. On October 24, 1972 the company submitted a new filing which assumed that the 1971 contract rates were a dead letter. The filing provided that the 1964 contract govern service up to 8.000 kilowatts per month until March 23, 1973. For service in excess of 8.000 kilowatts, and for all service after March 1973, substantially higher rates were proposed. The Borough asked that the Commission summarily reject the new filing as inconsistent with the 1971 contract and that the Commission direct the company to file that contract instead.

On November 22, 1972, in the first order challenged here, the Commission denied Lansdale’s motion to reject the filing summarily. Instead the Commission suspended the company’s filing until November 25 and set a hearing on the “lawfulness” of both the “proposed rate schedule tendered for filing by Philadelphia” and “the provisions of the aforesaid November 12,1971, contract.” The Commission rejected Lansdale’s demand that Philadelphia be ordered to file the 1971 contract rates:

[W]e indicated in our order of August 31, 1972, in which we rejected that contract, that it is our intention in future cases involving new fixed rate contracts to scrutinize the provisions of each contract in order to determine whether it is in the public interest. It is stated in the filing that Lansdale has required service substantially in excess of 8,000 kw demand * * x- -x- * Under these circumstances we believe it is appropriate to require Philadelphia to submit the November 12, 1971, contract to the Commission in order for us to determine whether such contract is in the public interest in light of the circumstances of this case.

Lansdale applied for a rehearing, which application was rejected by the Commission’s order of January 4, 1973, the second order under review here. The Commission reasserted that Philadelphia Electric’s October 24 rate schedule was accepted as effective pending a hearing on its lawfulness. But the order had new things to say about the 1971 contract. The document was now termed “the alleged fixed rate contract.” The contract was declared “presumptively not in the public interest.” Consequently, the Commission decided that “[submission of such contract is not material to our disposition of the pleadings before us.”

II. THE ISSUES

A. The Sierra-Mobile Doctrine

The FPC very much dislikes the Sierra-Mobile doctrine but, knowing that this court cannot change it, the Commission asks only that we find the instant controversy to lie outside the boundaries of the doctrine. The asserted grounds for such a finding are examined in the next section. But our inquiry must begin with the doctrine itself.

FPC v. Sierra Pacific Power Co., supra, and United Gas Pipe Line Co. v. Mobile Gas Service Corp., supra, deal respectively with parallel provisions of the Federal Power and Natural Gas Acts and explore the relationship between fixed-rate contracts and FPC regulation in formation of public utility rates. The statutory framework is quickly sketched. Public utilities must file with the Commission all rates charged to, and contracts made with, their customers. Filing is merely to give notice; advance Commission approval is not necessary for new and changed rates, and summary rejection of a filing is proper only when the filing is patently unlawful. But the Commission may reject a filing after a hearing if the new or changed rates are found to be “unjust” or “unreasonable.” Pending the hearing, the Commission may summarily “suspend” the filing for up to five months, and if there has been a suspension, of even one day, the Commission may order refunds to customers of a rate increase subsequently found to be unlawful. Even where a rate is in effect, it remains subject to prospective alteration, by the Commission if, after a hearing, the rate is shown to be “unjust, unreasonable, unduly discriminatory, or preferential.” In Sierra Pacific and United-Mobile, public utility companies filed rate increases inconsistent with fixed-rate contracts, between the companies and their customers, which had previously been filed with, and deemed effective by, the Commission. In both cases the customers demanded that the Commission reject the filed increases summarily.

In United-Mobile the Commission refused even to suspend the rate increase, and deemed it effective. The aggrieved customer paid the new rates but brought a contract action against the filing company. Ruling for the customer, the Supreme Court held that a public utility’s statutory duty to file a rate increase before charging it to customers does not create a power in the utility company to alter contract rates unilaterally.

* * * The initial rate-making and rate-changing powers of natural gas companies remain undefined and unaffected by the Act.
* * * The obvious implication is that, except as specifically limited by the Act, the rate-making powers of natural gas companies were to be no different from those they would possess in the absence of the Act: to establish ex parte, and change at will, the rates offered to prospective customers; or to fix by contract, and change only by mutual agreement, the rate agreed upon with a particular customer. * * *

The Court stated that the Commission should have summarily rejected the filed rate increase.

In Sierra Pacific the Commission suspended the rate increase pending a hearing, but the hearing determined the increase to be lawful and it went into effect. The Court reversed the Commission, holding that neither the filing of the increase nor the subsequent acceptance of it by the Commission was “effective to supersede [the] contract.” The Court recognized a power in the Commission to increase utility rates contrary to an outstanding contract between the utility company and its customers, but stated that this power could be exercised only if, and after, a hearing had shown the contract rates to violate the “public interest.” The hearing conducted in Sierra Pacific had determined the prevailing contract rates to be unlawful simply because they afforded the utility company a very low rate of return. This, said the Court, was not enough to invalidate the contract rates:

[W]hile it may be that the Commission may not normally impose upon a public utility a rate which would produce less than a fair return, it does not follow that the public utility may not itself agree by contract to a rate affording less than a fair return or that, if it does so, it is entitled to be relieved of its improvident bargain. * * * In such circumstances the sole concern of the Commission would seem to be whether the rate is so low as to adversely affect the public interest — as where it might impair the financial ability of the public utility to continue its service, cast upon other consumers an excessive burden, or be unduly discriminatory. * * * [I]t is clear that a contract may not be said to be either “unjust” or “unreasonable” simply because it is unprofitable to the public utility.

B. The Asserted Differences Between This Case and the Sierra-Mobile Proceedings

There are striking similarities between the present case and the discredited FPC proceedings in Sierra Pacific and United-Mobile. In its October 24, 1972 rate filing, Philadelphia Electric sought to convert its statutory duty to file into a vehicle for breaching the 1971 contract with Lansdale. By conditionally accepting the filing, in the order of November 22, 1972, the Commission overrode the 1971 contract rates, before holding an evidentiary hearing on whether the contract rates contravened the public interest. Indeed, by declaring the 1971 contract to be “immaterial” and “presumptively not in the public interest,” the Commission decided in its order of January 4, 1973 never to hold such a hearing. The only hearing scheduled is identical in form and purpose to the one found inadequate in Sierra Pacific, i. e., a hearing on the “reasonableness” of the filed rate increase.

Yet the Commission and Philadelphia Electric contend that, for two reasons, the Sierra-Mobile doctrine does not apply here. (1) In Sierra Pacific and United-Mobile the attempted rate increase violated fixed-rate contracts which the Commission had long before accepted for filing and declared effective for regulatory purposes. The Commission has never accepted or declared effective the 1971 contract between Lans-dale and Philadelphia Electric. The Commission argues that the Sierra-Mobile doctrine has no application to “new” contracts not yet on file with the Commission. (2) The Commission argues that its now final order of August 31, 1972 not only declined to accept filing of the 1971 contract at the time but definitively rejected the contract on its merits for all time and for all regulatory purposes. This rejection is, according to the Commission, res judicata and thus immune to collateral attack in the instant proceedings.

We are persuaded by neither of these arguments.

1. The “New” Contract Distinction

The Commission and Philadelphia Electric argue that, if a fixed-rate contract is not yet filed with the FPC, the Commission and the public utility which signed the contract may ignore the document and proceed, respectively, to file rates and to accept their filing as if the contract had never been negotiated. This theory has two hidden, but necessary, corollaries: The company need not file a new contract, and the Commission need not order the company to do so. These are preposterous notions.

The Third Circuit has given appropriately short shrift to the Commission’s theory.

The fact that the Mobile case dealt with an attempt to supersede an already filed rate and that the instant case is concerned with the filing of an initial rate is an immaterial difference.

Natural Gas Pipeline Co. v. FPC, 3 Cir., 253 F.2d 3, 7, cert, denied, 357 U.S. 927, 78 S.Ct. 1372, 2 L.Ed.2d 1370 (1958). Holding otherwise would, in practical effect, amount to overruling Sierra Pacific and United-Mobile prospectively. The Supreme Court thought of these decisions as “preserving the integrity of contracts” so as to “permit [] the stability of supply arrangements” and to encourage the “substantial investments which the consumer would be unwilling to make without long-term commitments.” United Gas Pipe Line Co. v. Mobile Gas Service Corp., supra, 350 U. S. at 344, 76 S.Ct. at 380. But, if the Commission’s theory were accepted, no electric power consumer could place the slightest reliance on any fixed-rate agreement it might negotiate in the future.

The gist of the Commission’s theory is that a fixed-rate contract has no binding force, at least for regulatory purposes, until it is physically filed with, and accepted by, the Commission. This stands the Sierra-Mobile doctrine on its head, for it is the purpose of that doctrine to subordinate the statutory filing mechanism to the broad and familiar dictates of contract law.

The rule * * * is refreshingly simple: The contract between the parties governs the legality of the filing. Rate filings consistent with contractual obligations are valid; rate filings inconsistent with contractual obligations are invalid. * * *

Richmond Power & Light of Richmond, Ind. v. FPC, 156 U.S.App.D.C. 315, 318, 481 F.2d 490, 493 (1973). Contracts govern the legality of filings not because the contracts may themselves have been previously filed but because the regulatory statutes permit

the relations between the parties to be established initially by contract, the protection of the public interest being afforded by supervision of the individual contracts, which to that end must be filed with the Commission and made public.

United Gas Pipe Line Co. v. Mobile Gas Service Corp., supra, 350 U.S. at 339, 76 S.Ct. at 378.

A public utility company has a statutory obligation to file any new or altered contract which it has negotiated. 16 U.S.C. § 824d(e) & (d). This obligation does not vanish merely because the company, or indeed the Commission, decides the contract affords the company too low a rate of return. Breach of the filing obligation gains the company nothing, for rates established in a fixed-rate contract become effective for regulatory purposes even if the company bound by the contract neglects to file it.

The failure to file [a rate contract] earlier, however, did not prevent the jurisdiction of the Commission from attaching. * * * [U]nder the rationale of United Gas Pipe Line Co. v. Mobile Gas Corp., supra, the contract rate, even though unfiled, became and remained the only lawful rate until changed by order of the Federal Power Commission. * * *

Natural Gas Pipeline Co. of America v. Harrington, 5 Cir., 246 F.2d 915, 919 (1957), cert, denied, 356 U.S. 957, 78 S. Ct. 992, 2 L.Ed.2d 1065 (1958). See also Plaquemines Oil & Gas Co. v. FPC, 146 U.S.App.D.C. 287, 450 F.2d 1334 (1971); City of Colton v. So. Cal. Edison Co., 26 FPC 223 (1961), order set aside, 9 Cir., 310 F.2d 784 (1962), 9th Cir. reversed, 376 U.S. 205, 84 S.Ct. 644, 11 L.Ed.2d 638 (1964). The Commission’s own regulations recognize that new and unfiled contracts govern the legality of rate filings subject to the terms of the contracts. A public utility company filing either a new or an altered rate schedule must “show that all requisite agreement to the rate schedule or the filing thereof, including any contract embodied therein, has in fact been obtained.” 18 C.F.R. §§ 35.12(a) & 35.-13(a) (1973). Settled law holds administrative agencies to compliance with their own regulations.

Thus the present case does not fall outside the confines of the Sierra-Mobile doctrine merely because the 1971 contract has never been filed with, or accepted by, the Commission. Just as the regulatory force of a contract survives the filing, and summary Commission acceptance, of rates inconsistent with the document, so also the regulatory force of a contract arises before, and survives in the absence of, the physical filing of the document with the Commission. The Commission must summarily reject rate filings inconsistent with outstanding fixed-rate contracts whether or not the contracts have been filed with the Commission.

2. The “Res Judicata” Argument

The August 31, 1972 order, no longer open to judicial review, contained these two statements:

In rejecting the proposed change in rate schedule for service to Lansdale we shall not accept the agreement pro-' viding for full requirements service to Lansdale by Philadelphia.
* * -x- * * *
Philadelphia’s agreement with Lans-dale for full requirements service is not allowed to become effective

Counsel for the Commission and the company construe this language as a definitive rejection of the 1971 contract rates for all time and for all regulatory purposes, and argue that such a definitive rejection is not subject to collateral attack in the present proceeding. As we construe the order’s language differently, we need not decide whether the essentially judicial concepts of res judicata should be applied to FPC “rejections” of rate filings.

Apparently Lansdale thought the August 31 order meant only to defer until a subsequent proceeding the question whether the contract was in the public interest and should be accepted. In Lansdale’s view, the Commission was merely warning that its rejection of Philadelphia Electric’s rate increase did not necessarily entail ultimate acceptance of the 1971 contract; under Sierra Pacific that was a question for a full hearing. In the interim the Borough was receiving increased service under the 1971 contract, confident that United-Mobile preserved the contract rates unless and until these were qualified in an evidentiary hearing. Under Lansdale’s theory the August 31 order is not res judicata as to the lawfulness of the 1971 contract under the Federal Power Act because the order did not address that issue but rather put off its resolution to a later date. Without an identity of issues between the two administrative proceedings, res judicata doctrines have no application. See, e. g., FTC v. Motion Picture Advertising Service Co., 344 U.S. 392, 73 S.Ct. 361, 97 L.Ed. 426 (1953); FCC v. Pottsville Broadcasting Co., 309 U.S. 134, 60 S.Ct. 437, 84 L.Ed. 656 (1940); Jason v. Summerfield, 94 U.S.App.D.C. 197, 214 F.2d 273, cert, denied, 348 U.S. 840, 75 S.Ct. 48, 99 L.Ed. 662 (1954).

We adopt Lansdale’s construction of the August 31 order. That the order is open to divergent interpretations cannot be denied. Indeed, we doubt that the FPC itself knew exactly what it was doing on August 31; throughout these proceedings the Commission’s course has been aimless, erratic, and confused. But the ambiguities in the August 31 order are the Commission’s responsibility, not Lansdale’s, and

[t]he Supreme Court has made reasonably clear that the party asserting collateral estoppel has the burden of showing identity of issues and determination of issues on the merits.

2 K. Davis, Administrative Law Treatise § 18.04 at 569 (1958), citing United States v. International Building Co., 345 U.S. 502, 73 S.Ct. 807, 97 L.Ed. 1182 (1953).

Moreover, the available evidence strongly supports the Borough’s interpretation of the August 31 order:

1. The order responded to Philadelphia Electric’s application to the FPC of May 1, 1972. This application physically contained the 1971 contract, but in a formal sense it “filed” not the contractual rates but a unilaterally formulated increase over the contractual rates. Arguably, the August 31 order declined to accept the contractual schedule simply because — as a matter of form — the schedule was not properly before the Commission. A defect of form is by far the most common ground for summary refusal of a rate schedule. Of course such a refusal contemplates a refiling in proper form and is not res ju-dicata as to the substantive merits of the filed material.

2. By the actual terms of the August 31 order, the company’s attempted rate increase was “rejected and not allowed to become effective,” but the 1971 contract was merely “not allowed to become effective.” The word “rejected” was not used with respect to the contract. The order made negative findings regarding the attempted rate increase, but made no findings of any kind regarding the 1971 contract. All of which suggests that the merits of the contract were yet to be decided.

3. If the August 31 order meant to reject the contractual rate schedule on its merits, the order was internally inconsistent, for it rejected the company’s attempted rate increase on the ground that the increase contravened the contract

4. The August 31 order stated:

[I]t is our intention in future cases involving new fixed rate contracts to scrutinize the provisions of each such contract in order to determine whether it is in the public interest.

Whether this ambiguous statement means that the 1971 contract would eventually receive this scrutiny, or that only contracts arising for the first time “in future cases” would do so, the statement does clearly imply that the Commission had not yet scrutinized the 1971 contract.

5. The November 22 order required the company to submit the 1971 contract to the Commission “in order for us to determine whether such contract is in the public interest in light of the circumstances of this case.” This would make no sense if the August 31 order had already found the contract to be unlawful.

6. Several important statements in the January 4 order make clear that — in the Commission’s own view — the August 31 order did not preclude Philadelphia Electric from filing the 1971 contract, and that definitive rejection of the contract did not occur until the January 4 order:

Consistent with our expressed intent in future cases to scrutinize the provisions of new fixed rate contracts in order to determine whether they are in the public interest we herein find that the alleged fixed rate contract of November 12, 1971, is presumptively not in the public interest. * * * Philadelphia’s refusal in the instant proceeding to file the November 12, 1971, contract and Lansdale’s characterization of that instrument as a fixed rate contract subject to the Mobile-Sierra rule satisfies us that it is not in the public interest to require Philadelphia to tender that contract for filing.

In sum, by theorizing that the August 31 order is res judicata as to the merits of the 1971 contract, counsel for the FPC and the company not only misconstrue the August 31 order; they also advance a rationale for the November 22 and January 4 orders which the Commission itself did not adopt at the time. “The courts may not accept appellate counsel’s post hoc rationalizations for agency action.” Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962).

III. DISPOSITION

The orders under review violated the principles established by Sierra Pacific and United-Mobile. The Commission erroneously refused to reject summarily the company’s October 24, 1972 rate increase, which filing was inconsistent with the outstanding 1971 contract. The Commission erroneously denied Lansdale’s motion that the company be ordered to file the 1971 contract. The Commission erred in finding the 1971 contract unlawful without conducting • an evidentiary hearing on the issue. And the Commission erred in setting a hearing on the company’s rate increases rather than on the lawfulness of the 1971 contract.

Though this fixed-rate contract has not been on file with the Commission, the Commission has been powerless to disturb the contractual rates, and remains so until an evidentiary hearing shows them to be so low as to contravene the public interest. Filed or not, this contract has been within the Commission’s jurisdiction from the moment it became effective by its own terms. The company had and has a statutory duty to file the contract, which duty the Commission was and is obligated to enforce.

Consequently, the orders under review are modified to the extent that Philadelphia Electric is directed to file the 1971 contract with the Commission forthwith; in all other respects the orders are vacated. We direct the Commission to dismiss all proceedings commenced pursuant to the vacated orders. The 1971 contract rates are currently effective. The Commission may at any time in the future conduct a Section 206(a) hearing on whether those contract rates failed to conform with the public interest. See FPC v. Sierra Pacific Power Co., supra, 350 U.S. at 353, 76 S.Ct. 368.

So ordered.

      . Order Suspending Proposed Rate Schedule, Providing for Hearing, Denying Motion to Reject, Granting Motion to Require Filing of Contract and Permitting Intervention, issued November 22, 1972 (hereinafter the November 22 order) ; Order Denying Rehearing and Amending Prior Order, issued January 4, 1973 (hereinafter the January 4 order). These orders are in Docket No. E-7795. Lansdale additionally challenges Order Accepting for Filing and Suspending Tendered Filing, Consolidating Proceedings Providing for Hearing, and Requiring Submission of Updated Cost Data, issued March 19, 1973, originally Docket No. E-7789 but later consolidated with Docket E-7795 (hereinafter the March 19 order). The March 19 order was affirmed on rehearing, May 14, 1973. Lansdale has exhausted its administrative remedies in timely fashion so as to secure judicial review of each of these orders in this court pursuant to 16 U.S.C. § 825i(b) (1970).

      . A fixed-rate contract establishes a particular price for electric power. A contract might instead leave the price term open, thus allowing the public utility company to establish whatever rate it wishes, subject to FPC supervision. Or the contract might provide for rates to escalate in a particular manner from time to time. On the important difference between the latter type of contract and a fixed-rate contract, see Episcopal Theological Seminary v. FPC, 106 U. S.App.D.C. 37, 269 F.2d 228, cert, denied, 361 U.S. 895, 80 S.Ct. 197, 4 L.Ed.2d 151 (1959).

      . Order Rejecting Proposed Rate Agreement, issued August 31, 1972, Docket No. E-7726 (hereinafter the August 31 order). As no party sought rehearing of that order within 30 days of its issuance, judicial review is statutorily foreclosed. 16 U.S.C. § 825Z.

      . The letter apparently reached the FPC on January 7, 1972. See the August 31 order, supra note 3, at 1. The letter is reprinted as Appendix A to petitioner’s brief.

      . Letter, supra note 4, at 2.

      . The August 31 order, supra note 3, at 1 n. 1.

      . The Commission stated that the 1971 contract “by its terms * * * was not to become effective until initiation of the increased service to Lansdale.” Id. The 90-day regulation, at 18 C.F.R. § 35.3(b) (1973), provides an escape hatch:
      The Commission, upon request and for good cause shown, may permit a rate schedule or part thereof to be tendered for filing and posted more than 90 days before it is to become effective.
      But Philadelphia Electric never bothered to invoke this provision.

      . Brief for petitioner at 3.

      . The May 1 filing is reprinted in the Joint Appendix at 10-23. Rates were to increase about 41% over the levels set in the 1971 contract. The May 1 filing consisted of a package in three parts: the 1971 fixed-rate contract, the 1971 facilities agreement (denoted an appendix), and “Supplement 1” to the 1971 rate contract. This “Supplement 1,” to which Lansdale had not consented, contained the rate increase along with other, now immaterial, changes in the 1971 contract. The supplement purported to supersede particular pages of the 1971 contract. This effort was, however, somewhat confused for one page of the supplement sought to supersede an “Original Page No. 5” of the 1971 contract, while that contract in fact had only four pages. It was therefore somewhat difficult, though not impossible, to distinguish the rate increase supplement from the original provisions of the 1971 contract.

      . See note 3 supra.

      . The August 31 order, supra note 3, at 4.

      . Id. at 2.

      . Id. at 4.

      . Id. at 5.

      . Id.

      . The January 4 order, supra note 1, at 5.

      . The filed tariff, entitled “Wholesale Municipal Service Rate Schedule” and subsequently designated FPG No. 38, is reprinted at JA 33-38a. This filing did not contain the 1971 agreements. A letter fi'om Philadelphia Electric accompanying the filing did, however, refer to the agreements by stating that the August 31 order had “rejected” them. That letter is reprinted at JA 29-32.

      . At this date the 1964 agreement — which had been a year-to-year contract since 1967 — would have expired by its own terms had not the 1971 contract already entirely superseded it.

      . The rates were designed to provide Philadelphia Electric with the same rate of return on service to Lansdale — about 2.3% — as would have resulted from the “Supplement 1” rates filed on May 1, 1972 and rejected by the August 31 order, supra note 3. See letter from the company to the Commission mentioned in note 17 supra, JA at 31.

      . The November 22 order, supra note 1.

      . Id. at 3.

      . Id. at 2-3.

      . The January 4 order, supra note 1. This order also vacated a December 11, 1972 “Order Correcting and Amending Prior Order.” This December 11 order is further-evidence of the Commission’s befuddlement throughout these complex proceedings. The December 11 order became necessary because the November 22 order had created a seeming paradox. It liad directed the company to “submit” to the Commission the 1971 contract “to become effective on November 25, 1972.” The November 22 order, supra note 1, at 4. Furthermore, the Commission liad entitled the November 22 order in part as “Granting Motion to Require Filing of Contract * * (Emphasis added.) Consequently, the November 22 order appeared to make the 1971 contract rates effective as of November 25, 1972— while simultaneously making the October 24 rate increase also effective as of that date. This was an obvious impossibility. The December 11 order sought to meet this dilemma. It stated that the 1971 contract was to be submitted only as evidence bearing on the lawfulness of the October 24 rate increase; the January 4 order would, however, eventually decide that the contract was not material evidence on this issue. The December 11 order went on to elaborate a view as to the “effective” date of the contract, stating that the document “by its own terms became effective on November 12, 1971.” This statement conflicted with the Commission’s determination, announced in the August 31 order, that the 1971 contract, “by its own terms,” “was not to become effective until initiation of the increased service to Lansdale” (i. e., September 1, 1972). See note 7 supra.

      . The January 4 order, supra note 1, at 5.

      . Id. at 4 & 5.

      . Id. at 5.

      . Id. On January 19, 1973 the company, by yet another filing, asked the Commission to apply its October 24, 1972 rate increase to all Lansdale service (i. e., including the first 8,000 kilowatts per month) effective March 1973. In the March 19 order, supra note 1, the Commission suspended this new filing for one day and set a hearing on it; the hearing was consolidated with the one set on the October 24 filing by the November 22 and January 4 orders. In the March 19 order, at 2, the Commission stated that “Lans-dale’s Motile-Sierra arguments were answered in our order issued January 4, 1973, in Docket No. E-7795 and require no further discussion in this order.”

      . See, e. g., the August 31 order, supra note 3, at 4; the November 22 order, supra note 1, at 2; the January 4 order, supra note 1, at 4. See also Richmond Power & Light of Richmond, Ind. v. FPC, 156 U.S.App.D.C. 315, 320, 481 F.2d 490, 495 (1973) ; Carolina Power & Light Co., 47 FPC 1, 4 (1972).

      . Sections 205 and 206 of the Federal Power Act of 1920, ch. 285, as added August 26, 1935, ch. 687, Title II, § 213, 49 Stat. 851 & 852, 16 U.S.C. §§ 824d & 824e (1970).

      . Sections 4 and 5 of the Natural Gas Act of 1938, ch. 556, 52 Stat. 822 & 823, 15 U. S.C. §§ 717c & 717d (1970).

      . Section 205(c) & (d) of the Federal Power Act, 16 U.S.C. § 824d(c) & (d) ; §§ 4(c) and 4(d) of the Natural Gas Act, 15 U.S.C. § 717e(c) & (d).

      . United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332, 342, 76 S.Ct. 373, 100 L.Ed. 373 (1956).

      . Commission regulations authorize summary rejection of “any material submitted for filing with the Commission which patently fails to substantially comply with the applicable requirements set forth in this part, or the Commission’s rules of practice and procedure.” 18 C.F.R. § 35.5. We have upheld .this provision as being within the Commission’s statutory powers. Municipal Light Boards of Reading & Wakefield, Mass. v. FPC, 146 U.S.App.D.C. 294, 299, 450 F.2d 1341, 1346 (1971), cert, denied, 405 U.S. 989, 92 S.Ct. 1251, 31 L.Ed.2d 445 (1972). Summary rejection “classically is used not to dispose of a matter on the merits but rather as a technique for calling on the filing party to put its papers in proper form and order.” Id. But “ [i] t may be used by an agency where the filing is so patently a nullity as a matter of substantive law, that administrative efficiency and justice are furthered by obviating any docket at the threshold rather than opening a futile docket.” Id.

      . Section 205(e) of the Federal Power Act, 16 U.S.C. § 824d (e) ; § 4(e) of the Natural Gas Act, 15 U.S.C. § 717c(e).

      . Id.

      . Section 206(a) of the Federal Power Act, 16 U.S.O. § 824e(a) ; § 5(a) of the Natural Gas Act,15 U.S.C. § 717d(a).

      . United Gas Pipe Line Co. v. Mobile Gas Service Corp., supra note 32, 350 U.S. at 343, 76 S.Ct. at 380.

      . Id. at 347, 76 S.Ct. 373.

      . FPC v. Sierra Pacific Power Co., 350 U. S. 348, 352-353, 76 S.Ct. 368, 100 L.Ed. 388 (1956).

      . Id. at 353-355, 76 S.Ct. 368.

      . Id. at 355, 76 S.Ct. at 372 (emphasis in original). The Supreme Court has recently reaffirmed these principles:
      The regulatory system created by the [Natural Gas] Act is premised on contractual agreements voluntarily devised by the regulated companies; it contemplates abrogation of these agreements only in circumstances of unequivocal public necessity. * * *
      Permian Basin Area Rate Cases, 390 U.S. 747, 822, 88 S.Ct. 1344, 1389, 20 L.Ed.2d 312 (1968).

      . Service v. Dulles, 354 U.S. 363, 372-373, 77 S.Ct. 1152, 1 L.Ed .2d 1403 (1957) ; United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260, 74 S.Ct. 499, 98 L.Ed. 681 (1954) ; Bonita, Inc. v. Wirtz, 125 U.S.App. D.C. 163, 167, 369 F.2d 208, 212 (1966) ; Elmo Division of Drive-X Co. v. Dixon, 121 U.S.App.D.C. 113, 117, 348 F.2d 342, 346 (1965) ; Sangamon Valley Television Corp. v. United States, 106 U.S.App.D.C. 30, 33, 269 F.2d 221, 224 (1959).

      . This is not to deny that the Commission may suspend, and hold a § 205(e) hearing on the filing of, a fixed-rate contract. Under the Federal Power Act the Commission may suspend, and hold a hearing on the justness and reasonableness of, any “new schedule” filed with the Commission. Section 205(e), 16 U.S.C. § 824d(c). The term “new schedule” refers to a schedule stating “[a] change or changes to be made in the schedule or schedules then in force.” Section 205(d), 16 U.S.C. § 824d(d). Such “new schedules” must be filed by a public utility to effect a “change * * * in any * * * rate, charge, classification, or service, or in any rule, regulation, or contract relating thereto.” Id. If a rate filing effects an increase in rates already on file with the Commission, “the burden of proof to show that the increased rate or charge is just and reasonable shall be upon the public utility.” Section 205(e), 16 U.S.C. § 824d(e). But § 205(e) provides no means for a public utility or the Commission to circumvent the Sierra-Mobile doctrine. That doctrine broadly holds that the Commission cannot order an increase in rates set in a fixed-rate contract, or reject the rates on grounds they are too low, unless and until a hearing has shown the rates to be lower than the public interest requires. This doctrine applies as fully to a § 205(e) hearing as to a § 206(a) hearing.

      . The August 31 order, supra note 3, at 5.

      . The Federal Power Act does not lay down any rules of res judicata or collateral estop-pel. The provision relied upon by the Commission and the company, § 313 of the Act, 16 U.S.C. § 825Í, does not deal with res ju-dicata but with timely exhaustion of administrative remedies as a prerequisite to securing judicial review of a Commission order. The provision would be pertinent here if Lansdale were asking this court to set aside or modify the August 31 order itself. But the issue is a different one, viz. whether the August 31 order precludes the Borough from petitioning the Commission at a later date to recognize the contract prospectively and order its filing.
      This court has noted that conventional res judicata doctrines are not always applicable in the administrative realm. Niagara Mohawk Power Corp. v. FPC, 91 U.S.App.D.C. 395, 402, 202 F.2d 190, 197 (1952), affirmed on other grounds, 347 U.S. 239, 74 S.Ct. 487, 98 L.Ed. 666 (1954) ; Churchill Tabernacle v. FCC, 81 U.S.App.D.C. 411, 413, 160 F.2d 244, 246 (1947). The Supreme Court lias suggested that res judicata doctrines should apply
      [wjlien an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate. United States v. Utah Construction & Mining Co., 384 U.S. 394, 422, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642 (1966). Professor Davis has sensibly suggested:
      The sound view is * * * to use the doctrine of res judieata when the reasons for it are present in full force, to modify it when modification is needed, and to reject it when the reasons against it outweigh those in its favor.
      2 K. Davis, Administrative Law Treatise § 18.02 at 548 (1958).
      There are three reasons to doubt that summary “rejection” of a rate schedule should preclude refiling and reconsideration of the schedule in a subsequent proceeding. First, the appropriateness of a particular rate schedule typically depends on factual circumstances and policy considerations which change drastically, and often quite rapidly, over time. A doctrine barring all reconsideration would seem to be contrary to sound regulatory policy. Second, the Commission has no authority to reject a rate schedule summarily if the schedule is not improper as a matter of form or “patently a nullity” as a matter of substantive law. See note 33 supra. Therefore, if the August 31 order “rejected” the 1971 contractual rate schedule, it committed a serious mistake of law. Administrative errors of law are typically open to rectification in subsequent proceedings on the same subject matter and between the same parties. See generally 2 K. Davis, supra, § 18.03; of. Automobile Club of Michigan v. Com’r of Internal Revenue, 353 U.S. 180, 77 S.Ct. 707, 1 L.Ed.2d 746 (1957). Third, as rates can be “rejected” only after a hearing, it is at least arguable that the summary character of the August 31 proceeding “deprive [d] the Commission of power or jurisdiction” so as to render the rejection a nullity, opening it to collateral attack in a subsequent proceeding. Compare Public Utility Dist. No. 1 of Douglas County v. FPC, 9 Cir., 242 F.2d 672, 683 (1957), with United States v. L. A. Tucker Truck Lines, Inc., 344 U.S. 33, 73 S.Ct. 67, 97 L.Ed. 54 (1952).

      . Of course Lansdale’s theory does assume that the Commission acted illegally on August 31 for, under the Sierra-Mobile doctrine, the FPC had an affirmative duty to accept the 1971 contract for filing pending an evidentiary hearing on whether it comported with the public interest. But the Commission’s counsel asks us to impute an even grosser illegality to the Commission, viz. that the August 31 order constituted a “permanent” rejection of the 1971 contract on its merits. See note 45 supra. Where there is ambiguity, we prefer to assume that the Commission temporarily neglected an affirmative duty rather than that it willfully and irrevocably committed itself to an unlawful course.

      . See note 9 supra.

      . But see note 46 supra.

      . See note 33 supra.

      . The August 31 order, supra note 3, at 39.

      . Counsel for the FPC argues that the August 31 order rejected the company’s May 1 rate increase on Sierra-Motile grounds only because the increase was inconsistent with the 1964 fixed-rate contract already on file with the FPO. This is an astonishing argument. The August 31 order makes no mention of the 1964 contract.

      . The August 31 order, supra note 3, at 4.

      . The November 22 order, supra note 1, at 3.

      . An alternative interpretation is possible but it does not advance the Commission’s res judicata theory. Perhaps the phrase quoted in text means the Commission thought its August 31 order had definitively rejected the 1971 contract but that provision of increased service to Lansdale after that order — i. e., “the circumstances of this case” —required a fresh determination of the 1971 contract’s acceptability. If the Commission purports to reopen an issue in this fashion, and to decide it anew, judicial review of the new decision cannot be cut off on the ground that the new decision is consistent with the old one. See Natural Gas Pipeline Co. v. FPC, 3 Cir., 253 F.2d 3, 9, cert, denied, 357 U.S. 927, 78 S.Ct. 1372, 2 L.Ed.2d 1370 (1958).

      . The January 4 order, supra note 1, at 4-5 (emphasis added),


source: Caselaw Access Project

license: Public Domain

text:
    AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent (two cases), Delta Air Lines, Inc., Intervenor. AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent, Texas International Airlines, Inc., Intervenor.
    Nos. 73-1068, 73-1069 and 73-1173.
    United States Court of Appeals, District of Columbia Circuit.
    Argued Jan. 10, 1974.
    Decided March 20, 1974.

      Gary Green, Washington, D. C., for petitioner.
    Glen M. Bendixsen, Atty., C.A.B., for respondent. O. Z. Ozment, Acting Gen. Counsel, C.A.B., Warren L. Sharf-man, Associate Gen. Counsel, Litigation and Research, C.A.B., at the time the brief was filed, Robert L. Toomey and Ivars V. Mellups, Attys., C.A.B., and Howard E. Shapiro, Atty., Dept, of Justice, were on the brief for respondent. R. Tenny Johnson, Gen. Counsel, C.A.B., at the time the record was filed, also entered an appearance for respondent.
    Robert Reed Gray, Washington, D. C., was on the brief for intervenor Delta Air Lines, Inc.
    Before BAZELON, Chief Judge, and WRIGHT and TAMM, Circuit Judges.
   J. SKELLY WRIGHT, Circuit Judge:

In these consolidated cases the Air Lines Pilots Association, International seeks review of three orders of the Civil Aeronautics Board authorizing temporary suspensions of service between specified points by certain certificated air carriers. The authorizations are all conditioned upon provision of replacement service by particular carriers, termed air taxis or commuters, which have been exempted from certification. This court previously considered an earlier Board approbation of the temporary suspensions with which the challenged order in No. 73-1068 is principally concerned. See Air Line Pilots Assn, International v. CAB, 148 U.S.App.D.C. 24, 458 F.2d 846 (1972) (hereinafter ALPA I). Our previous consideration resulted in a remand to the Board to determine whether the exemption of the replacement carriers could continue in effect “given the changes in their operations that are contemplated by the orders.” 148 U.S.App.D.C. at 27, 458 F.2d at 849. We find that the Board has made such a determination and that this determination was rational and within the Board’s discretion. We further find that the Board gave sufficient opportunity to ALPA to argue for inclusion in the new authorization order of provisions protective of the carrier employees affected by the suspensions, and that the Board’s decision not to include such provisions was also within its discretion. Inasmuch as our disposition of No. 73-1068 settles any issue raised by ALPA relevant to Nos. 73-1069 and 73-1173, we need not consider 73-1069 and 73-1173 separately.

I

The authorizations of the temporary suspensions challenged here were all granted by the Board in response to the problem posed by short-haul, low-density routes in certificated carrier systems. At least partially because of certificated carriers’ shift to larger, technologically advanced equipment, these markets, which were never more than marginally profitable, have become an increasing economic burden on the carriers. As a result, the certificated carriers have been cutting back their short-haul operations to the minimum level of adequacy permitted by their certificates and have been receiving substantial amounts of subsidy from the federal treasury. In addition the CAB has permitted the carriers to delete some of their especially burdensome routes from their certificates. No one — not the small communities served by these markets, not the certificated carriers, not the taxpayers —has been benefitted by these developments.

Another development in the air carrier industry has provided the Board with a means to address the short-haul market problem. That development has been the proliferation of “air taxi operators,” a class of carriers exempt from most of the Federal Aviation Act’s regulatory provisions, including the certification requirement, by virtue of the relatively small size of the aircraft which they employ. The exemption for air taxi operators was first adopted by the Board in 1952 pursuant to its authority to relieve carriers from the requirements of the Act when it finds that enforcement of the provisions from which exemption is granted (1) would be an “undue burden” on a carrier or class of carriers “by reason of the limited extent of, or unusual circumstances affecting, the operations” of the carrier or class of carriers, and (2) would “not [be] in the public interest.” 49 U.S.C. § 1386(b)(1). The exempt air taxi operators have competed effectively with certificated carriers in many short-haul, low-density markets. Their smaller aircraft have enabled them to provide more frequent and better timed service. Many provide “commuter” round trip service between two or more points which certificated carriers cannot match. Because of their exempt status, the air taxis have been able to change routes and schedules without a Board hearing and thus have responded quickly to changing demand patterns.

The Board decided that substitution of air taxi for certificated service would benefit not only taxpayer and certificated carrier budgets, but also the small communities whose needs the air taxis can more adequately meet. The Board has therefore entered a number of orders authorizing certificated carriers to suspend service at certain points which could not support a certificated carrier’s service on an economically sound basis and at which service was or would be provided by air taxis. Such suspensions usually have been conditioned upon provision of a specified level of service by an air taxi. The Board has termed conditional suspensions “a middle course between wholesale deletion, on the one hand, and a combination of subsidy funding and losses by the certificated carriers at an unreasonable level, on the other hand.” Our previous opinion in this case resulted from ALPA’s appeal from three of the Board’s early orders approving conditional suspensions. These three orders rested simply on the Board’s findings under cSeetion 401 (j) of the Act, 49 U.S.G. § 1371 (j), that the suspensions were required by the public interest. We held in ALPA I that such findings were not sufficient, that where the Board bases a suspension of certificated service on the substitution of non-certifieated service the Board must reexamine and make new findings on the exempt status of the substitute carrier. More specifically, the ALPA I court remanded the cases before it to the Board for findings on the issues raised by the Act’s exemption provision: “(1) whether certification would be an undue burden on the carriers, and (2) the public interest in certification in these circumstances * * *.”

On September 12, 1972, in response to this court’s remand, the Board issued an order to show cause setting forth tentative findings concerning the three previously challenged suspensions and two other theretofore unreviewed suspension agreements. The order tentatively found not only that all the suspensions were in the public interest, but also that the involved substitute carriers should maintain their exempt status. The order further concluded that labor protective provisions should not be imposed on any of the certificated carriers whose suspensions were approved. All interested parties were directed by the order to show cause why the tentative findings and conclusions should not become final. They were invited to support any objection with statistical data or other evidence they deemed relevant. Interested parties who desired a full evidentiary hearing on the order were further directed to state in detail why such a hearing was necessary and what facts they would there attempt to establish. In reaching its tentative conclusions, the show cause order explained at length the Board’s general position on the “public interest” and “undue burden” exemption issues on which the ALPA I court directed the Board to make findings. The order then related this position to the specific suspensions with which it was concerned.

ALPA filed objections to finalization of the show cause order, arguing that the Board’s general position on the exemption was incorrect, that an eviden-tiary hearing should in any case be held on this issue, and that the Board’s proposed disposition should have at least imposed provisions protective of the certificated carrier employees affected by the suspensions. On January 2, 1973, however, the Board issued an order making final its tentative findings. The order found ALPA’s objections to the Board’s position on the exemption issue to be principally ones of law and policy which the Board could reject without an evidentiary hearing. The order further concluded that the Board could dismiss ALPA’s objections to the findings on the labor protective issue without a full-scale evidentiary hearing because “ALPA * * * has failed to offer any facts to substantiate its claims that protective provisions are required.” It is from this order that ALPA appeals in No. 73-1068

II

ALPA’s primary challenge is directed toward the Board’s finding that the carriers providing the air taxi replacement service should continue to be exempt from most of the economic regulatory provisions of the Act. At the outset we note that ALPA is foreclosed from arguing on this appeal that, regardless of its rationale or evidentiary basis,, the CAB is restricted by the Act from permitting an exempted carrier to provide service over a particular route in place of a certificated carrier. We held in ALPA I that the CAB was to reconsider a replacement carrier exemption when it substantially took over a route of a certificated carrier. It is a necessary corollary of this holding that the CAB can legally make findings which, in some circumstances at least, justify permitting such a replacement carrier to continue its exempt status. If the ALPA I court had thought that continuing the exemption for a replacement carrier was prohibited by the Act and consequently beyond the discretion of the CAB, it would have decided the case without a remand. Therefore, all that ALPA I leaves for us to determine on this issue is whether the Board’s decision to continue to exempt the replacement carriers here was a rational one supported by substantial evidence.

We turn to this task. Inasmuch as ALPA attacks only the Board’s general position that air taxi operators which participate in suspension-substitution agreements should continue to be exempted rather than the Board’s application of this position to specific suspensions, we shall confine our review to the Board’s general findings. As stated above, the ALPA I court asked the Board to make findings on each of the issues upon which exemption is to hinge under the statute: (1) whether certification would be an undue burden on the replacement carriers by reason of the limited extent of, or unusual circumstances affecting, their operations, and (2) whether certification is not in the public interest. Because in this case at least the “undue burden” issue is logically anterior to the “public interest” issue, we shall consider the undue burden issue first.

A.

The Board’s findings on the “undue burden” issue were based primarily on its recent opinion in Part 298 Weight Limitation Investigation, CAB Order 72-7-61 (July 18, 1972), which we upheld in Hughes Air Corp. v. CAB, 160 U.S.App.D.C. -, 492 F.2d 567 (1973). Order 72-7-61 resulted in promulgation of an amendment to the CAB regulation which provides air taxi operators with their general exemption. The amendment increases the size of the aircraft the air taxi operators can employ without losing their exempt status. In consideration of the amendment, the Board concluded that regardless of increased aircraft size “certification requirements would be an undue burden on air taxis, as a class, by reason of the limited extent of, and unusual circumstances affecting, their operations.” The Board stressed the small size of the air taxi operators and their operations relative to the certificated carriers. It found that most of the air taxis were operating at a loss or at a level of only marginal profitableness and that firms enter and leave the industry at a high rate. Noting that the cost of one not extraordinary proceeding in which a former air taxi gained certification was $50,000, the Board found that certification would impose a significant financial strain upon air taxis. The Board in the Part 298 case further found that the unusual circumstances affecting air taxi operations —high-risk, short-haul, low-density markets in which surface transportation may offer serious competition — would make certification especially burdensome. In order to stay economically viable air taxi operators need to initiate, alter or discontinue service without the delay and costs of a formal hearing to amend their certification before the CAB.

We upheld these findings in Hughes; we think they offer adequate support for the Board’s resolution of the undue burden issue in the order we review today. The Part 298 findings are not less significant for this case because of any change in air taxi operations contemplated by the order under review. The short-haul, low-density, at least relatively unprofitable routes on which the air taxi operators provide replacement service under this order constitute the precise unusual circumstances which the Board found in the Part 298 case would make certification an undue burden. Nor is there any indication that the replacement service here challenged will enable the exempt carriers to increase appreciably the limited extent in terms of size and profitableness of their operations. If certification would have been a financial strain on a commuter carrier before it entered into a suspension-substitution arrangement, it is certainly rational to conclude that it would impose a strain after such an arrangement. It is true, as ALPA points out, that the ALPA I court stated: “It is unlikely that service which is the subject of certification can be service of a ‘limited extent’ within the meaning of the statute.” If so, it of course could not be performed by an exempt carrier. But as the Board’s order explains, the routes involved in suspension-substitution arrangements have not been independently certificated. They are ordinarily part of a much larger system which includes some very profitable long-haul routes. The fact that the certificated carriers which formerly provided the suspended services do not have “limited” operations does not mean that substitute air taxi operations are not limited in extent.

If an air taxi operator providing replacement service becomes sufficiently large and economically viable and free of the general uncertainties of short-haul, low-density markets, the Board can always determine that its exemption from certification is no longer necessary. Indeed, the Board’s order recognizes “that the certification of former air taxis may well be desirable in individual circumstances” and cites two cases in which it has required certification of air taxis. After individualized consideration, however, the Board found that all air taxi operators providing substitute service in the five cases before it should continue to be exempt. Since, as stated, these individual determinations were not criticized by ALPA we need not give them specific review.

B.

Though the Board considered the “public interest” issue first, its public interest findings rested in an important respect upon its undue burden analysis. In finding exemption to be in the public interest, the Board reasoned that the suspension-substitution arrangements provide small communities, the federal treasury, and certificated carriers with important benefits and that these arrangements would be jeopardized by requiring the replacement carriers to obtain certification. The Board quoted from the Hughes-affirmed Part 298 case in support of its view that the air taxi operators, “[functioning at a relatively high financial risk,” must have “the maximum possible operational flexibility” and thus cannot and should not be burdened by certification.

We held in Hughes that it was at least a rational inference for the Board to conclude from its findings on the burden of certification that if the air taxi operators had to choose between using larger, more efficient aircraft and exemption, they would choose the latter. We hold today that it was also rational for the Board to conclude that air taxis would probably not be willing and able to provide substitute service if this provision meant losing their exemption. The routes on which the certificated carriers desire to suspend service do not differ from the general short-haul, low-density routes for which the air taxis’ continuing exemption was approved as necessary in Hughes. Air taxis were operating under their exemptions on many of the suspended routes even before the certificated carriers sought suspensions. As indicated above, the Board’s earlier inclusion of these routes in the route system of a certificated carrier does not prove that these routes would independently support certification. It was rational for the Board to conclude that they would not.

Having upheld the Board’s finding that the benefits to be derived from the suspensions would be threatened by revocation of the air taxi exemptions, we have no difficulty in rejecting ALPA’s argument that it was inappropriate to consider these benefits as relevant to the public interest in exemption. We did state in ALP A I that the public interest in certification of services is distinct from the public interest in having these services provided, but our Hughes opinion made clear that, where provision of the services may be dependent upon exemption, the benefits to be derived from the services are relevant to the public interest in exemption. ALPA does not question the Board’s findings that the substitution-suspension arrangements will improve services to the small communities affected, reduce the burden on the federal treasury of subsidies to certificated carriers, and benefit the economic position of certificated carriers. The Board’s conclusion that certification would adversely affect the public interest by jeopardizing these benefits was surely a rational one.

We further do not find merit in ALPA’s contention that the Board failed adequately to deal with three alleged disadvantages of exemption in its consideration of the “public interest.” Two of these alleged disadvantages — the instability of air taxi operations and their generally higher fares — were addressed and quite properly discounted by the Board in its final order’s discussion of ALPA’s objections to the show cause order. The Board stated that the relative stability of air taxi operations was not a relevant consideration because under each of the approved suspensions the certificated carrier remains obligated to provide its previous service whenever the air taxi fails to provide the agreed upon mimimum level of service. The higher fares generally charged by the air taxis were deemed by the Board relevant to the public interest in exemption vel non, but were overweighed by the benefits of the suspension-substitution arrangements. Inasmuch as the lower fares of certificated carriers are made possible by subsidies from the average American taxpayer and from passengers on longer flights who, through Board-approved higher rates, effectively compensate the certificated carriers f.or the money they lose on short hauls, we think the Board’s weighing of this factor was well within its discretion.

The Board’s statement of its general position on exemption of replacement carriers did not address ALPA’s third alleged disadvantage of exemption- — that the service of the air taxis is not as safe as that of the certificated carriers. Instead in its individualized consideration of each of the suspensions the Board noted that it had determined from inquiries at the Federal Aviation Administration that the replacement carrier had conducted its operation in accordance with the applicable FAA safety regulations - and concluded that, given the FAA’s ongoing regulation of airline safety, there were no safety considerations which warranted finding the arrangement contrary to the public interest. This treatment of the safety issue was not an abuse of the CAB’s responsibility. The Federal Aviation Act of 1958 relieved the Board of primary responsibility for safety regulation, placing that responsibility instead upon the FAA, see 49 U.S.C. §§ 1421, 1341 (1970). The FAA has fulfilled the responsibility by imposing detailed safety regulations upon air taxi operators as well as certificated carriers. See 14 C.F.R. Part 135 (January 1, 1973). At least where, as here, there is no evidence to contravene the FAA’s opinion that a replacement carrier has operated safely within the regulations, the CAB is entitled to rely on such an opinion.

In sum, we conclude that the Board’s findings that the replacement air taxi operators should continue to be exempted under the Part 298 regulations were rational and well within the Board’s discretion to implement the Act. We therefore uphold the Board’s authorization of the temporary suspensions of certificated service conditioned on provision of substitute service by exempt carriers.

Ill

ALPA contends, however, that even if the air taxi exemptions and the conditional suspensions are proper, the Board should have included in its order provisions protective of the certificated carriers’ employees, or at least should have held full evidentiary hearings to determine the need for such provisions. In arguing that the Board should have held full hearings, ALPA relies principally on a statement in our ALPA I decision “that if the Board concludes * * * that the exemptions of the non-certificated carriers remain valid * * *, it should then conduct hearings on the need for protective labor conditions * * * ” 148 U.S.App.D.C. at 30, 458 F.2d at 852. (Emphasis in original.) The Board did not interpret this language to require a full-scale evidentiary-hearing similar to the kind prescribed by the Administrative Procedure Act for cases of “adjudication required by statute to be determined on the record after opportunity for an agency hearing,” 5 U.S.C. § 554 (1970). Instead it determined that the ALPA I court’s reference to a hearing meant that the Board was to employ those fair procedures which it deemed appropriate for collection of the evidence necessary to a resolution of the labor protective provision issue. We first review the Board’s interpretation of our prior opinion with respect to the procedures it was to follow in resolving the labor protective provision issue before considering the merits of the Board’s order.

A.

A mere reading of the above quoted language might well lead us to agree with ALPA that the Board misinterpreted our prior opinion. However, considering that language in the context of the entire opinion and the further proceedings in this case enables us to approve the Board’s position that it was not required to hold full-scale hearings.

We first note, as did the Board in deciding not to employ full-scale hearing procedures, that this court has refused to import a full-scale hearing requirement into any of the statutory provisions pursuant to which the Board acted in this case — Section 416, 49 U.S.C. § 1386, under which exemptions may be issued, Section 401 (j), 49 U.S.C. § 1371 (j), under which certificated operations may be temporarily suspended, or Section 412, 49 U.S.C. § 1382 (1970), under which agreements between air carriers are approved. Moreover, we recently held in another ALPA ease, Air Line Pilots Assn, International v. CAB, 154 U.S.App.D.C. 316, 322, 475 F.2d 900, 906 (1973), that the Board had discretion to determine whether to hold a hearing on labor protective provisions before approving a multilateral schedule reduction agreement. The Board has indeed regularly denied requests to impose labor protective provisions without- holding full-scale hearings.

To be sure, ALPA’s principal argument is not that full-scale hearings on labor protective provisions must be held in every exemption or suspension case, but that such hearings were required in this particular case because our prior opinion specifically so directed. -However, the ALPA I court’s stated reason for finding the case before it somewhat special with respect to this issue suggests that it did not intend to carve out an exception to the general law. The court asserted that since “[t]he agreements have been in effect for a substantial period prior to the issuance of this opinion, * * * there should be hard evidence on which to make a determination” on the labor protective issue. The court’s stated concern in making reference to a hearing was that this evidence be considered, that “ALPA * * * ke entitled to demonstrate that a need for protective conditions exists.” We think the Board’s liberal interpretation of the ALPA I court’s hearing reference was not unresponsive to the court’s concern.

We also cannot ignore the fact that the Board gave notice of its liberal interpretation of the hearing requirement in a petition to the ALPA I court to clarify its opinion on this point. Though not dispositive, the court’s decision to decline clarification in the face of this notification is a factor in our affirmance of the Board’s interpretation.

B.

We turn next to the Board’s actual consideration of whether labor protective provisions should be imposed on the suspensions. We must determine whether the Board resolved this issue within its discretion after employing fair procedures which, in accordance with our prior opinion’s directive, gave ALPA an opportunity “to demonstrate that a need for protective conditions exists.” In order to make this determination, it is necessary to set forth the legal basis for the Board’s discretion to impose these provisions and the manner in which the Board has exercised this discretion in the past.

The Board first conditioned its approval of a change in a carrier’s certificate on the carrier’s agreeing to provide some protection to adversely affected employees in United-Western, Acquisition of Air Carrier Property, 11 CAB 701 (1950). The Board in United-Western acknowledged that it had no express statutory authority to impose such conditions, but nonetheless found implicit in the Act a completely discretionary power to “impose conditions for the benefit of adversely affected employees in cases involving route transfers, acquisitions, and mergers * * The Board explained that beyond the interest of employees in labor protective provisions there is an important general public interest in insuring that “route transfers and mergers” which are otherwise desirable “not be prevented or delayed by labor difficulties arising out of hardships to employees * * The Board’s power to impose labor protective provisions under the United-Western precedent and the discretionary nature of this power were approved by this court just last term. See Air Line Pilots Assn, International v. CAB, supra, 154 U.S.App.D.C. at 321, 475 F.2d at 905.

The Board has exercised its labor protective discretion almost exclusively in cases which, like United-Western, involved route transfers, acquisitions, or mergers with a clear impact on a certificated carrier’s entire system. In these cases the Board has presumed, even in the absence of any definite evidence, that there will be sufficient impact on employees to impose protective provisions. In cases like the instant one, involving temporary certificated carrier suspensions on particular routes, the Board has been much more restrained in the use of its labor protective power, declining to impose provisions “unless the need therefor is clearly demonstrated.” The Board has imposed provisions in only one suspension case, Seven States Area Investigation, 30 CAB 473 (1960), after an “affirmative showing” was made “that the suspensions and deletions * * * are likely to cause substantial employee dislocation * * The Board has recently continued to adhere to its policy of restraint in suspension cases, stressing the strong affirmative showing that was made in Seven States and that the latter case effectively involved a basic transformation in a certificated system. The Board has grounded its special treatment of suspensions on its determination that a suspension of a particular route or routes, unlike a merger, will not normally substantially affect employees and thus will not threaten airline labor strife. It has further distinguished suspensions by noting that labor protective provisions might “tend to nullify one of the principal benefits of suspensions, i. e., the reduction in costs which the carrier will experience.” We think the Board has thus developed a rational policy for the exercise of its discretionary labor protective power.

Having made this determination, it merely remains for us to review whether the Board’s refusal to exercise its labor protective power in this case was consistent with its rationally developed policy and the ALPA I decision as we read it. Thus we must only determine that ALPA was given adequate opportunity to make an affirmative showing that “a need for protective conditions exists,” ALPA I, supra, 148 U.S. App.D.C. at 30, 458 F.2d at 852, and that the Board rationally concluded that ALPA had not made such a showing. We have no difficulty making these determinations.

Under its interpretation of our prior opinion, the Board, as stated above, decided to commence the proceedings on remand by publication of a show cause order setting forth its tentative findings on the exemption and labor protective provision issues. Any interested parties having objections to making the tentative findings final were directed by the order to submit a “statement of objections together with such statistical data, and other materials and evidence relied upon to support the stated objections.” In addition interested parties who requested an evidentiary hearing were told to “state in detail why such a hearing is necessary and what relevant and material facts he would expect to establish through such a hearing.” ALPA was thus given fair notice that its reply to the show cause order should either make an affirmative showing that employees had been substantially affected or indicate how it would make such a showing at an evidentiary hearing. The Board concluded in its order making final the tentative findings that ALPA had done neither.

ALPA apparently argued in its response to the show cause order that the Board should impose labor protective provisions on the basis of statistics which showed a decline in the number of pilots employed by the two carriers— Mohawk Airlines and Northeast Airlines — whose suspensions were at issue in ALPA I. The Board had specifically discussed the available data on both the Mohawk and the Northeast labor situations in its show cause order and it found that ALPA’s response offered no evidence or lines of analysis which it had not previously considered. The Board noted that the personnel forms filed at the CAB by Mohawk from which ALPA’s statistics were derived showed that there was no decrease in Mohawk’s pilot or overall employment for the period directly following approval of the suspensions. The drop in Mohawk’s reported pilot employment came almost a year and a half after the suspensions and immediately after an ALPA strike at Mohawk. The Board stressed that the drop in Northeast’s employment coincided with Northeast’s substantial reduction of schedules in certain Florida and other non-New England markets.

The Board found no evidentiary support in ALPA’s response for any finding that the Northeast suspensions approved in the orders on review here caused the “substantial employee dislocation” upon which imposition of protective provisions in Seven States was based. In the absence of any analysis from ALPA as to how it could prove at a full evidentiary hearing some “substantial employee dislocation” from the challenged limited suspension orders, the Board declined to hold such a hearing. In its show cause order the Board acknowledged that the challenged Northeast suspensions were part of a general pattern of suspensions of service by that carrier in New England, but pointed to the evidentiary hearing in New England Service Investigation, wherein the Board is undertaking a complete review of small community service in New England, as an appropriate forum to consider any cumulative labor impact of past and planned Northeast reductions. The Board cited ALPA’s failure in the New England hearing to make any showing of substantial impact, ' and indeed ALPA’s failure to even enter an oral appearance, as support for its view of the futility of evidentiary hearings on the limited particular suspensions being reviewed.

ALPA makes the same arguments for imposition of labor protective provisions, based on the same general evidence, before this court as it made before the Board. It does not suggest to us what more it would attempt to prove at an ev-identiary hearing; indeed it asks us on the basis of its assertions to order imposition of labor provisions without a full hearing. In some cases a full eviden-tiary hearing before the Board on the labor protective provision issue would no doubt be necessary, but we cannot say that in this case the Board’s decision to make its tentative findings on the labor protection issue final without an eviden-tiary hearing was unreasonable. The suspensions in Seven States involved a basic transformation in a certificated system; it was rational for the Board to conclude that no showing was made or could be made at an evidentiary hearing that the suspensions here involved resulted in the same substantial employee dislocation.

We therefore find ALPA’s challenges to the Board’s order on both the exemption and the labor protective provision issues to be without merit.

Affirmed.

      . 49 U.S.C. § 1371(a) (1970) states:
      No air carrier shall engage in any air transportation unless there is in force a certificate issued by the Board authorizing such air carrier to engage in such transportation.

      . 49 U.S.C. § 1371 (j) (1970) provides, in pertinent part:
      * * * The Board may, by regulations or otherwise, authorize such temporary suspension of service as may be in the public interest.

      . 49 U.S.C. § 1386(b)(1) (1970) provides, in pertinent part:
      The Board, from time to time and to the extent necessary, may * * * exempt from the requirements of this subchap-ter or any provision thereof * * * any air carrier or class of air carriers, if it finds that the enforcement of this subchapter or such provision * * * is or would be an undue burden on such air carrier or class of air carriers by reason of the limited extent of, or unusual circumstances affecting, the operations of such air carrier or class of air carriers and is not in the public interest.

      . We have jurisdiction by virtue of § 1006(a) of the Federal Aviation Act of 1958, 49 U.S.C. § 1486(a) (1970).

      . See note 14 infra.

      . See. 14 C.F.R. Part 298 (Jan. 1, 1973).

      . The air taxi operator exemption was amended by the Board in 1972 to permit air taxis to use somewhat larger aircraft. Part 298 Weight Limitation Investigation, CAB Order 72-7-61 (July 18, 1972). This court recently upheld that amendment in Hughes Air Corp. v. CAB, 160 U.S.App.D.C. -, 492 F.2d 567 (1973).

      . CAB Order 72-9-39, Sept. 12, 1972, Joint Appendix at 25.

      . 148 U.S.App.D.C. at 27, 458 F.2d at 849.

      . CAB Order 72-9-39, supra note 8, JA at 20. With respect to one of these unre-viewed agreements, the Board did not actually accept ALPA’s position that ALPA I required reconsideration of the air taxi exemption. Under this agreement a certificated carrier, Texas International Airlines, agreed to provide ground service for a fee to an exempt carrier, Metroflight Airlines. Texas International also reduced its own flight service to one round trip daily, the minimum allowed under its certificate. The Board reviewed Metroflight’s exemption, but only assumed arguendo the applicability of ALPA I to such an agreement.

      . CAB Order 73-1-3, Jan. 2, 1973, JA at 1.

      . Id. at 5.

      . Id. at 8.

      . The appeal in No. 73-1069 is taken from tlie Board’s denial of ALPA’s motion to reopen 26 CAB eases in which, before our ALPA I decision, certificated carriers were authorized to suspend service on the basis of substitute-service arrangements with air taxi operators. CAB Order 73-1-49, Jan. 15, 1973, JA at 65. The Board’s order denying ALPA’s motion rested primarily on the show cause order and final order challenged in No. 73-1068 and on ALPA’s failure to focus upon any disputed factual issues in any of these cases which would require an eviden-tiary hearing. Id. at 67.
      In No. 73-1173 ALPA appeals from a Board authorization of a certificated carrier’s temporary suspension of service, conditioned on provision of a minimum level of service by an air taxi operator. This authorization, resulting from finalization of a show cause order, was made subsequent to the Board’s order in No. 73-1068, and the Board thus was able to apply its general position on the exemption issues as set forth in the 73-1068 orders to the specific facts of this suspension.

      : Since the exemption was within the CAB’s discretion, the standard of our review is, of course, the traditional one of reasonableness.
      * * * It is the task of this court to determine whether the Board acted within its power and authority in granting the exemption. We must be convinced that upon the record before it the Board acted reasonably. * * * Furthermore, it is not the prerogative of this court to substitute its judgment for that of the Board’s on issues the Board lias resolved in a rational manner.
      World Airways, Inc. v. CAB, 145 U.S.App. D.C. 3, 6, 447 F.2d 377, 380 (1971).. See also North Central Airlines, Inc. v. CAB, 105 U.S.App.D.C. 207, 210-211, 265 F.2d 581, 584-585, cert, denied, 360 U.S. 903, 79 S.Ct. 1285, 3 L.Ed.2d 1254 (1959) ; American Airlines, Inc. v. CAB, 98 U.S.App.D.C. 348, 354, 235 F.2d 845, 851 (1956), cert, denied, 353 U.S. 905, 77 S.Ct. 668, 1 L.Ed.2d 666 (1957). See generally Frontier Airlines, Inc. v. CAB, 142 U.S.App.D.C. 124, 131, 439 F.2d 634, 641 (1971).

      . Hughes Air Corp. v. CAB, supra note 7, 160 U.S.App.D.C. at -, 492 F.2d at 569.

      . CAB Order 72-7-61, supra note 7, at 33.

      . 148 U.S.App.D.C. at 28-29, 458 F.2d at 850-851.

      . CAB Order 72-9-39, supra note 8, JA at 35.

      . Ibid. See Reopened TAG — Wright Case, CAB Order 72-2-52 (Feb. 14, 1972) ; Aspen Airways, Ine., CAB Order 71-1-98 (Jan. 20, 1971). The Board can also consider the cumulative impact of several suspensions-substitutions on the extent of a particular air taxi’s operations in a probe like that of New England Service Investigation, Docket 22973, into the route structure of an entire geographic region. Indeed, the Board stated it would consider the question of commuter certification in New England Investigation. CAB Order 72-9-39, supra note 8, JA at 35.

      . CAB Order 72-9-39, supra note 8, JA at 28.

      . 160 TJ.S.App.D.C. at-, 492 F.2d at 578.

      . There surely is nothing especially financially enticing about the routes on which the certificated carriers want to suspend service. Even if the CAB provided air taxis with subsidies after certification, thus eliminating one of the advantages of the substitution arrangements, the air taxis might well decline to provide service. As stated in the Hughes opinion, “The prospect of being subsidized can hardly be deemed a significant allure, since so many air taxi routes are precisely those from which certificated carriers withdrew because they could not support certificated service even with a subsidy.” 160 U. S.App.D.C. at 312, 492 F.2d at 578.

      . 148 U.S.AppJD.C. at 27, 458 F.2d at 849.

      . 160 U.S.AppJD.C. at 305, 492 F.2d at 571.

      . We also note that removal of an economic burden from a certificated carrier may well ultimately redound through relatively lower rates to the benefit of the average passenger of that carrier. In exercising its rate-making responsibilities the CAB is directed by the Act to take into consideration, inter alia, the need of each air carrier to obtain sufficient revenue to provide efficient service. 49 U.S.C. § 1482(e)(5) (1970). If carrier revenues were not depleted by unprofitable short-haul routes, the Board should at least be more likely to disapprove rate increases on longer-haul profitable routes.

      . The Board gave additional reasons why certification would not be in the public interest which did not turn on its conclusion that air taxis might not provide the replacement service without exemption. The Board stated that if air taxis were certificated the Board would no longer be able to limit, through the threat of certification, the size of replacement carrier aircraft and thereby encourage high frequency of air taxi service. The Board also noted that the minimum level of replacement carrier service on which certificated carrier suspensions are conditioned is normally greater than the “adequate” level of service which the Board requires of a certificated carrier. And it found that after a replacement carrier was certificated the Board would not as a practical matter expect the suspended certificated airline to step back into the market if the replacement carrier’s service proved deficient though legally adequate. To do so, the Board stated, “would be to place two certificated carriers in a market unable to support even one.” CAB Order 72-9-39, supra note 8, JA at 29. Though we might question the Board’s reasoning on the above findings, it is not necessary for us to address them given our determination that it was reasonable for the Board to conclude that the suspension-substitution arrangements would be endangered by requiring certification.

      . ALPA cites Kodiak Airways, Inc. v. CAB, 144 U.S.App.D.C. 371, 380, 447 F.2d 341, 350 (1971), wherein we stated :
      * * * [A] grant [of exemption authority] is not necessarily in the public interest merely because it would bring about a marginal increase in the quantity or quality of air service. It must also be shown that the improved service outweighs any detrimental effects resulting from the grant. * * *

      . CAB Order 73-1-3, supra note 11, JA at 4.

      . Id. at 6 n. 7.

      . See note 26 supra.

      . ALPA’s citation to National Transportation Safety Board, Air Taxi Safety Study (Sept. 27, 1972), does not constitute sucli evidence. Though, the report criticizes the general safety record of carriers exempted under the Part 298 regulation, it concludes that “[a] variable data do not provide the means for meaningful comparison of the rel-active safety levels in air taxi/commercial operations with other general aviation and certificated air carrier operations.” Id. at 12-13. More importantly, the report does not discuss the safety records of specific commuters at all.

      . The opinion should consist of a written safety evaluation of the air taxi’s operations which could be made a matter of public record in the suspension proceeding. See Air Taxi Safety Study, supra note 32, at 16. We are not satisfied with the OAB’s present policy of making undocumented inquiries at the FAA. In order to support its finding in this case, the Board should obtain from the FAA a written report on the safety of the operations of each exempt carrier providing replacement sex-vice.

      . CAB Order 72-9-39, supra note 8, JA at 23.

      . Eastern Airlines, Inc. v. CAB, 87 U.S. App.D.C. 331, 185 F.2d 426 (1950), dismissed as moot, 341 U.S. 901, 71 S.Ct. 613, 95 L.Ed. 1341 (1951).

      . Springfield Airport Authority v. CAB, 109 U.S.App.D.C. 197, 285 F.2d 277 (1960). See also Nebraska Dept, of Aeronautics v. CAB, 8 Cir., 298 F.2d 286, 290-293 (1962).

      . National Air Carrier Assn. v. CAB, 141 U.S.App.D.C. 31, 40, 436 F.2d 185, 194 (1970).

      . See, e.g., Trans World Airlines, Inc., CAB Order 71-8-91 (Aug. 19, 1971) ; Slick Airways, Suspension of Service, 26 CAB 779, 782 (1958).

      . 148 U.S.App.D.C. at 30, 458 F.2d at 852.

      . Ibid.

      . The Board stated it assumed that the court, rather than requiring the Board to hold full-scale evidentiary hearings, intended the Board to follow those fair procedures which it deemed appropriate for resolution of the remanded issues. Included as one “fair procedure” which it might find appropriate was the show cause order used on remand here. CAB petition for rehearing in ALPA I at 13-14.

      . We do not suggest that as a general rule a court’s refusal to correct an interpretation of its opinion contained in a petition for clarification or rehearing constitutes an approbation of that interpretation. But where an administrative agency expresses in a petition for clarification a good faith interpretation of an opinion remanding a proceeding to it for further consideration, a court’s decision not to clarify the opinion should be relevant to a later court’s review of the agency’s compliance with the remanding opinion.

      . United-Western, Acquisition of Air Carrier Property, 11 CAB 701, 707-708 (1950).

      . Id. at 708.

      . See, e.g., West Coast-Empire Merger Case, 15 CAB 971, 975 (1952).

      . Southwest Renewal-United Suspension Case, 15 CAB 61, 76 (1952). See also Slick Airways, Suspension of Service, supra note 38, 26 CAB at 782; Frontier Certificate Renewal Case, 14 CAB 519, 556 (1951).

      . Seven States Area Investigation, 30 CAB 473,475 (1960).

      . Frontier Airlines, Inc., CAB Order 72-1-100 at 10-11 (Jan. 28,1972).

      . Id. at 11. See also Slick Airways, Suspension of Service, supra note 38, 26 CAB at 782.

      . Even an administrative agency’s discretionary power must, of course, be employed consistently. See Norwegian Nitrogen Products Co. v. United States, 288 U.S. 294, 315, 53 S.Ct. 350, 77 L.Ed. 796 (1933).

      . CAB Order 72-9-39, supra note 8, JA at 57-58.

      . Id. at 58.

      . Subsequent to our ALPA I decision, but prior to the Board’s issuance of this show cause order, Mohawk was merged into Alie-glieny Airlines and Northeast was merged into Delta Air Lines.

      . As indicated above, there were two other theretofore unreviewed suspensions tentatively approved in the show cause order. One of these suspensions involved Texas International rather than Mohawk or Northeast, see note 10 supra, but ALPA does not even attempt to make any specific showing why labor protective provisions should be imposed against Texas International.

      . CAB Order 73-1-3, supra note 11, JA at 9-10 & n.15.

      . Id. at 9 n.12.

      . The Board’s conclusion that a full eviden-tiary hearing on the labor protective provision issue would be futile might have led us to accept the OAB’s procedure for consideration of this issue even if we had determined that our previous opinion used “hearing” to refer to the full-scale hearing required by the Administrative Procedure Act for cases which a statute commands are “to be determined on the z-ecord after opportunity for an agency hearing.” 5 U.S.O. § 554. The Supreme Court only last term reaffirmed that an administrative agency, with rules providing for adequate summary procedures, need not hold adjudicatory hearings even when they are required by statute where it appears conclusively that the party requesting them would be unable thereat to carry its burden of proof. Weinberger v. Hynson, Westcott & Dunning, Inc., 412 U.S. 609, 93 S.Ct. 2469, 37 L.Ed.2d 207 (1973). See also FPC v. Texaco, Inc., 377 U.S. 33, 39, 84 S.Ct. 1105, 12 L.Ed.2d 112 (1964) ; United States v. Storer Broadcasting Co., 351 U.S. 192, 202, 76 S.Ct. 763, 100 L.Ed. 1081 (1956) ; Citizens for Allegan County, Inc. v. FPC, 134 U.S.App.D.C. 229, 414 F.2d 1125 (1969).