(Undocketed) / Docket OST-97-2548 / Joint Petition US-Argentina / August 21, 1997

Joint Application of

for approval of a transfer of frequency allocations pursuant to 49 U.S.C. §41105 (U.S.-Argentina All-Cargo Frequencies)

August 21, 1997

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In support of this Petition for Review, the Joint Applicants state as follows.

1. Background. On May 21, 1997, the Joint Applicants filed a fully-documented application in Docket OST-97-2548 for approval of the transfer of three (3) Argentina cargo frequencies currently allocated to Arrow and FWIA to Federal Express pursuant to 49 U.S.C. § 41105.

Nearly three months later, on August 14, 1997, without any prior procedural or substantive order bearing on the matters at issue in Docket OST-97-2548, the Director of the Office of International Aviation, acting under delegated authority, /2 issued the Argentina Notice at issue as an undocketed Notice. The Argentina Notice refers to the "suggest[ed]" dormancy of certain Argentina cargo frequencies allocated to Arrow and Challenge Air Cargo, and then

2/ As discussed in Section 3 of this Petition, the Joint Applicants submit that the delegations of authority to the Director of OIA under Section 385.13 apply only in circumstances "where the course of action is clear under current policy and precedent", and would not extend to the solicitation of completing applications for the authority at issue in a pending route transfer application.

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notes the existence of "pending applications of Florida West [for renewal of its Argentina frequency allocation], Polar [for reallocation of Argentina frequencies now allocated to Challenge] and Federal Express [for approval of the transfer of three Argentina frequencies]". The Argentina Notice further notes "the possibility that not all interested carriers may have been served with all the relevant pleadings in the above-described matters" (Argentina Notice, p. 2; emphasis added).

On that basis, the Argentina Notice solicits additional applications for U.S.-Argentina all-cargo authority in order to "afford all U.S. carriers interested in serving the U.S.-Argentina all-cargo market an opportunity to apply to operate such services" (Id., p. 2).

2. Due Process and Precedent. The Joint Applicants submit that, insofar as the Argentina Notice purports to solicit competing applications with respect to any of the three Argentina cargo frequencies at issue in Docket OST-97-2548, it is fundamentally inconsistent with settled principles of administrative due process and longstanding Department precedent in route-authority transfer proceedings.

The Argentina Notice is not a procedural or substantive Order. It makes no findings of fact or conclusions of law with regard to any matter at issue in the three-month-old Joint Application in Docket OST-97-2548. Notwithstanding the total absence of any such legally necessary findings of fact and law, it purports to take an action -- the solicitation of competing applications -- which would be grossly prejudicial to the Joint Applicants and would be wholly inconsistent with

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longstanding Department precedent of refusing to entertain competing applications in the context of route-authority transfer applications. Federal Express-Flying Tigers, Order 89-3-21, March 8, 1989, pp. 6-8.

3. Lack of Delegated Authority. Although the Director of the Office of International Aviation clearly holds delegated authority to issue a Notice or Order which includes a "solicitation of applications for authority" in various circumstances where such a solicitation is consistent with "current policy and precedent", including instances where such a solicitation is required by the Ashbacker Doctrine /3 (14 CFR § 385.13(p)), the Director does not have delegated authority to solicit competing applications for the authority at issue in a route transfer proceeding. As noted previously, the Department has followed a consistent practice of refusing to entertain competing applications for authority in the context of route transfer proceedings. If the Argentina Notice were interpreted to solicit competing applications for the three Argentina cargo frequencies at issue in Docket OST-97-2548, it would represent a clear departure from that longstanding policy.

The Department, of course, is free to change its prior policy, but the Courts have held that it must acknowledge that it is departing from its prior policy and must articulate a sound rationale for doing so. Such a change cannot be accomplished by an action of a Department staff official acting under delegated

3/ Ashbacker Radio Corp. v. F.C.C., 326 U.S. 327 (1945).

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authority pursuant to Part 385. Indeed, every delegation of authority under Part 385.13 is clearly limited to essentially clear and routine circumstances.

Insofar as the Argentina Notice purports to solicit competing applications for the frequencies at issue in Docket OST-97-2548, it exceeds the Director's delegated authority and it must be set aside to that extent.

4. Dormancy. It is clear that the action taken in the Argentina Notice is based on the presumed dormancy of the Argentina cargo frequencies issued previously to Arrow and Challenge. However, the Argentina Notice does not make -- and legally could not make -- any findings of fact or conclusions of law with respect to the issue of whether the Argentina frequencies allocated to Arrow and Challenge have become dormant under the terms of the 90-day dormancy condition applicable to those allocations. Such findings could only be made by Order, based on factual evidence and analysis of applicable law, including the settled principle that a carrier's duly-granted operating authority may not be altered, amended, suspended or revoked without due process (See, e.g., C.A.B. v. Delta Air Lines, 367 U.S. 316, 320-323, 330 (1961)).

The Joint Applicants strongly assert that the Argentina frequency allocation held by Arrow /4 has been utilized by Arrow to provide a limited amount of scheduled all-cargo service between the U.S. and Argentina. The level of service provided by Arrow, although very limited, is consistent with the literal

4/ The Joint Applicants take no position with respect to the frequency allocation granted to Challenge, which is not at issue in Docket OST-97-2548. The Argentina Notice does not suggest that the frequency held by FWIA has not been utilized.

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terms of the 90-day dormancy condition, which provides that an allocation "will expire automatically and the frequencies will revert back to the Department for reallocation if they are not used for a period of 90 days" (Order 97-3-6). Contrary to the limited and inconclusive discussion of dormancy in the Argentina Notice, the Department's standard dormancy condition does not currently require that a carrier operate service at any specified minimum frequency or that it must publish its service in the OAG's Air Cargo Guide. Arrow has complied with the dormancy condition as it is now written, and it continues to hold the two Argentina frequencies which it has sold to Federal Express subject to Department approval in Docket OST-97-2548. The Department is, of course, free to change the language of its 90-day dormancy condition to specify the level of usage required to avoid a finding of dormancy, but it cannot do so retroactively.

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which might be interested in Argentina cargo matters (see, Service List attached to Joint Application, filed May 21, 1997 in Docket OST-97-2548).

In any event, as discussed above, to the extent that the Argentina Notice purports to solicit competing applications with respect to the three Argentina frequencies at issue in the pending Joint Transfer Application in Docket OST-97-2548, it is squarely contrary to long-established Department policy and precedent. Federal Express-Flying Tigers, supra. That policy and precedent cannot be ignored or altered by a Notice issued pursuant to delegated authority by a staff official. To the extent that the Argentina Notice solicits applications for the frequencies at issue in Docket OST-97-2548, it is invalid as a matter of law and cannot stand.

6. Expedition Policy. Finally, the Argentina Notice represents a serious departure from the Department's long-established policy of affording expedited processing to route authority transfer applications, in order to minimize the period of uncertainty to consumers and employees, and in recognition of the strong presumption favoring approval of such applications. See, e.g., Federal Express-Evergreen, Order 95-8-9, August 18, 1995, p. 4.

The Joint Application in Docket OST-97-2548 was filed thirteen weeks ago. The Joint Applicants specifically requested expedited processing, and expressed the desire of the Joint Applicants to close on the sale transaction on or before July 15, 1997. The procedure initiated by the Argentina Notice, if it were applied to the frequencies at issue in Docket OST-97-2548, and if competing

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applications were filed, could delay final action on the Joint Application for a year or longer. Such a delay would be grossly inconsistent with Department precedent and grossly unfair to the Joint Applicants.

7. Specific Relief Requested. The paramount interest of the Joint Applicants is in receiving an expedited Final Decision on their May 21, 1997 Joint Application, adjudicated on a basis consistent with longstanding Department policy and precedent in route authority transfer proceedings.

Accordingly, the Joint Applicants urge the Department to take the following two specific actions:

(1) Issue an immediate Notice modifying or clarifying the August 14, 1997 Argentina Notice to confirm that only the two Argentina cargo frequencies allocated to Challenge and applied for by Polar Air are currently available for possible reallocation upon application by interested carriers.

(2) Issue an immediate tentative or final order approving the transfer of three Argentina cargo frequencies to Federal Express in Docket OST-97-2548, based on evaluation of the arguments of fact, law and policy contained in the Joint Application and subsequent pleadings filed in that Docket.

WHEREFORE, the Joint Applicants urge the Department to review and vacate the staff action embodied in the Argentina Notice insofar as that Notice solicits competing applications for the Argentina frequencies at issue in Docket OST-97-2548. The Joint Applicants further urge the Department to issue an

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immediate Final Order approving the frequency transfer application in Docket OST-97-2548 without further delay.

Respectfully submitted,

Allan Markham for Arrow Air

Nathaniel Breed of Shaw Pittman for Federal Express

Warren Goff of Federal Express

August 21, 1997