The opinion of the court was delivered by: LUONGO
This is a suit by Allegheny Airlines, Inc. (Allegheny) to have declared null and void certain actions against it by the Pennsylvania Public Utilities Commission (PUC), and to enjoin permanently the PUC and its individual members from proceeding further against Allegheny or its employees for violations of the laws of the Commonwealth of Pennsylvania.
Allegheny was originally certificated by the PUC in 1941 to transport property by air in intrastate commerce within Pennsylvania pursuant to the Pennsylvania "Public Utilities Law ", 66 PS § 1101, et seq. In January, 1949 Allegheny received a certificate from the Civil Aeronautics Board (CAB), the federal regulatory agency established under the Federal Aviation Act, 49 U.S.C. § 1301 et seq., to provide interstate passenger service over a route structure covering the District of Columbia and seven states, including Pennsylvania. In March, 1949 the PUC approved Allegheny's application to transport persons and property by air in intrastate commerce within Pennsylvania. The intrastate routes authorized by the PUC paralleled Allegheny's interstate routes within the boundaries of Pennsylvania.
Under its CAB certificate, Allegheny is a "local service" carrier, i.e., one which provides service between smaller cities, linking them with larger ones where connections can be made with the "trunk line" carriers (e.g., American Airlines, United Air Lines) which primarily provide long haul service between larger cities. Allegheny is now the largest "local service" carrier in the United States, with an interstate route structure covering seventeen states, the District of Columbia and parts of Canada. Allegheny has intrastate rights in nine of those states, including Pennsylvania. For the fiscal year ending September 30, 1969 its gross revenues aggregated almost $113,000,000, including a federal subsidy
of approximately $3,000,000. A little more than 2% of Allegheny's 1969 revenues were generated by intrastate traffic within Pennsylvania.
For the efficient operation of its interstate routes, Allegheny makes frequent changes in its patterns of service and schedules. Under federal law, Allegheny is permitted to make such changes without interference from the CAB so long as it provides adequate service. 49 U.S.C. §§ 1371(e)(4), 1374(a). See Capital Airlines, Inc. v. Civil Aeronautics Bd., 108 U.S. App. D.C. 215, 281 F.2d 48 (1960). The CAB does not require Allegheny to maintain direct plane service between intermediate points on its interstate routes, it being sufficient if Allegheny services each intermediate point on such routes by two round trips in each direction each day, regardless of point of origin or destination.
After attempts to resolve the matter amicably the PUC issued rules (at different times) on Allegheny to show cause why its state certificate should not be cancelled or other penalties imposed (a) for abandoning direct plane service between Williamsport and Harrisburg; (b) for abandoning direct plane service between other pairs of points on its intrastate routes; and (c) for furnishing intrastate service not authorized by the PUC. At the hearing on the rule to show cause on the abandonment of Williamsport-Harrisburg direct service
Allegheny declined to present evidence and answered only that the PUC lacked jurisdiction over routes, flight frequency and schedules of intrastate carriage of persons and property where that service is part of a federally certificated route operated by a federally certificated interstate carrier operating under the rules and regulations of the CAB.
On June 23, 1969 the PUC entered an order making the rule absolute, imposing a fine of $5000 on Allegheny and directing Allegheny to reinstitute direct service between Williamsport and Harrisburg within thirty days or file a petition with the PUC to abandon such service. After the time for filing an appeal from the PUC order to the state courts had passed, Allegheny instituted the instant suit to enjoin the PUC and the individual members thereof from taking any actions against Allegheny or its officers based upon changes in patterns of service or frequency or scheduling of service.
Because of the nationwide impact of the outcome of this suit on the federal-state roles in the economic regulation of air commerce, both the CAB and the National Association of Regulatory Utility Commissioners (NARUC) sought, and were granted, leave to file briefs amicus curiae. The CAB also participated in oral argument. The CAB supported Allegheny's contentions on the merits but took "no position with respect to procedural issues or questions of judicial jurisdiction." (CAB's brief, page 6). NARUC's brief supports the PUC both on the merits and, in particular, in attacking the propriety of federal intervention in the absence of exhaustion of state processes.
In suits in the federal courts arising out of proceedings pending or threatened in state tribunals, the federal court's jurisdiction may not be predicated upon federal question defenses to the state proceedings.
See Public Serv. Comm'n of Utah v. Wycoff, 344 U.S. 237, 73 S. Ct. 236, 97 L. Ed. 291 (1952); Public Utilities Comm'n of California v. United Air Lines, Inc., 346 U.S. 402, 98 L. Ed. 140, 74 S. Ct. 151 (1953); rev'g 109 F. Supp. 13 (N.D. Cal. 1952); California v. Oroville-Wyandotte Irrigation Dist., 409 F.2d 532 (9th Cir. 1969); Bonanza Air Lines, Inc. v. Public Serv. Comm'n of Nevada, 186 F. Supp. 674 (D. Nev. 1960). It is ...