Hastie and Rosenn, Circuit Judges and McCune, District Judge.
Allegheny Airlines, Inc. (Allegheny) brought suit in the United States District Court for the Eastern District of Pennsylvania seeking a declaratory judgment holding that certain of the Pennsylvania Public Utility Commission's (PUC) orders and rules, pertaining to air service between Pennsylvania cities, constituted an unlawful intrusion upon an area occupied exclusively by federal legislation. Allegheny also sought to perpetually enjoin the PUC from further actions against it.*fn1 The district court decided that the case presented a situation in which it was compelled to abstain. It therefore dismissed the complaint. Allegheny Airlines, Inc. v. Pennsylvania Pub. Util. Comm'n, 319 F. Supp. 407 (E.D. Pa. 1970). From this decision, Allegheny appeals.
Allegheny received from the PUC an intrastate freight certificate in 1940, and a passenger certificate in 1949. Until 1963, one of the services provided by Allegheny, and for which it was and is certificated by the PUC, was nonstop service between Williamsport and Harrisburg, a distance of some 71 miles.
The flight between Harrisburg and Williamsport was part of a longer flight route designated by the PUC "intrastate route No. 5." It appears that intrastate route No. 5 was a segment of a still larger route, certified by the Civil Aeronautics Board (CAB), which is interstate in nature. That is to say, planes coming from outside of Pennsylvania fly through the state, landing along the route designated intrastate route No. 5.
In 1963, Allegheny unilaterally discontinued the segment of intrastate route No. 5 which directly connected Willamsport and Harrisburg. Allegheny did not entirely eliminate either Harrisburg or Williamsport from all Allegheny plane service. It was still possible to travel by air on Allegheny airplanes between Williamsport and Harrisburg, although such a journey might require flying to numerous distant points, on a variety of planes, before eventually reaching the desired destination.
After Allegheny discontinued the Williamsport-Harrisburg segment of route No. 5, the PUC and Allegheny entered into negotiations. In the meantime, Allegheny discontinued furnishing single plane direct service between at least six other pairs of points within Pennsylvania. All these discontinuances were on intrastate routes authorized and certificated by the PUC. Subsequently, the negotiations between the airline and the PUC broke down.
The PUC then took official agency action to compel Allegheny -- not to furnish the discontinued plane service -- but to apply to the PUC, in the manner prescribed by the applicable Pennsylvania law and the regulations of the PUC, whenever it wished to discontinue single plane direct service between intra-Pennsylvania points on routes authorized by the PUC. In the alternative, the PUC sought restoration of the deleted air service.
On June 10, 1968, the PUC issued a "Rule to Show Cause," which noted that Allegheny had abandoned the air service between Harrisburg and Williamsport without seeking approval of the Commission. The rule directed Allegheny to show cause why its certificate of public convenience should not be canceled, and other appropriate penalties imposed, for its discontinuance of service.
Allegheny answered this rule by arguing that under federal law and the CAB regulations and practice, it was permitted to make such changes at will. Further, it contended that "both as a practical matter and a matter of law, its Pennsylvania certificate of public convenience should be interpreted in a manner which is consistent with its federal certificate." It is clear that the thrust of the airline's answer was that federal law and practice had preempted the state regulation asserted by the PUC. A hearing on the Commission's rule was held on September 19, 1968. At this hearing, Allegheny offered no testimony or other evidence concerning the need to discontinue the service in question. Again, it was clear that the thrust of the airline's position was that federal law had preempted the asserted state action.
On June 23, 1969, the PUC entered an order making absolute its rule of June 10, 1968, and directed Allegheny to pay a penalty of $5,000 for its failure to seek approval of its abandonment of service between Harrisburg and Williamsport. The PUC also directed Allegheny to reinstitute the service within thirty days or, in lieu thereof, file with the PUC nunc pro tunc an appropriate petition or application seeking approval for the abandonment of service.
The June 23rd order was accompanied by an extensive written opinion, which defined the PUC's concerns, and which laid clear the legal foundation for their decision. The Pennsylvania authority for controlling the deletion of direct air service between Harrisburg and Williamsport was 66 P.S. § 1122:
Upon the application of any public utility and the approval of such application by the commission, evidenced by its certificate of public convenience first had and obtained, and upon compliance with existing laws, and not otherwise, it shall be lawful:
(b) For any public utility to abandon or surrender, in whole or in part, any service. . . .
-- Every public utility shall furnish and maintain adequate . . . reasonable service. . . . Such service also shall be reasonably continuous and ...