December 21, 1979
79-87 MEMORANDUM OPINION FOR THE COUNSEL TO THE PRESIDENT
Federal Aviation Act—Foreign Air Transportation— Scope of Presidential Authority on Review of Civil Aeronautic Board’s Approval of Airline Mergers (49 U.S.C. § 1461)
This is in response to a request for an opinion on the President’s authority under § 801 of the Federal Aviation Act, as amended by the Airline Deregulation Act, 49 U.S.C. § 1461, to review the order of the Civil Aeronautics Board (the Board) in the Pan American-Acquisition o f Control of, and Merger with, National Case (Docket 33283). The Board approved a merger between Pan American World Airways (“ Pan Am” ) and National Airlines (“ National” ), as well as the transfer to Pan Am of National’s certificates, including National’s certificates to engage in foreign air transportation. The only foreign route excepted from the ap proval was National’s Miami-to-London route. You have asked us what the President’s legal options are in reviewing the Board’s order and more specifically whether the President has the authority to award the Miami- to-London route to Pan Am.
Several conclusions emerge from our consideration of this matter. First, the President does not have the authority under the statute to order the Board affirmatively to award the Miami-to-London route to Pan Am. Second, because the Board’s deletion of the Miami-to-London route ap pears to be inextricably related to its approval of the merger and of the transfer o f National’s certificates, the President cannot reinstate the route by disapproving only the deletion of the route. Moreover, even if the President could reinstate the Miami-to-London route in the certificates transferred to Pan Am by disapproving the deletion, it is possible that the Board may have the authority thereafter to reconsider its order and deny Pan Am’s merger application as well as the transfer of National’s certifi cates to Pan Am. Third, we have also concluded that the Department of State has articulated a foreign relations concern on which the President
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may rely to justify a disapproval of the deletion of the Miami-to-London route under § 801, should he decide to rely upon it. We have pointed out, however, that the President can satisfy the Department of State’s articu lated foreign relations concern if he takes no action on the Board’s merger order and reviews instead the Board’s forthcoming selection of a carrier to service that route in the Miami-London Case, which is now pending before the Board.
I.
Under § 801 of the Federal Aviation Act, as amended by the Airline Deregulation Act of 1978, 49 U.S.C. § 1461,' the Board’s issuance, denial, transfer, amendment, cancellation, suspension, or revocation of a cer tificate to engage in foreign air transportation and the terms, conditions and limitations contained in such certificates must be presented to the President for review. The President has the right to disapprove any such Board action “ solely upon the basis of foreign relations or national defense considerations which are within the President’s jurisdiction, but not upon the basis of economic or carrier selection considerations,” 49 U.S.C. § 1461(a).2 The President’s disapproval renders the Board’s action null and void.
At the outset, it is necessary to identify the Board’s actions in this case which are subject to Presidential review under § 801. In its order, the Board approved3 the application of Pan American World Airways, Inc., for acquisition of control of and merger with National Airlines, Inc., and the transfer to Pan American of the certificate of public convenience and necessity issued to National for its international routes with the exception
'The provision o f § 801, as codified, reads as follows:
(a) The issuance, denial, transfer, am endm ent, cancellation, suspension, or revoca tion of, and the terms, conditions, and limitations contained in any certificate authoriz ing an air carrier to engage in foreign air transportation, or any permit issuable to any foreign air carrier under 1372 o f this title, shall be presented to the President for review. T he President shall have the right to disapprove any such Board action concerning such certificates or permits solely upon the basis o f foreign relations or national defense con siderations which are within the President’s jurisdiction, but not upon the basis of economic or carrier selection considerations. Any such disapproval shall be issued in a public docum ent, setting forth the reasons for the disapproval to the extent national security permits, within sixty days after submission o f the B oard’s action to the Presi dent. Any such Board action so disapproved shall be null and void. Any such Board ac tion not disapproved within the foregoing time limits shall take effect as action o f the Board, not the President, and as such shall be subject to judicial review as provided in section 1486 o f this title. 2The question whether the President has grounds to disapprove the B oard’s order is dis cussed in the next section o f this opinion.
’The Board approved the merger and transfer subject to the conditions that Pan Am accept certain labor-protective conditions and agree to operate the M iam i-to-London route until another carrier is selected by the Board. O n O ctober 1, 1979, the Board instituted pro ceedings to hear applications for the M iam i-to-London route. Miami-London Case (Docket 36764).
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of National’s Miami-to-London authority. Because National’s certificates authorize it to engage in foreign air transportation, the transfer of those certificates is clearly subject to Presidential review. Under the case law, the merger approval, because it is inextricably linked to the transfer of cer tificates, has also been viewed as subject to Presidential review under § 801(a). Trans World Airlines v. Civil Aeronautics Board, 184 F. (2d) 66, 71 (2d Cir. 1950). It could also be reasonably argued that the deletion of the Miami-to-London route from the certificate for Route 168 may be viewed as an “ amendment” to the transferred certificate and, as such, also subject to Presidential review as a separate Board action.4 However, the Board’s deletion of the route appears to be inextricably related to its approval of the merger and of the transfer of the certificates.5 For that reason, we believe that the Board’s actions should be viewed as a single Board action under § 801, which the President may either disapprove or approve by expressing no disapproval.
If the President were to adopt the view that the Board’s actions are reviewable separately under § 801, it is unlikely that the President could effectively reinstate the deleted route by disapproving the “ amendment” and expressing no disapproval of the transfer and the merger. From the order, it is apparent that the Board regarded its approval of the merger and transfer as conditioned on the deletion of the Miami-to-London route.6 The Board may argue that without the fulfillment of that conditon there is no Board approval of the transfer and merger and therefore no reviewable Board actions concerning the transfer and merger.
Alternatively, the Board could maintain that under § 801(a) the transfer and merger not disapproved by the President are not actions of the Presi dent but rather Board actions and as such may be reconsidered by the Board either sua sponte1 or upon petition for reconsideration by a party to
‘The Board states in its opinion that it is deleting the M iam i-to-London route. As a fo o t note to that statem ent, it m entions that the certificate for Route 168 had been amended several times before. M ajority O pinion at 52, n. 135.
’The Board also apparently viewed its deletion o f the M iam i-to-London route from Na tional’s certificates and its approval o f the merger and o f the transfer of N ational’s cer tificates as inextricably related. In its order in the Miami-London Case (Docket 36764), the Board states:
Absent the condition that M iam i-London authority not be transferred, we would not ap prove the Pan Am erican-N ational merger. [Order at 1.]
O ur conclusion that the B oard’s order constitutes a single inseverable Board action for the purpose o f Presidential review under § 801 is based on the interrelationship among the merger, transfer, and am endm ent decisions and not on the basis that all three decisions were included in one order. W e do not foreclose the possibility that there may be instances in which the Board may include in one order actions that could be considered severable and thus separately subject to Presidential disapproval.
‘The Board m entions twice in its opinion that its approval o f the transfer is conditioned on the deletion o f the M iam i-to-London route. M ajority Opinion 7, 64. See also its order in the Miami-London Case at 1. (Docket 36764.)
’Except as otherwise provided in this chapter the Secretary o f T ransportation or the Board is empowered to suspect or modify their orders upon such notice and in such m anner as they shall deem proper. [49 U .S.C . § 1485(d).]
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the proceeding.' As support for such an argument, the Board could point to § 801(a)’s provision that “ [a]ny such Board action not disapproved within the foregoing time limits shall take effect as action of the Board, not the President, and as such shall be subject to judicial review as pro vided in section 1006 of this A ct.” If § 801(a) was intended to treat Board actions not disapproved by the President as actions of the Board for all purposes, an argument that the transfer and merger actions may be recon sidered would have some merit. From the face of the statute,’ however, it is apparent that the purpose of treating actions not disapproved by the President as Board actions was to overcome the reluctance of the courts to review Presidential decisions under the former § 801(a).10 Thus, it could be argued that Board actions reviewed and not disapproved by the Presi dent are treated as Board actions under § 801(a) only for the purpose of ensuring judicial review and that § 801(a) does not permit the Board under the guise of reconsideration to review Presidential decisions." Given these uncertainties and the Board’s threat to disapprove the merger if the Presi dent attempts to reinstate the Miami-to-London route, we doubt that, even if the Board’s actions were viewed separately, the President would succeed in reinstating the Miami-to-London route.
Nor do we believe that the President could reinstate the route by order ing the Board to do so. The argument suggesting this course of action relies upon case law construing § 801(a) prior to its amendment by the Airline Deregulation Act. For this reason, the argument has no merit. Sec tion 801(a) prior to amendment12 required that the transfer of certificates
‘Any party t o a proceeding, unless an order o r rule of the Board specifically provides otherwise, may file a petition for reconsideration, rehearing or reargument o f (1) final orders issued by the Board. [14 CFR § 302.37.]
’The legislative history o f the Airline Deregulation Act does not discuss the purpose o f treating action not disapproved by the President as Board action.
10Chicago & Southern A ir Lines, Inc. v. Waterman Steamship Corp., 333 U.S. 103 (1948) (absent clear congressional intention, judicial review should be unavailable).
" I f the Board were perm itted to reconsider the decision to transfer and it disapproved the transfer, its disapproval would have to be subm itted to the President under § 801(a) for review. Trans World Airlines v. Civil Aeronautics Board, 184 F. (2d) 666, 70-71 (2d Cir. 1930). The President could then disapprove the B oard’s disapproval, and the B oard’s disap proval would under § 801(a) become null and void. It is not clear what would be the status at that point o f Pan A m ’s application for merger and transfer, but, since the Board’s action would be a nullity, Pan A m ’s application would probably be considered as pending before the Board and the whole process would begin again.
’’Section 801(a), prior to am endm ent by the Airline Deregulation Act, provided:
The issuance, denial, transfer, am endm ent, cancellation, suspension, revocation of, and the terms, conditions, and limitations contained in, any certificate authorizing an air carrier to engage in overseas or foreign air transportation, or air transportation be tween places in the same Territory or possession, or any permit issuable to any foreign air carrier under section 1372 o f this title, shall be subject to the approval o f the Presi dent. Copies o f all applications in respect o f such certificates and permits shall be transm itted to the President by the Board before hearing thereon, and all decisions thereon by the Board shall be subm itted to the President before application thereof. (72 Stat. 782 (1958).)
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to engage in foreign air transportation be subject to the approval of the President. In Chicago & Southern A ir Lines, Inc. v. Waterman Steamship Corp., 333 U.S. 103 (1948), the Supreme Court interpreted this power of review very broadly:
Nor is the President’s control o f the ultimate decision a mere right o f veto. It is not alone issuance of such authorizations that are subject to his approval, but denial, transfer, amendment, cancellation, or suspension as well. And likewise subject to his approval are the terms, conditions and limitations of the order. 49 U.S.C. § 601. Thus, Presidential control is not limited to a negative but is a positive detailed control over the B oard’s deci sions unparalleled in the history o f American administrative bodies. [Id. at 109. (Emphasis added.)]
Relying on this interpretation of former § 801, Presidents have ordered the Board to rewrite its orders to select carriers and otherwise to revise its orders to make them acceptable to the President.”
Section 801(a), as amended by the Airline Deregulation Act, still re quires that the issuance, denial, transfer, amendment, cancellation or suspension be presented to the President for his review. That review, how ever, has now been circumscribed. The statute makes clear that the Presi dent is limited to disapproving Board actions and, therefore, unlike the former § 801(a), he is given a “ mere right of veto.” Id. at 109. This limita tion does not preclude the President from exercising his veto in such a way that he indirectly retains some control over the Board’s decision. For in stance, the President may disapprove the Board’s entire action in this case and make it clear that he will continue to disapprove a merger between Pan Am and National unless the Miami-to-London route is transferred to Pan Am. C f , Trans Alaska Pipeline Rate Cases, 436 U.S. 631, 652-54 (1978).14 Of course, the Board then has the option of disapproving the merger and transfer entirely, but it should be remembered that the Board’s disapproval is subject to Presidential review, and may be disapproved. To break the stalemate, the Board may choose to submit an order acceptable to the President, rather than submit another disapproval of the merger to the President for his review.
II.
As mentioned above, the President may disapprove a Board action under § 801(a) “ solely upon the basis of foreign relations or national defense considerations which are within the President’s jurisdiction, but not upon the basis of economic or carrier selection grounds.” 49 U.S.C.
"See, e.g.. President C arter’s action in the Transatlantic Route Proceeding (Docket 25908).
MIn Trans Alaska, the Supreme C ourt held that the Interstate Commerce Commission, although it had no express power to prescribe interim rates, could, in suspending a rate, in dicate the maximum interim tariff which it would not suspend.
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§ 1461(a). If read narrowly, § 801(a) would permit the President to disap prove on foreign relations or national defense grounds only when those grounds did not include economic or carrier selection considerations. Under this interpretation, the President would be precluded from disap proving the Board’s selection o f a particular carrier even if such selection would have a significant adverse effect on foreign relations. We believe that such an interpretation is not consistent with the purpose o f the statute. In explaining the purpose o f the amendments to § 801, the House Report states:
Section 801 o f the Federal Aviation Act does not impose any specific standards for the President to follow in reviewing deci sions o f the CAB on international air routes. From time to time questions have arisen as to whether this section permits the Presi dent to substitute his judgm ent fo r that o f the CAB as to which routes will best serve the interests o f the traveling public. The committee believes that this type o f judgm ent should be made by the CAB which is an arm o f Congress and that the President should only disapprove CAB decisions when the decision would create difficulties in our foreign relations or national security. Accordingly, H .R . 12611 provides that the President may disap prove CAB international route decisions only on the basis o f foreign relations or national defense considerations and that the President may not disapprove CAB decisions on economic grounds or carrier selection grounds. [H. Rept. 95-1211, 95th Cong., 2d sess. at 19 (1978). (Emphasis added.)] From the foregoing passage, it is apparent that Congress limited the grounds upon which the President could disapprove Board actions in order to preclude the President from second-guessing the B oard’s decision as to what action would best serve the interests o f the traveling public. The legislative history reveals no intention to confine the scope o f the Presi dent’s authority to disapprove Board action on foreign relation or na tional security grounds to situations in which these considerations did not encompass economic or carrier selection issues. To infer such an intention would run counter to the established principle that when the President acts under a legislative grant in the area o f foreign relations or national secu rity, his powers should be construed broadly. United States v. Curtiss- Wright Corp., 299 U.S. 304, 318-22 (1936). It is apparent that a require ment that the President’s power to act arise only where his foreign affairs concerns have no economic or carrier selection aspects would significantly restrict the President’s prerogative to act. Those knowledgeable about the issues that ordinarily arise in the review o f these types o f CAB decisions would agree that most sensitive international air transportation decisions have aspects both o f foreign relations and economic or carrier selection considerations. In the absence o f a clear expression from Congress that it intended to restrict the President in this way, we see no basis for so limiting his authority.
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The Departm ent o f State, although noting it had no objection to the Board’s order, has indicated in its letter to the Office o f Management and Budget that withholding the M iami-to-London route from Pan Am may create difficulties with Great Britian. According to the Departm ent o f State, Great Britain has indicated that it will not permit any American car riers not presently serving Heathrow Airport to start service at Heathrow and that such carriers must fly into Gatwick A irport. The Department of State believes that because Pan Am presently serves Heathrow, Great Britain would permit Pan Am to fly from Miami into Heathrow Airport. If a replacement carrier is selected, the British may deny such carrier the facilities at Heathrow and insist that it fly into Gatwick instead. A dispute may then arise between the United States and Great Britain as to the rights o f American carriers under Bermuda II. The Department o f State believes that “ the issue could become extremely abrasive, with possible adverse consequences for our efforts to gain broad liberalization o f the present U.S.-UK Civil Aviation agreem ent.” Letter dated November 19, 1979, from Julian L. Katz, Assistant Secretary for Economic and Business A f fairs, Departm ent o f State, to James T. McIntyre, Jr., Director, Office o f Management and Budget.
The concern that a dispute may arise between Great Britain and the United States if a replacement carrier for the M iam i-to-London route can not fly into Heathrow A irport appears on its face to provide a basis for an assertion by the President that withholding that route from Pan Am will create difficulties in foreign relations. Because o f the deference the courts have traditionally accorded to the President when he acts as the N ation’s organ o f foreign policy, his determ ination would most likely be accepted on its face by the courts. United States v. Curtiss- Wright Corp., 299 U.S. at 319-21; Chicago & Southern A ir Lines, Inc. v. Waterman Steamship Corp., 333 U.S. at 111.
Nevertheless, we believe that, in the light o f § 801(a)’s requirement that the President state in a public docum ent the reasons for disapproving a Board action, the President should be aware o f a weakness we perceive in this foreign relations argument. To our knowledge Pan Am is not the only American carrier that presently serves Heathrow. Even if the British insist that no new carriers may serve Heathrow, a dispute may not arise if the replacement carrier selected by the Board also presently serves Heathrow. Thus, whether a foreign relation problem may arise will be known only after the Board has selected a carrier for that ro u te.15 If the Board selects a carrier that does not presently serve Heathrow, the President may disap prove that Board action on the ground that he does not want to create a
' ’The Board has commenced proceedings to select a replacement carrier for the Miami-to- L ondon route. Miami-London Case (Docket 36764). The B oard’s order approving the merger between Pan Am and National requires Pan Am to operate the route until a carrier is finally selected.
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conflict with the British by demanding that the replacement carrier be per mitted to fly into Heathrow. His reasons would give a signal to the Board to select a carrier that presently serves Heathrow and the President’s artic ulated foreign relations concerns could, presumably, ultimately be satisfied.
Conclusion
In our view, the President does not have the power under § 801(a) to reinstate the M iami-to-London route or to order the Board to do so. Because the Board’s merger, transfer, and amendment decisions are inex tricably related, the President may not disapprove only the amendm ent. The President does have the power to disapprove the entire Board action and may justify disapproval on the ground that withholding the Miami-to- London route from Pan Am will create difficulties in our relations with Great B ritain.16
Larry A . H a m m o n d
Deputy Assistant A ttorney General Office o f Legal Counsel
“ Your Office asked us also to comm ent briefly on some other proposed reasons for disap proving the Board’s action. The first suggestion is that the Board’s concern that Pan A m ’s operation o f the M iam i-to-London route would be anticompetitive will be groundless when Bermuda II is liberalized to permit more American carriers to fly into Great Britain. In our opinion, this reason merely criticizes the Board’s economic analysis and does not provide a ground for asserting that the deletion o f the route will create difficulties in foreign relations or national security. A nother suggested ground for disapproval is that the President has a foreign policy o f maintaining a strong national carrier and that awarding the Miami-to- London route to Pan Am will accomplish that policy. Again we do not perceive the nexus between maintaining Pan Am as a strong carrier and § 801’s standard for disapproval— whether the B oard’s action will create difficulties in foreign relations o r national security. Finally, it has been suggested as a national defense consideration that Pan Am must be m ain tained as a financially viable carrier so that it is available to airlift American citizens out of troubled areas. We are not sufficiently knowledgeable about the state o f the international air travel industry, or about the practical need to preserve Pan Am as a “ viable” entity, to com ment on this argument.