British Airways Board v. Civil Aeronautics Board Court Opinion

    UNITED STATES COURT OF APPEALS 
F oe t h e  S econd C ircuit

Jew York
LI S R

No. 814—September Term, 1976.

(Argued April 5, 1977 Decided August 22, 1977.)

Docket No. 76-4226

B r itish  A irw ays  B oard,

v.
Petitioner,

C iv il  A eronautics B oard,
Respondent.

B e f o r e  :
Oak es , Circuit Judge,

and W y za n s k i* and H olden ,** District Judges.

Petition for review of orders of the Civil Aeronautics 
Board requiring petitioner to file existing schedules and 
proposed schedules 30 days prior to commencement of 
service.

Petition granted. Orders set aside in accordance with 
opinion.

W il l ia m  C. Clark e , New York, N.Y. (Peter F. 
Yentro, New York, N.Y., of counsel), for 
Petitioner.

Of the District of Massachusetts, sitting by designation.

Chief Judge of the District o f Vermont, sitting by designation.

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J ames C. S c h u l t z , General Counsel, Civil Aero­
nautics Board (Jerome Nelson, Deputy 
General Counsel, Glen M. Bendixsen, Asso­
ciate General Counsel, Robert L. Toomey, 
David E. Bass, Attorneys, Civil Aeronau­
tics Board, Donald I. Baker, Assistant 
Attorney General, Carl D, Lawson, Joen 
Grant, Attorneys, Department of Justice, 
of counsel), for Respondent.

Oakes , Circuit Judge:

British Airways Board (British Airways), the United 
Kingdom’s government-owned air carrier, petitions for re­
view of three orders of the Civil Aeronautics Board (the 
Board or CAB). The first order, said to be in response to 
certain United Kingdom actions taken against American- 
owned carriers, required British Airways to file its exist­
ing schedules of service to and from the United States by 
September 28, 1976, and to file proposed schedules for any 
new or modified service thirty days before making the 
schedule changes. In re the Schedules of Air VBI Limited, 
Order 76-9-74, No. 29778 (CAB Sept. 14, 1976). The second 
order denied a stay of the first, schedule-filing order (ex­
cept as to Washington-London Concorde service). Order 
76-9-161 (Sept. 30, 1976). The third order was issued in 
response to a letter from President Ford to the CAB, dated 
October 9, 1976, in which the President stated that, because 
Britain and the United States had resolved their differ­
ences, “prompt rescission of the Board’s [first or schedule­
filing] order . . . would be appropriate and in the interests 
of our foreign policy.” The CAB then vacated its earlier 
orders and terminated their effectiveness nunc pro tunc

5428



as of October 8, 1976. Order 76-10-110 (Oct. 26, 1976 ).* 
Because British Airways had not filed any schedules be­
tween September 28 and October 8, 1976, however, the 
Board indicated in the October 26 order that the airline 
would be subject to “ enforcement liability” for that period. 
Id. at 3.1 2

A schedule-filing order such as the one under review 
may be required under 14 C.F.R. § 213.3(c) (1975) when 
the CAB finds that the government of the holder of a 
foreign air carrier permit has taken action impairing or 
limiting an American air carrier’s operating rights in the 
foreign country. When such an order is entered against a 
foreign air carrier, the carrier cannot make changes in 
equipment or in times or frequency of arrival and depar­
ture for thirty days, see id. § 213.3(b). The CAB can also 
issue a schedule-limitation order that limits the number 
of flights the subject airline can make to or from the 
United States, with the order expressly subject to “ stay or 
disapproval by the President of the United States within 
10 days after adoption . . id. § 213.3(d). Here an order 
limiting petitioner’s United States schedules was issued by 
the CAB on September 29, 1976. The October 9 letter of 
the President to the CAB referred to above was issued in 
response to this schedule-limitation order and disapproved

1 Despite the GAB's vacation of these orders, at least the first of them 
remains before us because the petition for review as to it was filed 
prior to the CAB’S vacation order, and the vacation order itself was 
explicitly made "subject to any necessary approval by the United States 
Court of Appeals for the Second Circuit.”  Order No. 76-10-110, at 4; 
see id. at n.6.

2 During the pendency of this review proceeding, an administrative 
enforcement proceeding against British Airways was initiated by the 
CAB. The enforcement proceeding has been stayed by agreement of 
the parties. According to the CAB’S third order, British Airways is to be 
held liable only for its failure to file existing schedules; no liability for 
failure to file proposed schedules is contemplated. See id. at 3 & n.5.

5429



it within the requisite ten-day period, id. The letter then 
went on to refer to the schedule-filing order here under 
review.* 1 * 3

This court’s jurisdiction to review these orders is prem­
ised on 49 U.S.C. § 1486. That section makes reviewable 
in the courts of appeals “ [a]ny order . . . issued by the 
Board . . ., except any order in respect of any foreign air 
carrier subject to the approval of the President as pro­
vided in [id. § 1461] . . .” Insofar as here relevant, Section 
1461 requires that presidential approval be obtained when­
ever the CAB desires to amend or otherwise modify a 
foreign air carrier’s operating permit or certificate. Thus, 
if the CAB’s schedule-filing directive to British Airways 
were considered an amendment of the carrier’s permit, ad­
vance presidential approval, which was not obtained, would 
have been required, and this court would be without juris­
diction to review the orders.

3 The letter from the President provides in full (emphasis added)
T he W hite House 

Washington 
October 9, 1976

Dear Mr. Chairman:
I  have reviewed the Board’s proposed order in the matter of the 
schedules of British Airways Board (British Airways) in Docket 
29778 and the circumstances surrounding that order. In view of 
the fact that the issues necessitating the actions proposed in the 
order have been satisfactorily resolved with the British authorities, 
I  am hereby disapproving the order.
1 have further determined that prompt rescission of the Board’s 
order 76-9-74, which requires the carrier to file with the Board its 
existing and proposed schedules, would he appropriate and in the 
interests of our foreign policy.
Bespectfully,

s / Gerald B. Ford 
The Honorable John E. Bobson 
Chairman
Civil Aeronautics Board 
Washington, D.C. 20428

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We believe that the orders here involved did not amend 
British Airways’ permit. In 1970, by an order approved 
by the President, the Board amended the permits of 48 
foreign carriers, including that of British Airways’ corpo­
rate predecessor, to make the permits subject to the pro­
visions of certain regulations adopted on the same date. 
It was under these regulations, 14 C.F.R. §§ 213.1-.6 (1975), 
that the Board issued its schedule-filing directive in the 
instant case. The directive thus amounted to implementa­
tion of a previously approved condition and did not modify 
British Airways’ permit. An implementation effort of this 
nature does not require separate presidential approval. 
Dan-Air Services, Ltcl. v. GAB, 475 F.2d 408, 412 (D.C. 
Cir. 1973) (per curiam). Therefore this court has juris­
diction to review the orders before us.4

The fact that the CAB did not have to obtain presiden­
tial approval before it ordered British Airways to file 
schedules, however, does not mean that it was free as a 
matter of law to ignore the disapproval embodied in the 
presidential letter of October 9 relative to the schedule­
filing order under review, see note 3 supra. The Board

4 The scope of review is governed by Section 10(e) o f the Admin­
istrative Procedure Act, 5 TJ.S.C. $ 706(e), which provides:

To the extent necessary to decision and when presented, the 
reviewing court shall decide all relevant questions of law, interpret 
constitutional and statutory provisions, and determine the meaning 
or applicability of the terms of an agency action. The reviewing 
court shall—

(2) hold unlawful and set aside agency action, findings, and 
conclusions found to be—

(A ) arbitrary, capricious, an abuse of discretion, or otherwise 
not in accordance with law;

( B )  ' contrary to constitutional right, power, privilege, or im­
munity ;

(C) in excess of statutory jurisdiction, authority, or limitations, 
or short of statutory right;

5431



recognized this by largely deferring to the President’s 
wishes and vacating its schedule-filing order nunc pro tunc 
as of October 8, 1976. But at the same time it insisted 
that it was acting as “an independent agency,” and to show 
its independence it decided to hold British Airways liable 
for its failure to file existing schedules in the September 
28-October 8 period, though, “to strike a balance,” not for 
failure to file proposed schedules thirty days in advance, 
see note 2 supra. We believe that the Board’s insistence 
on its independence in this matter represents a misunder­
standing of its role with regard to foreign air carriers and 
of the extent of presidential primacy on issues related to 
foreign affairs. We accordingly set aside the orders.

In Chicago & Southern Air Lines, Inc. v. Waterman 
Steamship Corp., 333 U.S. 103 (1948), the Supreme Court 
discussed the “ inversion] [of] the usual administrative 
process” that Congress intended when it made CAB deci­
sions relating to foreign air carriers subject to presidential 
approval:

Instead of acting independently of executive control, 
the agency is . . . subordinated to it. Instead of its 
order serving as a final disposition . . ., its force is 
exhausted when it serves as a recommendation to the 
President. . . . Presidential control is not limited to a 
negative but is a positive and detailed control over 
the Board’s decisions, unparalleled in the history of 
American administrative bodies.

Id. at 109.B A necessary implication of the President’s 
“positive and detailed control”  under the statute, we be- 5

5 The Chicago #  Southern holdings with regard to ripeness and judicial 
review have teen limited and criticized by certain courts and commen­
tators. See, e.g., Zweibon v. Mitchell, 516 F.2d 594, 622-23 (D.C. Cir. 
1975) (en banc) (plurality opinion of Wright, <7.); Air tin e  Pilots’ 
Ass’n International v. Department of Transportation, 446 F,2d 236,

5432



lieve, is the power to disapprove particular actions taken 
by the Board under broad regulations that the President 
has previously approved. Cf. Trans World Airlines, Inc. 
v. CAB, 184 F.2d 66, 71 (2d Cir. 1950) (power of President 
to withdraw approval), cert, denied, 340 U.S. 941 (1951). 
Were this power lacking, presidential approval of broad 
regulations would in effect give the CAB carte blanche in 
an area in which Congress has quite clearly indicated that 
the President, not the CAB, is supreme. It is in an area 
of foreign policy, moreover, in which the President’s deci­
sions, to use Mr. Justice Jackson’s words for the Supreme 
Court, “are delicate, complex, and involve large elements 
of prophecy.” 333 U.S. at 111. In such an area, an agency 
of the United States Government, even if independent for 
other purposes, is subordinated to executive control “ [i]n- 
stead of acting independently . . .,”  333 U.S. at 109, at 
least when the Chief Executive has been given positive 
and detailed control by the Congress. See Chicago & 
Southern Air Lines, Inc. v. Waterman Steamship Corp., 
supra, 333 U.S. at 109-10 (President is “ the Nation’s organ 
in foreign affairs” ; his powers and those of Congress are 
“pooled” in this area “to the end that commercial strategic 
and diplomatic interests of the country may be coordinated 
and advanced without collision or deadlock between agen­
cies” ) ; In re British Overseas Airways Corp. Permit 
Amendment, 29 C.A.B. 583, 594 (1959) (CAB cannot be 
equated with U.S. Government with regard to foreign

240-41 (5th Cir. 1971) ; Pan American World Airways, Inc. v. CAB, 
392 F.2d 483, 492-93 (D.C. Cir. 1968) ; Pan American World Airways, 
Inc. v. CAB, 380 F.2d 770, 775-76 (2d Cir. 1967), aff’d by equally 
divided Court sub nom. World Airways, Inc. v. Pan American World 
Airways, Inc., 391 U.S. 461 (1968); Miller, The Waterman Doctrine 
Bevisited, 54 Geo. L.J. 5 (1965). None of these limitations or criticisms, 
however, is directed at the portion of Chicago #■ Southern quoted, in text, 
which involves the President’s statutory powers over CAB decisions 
affecting foreign air carriers.

5433



carriers ; there is a “ division of functions,” with the Pres­
ident making the final decision for the Government).

Once it is accepted that the CAB must take the Presi­
dent’s word as supreme in a case of this nature, it follows 
that the Board’s orders here under review must he set 
aside. The Board itself recognized that it was not follow­
ing the President when, in its third order, which vacated 
the first two but preserved a basis for enforcement liability, 
it explicitly stated that the Board’s deference to presiden­
tial wishes “will not be unqualified.” Order No. 76-10-110, 
supra, at 2. The President’s letter to the Board, moreover, 
although not phrased as a directive, could not be more clear 
as to the action that the President had “determined” to be 
“appropriate and in the interests of our foreign policy.” 
See note 3 supra.

That this determination was embodied in a letter issued 
in response to the Board’s schedule-limitation order of 
September 29, 1976, reinforces the view that the President 
was exercising his full prerogative in the area and demon­
strates the importance of the schedule-filing order in the 
overall settlement of the then-current dispute between the 
United States and Great Britain. The only action required 
of the President under the regulations was approval or 
disapproval of the schedule-limitation order; by inclusion 
of the reference to the schedule-filing order, the President 
made it clear that he was exercising the full extent of his 
presidential control. The “prompt rescission” that the 
President called for is not anywhere suggested to be a 
partial rescission, and the common meaning of the verb 
“rescind,” at least in law, involves. declaring something 
(usually a contract) abrogated from its inception, so that 
the parties are restored to the positions they would have 
occupied had no action been taken initially, see Blank’s Law 
Dictionary 1471 (4th ed. 1951). Rescission in this sense has

5434



been denied British Airways by the CAB’s preservation of 
a basis for enforcement liability, contrary to the express 
determination of the President.6

We therefore set aside the Board’s orders. Because we 
have concluded that the orders improperly ignored a pres­
idential directive, made in the exercise of his statutory and 
constitutional powers, we need not reach the other attacks 
on the orders made by British Airways.

Petition for review granted. Orders set aside in accor­
dance with opinion.

I f  there were any doubt as to the President’s intention, it is resolved 
by tracing the underlying advisory memoranda. At our request the De­
partment of Justice, on behalf o f the Counsel to the President, the De­
partment of State, and the Justice Department’s Office of Legal Coun­
sel, furnished the court with memoranda pertaining to the draft of the 
President's letter of October 9. This material is short and simple. 
The Department of State wrote the Office of Managament and Budget 
on October 8, 1976. It pointed out that, in view of the satisfactory 
solution worked out with the British, the basis for the issuance of the 
schedule-filing order under review was "no longer valid,” and that 
"withdrawal of the order has substantive importance, since the require­
ment . . . significantly reduces the scheduling flexibility of [the British] 
airlines.” State therefore recommended that the President’s letter 
"strongly urge the CAB to withdraw its order 76-9-74 of September 14, 
1976.”

The Office of Management and Budget’s "Memorandum for the 
President," also dated October 8, points out that "State . . . recommends 
that you advise the Board that recission [sic] of its September 14, 1976, 
order is appropriate and in our foreign policy interests.” It goes on to 
note: "In view of the foreign policy issues inherent in this case, the 
interested executive agencies defer to the recommendations of the De­
partment of State. The National Security Council concurs with the 
Department of State recommendation.” The final draft of the letter 
expressly used the term "rescission,” see note 3 supra, whieh carries with 
it, we think, a definite retroactive meaning of significance, as dis­
cussed in the text. Bather than "strongly urge” the agency, as State 
had suggested, which would imply a power in the Board of independent 
action, the final draft pointedly uses the terminology, "I  have . . . deter­
mined, which is consistent with an exercise of presidential prerogative, 
not subject to independent action by the agency.

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