British Airways Board, Petitioner, v. Civil Aeronautics Board, Respondent, 563 F.2d 3 (2d Cir. 1977)

British Airways Board (British Airways), the United Kingdom's government-owned air carrier, petitions for review 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 existing 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 (except 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 differences, "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 as of October 8, 1976. Order 76-10-110 (Oct. 26, 1976).¹  Because British Airways had not filed any schedules between 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 3.² 

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

This court's jurisdiction to review these orders is premised 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 provided in (id. § 1461) . . ." Insofar as here relevant, Section 1461 requires that presidential approval be obtained whenever 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, advance presidential approval, which was not obtained, would have been required, and this court would be without jurisdiction to review the orders.

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' corporate predecessor, to make the permits subject to the provisions 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 implementation 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, Ltd. v. CAB, 154 U.S.App.D.C. 297, 475 F.2d 408, 412 (1973) (per curiam). Therefore this court has jurisdiction to review the orders before us.⁴ 

The fact that the CAB did not have to obtain presidential 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 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 misunderstanding 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, 68 S. Ct. 431, 92 L. Ed. 568 (1948), the Supreme Court discussed the "inver(sion) (of) the usual administrative process" that Congress intended when it made CAB decisions 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, 68 S. Ct. at 434.⁵  A necessary implication of the President's "positive and detailed control" under the statute, we believe, 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, 71 S. Ct. 504, 95 L. Ed. 679 (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 decisions, 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, 68 S. Ct. at 436. In such an area, an agency of the United States Government, even if independent for other purposes, is subordinated to executive control "(i)nstead of acting independently . . .," 333 U.S. at 109, 68 S. Ct. 431, 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, 68 S. Ct. at 435 (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 agencies"); 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 carriers; there is a "division of functions," with the President making the final decision for the Government).

Once it is accepted that the CAB must take the President's word as supreme in a case of this nature, it follows that the Board's orders here under review must be set aside. The Board itself recognized that it was not following 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 presidential 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 demonstrates 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 Black's Law Dictionary 1471 (4th ed. 1951). Rescission in this sense has 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 presidential 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 accordance with opinion.