                                                          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

                                     470
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).

                                               471
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).]

                                              472
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).)

                                                 473
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.

                                            474
§ 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.

                                     475
   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.

                                           476
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.

                                              477
