CIVIL AERONAUTICS ACT AMENDMENTS OF 1955 THURSDAY, APRIL 28, 1955 UNITED STATES SENATE, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, SUBCOMMITTEE ON AVIATION, The subcommittee met, pursuant to adjournment, at 10: 10 a. m., in room G-16, United States Capitol, Senator A. S. Mike Monroney (chairman of the subcommittee) presiding. Present: Senators Monroney, Bible, and Schoeppel. Also present: Edward C. Sweeney, aviation counsel. Senator MONRONEY. The Aviation Subcommittee will be in order. Our first witness is Mr. Kalijarvi, Deputy Assistant Secretary of State for Economic Affairs. Mr. Kalijarvi, will you come forward, please. We appreciate your courtesy in appearing before the committee and are glad to have the benefit of your views on these two aviation bills, and we would be glad to have you proceed in your own way. STATEMENT OF T. V. KALIJARVI, DEPUTY ASSISTANT SECRETARY OF STATE FOR ECONOMIC AFFAIRS, ACCOMPANIED BY J. PAUL BARRINGER, DIRECTOR OF THE OFFICE OF TRANSPORT AND COMMUNICATION, DEPARTMENT OF STATE Mr. KALIJARVI. Thank you, Mr. Chairman. The Department is very much interested in the two bills. It feels, however, that most of the bills are concerned with other agencies, rather than the Department itself. There are two principal provisions that the Department is very much concerned about: one in S. 308, and the other in S. 1119. Therefore, my statement would be very short. The Department of State is interested in S. 308 and S. 1119 from the standpoint of the development of international aviation and the effect which enactment might have on the foreign relations of the United States. There are two sections of the bills-one in S. 308 and another in S. 1119-which are of primary interest to the Department of State, as I said before. The views of the Department with respect to the amendments proposed in these sections are as follows: The first amendment of primary interest to the Department of State is contained in section 30 of S. 308. Section 30 of Senate bill 308 provides for the addition of a paragraph (b) to section 802 of the act to prohibit the conclusion except by treaty of any multilateral agreement between the United States and foreign governments which (1) generally grants a foreign gov 62505-55- -11 ernment, or foreign airline a right to operate in air transportation or air contract service or (2) provides for United States participation in an international organization for regulation or coordination of international aviation. In this regard, it should be noted that the only international aviation organization in which the United States participates is the International Civil Aviation Organization, ICAO. The provisions for the establishment of this organization are contained in the Convention on International Civil Aviation, a treaty submitted to the Senate for its advice and consent to ratification. After extensive hearings before the Senate Committee on Foreign Relations, the 79th Congress on July 25, 1946, gave its advice and consent to ratification (92 Congressional Record 9972). No multilateral agreement or treaty to which the United States is a party grants the right for foreign air carriers to exercise traffic rights in the United States, either as foreign air carriers or as foreign air contractors. As is evident from the above analysis this Department has not concluded any agreements contrary to the provisions of section 802 (b). The other amendment of primary interest to the Department of State is that contained in section 27 of S. 1119. Section 27 of S. 1119 provides for amendment of section 801 of the Civil Aeronautics Act of 1938, as amended. The proposed amendment would eliminate the requirement of Presidential approval on certificates authorizing an air carrier to engage in overseas transportation or air transportation between places in the same territory or possession and would limit the requirement for Presidential approval on certificates or permits for operations in foreign air transportation to cases in which the President determines that the national defense or the foreign relations of the United States would be affected by the transportation involved. The amendment would also include a request that in any case in which the President did not approve the proposed decision of the Board, he should report to the Congress giving the reasons for his disapproval and the nature of the action which he proposed. This Department recommends that the proposed amendments not be enacted. It is believed that the President in the exercise of his responsibilities relating to the national defense and to the interest of the United States in connection with international relations are such that he should have an opportunity to review any case dealing with operations beyond the continental United States and should not be requested to report his reasons for approving and disapproving proposed decisions of the Board except to the extent that he in his own discretion might consider such a report valuable to the welfare of the Nation. In connection with the Committee's consideration of amendments to section 801 of the act as proposed in section 27 of S. 1119, the Department suggests that the committee consider a further amendment to require Presidential approval-in cases comparable to those in which such approval is required for air carrier certificates and foreign air carrier permits-of Civil Aeronautics Board action on licenses for the new categories of operators-air contractors and foreign air contractors--mentioned in section 21 of S. 1119. In addition to the comments which I have just made, I would like at this point to invite the attention of the committee to two appendices which I am submitting to the committee for their consideration. Appendix A contains a series of comments and recommendations on other sections of S. 308 and S. 1119 upon which the Department places special emphasis. Appendix B contains comments and suggestions regarding other amendments of interest to the Department. I have confined my comments to those aspects of the bills which are of direct and immediate concern to the Department of State. I hope they will be responsive to the committee needs. However, should the committee desire, further statements or answers to questions will be given gladly. Senator BIBLE. Thank you, sir. Senator Schoeppel, do you have any questions? Senator SCHOEPPEL. NO. Mr. SWEENEY. Mr. Kalijarvi, would you elaborate on why you feel it is necessary for the President to retain the power of approving certificates and licenses with respect to overseas air transportation; that is, transportation in and to United States possessions and Territories? Mr. KALIJARVI. The basis is that the President has responsibility for overseas operations, and it is our feeling that he should exercise the control, because of that particular approach or that particular responsibility. Perhaps, Mr. Barringer, you could give some details as to some of the basic thinking on this. Mr. BARRINGER. I would be glad to, Mr. Chairman, with your permission, I will elaborate a little further on that. Senator BIBLE. Certainly, Mr. Barringer. Please do so. Mr. BARRINGER. It is felt that on air transportation beyond the continental limits of the United States has as its extension transportation routes to foreign countries, and, consequently, may affect the conduct of foreign affairs in such a way as to basically affect the President's primary responsibility in these fields, and it is felt by the Department that the President, therefore, should have this opportunity to express approval or disapproval of routes in those areas. Mr. SWEENEY. I was referring particularly to certificates that relate to routes within Hawaii or within Alaska. I believe they come now within the power of the President too, do they not? Mr. BARRINGER. The Department of State, from the point of view of the conduct of foreign affairs, would not be concerned with these particular routes. It is the extension of those routes into foreign territories that is the concern of the Department of State and of the President, of course. Mr. SWEENEY. Such extensions would come within the term of foreign air transportation, I believe. Mr. BARRINGER. Yes, that is correct, Mr. Sweeney. Mr. SWEENEY. The witness for the Post Office Department yesterday, I believe, the Solicitor of the Department, raised the question as to whether postal conventions and agreements might come within the scope of these proposed amendments. Have you given any thought as to whether we should specifically provide for them? Mr. BARRINGER. No specific thought has been given, but certainly from reviewing the proposed amendments, I can see no conflict to possible postal conventions. I would like to check with a member of my staff to be sure that statement is correct. (The witness then confers with his staff.) Yes, that is correct. Senator BIBLE. Did you care to ask anything further, Senator Schoeppel. Senator SCHOEPPEL. No. Senator BIBLE. At this point, without objection, the appendixes A and B which you submitted will be inserted in the record. (The above-mentioned document is as follows.) APPENDIX A DEPARTMENT OF STATE TESTIMONY ON S. 308 AND S. 1119 (AS AMENDED) Section 12 of S. 308 (sec. 11 of S. 1119) provides for the deletion of section 1 (29) of the Civil Aeronautics Act of 1938, as amended, and the substitution of a new paragraph (31) therefor, defining the term "Possessions of the United States." It is suggested that the revised definition be further amended to include territories (such as Okinawa) for the administration of which the United States is responsible under other than trusteeship or temporary military occupation pending the termination of any hostilities by a treaty of peace. This could be accomplished by adding after subparagraph (c) a new subparagraph to read substantially as follows: "Any territory for the administration of which the United States is, or may become, responsible under any treaty or other international arrangement: Provided, That nothing in this subparagraph shall be construed to apply to territories under temporary military occupation by the United States." Section 20 of S. 308 (sec. 17 of S. 1119) provides for amendment of section 402 of the act by adding a new subsection (i) which would grant the Board authority to set aside or suspend any rate, fare, charge, or service in foreign air transportation of a foreign air carrier upon a finding that such action is necessary in the public interest. The Department welcomes the opportunity to support this proposal. Together with the extension of Board control over minimum foreign air transportation rates, fares, and charges of United States carriers as well as rates and charges for foreign air contract service by United States and foreign air contractors as proposed in section 35 of S. 308 (sec. 32 of S. 1119), such authority would strengthen the United States negotiating position in protecting the rights and privileges of United States carriers in foreign countries and in fostering the orderly development of foreign air transportation. Section 35, paragraphs (c) and (d), of S. 308 (sec. 32 of S. 1119) amend section 1002 (d) of the Civil Aeronautics Act of 1938, as amended (changed to sec. 1002 (e) by sec. 34 of S. 308, sec. 31 of S. 1119) by extending the power of the Civil Aeronautics Board (under specified circumstances) to prescribe minimum rates and practices of air carriers in foreign air transportation. Section 35 (e) provides for new subsection (2) to section 1002 (d) which would require the Board (under certain circumstances) to determine minimum rates or practices of United States and foreign air contractors in air contract service (including foreign air contract service). The Department urges adoption of the amendments contained in section 35 (c), (d) and (e). Enactment will improve aviation relations between the United States and foreign countries and, in conjunction with extension of limited control over rates and practices of foreign air carriers as provided in section 20 of S. 308 (sec. 17 of S. 1119), will strengthen the position of the United States Government in fostering the orderly development of foreign air transportation and foreign air contract service. With respect to specific amendments as proposed in S. 308, the Department recommends that the committee consider the following additional amendment to the Civil Aeronautics Act of 1938, as amended. Section 801 of the act sets forth these Civil Aeronautics Board actions with respect to air carrier certificates and foreign air carrier permits which Congress decided should be subject to the approval of the President. Since section 24 of S. 308 (new title IV-A) requires the issuance of air contractor and foreign air contractor licenses, it is suggested that section 801 be amended to include the new categories of licenses. A similar statement with respect to S. 1119 is included in the Department's statement regarding section 27 of that bill. APPENDIX B DEPARTMENT OF STATE TESTIMONY ON S. 308 AND S. 1119 (AS AMENDED) TITLE I.-GENERAL PROVISIONS Paragraph (19) of section 1 of the Civil Aeronautics Act of 1938, as amended, defines "foreign air carrier". Unlike the corresponding definition of “air carrier" contained in paragraph (2) of section 1 of the act, this paragraph does not give the Civil Aeronautics Board the authority to grant exemptions from provisions of the act in appropriate cases. It is recommended that there be added to paragraph (19) a proviso comparable to that contained in paragraph (2), which would read substantially as follows: "Provided, That the Board may by order relieve foreign air carriers who are not directly engaged in the operation of aircraft in foreign air transportation from the provisions of this Act to the extent and for such periods as may be in the public interest." The permissive nature of the authority granted to the Board by such a proviso and the requirement that the exemption shall be of the extent and for such periods as may be in the public interest will insure a careful scrutiny of the advantages and disadvantages resulting from any exemption. At the same time such a proviso would make it possible to relieve foreign enterprises which engage in activities such as freight forwarding from requirements which a strict interpretation of the act might dictate. In many cases the ability to grant exemptions in appropriate cases could provide a basis for freedom from restrictions by foreign governments on United States enterprises conducting similar businesses. On the other hand imposition of restrictive regulations by this Government might result in ill feeling abroad and consequent retaliatory action against United States aviation enterprises. Section 7 of S. 308 (sec. 6 of S. 1119) provides for a new paragraph (22) of Section 1 of the Civil Aeronautics Act of 1938, as amended, to define the term "foreign air contractor." Indirect contractors are included in the definition. This definition does not have a proviso permitting exemptions in appropriate cases. In this case as in the case of the “foreign air carriers” authority to grant exemptions with regard to the activities of indirect ccontractors would be desirable. It is therefore recommended that a proviso comparable to that contained in section 1, paragraph (2) of the Civil Aeronautics Act of 1938 be included in this paragraph. DECLARATION OF POLICY Section 13 of S. 308 provides for an amendment to section 2, "Declaration of policy," of the Civil Aeronautics Act of 1938, as amended, including the addition of a new paragraph (2) (h) "the maintenance by the United States of the greatest possible influence at all times in world aviation." This provision is not contained in S. 1119. This Department is anxious that United States influence in world aviation be as widespread as possible, and is striving consistently toward that end. Nevertheless, it believes that the inclusion of the proposed statement in the basic aviation law of the United States would serve to stimulate determination on the part of other countries to oppose extension of United States influence as much as possible. It is therefore recommended that the provision be deleted. Alternatively, it is suggested that the provision be amended by substituting the word "participation" for the term "influence." TITLE IV-AIR CARRIER ECONOMIC REGULATION Section 18 of S. 308 (sec. 15 of S. 1119), which provides for amendment of section 401 (f), "Terms and conditions of certificates," of the Civil Aeronautics |