This report has been coordinated within the Department of Defense in accordance with procedures prescribed by the Secretary of Defense. The Bureau of the Budget advised that it has no objection to the submission of this report but that the Bureau of the Budget concurs in the report of the Department of Commerce. Sincerely yours, Hon. WARREN G. MAGNUSON, United States Senate. DEPARTMENT OF STATE, Washington, D. C., April 29, 1955. DEAR SENATOR MAGNUSON: Reference is made to your letter of January 13, 1955, requesting the comments of the Department of State with respect to S. 308, a bill to amend the Civil Aeronautics Act of 1938, and for other purposes. The Department has reviewed the bill from the standpoint of the current development of international aviation and the effect which enactment might have on the foreign relations of the United States. There are certain sections of the bill which are believed to be of primary significance to international aviation, with respect to which detailed comments are included in the text of this letter. In addition a series of brief comments on other sections are set forth in an attachment to this letter. Section 12 of S. 308 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 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, 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 30 of S. 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 government, 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). Section 35, paragraphs (c) and (d), of S. 308 amend section 1002 (d) of the Civil Aeronautics Act of 1938, as amended (changed to sec. 1002 (e) by sec. 34 of S. 308) 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, will strengthen the position of the United States Government in fostering the orderly development of foreign air transportation and foreign air contract service. In connection with the comments offered herein 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 those 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. As was mentioned in the second paragraph of this letter, additional comments have been included in the enclosed summary. The Department has been informed by the Bureau of the Budget that there is no objection to the submission of this report. Sincerely yours, THRUSTON B. MORTON, ATTACHMENT TO LETTER COMMENTING ON S. 308, 84TH CONGRESS 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 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 contractors 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 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, which provides for amendment of section 401 (f), "terms and conditions of certificate," of the Civil Aeronautics Act of 1938, as amended, would retain without change the fourth sentence of the subsection. That sentence provides that a certificate may not restrict the right of an air carrier "to add to or change schedules ** as the development of the business and the demands of the public shall require." * This provision was included in the act before the United States had much experience in international operations. Subsequent experience, especially in cases where United States carriers are competing with other United States as well as foreign carriers for the same traffic, has shown that the competitive desires of the carriers and the national interest of the United States are not always the same. The committee may wish to consider whether this subsection should be further amended to require that each carrier take into account the manner in which its increases in service will affect not only the particular service in which that carrier is interested at the time, but also the welfare of the transportation system of the United States as a whole. A broad understanding of the services being offered by United States air carriers, and by foreign air carriers, and of the effect that might result from changes in that service is necessary to prevent actions which may actually retard the United States air carriers by reason of creating or intensifying restrictive tendencies on the part of foreign governments. Section 19 of S. 308 retains without change (as 401 (h) (1)) section 401 (h), "authority to modify, suspend, or revoke," of the Civil Aeronautics Act of 1938, as amended. It is suggested that the words "or the national interest" be inserted after the word "necessity" in the first sentence of the subsection. This addition would enable the Board to alter, amend, modify, or suspend the whole or part of any certificate authorizing an air carrier to engage in foreign air transportation, upon a finding that such action is required in the national interest. Section 19 of S. 308 includes a provision for a new subsection (401) (h) (3) ) empowering the Board, under specified conditions, to order an air carrier to make reasonable extension of its existing service (including foreign air transportation), provided such extension is required" *** for the maintenance of cooperative relationships between the United States and any foreign country or otherwise to further national policy; * * *” In supporting the proposal, the Department suggests that an appropriate provision be added which would empower the Board to order cancellation of such extension, if required, should the basis for the original order cease to exist. Section 23 of S. 308 amends paragraph (2) of section 416 (b), "Exemptions," of the Civil Aeronautics Act of 1938, as amended. It is recommended that section 416 (b) be further amended by the addition of provisions permitting the Board to exempt foreign air carriers (as well as United States air carriers) from the requirements of title IV, where such exemption of foreign air carriers is in the national interest. TITLE IV-A-AIR CONTRACT SERVICE REGULATION Subsection 450 (b), 450 (e), and 452 (b) appear to indicate that air contract service is limited to the carriage of commodities only, whereas the term as defined in section 6 of S. 308 expressly refers to the carriage of persons. It is suggested that appropriate amendments be made to reflect the intent of the committee. Subsection 450 (b) and 452 (b) require that copies of contracts for air contract service be filed with the Civil Aeronautics Board. While it is recognized that the drafters of the bill probably did not wish to give more favorable treatment to foreign air contractors than to United States air contractors, the committee is requested to take into account the undesirable consequences of requiring foreign air contractors to file copies of their contracts. Particularly in cases where citizens of one country are applying to the government of another country for authorization to do business, the contracts entered into by such citizens are considered as of such competitive business significance that a requirement that they be filed with the regulatory authorities of the other government would be considered as competitively untenable. Therefore, it is recommended that the United States should not establish a requirement which could induce foreign governments to establish retaliatory measures which United States citizens engaging in business of the nature of air contractors would find detrimental to their business. Section 454 (b) (1) and (2) authorizes the Civil Aeronautics Board to grant certain exemptions to United States air contractors. It is recommended that section 454 (b) (1) and (2) be expanded to permit the Board to exempt foreign air contractors as well as United States air contractors from the requirements of title IV-A, wherever such exemption of foreign air contractors is in the national interest. In addition to the specific amendments to the Civil Aeronautics Act of 1938, as amended, which have been proposed in S. 308, the Department recommends that the committee consider further amendments to the act, as follows: Section 402 (b) empowers the Civil Aeronautics Board to issue a permit to a foreign air carrier if it finds that such carrier is “fit, willing, and able properly to perform such air transportation and to conform to the provisions of this act and the rules, regulations, and requirements of the Authority (Board) hereunder, and that such transportation will be in the public interest." The Department recommends that the text of section 402 (b) be deleted and the following substituted therefor: "(b) The Board is empowered to issue such a permit (1) if it finds that such carrier is fit, willing, and able properly to perform such air transportation and to conform to the provisions of this act and the rules, regulations, and requirements of the Board hereunder, and that such transportation will be in the public interest, or (2) if such air transportation is covered by an agreement between the Government of the United States and the government of the foreign nation in which such a carrier is organized, and if such carrier has been designated by the government of such foreign nation for the operation of the service agreed upon." The above-suggested revision would empower the Board to issue a permit if either of the two alternatives are met. It is suggested that a provision be added to section 501 (c), requiring that eligibility for registration must be established to the satisfaction of the Civil Aeronautics Administration, and in accordance with regulations established by the Administration, particularly when the aircraft previously was registered in a foreign country. It is also suggested that section 501 (e) "suspension or revocation" should authorize Administration action not only for any cause which renders the aircraft ineligible for registration (the requirements of which are specified in section 501 (b)), but also when the aircraft has been used in a manner detrimental to the national interest. Such authority would enable the United States to take appropriate action to prevent the continued operation of an aircraft which might be used by its United States citizen owner, or by a charterer or lessee, in activities of an illegal nature or of a nature contrary to the international commitments of the United States. Hon. WARREN G. MAGNUSON, TREASURY DEPARTMENT, Washington 25, D. C., April 25, 1955. Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington, D. C. MY DEAR MR. CHAIRMAN: Further reference is made to your letter of January 13, 1955, requesting a statement of this Department's views on S. 308, to amend the Civil Aeronautics Act of 1938, as amended, and for other purposes. The proposed legislation involves matters primarily within the jurisdiction of other agencies, and the Treasury Department, therefore, does not wish to comment on the policies and merits of the proposed legislation. There is, how ever, a technical comment which the Department would like to call to the attention of your committee. Section 22 of the bill would amend section 406 of the Civil Aeronautics Act of 1938 to require repayments of subsidies under certain conditions. It is suggested that the sentence beginning on line 24, page 19, of the bill and the sentence beginning on line 7, page 21, of the bill be amended to read as follows: "Any such repayment by an air carrier shall be deposited in the Treasury by the Board, and shall be credited to the appropriation from which the payment was made." This change is recommended (1) to provide that the Civil Aeronautics Board, as the administrative office, account for repayments by air carriers under the program and (2) to identify clearly the appropriations which would be credited with such repayments. The Department has been advised by the Bureau of the Budget that there is no objection to the submission of this report to your committee. Very truly yours, W. RANDOLPH BURGESS, Acting Secretary of the Treasury. Hon. WARREN G. MAGNUSON, FEDERAL COMMUNICATIONS COMMISSION, Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington 25, D. C. DEAR SENATOR MAGNUSON: This is in reply to the request of your committee for the Commission's comments on S. 308, a bill to amend the Civil Aeronautics Act of 1938, as amended, and for other purposes. S. 308 is identical to certain rovisions of S. 2647, introduced in the 83d Congress, and concerning which the Commission submitted comments to your committee by letter of May 25, 1954. The provisions of S. 2647, which it was felt might result in certain jurisdictional onflicts between the Commission and the CAA, have not been included in S. 308. The Commission appreciates the opportunity you have give us to comment on his bill. However, an analysis of the provisions of S. 308 indicates that the enactment of this bill would have no substantial effect upon the operation of his Commission or upon communications activities subject to our regulation. By direction of the Commission: GEORGE C. MCCONNAUGHEY, Chairman. Ion. WARREN G. MAGNUSON, FEDERAL TRADE COMMISSION, OFFICE OF THE CHAIRMAN, Washington, D. C., April 22, 1955. Chairman, Committee on Interstate and Foreign Commerce, Senate Office Building, Washington 25, D. C. MY DEAR MR. CHAIRMAN: This is in response to your letter of January 13, 1955, viting any comment this agency may care to make concerning S. 308, 84th Conress, 1st session, a bill to amend the Civil Aeronautics Act of 1938, as amended, nd for other purposes. There are only two provisions of S. 308 which relate to any of the laws admintered by the Federal Trade Commission. Section 45 proposes to amend section I of the Clayton Act (15 U. S. C., sec. 21), and section 46 would amend section 5 a) of the Federal Trade Commission Act (15 U. S. C., sec. 45 (a)). The amendents to these acts merely substitute for the words "air carriers and foreign air rriers,” which now appear in these acts, the words "air carriers, air contractors, reign air carriers, and foreign air contractors," and are consistent with the licy of the present exclusion in the Federal Trade Commission Act and the jurdictional provisions of the Clayton Act. The other provisions of S. 308 and their execution relate to matters outside the risdiction of this Commission and as to which this agency has no information hich would appear to be useful to your committee in its consideration of the prosed legislation. By direction of the Commission. Sincerely yours, EDWARD F. HOWREY, Chairman. |