STATEMENT OF DAGGETT HOWARD, OFFICE OF THE GENERAL COUNSEL, DEPARTMENT OF THE AIR FORCE Mr. HOWARD. I want to thank you and your committee on behalf of the Department of Defense for offering this opportunity to express our views on S. 308 and S. 1119. The Department of the Air Force has been designated to speak in behalf of the Department of Defense on these bills. As you know, both S. 308 and S. 1119 represent thoroughgoing revisions of certain existing Federal laws governing civil aviation-in particular the Civil Aeronautics Act of 1938. Before making several more detailed comments upon the proposed legislation, I would like to discuss briefly the general interest we have in these bills. S. 308 and S. 1119 would make some rather sweeping changes in existing law relating to economic and safety regulation of civil aviation, together with the mechanics of accomplishing such regulation. As might be expected, the Department of Defense is more interested in the overall results of regulation than in detailed methods and mechanics. It has become increasingly clear with the passing of time that civil aviation-being the key factor it is in the national transportation system is an integral part of the highly developed economy needed in our modern age to support defense preparations in time of peace, and to support successful military operations in time of war. It performs vital defense tasks both in day-to-day transportation of goods and personnel for the military departments and in making available much-needed reserve airlift in times of emergency. In addition, the military departments have a vital interest in the strategic route services provided by our international carriers, to meet a major part of worldwide military communication and transportation requirements. The Department of Defense believes there is no other means of meeting these national defense needs at lower cost to the Government than by fostering a healthy civil aviation industry, as nearly self-sufficient as possible. I might add that the task of building and maintaining the large numbers of aircraft utilized by a growing civil air transport industry provides, in turn, a stabilizing influence on the aircraft manufacturing industry. And it goes without saying that the Department of Defense wants the productive capacity of our aircraft manufacturers kept at the highest practical level. The Department of Defense is not in a position to make any definitive appraisal of the effect S. 308 or S. 1119 may have on the air route structure or the capability of civil aviation to meet military needs. At the same time, it can be said that no serious impediment has presented itself under existing law, as far as Department of Defense transactions with civil aeronautics agencies of the Government or with the air carrier industry are concerned; and there do not appear to be any substantial changes proposed in either S. 308 or S. 1119 which would in any way prejudice such transactions. On the other hand, after careful study of both bills, we have found several aspects which we think could be altered to make better allowance for certain national-defense considerations. As I understand it, the chief objective of either S. 308 or S. 1119 is to bring existing law governing civil aviation up to date. In this connection, I believe there are certain respects in which both bills could be changed to reflect important changes in world conditions since 1938. One example is the failure to make due allowance in the safety regulation provisions of the bill for certain fundamental problems of modern air defense. Under present world conditions, military aircraft may require complete freedom of operation in disregard of flight rules on the shortest possible notice to meet armed attack or to cope with other military emergencies. In its present form, both S. 308 and S. 1119 imply very strongly that military aircraft must always comply with civil-flight rules and provide no flexibility to cope with eventualities of the kind I have just mentioned. Certain appropriate amendments to correct this have been suggested in our written comments. We think certain other amendments to the bill would be desirable to insure that civil aviation, while retaining its purely civilian status, will most effectively provide service upon request of the military in time of peace-and, even more important, to insure its capability of helping to meet military requirements in time of war. Among other things, I have in mind a change in the bill which would make it clear that the new class of operators it establishes (air contractors) may, pursuant to regulations issued by the Board, perform charter and special services on a more flexible basis to meet requirements of a department or agency of the Federal Government. In addition to the foregoing amendments, there is a category which I would describe as amendments clarifying the relations between the Defense Establishment and the civil aeronautics agencies of the Government, and delineating the responsibilities of each. Such an amendment seems to be called for in the definition of "airport" contained in the bill. Inasmuch as the Secretary of Commerce has responsibilities throughout the Civil Aeronautics Act and in certain provisions of the bill for development and control of airports and aerial approaches thereto, I think it should be made plain that a military air base is not included in the definition of airports. Several other suggested amendments in this same category have been set forth in our written comment Subject to amendment along the lines I have discussed, and along the lines set forth in our detailed written comments on these bills, the Department of Defense has no objection to enactment of either S. 308 or S. 1119. We regret that time has not permitted the Department of Defense position to be submitted to and cleared by the Bureau of the Budget. Mr. Chairman, I again wish to express our appreciation for the consideration your committee has given the Department of Defense in inviting us to present our views on this proposed legislation. Senator MONRONEY. Thank you, very much, Mr. Howard, for your statement. Senator Bible, do you have any questions? Senator BIBLE. No questions. Senator MONRONEY. Senator Schoeppel? Senator SCHOEPPEL. No questions. Senator MONRONEY. Mr. Sweeney, do you have any questions of Mr. Howard? Mr. SWEENEY. The detailed comments that were submitted are very important, but I think we hardly have time to go into them here. Senator MONRONEY. You will stand ready, if you will, when we get through the compilation of the testimony, to perhaps go into this again. Mr. HOWARD. Yes. Thank you, very much, Mr. Chairman. (The letters referred to above are as follows:) CIVIL AERONAUTICS BOARD, Washington, D. C., June 20, 1955. Hon. A. S. MIKE MONRONEY, Committee on Interstate and Foreign Commerce, United States Senate, Washington, D. C. DEAR MIKE: In accordance with the oral request which you made of me several days ago, the Board has reviewed the provisions of S. 308 and S. 1119, for the purpose of recommending to the committee those provisions which, in our opinion, are most urgent and necessary for civil aviation today. The Board's basic position with respect to the two bills is contained in the statement presented by me before your subcommittee on April 27, 1955, and in the Board's supplementary statement transmitted to you under date of May 25, 1955. These 2 documents still represent the Board's views with respect to the 2 bills. However, in the Board's opinion, certain of the amendments recommended in these bills are of greater importance than others; and the purpose of this letter is to set forth those provisions which we feel are of the greatest importance for enactment in this session. Three amendments stand out above the others in importance. One of these is the amendment of the act to authorize the Board to issue supplemental service certificates. The material necessary to accomplish this result is contained in an amendment intended to be proposed by Senator Magnuson to S. 1119. This proposed amendment would insert in the Civil Aeronautics Act a definition of "supplemental service air carrier," and a new amendment to section 401 (f) of the Civil Aeronautics Act. An area of equal importance in the Board's opinion is rate power in foreign air transportation. This has two aspects, the first relating to authority over rates charged by foreign air carriers, the second over rates of United States flag line carriers in foreign air transportation. With respect to the first aspect, the language set forth in section 17 of S. 1119 is appropriate, and the Board recommends its enactment. With respect to the second aspect, sections 18, 32, 33, and 34 of S. 1119 are designed to accomplish the basic purpose, although the Board strongly urges that certain amendments be made to these sections before they are enacted. Present section 32 of the bill would insert a proviso limiting rate control to the prescription of reasonable minimum rates, fares, and charges. Not only does the Board believe that such a limitation is wrong in principle, but we also desire to point out to the committee that the advantages which would accrue to the United States under the various bilateral air transport agreements incorporating the so-called Bermuda principles would be placed in doubt by providing only minimum rate control power. In this regard we respectfully refer the committee to the Board's letter to you of May 27, 1955, commenting upon the statement of Mr. Miles in his testimony on behalf of the United States Chamber of Commerce for a full discussion of the advantages which would accrue by full rate regulatory power in foreign air transportation. The third area of paramount importance, in the Board's opinion involves the matter of civil penalties for violations of the economic provisions of the act. The appropriate amendments are set forth in sections 32 and 33 of S. 308. The Board believes that enactment of the foregoing three items at this session would be a major accomplishment. Other items which the Board believes are desirable for enactment, but which do not have the same pressing urgency as the foregoing, are: (a) Subsidy separation legislation. Section 19 of S. 1119 will properly accomplish this result in principle, but the provisions should be modified, we believe, in accordance with the comments we submitted on April 27, 1955. (b) Contract carrier legislation. The provisions of title IV-A of S. 1119 and the corollary amendments throughout the bill will properly carry out this objective provided that the proposed section 454 (b) (2) is deleted. (c) Extension of Board jurisdiction over intrastate operations of interstate air carriers. The adoption of this recommendation would be accomplished by the amendments proposed in sections 9 and 2 of S. 1119. With respect to the latter section, it is recommended that clause (b) beginning on line 3 of page 2 of the bill be revised to read as follows: "(b) That the Board shall by order relieve from the provisions of title IV, subsections (d), (g), (h), and (i) of section 1002, and section 1003 of this act, air carriers who are not engaged in air transportation except for the carriage by aircraft between places in the same State of persons or property, the origin and destination of which are both in such State, if, and for so long as the Board finds, after notice and hearing, that the operations of such air carriers do not and will not directly and adversely affect other air transportation." (d) Extension of safety regulatory power over mechanics and air agencies. This result would be accomplished by enactment of subsections 26 (b) and (c) of S. 1119. The Board also believes it would be highly desirable if subsidy legislation, along the lines set forth in our supplemental statement, could be enacted at this session of the Congress. However, the Board recognizes that there are many controversial aspects to this matter which might not be subject to satisfactory resolution without further committee hearings. Consequently we have not included this subject in the items enumerated above. The Board hopes that the foregoing recommendations will be useful to the committee in its deliberations. Due to time limitations this report has not been cleared with the Bureau of the Budget. Sincerely yours, Ross RIZLEY, Chairman. SOCIETY OF AMERICAN FLORISTS, Senator A. S. MIKE MONRONEY, Chairman, Aviation Subcommittee, Committee on Interstate and Foreign Commerce, DEAR SENATOR MONRONEY: This is in reference to bills introduced by Senator Magnuson and Senator Bricker both of which are described as the "Civil Aeronautics Act of 1955" (S. 1119 and S. 308, respectively).. Recently I offered testimony before your subcommittee in support of S. 1192 which had been introduced by Senator Magnuson and which proposes to provide by statute the same considerations with respect to the transportation of agricultural commodities by air as has been traditionally provided for many years for those commodities in surface transportation. We feel that this is a matter of public policy which should be recognized in the Civil Aeronautics Act so that the producers of agricultural commodities will not be subject to changes in the administrative and regulatory policy of the Civil Aeronautics Board. Bitter experience with the Interstate Commerce Commission in very recent years has demonstrated that such discretion can become not only arbitrary but unpredictable. It will be appreciated very much if the testimony I presented to your committee on March 30 will be referred to directly in connection with hearings on S. 1119 and S. 308. Another matter that concerns the florist industry is the need for some protection against arbitrary embargoes by an airline. This problem was explained in considerable detail in testimony in connection with S. 2647 in the 83d Congress introduced by the late Senator McCarran and cited as the Civil Aeronautics Act of 1954. I pointed out that one airline did a considerable amount of promotion for several years immediately after the war in the development of a new market in the Southeastern States for carnations grown in the New England area. The results were so successful that several producers made capital investments to increase their production facilities. Suddenly in the fall of 1951, just when the major shipping season was about to open, this airline placed a "temporary embargo" on the shipment of flowers. The reason given at that time was that the Government had requisitioned many of its planes so that there was now inadequate cargo capacity. Assurances were given that the service would be resumed as soon as additional facilities could be obtained. It is now three and a half years later and the embargo is still in effect. We respectfully urge the serious consideration of these matters by your committee. Very cordially yours, ROBERT H. ROLAND, Executive Secretary. Hon. WARREN G. MAGNUSON, AIR LINE PILOTS ASSOCIATION, Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington 25, D. C. DEAR SENATOR MAGNUSON: The Air Line Pilots Association has had an opportunity to review the comments submitted by Mr. Roger Lewis, Assistant Secretary of the Air Force, Department of Defense, on S. 308, a bill to amend the Civil Aeronautics Act of 1938, which is currently being considered by your committee. We find, after careful review of these comments, that we must, in the interest of the proper development of a sound aviation system for this country, take exception to several of the suggested amendments. As We should like to make reference first to the proposed amendment 8 (d) (2) wherein an attempt is made to so amend the act as to allow military aircraft to be excluded from many of the currently existing air traffic rules. The Air Line Pilots Association firmly opposes the passage of any law which will give the authority for the control of air space to more than one agency. As a matter of practical fact, both civilian and military traffic must use the same air space. the nature and extent of our flight activities has increased, it has become painfully evident that we are now approaching a saturation point insofar as this air space is concerned. To allow this air space to be regulated by more than one agency could only result in increased confusion and diminution of effective use of such air space. Further, subsection b. of the same numbered proposed change would provide the Department of Defense with the authority to suspend any air traffic rules upon notice by the Department that these aircraft were engaged in a military operation. Under presently existing regulations, the Civil Aeronautics Administration may suspend these rules upon proper notice by the Department and a determination by the Civil Aeronautics Administration that such suspension is in the public interest and necessary to further essential activities of the Air Force. We are unable to visualize a situation other than an extreme national emergency which would necessitate the placing of this right to suspend the rules exclusively in the hands of the Military Establishment. Consequently, we must oppose any amendment to the Civil Aeronautics Act of 1938 which would grant the Department of Defense the right to suspend air traffic rules upon their own initiative. We would also like to make particular reference to item 4 in the letter submitted by Mr. Lewis which would amend the act to provide that any air contractor may make charter trips or perform any other special service for a department or agency of the United States Government, without regard to the geographical or other limitations on services authorized in its license, under regulations prescribed by the Board. Under the present statute, such authority may be granted by the Civil Aeronautics Board upon proper demonstration by the affected Government agency that such trips are in the public interest and will in no way provide an economic advantage for one carrier over any other. It is felt that the present statute provides the relief requested and that to allow any department or agency of the United States Government to suspend the economic authority of the Civil Aeronautics Board whenever they wished, would not be in the best public interest and could, in the extreme, result in nullifying the authority of the Civil Aeronautics Board insofar as a substantial part of air commerce is concerned. While we realize that the military have problems different from those encountered by civil air carriers, it is felt that, insofar as the use of air space and the application of economic controls are concerned, there can only be one set of rules and one responsible governing agency. We do not believe that your committee will give serious consideration to the aforementioned proposed amendments, but wish to apprise you of our extreme interest in these matters and further, in the event that serious consideration is given, we request the opportunity to appear and present more detailed informa |