Hon. OREN HARRIS, COMPTROLLER GENERAL OF THE UNITED STATES, Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: We again refer to your letter of May 23, 1963, in which you ask for our comments on H.R. 6400. This bill is designed to amend the Federal Aviation Act of 1958, 49 U.S.C. 1301, et seq., to give the Civil Aeronautics Board more power and control than it now possesses over foreign air transportation. Under the present law, the Civil Aeronautics Board has practically no direct authority over the rates and practices of either United States or foreign air carriers engaged in foreign air transportation. The only power as to the adjustment of rates and practices in foreign air transportation now possessed by the Board (apart from its power to disapprove agreements among air carriers and foreign air carriers fixing rates and practices in foreign air transportation) is that of ordering a carrier to remove a discrimination in its rate structure if, after notice and hearing, such a discrimination is found to exist (49 U.S.C. 1482(f)). If enacted, H.R. 6400 would not affect the functions and activities of the General Accounting Office. Its provisions generally seem to be in the public interest and we are not opposed to enactment. The need for some type of legislative control has been emphasized by the publicity given to a recent proposal of the International Air Transport Association, an international organization of 90 airlines that set fares and rates for most of the world's international air routes, to increase fares on the North Atlantic routes. The United States found it necessary to agree to the proposal. We note that the provisions of H.R. 6400 accord with a statement of U.S. international air transport policy, recently approved by the President after submission to him by an Interagency Steering Committee, and that the bill would serve to implement paragraph II(j) of the annex to the Agreement Between the Government of the United States of America and the Government of the United Kingdom Relating to Air Services Between Their Respective Territories, commonly called the Bermuda Agreement (60 Stat. 1499, 1506 (1946)). Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: This is to acknowledge and reply to your letter of May 23, 1963, requesting the views of the Bureau of the Budget on H.R. 6400, a bill to amend the Federal Aviation Act of 1958 to provide for the regulation of rates and practices of air carriers and foreign air carriers in foreign air transportation, and for other purposes. While the immediate problem of the breakdown of the system of rate negotiations developed by the International Air Transport Association lends urgency to this proposal, there is a longstanding underlying need to place the U.S. Government, through the Civil Aeronautics Board, in a position more nearly equal to that of foreign governments with respect to the control of international air rates. Virtually all important international air carrier nations, except the United States, assert this power. At the present time, however, the powers of the CAB over the rates and practices of both U.S. carriers in foreign air transportation and foreign air carriers is limited to removing discriminatory or prejudicial rates found to exist after notice and hearing. In keeping with the Administration's international air policies, this Government, in the interests of U.S. citizens who travel abroad by air and U.S. businessmen shipping goods by air in international commerce, should maintain continuous surveillance of international air rates and should press for the lowest rates consistent with reasonable profits for U.S.-flag carriers who are believed to be the most efficient. The proposed bill would give the Board authority to prescribe rates and practices and to suspend tariffs, but these powers would be exercised consis ently with the provisions of our international agreements, as provided by section 1102 of the Federal Aviation Act, and would be subject to the approval of the President to assure consistency with the general foreign policy and security objectives of the U.S. Government. The Bureau of the Budget strongly recommends enactment of H.R. 6400 and advises that it would be in accord with the program of the President. Sincerely yours, PHILLIP S. HUGHES, Assistant Director for Legislative Reference. Hon. OREN HARRIS, U.S. DEPARTMENT OF JUSTICE, OFFICE OF The Deputy ATTORNEY GENERAL, Washington, D.C., May 5, 1964. Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: This is in response to your request for the views of the Department of Justice on H.R. 6400, a bill to amend the Federal Aviation Act of 1958 to provide for the regulation of rates and practices of air carriers and foreign air carriers in foreign air transportation, and for other purposes. The bill would amend the Federal Aviation Act of 1958 to give the Civil Aeronautics Board discretionary authority, subject to Presidential approval, to prescribe rates and practices and to suspend tariffs in international air transportation to and from the United States under the same standards now applicable to interstate transportation. The bill embodies the recommendations of an interdepartmental committee and was transmitted to the Congress by President Kennedy on May 14, 1963. On November 26, 1963, the Senate passed S. 1540, companion bill to H.R. 6400, and S. 1540 is likewise with the House Committee on Interstate and Foreign Commerce. As S. 1540 passed the Senate, it differs from H.R. 6400 in only one respect. Whereas H.R. 6400 requires Presidential approval of Board orders or actions relative to foreign air transportation, S. 1540 merely requires that Board orders or actions be reported to the President prior to publication. Whether or not this legislation should be enacted involves policy considerations concerning which the Department of Justice makes no recommendation. However, the Bureau of the Budget has advised that although there is no objection to the submission of this report, the enactment of H.R. 6400 would be in accord with the program of the President. Sincerely yours, Hon. OREN HARRIS, NICHOLAS DEB. KATZENDACH, Deputy Attorney General. DEPARTMENT OF STATE, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: In your letter of May 23, 1963, you requested the Department's view on H.R. 6400, a bill to amend the Federal Aviation Act of 1958 to provide for the regulation of rates and practices of air carriers in foreign air transportation, and for other purposes. The Department strongly supports enactment of this legislation. Passage of the bill would achieve two objectives. By giving the Civil Aeronautics Board anthority to fix rates in international air transportation, H.R. 6400 would greatly improve the position of the United States in the bilateral agreements it has with more than 40 countries. Moreover, if the Civil Aeronautics Board has clear ratemaking authority over international air transportation. the United States will go with a far stronger hand into any intergovernmental conference on rates that may come out of the present situation. Since the subject of this legislation is primarily within the Jurisdiction of the Civil Aeronautics Board, this statement is directed primarily to those aspects of the bill which bear upon the series of bilateral air agreements to which the United States is a party. Specifically, this statement is directed to the question of how the legislation would affect the position of the United States under the alternative rate articles in our present "Bermuda type" bilateral air services agreements. In presenting this detailed analysis, however, we wish to emphasize the effect upon our existing bilateral is not the only aim of the bill. We believe that passage of H.R. 6400 would make it possible for the United States to work far more effectively than at present for our position that international air fares should be lowered and not raised. We shall use as examples of the two alternative rate provisions article II (e) and II (f) of the annex to the Bilateral Air Agreement between the United States and the United Kingdom. Both articles provide for the submission of proposed rates by the carriers of one country to the aeronautical authorities of the other, and provide for a 30-day period in which notice of dissatisfaction may be given and consultations may be held. At the present time, because the CAB has no ratemaking authority over international air services, the article which is now in force is II (f). It provides, in substance, that if no agreement has been reached on the proposed rate at the end of 30 days, the country objecting to the proposed rate "may take such steps as it may consider necessary to prevent the inauguration or continuation of the service in question at the rate complained of." On the other hand, under the alternative article II (e), which would be applicable if H.R. 6400 were enacted, a proposed rate goes into effect provisionally, unless the aeronautical authorities of the country whose flag carrier proposed the rate agrees to suspend its operation. The critical factor in determining which of the two alternative rate articles applies is whether "power is conferred by law upon the aeronautical authorities of the United States to fix fair and economic rates for the transport of persons and property by air on international services and to suspend proposed rates in a manner comparable to that in which the Civil Aeronautics Board at present is empowered to act with respect to such rates for the transport of persons and property by air within the United States ***." In the Department's view, H.R. 6400 meets this criterion in every relevant respect. Section 4 of the hill would amend section 1002 (e) of the Federal Aviation Act of 1958 which sets forth the criteria to be applied by the Board in determination of rates. By inserting the words "foreign air carriers" at each point in the present section 1002 (e) where only the words "air carriers" now appear, the bill would make precisely the same criteria applicable with respect to rates in international air transportation as are presently applicable with respect to rates in air transportation within the United States. This is made clear by the definition of "foreign air carriers" which appears in section 101 (19) of the present act, and the definition of "foreign air transportation" which appears in section 101 (21). Section 5 of the bill would amend section 1002 (f) of the Federal Aviation Act, which sets forth the powers of the Civil Aeronautics Board with respect to rates in international air transportation. Under the present section 1002(f), the only authority vested in the Board over rates in international air transportation relates to removal of unjustly discriminatory, or unduly preferential, or unduly prejudicial rates or practices. This authority is clearly not comparable to that vested in the Board by section 1002(d) with respect to rates in domestic air transportation. The proposed amendment would add to the CAB's present authority over existing rates definite power to review and disapprove "unjust" or "unreasonable" rates. The Board's authority would be to alter, set forth, and prescribe the lawful rate, after notice and hearing, upon complaint or upon its own initiative. Section 6 of the bill would amend section 1002(g) of the Federal Aviation Act, which sets forth the authority of the Board with respect to suspension of proposed rates. By striking the words “interstate or overseas" qualifying the words "air transportation," and by adding the words "or foreign air carriers" wherever they appear in the present section, the bill would give the CAB precisely the same power to suspend rates in international air transportation as it now has with respect to rates proposed by U.S. air carriers for transportation within the United States. This authority would be to suspend new rates, according to the criteria set forth in section 1002 (e), for a period of up to 90 days, which may be extended to an aggregate of up to 180 days. Thus, in all relevant respects the bill would accomplish the purpose of bringing into force the preferable rate article article II (e) of the annex to the bilateral with Great Britain and corresponding provisions in other agreements. Present article II (f) would not longer be in force. As set forth previously this report, the effect would be to permit our carriers to operate provision at rates which they propose, pending arbitration or other settlement. Foreig countries would be precluded from taking steps to suspend inauguration e continuation of services at such rates. There may appear to be some inconsistency between the Federal Aviation As as it would be amended by passage of H.R. 6400 and the provisions of the the applicable rate article in the bilateral agreements. Under that article, ra proposed by one country's carriers and objected to by the other country are te go in effect provisionally, pending arbitration or other settlement. This pro sion, of course, applies to both parties. Thus, the CAB would not, consistently with the bilaterals, be able to suspend the proposed rates of a foreign carriet. However, the other country could not suspend the rates proposed by our earriers. In such a situation we could expect that the dual rate permitted by bilateral would be resolved by competitive forces in favor of the lower rate. I is of course clear that the power to suspend rates that would be granted to th CAB by section 1002(g) as amended would be subject to section 1102, relating to conformity with international agreements. Thus there could be no confid between exercise of the authority granted to the Board in H.R. 6400 and existing international agreements. It should be noted that under the so-called new rate article, which appears in the bilateral air agreement with Mexico and the agreement with the Unite Arab Republic now awaiting signature, the situation would be reversed. Under this article, which is to be the model for future bilateral air negotiations, bot: countries would have the right to suspend an objectionable rate. Thus, under the new rate article suspension action by the CAB pursuant to amended sectic 1002(g) would be consistent with our international obligations and, at the time, all countries would be in an equal position unlike the situation preval ing today. Finally, it is appropriate to comment briefly on section 2 of the bill. whic would amend section 801 of the Federal Aviation Act, which sets forth the powers of the President to review determinations with respect to international air transportation. Under the present statute, only those actions of the Boar under section 401 relating to oversea or foreign air transportation and under section 402 relating to permits to foreign air carriers are subject to the approval of the President. Since H.R. 6400 would substantially add to the powers of the Board over foreign air carriers and international air transportation, the bui would make actions under these new powers likewise subject to approval of the President. The Department of State believes that this provides adequate surance that the powers granted to the Board would be exercised in conformit with our international obligations and with the overall foreign policy interess of the United States. For the reasons stated, the Department of State supports H.R. 6400, and strongly urges its prompt enactment. The Bureau of the Budget advises that there is no objection to the submissi of this report and that enactment of H.R. 6400 would be in accord with the program of the President. Sincerely yours, For the Secretary of State: FREDERICK G. DUTTON, Hon. OREN HARRIS, Assistant Secretary FEDERAL AVIATION AGENCY. Washington, D.C., January 23, 154 Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: This is in response to your request of December 30, 19 for the views of this Agency on S. 1540, a bill to amend the Federal Aviation A of 1958 to provide for the regulation of rates and practices of air carriers 20 foreign air carriers in foreign air transportation, and for other purposes. the authority necessary to meet and deal with the foreign air transportation re This bill, as originally proposed by the Civil Aeronautics Board, would provi problem in a manner consistent with the President's international air transport policy statement issued in April 1963. It would vest in the Civil Aeronautics Board authority to assure "just and reasonable" rates in foreign air transportation, as distinguished from the present limited authority simply to remove discriminatory rates. Its effect would be to vest in the Board authority over rates in foreign air transportation similar to the authority which the Board now possesses with respect to interstate and oversea air transportation, except that such authority would have to be exercised within the framework of section 1102 of the act. The basic purpose of S. 1540 is to equip this Government with the authority over rates in foreign air transportation equivalent to that possessed by other governments. Given the present system for formulating rates in foreign air transportation and the terms and conditions of existing bilateral air transportation agreements, this authority is particularly desirable. The bill as passed by the Senate contains one very substantial amendment to the Board's original proposal which we believe requires careful consideration by your committee. The original Board proposal provided that its orders requiring discontinuance of rates or practices or suspension of tariffs would be subject to the approval of the President. The Senate amendment requires only that such orders be reported to the President prior to publication. The statement on international air transport policy of April 1963, in urging this legislation specifically provided that the exercise of such authority by the Board should be subject to the President's approval. This was because international air transportation is an integral aspect of this Nation's foreign affairs. This being the case, it would seem very unwise to remove one area of foreign affairs from the effective control of the President. In enacting legislation designed to give this Government an effective means of controlling international air rates, we should not fragment the basic responsibility for the conduct of foreign affairs which the President bears. We urge favorable action on this bill, amended to conform to the Board's original proposal. The Bureau of the Budget has advised that there is no objection from the standpoint of the administration's program to the submission of this report to your committee. Sincerely, Hon. OREN HARRIS, N. E. HALABY, Administrator. CIVIL AERONAUTICS BOARD, Washington, D.C., March 30, 1964. Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: This is in further reply to your letter of December 30, 1963, requesting a report by the Board on S. 1540, an act to amend the Federal Aviation Act of 1958 to provide for the regulation of rates and practices of air carriers and foreign air carriers in foreign air transportation, and for other purposes. The provisions of S. 1540 are identical to those of H.R. 6400, which is also pending before your committee, except for the fact that under the Senate bill orders of the Board, other than those relating to the removal of discriminations, directing an air carrier or foreign air carrier to discontinue a rate in foreign air transportation or suspending tariffs of carriers for such transportation need only be reported to the President prior to publication, while under the House bill Presidential approval of such orders is required. As the Board pointed out to your committee in a letter dated May 29, 1963, urging that favorable consideration be given to H.R. 6400, the provisions of such bill are identical to those of a draft bill submitted by the President to the Congress on May 14, 1963. The Board reiterates, therefore, its endorsement of H.R. 6400, and urges that prompt and favorable consideration be given to such bill rather than to S. 1540. The Board has been advised by the Bureau of the Budget that there is no objection to the submission of this report from the standpoint of the administration's program. For the Civil Aeronautics Board: HAROLD R. SANDERSON, Secretary. |