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would make actions under these new powers likewise subject to approval of him.ORES problem in a manner consistent with the President's international air transan

bilateral with Great Britain and corresponding provisions in other agreements Present article II (f) would not longer be in force. As set forth preriosta this report, the effect would be to permit our carriers to operate provisional at rates which they propose, pending arbitration or other settlement. Forean countries would be precluded from taking steps to suspend inauguration : continuation of services at such rates.

There may appear to be some inconsistency between the Federal Aviation da as it would be amended by passage of H.R. 6400 and the provisions of the tra applicable rate article in the bilateral agreements. Under that article

, ree proposed by one country's carriers and objected to by the other country are in go in effect provisionally, pending arbitration or other settlement. This pour sion, of course, applies to both parties. Thus, the CAB would not consistent with the bilaterals, be able to suspend the proposed rates of a foreign carrier

. However, the otber country could not suspend the rates proposed by our ta riers. In such a situation we could expect that the dual rate permitted bir + bilateral would be resolved by competitive forces in favor of the lower rate. is of course clear that the power to suspend rates that would be granted to the CAB by section 1002(g) as amended would be subject to section 1102, relata to conformity with international agreements. Thus there could be no (VLK between exercise of the authority granted to the Board in H.R. 6100 and exista international agreements.

It should be noted that under the so-called new ráte article, which appears in the bilateral air agreement with Mexico and the agreement with the l'n'es Arab Republic now awaiting signature, the situation would be reversed. ['bih this article, which is to be the model for future bilateral air negotiations data countries would have the right to suspend an objectionable rate. Thus, unde

? the new rate article suspension action by the CAB pursuant to amended section 1002(g) would be consistent with our international obligations and, at the sie time, all countries would be in an equal position--unlike the situation preras ing today. Finally, it is appropriate to comment briefly on section 2 of the bill

, which would amend section 801 of the Federal Aviation Act, which sets forth the powers of the President to review determinations with respect to internatici air transportation. Under the present statute, only those actions of the Board under section 401 relating to oversea or foreign air transportation and Code section 402 relating to permits to foreign air carriers are subject to the apport 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 bil President. The Department of State believes that this provides adequate ?. surance that the powers granted to the Board would be exercised in conforait with our international obligations and with the overall foreign policy interest of the United States.

For the reasons stated, the Department of State supports H.R. GHOV, Di strongly urges its prompt enactment.

The Bureau of the Budget advises that there is no objection to the subnis. 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.

Assistant Secretary
FEDERAL AVIATION AGENCY.

Washington, D.C. January 23, 184,
Hon. OREN HARRIS,
Chairman, Committee on Interstate and Foreign Commerce.
House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: This is in response to your request of December 30, 14 for the views of this Agency on S. 1540, a bill to amend the Federal Aviation der of 1958 to provide for the regulation of rates and practices of air carriers 39 foreign air carriers in foreign air transportation, and for other purposes

This bill, as originally proposed by the Civil Aeronautics Board, would provit the authority necessary to meet and deal with the foreign air transportation 9

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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 gov0802 ernments. Given the present system for formulating rates in foreign air trans

portation and the terms and conditions of existing bilateral air transportation be (Be 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 the by your committee. The original Board proposal provided that its orders requir

ing 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 de signed 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,

N. E. HALABY, Administrator.

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CIVIL AERONAUTICS BOARD,

Washington, D.C., March 30, 1964.
Hon. OREN HARRIS,
Chairman, Committee on Interstate and Foreign Commerce,
House of Representatives, Washington, D.C.

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.

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GENERAL COUNSEL OF THE DEPABTMENT OF COMMERCE,

Washington, D.C., April 9, 1964.
Hon. OREN G. HARRIS,
Chairman, Committee on Interstate and Foreign Commerce,
House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: This is in further reply to your request for the views of this Department on S. 1540, an act to amend the Federal Aviation Act of 1978 to provide for the regulation of rates and practices of air carriers and foreign air carriers in foreign air transportation, and for other purposes.

S. 1.140 deals with oversea air transportation (i.e., transportation from the continental United States to U.S. territories and possessions or between l'S territories and possessions) and foreign air transportation (i.e., transportation between the United States and any place outside thereof but not including over sea transportation).

This act (1) sets forth the duties of the air carriers and foreign air carriers in foreign air transportation in establishing just and reasonable rates and prietices; (2) requires that orders of the Civil Aeronautics Board directing an air carrier or foreign air carrier to discontinue a rate or practice for foreign air transportation and actions of the Board suspending tariffs tiled by such carriers for such transportation be reported to the President; (3) extends the Board's authority over the rates of U.S. carriers in oversea air transportation from the present right to prescribe only maximum and minimum rates to the right to prescribe exact rates (the Board now has this authority in respect to rates for interstate transportation); (4) extends the public interest factors to be cutsidered by the Board in acting on rates to cover foreign air carriers as well & U.S. air carriers; (5) continues existing authority of the Board to order an air carrier or a foreign air carrier to remove a discrimination, preference, or prejudice in its foreign air transportation rate structure, and authorizes the Board to require discontinuance by the carrier of the unreasonable or discriminatory rate as practice, as well as provides new authority to prescribe the lawful rate or practice; and (6) authorizes the Board to suspend rates and practices of air carriers or foreign air carriers in foreign air transportation pending hearing. The Boari presently has this authority over air carriers in interstate and oversea air transportation.

A recent statement of international air transport policy, approved by the President, recommended that “* * * Congress should adopt legislation which would give to the Civil Aeronautics Board authority, subject to approval by the President, to control rates in international air transport to and from the United States."

H.R. 6100 and S. 1540 in its original form, introduced at the request of the President, give effect to the "Statement of International Air Transport Polies" by giving the Board power to approve or disapprove the rate of United States and foreign international air carriers similar to the power it now has with re spect to domestic carriers.

For some time, the Board has sought additional rate powers in foreign ait tranpsortation. At the present time, some foreign governments unilaterally control the rates of the U.S. air carriers, but the United States does not have the machinery to control the rates of foreign air carriers. It is in this area that the power to control rates and tariffs is desired. Because of the responsibilities of the President in the area of foreign affairs we supported legislation that would subject CAB action in this field to Presidential approval

We endorse enactment of H.R. 6400 and would therefore support s. 1540 if amended to the original language making the CAB orders regarding rates for foreign air transportation by air carriers or foreign air carriers subject to the approval of the President.

We have been advised by the Bureau of the Budget that there would be no ohjection to the submission of this report, and further, that enactment of H.R. 6400 or S. 15140 if amended as recommended herein would be in accord with the program of the President. Sincerely,

ROBERT E. GILES.

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DEPARTMENT OF STATE,

Washington, April 27, 1964. Hon. OREN HARRIS, "Tu Can Chairman, Committee on Interstate and Foreign Commerce,

House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: In your letter of December 30, 1963, you requested the the fra i Department's views on S. 1540, an act to amend the Federal Aviation Act of retines ' en 1958 to provide for the regulation of rates and practices of air carriers and treten foreign air carriers in foreign air transportation, and for other purposes.

Except for one amendinent made by the Senate, S. 1540 is identical to H.R. pe 6400, which has already received the unqualified support of the Department.

In our letter to you dated July 26, 1963, we analyzed in detail each of the probet visions of H.R. 6400, the effect which its passage would have on our extensive

network of bilateral aviation agreements, and the reasons why this country would be in a considerably more favorable position vis-a-vis foreign countries if the legislation were enacted. We strongly urged prompt enactment of the bill, and we renew that support now.

The purpose of S. 1510, as you know, is to give to the Civil Aeronautics Board authority 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 question raised by the amendment to the bill made by the Senate is whether this discretionary authority is to be exercised subject to the approval of the President. The Senate amendment would remove the requirement of approval by the President of any order granted pursuant to the new authority, and substitute simply a requirement to reporting such order to the President before publication.

The Senate amendment would remove the power to fix rates of international air transportation from policy review by the President. Removal of this power from Presidential review would fragment the President's authority over the conduct of foreign affairs. This could be justified only if international air ratemaking were not an integral aspect of our foreign relations. However, the incidents surrounding the North Atlantic rate dispute during the spring of 1963 demonstrate the interrelationship of aviation ratemaking, like other aspects of economic regulation of international transporation, with our overall foreign relations. The history of this dispute leaves no doubt that international ratemaking has vast and far-reaching foreign policy ramifications. We would con. clude, therefore, that the President's constitutional powers over foreign affairs require that the international ratemaking function, being an integral aspect of foreign affairs, should be subject to policy review by the President.

The executive branch, of course, does not propose to become directly involved in details of ratemaking. But the exercise of this function would affect our foreign relations to at least the same extent as exercised by the Civil Aeronautics Board of the other powers relating to regulation of international air transportation now contained in sections 401 and 402 of the Federal Aviation Act. Section 801 authorizes review in these latter cases and we see no justification for drawing a distinction between these cases and the new powers to be granted by H.R. 6400.

Moreover, as a practical matter, it would appear that elimination of Presidential review has the correlative effect of subjecting international ratemaking decisions to the process of judicial review as required by section 1006 of the Federal Aviation Act. As the law now stands, Board actions which are subject to Presidential review under section 801 are immune from judicial review under section 1006. Accordingly, if the requirement of Presidential review is eliminated, it would appear as though these decisions would then become subject to judicial review. If the powers available under S. 1510 are ever to be exercised, it would probably be essential that they be exercised promptly. Presidential review, rather than the cumbersome and time-consuming process of review in the courts of appeals, would permit this expeditious action.

In summary, we reiterate our support of the objectives of S. 1540 and H.R. 6400. We continue to be concerned by the problem of rates in international air transportation for the aviation industry, the traveling public, and for the overall foreign relations of the United States. We favor enactment of S. 1540 as originally introduced ; i.e., with the powers over rates in international transportation subject to Presidential approval.

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The Bureau of the Budget advises that there is no objection to the submissie of this report and that s. 1540 as introduced on May 15, 1963, would be i accord with the program of the President.

Sincerely yours,
For the Secretary of State:

FREDERICK G. DUTTOS,

Assistant Secretary.

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EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET,
Washington, D.C., April 27, 1984

,
Hon. OREN HARRIS,
Chairman, Committee on Interstate and Foreign Commerce,
House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: This is in response to your request for the views of the Bureau of the Budget on S. 1540, a bill to amend the Federal Aviation Act on 1958 to provide for the regulation of rates and practices of air carriers and for eign air carriers in foreign air transportation, and for other purposes, which des been passed by the Senate.

As introduced, at the request of the President, S. 1540 and H.R. 6400 mere identical. Their purpose is to give the Civil Aeronautics Board authority to ne scribe rates and practices of air carriers, both U.S. and foreign, and to suspend tariffs in international air transportation to and from the United States de proposed the legislation would have made the Board's authority subject to af proval of the President in view of his preeminent responsibilities in the area di foreign policy.

As passed, S. 1540 would give the Civil Aeronautics Board ultimate authority over international air rates and provide only that the President be informed at Board actions. The Bureau of the Budget would be strongly opposed to the enactment of S. 1540, in its present form, as a serious abridgement of the powers and responsibilities of the President in the realm of foreign policy.

The Bureau of the Budget endorses the views being expressed by the Depart:
ments of State and Commerce in reports being sent to your committee and urges
that the bill be restored to its original text. If thus amended the bill would live
in accord with the program of the President.
Sincerely yours,

PHILLIP S. HUGHES,
Assistant Director for Legislative Reference

. The CHAIRMAN. I think it is generally understood that the question of international rates came to a head sometime ago when a controversy resulted between this country and other nations regarding rates to be charged.

I am sure that it will be developed that IATA could not come to an agreement which resulted in a head-on crash between airlines operat ing in this country and our own airlines operating in other countries

Obviously, the question of the Bermuda-type agreements arises in connection with this matter. There are many questions that should be developed since this is quite a departure from, or would be quite a departure from, the procedures that we have had over the years

I have a feeling there will be some disagreement developing during the course of the hearings but it will be the purpose of the committee to try to develop all these questions with a view of trying to resolve the issue in the best interests of our own country and, of course

, nur own airlines, which compete with airlines from other countries coming to this country.

So, I should think that during the course of the hearings we world like to know something about the difficulty in IATA, just what the problem is that requires us to consider a complete departure from what we have experienced over the last many years

, and find out how it

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