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tive to Federal operation, as in the case of the Washington National Airport, we believe strongly that the Government should recognize that it is conducting a business and provide businesslike organization and management.

The representative of the General Accounting Office referred to the use of a revolving fund, which is taken up in the next paragraph.

The decision to recommend incorporation was not made until after thorough consideration of other possible solutions to the airport's problems, such as the creation of a revolving fund and use of the business-type budget and accounting procedures permissible under the Budget and Accounting procedures Act of 1950. It was concluded that a revolving fund by itself, while making possible considerable financial flexibility, would not afford the necessary degree of operating flexibility. I am submitting for inclusion in the record a column by column analysis showing the similarities and differences between a revolving fund and a Government Corporation.

The CHAIRMAN. It will be made a part of the record. (The document referred to is as follows:)


There is no completely uniform pattern either for Government corporations or revolving funds. The following analysis is based on generalizations from existing law and practice. There may be exceptions in the case of particular corporations or funds to one or several of the generalizations.

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Mr. BRUNDAGE. Revolving funds have been employed principally to facilitate certain intra-Government service operations such as the Bureau of Engraving and Printing, the Government Printing Office, and the General Supply Fund. None of these are genuine business activities and, unlike the airport, they do not, with some minor exceptions, sell goods or services directly to the public. No useful purpose would be served by conferring corporate powers, such as the right to sue and be sued, on activities of this type. These powers, however, become extremely significant when the Government undertakes a straight-line business activity.

We believe sincerely that establishment of a Government corporation will promote the most efficient and economical operation of the Washington National Airport. The Bureau of the Budget recommends favorable consideration of S. 3435.

The CHAIRMAN. Senator Schoeppel.

Senator SCHOEPPEL. No questions.

The CHAIRMAN. Would you favor the inclusion of the provision in the corporate charter that any contract over a certain amount should be given to the highest bidder under sealed bids, or something of that kind, to prevent the negotiation of contracts?

Mr. BRUNDAGE. It would be under the management of someone appointed by the Secretary of Commerce, and I personally think there has been enough publicity given to the importance of competitive bidding to be able to rely on his operating on that basis. Several examples have been cited in connection with the operation of the airport though where, in order to accept a competitive bid which was at a lower figure, an even slightly lower figure than someone else's that they actually incurred greater expenditures because they had other facilities of a similar type which had been furnished by another supplier.

I think in a business-type operation some discretion ought to be given to the manager to exercise his judgment.

The CHAIRMAN. Do you think that the taxi concession, which presumably is the largest one out there, should be negotiated?

Mr. BRUNDAGE. I am personally opposed to an exclusive type of concessionaire contract. I think we can give a primary contract to some agency. I would personally prefer to see that done entirely on a competitive basis.

The CHAIRMAN. Any further questions?

Senator SCHOEPPEL. No questions.

The CHAIRMAN. If not, we thank you very much. The next witness will be Mr. S. G. Tipton, general counsel of the Air Transport Association of America.

How long will you take, Mr. Tipton?


Mr. TIPTON. Not over 10 minutes.

The CHAIRMAN. You may proceed, Mr. Tipton.

Mr. TIPTON. My name is S. G. Tipton. I am general counsel of the Air Transport Association of America, which is composed of substantially all of the United States flag airlines.

We appreciate this opportunity of discussing S. 3435 with the committee. Unfortunately, because of the very short time we have had to study the bill, and because of our inability to ascertain the practical effect of certain sections of the bill, we are unable at this time to take a position on the proposal. Our limited study has raised questions, to which we must have answers before we can reach any firm conclusions. S. 3435 is of vital importance to the airline tenants at the airport, because it can affect drastically the conditions under which they use the field.

Ten of our member airlines operate into Washington National Airport; Allegheny, American, Capital, Colonial, Eastern, National, Northwest, Resort, Trans World, and United. Moreover, American, Eastern, Trans World, and United occupy hangars at the field, and it is the principal office and operating base for Capital and Allegheny. Capital Airlines has invested $1,765,000 in facilities and equipment on the field, and has a yearly payroll at the field of approximately $10 million. Allegheny, one of our local service airlines, has spent approximately $275,000 improving and modifying the hangar which it occupies, and that company has an annual payroll at the field of $1,176,000. Moreover, Washington is one of the most important traffic generating areas in the country, and a large volume of air traffic goes in and out of the airport.

S. 3435 involves an important question of public policy as well. Under present law Congress has the opportunity each year of scrutinizing very carefully the manner in which the airport is being operated. The Department of Commerce must justify every expenditure to the Appropriations Committee of the House and the Senate before it receives any funds for operating the airport. Under S. 3435 there would not be this same opportunity for scrutiny by Congress. I mentioned previously that our limited study had raised questions about the bill. I believe that a reference to three of those questions will indicate the need for further study of this matter.

The bill provides that the corporation will have working capital, which will compose part of the Washington National Airport Fund. Obviously, the amount of the working capital which the Secretary of Commerce considers necessary will have an effect on the fees and rentals paid by the airline tenants. We cannot determine from the bill what the size of this working capital fund will be, and we have not had opportunity to consult with the Secretary of Commerce about it.

The bill also provides that the Secretary of Commerce shall place a value on the airport, at which value it will be transferred to the corporation. This determination will, of course, have a direct and vital bearing on the fees and rentals which will be charged at the airport. The language of the bill relating to the determination of value is very general. We have no idea of what method the Department of Commerce intends to follow in valuing the airport and, of course, no idea of what figure, if any, the Department now has in mind as representing that value.

What we need in order to be able to comment intelligently on the bill is an estimated balance sheet and an operating statement of the proposed Washington National Airport Corporation. Of course, we do not expect to get this complete to the last penny, but we must have more information regarding the capital fund and the operating meth

ods of the corporation before we can take a position on the bill. We would like to see what we are "getting in for."

Finally, our limited study of the bill leads us to believe that the transfer of title to the airport, and authority over the airport, from the United States to the corporation, provided for in the bill, may raise constitutional and legal questions.

A full understanding of these important questions requires a brief review of the history of the legal arrangements surrounding the airport and the relationship of the United States and the State of Virginia, which they create.

Members of the committee will recall the long controversy between the United States and the State of Virginia with respect to the boundary between the District of Columbia and Virginia. Legislation was under consideration by Congress in 1945 which would fix the boundary by reference to established points. At about this time the Washington National Airport was being completed, and it was apparent that a part of the airport was going to be in Virginia and a part in the District of Columbia.

In order to avoid the conflict of jurisdiction that this would necessarily cause, the Congress established the Washington National Airport as an exclusive Federal reservation, under section 8, article 1, of the Constitution. The establishment of this Federal reservation was made a part of the bill which fixed the boundary. This bill was passed, as it had to be, not only by the Congress but also by the Legislature of Virginia. The effect of the establishment of a Federal reservation under the Constitution is to give Congress the exclusive power to legislate with respect to it, even though it may be within a State. This power the Congress has exercised up to the present time. While certain Virginia laws apply within the reservation, they do so only by the consent of Congress.

At the time this bill was passed, that is the boundary bill, title to the land and buildings comprising the Washington National Airport was in the United States. It is now proposed to transfer title from the United States to a corporation. Section 8, article 1, of the Constitution confers this exclusive legislative power upon the Congress when, with the consent of the State concerned, land within the boundaries of that State is "purchased by the United States."

Does the transfer of title to the Washington National Airport from the United States to a corporation result in the loss by Congress of exclusive power to legislate within that territory? We have had no time to do the necessary research on this legal question, but even if we had, I do not believe that this bill should go forward until this question has been answered by the Attorney General.

There is also a question arising under the statute which was passed by both the Congress and the Legislature of Virginia. The portion of that bill establishing exclusive jurisdiction by the United States over the airport recites the fact that title to the property involved is vested in the United States. Does the transfer of this title from the United States to a corporation void Virginia's consent to the acquisition by the United States of exclusive legislative jurisdiction over the airport? Here again we have not been able to satisfy ourselves on this point. In this case also we believe that the Attorney General should pass upon the matter.

I should interject at this point also to say after I prepared this testimony I noted either intentionally or inadvertently in preparing this bill the present description of Washington National Airport was eliminated.

In the present Washington National Airport Administration Act the airport is defined by metes and bounds. That definition in turn was quoted and referred to in the boundary legislation that was enacted by the Congress and the Legislature of Virginia. That description by metes and bounds is apparently being deleted. I have not checked this, but the only result I can come to is that that description is being deleted. If it is deleted, then it leaves unclear two questions.

First, in transferring the airport to the new corporation just what area constitutes the airport under the bill as presented to this committee.

The second question is, by deleting that description has the old boundary legislation been in any way affected?

As I say, I noted that after the testimony was prepared, and I can only raise the question. Unfortunately, I cannot answer it.

We appreciate that the time remaining for action by the committee is very limited, and that any delay may make it impossible for the committee to report a bill during the present session of Congress. This would not have any serious effect on the present operation of the airport. The airline leases on the terminal building have more than 5 years to run, and the leases covering the landing field have almost 7 years to run. It is expressly provided in the bill that the new corporation would take the airport subject to those leases. Thus, the airport will continue to function as it has in the past.

We should remember, also, that although reference to the incorporation of the airport was made in the President's budget message released on January 21, 1954, the bill which became S. 3435 was not cent by the Department to the Vice President until May 7, 1954. We did not obtain copies of it until it was released by the chairman of this committee on May 12, 1954.

For the reasons I have stated, we respectfully request the committee to give us not less than 30 days to study this bill and to consult with the Department of Commerce about it. Thereafter, we will be prepared to state our position on the bill, and will hold ourselves in readiness to appear before this committee at its convenience.

That concludes my statement, Mr. Chairman.

The CHAIRMAN. Any questions, Senator Schoeppel?

Senator SCHOEPPEL. The only question I have to raise here is the time element. I know you are serious about the constitutional phase of this boundary question, and I do not see any reason now why the matter that you have raised here might not be submitted to the Attorney General of the United States for an opinion.

Mr. TIPTON. It would add to the peace of mind about this legislation if that were done.

The CHAIRMAN. The Bureau of the Budget suggested that they have the answers to the questions you have raised. We will ask them to submit those answers and we will make them part of the record with a copy to you. If you are not satisfied with them communicate with the committee staff.

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