the name or a part thereof under which he or it does business, without the consent of the Corporation. "SEC. 14. The right to alter, amend, or repeal this charter is expressly reserved. "SEC. 15. Section 101 of the Government Corporation Control Act (31 U. S. C. 846) is hereby amended by inserting therein the words 'Washington National Airport Corporation'. "SEC. 16. There is hereby transferred to the Corporation all property, real, personal, and mixed, now operated by the Administrator of Civil Aeronautics as the Washington National Airport together with all sums due or to become due to the United States by virtue of any service rendered or facilities furnished in connection with the operation of the Washington National Airport, or under any contract executed by or on behalf of the Administrator of Civil Aeronautics in connection with such activties, together with the tract of land described in the Act of June 29, 1910 (54 Stat. 686) as the Washington National Airport (except that portion of such tract of land added to the Mount Vernon Memorial Highway by Executive Order 9851), together with all the structures, improvements, and other facilities located thereon (except the building designated as 'T-7' located on Abingdon Drive on the airport, now used and operated by the Administrator of General Services). The Corporation shall assume the performance on behalf of the United States of all existing contracts heretofore executed on behalf of the Administrator of Civil Aeronautics in connection with the care, operation, maintenance, and protection of the Washington National Airport. "SEC. 17. The Secretary or his designated representative shall have power to make and amend such rules and regulations as may be deemed necessary governing the protection of property and the conduct of persons on premises within the jurisdiction of the Corporation. "SEC. 18. (a) Employees of the Corporation appointed to protect life and property on areas within the jurisdiction of the Corporation, when designated by the airport manager, are hereby authorized and empowered (1) to arrest under a warrant within the limits of the airport any person accused of having committed within the boundaries of the airport any offense against the laws of the United States, or against any rule or regulation prescribed pursuant to this Act; (2) to arrest without warrant any person committing any such offense within the limits of the airport, in their presence; or (3) to arrest without warrant within the limits of the airport any person who they have reasonable grounds to believe has committed a felony within the limits of the airport. "(b) Any individual having the power of arrest as provided in the subsection (a) of this section may carry firearms or such other weapon as the Secretary or his designated represenative may direct or by regulation may prescribe. "(c) The United States Park Police may, at the request of the Secretary or his designated represenative, be assigned by the Director of the National Park Service in his discretion, subject to the supervision and direction of the Secretary of the Interior, to patrol any area of the airport, and any members of the United States Park Police so assigned are hereby authorized and empowered to make arrests within the limits of the airport for the same offenses, and in the same manner and circumstances as is provided in this section with respect to employees of the Corporation. "SEC. 19. Any person who violates any rule or regulation prescribed under section 17 of this Act, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than $500 or imprisoned not more than six months, or both. "SEC. 20. The officer on duty in command of those employees designated as provided in section 18 may accept deposit of collateral from any person charged with the violation of any rule or regulation prescribed under this Act, for appearance in court or before the appropriate United States commissioner; and such collateral shall be deposited with the appropriate United States commissioner. "SEC. 21. This Act shall take effect July 1, 1954. "SEC. 22. All laws or parts of laws inconsistent with this Act are repealed to the extent of such inconsistency." The CHAIRMAN. This is a bill that I introduced on May 11, 1954, at the request of the Acting Secretary of Commerce. At the time I introduced the bill, I inserted in the Congressional Record the Secretary's letter transmitting the proposed bill and explaining the reasons for recommending the incorporation of the Washington National Airport. At this point I will make a copy of the Secretary's letter a part of the hearing record. (Letter from Acting Secretary Robert B. Murray, Jr. is as follows:) Hon. RICHARD M. NIXON, President of the Senate, THE SECRETARY OF COMMERCE, United States Senate, Washington, D. C. DEAR MR. PRESIDENT: It is requested that the enclosed proposed bill to amend the act relating to the administration of the Washington National Airport, to incorporate the Washington National Airport Corporation, and for other purposes, be introduced in the Senate at your earliest convenience. In its report dated March 31, 1949, on Federal Business Enterprises, the (Hoover) Commission on Organization of the Executive Branch of the Government recommended with respect to Washington National Airport, "We urge the incorporation of this enterprise to bring it under the Government Corporation Control Act of 1945." This recommendation was based upon the finding by the Commission that Washington National Airport is a "straight-line business enterprise" for which incorporation was appropriate "so as to secure greater flexibility in management and simpler accounting, budgeting, and auditing methods." Most of the activities of Washington National Airport are predominantly of a business nature. It has a large number of business transactions with the public every day. These transactions involve the rental of space at the airport, the collection of landing fees, the supervision of the various concessionaires who sell merchandise and supply services to the public at the airport, and similar matters. The airport is continually expanding its services and finding new sources of revenue. A substantial income is produced every year, which is now paid into the Treasury as "miscellaneous receipts." The expenditures of the airport, on the other hand, must, under present law, be paid out of appropriations made on the basis of estimates submitted long in advance of the periods which they cover. It is extremely difficult to operate a business enterprise under this system. For example, one major problem has been the budgeting of appropriations for the purchase of electricity and the manufacture of steam used and sold to tenants at Washington National Airport. No reasonable estimate as to their annual cost can be made, because neither the quantity to be used nor the unit cost can be predicted with any accuracy. Several factors contribute to this difficulty. The notoriously capricious Washington weather makes heating cost prediction extremely difficult. Fluctuations in the air-transpoort business as a whole may cause the tenant of a hangar to increase its use from 1 shift a day to 3 shifts a day. Conversely, a carrier which has been employing multiple shifts may curtail its operations. Carriers can transfer their operating bases to or from Washington. During the winter this is always a possibility, since Washington is the southern terminus of several airlines, and thus the one having the most favorable climate for winter operations. These factors, none of them predictable by this Department, determine the amount of use of both electricity and steam, and consequently the cost of these services to the Government. Fuel used at the Washington National Airport for the production of steam is purchased through the General Services Administration. The airport has no control over the cost. Within one recent 12-month period it experienced a price rise of about 65 percent. Electricity is furnished to the airport by the Virginia Electric & Power Co. at a rate based upon the cost of coal, which in recent years has also been subject to substantial fluctuation. Electric power and steam for heating are metered and charged to the several tenants of the buildings at Washington National Airport on the basis of the quantities used. The cost of these services to the Government is paid from the appropriation for the maintenance and operation of the airport, while the amounts received from the tenants must, by virtue of Revised Statutes 3618 (31 U. S. C. 487), be covered into the Treasury. The appropriation, once made, cannot be augmented except by a deficiency appropriation. The anomalous result is that the greater the Government income from this source, the less funds are available to keep the activity operating. The business-type budgeting practices possible under the corporate form would permit the automatic adjustment of all of these variable factors by permitting the income from the resale of electricity and steam to be used for their purchase. The airport has often found that expenditures must be made up in 1 fiscal year in order to obtain revenues which will not accrue until the next fiscal year. This makes budgeting and handling of appropriations extremely difficult. A Government corporation, in which appropriated funds can be used until expended, and revenues used as received, will not be subject to this difficulty. Government corporations are also generally operated with business-type accounting systems rather than with the accounting system made applicable by statute to Government agencies in general. This business-type accounting system would greatly facilitate the administration of the airport and its operation on a more businesslike basis; rates could be more accurately keyed to costs, and proper businesstype reserves for contingencies and recurrent long-range expdenditures could be set up. Another typical difficulty in attempting to operate a business enterprise under the restrictions which apply to ordinary Government agencies arises from the necessity for advertising for bids on airport contracts. For example: 1. The high intensity lights originally installed on the landing field were made by the Revere Electric Co. When it became necessary to replace some of these lights, and to provide for spare lights in the warehouse, the contract had to be given to the Crous Hinds Co. since it was the lowest bidder. Thus, it now has become necessary for the airport to carry a stock of repair parts for both makes of high intensity lights since only the bulbs are interchangeable. This requires the investment of almost twice the funds in stock that would be required if all were the product of one manufacturer. 2. In the south extension to the Terminal Building, recently constructed, an Otis elevator was requested since all the other elevators in the building are of this make. Permission to specify the Otis elevator in the contract could not be obtained from the Public Buildings Administration, and the airport was required to purchase an elevator made by another manufacturer, although the difference in the bids was very slight. A service contract has been in effect with the Otis Co. for several years and the addition of a new Otis elevator to the building would have required only a small addition to this contract. As it is, the airport had to make special arrangements with Otis, on far less favorable terms, for the servicing of this additional elevator. 3. It became necessary to repair certain roofs at the airport, and due to the exposure of these roofs to extreme temperature, a particular kind of roofing was required. It was proposed that the airport personnel replace the material, thus effecting considerable saving of money. However, prolonged negotiations failed to obtain clearance for the purchase of this particular kind of roofing material. Consequently, the contract eventually was let for the application of roofing and the specifications called for this particular product. Such a procedure was, of course, more costly than the proposal made by the airport. 4. In another instance, the concrete apron in front of a hangar was broken at a time when a concrete contractor had his equipment and men at the airport on another job. It was desired that a new contract for repairing the apron be negotiated with this contractor to do the work before moving his equipment, etc., away from the airport. This, however, could not be done. A new invitation had to be issued, bids received and contract let. As a result, the repair work cost more and occasioned an unnecessary delay of several weeks. With respect to normal business transactions, Government corporations are exempted from the provisions of the statute which require that contracts be awarded to the lowest responsible bidder after advertisement for bids. This exemption would permit the airport to advertise or negotiate for such contracts in accordance with usual business practices, and would thus obviate the difficulties outlined above. Under the circumstances, the Department of Commerce feels that the Washington National Airport could be operated much more efficiently as a corporation. We therefore recommend the early and favorable consideration of the enclosed proposed legislation by the Congress. In general, the provisions of the enclosed bill were taken from the standard form of Government corporate charter prescribed by the Bureau of the Budget for use by executive agencies in drafting legislation of this type. The special provisions of the bill adjusted to fit this particular enterprise were developed in close consultation with the professional staff of that Bureau. We are advised by the Bureau of the Budget that enactment of this legislation would be in accord with the program of the President. Sincerely yours, ROBERT B. MURRAY, Jr., Acting Secretary of Commerce. The CHAIRMAN. The incorporation of the Washington National Airport was recommended by the Hoover Commission in its report on Federal Business Enterprises, dated March 31, 1949. That Commission pointed out the Washington National Airport is a "straight-line business enterprise" for which incorporation is appropriate "so as to secure greater flexibility in management and simpler accounting, budgeting and auditing methods." President Eisenhower, in his budget message for 1955, stated: New legislative authority is required *** to establish a corporation to operate the Washington National Airport. Senator Pat McCarran has written me supporting this bill. His letter comes from Reno, Nev., and is dated May 17, 1954. I will read it and then insert in in the hearing record. Hon. John W. Bricker, RENO, NEV., May 17, 1954. Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington, D. C. DEAR SENATOR: The purpose of this letter is to support your bill S. 3435, introduced May 11, 1954, for the incorporation of the Washington National Airport. In my opinion this is extremely worthwhile legislation, and I hope your committee acts on it favorably at an early date. Under the present status of the Washington National Airport, the Manager of the airport is in a tough spot. Figuratively speaking, he has to work his way to the surface through CAA and the Commerce Department, and fight off industry on the way. They have had good managers out there and the airport has done a pretty good job, but it is a cumbersome system. As a Government corporation, the airport would have much greater freedom of action and an opportunity for speedy adoption of improvements. At the present time, most improvements and activities hinge on appropriations. As a corporation it could operate on a profit-and-loss basis and the incentive would be to operate at a profit consistent with the highest degree of safety. The As you know, most airports are owned and operated by municipalities. District of Columbia is a municipality operated by the Federal Government. There appears to be no valid objection to operating the airport as a Government corporation. Another point worth considering is that so long as the CAA operates the airport, it is in business. There are those who doubt the wisdom of any Government agency being in business; and it makes sense to say that no regulatory agency (such as CAA) should be in business. Kindest personal regards and all good wishes. Sincerely, PAT MCCARRAN. (Letter from Senator McCarran is inserted in the record at this point.) Hon. JOHN W. BRICKER, RENO, NEV., May 17, 1954. Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington, D. C. DEAR SENATOR: The purpose of this letter is to support your bill S. 3435, introduced May 11, 1954, for the incorporation of the Washington National Airport. In my opinion this is extremely worthwhile legislation and I hope your committee acts on it favorably at an early date. Under the present status of the Washington National Airport, the Manager of the Airport is in a tough spot. Figuratively speaking, he has to work his way to the surface through CAA and the Commerce Department, and fight off industry on the way. They have had good managers out there and the airport has done a pretty good job, but it is a cumbersome system. As a Government corporation, the airport would have much greater freedom of action and an opportunity for speedy adoption of improvements. At the present time, most improvements and activities hinge on appropriations. As a corporation it could operate on a profit-and-loss basis and the incentive would be to operate at a profit consistent with the highest degree of safety. As you know, most airports are owned and operated by municipalities. The District of Columbia is a municipality operated by the Federal Government. There appears to be no valid objection to operating the airport as a Government corporation. Another point worth considering is that so long as the CAA operates the airport, it is in business. There are those who doubt the wisdom of any Government agency being in business; and it makes sense to say that no regulatory agency (such as CAA) should be in business. Kindest personal regards and all good wishes. Sincerely, PAT MCCARRAN. The CHAIRMAN. With this background of the proponents of incorporating the Washington National Airport, we will now proceed with the first witness, who will be Mr. Fred B. Lee. STATEMENT OF F. B. LEE, ADMINISTRATOR OF CIVIL AERONAUTICS Mr. LEE. I am prepared to testify on the general provisions of the bill. There are representatives of the Bureau of the Budget who will be prepared to answer technical questions on the incorporation. I appreciate very much this opportunity to speak in support of S. 3435, the bill sponsored by the Department of Commerce to incorporate Washington National Airport. The airport is now operated by the Civil Aeronautics Administration under delegation of authority from the Secretary of Commerce. This bill would streamline the administration of the airport and permit the use of business methods in our business operations. The airport is a substantial installation. It is 630 acres in area. It has a regular working population of approximately 7,500 persons; in 1953 some 2,720,000 passengers enplaned and deplaned at the airport and we estimate that several times that number of persons visited the airport in connection with these arrivals and departures. The airport has its own police and fire departments, adopts its own traffic ordinances, and maintains a network of roads. The primary business and public service purposes of the airport are to furnish facilities for the landing, takeoff, and servicing of aircraft, and for the accommodation of airline passengers and baggage and airfreight. These activities alone produce an income to the airport of approximately a million dollars annually. In the fiscal year 1953, roughly $500,000 was received for direct rental of space in structures at the airport to persons in the aviation business; the airport earned about $280,000 in landing fees; and miscellaneous services to aircraft produced approximately $140,000 additional. The presence of large numbers of people and the substantial industrial activity at the airport create secondary sources of income which produce revenue almost equal to that received from our primary activities. During fiscal year 1953, out of a total income of $1,838,812 |