[S. 3198, 89th Cong., 2d sess.] A BILL To amend section 402 of the Federal Aviation Act of 1958 Be it enacted by the Senate and House of Representatives of the United State America in Congress assembled, That subsection (f) of section 402 of the Fedz. Aviation Act of 1958 (49 U.S.C. 1372(f)) is amended by inserting "(1)” imme iately after "(f)" and adding at the end thereof the following new paragr "(2) Whenever the Board finds that the government or aeronautical author of any foreign country have, over the objections of the Government of the Un States, taken action which impairs, limits, terminates, or denies agreed operating rights of any air carrier designated by the United States to co flight operations to, from, through, or over the territory of such foreign countr the Board may, without notice or hearing, suspend and, after notice and heart. cancel or revoke the permits of foreign air carriers of such country, or a modify, amend, or limit operations under such permits, for the purpose of t posing sanctions of like or similar nature, if it "finds such action to be in the pub interest. The Board may also, without notice or hearing, to the extent it des mines necessary to make the operation of this paragraph effective, restrict op te tions between such foreign country and the United States by any foreign. carrier of a third country notwithstanding the provisions of any permit or ag ment." COMPTROLLER GENERAL OF THE UNITED STATES, Hon. WARREN G. MAGNUSON, DEAR MR. CHAIRMAN: We have your letter of April 11, 1966, in which y asked for our comments on S. 3197. S. 3197 proposes to amend section 416(b)(1) of the Federal Aviation Ac 1958, 49 U.S.Č. 1386(b)(1), to give the Civil Aeronautics Board discretion=" authority to exempt temporarily from the enforcement of section 401, 49 Us 1371, an American flag air carrier-applicant for a certificate to engage in overs or foreign air transportation. The grant of the exemption. limited to no E than 60 days after the Board's final decision on the application, would be e ditioned upon (1) a finding by the Board that the applicant-carrier, pend. hearing and final decision, would be competitively disadvantaged as agus permitted foreign carriers serving the United States; (2) a finding that the An ican flag international air transportation system would be thereby adverse affected; and (3) affirmative approval by the Civil Aeronautics Board and 2 President of the United States. The purpose of this bill is to rectify a situation created by the proced requirements of the Federal Aviation Act as interpreted by the Federal cours This situation works an economic hardship on American flag carriers wishing” engage in foreign and overseas air transportation and thus operates to obstr the development of the American flag international air transportation system Participation of American flag air carriers in foreign and overseas air transpor tion has its inception in bilateral air transport agreements between the Unte States and foreign governments; these agreements customarily provide for " granting of air routes to, from, and through the United States for the use foreign air carriers in exchange for the grant of reciprocal routes to American air carriers. A foreign air carrier then makes an application for a permit operate over the granted route under section 402 of the act, 49 U.S.C. 1 Generally only one foreign carrier applies and there is no opposition to the app cation so the hearing provided in section 402 is usually pro forma. The issuance of the foreign air carrier permit is not subject to judicial re because the act requires that it be approved by the President, 49 U.S.C. 1 See Trans World Airlines v. Civil Aeronautics Board, 184 F. 2d 66, certio denied 340 U.S. 941 (1950); U.S. Overseas Airlines v. Civil Aeronautics Be 222 F. 2d 303 (1955); Pan American-Grace Airways, Inc. v. Civil Aeronga's Board, 342 F. 2d 905 (1964). An American flag carrier, however, making app tion under section 401, 49 U.S.C. 1371, for a certificate to operate in foreign transportation over a reciprocally-granted route, is subject to all the procedur due process implicit in the enforcement requirements of section 401. Thus American flag carrier-applicants for the same or similar rights, all protestants & all intervenors are required to be heard in the same proceeding, Delta Air L Civil Aeronautics Board, 228 F. 2d 17 (1955); id. 275 F. 2d 632, certiorari nied 362 U.S. 969 (1959). The effect of S. 3197, if enacted, would be to permit the Civil Aeronautics ard and the President to place American flag carriers in a position of competitive uality and permit them to make their full contribution to the economic interests the United States. The requirements of procedural due process would be mplied with while the America flag carrier was operating under the temporary tificate. If enacted, S. 3197 would not directly affect the functions and operations of r Office. It seems to be in the public interest, however, and we have no objecon to its favorable consideration by your Committee. Sincerely yours, FRANK H. WEITZEL, Assistant Comptroller General of the United States. GENERAL COUNSEL OF THE DEPARTMENT OF DEFENSE, on. WARREN G. MAGNUSON, hairman, Committee on Commerce, .S. Senate, Washington, D.C. Washington, D.C., June 7, 1966. DEAR MR. CHAIRMAN: Reference is made to your request for the views of the epartment of Defense with respect to S. 3197, 89th Congress, a bill to amend ction 416 of the Federal Aviation Act of 1958. S. 3197 would permit the Civil Aeronautics Board to grant an exemption authoring a U.S. air carrier to engage temporarily in overseas or foreign air transportion covered by a pending application under section 401 of the Federal Aviation ct of 1958, if the Board found that, pending its hearing and final decision on the oplication for the operating certificate, the air carrier who filed the application ould be placed at a competitive disadvantage with respect to a foreign air rrier serving the U.S. Any such exemption to a U.S. air carrier would require Oproval of the Board and the President. The Department of Defense generally supports measures which would facilitate he operation of U.S. flag international air carriers and to the extent that legislaon along the lines of S. 3197 would enhance the ability of the Civil Aeronautics oard to provide appropriate operating authority to the U.S. air carriers, the Department of Defense favors its enactment. The Bureau of the Budget advises that there is no objection to the presentaon of this report for the consideration of the Committee. Sincerely, L. NIEDERLEHNER, U.S. DEPARTMENT OF JUSTICE, OFFICE OF THE DEPUTY ATTORNEY GENERAL, on. WARREN G. MAGNUSON, hairman, Committee on Commerce, .S. Senate, Washington, D.C. DEAR SENATOR: This is in response to your request for the views of the Departent of Justice on S. 3197, a bill "to amend section 416 of the Federal Aviation ct of 1958." The bill expands the authority of the Civil Aeronautics Board to grant exempons from statutory or administrative requirements governing United States r carriers involved in overseas or foreign air transportation. Under this bill, the coverage of section 416(b) (1) is enlarged to include tempory exemptions to air carriers from the enforcement of section 401 with respect overseas and foreign air transportation covered by application under that secon, if the Board finds that the carrier "is placed at a competitive disadvantage" ith respect to foreign carriers and that "the development and promotion of the nited States flag international air transportation system is thereby adversely Tected." Such exemption involving overseas or foreign air transportation will ontinue to require the approval of the President under section 801. Under existing law, American flag air carriers may obtain new operating rights o foreign countries only through lengthy certificate proceedings under section 401, including notice and hearing, or by an exemption, under section 416 spa cable in very limited conditions. Section 416(b)(1), as it now reads, requ that the Board find "an undue burden" on the carrier applying for exempe "by reason of the limited extent of, or unusual circumstances affecting the oper of such carrier." The Board's authority to grant relief under this provision been restricted by court decisions to require a showing of something more th loss of potential revenue pending completion of the certificate proceeding. A can Airlines v. C.A.B., 235 F. 2d 845 (D.C. Cir. 1956); Pan American Wr Airways v. C.A.B., 261 F. 2d 754 (D.C. Cir. 1958). It is the view of this Department that the bill enhances the Board's authen to protect and promote the United States flag international air transporta system and is consistent with the objectives of encouraging competitive coldtions in industry. The Department of Justice recommends enactment of this legislation. The Bureau of the Budget has advised that there is no objection to the samission of this report from the standpoint of the Administration's program. Sincerely, RAMSEY CLARK Deputy Attorney Gen FEDERAL AVIATION AGENCY, Hon. WARREN G. MAGNUSON, Chairman, Committee on Commerce, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: This is in reply to your request for the views of t Agency with respect to S. 3197, a bill "To amend section 416 of the Federa Aviation Act of 1958", and to S. 3198, a bill "To amend section 402 of the Fed Aviation Act of 1958". Procedures concerning the granting of economic authority under Title IV. the Federal Aviation Act of 1958 are within the purview of the Civil Aeronauts Board, and not the Federal Aviation Agency. Therefore, the FAA defers to t views of the Board on the subject bills. The Bureau of the Budget has advised that there is no objection from the stare point of the Administration's program to the submission of this report to you Committee. Sincerely, WILLIAM F. MCKEE, Administrator B-103950. COMPTROLLER GENERAL OF THE UNITED STATES, Hon. WARREN G. MAGNUSON, Chairman, Committee on Commerce, U.S. Senate. DEAR MR. CHAIRMAN: We have your letter of April 7, 1966, in which you 2587 for our comments on S. 3198. S. 3198 proposes to amend section 402 (f) of the Federal Aviation Act of 19 49 U.S.C. 1372(f), to authorize the Civil Aeronautics Board to suspend witte notice or hearing and to cancel, revoke, or modify by way of imposing sanctica after notice and hearing, the permits of foreign air carriers whose Governme over the objections of the United States, has taken action which denies or infrites agreed-upon rights of American flag carriers designated by the United States! operate to, from, through, or over the territory of the foreign country. The B also would be permitted, if necessary, and without notice or hearing, to restr operations between the United States and the said foreign country by a fore air carrier of a third country. Section 402(f) of the Federal Aviation Act of 1958 now authorizes the Board * alter, modify, amend, suspend, cancel or revoke any foreign air carrier permit up! a finding that such action is in the public interest. This action must be precer by notice and hearing, and any interested party may file with the Board a prete or a memorandum in support or opposition. The hearing procedure may protracted, particular since all of the requirements of due process must be served, and undue delay may serve to dilute the effectiveness of the action tak 3198 would permit prompt retalitory action by authorizing the Board to susnd a foreign air carrier permit prior to notice and hearing. We have no direct or special knowledge of the need for legislation such as that oposed in S. 3198 which reflects policy matters within the responsibility of ›ngress. If the bill is enacted, it would have no material effect upon our funcons and operations. We have, therefore, no recommendation to make concerng its consideration by your Committee. Sincerely yours, FRANK H. WEITZEL, Assistant Comptroller General of the United States. Senator MONRONEY. We are very pleased to welcome the very able ndersecretary of Transportation, Department of Commerce, and the ormer Chairman of the CAB, the Honorable Alan S. Boyd. TATEMENT OF HON. ALAN S. BOYD, UNDER SECRETARY OF COMMERCE FOR TRANSPORTATION; ACCOMPANIED BY ROBERT M. O'MAHONEY, OFFICE OF THE GENERAL COUNSEL, DEPARTMENT OF COMMERCE Mr. BOYD. Thank you, Mr. Chairman. I am accompanied by Mr. Cobert M. O'Mahoney of the Office of the General Counsel, epartment of Commerce. The Department appreciates this opportunity to appear in regard o two bills which would amend the Federal Aviation Act of 1958. 3197 would amend section 416 and S. 3198 would amend section 02 of the act. Since these two bills address themselves to different sections of the et, I will first discuss S. 3198 and then S. 3197. The Department favors enactment of S. 3198, which would authore the Board to suspend a foreign air carrier permit without notice nd hearing whenever it finds that authorities of any foreign country ave taken action against a carrier of the United States counter to greed-upon operating rights, and over objection of the U.S. Governent. Further, this bill if enacted would apply equally to any foreign r carrier of a third country if the United States felt such action ould preclude avoidance of the intent and effects of the authorized nctions by substitute foreign air carrier service via the country. aking action against the U.S. carrier. The growth of the passenger and cargo markets and the investment ecessary on the part of the airlines' management make it increasingly mportant that service not be interrupted by problems arising as the esult of this Government finding itself in a position whereby it is nable to assist U.S.-flag carriers to counteractions taken against em by other governments. Even of larger moment is the overall mportance of air transportation to international commerce. The le of aviation in international commerce is of such magnitude that verything possible should be done to assure a dependable transportaon network to meet the increasing demand of passenger and cargo evelopment. Since, in the last analysis, it is the governments concerned that conol international commerce, the United States should have the necesry authority to take positive action in protecting its carriers against D the actions of other countries that may be in conflict with operat rights of U.S.-flag carriers and the public interest generally. In the past there has been some question as to whether the Unre States has the authority under section 402 of the Federal Aviati Act to protect its carriers if it is determined that another governme arbitrarily restricts or limits U.S.-flag carrier operations. The C Aeronautics Board has taken the position that section 402 of the Fe eral Aviation Act does not give it the authority to condition or other wise limit foreign air carriers' operating permits where required by tis public interest in such cases. This Department takes the position that the proper U.S. author in this case the CAB, should have the authority it deems necess to carry out its statutory responsibilities. The Department supper the proposition that the United States should have authority o foreign air carriers equal to that other governments have over carre of the United States. This bill, if enacted, would accomplish t objective by making clear beyond any doubt what the Board's thority is and would remove the possibility for misunderstanding ¦ curtailment of agreed-upon operating rights of U.S. carriers. It is understanding, however, that the bill is intended primarily as a stat by proposition and it is contemplated that the authority would r have to be utilized except in rare situations. Commercial aviation has as its chief purpose the stimulation 22facilitation of trade and travel. It is the opinion of this Departnɛ i that amendment of section 402 of the Federal Aviation Act, as lined in S. 3198, would remove a possible barrier, or at least an of misunderstanding, that might limit the beneficial impact of estmercial aviation in the area of developing world trade. I would now like to comment on S. 3197. This bill would broad the exemption authority under section 416 of the Federal Aviat: Act by making it possible for the Board, pending a final decision applications by U.S.-flag carriers, to exempt a carrier from enfor ment of section 401. S. 3197, as presently written, would autho the Board to grant a U.S.-flag carrier the right to operate for a te porary period if the Board finds that such carrier has been placed atcompetitive disadvantage with respect to a foreign air carrier or riers serving the United States and that the development and pro tion of the U.S.-flag international air transportation system is there adversely affected. The Department is well aware of the protracted time requiren for final resolution of major route cases. This delay is a product the procedures which apply to granting a certificate of convenie and necessity to an American air carrier. Although the legisla before this committee concerns foreign air transportation, there also problems of delay in domestic route cases. In a domestic case, when all the applicants are American air carr and thus subject to the same delays, the cost is merely time before the carrier finally chosen can begin to fly the route. In national cases, where the routes are served by an American and fore carriers, the situation is not the same. Foreign states can chợ promptly the carrier to exercise their rights-frequently a s state-owned airline-and certify this selection to the United Sta The CAB can then issue a foreign air carrier permit under section 4and there is usually relatively little delay before a foreign air car |