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1975/01/03 S3481 International Air Transportation Fair Competitive Practices Act of 1974
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The original documents are located in Box 20, folder "1975/01/03 S3481 International Air
Transportation Fair Competitive Practices Act of 1974" of the White House Records
Office: Legislation Case Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Exact duplicates within this folder were not digitized.
Digitized from Box 20 of the White House Records Office Legislation Case Files at the Gerald R. Ford Presidential Library
APPROVED75
ACTION
THE WHITE HOUSE
Last Day: January 4
WASHINGTON
Posted 1/4/75
January 1, 1975
TO ARCHIVES
1/6/75
MEMORANDUM FOR THE PRESIDENT
FROM:
KEN COLE
SUBJECT:
Enrolled Bill S. 3481
International Air Transportation Fair
Competitive Practices Act of 1974
Attached for your consideration is S. 3481, sponsored by
Senators Cannon, Cotton and Magnuson, which:
-- Provides for Federal agency review and action on
discriminatory or unfair international air trans-
portation practices or user charges;
--
requires the CAB to establish compensatory air mail
transportation rates;
-- promotes the use of U.S. flag air carriers in inter-
national transportation;
-- requires ticket agents to charge the currently effective
tariff for air transportation; and
-- prohibits rebates by air freight shippers.
OMB recommends approval and provides additional background
information in its enrolled bill report (Tab A).
Max Friedersdorf and Phil Areeda both recommend approval.
RECOMMENDATION
That you sign S. 3481 (Tab B).
STATE FORD LIBRARY
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
DEC 26 1974
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill S. 3481 - International Air Transportation
Fair Competitive Practices Act of 1974
Sponsors - Sen. Cannon (D) Nevada, Sen. Cotton (R)
New Hampshire and Sen. Magnuson (D) Washington
Last Day for Action
January 4, 1975
Purpose
Provides for Federal agency review and action on discriminatory
or unfair international air transportation practices or user
charges; requires the CAB to establish compensatory air mail
transportation rates; promotes the use of U.S. flag air carriers
in international transportation; requires ticket agents to charge
the currently effective tariff for air transportation; and pro-
hibits rebates by air freight shippers.
Agency Recommendations
Office of Management and Budget
Approval
Department of Transportation
Approval (Signing
statement attached)
Department of State
Approval
Civil Aeronautics Board
No objection
U. S. Postal Service
No objection
Department of Justice
Defers to other agencies
Department of the Treasury
No objection (Informally)
Council on International Economic
Approval
Policy
2
Discussion
S. 3481 would direct various Federal agencies, including Treasury,
State, DOT, and the Civil Aeronautics Board, to review discri-
minatory and unfair competitive practices to which U.S. air
carriers are subjected and to work to eliminate those practices,
including requesting new authorizing legislation where necessary.
It would require an annual report from the CAB to the Congress
on these actions.
The bill would also direct the Secretary of Transportation (1)
to determine whether user charges at foreign points unreasonably
exceed comparable charges for furnishing such airport and airway
property in the U.S. or are otherwise discriminatory; and if
so, (2) to negotiate with the country concerned to reduce its
charges and in the absence of such reduction to impose compensa-
tory charges with prior approval of the Secretary of State on
the air carriers of the country concerned. It will be difficult
to implement this section because it is extremely difficult to
determine what charges are "comparable" since different forms
of airport ownership and management apply in the different
countries. In addition, under the Chicago Convention, the U.S.
may retaliate for discriminatory charges, but not for merely
excessive charges which are not discriminatorily applied.
Accordingly we could be accused of unjustified discrimination.
In letters to the Senate and House Commerce Committees, State
pointed out that this could set a precedent which could invite
retaliation by other countries. However, in its views letter
on the enrolled bill, State indicates that the bill refers to
"unreasonably" excessive charges and that in view of this, "we
would expect that in practice U.S. interpretation and implementa-
tion of these provisions would be consistent with our treaty
obligations inasmuch as such retaliatory measures as might be
necessary would be applied in all cases where discrimination
had been shown."
The bill would require the CAB to act expeditiously on proposed
changes in the rates for transportation of mail by U.S. flag
international carriers. It would require that in establishing
mail rates for U.S. flag carriers, the CAB consider (1) the
rates for transporting mail established by the international
Universal Postal Union (UPU) ; (2) all of the ratemaking elements
employed by the UPU in fixing its airmail rates; and (3) the
competitive disadvantage to U.S. flag carriers resulting from
foreign carriers receiving UPU rates. This bill would require
the CAB to reexamine the temporary rates it established in
early November 1974, in light of the requirements of these
provisions.
SEALLS of Fees
3
The mail rates provisions are a vast improvement over the House-
passed version of the bill, which would have required that U.S.
carriers receive the same rate as the UPU rates, which are
excessively high and unrelated to costs. Currently, only about
two percent of U.S. mail moves at the UPU rates, when no other
carriage is available. The UPU rate if applied to all U.S.
carriers would be inflationary and contain elements of a subsidy.
The U.S. Postal Service estimated that the application of UPU
rates would cost over $95 million per year and would raise the
international airmail rate from 21 and 26 cents to 27 and 35
cents per half ounce. It is estimated that Pan American would
have received about 40 percent and TWA about 20 percent of that
increase, since they carry the largest volume of mail.
The bill would also encourage private citizens to use U.S.
carriers in all travel between the U.S. and other countries and
would require that all U.S. federally financed travel between
the U.S. and other countries or between two points outside the
U.S. be on U.S. carriers if possible. This would apply to
contractors, subcontractors, and international agencies using
U.S. funds notwithstanding earlier State Department concerns
with the applicability to international agencies. Because
international agencies are often forbidden by their charters from
tying their purchases to a particular country, the State Department
asked, in letters to the Senate and House Commerce Committees,
that international agencies be exempted. In its views letter
on the enrolled bill State did not object to this provision.
The bill would extend the Federal Aviation Act to require ticket
agents as well as air carriers to observe currently effective
tariffs and charges for air transportation. Currently, the
prohibition against charging other than current rates applies
only to domestic and foreign air carriers, and not to ticket
agents. This provision would also authorize the CAB to inspect
all records of air carriers and ticket agents. As a practical
matter, this may encourage foreign entities to keep their records
abroad, beyond the CAB's authority.
The bill would also generally prohibit the solicitation or
acceptance of rebates respecting shipping rates and other practices
resulting in paying other than the current tariffs. Current law
forbids air carriers from such practices.
BERGED FORD
4
In its views letter on the enrolled bill, the CIEP
comments and recommends as follows:
"S. 3481 is basically an unnecessary and unsatis-
factory bill which will provide little financial
relief for US international carriers and cause a
number of problems in its implementation. These
problems are not, however, so great that I would
urge a veto.
"Therefore, given the fact that the bill (1) has
strong labor support, (2) would be tangible evi-
dence of Administration support of our interna-
tional carriers, and (3) no longer mandates UPU
rates, I recommend the President sign S. 3481."
We concur in these comments and, accordingly, recommend
your approval of the bill.
neefred $. 74 Ronemel
for
Registrative
Reference
Enclosures
FORD LIBRARY
OF
REPARTMENT THE TREASURY
THE
THE GENERAL COUNSEL OF THE TREASURY
WASHINGTON. D.C. 20220
1789
DEC 24 1974
Director, Office of Management and Budget
Executive Office of the President
Washington, D. C. 20503
Attention: Assistant Director for Legislative
Reference
Sir:
Your office has asked for the views of this Department on the
enrolled enactment of S. 3481, "To amend the Federal Aviation Act of
1958 to deal with discriminatory and unfair competitive practices in
international air transportation, and for other purposes.'
Section 2 of the enrolled enactment would require the Department
of State, the Department of the Treasury, the Department of Trans-
portation, the Civil Aeronautics Board and other agencies to keep
under review all forms of discrimination or unfair competitive prac-
tices to which United States air carriers are subject in providing
foreign air transportation services and each would be required to
take appropriate action within its jurisdiction to eliminate such
forms of discrimination or unfair competitive practices found to
exist.
Section 3 would provide that if the Secretary of Transportation
determines that excessive or discriminatory charges are being made
for the use of foreign airport property or airway property, the
Secretary of State (in collaboration with the Civil Aeronautics Board)
shall undertake negotiations to reduce charges which are excessive
or eliminate charges which are discriminatory. If, within a reason-
able time, the charges are not reduced or eliminated by negotiation,
the Secretary of the Treasury would be required (with approval of
the Secretary of State) to impose charges on the air carrier or
carriers of the foreign country concerned. Amounts collected by
reason of such charges would be paid into an account established by
the Secretary of the Treasury for the purpose of compensating United
States air carriers for excessive or discriminatory charges paid by
them to the foreign countries involved.
- 2 -
Section 5 of the enrolled enactment would encourage travel to
and from the United States on United States carriers and would require
that transportation of government-financed passengers and property be
on United States carriers.
The Department would have no objection to a recommendation that
the enrolled enactment be approved by the President insofar as sec-
tions 2, 3 and 5 are concerned.
Sincerely yours,
General Counsel
GERAL R. FORD
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.: 864
Date: December 28, 1974
Time: 10:00 a.m.
FOR ACTION: Mike Duval ohposs
cc (for information): Warren Hendriks
Phil Areeda oh DMITS ss
Jerry Jones
Max Friedersdorf oh tomit statement
Paul Theis oh
FROM THE STAFF SECRETARY
DUE: Date: Monday, December 30
Time:
1:00 p.m.
SUBJECT:
Enrolled Bill S. 3481 - International Air Transportation
Fair Competitive Practices Act of 1974
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
XX For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
THE FORD VERIFY
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
K. R. COLE, JR.
telephone the Staff Secretary immediately.
For the President
THE WHITE HOUSE
JION MEMORANDUM
WASHINGTON
LOG NO.: 864
Date:
December 28, 1974
Time:
10:00 a.m.
FOR ACTION: Mike Duval
ph Roso
Ross
CC (for information): Warren Hendriks
Phil Areeda
Jerry Jones
Max Friedersdorf
Paul Theis
FROM THE STAFF SECRETARY
DUE: Date: Monday, December 30
Time:
1:00 p.m.
SUBJECT:
Enrolled Bill S. 3481 - International Air Transportation
Fair Competitive Practices Act of 1974
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
Warren K. Hendriks
telephone the Staff Secretary immediately.
For the President
THE WHITE HOUSE
WASHINGTON
WARREN HENDRIKS
MEMORANDUM FROM: Ven FOR: Lowfor MAX L.
FRIEDERSDORF
SUBJECT:
Action Memorandum - Log No. 864
Enrolled Bill S. 3481
The Office of Legislative Affairs concurs in the attached proposal
and has no additional recommendations.
Attachment
SEAL
sent to mike 12/30
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.: 864
Date: December 28, 1974
Time: 10:00 a.m.
FOR ACTION: Mike Duval
cc (for information): Warren Hendriks
Phil Areeda
Jerry Jones
Max Friedersdorf
Paul Theis
FROM THE STAFF SECRETARY
DUE: Date: Monday, December 30
Time:
1:00 p.m.
SUBJECT:
Enrolled Bill S. 3481 - International Air Transportation
Fair Competitive Practices Act of 1974
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
which
we
don't
1) 2) Sign omt -IT the the It auggests bill he andestood DoT's to this Activoguent. commit 012 the plan" good the 11 legislation, President when there are to all SEAL
statemet because
1
aspects
may of inter agency P. And
TORD d LIBRARY
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
Warren K. Hendriks
telephone the Staff Secretary immediately.
For the President
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.: 864
Date: December 28, 1974
Time: 10:00 a.m.
FOR ACTION: Mike Duval
CC (for information): Warren Hendriks
Phil Areeda
Jerry Jones
Max Friedersdorf
Paul Theis Vr 12/20/24
01/01/2015
FROM THE STAFF SECRETARY
DUE: Date: Monday, December 30
Time:
1:00 p.m.
SUBJECT:
Enrolled Bill S. 3481 International Air Transportation
Fair Competitive Practices Act of 1974
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Ranin
For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
FORD 1 LIBRARY
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
Warren K. Hendriks
telephone the Staff Secretary immediately.
For the President
DRAFT STATEMENT
Remarks of President Ford upon signing S. 3481
5.3481,
I take great pleasure in signing the International Air
This act
Transportation Fair Competitive Practices Act
it
symbolizes
Congressional support of-the objectives of the Administration's
Federal Action Plan to improve the economic viability of
scheduled and charter U. S. flag international air service. The
the Executive and legislature
Bill Alaro signifies that all branches of the Federal Government are
determined to improve the competitive opportunities of U. S. flag
international air carriers. I am particularly pleased that the Bill
omits Federal subsidies, either direct or indirect.
OF
DEPARTMENT
OFFICE OF THE SECRETARY OF TRANSPORTATION
WASHINGTON, D.C. 20590
UNITED STATES OF AMERICA
December 20, 1974
GENERAL COUNSEL
Honorable Roy L. Ash
Director, Office of Management and Budget
Washington, D. C. 20503
Dear Mr. Ash:
You have asked for our comments on S. 3481, an enrolled bill
"To amend the Federal Aviation Act of 1958 to deal
with discriminatory and unfair competitive practices
in international air transportation, and for other
purposes. 11
Section 2 of the enrolled bill requires the Civil Aeronautics Board
to report annually to Congress on the actions that have been taken
to eliminate discrimination and unfair competitive practices faced
by United States carriers in foreign air transportation. We would
have preferred that the Department of State, rather than the CAB,
be made responsible for the report to Congress.
Section 3 of the enrolled bill requires the Department of State to
report to the Secretary of Transportation negative results of
negotiations to eliminate discrimination with respect to charges made
to air carriers by foreign countries. The Secretary of Transportation
would then be required to determine the amount and certify the payment
of compensating charges equal to such excessive discriminatory
charges to the air carriers involved. Such compensatory charges
would, with the approval of the Secretary of State, be imposed on the
foreign air carriers of the country concerned by the Secretary of the
Treasury. Amounts so collected would be used to compensate United
States air carriers for excessive or discriminatory charges paid by
them to the foreign countries involved.
We have a number of reservations concerning the provision establishing
a fund for compensating U.S. air carriers. First, we would hope that
the problem of excessive and discriminatory charges could be handled
successfully by the Secretary of State through the negotiations conducted
2
with the foreign countries involved. Secondly, failing success in that
area, we would prefer to look to action on the part of the CAB under
Part 213 of their Economic Regulations. Finally, we are concerned
that any attempt to retaliate against "excessive" charges imposed on
our carriers by foreign countries might be inconsistent with our
international obligations.
We are gratified to see that Section 4 of the bill does not require the
payment of Universal Postal Union (UPU) rates. The provisions on
rates for transportation of U.S. mail in foreign air transportation
now in Section 4 are in general accord with our earlier recommendations
to the Congress.
We support Section 5 of the bill (Transportation of Government-Financed
Passengers and Property) as well as Section 6 of the bill (Promotion
of Travel on United States Carriers in Foreign Air Transportation).
These provisions are in general accord with our Action Plan to aid
United States flag international carriers without subsidy.
Sections 7 and 8 require the observance of tariffs by ticket agents and
prohibit solicitation or acceptance of rebates by shippers of air freight.
The existing law applies only to air carriers and foreign carriers.
Should this increased coverage prove to be insufficient, it is our
intention to submit additional legislation as may be necessary.
While there are some provisions in the enrolled bill which are not
in accord with our earlier recommendations, the provision which
would have made the bill unacceptable--payment of UPU rates is
not in the legislation. The enrolled bill is now supportive of and is
generally consistent with the Administration's Federal Action Plan.
We, therefore, recommend that the President sign the enrolled bill.
We have enclosed a draft statement for use by the President upon
signing S. 3481.
Sincerely,
Rod langh
Rodney E. Eyster
General Counsel
Enclosure
DRAFT STATEMENT
Remarks of President Ford upon signing S. 3481
I take great pleasure in signing the International Air
Transportation Fair Competitive Practices Act because it symbolizes
Congressional support of the objectives of the Administration's
Federal Action Plan to improve the economic viability of all
scheduled and charter U. S. flag international air service. The
Bill also signifies that all branches of the Federal Government are
determined to improve the competitive opportunities of U. S. flag
international air carriers. I am particularly pleased that the Bill
omits Federal subsidies, either direct or indireet.
DEPARTMENT OF STATE
Washington, D.C. 20520
DEC 2 0 1974
Honorable Roy L. Ash
Director, Office of
Management and Budget
Washington, D. C. 20503
Dear Mr. Ash:
In response to your request of December 19, our views
and recommendations on enrolled bill S. 3481 are as
follows:
This legislation was initiated at the instance of
Pan American and TWA. While its objectives are con-
sistent with the Administration's Seven-Point Program
to help improve the financial condition of US carriers,
Section 3 could involve the United States Government
in actions inconsistent with international agreements
and could have some adverse effects on the long-run
position of the US carriers the bill is intended to
help. While we remain opposed to the provisions of
Section 3 in their present form, we would not, in the
light of other positive aspects of the legislation,
recommend veto.
Section 2 of this legislation contains a declaration
of policy and a request for an annual report by the
Civil Aeronautics Board on discrimination and unfair
competitive practices to which US flag air carriers are
subject in foreign air transportation.
Section 3 requires the Secretary of Transportation to
survey foreign charges for airports and airways and if
he determines that such charges "unreasonably exceed
comparable charges for furnishing such airport property
or airway property in the United States or are otherwise
discriminatory,' this Department in collaboration with
the CAB is required to seek reduction of the charges or
elimination of the discrimination through negotiations.
If these are unsuccessful, compensating charges are to
be imposed on the carriers of the foreign government
concerned and these amounts paid to the US carriers
who were required to pay excessive or discriminatory
charges.
-
074836
2
In the case of discriminatory charges, this provision
reinforces our current policy. However, insofar
as charges which are simply excessive are concerned,
there could be a problem, since the International
Civil Aviation Convention (Chicago 1946) and our in-
dividual bilateral air transport agreements forbid
discrimination among carriers of different nations
in respect to airport charges. Thus this legislation
could well stimulate the allegation that the United
States proposed to create an unjustified discrimina-
tion. In response we would point out that the legis-
lation does not apply simply to excessive charges,
but to "unreasonably" excessive charges, which we
believe is properly interpreted to mean discriminatory
charges. This view is substantiated by the language
of Section 3 where it refers to unreasonably excessive
charges or charges which "are otherwise discriminatory."
Thus, we would expect that in practice U.S. interpre-
tation and implementation of these provisions would
be consistent with our treaty obligations inasmuch
as such retaliatory measures as might be necessary
would be applied in all cases where discrimination
had been shown.
Section 4 requires the Secretary of State to oppose
any present or proposed Universal Postal Union rates
which are higher than fair and reasonable rates.
We support this provision. However, we would note
that an opportunity to challenge the existing Universal
Postal Union rates will not occur until 1979.
Section 5 requires the use of U.S. carriers where
a payment is by the United States Government or with
funds granted by the United States Government. It
also applies this requirement where the United States
Government furnishes transportation without reimburse-
ment to foreign nations or international agencies
or other international organizations. This provision
addresses one of the objectives of the Administration's
Seven-Point Program.
Section 6 adds to the international travel act of
1961, the additional objective to "encourage to the
maximum extent feasible travel to and from the United
States on U.S. carriers." This is another item in
3
the Administration's Seven-Point Program. Although
we have received protests from the British, French
and the International Chamber of Commerce against
this aspect of the Seven Point Program, it is our
view that this objective can be carried out consis-
tently with our obligations and in such a way as to
help assure that U.S. carriers receive a fair competi-
tive share of the international traffic serving the
United States.
For these reasons we recommend approval of this
legislation.
Sincerely,
Linwood Holton
Assistant Secretary
for Congressional Relations
CIVIL AERONAUTICS BOARD
WASHINGTON, D.C. 20428
IN REPLY REFER TO:
B-30-39
STATES DI
December 23, 1974
Honorable Roy L. Ash
Director, Office of Management
and Budget
Washington, D. C. 20503
Dear Mr. Ash:
As your staff was advised earlier today, the
Board does not object to S.3481, as adopted by the
Congress on December 19, 1974, being signed by the
President into law.
While the Act may present various problems
of administration, particularly in respect to
section 3 ("International User Charges"), it
is the Board's view that the Act will have a
net beneficial impact.
Sincerely,
Thomas J. Heye
General Counsel
FORD & Lineacy
ATES
POSTA
UNITED *
U.S.MAIL
SERVICE *
*******
LAW DEPARTMENT
Washington, DC 20260
Dear Mr. Rommel:
This responds to your request for the views of the Postal Service
with respect to the enrolled bill:
S. 3481, the "International Air Transportation Fair
Competitive Practices Act of 1974. "
1. Purpose of Legislation.
The interest of the Postal Service
in this legislation centers on sec-
tion 4. That section requires the
Secretary of State and the Post-
master General to take whatever
actions are appropriate to attempt
to assure that the rates paid for
the transportation of mail pursuant
to the Universal Postal Union shall
not be higher than fair and reason-
able rates for such services. The
section also requires the Civil
Aeronautics Board to act expeditiously
on pending changes in international
mail transportation rates and, in
fixing such rates, to take into con-
sideration UPU rates and related
matters.
2.
Position of the Postal
On June 24, 1974 the Postal Service
Service.
filed the attached report opposing
an earlier version of section 4 of
the bill which would have required
the Postal Service to pay the same
international mail rates to U.S. flag
carriers that it pays to foreign air
-2-
carriers. During the course of
the consideration of the bill the
section opposed by the Postal
Service was eliminated and the
present text of section 4 was
inserted as a compromise. Accord-
ingly, the Postal Service no longer
has any reason to object to the
enactment of the legislation.
3. Timing.
We have no recommendation to make
as to when the measure should be
signed.
4. Costs or Savings.
At this time it is not possible to
predict whether section 4 will
result in any additional costs or
savings to the Postal Service.
5. Recommendation of
The Postal Service does not object
Presidential Action.
to Presidential approval of S. 3481.
W. Sincerely, allen Sanders
W. Allen Sanders
Assistant General Counsel
Legislative Division
Attachment:
Postal Service report to
Chairman Staggers dated
June 24, 1974.
Mr. W.H. Rommel
Assistant Director
Legislative Reference
Office of Management
and Budget
Washington, D.C. 20503
1020
ON RALD
TATES
POSTA
UNITED
SERVICE
U.S.MAIL
*
LAW DEPARTMENT
Washington, DC 20260
June 24, 1974
Dear Mr. Chairman:
This responds to your request for the views of the Postal Service on
H.R. 14266, legislation to amend the Federal Aviation Act of 1958
(the Act).
Section 4 of the bill would amend subsection (h) of section 406 of the
Act (49 U.S. C. 1376) to add the requirement that the Civil Aeronautics
Board fix rates no lower for transportation of non-military mail by a
U.S. flag carrier between the United States and a foreign country than
the rates payable by the Postal Service to a foreign air carrier trans-
porting mail between the same two countries. Since this measure pro-
poses an unwarranted subsidy to air carriers to be paid by the Postal
Service, the Postal Service opposes its enactment.
The international rates which section 4 would require the Postal Service
to pay, as a minimum, to U.S. carriers over international routes are
Universal Postal Union rates fixed for political and operational reasons
at levels sharply higher than can be justified for payment by the United
States to U.S. flag carriers. First of all, the UPU rates reflect prin-
cipally the mean level of projected unit operating costs submitted to the
International Air Transport Association by member airlines. Since most
members are high-cost, short-haul carriers, often operated to "show
the flag" with high redundancy in employment as a matter of national
policy, the mean figure generated by this system bears little relation
to the costs of the relatively efficient long-haul U.S. carriers. In
addition, the reliability of cost projections submitted to the international
organization is questionable compared to that of the actual cost figures
required for submission before CAB rate proceedings, which can be
-2-
tested through cross-examination if a hearing is conducted or by com-
parison to disclosure reports on public file. A second factor in the
UPU rate -- a series of arbitrary percentage surcharges for priority
service, special handling, development of air service, and value of
service makes the rate even less responsive to the actual costs of
U.S. carriers. The resulting distortion in the rate structure is apparent
from a comparison of the CAB-fixed airmail rate, which varies from a
low of $0.288 per ton-mile in the Pacific area to a high of $0. 325 in the
Latin American area, with the UPU airmail rate to be introduced this
summer for letters and cards of $1.90 per comparable mileage standard.
To require the CAB to fix internati rates at least as high as the UPU
rates would be a drastic deporture From the principles now applicable
to the setting of rates by the Board for the carriage of mail by air. Sec-
tion 406(a) of the Act, 49 U.S. C. 1376(a), requires above all that such
rates be fair and reasonable. The idea that postal ratepayers should
subsidize the airlines through the rates set by the Board was rejected
over 20 years ago. Reorganization Plan No. 10 of 1953, 67 Stat. 644;
Act 406(c), 49 U.S. C. 1376(c). Protection of the air transportation
industry is important; but such protection should not be provided at the
expense of the Postal Service which has extremely difficult problems
of its own to solve.
The subsidy proposed by section 4 would not serve in any way the stated
purposes of this legislation to deal with discrimination and unfair competi-
tion in international air transportation. Section 406(h) of the Act already
requires the Postmaster General to see that he pays no higher rate to a
foreign air carrier than the rate the foreign country pays to U.S. flag
carriers. Since the UPU rates are inordinately high, the Postal Service
uses foreign flag carriers only where U.S. flag service is non-existent
or infrequent. For example, in fiscal year 1973, U.S. flag carriers
provided international transportation for non-military United States
mail totaling 110, 628, 000 ton-miles, compared to 1, 397, 000 ton-miles
provided by foreign flag carriers. To require the United States to pay
its own carriers the UPU rates just because the United States is required
by international agreement to pay those inflated rates in the relatively
few situations where foreign flag service is used, and even though other
countries are required to reciprocate, would tend in no way to encourage
the UPU rates to be set at a proper level and would result only in a
windfall to the airlines.
-3-
For the reasons stated, the Postal Service urges that section 4 of this
bill be deleted if the bill is to be favorably considered.
Sincerely,
W.
W. Allen Sanders
Assistant General Counsel
Legislative Division
Honorable Harley O. Staggers
Chairman, Committee on Interstate
and Foreign Commerce
House of Representatives
Washington, D.C. 20515
ASSISTANT ATTORNEY GENERAL
LEGISLATIVE AFFAIRS
Department of Justice
Washington, D.C. 20530
DEC 23 1974
Honorable Roy L. Ash
Director, Office of Management
and Budget
Washington, D.C. 20503
Dear Mr. Ash:
In compliance with your request, I have examined a facsimile of
the enrolled bill (S. 3481), "To amend the Federal Aviation Act of 1958
to deal with discriminatory and unfair competitive practices in inter-
national air transportation, and for other purposes".
The bill would direct Government agencies, specifically the
Departments of State, Treasury, and Transportation, the Civil Aeronautics
Board, and the Postal Service, to review the different forms of discri-
mination and unfair competitive practices to which U.S. air carriers
are subject and to act to eliminate such practices. It would set up
machinery to deal with such specific practices as unfair or discrimi-
natory airport and airway user charges and inequitable payments for the
international transportation of mail; it would require the preferred
use of U.S. flag carriers when performing service to be paid from U.S.
Government funds; and it would further direct the encouragement of
travel to and from the United States on U.S. flag carriers by the
Department of Commerce. These provisions would be effected through
amendments to the International Aviation Facilities Act (49 U.S.C.
1151-1160), the Federal Aviation act of 1958 (49 U.S.C. 1376, 1501-1513)
and the International Travel Act of 1961 (22 U.S.C. 2122).
Since the avowed purpose of the bill is to strengthen the authority
of the named agencies to deal with various unfair practices of foreign
governments and foreign air carriers, the amendments would be necessary
to confer such authority because at present the referenced statutes do
not contain the specific requirements which are in S. 3481.
The Department of Justice defers to the interested agencies named
in S. 3481 as to recommendations for Executive action.
Sincerely,
W. Vincent Rakestraw
Assistant Attorney General
COUNCIL ON INTERNATIONAL ECONOMIC POLICY
WASHINGTON, D.C. 20500
December 23, 1974
-
your
MEMORANDUM
SERVICE
FOR:
W. H. ROMMEL
FROM:
W. D. EBERLE
me
SUBJECT:
CIEP Comments on Enrolled Bill S 3481
(The International Air Transportation
Fair Competitive Practices Act of 1974)
This is in response to your request for CIEP views on
S 3481.
General Comments
S 3481 is basically an unnecessary and unsatisfactory
bill which will provide little financial relief for US
international carriers and cause a number of problems in
its implementation. These problems are not, however,
so great that I would urge a veto.
Therefore, given the fact that the bill (1) has strong
labor support, (2) would be tangible evidence of Adminis-
tration support of our international carriers, and (3) no
longer mandates UPU rates, I recommend the President
sign S 3481.
Specific Comments
Section 3 - User Charges. By using a test of "unreasonable
excess" over comparable US charges, the bill may (as
the State Department has noted) violate Section 15 of the
Chicago Convention. In addition, such test neglects the
main problems with many foreign user charges -- i.e. they
are not cost based and often involve cross subsidization
in that international flights are used to subsidize domestic
flights.
The use of the "unreasonable excess" test could mean that
the US would be required to retaliate against higher foreign
charges even though they were cost based. To avoid such
a result, one would need to argue that an excess was
not "unreasonable" if it was cost based; and the legislative
history does not seem to suggest such an interpretation.
-2-
Section 4 - Mail Rates. The Section 4 (2) requirements
that the US (1) take appropriate action to ensure UPU
rates not "higher than fair and reasonable rates for such
service" and (2) oppose present UPU rates will provide no
near term relief for our carriers. The next UPU rate
setting will not take place for 2-3 years and there is no
assurance that the US view would prevail. Furthermore,
opposition to present UPU rates provides no meaningful
financial relief to US carriers and does not reduce
the alleged competitive advantage obtained by foreign
carriers when their governments pay them UPU rates.
The Section 4 (3) provisions no longer mandate UPU rates
for US carriers --- thus removing the major Administration
objection to the bill. It merely requires the CAB to
"take into account" UPU ratemaking elements (e.g. value
of service and development of service). This still leaves
the CAB with considerable discretion, and there is apt to
be controversy over the precise application of the mandate.
Section 5 and 6. These sections are unnecessary to accomplish
the intended results as (1) GSA regulations already
require USG personnel and USG financed contractors to use
US carriers and (2) the Administration has already insti-
tuted a "Fly US Program".
Section 7. Section 7 (b) amends the existing Federal Aviation
Act to extend CAB inspection powers to foreign carriers.
This may create problems when CAB officials seek access
to records and documents of foreign carriers located outside
the US. We may expect carrier resistance (and possible
diplomatic protests) similar to those encountered in
1960 when the Federal Maritime Commission tried to collect
documents from foreign shippers pursuant to Section 21 of
the Shipping Act of 1916. The grounds for such resistance
(or protest) would be that the US does not have jurisdiction
over documents, records, etc. outside the US.
Sections 7 and 8. Sections 7 and 8 are, perhaps, the most
useful provisions of the bill in that they clear up a
dispute over the type of rebates that are illegal which
has been handicapping Justice Department efforts to prosecute
foreign air carriers for illegal discounting and rebating.
EXECUTIVE OFFICE OF THE PRESIDENT
Dramo
12-26-7m.
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
DEC 26 1974
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill S. 3481 - International Air Transportation
Fair Competitive Practices Act of 1974
Sponsors - Sen. Cannon (D) Nevada, Sen. Cotton (R)
New Hampshire and Sen. Magnuson (D) Washington
Last Day for Action
January 4, ,975
Purpose
Provides for Federal agency review and action on discriminatory
or unfair international air transportation practices or user
charges; requires the CAB to establish compensatory air mail
transportation rates; promotes the use of U.S. flag air carriers
in international transportation; requires ticket agents to charge
the currently effective tariff for air transportation; and pro-
hibits rebates by air freight shippers.
Agency Recommendations
Office of Management and Budget
Approval
Department of Transportation
Approval (Signing
statement attached)
Department of State
Approval
Civil Aeronautics Board
No objection
U. S. Postal Service
No objection
Department of Justice
Defers to other agencies
Department of the Treasury
No objection (Informally)
Council on International Economic
Approval
Policy
FORD VERIFY
93D CONGRESS
HOUSE OF REPRESENTATIVES
REPORT
2d Session
No. 93-1475
INTERNATIONAL AIR TRANSPORTATION FAIR
COMPETITIVE PRACTICES ACT OF 1974
NOVEMBER 19, 1974.-Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
Mr. STAGGERS, from the Committee on Interstate and Foreign
Commerce, submitted the following
REPORT
together with
DISSENTING VIEWS
[To accompany H.R. 14266]
The Committee on Interstate and Foreign Commerce, to whom
was referred the bill (H.R. 14266) to amend the Federal Aviation Act
of 1958 to deal with discriminatory and unfair competitive practices
in international air transportation, and for other purposes, having
considered the same, report favorably thereon with amendments and
recommend that the bill as amended do pass.
The amendments, as they appear in the reported bill, are as follows:
1. On the first page, line 6, strike out "Declaration of Policy" and
insert in lieu thereof "Discriminatory and Unfair Competitive
Practices".
2. On page 3, beginning in line 6, strike out "section 11 as section
12" and insert in lieu thereof "sections 11 and 12 as sections 12 and
13, respectively,".
3. On page 4, strike out line 16 and all that follows down through
line 5 on page 6, and insert in lieu thereof the following:
RATES FOR TRANSPORTATION OF UNITED STATES MAIL IN
FOREIGN AIR TRANSPORTATION
SEC. 4. Subsection (h) of section 406 of the Federal Avia-
tion Act of 1958 (49 U.S.C. 1376) is amended by inserting
"(1)" immediately after "(h)", and by adding at the end
thereof the following new paragraphs:
"(2) The Secretary of State and the Postmaster General
each shall take all necessary and appropriate actions to
38-006-74-1
2
3
assure that the rates paid for the transportation of mail
through any agent or broker, or otherwise, refund or remit
pursuant to the Universal Postal Union Convention shall
any portion of the rates, fares, or charge SO specified, or ex-
not be higher than the actual cost of transportation of the
tend to any person any privileges or facilities, with respect
mail (including a reasonable rate of return on investment).
to matters required by the Board to be specified in such
The Secretary of State and the Postmaster General shall
tariffs, except those specified therein."
oppose any present or proposed Universal Postal Union
(b) The first sentence of section 407 of such Act (49
rates which are higher than the actual costs of the trans-
U.S.C. 1377(e)), relating to inspection of accounts and
portation.
property, is amended to read as follows: "The Board shall
"(3) The Civil Aeronautics Board shall act expeditiously
at all times have access to all lands, buildings, and equip-
on any proposed changes in rates for the transportation of
ment of any air carrier or foreign air carrier and to all
mail by aircraft in foreign or overseas air transportation.
accounts, records, and memorandums, including all docu-
Pending final action on any rate proposals contained in Civil
ments, papers, and correspondence, now or hereafter existing,
Aeronautics Board docket 26487, the Board shall, by Decem-
and kept or required to be kept by air carriers, foreign air
ber 31, 1974, establish temporary rates based on the best
carriers, or ticket agents and it may employ special agents
available estimates of the actual cost of transporting the mail,
or auditors, who shall have authority under the orders of the
including, but not limited to, the cost of fuel and a reasonable
Board to inspect and examine any and all such lands, build-
rate of return on investment. In establishing rates under this
ings, equipment, accounts, records, and memorandums.".
paragraph the Board shall take into consideration rates paid
on the date of the enactment of this paragraph for transporta-
COMMITTEE AMENDMENTS
tion of mail pursuant to the Universal Postal Union Con-
vention as ratified by the United States Government.".
The committee amendments described above make only two sub-
4. On page 7, line 11, immediately after "Sec. 5." insert "(a)".
stantive changes in the proposed legislation.
5. On page 7, line 12, strike out "1501-1513" and insert in lieu
First, the Committee Amendment numbered (3) deleted from the
thereof "1501 and the following".
original bill Sec. 4 which provided that all rates paid to U.S. carriers
6. On page 7, line 13, strike out "the addition of the" and insert
for the carriage of international air mail shall be at the Universal
in lieu thereof "adding at the end thereof the".
Postal Union (UPU) rate. In place of this provision the Committee
7. On page 7, strike out lines 15 and 16 and insert in lieu thereof
inserted language which would require the appropriate authorities to
" "Transportation of Government-Financed Passengers and Property".
oppose any present or proposed UPU rate which is higher than the
8. On page 7, line 19, strike out "1114" and insert in lieu thereof
actual cost of the transportation and would require the CAB to act
"1117".
quickly on any pending change with respect to the mail rates it has
set for our international carriers. Pending such action the CAB must
9. On page 8, immediately after line 22, insert the following:
establish temporary rates based on all costs and including a reasonable
(b) That portion of the table of contents contained in
the first section of the Federal Aviation Act of 1958 which
rate of return. The CAB must consider the UPU rates before approval
of any new rates.
appears under the center heading "TITLE XI-MIS-
Second, the committee amendment numbered 10 amends section
CELLANEOUS" is amended by adding at the end thereof
403(b) of the Federal Aviation Act, relating to observance of tariffs
the following new item:
and prohibiting rebating, to require ticket agents to observe currently
"SEC. 1117. TRANSPORTATION OF GOVERNMENT-FINANCED
effective tariffs and to prohibit rebating by ticket agents.
PASSENGERS AND PROPERTY.".
PURPOSE
10. On page 9, immediately after line 12, insert the following:
The purpose of H.R. 14266 is to deal specifically with several of the
major problems that U.S. air carriers operating in foreign air trans-
OBSERVANCE OF TARIFFS BY TICKET AGENTS
portation encounter in their competition with foreign air carriers.
SEC. 7. (a) The first sentence of section 403(b) of the
First, the bill provides relief to U.S. air carriers operating in in-
Federal Aviation Act of 1958 (49 U.S.C. 1373 relating to
ternational air transportation from discriminatory and unfair com-
observance of tariffs and prohibition against rebating, is
petitive practices to which these carriers have been subjected in their
amended to read as follows: "No air carrier or foreign air
competition with foreign air carriers.
carrier or any ticket agent shall charge or demand or collect
Second, the bill requires expeditious action on any proposed changes
or receive a greater or less or different compensation for air
in rates for transportation of mail by our international carriers and
transportation, or for any service in connection therewith,
mandates that any UPU rates which are higher than the actual cost
than the rates, fares, and charges specified in then currently
of transportation be opposed by the Secretary of State and the Post-
effective tariffs of such air carrier or foreign air carrier; and
master General.
no air carrier or foreign air carrier or ticket agent shall, in
Third, the bill encourages travel to and from the U.S. on U.S.
any manner or by any device, directly or indirectly, or
carriers and requires that transportation of government-financed
passengers and property be on U.S. carriers.
5
4
DISCRIMINATORY AND UNFAIR COMPETITIVE PRACTICES
Fourth, the bill specifically precludes any ticket agent from charging
or collecting a compensation for air transportation which is different
Subsection (a) of section 2 directs the CAB, and the Departments
from the currently effective tariff for such transportation.
of State, Treasury, and Transportation, and other Federl agencies, to
oversee and take appropriate action within their respective jurisdic-
HEARINGS
tions for the purpose of eliminating discriminatory or unfair competi-
tive practices to which United States air carriers are subjected in pro-
The Subcommittee on Transportation and Aeronautics held hearings
viding foreign air transportation.
on H.R. 13824, H.R. 14266, H.R. 14355, H.R. 14394, H.R. 14627,
Subsection (b) of section 2 provides that when a Government
H.R. 14970 and H. Res. 1405 on June 25, 26, July 10, 11 and October
department or agency finds that it does not have adequate authority
9, 1974.
to deal with any such discriminatory or unfair competitive practice
COMMITTEE ACTION
such department or agency shall request from the Congress appropriate
legislative authority.
On October 9, 1974, the Subcommittee on Transportation and Aero-
Subsection (c) of section 2 requires that an annual report concerning
nautics considered the various legislative proposals included in the
such discriminatory or unfair competitive practices be provided to
hearing record and decided to report H.R. 14266. The Subcommittee
the Congress by the CAB.
action was unanimous.
The Committee notes that discriminatory and unfair competitive
On October 10, 1974, the Committee on Interstate and Foreign
practices are prevalent in many of the 85 countries in which our air
Commerce considered H.R. 14266 and by voice vote, ordered the bill
carriers operate. These practices include the uneven application of na-
reported with two amendments.
tional taxes, delays and considerable paperwork requirements imposed
on U.S. carriers in currency conversions, preferences for the local
COST ESTIMATE
carrier in accessibility to airport facilities and services, and denial to
U.S. carriers of domestic connecting space within the foreign country.
The Committee estimates that no additional costs to the Federal
It is expected by the Committee that the responsible authorities in
Government need be incurred by the provisions of H.R. 14266, and
the U.S. Government act most vigorously to determine where these
makes no specific recommendation for authorization of appropriations.
practices exist and take all possible actions to eliminate the problem,
BACKGROUND AND NEED
INTERNATIONAL USER CHARGES
American flag carriers are experiencing severe financial problems in
Section 3 of H.R. 14266 adds a new section 11 to the International
their overseas operations. The Committee recognizes that a major
Aviation Facilities Act which provides that, if the Secretary of Trans-
cause of these problems is the substantial increase that has occurred
portation determines that excessive or discriminatory charges are
in the price of jet fuel which has risen from a price of approximately
being made for the use of foreign airport property or airway property,
13c per gallon in October of 1973 to the present price of 33c per gallon.
the Secretary of State (in collaboration with the CAB) shall undertake
The Committee feels, however, that the current crisis resulting from
negotiations to reduce charges which are excessive or eliminate charges
the rapid acceleration of fuel prices is only part of the reason our
which are discriminatory.
international carriers are having economic problems. These problems
If, within a reasonable time, the charges are not reduced or eliminated
are really more deep-seated, and are in great part, the result of
by negotiation, the Secretary of the Treasury shall impose (with the
difficulties that U.S. carriers in international air transport have been
approval of the Secretary of State) charges on the air carrier or carriers
experiencing for a long period of time. These difficulties are directly
of the foreign country concerned. Such charges shall be in an amount
related to the actions of foreign governments with respect to air travel
determined by the Secretary of Transportation to equal the amount
between their countries and the United States. Simply put, many
of the charges imposed by such foreign country, which are excessive or
friendly nations discriminate against our carriers.
H.R. 14266 is a response to this long-term situation and specifically
discriminatory.
is addressed to what the Committee feels to be the most serious
Amounts collected by reason of such charges shall be paid into an
account established by the Secretary of the Treasury for the purpose of
matters affecting our international air transport system. These matters
include the discriminatory practices by foreign countries against our
compensating United States air carriers for excessive or discriminatory
carriers, inadequate compensation for carriage of mail, underutiliza-
charges paid by them to the foreign countries involved.
tion of U.S. carriers by the U.S. government and citizens in travel to
Evidence was presented to the Committee of several types of un-
reasonable or discriminatory user charge practices. These practices
and from the U.S., and the ticketing practices of many travel agents.
include efforts to recover costs of all support systems for air trans-
SECTION-BY-SECTION ANALYSIS
portation from only the international users of such systems, discrim-
inatory assessment of such charges, and imposition of charges that
are above the level of reasonableness for the service rendered.
SHORT TITLE
Section 1 provides that this legislation may be cited as the "Inter-
national Air Transportation Fair Competitive Practices Act of 1974".
6
7
RATES FOR TRANSPORTATION OF U.S. MAIL IN FOREIGN
of the reasonable costs of mail carriage. Therefore the Committee
AIR TRANSPORTATION
rejected the original provisions of H.R. 14266 which would have
Section 4 amends section 406(h) of the Federal Aviation Act of
provided that our carriers receive the UPU rate for all mail hauled,
1958 by adding two new paragraphs.
including U.S. mail. Alternatively, the Committee felt that the CAB
The new paragraph (2) directs the Secretary of State and the Post-
had set the mail rates for U.S. mail hauled by our international
master General to take all necessary and appropriate actions to
carriers at too low a point to accurately reflect the cost of carriage.
limit the rates paid for the transportation of mail pursuant to the
Sec. 4 is structured SO as to require action that will result in the
Universal Postal Union Convention to the actual costs of such trans-
lowering of the UPU rate internationally, while also achieving an
portation (including a reasonable rate of return on investment). The
increase in the CAB-set mail rate. The new paragraph (2) that was
Secretary of State and the Postmaster General are also directed to
added to Sec. 406(h) of the Federal Aviation Act by the Committee
action on H.R. 14266 reflects the displeasure of the members with
oppose any present or proposed UPU rates that exceed such costs of
these excessively high UPU rates. It is the Committee's intent
transportation.
The new paragraph (3) added to section 406(h) requires the CAB
that the Secretary of State and the Postmaster General use all means
at their disposal to get the rates changed to more accurately reflect
to act expeditiously on any proposed changes in rates for foreign or
costs. Such means include steps to attempt to obtain the necessary
overseas air transportation of mail. The C.A.B. is also required by
December 31, 1974, to establish temporary rates pending final action
bilateral arrangements with foreign countries to charge less than the
UPU maximum on mail carriage between the U.S. and such countries,
on any rate proposals contained in C.A.B. docket 26487. Such
and steps to promulgate as soon as possible before 1979 a modifica-
temporary rates are to be based on the best available estimates
of the costs, including fuel costs and a reasonable rate of re-
tion, through the mechanism set out in Articles 118 and 119 of the
UPU General Regulations of the basic, UPU rate. (See Appendix B).
turn on investment, for the transportation of the mail. The current
rates for transporting mail pursuant to the Universal Postal Union
The new paragraph (3) added to Sec. 406(h) would require the CAB
Convention (as ratified by the United States) must be considered by
to act expeditiously on any proposed changes in the international mail
the C.A.B. in the establishment of rates under this paragraph.
rate now paid to U.S. carriers by the U.S. Postal Service. In establish-
In dealing with the problems of mail rates, the Committee was faced
ing any new rate, the CAB must take into consideration the fact that
with a situation in which two different rates are paid to carriers of U.S.
present UPU rates being paid worldwide are substantially higher than
international mail.
the rates the U.S. Postal Service pays to our carriers.
The Committee is aware that on November 11, the CAB established
First, there is the rate for the carriage of international air mail
(Order 74-11-47) a temporary mail rate to be paid to U.S. international
world-wide set by the Universal Postal Union (UPU), an international
body of 145 nations that has been in existence since 1874. This is the
carriers for the purpose of covering various increased costs including
the increased price of fuel. The Committee amendment would require
rate which is paid by the U.S. Postal Service to foreign air carriers
the CAB to reevaluate by December 31 this temporary rate to insure
carrying U.S. mail from the U.S. to foreign countries.
that it meets the requirements for such a rate set forth in the new
The UPU Convention provides that every five years a UPU
Congress will meet to make any necessary changes in the basic agree-
paragraph (3) added to Sec. 406(h), particularly the mandate that the
rates paid pursuant to the UPU Convention be taken into considera-
ment. The most recent of these meetings was in May of 1974 in
tion by the CAB in the establishment of new international mail rates.
Lausanne, Switzerland, and the next one is scheduled for 1979 in Rio
de Janeiro, Brazil. The presently applicable UPU mail rate was last
TRANSPORTATION OF GOVERNMENT-FINANCED PASSENGERS AND
modified at the Tokyo Congress in 1969. (See Appendix A) Article 65
PROPERTY
of the Protocol signed at this Congress provided that the maximum
rate that could be charged would be an amount equal to $1.73 per ton
Subsection (a) of section 5 adds a new section 1117 to the Federal
mile for carriage of letters and $.577 per ton mile for other mail.
Aviation Act of 1958 which provides that when foreign air trans-
The Convention signed at the Lausanne Congress earlier this year did
portation of persons or property is paid for or furnished by the United
not modify this rate structure although the United States and some
States Government, the appropriate agencies shall take necessary
other countries attempted to get it lowered.
steps to assure that such air transportation is furnished by United
The second of the two rates paid to carriers of U.S. international
States air carriers authorized to perform such transportation under
mail is the rate set by the CAB pursuant to Sec. 406 of the Federal
the Act. Expenditures from appropriated funds for foreign air trans-
Aviation Act to be paid to U.S. carriers for the carriage of our inter-
portation not meeting such requirements shall be disallowed by the
national mail.
Comptroller General unless satisfactory proof of necessity is shown.
There is a substantial difference between these rates. The CAB rate
Subsection (b) of section 5 amends the table of contents of the Act
is only 30 to 33c per ton mile compared to the $1.73 and 58c UPU
to reflect the addition of section 1117.
rates for letter and other mail respectively. In attempting to deal with
The Committee recognizes that many foreign governments require
this difference, the Committee decided to reach a compromise. It was
use of their carriers for official government transportation and often
felt on the one hand that the UPU rate was too high and was in excess
for transportation required by organizations or businesses in which
the government has an interest. This latter category is quite large
8
because of the fact that many of these governments are heavily in-
volved in the commercial and industrial activities of their countries;
in communist nations, of course, such involvement is virtually total.
As a result, business and government traffic originating abroad is
dominated by foreign carriers. Section 5 will counterbalance some of
the disparity by insuring that, to the extent service is available, U.S.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
government financed traffic is transported by U.S. carriers.
In compliance with clause 3 of rule XIII of the Rules of the House
PROMOTION OF FOREIGN TRAVEL ON U.S. CARRIERS
of Representatives, changes in existing law made by the bill, as
reported, are shown as follows (existing law proposed to be omitted is
Section 6 of the reported bill amends section 2 of the International
enclosed in black brackets, new matter is printed in italic, existing
Travel Act of 1961 to provide for the promotion by the Secretary of
law in which no change is proposed is shown in roman):
Commerce of travel to and from the United States on carriers of the
United States.
INTERNATIONAL AVIATION FACILITIES ACT
The Department of Commerce has stated that in 1973 only 47% of
the Americans flying scheduled flights to Europe flew on U.S. air-
lines. According to the Department, if the U.S. carriers' share of these
SEC. 11. The Secretary of Transportation shall survey the charges
passengers had been 50%, their added revenues would have amounted
made to air carriers by foreign governments or other foreign entities for
to $28 million.
the use of airport property or airway property in foreign air transpor-
It is evident that travel to and from the United States is a major
tation. If the Secretary of Transportation determines at any time that
part of the world tourist industry, and it is essential that the U.S.
such charges unreasonably exceed comparable charges for furnishing
government do all that it can to assist our carriers in securing a fair
such airport property or airway property in the United States or are
and solid share of this market.
otherwise discriminatory, he shall submit a report on such cases promptly
to the Secretary of State and the Civil Aeronautics Board, and the Sec-
OBSERVANCE OF TARIFFS BY TICKET AGENTS
retary of State, in collaboration with the Civil Aeronautics Board, shall
Subsection (a) of section 7 prohibits ticket agents from charging or
promptly undertake negotiations with the foreign country involved to
reduce such charges or eliminate such discriminations. If within a
receiving compensation for air transportation (or related services)
reasonable period such charges are not reduced or such discriminations
other than in amounts specified under currently effective tariffs. In
eliminated through negotiations, the Secretary of State shall promptly
addition, ticket agents are prohibited from giving rebates, refunds,
etc., except as provided in the tariffs.
report such instances to the Secretary of Transportation who shall deter-
mine compensating charges equal to such excessive or discriminatory
Subsection (b) of this section provides the CAB with access to the
charges. Such compensating charges shall, with the approval of the
records, accounts, and papers of travel agents.
Presently under section 403(b) of the Federal Aviation Act, the
Secretary of State, be imposed on the foreign air carrier or carriers of the
prohibition on such actions lies only against air carriers or foreign car-
country concerned by the Secretary of the Treasury as a condition to ac-
riers, and in the case of rebates and refunds, also against agents and
ceptance of the general declaration at the time of landing or takeoff of
brokers of such carriers.
aircraft of such foreign air carrier or carriers. The amounts so collected
shall accrue to an account established for that purpose by the Secretary of
Additionally, unders section 407(e), the CAB has authority to
the Treasury. Payments shall be made from that account to air carriers in
enter and to inspect both the facilities and the records of air carriers.
such amounts as shall be certified by the Secretary of Transportation in
The Committee amendment extends to ticket agents the prohibition
accordance with such regulations as he shall adopt to compensate such air
on charging other than tariff rates and refunding or rebating. Ticket
agents are defined in existing law (Sec. (35) of the Federal Aviation
carriers for excessive or discriminatory charges paid by them to the foreign
countries involved.
Act, 49 U.S.C. as persons other than air carriers who sell or
arrange air transportation. The Committee amendment makes such
UTILIZATION OF FACILITIES AND SERVICES OF OTHER GOVERNMENT
agents subject to the C.A.B. authority to have access to and inspect
AGENCIES
records.
SEC. [11] 12. The Administrator and the Chief of the Weather Bu-
reau are authorized and directed, in carrying out the provisions of this
Act, insofar as they find it practicable, to arrange for the use of appro-
priate facilities or services of other United States Government agen-
cies, and to reimburse any such agency for such service out of funds
appropriated to the Federal Aviation Agency or the Weather Bureau,
as the case may be, to the end that personnel and facilities of existing
(9)
H.R. 1475-2
10
11
United States Government agencies shall be utilized to the fullest
SO specified, or extend to any person any privileges or facilities, with
possible advantage and not be unnecessarily duplicated. Any agency
respect to matters required by the Board to be specified in such tariffs,
of the United States Government receiving any such request is hereby
except those specified therein. Nothing in this Act shall prohibit such
authorized to furnish such facilities or to perform such services.
air carriers or foreign air carriers, under such terms and conditions
as the Board may prescribe, from issuing or interchanging tickets or
AUTHORIZATION FOR APPROPRIATIONS
passes for free or reduced-rate transportation to their directors, offi-
SEC. [12] 13. There are hereby authorized to be appropriated such
cers, and employees (including retired directors, officers, and em-
sums as may be necessary to carry out the provisions of this Act.
ployees who are receiving retirement benefits from any air carrier or
foreign air carrier), the parents and immediate families of such offi-
cers and employees, and the immediate families of such directors;
widows, widowers, and minor children of employees who have died as
FEDERAL AVIATION ACT OF 1958
a direct result of personal injury sustained while in the performance
of duty in the service of such air carrier or foreign air carrier; wit-
nesses and attorneys attending any legal investigation in which any
such air carrier is interested; persons injured in aircraft accidents and
TABLE OF CONTENTS
physicians and nurses attending such persons; immediate families,
including parents, of persons injured or killed in aircraft accidents
*
*
*
*
*
where the object is to transport such persons in connection with such
TITLE XI-Miscellaneous
accident; and any person or property with the object of providing
relief in cases of general epidemic, pestilence, or other calamitous
Sec. 1101. Hazards to air commerce.
visitation; and, in the case of overseas or foreign air transportation, to
Sec. 1102. International agreements.
Sec. 1103. Nature and use f documents filed.
such other persons and under such other circumstances as the Board
Sec. 1104. Withholding of information.
may by regulations prescribe. Any air carrier or foreign air carrier,
Sec. 1105. Cooperation with Government agencies.
under such terms and conditions as the Board may prescribe, may
Sec. 1106. Remedies not exclusive.
grant reduced-rate transportation to ministers of religion on a space-
Sec. 1107. Public use of facilities.
available basis.
Sec. 1108. Foreign aircraft.
Sec. 1109. Application of existing laws relating to foreign commerce.
Sec. 1110. Geographical extension of jurisdiction.
RATES FOR TRANSPORTATION OF MAIL
Sec. 1111. Authority to refuse transportation.
Sec. 1112. Exemption of certain compensation of employees from withholding for
AUTHORITY TO FIX RATES
income tax purposes for other than State or subdivision of residence
and State or subdivision wherein more than 50 per centum of com-
SEC. 406. (a)
*
*
*
pensation is earned.
Sec. 1113. State taxation of air commerce.
*
*
*
Sec. 1114. Suspension of air services.
Sec. 1115. Security standards in foreign air transportation.
PAYMENTS TO FOREIGN AIR CARRIERS
Sec. 1116. Liability for certain property.
Sec. 1117. Transportation of Government-financed passengers and property.
(h) (1) In any case where air transportation is performed between
*
the United States and any foreign country, both by aircraft owned or
TITLE IV-AIR CARRIER ECONOMIC REGULATION
operated by one or more air carriers holding a certificate under this
title and by aircraft owned or operated by one or more foreign air
TARIFFS OF AIR CARRIERS
carriers, the Postmaster General shall not pay to or for the account
of any such foreign air carrier a rate of compensation for transporting
FILING OF TARIFFS REQUIRED
mail by aircraft between the United States and such foreign country,
SEC. 403. (a)
which, in his opinion, will result (over such reasonable period as the
Postmaster General may determine, taking account of exchange
fluctuations and other factors) in such foreign air carrier receiving a
OBSERVANCE OF TARIFFS; REBATING PROHIBITED
higher rate of compensation for transporting such mail than such
(b) No air carrier or foreign air carrier or any ticket agent shall
foreign country pays to air carriers for transporting its mail by air-
charge or demand or collect or receive a greater or less or different
craft between such foreign country and the United States, or receiving
compensation for air transportation, or for any service in connection
a higher rate of compensation for transporting such mail than a rate
therewith, than the rates, fares, and charges specified in [its] then
determined by the Postmaster General to be comparable to the rate
currently effective tariffs of such air carrier or foreign air carrier; and
such foreign country pays to air carriers for transporting its mail by
no air carrier or foreign air carrier or ticket agent shall, in any manner
aircraft between such foreign country and intermediate country on
or by any device, directly or indirectly, or through any agent or broker,
the route of such air carrier between such foreign country and the
or otherwise, refund or remit any portion of the rates, fares, or charges
United States.
12
13
(2) The Secretary of State and the Postmaster General each shall take
for the account of the United States, or shall furnish to or for the account
all necessary and appropriate actions to assure that the rates paid for the
of any foreign nation, or any international agency, or other organization,
transportation of mail pursuant to the Universal Postal Union Convention
of whatever nationality, without provisions for reimbursement, any
shall not be higher than the actual cost of transportation of the mail
transportation of persons (and their personal effects) or property by air
(including a reasonable rate of return on investment). The Secretary of
between a place in the United States and a place outside thereof or between
State and the Postmaster General shall oppose any present or proposed
two places both of which are outside the United States, the appropriate
Universal Postal Union rates which are higher than the actual costs of
agency or agencies shall take such steps as may be necessary to assure that
the transportation.
such transportation is provided by arr carriers holding certificates under
(3) The Civil Aeronautics Board shall act expeditiously on any
section 401 of this Act to the extent authorized by such certificates or by
proposed changes in rates for the transportation of mail by aircraft in
regulations or exemption of the Civil Aeronautics Board and to the
foreign or overseas air transportation. Pending final action on any rate
extent service by such carriers is available. The Comptroller General of
proposals contained in Civil Aeronautics Board docket 26487 the Board
the United States shall disallow any expenditure from appropriated funds
shall by December 31, 1974, establish temporary rates based on the best
for payment for such personnel or cargo transportation on an air carrier
available estimates of the actual cost of transporting the mail, including
not holding a certificate under section 401 of this Act in the absence of
but not limited to the cost of fuel and a reasonable rate of return on invest-
satisfactory proof of the necessity therefor. Nothing in this section shall
ment. In establishing rates under this paragraph the Board shall take
prevent the application to such traffic of the antidiscrimination provisions
into consideration rates paid on the date of the enactment of this para-
of this Act.
graph for transportation of mail pursuant to the Universal Postal Union
Convention as ratified by the United States Government.
*
*
ACCOUNTS, RECORDS, AND REPORTS
FILING OF REPORTS
SECTION 2 OF THE INTERNATIONAL TRAVEL ACT OF 1961
SEC. 407. (a)
*
SEC. 2. In order to carry out the purpose of this Act the Secretary
of Commerce (hereafter in this Act referred to as the "Secretary")
INSPECTION OF ACCOUNTS AND PROPERTY
shall-
(1) develop, plan, and carry out a comprehensive program
(e) The Board shall at all times have access to all lands, buildings,
designed to stimulate and encourage travel to the United States
and equipment of any carrier or foreign carrier and to all accounts,
by residents of foreign countries for the purpose of study, culture,
records, and [memoranda] memorandums, including all documents,
recreation, business, and other activities as a means of promoting
papers, and correspondence, now or hereafter existing, and kept or
friendly understanding and good will among peoples of foreign
required to be kept by air carriers foreign air carriers, or ticket agents
countries and of the United States;
and it may employ special agents or auditors, who shall have authority
(2) encourage the development of tourist facilities, low cost
under the orders of the Board to inspect and examine any and all such
unit tours, and other arrangements within the United States for
lands, buildings, equipment, accounts, records, and [memoranda]
meeting the requirements of foreign visitors;
memorandums. The provisions of this section shall apply, to the
(3) foster and encourage the widest possible distribution of
extent found by the Board to be reasonably necessary for the ad-
the benefits of travel at the cheapest rates between foreign coun-
ministration of this Act, to persons having control over any air carrier,
tries and the United States consistent with sound economic
or affiliated with any air carrier within the meaning of section 5(8)
principles;
of the Interstate Commerce Act, as amended.
(4) encourage the simplification, reduction, or elimination of
*
barriers to travel, and the facilitation of international travel
TITLE XI-MISCELLANEOUS
generally;
(5) collect, publish, and provide for the exchange of statistics
and technical information, including schedules of meetings, fairs,
and other attractions, relating to international travel and
TRANSPORTATION OF GOVERNMENT-FINANCED PASSENGERS AND
tourism
[.];
PROPERTY
(6) encourage to the maximum extent feasible travel to and from
the United States on United States carriers.
SEC. 1117. Whenever any executive department or other agency or
instrumentality of the United States shall procure, contract for, or other-
wise obtain for its own account or in furtherance of the purposes or
pursuant to the terms of any contract, agreement, or other special arrange-
ment made or entered into under which payment is made by the United
States or payment is made from funds appropriated, owned, controlled,
granted, or conditionally granted or utilized by or otherwise established
AGENCY COMMENTS
EXECUTIVE OFFICE OF THE PRESIDENT,
OFFICE OF MANAGEMENT AND BUDGET,
Washington, D.C., August 6, 1974.
Hon. HARLEY O. STAGGERS,
Chairman, Committee on Interstate and Foreign Commerce, House of
Representatives, Rayburn House Office Building, Washington, D.C.
DEAR MR. CHAIRMAN: This is in reply to your request for the
views of the Office of Management and Budget on H.R. 14266, a bill
"To amend the Federal tAviation Act of 1958 to deal with discrimina-
tory and unfair competi ive practices in international air transporta-
tion, and for other purp °ses."
For the reasons stated in the report sent to you by the Department
of State, the Office of Management and Budget recommends against
enactment of H.R. 14266.
Sincerely,
WILFRED H. ROMMEL,
Assistant Director for Legislative Reference.
DEPARTMENT OF STATE,
Washington, D.C., May 1, 1974.
Hon. HARLEY O. STAGGERS,
Chairman, Committee on Interstate and Foreign Commerce, House of
Representatives, Washington, D.C.
DEAR MR. CHAIRMAN: The Department has received your letter of
April 23, 1974, enclosing for comment copies of H.R. 14266, to amend
the Federal Aviation Act of 1958 to deal with discriminatory and
unfair competitive practices in international air transportation, and
for other purposes.
This will be given careful consideration and a report on H.R.
14266 will be forwarded to you as soon as possible.
Sincerely,
LINWOOD HOLTON,
Assistant Secretary for Congressional Relations.
DEPARTMENT OF STATE,
Washington, D.C., Aug. 13, 1974.
Hon. HARLEY O. STAGGERS,
Chairman, Committee on Interstate and Foreign Commerce, House of
Representatives, Washington, D.C.
DEAR MR. CHAIRMAN: Secretary Kissinger has asked me to reply to
your letter of April 23 requesting the Department of State's comments
on H.R. 14266, "A bill to amend the Federal Aviation Act of 1958 to
(15)
16
17
deal with discriminatory and unfair competitive practices in inter-
tention to a Notice of Proposed Rule Making (NPRM) issued by the
national air transportation, and for other purposes."
CAB May 7, 1974, which would strengthen Section 213 of the CAB's
The Department has no objection to Section 2 or 6 on foreign policy
Economic Regulations. We believe that this proposal would permit us
grounds.
to deal more effectively with foreign government discriminatory
Section 3 directs the Secretary of Transportation (1) to determine
practices. The Board's proposal has the additional advantage that it
whether user charges at foreign points "unreasonably exceed com-
would cover a wide variety of discriminatory practices other than
parable charges for furnishing such airport property and airway prop-
user charges. The NPRM would have a more immediate impact
erty in the U.S. or are otherwise discriminatory" and if so, (2) to
on foreign governments, as stated in the explanatory note to the
impose compensatory charges with prior approval of the Secretary of
NPRM, by "giving this government the same control over foreign
State on the air carriers of the country concerned, if after negotiations
air carriers' schedules as the governments of those carriers possess
with the country concerned its charges are not reduced. We see the
over U.S. flag carrier schedules." In brief, the Department of State is
following problems with this section.
of the opinion that the Board's NPRM will be more effective in carry-
We note that that portion of this section which directs the Secretary
ing out the "Bermuda principles" which call for "fair and equal op-
of Transportation to impose a compensatory charge on foreign carriers
portunity" for air carriers covered by our bilateral agreements.
where their respective countries impose user charges on U.S. flag
The Department of State has also been active in working within
carriers which "unreasonably exceed comparable charges" in the U.S.,
the framework of ICAO to improve and refine its principles on user
is violative of Article 15 of the Chicago Convention to which the U.S.
charges. To assist the CAB in developing regulations for countering
is a party. That article provides inter alia; "Any charges that may be
discriminatory practices by foreign governments, we recently sur-
imposed or permitted to be imposed by a contracting state for the use
veyed our major foreign posts to obtain the latest information on
of such airports and air navigation facilities by the aircraft of any other
direct and indirect forms of assistance provided by foreign govern-
contracting state shall not be higher.
(b) as to aircraft engaged in
ments to their flag carriers, including discriminatory user charges.
scheduled international air services than those paid by its national
With respect to Section 4 of the Bill, we note that by virtue of
aircraft engaged in similar international air services". However, to the
U.S. membership in the Universal Postal Union, the U.S. Postal
extent that the proposed retaliatory charges would be imposed in
Service is obliged to conform its rates and payment procedures in
response to discriminatory, as cpposed to merely "excessive" charges
regard to the conveyance of international air mail by U.S. and non-
by foreign governments against U.S. carriers, there would be no viola-
U.S. air carriers with the general provisions annexed to the Universal
tion of the Chicago Convention since the discriminatory charge by one
Postal Convention. Insofar as the Bill is consistent with such pro-
party to the agreement, under generally recognized principles of inter-
visions and not detrimental to the delivery, on a timely basis, of mail
national law, could be considered a breach of the Convention and there-
dispatched to and from the U.S., we would support the proposed
fore grounds for retaliation by the other contracting parties against the
amendment to subsection (h) of Section 406 of the Federal Aviation
party in breach. For this reason, the Department believes that the
Act of 1958 to the effect that the USPS should not pay to or for the
language of this section would have to be amended to avoid the impli-
account of any foreign air carrier a rate of compensation for the trans-
cation that retaliation could be invoked for merely non-discriminatory
port of U.S. mail in excess of that paid to U.S. or non-U.S. carriers
but excessive user charges.
by such foreign postal administrations for similar service.
In addition to the legal objections noted above, we believe the follow-
The proposal to further amend the aforementioned section by
ing points militate against application of compensatory charges for
requiring the CAP to establish a rate of compensation for the trans-
merely "excessive" user charges at foreign points:
port of U.S. mail no lower than the rate payable by the USPS to or
(1) Different forms of airport ownership and management within
for the account of non-U.S. carriers for the transport of mail to the
our own country (e.g. National/Dulles V. New York/JFK), and dif-
U.S. raises the issue of how compensation to U.S. carriers ought to be
ferences in property values and tax systems would make the task of
computed. The CAB has established procedures and criteria for
devising national norms for user charges difficult, if not impossible.
examining rate questions of this kind, and we would not wish to sug-
Also, it should be noted that the types of user charges vary con-
gest application of a particular criterion which might, in turn, have an
siderably from country to country. For instance, in some countries
effect on both the cost of international air mail service and other
relatively high fees are imposed for parking, lighting and hangars with
rate matters until such potential consequences were fully studied.
only a nominal landing charge, while in other countries the reverse is
Broadly construed, Section 5 of the proposed Bill would require
true. For this reason, it would be extremely difficult to determine what
that in all transactions between the U.S. Government and private
are "comparable charges" for purposes of the proposed section of the
parties (contractors and subcontractors) or international agencies
Bill.
involving the transfer of U.S. funds which are used to purchase air
(2) The proposed surcharge for "excessive user charges" could set a
transportation services, steps be taken, whenever feasible, to assure
precedent which, if emulated by other governments, could redound to
utilization of U.S. carriers. This broad interpretation of the provisions
the possible detriment of U.S. carriers from resulting conflicts among
of this section would create problems especially with respect to trans-
differing standards and surcharges.
actions with international agencies which, in some cases, are pre-
Finally, to the extent this section prescribes retaliatory user charges
cluded by their Articles of Agreement from tying their purchases to a
for discriminatory user charges against U.S. carriers, we agree in
particular country. Moreover, we foresee considerable difficulty in
principle with the basic intent of the Bill. However, we draw your at-
18
19
enforcing these provisions with respect to subcontractors and their
approved an acquisition of control stemming from the grant of
assignees. A narrower construction of this section would require all
emergency financial assistance to a failing carrier); see also Marine
U.S. agencies contracting directly for air transportation to use the
Space Enclosures V. F.M.C., 429 F.2d 577 (CADC 1969), American
services of U.S. carriers unless forced by necessity to do otherwise.
Airlines and Trans Caribbean Airlines, Orders 70-4-43, 70-2-108.
We believe that such a legislation is unnecessary in view of existing
The Department's proposal not only fails to recognize this ability of
executive regulations which already require utilization of U.S. air
the Board to act as quickly as circumstances require, it would create
carriers whenever practicable.
an additional procedural step that would have to be concluded largely
The Office of Management and Budget advises that from the stand-
without the benefit of the nearly 37 years of experience in such matters
point of the Administration's program, there is no objection to the
of the Board and its staff. Moreover the Department's proposal fails
submission of this report.
to take into account the fact that the Board is itself rapidly bringing
Cordially,
to a close a comprehensive investigation for the restructuring of the
LINWOOD HOLTON,
transatlantic route system. This proceeding, instituted in the fall of
Assistant Secretary for Congressional Relations.
1973, included full hearings before one of the Board's administrative
law judges-hearings complying with all applicable legal require-
ments-and will result in the issuance of a recommended decision in
the near future. Similarly, a proceeding involving the international
CIVIL AERONAUTICS BOARD,
Washington, D.C., October 2, 1974.
authority-other than transatlantic authority-of U.S. supplemental
air carriers is at an even more advanced procedural stage.
Hon. HARLEY O. STAGGERS,
Chairman, Committee on Interstate and Foreign Commerce, House of
Second, the decisions that DOT's proposal would require to be made
in a crisis atmosphere could reshape the nation's international air
Representatives, Washington, D.C.
transportation system for years to come, and have important long-
DEAR MR. CHAIRMAN: On September 30 the Board received a copy
term effects on the country's domestic air transportation systems as
of the Department of Transportation's proposals regarding amend-
well. DOT's proposal could too easily result in such decisions having
ments to S. 3481 and H.R. 14266. This letter is to express the Board's
to be made on the basis of incomplete records limited by arbitrary
opposition to the Department's proposals. In our judgment, as set out
procedural deadlines. As DOT itself has often argued to the Board,
in more detail below, some of the Department's proposals are unneeded
in matters involving proposed actions that would substantially affect
while others would be detrimental to the U.S. international air trans-
the air transportation system, a hearing comporting with Administra-
portation system and the public it serves.
tive Procedure Act standards can be an indispensable tool for ensuring
that the action taken is in the public interest.
THE DEPARTMENT'S AIR CARRIER REORGANIZATION PROPOSAL
Third, DOT's proposal has serious legal drawbacks in that it would
The Department of Transportation proposes a scheme for restruc-
overturn the procedural safeguards of the Federal Aviation Act and the
turing and reorganizing international air carriers pursuant to "a
Administrative Procedure Act which have effectively protected the
simplified and expedited procedure." Pursuant to the DOT plan,
valuable property interests of the carriers. Not only does this raise
questions of fairness, it could eventuate in court proceedings that
reorganizations (including transfers of routes, mergers, suspensions,
etc.) would be presented initially to the Secretary of Transportation.
could lead to longer, rather than shorter, periods in which any given
He, in turn, would, within 30 days, certify them to the Board for
action was accomplished. See, e.g., Pan American World Airways V.
decision-without the constraints of usual administrative procedures.
C.A.B., 392 F. 2d 483 (CADC 1968), Estep V. U.S., 327 U.S. 114 (1946).
Board decision would be required within 60 days, followed by final
Last, we do not understand the rationale for an arrangement by
decision by the President no more than 10 days later.
which the Department of Transportation would be permitted to inter-
The Civil Aeronautics Board urges rejection of the DOT proposal.
pose itself between the carriers and the public, on the one hand, and the
To the extent that the Department's proposal rests on the assumption
Board, on the other. In this regard, we would note that the Executive
that the economic conditions of various U.S. flag carriers can be
Departments, such as DOT can-and do-participate as parties in
improved through an adjustment in their route structures, the Civil
cases at the Board, and then can-and do-provide counsel to the
Aeronautics Board is in agreement in principle. In addition, it may
President in those same cases, to the extent the cases involve inter-
well be that improvements could also be effected by the merger of two
national route matters (including mergers of air carriers with inter-
or more carriers or by the transfer of routes or operating divisions
national route authority) and thus are subject to the President's
from one carrier to another. However, the drastic modification of
approval. In our view that should provide ample opportunity for such
existing procedures that DOT would employ to effect such changes is
departments to participate in decisions involving the nation's airlines.
unwarranted by the circumstances and unwise.
In the first place, the Board can act with considerable expedition
MAIL RATES
under the Federal Aviation Act in its present form where the exigencies
of the circumstances SO warrant. See Toolco-Northeast Control Case,
We do not share the judgment implicit in the proposed legislation
34 CAB 583 (1961), aff'd. National Airlines V. C.A.B., 306 F.2d 753
(relating to section 4 of the bill) that the mail rate procedures estab-
(CADC 1962) (six weeks after the application was filed, the Board
lished by Congress in the Act have substantially contributed to the
short-term operating losses being experienced by some U.S. carriers.
20
21
The Board can and does establish temporary mail rates when required
to "a simplified and expedited procedure." Although the two changes
by rapid changes in economic circumstances, and those rates are based
now proposed by DOT represent a step in the right direction, they
on actual costs of operations. Recently, in fact, the Board authorized
will not, in our judgment, meet the fundamental objections which the
increases in space available mail rates retroactive to May 1973, and
Board has to the proposal. In the first place, the increase in decision-
indicated its intention to establish temporary rates for the carriage
making time from 60 days to 100 days, although potentially helpful
of all international mail to reflect recent increases in fuel cost. This
in some cases, continues to emphasize expedition at the expense of
approval will substantially alleviate whatever portion of the eco-
substantive review of difficult international issues. As we suggested
nomic hardship now being experienced by U.S.-flag carriers which can
in our letter of October 2, the time required for processing international
be traced to mail rate problems.
cases results from the complexity of the issues and the need for the
fullest consideration of the available options rather than any dilatory
DISCRIMINATORY USER CHARGES
action on the Board's part. And, indeed, the Board can-and has-
responded with expedition when the circumstances necessitated.
We fail to see how the proposed modifications of section 3-which
Secondly, we believe that a requirement of Federal Register publica-
would provide for a DOT survey of discriminatory user charges,
tion, comments within 10 days, and a decision by the Secretary within
negotiations with foreign governments by the Department of State
20 days of publication of the notice, will afford no meaningful op-
(in conjunction with DOT and the Board), and such eventual action
portunity for public comments and review of those comments (as a
pursuant to existing Board regulations as may be necessary-would
technical matter, we understand that the Federal Register will not
bring about any practical changes in existing procedures. All of these
accept for publication notices which require comments in fewer than
approaches are currently available. Thus the Board has regulations
15 days).
that (1) provide for reports by airlines to the Board on the kinds of
We would add two further observations. First, we see no need to
information section 3 would have DOT make surveys about, and (2)
interpose the Department of Transportation between the carrier-
specifically authorize the Board to take action against foreign carriers
applicants and the Board. Although we appreciate the intent of the
in retaliation for discriminatory action by the carriers' governments.
legislation to avoid the needless expedition of applications which are
The Department of Transportation, and in fact any interested party, is
not sufficiently meritorious, we believe that the Board's 37 year ex-
free to request action at any time against a foreign carrier under
perience in ordering its own docket justifies the continued submission
that latter regulation.
of such applications directly to the Board. Further, as we read the
OTHER MATTERS
legislation, no time limit is imposed on the Secretary between the
We have no serious difficulty with sections 2 and 7 of the bill. We
time the application is filed and the time the notice is published in the
note in respect to section 2, however, that the proposed change, which
Federal Register. Second, we fail to see how removal of Board
would substitute the Department of State for the Board as the spokes-
jurisdiction after 100 days will facilitate Presidential review. As we
man for inter-agency activities with respect to discrimination, does
understand the matter, if the Board is unable to finalize its decision
not appear to eliminate the Board's responsibility to report annually
within 100 days, the President and his staff would then be required
to the Congress insofar as the Board may take action pursuant to its
to evaluate, within only 10 days, a wholly undigested administrative
own responsibilities and functions.
record, or reach a decision on the merits on the basis of matters wholly
outside the record.
Sincerely,
ROBERT D. TIMM,
We would emphasize, in conclusion, that the Board is in agreement
Chairman.
with the need for prompt and serious consideration of various adjust-
ments in the route authority of U.S.-flag international carriers as a
means of improving economic conditions in foreign air transportation.
CIVIL AERONAUTICS BOARD,
We continue to believe, however, that the drastic modification of
Washington, D.C., October 9, 1974.
existing procedures that DOT would employ to effect such changes
Hon. HARLEY O. STAGGERS,
is unwarranted by the circumstances, and unwise.
Chairman, Committee on Interstate and Foreign Commerce, House of
Sincerely,
Representatives, Washington, D.C.
ROBERT D. TIMM,
DEAR MR. CHAIRMAN: This letter will reflect the Board's views
Chairman.
concerning the modifications in the Department of Transportation's
proposals regarding amendments to S. 3481 and H.R. 14266. Those
modifications would (a) increase the time in which the Board is per-
mitted to act from 60 days to 100 days and decrease the time in which
the Secretary of Transportation may act in certifying a case to the
Board from 30 days to 20 days, and (b) add further procedural steps
designed to provide additional notice and opportunity for public
comment. The Board continues to oppose the general procedural scheme for
the restructure and reorganizing of international air carriers pursuant
APPENDIX A
ARTICLE 65 OF THE UNIVERSAL POSTAL UNION CONVENTION
ARTICLE 65
Basic Rates and Calculation of Air Conveyance Dues Relating to Closed Mails
1. The basic rates applicable to the settlement of accounts between administra-
tions in respect of air conveyance shall be fixed per kilogramme of gross weight
and per kilometre. These rates, detailed below, shall apply proportionally to
fractions of a kilogramme:
(a) for LC items (letters, aerogrammes, postcards, postal money orders,
COD money orders, bills for collection, insured letters and boxes, advices
of payment, entry and delivery). 3 thousands of a franc at most;
(b) for AO items (items other than LC) : 1 thousandth of a franc at most.
2. Air conveyance dues shall be calculated according to, on the one hand, the
actual basic rates (fixed within the limits of the basic rates specified in $ 1) and the
kilometric distances given in the "List of air-mail distances" referred to in Article
201, § 1, (b), of the Detailed Regulations, and, on the other, the gross weight of
the mails; no account shall be taken of the weight of sacs collecteurs.
3. Where dues are payable for air conveyance in the interior of the country of
destination, they shall be fixed in the form of a single rate for each of the two cate-
gories, LC and AO. These dues shall be calculated on the basis of the rates pre-
scribed in § 1, and according to the weighted average distances of the sectors flown
by international mail on the internal network. The weighted average distance shall
be determined in terms of the gross weight of all the air mails arriving at the
country of destination, including the mail which is not reforwarded by air in the
interior of that country.
4. The sum of the dues referred to in § 3 may not exceed in total the amounts
which actually have to be paid for conveyance.
5. The rates for internal and international air conveyance (obtained by multi-
plying the effective basic rate by the distance), which are used in calculating the
dues mentioned in §§ 2 and 3, shall be rounded up or down to the nearest 10 gold
centimes according to whether or not the number made up by the figure of hun-
dredths and that of thousandths exceeds 50.
APPENDIX B
ARTICLES 118 AND 119 OF THE GENERAL REGULATIONS OF THE UNIVERSAL
POSTAL UNION
ARTICLE 118-PROCEDURE FOR SUBMITTING PROPOSALS BETWEEN CONGRESSES
1. To be eligible for consideration each proposal concerning the Convention
or the Agreements submitted by a postal administration between Congresses
shall be supported by at least two other administrations. Such proposals shall
lapse if the International Bureau does not receive, at the same time, the necessary
number of declarations of support.
2. These proposals shall be sent to other postal administrations through the
intermediary of the International Bureau.
ARTICLE 119-CONSIDERATION OF PROPOSALS BETWEEN CONGRESSES
1. Every proposal shall be subject to the following procedure: a period of two
months shall be allowed to postal administrations of member countries for con-
sideration of the proposal notified by an International Bureau circular and for
forwarding their observations, if any, to the Bureau. Amendments shall not be
admissible. The replies shall be collected by the International Bureau and com-
municated to postal administrations with an invitation to vote for or against the
proposal. Those which have not sent in their vote within a period of two months
shall be considered as abstaining. The aforementioned periods shall be reckoned
from the dates of the International Bureau circulars.
2. If the proposal relates to an Agreement, its Detailed Regulations or their
Final Protocols, only the postal administrations of member countries which are
parties to that Agreement may take part in the procedure described in § 1.
(23)
DISSENTING VIEWS OF JOHN M. MURPHY ON H.R. 14266
This bill, as introduced, contained in Section 4 a requirement that
the Civil Aeronautics Board fix international civil air mail rates for
U.S. Flag carriers no lower than those paid by the Postmaster General
to foreign air carriers for the carriage of U.S. international mail-the
so-called UPU rates. This provision would have resulted in substan-
tially increased mail revenues for U.S. Flag carriers. As amended by
this Committee, however, that section has been substantially emas-
culated and will not result in U.S. Flag carriers receiving any addi-
tional mail revenues to which they would not otherwise be entitled.
Thus, Section 4 of the bill, as amended, gives the appearance of
benefiting U.S. Flag carriers without really doing so.
U.S. FLAG CARRIERS NEED UPU RATES FOR COMPETITIVE EQUALITY
We believe that the arguments presented by those who favored
granting UPU rates to U.S. Flag carriers for the carriage of U.S.
civil air mail were persuasive. Without UPU rates, U.S. Flag carriers
will not have parity with most of their foreign competitors in the
revenues which they receive for the carriage of mail. This is because
most foreign countries pay their own carriers the UPU rate for
carrying their own mail. U.S. Flag carriers do receive the UPU rate
from foreign countries for the small amounts of mail that they carry
for those countries. For the great bulk of the mail they carry, however,
that is U.S. mail, they receive the much lower CAB rates. While
foreign carriers carry only a small percentage of U.S. mail, it should
be noted that they are paid the UPU rate for carrying even this mail,
thus completing the competitive disadvantage under which U.S.
Flag carriers operate internationally in the carriage of mail.
The need for U.S. Flag carriers to be given parity in mail rates must
be viewed in the broad context of maintaining the competitive position
of the United States in world air transportation. This need transcends
arguments over the differences between UPU and CAB rates and why
one is higher than the other. The fact is that UPU rates do exist, and
as long as other countries pay their carriers these higher rates while we
do not, the economic opportunity of the United States to share in
world air transportation, through its flag carriers, will be impaired by
this lack of parity and equality in a major source of revenue.
It is a basic economic fact that U.S. Flag carriers cannot maintain
the competitive position of this country in world air transportation
unless they receive the same pay for the same service as their foreign
competitors. They have this parity in passenger and cargo rates through
IATA. They lack it on mail, where rate parity is equally essential.
UPU RATES DO NOT CONSTITUTE A SUBSIDY
The major argument made by those who oppose removing the above
discrimination is that to do SO will result in "subsidy" to U.S. Flag
carriers and that achieving competitive equality with foreign air
(25)
26
27
carriers does not justify the payment of "subsidy." Assuming for the
be approximately $57.5 million. Thus, it is apparent that the Postal
sake of argument the validity of this premise it raises the specter of
Service claim of an additional cost of $96.5 million as a result of UPU
the Postal Service presently subsidizing foreign air carriers since it
rates is grossly exaggerated.
does pay such carriers the UPU rate, while refusing to subsidize U.S.
Flag carriers. The UPU rates (like CAB rates), however, are cost-
INTERPRETATION OF UPU PROVISION
based compensatory rates. They are fixed by UPU on a world-wide
class rate basis for all international airlines. Our review of the cost
The Postal Service questioned whether under the language of
elements that the UPU rates contain convinces us that these rates are
Section 4, as originally introduced, rate parity for U.S. Flag carriers
cost-based rates and not subsidy rates. The only non-cost element
might be limited to only those markets in which the Postal Service
involved in UPU rates, an allowance for Value of Service is a tradi-
utilized foreign carriers for the transportation of U.S. mail. It was not
tional element in compensatory rate making. The Interstate Commerce
the intent of Section 4 to be SO limited for the reasons that have been
Commission has held that "both cost and value of service must be
previously set forth. It was the intent of Section 4 that UPU rates
considered as well as all other elements entering into a rate." (22 I.C.C.
would be paid in all cases to U.S. Flag carriers over international
at 652). The mere fact that the CAB employs a different methodology
routes. In order to alleviate any doubt on this matter, Section 4 should
in fixing rates than does the UPU does not establish that the UPU
be revised as set forth in Attachment 1 hereto.
rates constitute subsidy.
ESTABLISHMENT OF UPU RATES SHOULD NOT AFFECT THE MAIL VOLUMES
THE COST OF UPU RATES HAS BEEN EXAGGERATED
OF U.S.-FLAG CARRIERS
There has been some disagreement in the hearings concerning what
The Postal Service has stated that if UPU rates are established for
payment of the UPU rates to U.S. Flag carriers would cost the Postal
U.S. Flag carriers it may divert mail to foreign air carriers offering
Service. The Postal Service claims that it would incur added costs of
more convenient schedules since there would no longer be any rate
$96.5 million, whereas Pan American states that the cost would be
advantage in using U.S. Flag carriers. We do not believe that the
$71.5 million. When correctly viewed, we believe both of these figures
establishment of rate parity for U.S. Flag carriers should be the
to be substantially exaggerated and that the added cost would be no
occasion for diversion of mail from them. We are confident that the
more than $57.5 million.
Postal Service would not thus act to injure not only our own carriers,
The disagreement on the question of cost arises from the way the
but our national economy as well by adversely affecting the balance of
geographic coverage of the present CAB rates is described and from
payments. Since the Postal Service is supported by substantial appro-
the fact that the UPU rates have been compared to CAB rates which
priations by Congress, we are certain that it would not be unmindful
all parties agree are substantially outdated and do not reflect the present
of our intent that no substantial shift*of mail from U.S. Flag carriers
cost of carrying the mail-even under the present CAB methodology
occur as the result of the establishment of UPU rates.
of computing mail rates. The present CAB domestic rates cover service
to Canada and to some points in Mexico, whereas the present CAB
PAYMENT OF UPU RATES TO ALL U.S.-FLAG CARRIERS
international mail rates cover service to certain points in U.S. ter-
ritories-Wake Island, Guam, American Samoa and the Canal Zone.
A question was raised during our consideration of this bill whether
Since the UPU rates would only apply to service to foreign points,
Section 4 could be revised to preclude the mail rate parity it would
those rates cannot be applied to the volumes of mail carried at the
provide from being extended to those U.S. Flag carriers which do not
CAB international rates without adjusting those volumes to include
appear to need it. We respectfully submit that there should be no
mail to foreign points not covered by those rates and to exclude mail
problem in extending rate parity (and the UPU rates it would provide)
to U.S. points covered by those rates. Pan American's lower figure or
to all U.S. Flag carriers. As previously stated, UPU rates are not
the cost of UPU rates is derived by excluding mail to certain U.S.
subsidy rates, but cost-based compensatory rates, fixed by a 145-
territories which was included in the Postal Service's computations
nation postal union for applicability to all of the world's international
and by using the more current mail tonnage figures for fiscal 1974
airlines as a class. Like all class rates, they provide an overall fit for
instead of the fiscal 1973 tonnage used by the Postal Service. Pan
the class of carriers as a whole, but fit particular carriers differently
American has also increased the base CAB rates by the 13.36 percent
fuel surcharge which has been proposed on such rates by the CAB.
applied. than others, which is no reason why they should not be generally
It is clear that such surcharge, however, does not reflect the full range
Foreign air carriers all enjoy UPU mail rates as a class, and with
of cost increases incurred in performing mail services since the present
the benefit of such rates, they fly alongside all U.S. Flag carriers
rates were established.
including those well off and those who are not. There is no equitable
In order to determine the true cost of UPU rates above CAB rates,
reason for denying mail rate parity and UPU rates to any U.S. Flag
it would be necessary to know what the CAB rates would be if they
carrier, considering the prevalence of those rates throughout the
were set on present costs. Pan American, in a document filed with the
world as class rates and the extent to which they are enjoyed by
CAB on October 3, 1974, has proposed increased temporary inter-
foreign competitors.
national rates. Based on the level of the rates set forth in that docu-
Moreover, the bulk of the additional revenue which UPU rates
ment, the additional cost of UPU rates above CAB rates would only
will provide will go to our two principal U.S. Flag carriers that need
28
it the most, namely, Pan American and TWA. We estimate that
approximately 75 percent of the added revenue will go to these two
carriers, and the remaining 25 percent will be spread among the other
U.S. Flag carriers with none of them receiving a very substantial
share of the total.
SECTION 4, AS AMENDED BY THE MAJORITY, PROVIDES NO RELIEF TO
U.S.-FLAG CARRIERS
Section 4 of the bill has been emasculated by the amendment made
by the majority. As a result of this amendment, U.S. Flag carriers
will not receive any additional mail revenues to which they would not
otherwise be entitled. In fact, they may end up receiving less revenue
than they would if the amended Section were not adopted. This is no
way to eliminate the discriminatory mail rates which these carriers
now receive.
Section 4 as proposed by the majority first directs the Department
of State and the Postal Service to seek lower UPU rates. First of all,
this is not a realistic near-term objective since these rates will not be
revised until 1979. Secondly, even if the UPU rates are lowered,
U.S. Flag carriers would then receive less for carrying the mail of
foreign countries than they now receive. Amended Section 4 also
directs the CAB to act expeditiously to set cost-based mail rates, in-
cluding a reasonable rate of return on investment. While this provi-
sion may possibly promote some greater expedition in CAB actions,
it really adds nothing of substance to existing statutory directions to
the CAB. The CAB has never contended that it should not set rates
on this basis or that they should not be set expeditiously.
The CAB has announced, in a press release accompanying its mail
rate order of October 4, 1974, that it does not have the authority to
fix UPU rates for U.S. Flag carriers and that
"The payment of any higher rate by the Postal Service,
such as the UPU rate, could only be required by legislation
enacted by Congress and signed by the President. Such
legislation could relieve the CAB of the duty of setting cost-
based mail rates (under CAB standards) and establish the
UPU rates for carriage of U.S. mail by U.S. carriers."
With this view by the CAB of its statutory powers, it is imperative
that we provide an unambiguous statutory directive to the CAB to
pay UPU rates or else we cannot expect that such rates will in fact be
established.
(S) John M. Murphy.
JOHN M. MURPHY.
FORD
S. 3481
Ainety-third Congress of the United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Monday, the twenty-first day of January,
one thousand nine hundred and seventy-four
An Act
To amend the Federal Aviation Act of 1958 to deal with discriminatory and
unair competitive practices in international air transportation, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SHORT TITLE
SECTION 1. This Act may be cited as the "International Air Trans-
portation Fair Competitive Practices Act of 1974".
DISCRIMINATORY AND UNFAIR COMPETITIVE PRACTICES
SEC. 2. (a) United States air carriers operating in foreign air
transportation perform services of vital importance to the foreign
commerce of the United States including its balance of payments, to
the Postal Service, and to the national defense. Such carriers have
become subject to a variety of discriminatory and unfair competitive
practices in their competition with foreign air carriers. The Depart-
ment of State, the Department of the Treasury, the Department of
Transportation, the Civil Aeronautics Board, and other departments
or agencies, therefore, each shall keep under review, to the extent of
their respective functions, all forms of discrimination or unfair com-
petitive practices to which United States air carriers are subject in
providing foreign air transportation services and each shall take all
appropriate actions within its jurisdiction to eliminate such forms of
discrimination or unfair competitive practices found to exist.
(b) Each of these departments and agencies of Government shall
request from Congress such additional legislation as may be deemed
necessary at any time it is determined there is inadequate legal author-
ity for dealing with any form of discrimination or unfair competitive
practice found to exist.
(c) The Civil Aeronautics Board shall report annually to Congress
on the actions that have been taken under subsection (a) and on the
continuing program to eliminate discriminations and unfair com-
petitive practices faced by United States carriers in foreign air trans-
portation. The Secretaries of State, Treasury, and Transportation
shall furnish to the Civil Aeronautics Board such information as may
be necessary to prepare the report required by this subsection.
INTERNATIONAL USER CHARGES
SEC. 3. The International Aviation Facilities Act (49 U.S.C. 1151-
1160) is amended by redesignating sections 11 and 12 as sections 12
and 13, respectively, and by inserting immediately after section 10 the
following new section:
"SEC. 11. The Secretary of Transportation shall survey the charges
made to air carriers by foreign governments or other foreign entities
for the use of airport property or airway property in foreign air
transportation. If the Secretary of Transportation determines at any
time that such charges unreasonably exceed comparable charges for
furnishing such airport property or airway property in the United
States or are otherwise discriminatory, he shall submit a report on
such cases promptly to the Secretary of State and the Civil Aero-
nautics Board, and the Secretary of State, in collaboration with the
Civil Aeronautics Board, shall promptly undertake negotiations with
S. 3481-2
the foreign country involved to reduce such charges or eliminate such
discriminations. If within a reasonable period such charges are not
reduced or such discriminations eliminated through negotiations, the
Secretary of State shall promptly report such instances to the Secre-
tary of Transportation who shall determine compensating charges
equal to such excessive or discriminatory charges. Such compensating
charges shall, with the approval of the Secretary of State, be imposed
on the foreign air carrier or carriers of the country concerned by the
Secretary of the Treasury as a condition to acceptance of the general
declaration at the time of landing or takeoff of aircraft of such foreign
air carrier or carriers. The amounts SO collected shall accrue to an
account established for that purpose by the Secretary of the Treasury.
Payments shall be made from that account to air carriers in such
amounts as shall be certified by the Secretary of Transportation in
accordance with such regulations as he shall adopt to compensate such
air carriers for excessive or discriminatory charges paid by them to
the foreign countries involved.".
RATES FOR TRANSPORTATION OF UNITED STATES MAIL IN FOREIGN AIR
TRANSPORTATION
Sec. 4. Subsection (h) of section 406 of the Federal Aviation Act of
1958 (49 U.S.C. 1376) is amended by inserting "(1)" immediately
after '(h)", and by adding at the end thereof the following new
paragraphs:
"(2) The Secretary of State and the Postmaster General each shall
take all necessary and appropriate actions to assure that the rates paid
for the transportation of mail pursuant to the Universal Postal Union
Convention shall not be higher than fair and reasonable rates for
such services. The Secretary of State and the Postmaster General shall
oppose any present or proposed Universal Postal Union rates which
are higher than such fair and reasonable rates.
"(3) The Civil Aeronauties Board shall act expeditiously on any
proposed changes in rates for the transportation of mail by aircraft in
foreign air transportation. In establishing such rates, the Board shall
take into consideration rates paid for transportation of mail pursuant
to the Universal Postal Union Convention as ratified by the United
States Government, shall take into account all of the ratemaking
elements employed by the Universal Postal Union in fixing its airmail
rates, and shall further consider the competitive disadvantage to
United States flag air carriers resulting from foreign air carriers
receiving Universal Postal Union rates for the carriage of United
States mail and the national origin mail of their own countries."
TRANSPORTATION OF GOVERNMENT-FINANCED PASSENGERS AND PROPERTY
SEC. 5. (a) Title XI of the Federal Aviation Act of 1958 (49 U.S.C.
1501 and the following) is amended by adding at the end thereof the
following new section:
"TRANSPORTATION OF GOVERNMENT-FINANCED PASSENGERS AND
PROPERTY
"SEC. 1117. Whenever any executive department or other agency or
instrumentality of the United States shall procure, contract for, or
otherwise obtain for its own account or in furtherance of the pur-
poses or pursuant to the terms of any contract, agreement, or other
CORRECTED SHEET
S. 3481-3
special arrangement made or entered into under which payment is
made by the United States or payment is made from funds appro-
priated, owned, controlled, granted, or conditionally granted or uti-
lized by or otherwise established for the account of the United States,
or shall furnish to or for the account of any foreign nation, or any
international agency, or other organization, of whatever nationality,
without provisions for reimbursement, any transportation of persons
(and their personal effects) or property by air between a place in the
United States and a place outside thereof or between two places both
of which are outside the United States, the appropriate agency or
agencies shall take such steps as may be necessary to assure that such
transportation is provided by air carriers holding certificates under
section 401 of this Act to the extent authorized by such certificates or
by regulations or exemption of the Civil Aeronautics Board and to
the extent service by such carriers is available. The Comptroller Gen-
eral of the United States shall disallow any expenditure from appro-
priated funds for payment for such personnel or cargo transportation
on an air carrier not holding a certificate under section 401 of this
Act in the absence of satisfactory proof of the necessity therefor.
Nothing in this section shall prevent the application to such traffic
of the antidiscrimination provisions of this Act.".
(b) That portion of the table of contents contained in the first
section of the Federal Aviation Act of 1958 which appears under the
center heading "TITLE XI-MISCELLANEOUS" is amended by
adding at the end thereof the following new item:
"Sec. 1117. Transportation of Government-financed passengers and property.".
PROMOTION OF TRAVEL ON UNITED STATES CARRIERS IN FOREIGN AIR
TRANSPORTATION
SEC. 6. Section 2 of the International Travel Act of 1961 (22 U.S.C.
2122) is amended by striking out the period at the end of paragraph
(5) and inserting in lieu thereof a semicolon and by adding at the
end thereof the following new paragraph:
(6) encourage to the maximum extent feasible travel to and
from the United States on United States carriers.".
OBSERVANCE OF TARIFFS BY TICKET AGENTS
SEC. 7. (a) The first-sentence of section 403(b) of the Federal
Aviation Act of 1958 (49 U.S.C. 1373(b)), relating to observance of
tariffs and prohibition against rebating, is amended to read as follows:
"No air carrier or foreign air carrier or any ticket agent shall charge
or demand or collect or receive a greater or less or different compen-
sation for air transportation, or for any service in connection there-
with, than the rates, fares, and charges specified in then currently
effective tariffs of such air carrier or foreign air carrier; and no air
carrier or foreign air carrier or ticket agent shall, in any manner
or by any device, directly or indirectly, or through any agent or
broker, or otherwise, refund or remit any portion of the rates, fares,
or charges SO specified, or extend to any person any privileges or facili-
ties, with respect to matters required by the Board to be specified in
such tariffs except those specified therein.".
S. 3481-4
(b) The first sentence of section 407(e) of such Act (49 U.S.C.
1377 (e)), relating to inspection of accounts and property, is amended
to read as follows: "The Board shall at all times have access to all
lands, buildings, and equipment of any air carrier or foreign air carrier
and to all accounts, records, and memorandums, including all docu-
ments, papers, and correspondence, now or hereafter existing, and kept
or required to be kept by air carriers, foreign air carriers, or ticket
agents and it may employ special agents or auditors, who shall have
authority under the orders of the Board to inspect and examine any
and all such lands, buildings, equipment, accounts, records, and
memorandums.".
PROHIBITION AGAINST SOLICITATION OR ACCEPTANCE OF REBATES BY
SHIPPERS OF AIR FREIGHT
SEC. 8. (a) Section 403 (b) of the Federal Aviation Act of 1958 (49
U.S.C. 1373(b)), relating to observance of tariffs and prohibition
against rebating, is amended by inserting "(1)" immediately after
"(b)" and by adding at the end thereof the following new paragraph:
(2) No shipper, consignor, consignee, forwarder, broker, or other
person, or any director, officer, agent, or employee thereof, shall know-
ingly pay, directly or indirectly, by any device or means, any greater
or less or different compensation for air transportation of property,
or for any service in connection therewith, than the rates, fares, and
charges specified in currently effective tariffs applicable to such air
transportation; and no such person shall, in any manner or by any
device, directly or indirectly, through any agent or broker, or other-
wise, knowingly solicit, accept, or receive a refund or remittance of
any portion of the rates, fares, or charges SO specified, or knowingly
solicit, accept, or receive any privilege, favor, or facility, with respect
to matters required by the Board to be specified in such tariffs, except
those specified therein.".
(b) Section 902(d) of such Act (49 U.S.C. 1472(d)), relating to
granting rebates, is amended by inserting "(1)" immediately after
"(d)" and by adding at the end thereof the following new paragraph:
(2) Any person who, in any manner or by any device, knowingly
and willfully solicits, accepts, or receives a refund or remittance of
any portion of the rates, fares, or charges lawfully in effect for the
air transportation of property, or for any service in connection there-
with, or knowingly solicits, accepts, or receives any privilege, favor,
or facility, with respect to matters required by the Board to be
specified in currently effective tariffs applicable to the air transporta-
tion of property, shall be fined not less than $100, nor more than
$5,000, for each offense.".
(c) The subsection heading of subsection (d) of such section 902
is amended to read as follows:
S. 3481-5
"GRANTING OR RECEIVING REBATES".
(d) That portion of the table of contents contained in the first
section of the Federal Aviation Act of 1958 which appears under the
side heading
"Sec. 902. Criminal penalties."
is amend by striking out
"(d) Granting rebates."
and inserting in lieu thereof
"(d) Granting or receiving rebates.".
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.
December 24, 1974
Dear Mr. Director:
The following bills were received at the White House on December 24th:
S.J. Res. 40
B. 3481
N.R. 8958
H.R. 14600
S.J. Res. 133
8. 3548
M.R. 8981
H.R. 14689
S.J. Res. 262
8. 3934
K.R. 9182
H.R. 14718
S. 251
8. 3943
H.R. 9199
H.R. 15173
S. 356
S. 3976
H.R. 9588
H.R. 15223
S. 521
S. 4073
H.R. 9654
H.R. 15229
S. 544
S. 4206
M.R. 10212
M.R. 15322
S. 663
H.J. Res. 1178
H.R. 10701
M.R. 15977
vs. 754
H.J. Res. 1180
H.R. 10710
H.R. 16045
S. 1017
H.R. 421
H.R. 10827
H.R. 16215
S. 1083
M.R. 1715
H.R. 11144
H.R. 16596
vs. 1296
H.R. 1820
H.R. 11273
M.R. 16925
S. 1418
H.R. 2208
H.R. 11796
MI.R. 17010
S. 2149
H.R. 2933
H.R. 11802
H.R. 17045
S. 2446
H.R. 3203
H.R. 11847
M.R. 17085
S. 2807
H.R. 3339
H.R. 11897
H.R. 17468
S. 2854
H.R. 5264
H.R. 12044
H.R. 17558
S. 2888
H.R. 5463
H.R. 12113
H.R. 17597
S. 2994
H.R. 5773
H.R. 12427
H.R. 17628
S. 3022
H.R. 7599
H.R. 12884
H.R. 17655
S. 3289
H.R. 7684
H.R. 13022
S. 3358
H.R. 7767
H.R. 13296
S. 3359
H.R. 8214
M.R. 13869
S. 3394
H.R. 8322
H.R. 14449
S. 3433
H.R. 8591
H.R. 14461
Please let the President have reports and recommendations as to the
approval of these bills as soon as possible.
Sincerely,
Robert D. Linder
Chief Executive Clerk
The Honorable Roy L. Ash
Director
Office of Management and Budget
Washington, D. C.