Mr. HEMPHILL. Thank you very much. Mr. ROGERS of Texas. Mr. Loevinger, with relation to the title 26 that we were discussing a minute ago, I believe you said that it was the deregulation that actually in effect vested in the aggrieved party himself the right to sue, whereas prior to that it would have been under a regulation. Therefore, any remedies sought would have to be pursued through the United States. That would be as to the reasonableness of the rate, would it not? Would he get that same rate insofar as the situation concerned if he was claiming discrimination? Mr. LOEVINGER. I suppose that there is an area here of not absolute certainty. It seems to me that if it is claimed that the minimum rates are discriminatory as established there would be such remedies available. On the other hand, the argument against this would be that even though the Commission cannot set the minimum rate on the basis of reasonableness, it still retains the right to control discrimination and, therefore, when the claim as to discrimination is made it has lost. none of its powers and, therefore, there should not be a specific antitrust remedy. I suppose that this is something that ultimately would have to be determined by the courts. However, my opinion, which I trust will not bind either me or anyone else in the Department of Justice in the event of litigation, at this time would be that this act takes the minimum rate establishment out of the area of regulation sufficiently to subject it to all of the remedies of the antitrust laws, having in mind the provisions of 15 U.S. Code, section 26. Mr. ROGERS of Texas. Thank you, sir. Now, I believe Mr. Hemphill's request was for a written statement on this. Mr. LOEVINGER. Yes, sir. Mr. ROGERS of Texas. Let me say this: I cannot speak for the other members of the committee, but certainly I am not trying to bind you or the Justice Department. We are merely on a fishing expedition. Mr. LOEVINGER. Surely. These are perfectly reasonable questions, sir. I put in the caveat only because my opinions are sort of curbstone opinions and there is always a possibility, in further consideration or discussion with the Attorney General or the Deputy Attorney General, the Department may conclude to take a different position. Mr. ROGERS of Texas. If you decide differently, we will not object to your reconsideration. Mr. LOEVINGER. Yes, sir. Mr. ROGERS of Texas. Do you have any further questions? Mr. YOUNGER. No. Mr. ROGERS of Texas. Thank you very much. Do you have any more questions? Mr. HEMPHILL. No, sir. Mr. LOEVINGER. Thank you, Mr. Chairman. Mr. ROGERS of Texas. The next witness scheduled this morning is Hon. Alan S. Boyd, Chairman of the Civil Aeronautics Board. Mr. Chairman, we are glad to have you before the committee again, and you may proceed. STATEMENT OF ALAN S. BOYD, CHAIRMAN, CIVIL AERONAUTICS BOARD, ACCOMPANIED BY ROSS I. NEWMANN, ASSOCIATE GENERAL COUNSEL, AND IRVING ROTH, DIRECTOR, BUREAU OF ECONOMICS REGULATION Mr. BOYD. Thank you, Mr. Chairman and members of the committee. I am accompanied this morning by Mr. Ross I. Newmann, Associate General Counsel, and Mr. Irving Roth, Director of our Bureau of Economic Regulation. The Board appreciates this opportunity to submit its views in support of H.R. 11583 and H.R. 11584, bills to implement certain recommendations contained in the President's message on transportation which was submitted to the Congress on April 5, 1962. H.R. 11584, if enacted, would be identified as the Transportation Act of 1962. Section 2 of this bill would empower the three regulatory agencies, the Interstate Commerce Commission, the Civil Aeronautics Board, and the Federal Maritime Commission to authorize controlled experiments in rate, classification and documentation systems. Participation by common carriers in the experiments would be voluntary and the experiments could be authorized intramode or jointly with carriers of different modes. The purpose of these experiments is to determine the best service/price transportation patterns by testing new services, service combinations or arrangements, simplified documentation, and different or simplified rate bases and freight classifications. Some areas of experimentation insofar as air transportation has been concerned include excursion fares, family fares, night coach fares, youth fares, golden age fares, commuter fares, and their class or thrift fares. Since the Board presently has authority to permit such experimentation, we construe the proposed legislation as a statement and encouraged by the regulatory agencies. The Board endorses this policy objective and recommends enactment of section 2 of H.R. 11584. We suggest, however, that a revision be made in section 2(b) which provides that experiments shall, after notice to the public affording interested persons opportunity to submit written views, be authorized by the regulatory agencies concerned * This language could be read as an unequivocal direction under which the Board would be required to authorize the experiments. We do not believe this to be the intent of section 2(b), which we assume is merely determinative of the circumstances in which action will be taken by a single agency or agencies jointly. This conclusion is borne out by the permissive language of subsection (a), and by the language of subsection (e). In order to clarify this point, the Board recommends that section 2(b) on page 2, line 9, be amended to delete the word "authorized" and in lieu thereof the words "acted upon" be inserted. 91497-62- -8 Section 4 of H.R. 11584 would carry out the President's recommendation that Congress declare as a matter of public policy that through routes and joint rates should be vigorously encouraged and that all transportation agencies be authorized to participate in joint boards. New joint boards, comprised of the Interstate Commerce Commission, the Civil Aeronautics Board and the Federal Maritime Commission would supersede establishment of the joint boards of the Interstate Commerce Commission and the Civil Aeronautics Board which is presently authorized in the Federal Aviation Act. The Board favors enactment of section 4. We suggest, however, that a technical amendment be made in section (c) to make it clear that the availability of through service, even where joint rates have not been established, must be reflected in the tariffs. We will be glad to submit appropriate language to the committee to accomplish this objective. Section 7 of the bill would amend section 901 of the Federal Aviation Act to make air carriers and foreign air carriers liable for the payment of damages from charges collected or practices maintained in violation of any provision of the Federal Aviation Act. It would also give an injured party the choice of pursuing his remedy either before the Board or in any district court of the United States of competent jurisdiction. Appropriate periods of limitation are provided with respect to the commencement of such actions or proceedings. Section 8 would amend section 1006 of the Federal Aviation Act so that orders of the Civil Aeronautics Board concerned with reparations would be reviewable by a Federal district court rather than by a court of appeals. The Board favors enactment of sections 7 and 8 which would empower the Board to pass upon the past lawfulness of tariffs with respect to both rates and practices. The interest of the public in air tariff rules is generally not of sufficient importance to individuals or groups as to result in a significant number of complaints being filed against tariff rules prospectively. On the contrary, a pecuniary interest sufficient to warrant litigation before the Board by a passenger or a shipper will usually occur only after the rule is relied upon in a specific case. The reparations provisions of H.R. 11584 would insure that individuals have such an opportunity to challenge the lawfulness of a tariff rule in an adjudicatory proceeding before the Board or to initiate a proceeding in a Federal district court. The Board recommends enactment of sections 7 and 8. We wish to point out, however, that some increase in personnel will be required in order to perform these functions. Section 9, among other things, is intended to simplify rate structures for the procurement of Government transportation and by experiments to develop systems that will make rate ascertainment and publication less costly and more convenient. The Board supports this provision and recommends its enactment. Sections 10 through 14, would implement the President's recommendation that the railroad loan guaranty authority and the aviation loan guaranty authority, if it is to be extended, be transferred to the Department of Commerce. Provisions are included for the continuance of actions taken by the Civil Aeronautics Board and the Interstate Commerce Commission unless and until changed by the Secretary of Commerce, and for the transfer of persons, property, records, and unexpended appropriations from these agencies to the Department of Commerce. Under existing law, section 410 of the Federal Aviation Act, the Board is empowered to approve or disapprove applications for any loan or other financial aid from the United States or any agency thereof, to or for the benefit of any air carrier. Under this section, no such loan or financial aid can be made or given without Board approval. The Board also has the responsibility of prescribing the terms and conditions upon which such loan shall be made. Section 10(f) of H.R. 11584 would amend section 410 to make that section inapplicable to the guaranty of loans by the Secretary of Commerce under the Loan Guaranty Act, but would require the Secretary to consult with and consider the views and recommendations of the Board in making such guaranties. The Board agrees in principle with the administration's proposal to transfer the loan guaranty authority to the Department of Commerce and wishes to point out that there is a need for a close relationship between the Board and the Department in granting subsidies on the one hand and approving loan guaranties on the other. This concludes our testimony on H.R. 11584. I would now like to present our views on H.R. 11583. This bill is primarily concerned with exempting certain carriers from minimum rate regulation in the transportation of bulk commodities, agricutural and fishery products, and passengers. Since many of the provisions of this bill involve matters. outside the jurisdiction of the Civil Aeronautics Board, I will confine my testimony to section 5 which affects the Board and the air transport industry. Section 5(a) would amend section 1002 (d) of the Federal Aviation Act to limit the Board's authority to the determination of maximum rates and charges for the transportation of bulk commodities and certain agricultural and fishery products. Section 5(c) would amend section 414 of the Federal Aviation Act so that the Board could no longer grant immunity from the antitrust laws by approving rate agreements under section 412 of the act with respect to the commodities set forth above. Section 5(d) is a statement of congressional intent that regulatory control over minimum passenger fares of air carriers be reduced to the greatest extent consistent with the public interest, so that business incentives and competition may play a more influential role in the pricing of air transportation. The Board concurs in the objective of section 5 of the bill and recommends its enactment. In endorsing this proposal we want to point out that we construe section 5(a) as leaving undisturbed the Board's powers under section 411 of the Federal Aviation Act under which the Board may prosecute antitrust violations which constitute unfair practices or unfair methods of competition. Since section 5(a) is an express declaration of congressional intent to make the antitrust laws applicable to the fixing of rates which are no longer under minimum rate control by the Board, it must also be the intent of Congress that section 411 remains in full force and effect with respect to the fixing of such rates. This concludes our testimony, Mr. Chairman. If the Board can be of any further assistance, I hope you will call upon us. Mr. ROGERS of Texas. Thank you, Mr. Boyd. Mr. HEMPHILL. No questions. Thank you, Mr. Chairman. Mr. YOUNGER. Thank you, Mr. Chairman. Mr. Boyd, can you give us any information as to why the air carriers were not exempt from the minimum passenger fare rates? Mr. BOYD. I can give you several reasons I think. I don't know how valid they are, but I will tell you what they are. The first is that this is the essence of the President's statement in his transportation and the bill I presume is an extension of the philosophy expressed by the President for the administration. The second is that, unlike the surface carriers, the bulk of the movement by air is passengers. The third, which is related to that, is that the common carriage aviation industry is having a pretty rough struggle these days financially. I think it may be said that there are a number of mavericks in that industry and the feeling was that this is not a good time, or my feeling is, at any rate, to rock the boat and give somebody a license to get very far out of line in view of the poor economic condition of the industry. I would like to say in reference to the colloquy when you and Mr. Loevinger earlier, that, while safety is certainly a very important part of aviation, I want to make it as plain and as clear as I possibly can that the common carrier air transport industry has evidenced over the years that any financial considerations have nothing to do with safety, that they are going to operate in the safest manner known to human beings regardless of what their fare structure or their profit or loss position may be, so I don't think that there is any relations that can be attributed to safety here, really. Mr. YOUNGER. I recognize what you say about the financial condition of the industry, which I doubt is any worse than the railroads. At least some of them seem to be about in the same financial condition. Yet all the passengers fares are exempt, on the surface carriers and not exempt under the air carriers. I haven't been able to get a good reason as to why that was done. Mr. BOYD. I did the best I could for you, Mr. Younger. If it is not a good one, I am sorry. Mr. YOUNGER. There is one other question that bothers our people. As you know, we ship a lot of freight, flowers, and it is all carried by air. Under the surface carriers, regardless of the fact that you have more than one carrier, if there is any damage to the product they are compensated for it. Under the air carriers when they ship flowers which have to be transferred at Chicago to another line to go to Pittsburgh or somewhere else, frequently the flowers are left out and they are frozen, or it is very hot weather and they are destroyed. The shipper can get no recovery from any of the lines. I have had legislation introduced on this subject but we just don't seem to get anywhere. What recommendation would you make to cure this deficiency which occurs only in air travel? Mr. Bord. We started a proceeding 2 or 3 years ago, Mr. Younger, on this very item, and while the proceeding was pending the shippers and the carriers worked out a compromise which suited both of them and as a result of that the proceedings were dismissed, and so far as we know today the situation is being handled satisfactorily to the shippers. |