(e) Subsection 407(a) (Filing of Reports): Provided, That no provision of any rule, regulation, term, condition, or limitation prescribed pursuant to said subsection 407(a) shall be applicable to air freight forwarders unless such rule, regulation, term, condition, or limitation expressly so provides;

(f) Subsection 407(b) (Disclosure of Stock Ownership);

(g) Subsection 407(c) (Disclosure of Stock Ownership by Officers or Directors);

(h) Subsection 407(d) (Form of Accounts): Provided, That no provision of any rule, regulation, term, condition, or limitation prescribed pursuant to said subsection 407(d) shall be applicable to air freight forwarders unless such rule, regulation, term, condition, or limitation expressly so provides;

(i) Subsection 407 (e) (Inspection of Accounts and Property);

(j) Section 408 (Consolidation, Merger and Acquisition of Control);

(k) Section 409 (Prohibited Interests);

(1) Section 410 (Loans and Financial Aid);

(m) Section 411 (Methods of Competition);

(n) Section 412 (Pooling and Other Agreements);

(0) Section 413 (Form of Control); (p) Section 414 (Legal Restraints); (q) Section 415 (Inquiry into Air Carrier Management); and

(r) Section 416 (Classification and Exemption of Carriers).

Provided, however, That the provisions of sections 403 and 404 shall not be applicable insofar as they would otherwise prohibit any air freight forwarder from engaging in joint loading, as defined in § 296.1(c).

Provided, further, That the provisions of subsection 404(b) shall not be applicable insofar as they would otherwise prohibit the exercise, by any air freight forwarder, of its reserved option to act as either a forwarder or as agent of the shipper, in accordance with provisions of § 296.3.

(Interpret or apply sec. 101 (3), 72 Stat. 737; 49 U.S.C. 1301) [ER-209, 21 F.R. 2511, Apr. 18, 1956, as amended by ER-231, 23 F.R. 1918, Mar. 22, 1958; ER-332, 26 F.R. 5121, June 8, 1961; 27 F.R. 11406, Nov. 20, 1962]

§ 296.12 Exemption of cooperative shippers associations.

Subject to the other provisions of this part applicable thereto, cooperative shippers associations are hereby relieved from the provisions of section 610(a) (4) (Requirement of Air Carrier Operating Certificate) of Title VI of the Act, and from all provisions of Title IV of the Act, other than the following:

(a) Subsection 407(a) (Filing of Reports): Provided, That no provision of any rule, regulation, term, condition, or limitation prescribed pursuant to said subsection 407(a) shall be applicable to cooperative shippers associations unless such rule, regulation, term, condition, or limitation expressly so provides;

(b) Subsection 407(b) (Disclosure of Stock Ownership);

(c) Subsection 407 (c) (Disclosure of Stock Ownership by Officers or Directors);

(d) Subsection 407 (e) (Inspection of Accounts and Property);

(e) Section 408 (Consolidation, Merger and Acquisition of Control);

(f) Section 409 (Prohibited Interests); (g) Section 411 (Methods of Competition);

(h) Section 412 (Agreements); (i) Section 413 (Form of Control); (j) Section 414 (Legal Restraints); (k) Section 415 (Inquiry into Air Carrier Management); and

(1) Section 416 (Classification and Exemption of Carriers).

Provided, however, That cooperative shippers associations shall remain subject to the requirements of sections 403 and 404 of the act insofar as they engage in joint loading except as defined in § 296.1(c).

Provided, further, however, That cooperative shippers associations are hereby relieved from the requirements of section 412 of the act insofar as agreements relate to joint loading as defined in § 296.1(c);

Provided further, however, That unless the reserved option of any cooperative shippers association to act as an indirect air carrier or as agent of the shipper is exercised in accordance with the provisions of § 296.4, the provisions of subsection 404(b) shall be applicable insofar as they would otherwise prohibit the exercise of such option.

(Interpret or apply sec. 101(3), 72 Stat. 737; 49 U.S.C. 1301) [ER-209, 21 F.R. 2511, Apr.

18, 1956, as amended by ER-231, 23 F.R. 1918, Mar. 22, 1958; ER-332, 26 F.R. 5121, June 8, 1961; 27 F.R. 11406, Nov. 20, 1962]

§ 296.13

Duration of exemptions.

The exemption authority provided by this part shall continue in effect until the Board shall find that the continuation of such authority in respect of either air freight forwarders or cooperative shippers associations, or both such classifications, is no longer in the public interest, and thereafter the authority with respect to such classification or classifications shall terminate: Provided, however, That the exemption authority of any air freight forwarder which the Board shall find to control, be controlled by, or be under common control with any common carrier by rail shall in any event terminate 5 years from the effective date of this part.

Subpart C-Limitations on Exemptions; General

§ 296.21

Limitations on use of aircraft. The exemption authority provided to indirect air carriers by this part shall be effective only with respect to shipments of property, by air, in aircraft operated in common carriage by (a) air carriers which have effective tariffs for the services thus utilized on file with the Board, or (b) air carriers which have been exempted from the filing of such tariffs. No indirect air carrier shall ship property, by air, except in aircraft operated in common carriage by a direct air carrier of the class specified in this section.

§ 296.22

Prohibition on use of aircraft.

The Exemption authority provided by this part, to indirect air carriers, shall not be effective to authorize any such air carrier to directly engage in the operation of aircraft in air transportation. No indirect air carrier may directly engage in the operation of aircraft in air transportation: Provided, however, That this limitation and prohibition shall not be construed to prohibit charters of aircraft by such indirect air carrier from a direct air carrier operating charter trips and special services under the authority conferred by any applicable regulation or order of the Board.

Subpart D-Limitations on Exemptions; Cooperative Shippers Associations

§ 296.31 Filing of schedules or formulae used to compute charges to members.

The exemption authority provided by this part with respect to any cooperative shippers association, shall be effective only after, and during only such periods of time as each such indirect air carrier has filed with the Board, and either distributed to its members or posted in each office where shipments are accepted, copies of all currently effective schedules or formulae used for assessing drayage, consolidation, air transportation, breakbulk, and any other charges to its members. Upon changing any of such schedules or formulae, each cooperative shippers association shall again comply with the requirements of this section.

Subpart E-Conditions on Exemption; Air Freight Forwarders

§ 296.40 Prohibition on use of agents of direct air carriers.

No air freight forwarder shall tender any shipment for transportation, wholly or partially by air, to any cargo agent or sales agent of any direct air carrier or to any other intermediary receiving a commission on such shipments from the direct air carrier. Nor shall any air freight forwarder tender any shipment to the direct air carrier for the account of, or on behalf of, any cargo agent, sales agent, or any other intermediary. The payment of a commission, by the direct air carrier to such agent or intermediary, shall be prima facie evidence of the violation of this prohibition by the air freight forwarder concerned in all proceedings before the Board conducted under the authority of sections 1002 (a), (b) and (c) of the act.

[ER-231, 23 F.R. 1918, Mar. 22, 1958]

§ 296.41 Necessity for Operating Au

thorization.

No person shall operate as an air freight forwarder, within the meaning of this part, unless there is in force with respect to such person a document entitled "Operating Authorization” authorizing him to engage in air transportation pursuant to the general exemption granted by this part.

§ 296.42 Application for issuance.

(a) Application form. Any person, other than those specified in § 296.43 (a), desiring to operate as an air freight forwarder may apply to the Board for an appropriate Operating Authorization. Such an applicant shall execute in duplicate, an "Application for Operating Authorization as an Air Freight Forwarder" (CAB Form 351). The application shall be certified by a responsible official of such carrier and shall contain the following information: (1) Date; (2) name of applicant, trade names, and name in which authorization is to be issued; (3) address of principal office and mailing address; (4) form of organization (i.e. corporation, partnership, etc.), State under whose laws company is authorized to operate, and date company was formed; (5) a list containing the names of each officer, director, partner, owner, or member of applicant, and holder of more than 5 percent of outstanding stock if a corporation, or owner of a more than 5 percent interest if other than a corporation; an indication as to whether or not 75 percent or more of the voting interest is owned or controlled by citizens of the United States or one of its possessions; if more than 5 percent of applicant's stock is held by a corporation an indication must be made as to whether or not 75 percent or more of the voting interest of such corporation is owned or controlled by citizens of the United States or one of its possessions; (6) a description of current business activities and of former business experience in, or related to, the tranportation field; (7) description of operating authority granted applicant by agencies of the United States Government (such as that of surface freight forwarder, motor carrier, etc.) and, if applicable, reasons for revocation or other termination; (8) totals of cargo tonnage handled during past year, the capacity in which handled (as agent of carrier, agent of shipper, as direct carrier, etc.), and means of transportation (air, truck, rail, etc.); (9) an indication as to whether applicant is a cargo sales agent; affiliations, commissions and agreements of the past year in this regard; (10) list of names of parties, effective dates, operating areas, nature and terms of any oral or written agree

1 Form filed as part of original document. Available from Publications Section, Civil Aeronautics Board.

ments, contracts, or working arrangements concerning transportation activities to which applicant is a party; (11) list of domestic and international points served and proposed to be served; list of offices, agents, etc., at points served and proposed to be served; (12) description of proposed services and specializations and an indication as to whether or not owners or affiliates will use the applicant's proposed air freight forwarding services; (13) list of names of the officers, owners, etc., of applicant who have at any time applied for any type of authority or registration from the Civil Aeronautics Board and, if applicable, reasons for revocation or other termination; (14) list of officers, owners, etc., of applicant who have at any time been employed by or associated with any air carrier authorized to operate by the Civil Aeronautics Board indicating dates of employment and capacity in which employed; also a list of officers, owners, etc., of applicant who were connected in any way with any air freight forwarder, noncertificated carrier, etc., which had its operating authority revoked or suspended during the time of that connection; (15) description of experience of applicant's officers, managers and key personnel in transportation activities qualifying them for air freight forwarder operations; (16) a detailed description of any affiliated companies, their activity, operating authority, points served, total cargo tonnage handled during past full calender year, agency relationships, agreements concerning transportation activity to which affiliate is a party, and integration between applicant and affiliates; (17) any additional information as desired in support of applications; (18) Profit and Loss Statement (for the full year ending as of date of Balance Sheet); Balance Sheet as of a date not more than three months prior to application, list of terminal facilities and automotive equipment owned or leased; Certificate of Insurance (CAB Form 350)' or statement of qualification as a self-insurer (filing of a certificate of insurance may be postponed until later notification); sample of proposed air waybill; report of ownership of stock and other interests (CAB Form 2786)' by each officer, director, member, partner or owner of applicant; for each affiliate,

'Available from Publications Section, Civil Aeronautics Board.

a Profit and Loss Statement (for the full year ending as of date of Balance Sheet) and Balance Sheet, as of a date not more than three months prior to application; organizational chart, diagram of intercompany ownership and interlocking relationships, annotated to show percentages of stock holdings, officers, directors, members, partners and owners in each company; plus a brief account of any arrangement by which applicant will have available financial sources and facilities of other companies or individuals.

(b) Additional information. The applicant shall also submit such other additional information pertinent to its proposed activities as may be requested by the Board with respect to any individual application.

(Interpret or apply sec. 101(3), 72 Stat. 737, 49 U.S.C. 1301) [ER-310, 25 F.R. 6919, July 21, 1960]

§ 296.43 Issuance of Operating Authorization.

(a) To successful parties to the investigation. Any air freight forwarder applicant whose application for issuance or renewal of operating authority was approved in the Air Freight Forwarder Investigation, Docket No. 5947 et al., shall be issued an Operating Authorization bearing the same effective date as this part.

(1) If,

(b) To all other applicants. after the filing of an application for an Operating Authorization, it appears that the applicant is capable of performing the air transportation authorized by this part as an air freight forwarder and of conforming to the provisions of the act and all rules and requirements thereunder, and that the conduct of such operations by the applicant will not be inconsistent with the public interest, the applicant will be notified by letter. Such notification will advise the applicant that upon the filing of a valid tariff, an Operating Authorization will be issued to the applicant unless it has engaged in unauthorized air transportation or other activities prohibited by the act or the rules and regulations of the Board between the date of such notification and such filing. In the latter event, an Operating Authorization will not be issued unless and until a due showing is made by the applicant that it has terminated such unauthorized or prohibited activities, and that the issuance of such an

authorization would be consistent with the public interest.

(2) If, after the filing of an application for an Operating Authorization, it appears that the applicant has not made a due showing of capability or that the conduct of operations by the applicant might otherwise be inconsistent with the public interest, the Board shall by letter notify the applicant of its findings to that effect. The Board may dismiss any such application unless within 30 days of the date of the mailing of such letter, the applicant has in writing requested reconsideration and submitted such additional information as it believes will make the necessary showing, or requested that the application be assigned for hearing, in which case the applicant shall outline the evidence to be presented at such hearing and shall show the need for hearing in order to properly present its case.

(3) In the event that reconsideration or hearing is requested the Board may, without notice or hearing, enter an order of approval or of disapproval in accordance with its determination of the public interest upon the showing made, or on its own initiative may assign the application for hearing.

thorization will be issued to an applicant which has, or proposes to have, as owner, partner, manager, officer, director, or stockholder holding a controlling interest, any person who is or has been connected in any such capacity with any other air freight forwarder, international air freight forwarder, cooperative shippers association, irregular air carrier, or noncertificated cargo carrier, if the letter of registration, Operating Authorization, or other exemption privilege of such carrier was suspended or revoked by the Board on account of acts or omissions which occurred during the time of such connection: Provided, however, That an Operating Authorization may be issued to such an applicant where the Board finds, upon a showing by applicant, that the public interest and applicant's intention and ability to conform to the provisions of the act and requirements thereunder are not adversely affected by such relationship.

(c) Prohibition against holders of Operating Authorizations having tainted officers or owners. No holder of an Operating Authorization shall have and retain as an owner, partner, manager, officer, director, or stockholder holding a controlling interest, any person who was, or is, affiliated in any of said capacities with any other air freight forwarder, international air freight forwarder, cooperative shippers association, irregular air carrier, or noncertificated cargo carrier, under the circumstances set forth in paragraph (b) of this section: Provided, however, That such holder may have and retain persons presently or previously affiliated, in the manner described above, where the Board finds that the public interest and the carrier's intention and ability to conform to the provisions of the act and requirements thereunder are not adversely affected by such relationship.

§ 296.47 Nontransferability of Oper ating Authorizations.

(a) An Operating Authorization shall be nontransferable and shall be effective only with respect to the person named therein or his successor by operation of law, subject to the provisions of this section. The following persons may temporarily continue operations under an Operating Authorization issued in the name of another person, for a maximum period of six months from the effective Idate of succession, by giving written notice of such succession to the Board within 60 days after the succession:

(1) Administrators or executors of deceased persons;

(2) Guardians of incapacitated persons;

(3) Surviving partner or partners collectively of dissolved partnerships; and

(4) Trustees, receivers, conservators, assignees or other such persons who are authorized by law to collect and preserve the property of financially disabled persons.

(b) All operations by successors, as above authorized, shall be performed in the name or names of the prior holder of the Operating Authorization and the name of the successor, whose capacity shall also be designated. Any successor desiring to continue operations after the expiration of the six-month period above authorized must file an application for a new Operating Authorization within 120 days after such succession. If & timely application is filed, such successor may continue operations until final disposition of the application by the Board.

§ 296.48 Suspension of Operating Au

thorizations.

An Operating Authorization may be suspended by the institution of suspension proceedings in accordance with either the procedure specified in Subpart B of Part 302, of this chapter, or the procedure prescribed in paragraphs (a), (b), and (c) of this section.

(a) Whenever the Board contemplates the institution of suspension proceedings, pursuant to this section, which involve alleged knowing and willful violations, it shall issue an order instituting a suspension proceeding. However, whenever the alleged violations are not knowing and wilful the Board shall, by letter, give the carrier the notice and warning specified in section 9 (b) of the Administrative