PRESS RELEASE FROM THE OFFICE OF GOVERNOR ROBERT F. BRADFORD

[For release April 16, 1948]

Governor Robert F. Bradford today announced that his special counsel, Harold E. Stevens, and Assistant Attorney General Sumner W. Elton will confer in Washington Monday with leaders of the Massachusetts' congressional delegation relative to the $600,000 in Federal funds allocated to the Logan International Airport, which have been withheld from the Commonwealth.

At the same time the chief executive released the text of a resolution passed unanimously at this week's meeting of the executive council condemning interference by the Civil Aeronautics Administration with the State's operation of the airport.

The resolution states that the CAA's action was done "without congressional warrant" and "would require violation of the Massachusetts statutes" if their dictum was complied with. It further states that following the action prescribed by the CAA "would seriously interfere with, if not make impossible, the operation of the airport on a self-supporting basis."

The resolution follows:

"RESOLUTION ADOPTED BY THE EXECUTIVE COUNCIL, COMMONWEALTH OF

MASSACHUSETTS, APRIL 14, 1948

"Whereas the Commonwealth of Massachusetts has invested approximately $50,000,000 in the General Edward Logan Airport, which is operating at an annual deficiency of about $75,000 and should, as promptly as possible, be placed on a self-supporting basis and

"Whereas to accomplish this purpose the department of public works, which is the operating agency, has been directed by act of the legislature to establish a schedule of charges at the airport on items including the 'sale of gasoline or other aviation fuels, oils or other articles and supplies' and

"Whereas the Civil Aeronautics Administration has allocated $600,000 from Federal funds to Logan Airport under the terms of the Federal Airport Act, which amount is urgently needed to assist in meeting the cost of large expenditures required to complete the development of the airport, but has refused to allow the Commonwealth to receive said sum unless the Commonwealth binds itself for 20 years not to impose any fee on supplies delivered at the airport for operation of aircraft other than a charge for the cost of services rendered by the airport in connection therewith, and

"Whereas such interference by the Civil Aeronautics Administration in the operation by the Commonwealth of Logan Airport as the price of receiving Federal funds, which represent only a small fraction of the money paid by ciitzens of the Commonwealth to the Federal Government, is without congressional warrant, would require violation of the Massachusetts statutes and would seriously interfere with, if not make impossible, the operation of the airport on a self-supporting basis: Now, Therefore, be it

"Resolved, That the executive council unanimously opposes such unwarranted interference by a Federal administrative agency and be it further

"Resolved, That each member of the Massachusetts delegation to the Congress of the United States be sent a copy of this resolution and be requested to take immediate action to protect the Commonwealth from such abuse of authority by the Civil Aeronautics Administration."

Mr. HESELTON. Next, I would like to ask you if the airport you refer to that does have this landing-fee schedule that you describe, is the Minneapolis-St. Paul Airport?

Mr. ELTON. That is the airport; yes.

Mr. HESELTON. I would like to ask you if you have any information at all as to the amount of revenue the oil companies derive from the sale of gasoline and oil at the Logan Airport?

Mr. ELTON. I do not have. We were able to estimate the number of gallons used at Logan through the requests for tax refunds at the Commissioner's office, but we have no figures on it.

Mr. HESELTON. If you will supply it to me, I would like to see that it goes in the record.

Mr. ELTON. We have made an effort to get those, to sit down and talk about it, and we have been informed that those are confidential matters of private business.

Mr. HESELTON. If I understand it correctly, this alternative that has been so highly recommended to this committee of developing a landing fee schedule which would accomplish the purpose of eliminating the known deficit in operating the Logan Airport has been completely impossible of realization due to the resistance of the air lines themselves.

Mr. ELTON. That is absolutely right, sir. And that dates even so recently as the refusal in the matter of the last few weeks.

Mr. HESELTON. Is it correct to state that as of this very moment the Commonwealth of Massachusetts, which as we all know pays somewhere between $3 or $4 of Federal tax revenue for every dollar that it gets out in the way of return, has been told in substance and effect by the CAA that the money appropriated by Congress and allocated to the Logan Airport in the amount of $600,000 will be denied them unless they yield before May 31 in their very sincere contentions that this is an unwarranted and illegal interpretation of the Federal Airport Act?

Mr. ELTON. That is right, sir. We have been given now until May 31.

Mr. HESELTON. So it is as close as that, and if they persist in their attitude the Commonwealth of Massachusetts will lose at least $400,000?

Mr. ELTON. It is about $450,000.

Mr. HESELTON. It will be taken away from the Commonwealth. Mr. ELTON. $150,000 is so-called nondiscretionary fund, which would have to be reallocated to some airport in Massachusetts, but $450,000 would be lost.

Mr. HESELTON. Your deficit, demonstrated on experience, is something like $250,000 a year? It runs around that figure?

Mr. ELTON. It runs that, and an item we don't carry in there is the cost of policing, the State police do it, and it is not carried on our budget.

Mr. HESELTON. And all that is involved in this $600,000?
Mr. ELTON. That is right.

Mr. HESELTON. The actual agreement there that they are asking you to sign, which would eliminate the provisions that have been undertaken as a result of an act of the legislature, would mean that for 20 years you would bind the Commonwealth of Massachusetts to eliminate that revenue that they are now getting.

Mr. ELTON. As a practical matter, yes.

Mr. HESELTON. So the practical side of it is you multiply the receipts that you are now getting; and how much is that?

Mr. ELTON. It is a minimum of 5,000,000 gallons at 3 cents, which would be $150,000 a year.

Mr. HESELTON. Would be multiplied times 20, and that is the amount that the Commonwealth of Massachusetts would lose if they accepted this provision of the Federal Government.

Mr. ELTON. That is right.

Mr. HESELTON. And the proposition of the Federal Government only involves $650,000.

Mr. ELTON. Yes.

Mr. HESELTON. I think that points up rather clearly that you have a situation here of which you had no adequate notice, and which in terms of Mr. Rhyne's book is so clearly described as a vaccilating and fluctuating policy of the CAA in which they first state they rely on section 11 (1), that the airport will be available for us on fair and reasonable terms, and then they go over to a first draft of an agreement in which they provide that the sponsor will not grant to any one airport service operator an exclusive right to sell gasoline or oil, and then they jump to 1946, to the statement that the sponsor shall not hereafter grant to any one the exclusive right to sell, and then they come up in the summer of 1947 with a most amazing letter, in which they said that this section permits the sponsor to exercise in its own right and exclusive right to sell aviation gasoline and/or oil.

It also permits the sponsor to exact a gallonage charge on gasoline and oil dispensed or used by other at the airport. The prohibition is that the sponsor will not after the date of the agreement grant to someone else the exclusive right to sell aviation gas or oil and then the general counsel, in a letter dated February 10 of this year, stated that the revised regulations will shortly be forthcoming, which "would permit the grant of an exclusive right to sell aviation gasoline and oil for terms not in excess of 3 years," and finally, they come out with this new language, that they have incorporated into the proposed agreement in Massachusetts.

In other words, they are on and off again.

Mr. ELTON. It is an endless performance for anyone to get involved. in.

Mr. HESELTON. It may be there are not enough of us here in Congress who realize what this situation is, so that if they are going to persist in this matter in terms of just Massachusetts alone, we will not get very far.

However, I have a strong suspicion that the Congress of the United States has had enough experience with the misinterpretation of the clear intent of congressional acts so that there may be a few ears willing to listen, to what I think is a distorted and unreasonable and highly impracticable gun-at-the-head proposition that they are trying to hold up against my own State.

Mr. ELTON. I might just add one statement, Mr. Chairman, and that is this: that if the Civil Aeronautics Administration this year is going to prescribe a cost-basis formula for a gasoline charge, what assurance does any airport have that next year-as a condition of getting funds next year-the Civil Aeronautics Administration won't have been prevailed upon to establish a cost-basis formula for landing fees?-then they will have it all.

Mr. HALE. Are there any other questions?

Thank you very much, Mr. Elton.

Mr. HESELTON. The gentleman who was here from SoconyVacuum this morning after the meeting recessed handed me this tabulation from the American Petroleum Institute Committee, with reference to various kinds of taxation, and I wondered if I might ask that that be inserted at the place where it was requested. Mr. HALE. Without objection, it will be so inserted.

Mr. HALE. The next witness is Mr. E. P. Owen, municipal consultant of the city of Jacksonville, Fla. I understand that Mr. Owen

was obliged to leave and that his statement will be offered by Mr. Rogers.

Mr. ROGERS. I wish to file in the record at this point a statement by Mr. E. P. Owen, who is the municipal consultant of the city of Jacksonville, Fla.

Mr. HALE. The committee will be pleased to receive the statement. (The statement is as follows:)

STATEMENT SUBMITTED BY E. P. OWEN, JR., MUNICIPAL CONSULTANT, CITY OF JACKSONVILLE, FLA.

This bill seeks to amend section II of the Federal Airport Act (U. S. Code, title 49, sec. 1110) to provide that if Federal aid is received, the scheduled air carriers shall have the right to obtain and take delivery of personal property of any nature, at the airport, including among other things gasoline, food and beverages, without the payment of any fees, charges, rentals, payments or taxes for the privilege, except those representing fair and reasonable compensation for services rendered in connection therewith.

Under the provisions of the proposed amendment, the city of Jacksonville, would stand to lose some $6,000 annually in airport revenue, which amount represents the 5-percent commission received by the city on "in flight" meals placed on airplanes in Jacksonville by the caterers serving the various air lines. Under existing regulations, the right to require the use of storage, dispensing and delivery systems owned by the airport, when necessary for the safe and efficient operation of the airport, is eliminated. Another provision of the proposed amendment purports to exempt property and transactions of the air lines from State and local taxes "except for the payment of any tax which is imposed by the airport owner or operator upon business organizations in the tax jurisdiction." We do not feel that the cities should be deprived of the revenues they now receive as commissions on "in flight" meals and commissions they may later receive on other nonaeronautical services furnished the air lines.

Mr. HALE. The next witness is Mr. James C. Buckley, the director of airport development of the Port of New York Authority.

STATEMENT OF JAMES C. BUCKLEY, DIRECTOR OF AIRPORT DEVELOPMENT OF THE PORT OF NEW YORK AUTHORITY, NEW YORK, N. Y.

Mr. BUCKLEY. The Port of New York Authority is a municipal corporate instrumentality of the States of New York and New Jersey created by treaty between the States in 1921, with the approval of the Congress, to deal with the planning and development of terminal and transportation facilities, and to facilitate the commerce of the metropolitan area.

Its geographic jurisdiction covers an area roughly 20 miles in radius around the Statue of Liberty in New York Harbor. Within the area there is a population of approximately 11 million, or more than 8 percent of the population of the continental United States.

The authority is given wide powers to finance, construct, and operate terminal and transportation facilities within the port district. It has no taxing powers; its projects must be self-sustaining and they are financed through the issuance of port authority bonds which are sold in the open market on the basis of the port authority's established credit base and its anticipated earning power.

As a part of its statutory obligations, and under its leases with the cities of New York, N. Y., and Newark, N. J., the port authority had the responsibility for operating, maintaining, and developing the air-line airports of the port district for a period of 50 years.

Currently, we are operating LaGuardia Airport in New York City, and Newark Airport in Newark, N. J. On July 1, 1948, we shall open the great New York International Airport in New York City, and in about 10 years we anticipate that the air traffic of the New York region will require a fourth air-line airport.

The airports for which the Port of New York Authority is responsible under its leases with the cities of Newark and New York represent accumulated municipal investments of approximately $100,000,000. The port authority is prepared to invest an additional $200,000,000 in these facilities over the next 10 years to keep them abreast of the developing needs of commercial air transportation.

The marginal nature of this program is clearly indicated by the fact that even with a reasonable amount of Federal aid our anticipated margin, after all charges over the next 37 years, will average less than seven-tenths of 1 percent per annum on our invested capital. And the achievement of even this infinitesimal margin of safety is further contingent upon the greatest possible development of nonflight revenues at our airports through the exercise of good business judgment in their development and operation.

Today, however, that program as well as the program of every major air traffic center in the country is threatened by the bill which is before the committee. I am referring, of course, to H. R. 6180, a bill to amend the Federal Airport Act. It is important to have that in mind in considering any legislation which will hamper or in fact eliminate any ability of the airport operator to use his business judgment. That is the reason why today on behalf of the Port of New York Authority for the first time in my experience before this committee, we are wholeheartedly opposing a bill completely and unequivocably, and we recommend and urge that the bill neither be approved or reported out on the floor of the Congress.

Gentlemen, it has been my privilege from time to time over the past few years to testify before this committee on various measures affecting our national transportation pattern. Today, for the first time in my appearances before this committee, I must state that the organization which I represent is inequivocably opposed to the measure before you. We urge that this bill not be approved by the committee and not be recommended for consideration by the House. Let me review briefly a few of the many compelling reasons which have brought us to this view.

Passage of this will force the continued subsidization of scheduled air carriers by local municipalities and authorities who accept Federal airport aid. Under this bill, the scheduled air carriers will be relieved of paying their fair share of the cost of providing and maintaining facilities at airports which are used by them and their suppliers. Under this bill, the airport operator could charge only "for the cost of any service rendered in connection" with the procurement by the scheduled air carrier of personal property of any nature.

This provision obviously intends that charges made on account of gasoline, oil, flight meals, and other supplies brought into the airport from the outside shall be based solely upon services, if any, rendered by the airport operator directly in connection with such supplies. It obviously is intended to prevent the airport operator from including a fair and just proportion of his general expenses in connection with