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cluding, but not limited to, maintenance and repair) that it may choose to perform.

(2) Purchasing off the airport and having delivered on the airport without entrance fee, delivery fee or other surcharge for delivery any parts, materials, or supplies necessary for the servicing, repair, or operation of its aircraft: Provided, That the sponsor may make reasonable charges for the cost of any service (including charges for maintenance, operation, and depreciation of facilities and rights-ofway) furnished by the sponsor in connection with the delivery of any parts, materials, or supplies: And provided further, That in the case of aviation gasoline and oil purchased off the airport and delivered to the airport, the sponsor may require the aviation gasoline and oil to be stored in specified places, limiting the amount delivered to the amount of storage space available, and if necessary for the safe and efficient operation of the airport, require persons furnishing their own aviation gasoline and oil to utilize such storage, dispensing, and delivery system as the sponsor may designate.

(c) That if it exercises any of the rights or privileges set forth in subsection (a) of this paragraph it will be bound by and adhere to the conditions specified for contractors set forth in said subsection (a).

Mr. LEE. However, the two are inconsistent with each other in that, first, H. R. 6180 applies only to air carrier users of airports, whereas the regulations apply to all users; second, H. R. 6180 applies to food, beverages, and other nonaeronautical materials and supplies as well as to gasoline, fuel, propellants, lubricating oil, and other materials, equipment and supplies necessary for the operation and servicing of aircraft, whereas the regulations apply only to materials, equipment and supplies, including gas and oil

, necessary for the operaand servicing of aircraft; and three, H. R. 6180 provides that air carriers shall not be required to use any storage, dispensing, or delivery system operated by the airport owner or controlled by him under contract with a concessionnaire, whereas the regulations provide that the public agency owning the airport may require persons furnishing their own aviation gasoline and oil, and so forth, or purchasing such aviation gasoline or oil, and so forth, from off the airport to use such storage, dispensing and delivery system as the public agency may designate.

While in our judgment the furnishing of food and drink is a matter of local concern which should be left entirely with the local public agencies, our principal objection to the bill involves the application of its provisions to only air carriers instead of to all users, and the delivery of property to air carriers without permitting the airport owner to require that such property be delivered through such storage, dispensing and other delivery system as may be designated by the airport owner.

With respect to the delivery of gas and oil, generally speaking, we feel that the bill would take away from the airport owner, certain control that is necessary to protect, or avoid endangering life and property of others as well as to avoid the creation of confusion on the airport and interference with use of the airport facilities by others.

Specifically, insofar as concerns the inconsistency between the provisions of the bill and those of the regulations, the Federal Airport Act provides, in section 11, that as a condition precedent to his approval of a project under the act, the Administrator shall receive assurances, in writing, that, among other things, the airport to which the project relates, will be available for public use on fair and reasonable terms and without unjust discrimination.

In carrying out this intent to prevent discriminatory practices on airports constructed or improved with funds under the act, the regulations, as originally adopted in January 1947, provided that the

public agency owner of the airport would not grant or authorize the grant of an exclusive right for the sale of aviation gas or oil or for the sale of aircraft, aircraft parts or equipment, or for carrying on of other airport services or fixed base operations of an aeronautical nature.

Since that time, however, experience has disclosed that a number of airports, particularly the smaller ones, were deprived of a valuable source of revenue by being prohibited from granting an exclusive right to one dispenser of aviation gas and oil as well as the exclusive right for the furnishing of certain other aeronautical materials and equipment. Therefore, in order to enable the airport owner to derive the benefits of the granting of such exclusive rights and at the same time assure availability of the airport to the public without unjust discrimination and on fair and reasonable terms, the regulations were revised, effective May 1, 1948, to permit the granting of an exclusive right for the sale of gas and oil and aircraft parts, materials and supplies; provided that the contract granting such exclusive right contained provisions which would prohibit the contractor from exercising such right or privilege in a way that would prevent any person, firm or corporation operating aircraft on the airport from purchasing off the airport and having delivery to him on the airport, any parts, materials or supplies, including, of course, gas and oil, without any entrance fees, delivery fee, or other surcharge for such delivery.

However, the airport owner may make a reasonable charge for the cost of any service rendered by him in connection with the delivery of such materials and supplies and may require that gas and oil purchased from off the airport be stored in specified places or require the supplier of such gas and oil to utilize such dispensing or delivery system as the airport owner may designate. In our opinion, the airport owner must have the right to exercise such control over gas and oil deliveries on the airport in the interest of orderly operation of the airport, as well as for safety reasons.

In the event the restriction against the granting of exclusive rights for the furnishing of aeronautical materials and supplies bad been prescribed by law, instead of by regulations, as was the case, no change could have been made except by amendment to such law. The rapid development of the aviation industry requires a flexibility in the regulation of the operation of airports not attainable in basic statutory law.

Under the present provisions of the Federal Airport Act with respect to the public use of airports, the Administrator is able continuously to adjust the regulations to keep them in step with such economic changes, to the extent of flexibility permitted by the law. Even though the regulatory provisions contemplated by H. R. 6180 were considered desirable at this time, they should be in the form of administrative regulation rather than basic law in order that they may be revised as the need dictates in accordance with changing conditions and circumstances. In other words, we believe that it is not practicable to include in the basic law, detailed regulatory provisions which may require constant change to keep abreast of the constant changing conditions in aviation industry, economic and otherwise.

It is also our feeling that H. R. 6180 itself, would result in discrimination in that it grants to certain class of airport users, namely, the scheduled air carriers, privileges that are not granted to other classes of airport users, such as private aircraft operators and charter and nonscheduled operators.

In addition, I believe it important to call your attention to the fact that, in the promulgation of the regulations under the Federal Airport Act, we have carefully avoided any provision which might be construed as interfering with State sovereignty by limiting the right of the States and their various political subdivisions to levy and collect taxes. It is possible that H. R. 6180 might be interpreted as so interfering with State sovereignty.

In conclusion, I should like to say that in the drafting of the revised regulations under which the Federal Airport Act is now being administered, the rights and interests of all concerned were carefully considered and representatives of the various interested groups were invited to submit comments on such regulations prior to their publication and promulgation.

It is our feeling that those provisions of the regulations relating to the supplying and delivery of materials and equipment to users of the airport are reasonable and equally fair to all interests. It is likewise our feeling that the provisions of H. R. 6180 which I have indicated are objectionable to the Civil Aeronautics Administration, would result in giving the scheduled air carriers an unfair and undue advantage over other users of the airport, as well as divest the airport owner of such control of airport operations and activities as is necessary for efficient and safe operation of the airport.

Mr. HESELTON. I realize the hour is late, Mr. Lee, but I am very much interested in this problem. I am very much interested in the arguments you advanced in opposition to the bill, and I subscribe to them. I think that they are completely sound. But it seems to me that they represent some very interesting points as to the propriety of the agreements that you are insisting should be executed.

For instance, you say on page 2 thatthe regulations provide that the public agency owning the airport may require persons furnishing their own aviation gasoline and oil, and so forth, or purchasing such aviation gasoline or oil, and so forth, from off the airport to use such storage, dispensing, and delivery system as the public agency may designate.

I realize that you suggest part of that as safety matter and part of it as the efficient operation of the airport. Nevertheless, basically, , you are recognizing right then and there, are you not, that a local agency shall have the right to exact some type of fee from the air lines which is comparable to the fee that is exacted in the way of delivery charges? The result is the same, is it not? You approve it in one case and disapprove it in another case.

Mr. LEE. Yes, sir; I think the result is in effect the same; however, in one case the charge is being made for a service rendered.

Mr. HESELTON. You have different reasons, I understand, but still the results are the same.

Mr. LEE. Yes.

Mr. HESELTON. And then you say that the matter of furnishing food and drink is a matter of local concern which should be left entirely with the local public agencies. Now, will you tell me where it is in the law that you find the authority and the intention of Congress to let you instruct the CAA to go into this field of local administrative action and local economic action, specifically?

Mr. LEE. Section 11 (1) of the act.

Mr. HESELTON. That is the section to which we have referred to repeatedly today?

Mr. LEE. Yes, sir.

Mr. HESELTON. Have you ever found that the charges for the delivery of gasoline, oil or materials or parts on an airport have been unreasonable?

Mr. LEE. Not to my knowledge, sir.
Mr. HESELTON. Have you ever found them to be discriminatory?

Mr. LEE. Not to my knowledge. May I request permission to consult one of my associates?

Mr. HESELTON. You may.

Mr. LEE. There have been no findings or unreasonable or discriminatory charges.

Mr. HESELTON. Now, I take it that you and your staff have examined carefully the hearings, the committee reports and the debates in both bodies; and can you tell me where in any of those proceedings you found a single indication that Congress intended to vest in the CAA the power to promulgate regulations which affected the local administrative set-up and the local economic handling of the airport?

Mr. LEE. Well, sir, the requirement that the airport be available to the public without unjust discrimination.

Mr. HESELTON. You have just said that you have never found either unjust discrimination or unreasonableness. Those are the two conditions that Congress set up. Those are the things, it seems to me, that you have overlooked in terms of promulgating this regulation at least in the terms that the agreement requires. Do not you agree with me? Or let me ask you again, and I want to be perfectly fair about this thing, but I feel quite intensely, as you know, and now I will put it conditionally. If the staff of the CAA have not been able to find anything unreasonable or discriminatory, and if they have not been able to lay their hands on a single word printed or spoken in the terms of the enactment of the Federal Airport Act which directs them to promulgate regulations which would bring about these results on the economic operation of the airport and upon the local administrative operation of the airport, how can you conceivably justify the sort of an agreement that you are insisting the Logan Airport must sign?

Mr. LEE. Well, sir, I believe that the provisions for reasonable charges are justified in the regulations, and they are justified under section 11 (1) of the act.

Mr. HESELTON. But you have just said, have you not, that you have not found them unreasonable, and is not that a condition precedent?

Mr. LEE. We have made no formal findings of unreasonableness.

Mr. HESELTON. Should not you reexamine and redetermine the question of reasonableness and the question of discrimination before you insist upon a local authority changing a pattern that they have set up as reasonable and nondiscriminatory?

Mr. LEE. Well, in determining reasonableness, sir, we feel that they should bear some relation to the cost. Now, those costs can include many intangible costs, not the direct costs of any service rendered, but they can include the indirect costs, including amortization and so forth. The reasonableness of the charge is measured against the actual costs, and we feel that in passing on the reasonableness we should measure them against the costs.

Mr. HESELTON. If that is the approach you take, you admit, will you not, that an idea that has been repeatedly expressed here this afternoon that these airports, all of them, should be permitted within the scope of their conception of how they can best operate their airports locally, and in terms of the conditions that exist in those communities or those states, so as to operate them on at least a self-sustaining, if not upon a profit basis, is a perfectly proper approach for them to take?

Mr. LEE. Yes, sir.

Mr. HESELTON. And you subscribe whole-heartedly, I take it, to the plea that has been made here this afternoon by all of these witnesses, that they be permitted in the interests of a strong and vigorous air liné industry to get to that stage just as soon as they can?

Mr. LEE. Yes, sir.

Mr. HESELTON. And you also recognize that in a country as vast as ours, with as many different local circumstances, that there must be some freedom and there must be some flexibility, the very thing that you have urged here, given to the local authorities in their

solemn judgment, unless they go outside the field of clear reasonableness to build up a pattern.

Mr. LEE. We believe in not getting into the actual administration of the airport. Our function is not to fix rates at all as far as the local communities are concerned.

Mr. HESELTON. Well, you have said further in your statement, referring to the contract for exclusive right and so forth:

However, the airport may make a reasonable charge for the cost of any service rendered by him in connection with the delivery of the materials and supplies.

Now, if the Commonwealth of Massachusetts, through its duly authorized representatives, has in fact fixed what it believes to be a reasonable charge for the cost of the services in terms of providing facilities and all that goes with a $53,000,000 investment on their part, how can you possibly say that you can justify a denial to them of the right to exact that small fee, which in fact places them on a self-sustaining basis, or probably would?

Mr. LEE. Sir, if it is a reasonable charge, we would not interfere.

Mr. HESELTON. You still insist, although you have never found that it was unreasonable, that the ground for it is that you think it is not reasonable, is that right?

Mr. LEE. Sir, we have never made an actual formal finding that it is unreasonable.

Mr. HESELTON. You are trying to say to me and to this committee that that is the reason why you insist on this, is that right?

Mr. LEE. Yes, sir.
Mr. HESELTON. What is unreasonable about it?

Mr. LEE. I did not participate in the actual discussions, sir, but the manner in which the charge is specified, it does not necessarily bear any relationship to the costs. Now, in actual amount, I do not know, it might be proper.

Mr. HESELTON. Certainly, you would not venture the opinion that as far as the amount is concerned, there was anything unusual about it?

Mr. LEE. No, sir.

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