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Mr. LEE. As to the method of imposition on the charge, as a service charge, it does appear unreasonable. As I say, we would have no objection, and we do not file objection, to the imposition of local taxes.

Mr. HESELTON. Certainly this much is true, is it not, that without any means by which you can determine the costs of operating these airports, you certainly cannot come up with any conclusion that it is unreasonable economically?

Mr. LEE. No, sir, we make no statement that it is unreasonable in amounts.

Mr. HESELTON. You have specifically thrown that out, and it is unreasonable for some other reason?

Mr. LEE. Yes, sir.
Mr. HESELTON. What is that other reason?
Mr. LEE. The method of imposition of the charge.
Mr. HESELTON. What is that?

Mr. LEE. The method of imposition of the charge. It bears no relation to the service rendered.

Mr. HUNTER. In fact, it applies to the fixed-base operators as well.

Mr. HESELTON. Is Washington National Airport the only major airport in the United States that now has an underground distribution system?

Mr. HUNTER. I do not think so, but I could not say.

Mr. LEE. I know there are some major military airports with them, but I do not know about the others.

Mr. HESELTON. Is that the only one that you know of?
Mr. LEE. I would say so, subject to correction, sir.

Mr. HESELTON. I do not think that there is any secret about this, that Gulf Oil Co. has the concession.

Mr. LEE. At the present time.

Mr. HESELTON. Do you know whether they pass that concession fee of $150,000 on to the air lines?

Mr. LEE. No, sir; when we talk about that fee, I would like to make a statement that that is not a profit, as was, I believe, testified to this morning. In taking the cash payment, it might be interpreted as a profit, but against that there are many charges, such as those I have mentioned, the intangible charges and indirect charges, which in effect leave us with no "plus” on a sound accounting basis on that fee.

Mr. HESELTON. Notwithstanding the underground distribution system, is it not true that the air lines still insist on trucking in their own gasoline, and does not the airport let them do that?

Mr. LEE. That has been the subject of negotiation; yes, sir.
Mr. HESELTON. Are they not doing it now?
Mr. LEE. I do not think so.
Mr. HESELTON. They are still all pooled in there?
Mr. LEE. Yes, sir.

Mr. HESELTON. I guess you have answered this question, that you, are negotiating; but the question was suggested to me: Are you changing that policy? Is the negotiation, for the purpose of changing the policy? You still are going to retain the policy; is that not right?

Mr. LEE. We believe in using the underground distribution system as being the most economical and safe method of distributing the gasoline. As far as the individual purchase of gasoline and the trucking in, that could be subject to change.

Mr. HESELTON. Has the position of the National Association of State Aviation Officials on your present policy been brought to your attention, as to these regulations?

Mr. HUNTER. There was no objection raised to that last one. They had no objection to the last provision of the regulations.

Mr. HESELTON. I mean as to the regulations as a whole. Were they in accord with your policy?

Mr. HUNTER. That one, yes; they raised no objection to paragraph (4) of part 3 of the application.

Mr. HESELTON. How about the rest of the policy?
Mr. HUNTER. We have our disagreements; yes, sir.

Mr. HESELTON. How about the Conference of Mayors, do you have disagreements with them?

Mr. HUNTER. Certainly, we cannot hope to please everybody.

Mr. HESELTON. That is no answer to the question, sir. They disagree with you, do they not?

Mr. HUNTER. On that point, from what I have heard today, very much so.

Mr. HESELTON. Does it not boil down to this, that those who are affected by these regulations, whether they be the Governor and the council and the legislature and the airport management and the airport managers that are represented here, or the Council of Mayors or the Association of State Aviation Officials, there is a substantial unrest in terms of the promulgation and application of some of these regulations that you have put on the books?

Mr. HUNTER. I would say that that was true of the precediny regulations, but these have met with almost complete acceptance.

Mr. HESELTON. What is the highest gas tax, so far as you know, at any United States airport?

Mr. HUNTER. You mean State tax? Seven cents, I believe.

Mr. HESELTON. Who pays the cost of installing this distribution system out here at the airport?

Mr. LEE. That was paid by the Federal Government, sir. May I correct that last statement? I believe that our contract with the oil company provided for meeting at least some of the expenses, and I can correct the record in that respect.

Mr. HESELTON. Do you know how much?
Mr. LEE. Not at the present time.
Mr. HESELTON. Can you find out?
Mr. LEE. Yes, sir.

Mr. HESELTON. Does not the National Airport gasoline contractand I will take it for granted it is the old one, and not the one that you are negotiating-require that the price for gasoline be the lowest price given any other purchaser; is that right?

Mr. HUNTER. I do not know.
Mr. HESELTON. Suppose that you file a copy of the contract with

us.

Mr. LEE. Yes, sir, I will.

Mr. HESELTON. Do not the laws of many of the States require Government purchases to be advertised and bid and awarded to the lowest bidder?

Mr. LEE. Yes, sir.

Mr. HESELTON. Is that not the way we operate, as a matter of fact, through our Federal purchasing agency here?

Mr. LEE. I believe so, yes, sir.

Mr. HESELTON. Then this charge this morning, or this statement this morning about monopolistic practices and un-American activities, on the part of some of the local communities, is rather flimsy, is it not?

Mr. HUNTER. You are talking about two different things.
Mr. HESELTON. I do not think that we are too far apart.

Mr. HUNTER. One is the services, and the other is granting of a right to do business on public property.

Mr. HESELTON. “Is it not customary, as a matter of fact, to award concessions on public grounds or public operations, on a percentage of the gross income, a flat license, or some similar basis?

Mr. LEE. I think so, I believe so, yes, sir.
Mr. HESELTON. And I think your associate agrees with that.
Mr. HUNTER. Yes.

Mr. HESELTON. I am sorry that we do not make much progress toward my ideas, but I would like to have you let me know as soon as possible, and I will make this quite specific, whether you are going to insist: (1) On the Commonwealth of Massachusetts signing this by May 31; and (2) whether you have any other alternative as a result of these hearings and anything that has been said or that has come to your mind; and are you willing to explore the question which has been raised here as to just whether you are acting within the scope and intent of the Federal Airport Act. And furnish a specific and detailed brief as soon as possible, pointing out to this committee upon what provisio of law you rely, what testimony in the hearings, and what phraseology in the committee reports on either side, or in the conference report, or in the debates, when any of this legislation was enacted, which gives you the right or imposes upon you the duty of going into these matters which I have described as, in my opinion, matters of local administration essentially, and matters of economic judgment by competent local authority.

I would like to see that brief as closely written as possible, omitting nothing that you rely upon as the basis of your answer.

Mr. LEE. We shall be glad to furnish that.
Mr. HESELTON. That is all.
(The material referred to above is as follows:)

CIVIL AERONAUTICS ADMINISTRATION,

Washington 25, May 24, 1948. Hon. CHARLES A. WOLVERTON, Chairman, Interstate and Foreign Commerce Committee,

House of Representatives, Washington 25, D. C. DEAR CONGRESSMAN WOLVERTON: This is written with reference to certain requests for information and statements made by Congressman John W. Heselton at the hearing on H. R. 6180 on Monday, May 17.

Mr. Heselton inquired as to whether or not the date of May 31, 1948, which has been set as the time by which Massachusetts must either accept or refuse the $600,000 allocated to the Logan Airport, could again be put off. In answering this inquiry I would like to mention certain factors that require our reply in the negative.

The $600,000 was tentativelv allocated to the Logan Airport in August 1947, and since that time the Administration has set six dead lines, the first being in January 1948, all of which have been extended for one reason or another at the urgent request of the State of Massachusetts.

During the last month Mr. Burgess, Deputy Administrator, has conferred at length with Mr. Heselton, Senator Saltonstall, and other Members of the Massachusetts delegation, as well as with Governor Bradford and his counsel, both here in Washington and in Boston. On the 11th of May Mr. Burgess conferred with the Governor, aviation officials of the State of Massachusetts, and the chairman of the Ways and Means Committee of the State house of representatives. At that meeting the State officials agreed that a landing fee is more equitable than the proposed gasoline-flowage charge and should be imposed at Logan at a level which would provide the revenue from the air lines required by the airport and reflecting the air lines' proportionate use of the airport.

Throughout our dealings on this matter the Massachusetts officials have felt that any action on their part in accepting or refusing to accept the terms of the assurance agreement might have a harmful effect politically on the passage of a bill for the reorganization of the State aviation administrative bodies and the bill authorizing the issuance and sale of $15,000,000 of State bonds for the construction of a terminal building and ramp building at the Logan Airport. The major reason for this feeling is that on the one hand the assurance agreement prohibits a charge for the delivery on an airport of gasoline bought off an airport other than one that is in reasonable relation to the costs of services and facilities incurred by the airport as a result of the delivery, whereas the Logan Airport management, in accordance with authority granted by a Massachusetts statute, proposed to charge for the delivery of gasoline on the airport at a rate that would defray most if not all of the entire airport's operating deficit. (This point is outlined more fully in Mr. Burgess's letter to Governor Bradford of April 23, 1948, enclosed herewith.)

In these circumstances, Mr. Burgess discussed at the meeting in Boston the time needed in which to gain passage or assurance of passage of these reorganization and bond issue bills. It was the consensus of the State officials, including all those mentioned above, that 2 weeks would provide adequate time and that certainly by the end of the month the State legislature would have made its decision.

The other major factor bearing on this situation is that there are five important airport projects in region 1 alone on which bids have been received exceeding the estimates and grant offers by a total of $1,475,000 of Federal funds. It is therefore necessary that we notify the sponsors of these five projects promptly as to whether or not they must either abandon the projects insofar as the Federal funds are concerned, or reduce substantially the work contemplated. Obviously we cannot give these sponsors a definitive answer until we know whether or not Massachusetts is going to accept the $600,000 for Logan Airport, which includes some $440,000 of discretionary funds.

Mr. Burgess has discussed this situation recently with Congressman Heselton, who has throughout been cooperative and understanding of our situation in view of the factors above delineated.

in connection with Mr. Heselton's request for a brief outline of the legislative background for the stand we have taken in regard to fees for the sale and delivery of gasoline on an airport, this brief is in the process of being drawn up and will be delivered to you as soon as possible. In the meantime, I am providing you with copies of Mr. Burgess' letters of April 23 and May 14, 1948, to Governor Bradford of Massachusetts.

I might mention also at this time that we have made nearly 300 grant offers to project sponsors, in addition to which there are some 150 project applications in the hands of our field and Washington offices. All of the sponsors involved have, of course, signed an assurance agreement, and the amounts in each case have varied from $1,000 of Federal funds up to something in excess of $1,000,000.

In view of your committee's active and constructive part in the drawing and passage of the Federal Airport Act, I believe you will be gratified in being informed not only of this progress, but also concerning the expressions of satisfaction and praise which we have generally received throughout the country from prospective sponsors and other interested groups concerning the revised regulations and sponsors assurance agreement which became effective on the first of this month. This, together with the fact that Massachusetts, due largely to peculiar circumstances, is the only prospective sponsor who is currently protesting to the Washington office any of the terms of the revised regulations and sponsors assurance agreement, comprise I believe strong evidence that our requirements are an accurate interpretation of law and the intent of Congress, and are also fair and reasonable.

In compliance with Mr. Heselton's last request, I will forward to you in the next few days copy of our lease with the Gulf Oil Co. through which they supply gasoline and oil at the Washington National Airport. In this connection and for the purpose of both correcting and filling in the statements made in regard to the Washington National Airport at the hearing, I would like to outline here briefly the situation in regard to this lease. It was entered into almost concurrently with the 10-year leases with the air lines in June of 1941. The lease with the Gulf Oil Co. was for 5 years, and consequently expired in June of 1946, since when it has remained in effect on a month-to-month basis, which, needless to say, is unsatisfactory to all concerned.

Under the lease the Gulf Oil Co, established at their own expense what was and still is the only underground aviation gasoline distributing system at any civil terminal type airport in this country. It has proven itself so economical and efficient that the air lines agree they cannot truck gasoline onto the airport nearly as cheaply. They have had this right since the expiration of the Gulf contract.

By its very nature, such a system requires that either one type of gasoline be distributed or that various types be comingled. Since the lease expired nearly 2 years ago we have been hopeful of making arrangements whereby an independent distributor would purchase Gulf's distributing system, operate on a service basis and distribute through it gasoline of any oil company with which any of the air lines serving the airport have a contract. We have been carrying on active negotiations with the air lines not only for this purpose, but also for the purpose of raising the existing landing fees at the airport, which all concerned acknowledge are inequitably low, so that we can reduce the $150,000 paid to the airport annually by Gulf Oil to an amount that is in line with a ground rental. One of our primary reasons for attempting to make these changes in our existing contracts with the air lines is to get away from a fee that is in the nature of a flowage charge on aviation gasoline, and also to do away with the exclusive right nature of the existing lease. Whether or not we will be able to accomplish any of the above prior to the expiration of our 10 year leases with the air lines in June of 1951 is questionable, but in view of some of the questions and remarks made at the hearing in regard to present arrangements for the sale of aviation gasoline at the Washington National Airport, I feel that your committee should be informed of our efforts to change them.

I hope the above supplies you with the information that has been requested. I would appreciate your having this letter and the enclosures made a part of the record of the hearings. Sincerely,

GEORGE W. BURGESS,

Deputy Administrator (For the Acting Administrator).

DEPARTMENT OF COMMERCE,
CIVIL AERONAUTICS ADMINISTRATION,

Washington, June 1, 1948.
Hon. CHARLES A. WOLVERTON,
Chairman, Interstate and Foreign Commerce Committee,

House of Representatives, Washington 25, D. C. DEAR CONGRESSMAN WOLVERTON: As promised in the second paragraph on page 3 of our letter to you dated May 24, 1948, I have obtained and enclose herewith copies of the Gulf Oil Co. leases under which that company supplies gasoline and oil at Washington National Airport. These enclosures consist of a photostatic copy of the original agreement dated February 15, 1941, and a typewritten copy of the extension agreement dated June 15, 1946.

Within a few days our general counsel's office will be in a position to supply you with an informal brief in support of our position that the Administrator, in insisting upon the execution of the sponsor's assurances portion of the project application, is carrying out the intent of Congress as manifested in the Federal Airport Act of 1946. Sincerely,

F. B. LEE, Acting Administrator for Civil Aeronautics.

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