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Washington, D.C. The committee met, pursuant to adjournment, at 10 a. m., Hon. Clarence F. Lea (chairman) presiding.

The CHAIRMAN. The committee will come to order.

In connection with the enactment of the Civil Aeronautics Act of 1938, the problem of insurance for air carriers was developed. The committee concluded to omit specific legislation on that question, thinking that perhaps there would be a development of experience that would better guide us as to what, if anything, should be done.

It is, of course, apparent that the question of insurance is a very practical part of the problem of aviation on account of the high cost of insurance.

Judging by what has been reported here and what the committee has learned, it would seem that the committee should very properly consider giving the Civil Aeronautics Board some authority in reference to insurance with a view of in the first place being assured that the insurer is a responsible party to carry out the obligation he assumes and that the terms of the policy of insurance should be consistent with the proper protection to the carriers and to the persons who are beneficiaries under the insurance and also that so far as practical provision be made to secure reasonable rates for such insurance and reinsurance.

Of course, it is possible that a lack of proper rates might be a handicap to our air carriers in competition especially in the foreign field as well as local because, of course, the cost is a very important part of the general cost of aviation transportation.

So I would be glad if the attorney for the Civil Aeronautics would consider a suggestion that a provision be made that would give the Civil Aeronautics Board authority enough to see that the policy did have these qualities and was fitted to accomplish those purposes.

Mr. HOLMES. Mr. ChairmanThe CHAIRMAN. Mr. Holmes. Mr. HOLMES. May I make an observation on that point? Was there not some thought men we were discussing this legislation previously that some study was going to be made relative to insurance ? At least, it occurs to me that in our discussion we had that in mind.

The CHAIRMAN. Yes. Mr. Holmes. That some studies were going to be made with the thought of taking up the subject at some later time..


The CHAIRMAN. Yes; and we thought that out of the experience we would know whether or not it was necessary and what should be done along that line.

Mr. Stanton, we will be glad to hear from you.


AERONAUTICS, DEPARTMENT OF COMMERCE Mr. STANTON. Mr. Chairman, my name is C. I. Stanton, Administrator of Civil Aeronautics, Department of Commerce.

Mr. Chairman, as I understand it, the fundamental purpose of H. R. 1012 is to bring the Civil Aeronautics Act of 1938 up to date by making such changes in those provisions as experience with the administration of the act shows to be desirable and making such additions to the act as experience has indicated will make it a better instrument for the control and development of American civil aviation.

- It seems to me that it would be of fundamental importance to work out such amendments to title II as will accurately describe the organization as it now actually is, or as the Congress may desire it to be further revised.

The original act provided an agency to be known as the Civil Aeronautics Authority, composed of five members, and states that “there shall be in the Authority an Administrator who shall be appointed by the President, by and with the consent of the Senate." It also provided for an Air Safety Board "created and established within the Authority.” As in the case of the members of the Authority and the Administrator, each of the three members of the Safety Board were to be appointed by the President with the advice and consent of the Senate. Thus, there were three independent authorities within this agency but notwithstanding the fact that the line of demarcation between the authority of the five-man board and the Administrator was somewhat blurred, it functioned in a satisfactory manner until July 1, 1940, when it was changed by Presidential Reorganization Plans III and IV.

Plan III undertook toclarify the relations of the Administrator of the Civil Aeronautics Authority and the five-member Board of the Civil Aeronautics Authority.

The Administrator is made the chief administrative officer of the Authority with respect to all functions other than those relating to economic regulation and certain other activities primarily of a rule-making and adjudicative character which are entrusted to the Board. This will eliminate the confusion of responsibilities existing under the Civil Aeronautics Act and provide a more clear cut and effective plan of organization for the agency.

The quotations are from the President's message of April 2, House Document 681.

I would like to further quote section 7 of the plan itself, which reads as follows:

SEC. 7. FUNCTIONS OF THE ADMINISTRATOR TRANSFERRED: The functions vested in the Civil Aeronautics Authority by the Civilian Pilot Training Act of 1939; the functions of aircraft registration and of safety regulation described in titles V and VI of the Civil Aeronautics Act of 1938, except the functions of prescribing safety standards, rules, and regulations and of suspending and revoking certificates after hearing; the function provided for by section 1101 of the Civil Aéronautics Act of 1938; and the functions of appointing such officers and employees and of authorizing such expenditures and travel as may be necessary for the performance of all functions vested in the Administrator, are transferred from the Civil Aeronautics Authority to and shall be exercised by the Administrator, who shall hereafter be known as the Administrator of Civil Aeronautics.

Plan III was followed by Reorganization Plan IV transmitted by the President on April 11, 1940. This plan brought the Civil Aeronautics Authority within the “framework” of the Department of Commerce. It provided that the Civil Aeronautics Authority should hereafter be known as the Civil Aeronautics Board which should thereafter discharge, in addition, the duties formerly vested in the Air Safety Board, the offices of the members of which were abolished. It further provided that the functions of the Administrator of Civil Aeronautics should be administered under the direction and supervision of the Secretary of Commerce, whereas the Civil Aeronautics Board should exercise its functions of rule making, adjudication, and investigation independently of the Secretary of Commerce but that the budgeting, accounting, personnel procurement, and routine management functions of the Civil Aeronautics Board should be performed under the direction and supervision of the Secretary of Commerce. Thus, the Civil Aeronautics Authority is no longer a functioning entity or organization, but is a mere term inclusive of two quite separate organizations, namely, the Civil Aeronautics Board and the Office of the Administrator of Civil Aeronautics, which has been termed the Civil Aeronautics Administration.

H. R. 1012 does not, we believe, revise title II of the Civil Aeronautics · Act of 1938 so as to properly describe the existing organization and we shall be glad to submit detailed suggestions as to a revision which will accomplish this purpose.

The Civil Aeronautics Act of 1938 undertook to combine in one agency functions hitherto performed by the Department of Commerce, the Interstate Commerce Commission, and some of those relating to Air Mail Service by the Post Office Department. As a result of that act and the subsequent reorganization plans, it may be said that at the present time the Civil Aeronautics Board performs all of the functions which were taken from the Interstate Commerce Commission and the Post Office Department, plus the functions of prescribing safety regulations, investigating accidents, and conducting hearings on cases involving suspension or revocation of permits or licenses which were formerly performed by the Commerce Department. It also performs functions such as the issuance of certificates of convenience and necessity and economic regulations which were newly authorized by the Civil Aeronautics Act of 1938, and these functions are all performed independently of supervision by the Department of Commerce. The Office of the Administrator of Civil Aeronautics, or, as it is known, Civil Aeronautics Administration, is now an integral part of the Commerce Department in a status similar to that of the Coast and Geodetic Survey, Patent Office, and other subdivisions of the Department.

Now, I mention that particularly because in some of the proposed amendments the term "authority” is used with respect to prescribing functions to be performed, and it is not clear from an examination of

Civil Aeronautics Board, and that can only be determined by a knowledge of the type of function which one or the other performs. But, as I said, if it is desired, we shall be glad to note these items and make

any suggestions we can so as to help clarify the proposed legislation in accordance with the actual existing organization.

Now, as you can see, the work of the Civil Aeronautics Administration has three general phases. One is the matter of administering the regulations made by the Board, in exercising control over flying of all types—that is, private flying and commercial flying, as well as the actual manufacture of aircraft in general, engines, and accessories.

The second is the matter of a service to the aeronautical industryservice which helps the industry develop, grow, and expand.

The third feature is the promotional work or the fostering of aviation development generally by broadening the field for its application.

Now, the Administration is divided into four main service units. First, I would like to name the Safety Regulations Service. That Service performs inspection work necessary in connection with carrying out the civil air regulations and the inspection work necessary to discover violations and take enforcement action with respect to violations of the regulations.

The second major unit is the Federal Airways Service. That, of course, is engaged in service to the entire industry. That is the organization which builds and maintains the Federal airways system, conducts the airways traffic control, and carries on technical development work.

Now, the third major unit is the Airport Division. That really functions in two ways: It renders service to the industry which carries on existing air-transport aeronautical operations. It also promotes and fosters the development of air transportation through the airport consulting work and its work in establishing new airports.

Our other fourth major unit is the former Civilian Pilot Training Service, now known as the C. A. A.'s War Training Service. That, of course, is concerned solely with the third phase of work, the fostering and development of aviation through training of airmen.

Now, that is quite a large-scale business, particularly this year. Safety Regulations has an appropriation of $3,000,000.

The Federal Airways has an appropriation of $33,500,000 and working funds transferred to it by the Army and the Navy to establish radio facilities on the various military routes both within and without this country of another $33,500,000. This makes a grand total of $67,000,000 for the work of Federal airways in this fiscal year of 1943

The Airport Division has by far the largest sum of money. Its appropriation, under which it is now working, is $199,000,000, intended for the improvement or establishment of some 430 airports.

Civilian Pilot Training or War Training Service has an appropriation at the present time of $72,000,000, but actually will need more on account of the new Army Air Forces cadet training program which Mr. Burden described to you yesterday, unless adjustments are made by transfer from Army and the Navy appropriations to Civil Aeronautics Administration funds.

So, together with about another million, five hundred thousand dollars, roughly, for administrative housekeeping-accounting, personnel, and other administrative management services—this organi zation has total appropriations of $310,500,000 and working funds transferred from the Army and the Navy to the extent of $33,500,000,

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