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 ■ H E A R I N G S

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SUBCOMMITTEE OF THE

COMMITTEE ON

INT ERSTA TE AND FOR EIGN COMMERCE 

HOUSE OF REPRESENTATIV ES

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EIGH TY -SE VE NT H CONGRESS

FIR ST SES SIO N

ON

H.R. 7399

Q

 A B IL L TO C R E A T E T H E N A TIO N A L C A P IT A L A IR P O R T S 

□ C O R PO R A TIO N , TO P R O V ID E F O R T H E O P E R A T IO N O F T H E 

IT F E D E R A L L Y O W N E D C IV IL A IR P O R T S IN T H E D IS T R IC T

O F C OLUM BIA O R IT S V IC IN IT Y BY T H E C O R PO R A TIO N , 

< AN D F O R O T H E R P U R P O S E S

H.R. 7398

A B IL L TO AM EN D T H E ACT O F O C T O B E R 9, 19 40 ( 50 ST AT. 

1030, 103 9) , IN O R D E R TO IN C R E A S E T H E P E R IO D S FO R 

W H IC H A G R E E M E N T S F O R T H E O P E R A T IO N O F C E R T A IN 

C O N C E SSIO N S MA Y B E G R A N T ED A T T H E W A SH IN G T O N 

N A TIO N A L A IR P O R T , AND F O R O T H E R P U R P O S E S

JU L Y 18 AND 19, 196 1

P rin te d fo r th e use o f th e 

C om m it te e on I n te r s ta te a n d F o re ig n C om m er ce

74134

U.S. GOV ERNMENT PRINTIN G OF FIC E 

WASHINGTON : 1961

REFERENCE ‘cP1

'L IB R A R Y

g. department
COMMITTEE ON INTERS TAT E AND FOREIGN COMMERCE

OREN HA RR IS, Arkansas, Chairman

JO HN BE LL WILL IAMS , Mississippi

PE T E R F. MA CK , J r., Illinois

KENNET H A. RO BE RT S, Alabama

MO RG AN M. MO UL DE R, Missouri

HA RL EY O. STAG GE RS , West Virginia

WAL TE R RO GE RS , Texas

SAMU EL N. FRIE D EL, Maryland

JO HN J. FL YN T, Jr., Georgia

TO RB ER T H. MA CD ON AL D, Massachusetts

GE OR GE M. RH OD ES , Pennsylvania

JO HN JA RM AN , Oklahoma

LEO W. O’BR IE N, New York

JO HN E. MOSS, California

JO HN D. DIN OEL L, Michigan

JO E M. KIL GO RE , Texas

PA UL G. RO GE RS , Florida

RO BE RT W. H EM PH IL L, South Carolina

DA N RO ST EN KO WSK I, Illinois

JO HN B. BE NNET T, Michigan 

WILL IAM L. SP RI NG ER , Illinois 

PA UL F. SC HE NC K, Ohio 

J. AR TH UR YO UN GE R, California 

HA RO LD R. CO LL IER, Illinois 

M IL TO N W. GL EN N, New Jersey 

SA MU EL L. DE VI NE , Ohio 

AN CHER NE LS EN , Minn esota 

HA ST INGS KE IT H, Massachu setts 

WILLA RD S. CU RT IN , Pennsylvania 

AB NER W. SIBAL, Connecticut 

VE RN ON W. TH OM SO N, Wisconsin 

PE T E R H. DO MIN IC K, Colorado

JA MES C. HEA LE Y, New Ykro

W. E. Williamson, Clerk

Kenneth J. P ainter, Assis tan t Clerk

Professional S ta ff

Andrew Stevenson Sam G. Spal

K urt Borciiardt Martin W. Cunningham

Subcommittee on Transportation and Aeronautics

JO HN BE LL WILLIAM S, Mississippi, Chairman

HA RL EY O. STAG GE RS , West Virginia WILLIAM L. SP RI NG ER , Blinois

SA MU EL N. FRIE D EL, Maryland HA RO LD R. CO LL IER, Blinois

TORBERT II. MA CD ON AL D, Massach usetts SA MU EL L. DE VI NE , Ohio 

JO HN JA RM AN , Oklahoma

II
C O N T E N T S

Tex t of— Page

H.R . 7398 . ________ 63

H.R. 7399________________________________________ 1

Report of—

Bureau of the Budget on—

H.R. 7398_______________ 63

H.R . 7399_______________________________________________ 7

Commerce Departme nt on H.R. 7398___________________________ 64

Comptroller General on H.R . 7399_____________________________ 9

General Services Adm inistration on H.R. 7398___________________ 64

Interior Dep artm ent on H.R . 7399_____________________________ 8

Labor Dep artm ent on H.R . 7399_______________________________ 9

Sta tem ent of—

Brown, Arch B., Attorney, Office of General Counsel, General Accounting Office_____________________________________________ 41

Cohen, Burton, Airway Hotel, Inc., Miami, Fla __________________ 66

Dean, Alan L., Assistant Admin istrator for Management Services,

Federal Aviation Agency____________________________________ 14, 55

Durand, J. D., assistant general counsel, Air Trans por t Association

of America________________________________________________ 45

Fascell, Hon. Dan te B., a Rep resentativ e in Congress from the State

of Flo rida_________________________________________________ 65

Halaby, Hon. N.E., Adm inistrator, Federal Aviation Agency______ 14

Hobbs, G. Ward, Director, Bureau of National Cap ital Airports,

Federal Aviation Agency____________________________________ 14, 55

Howard, Daggett H., General Counsel, Federal Aviation Agency___ 14, 55

Munson, David M., Deputy Director, Bureau of National Capital

Airports, Federal Aviation Agency____________________________ 14

Randall, Frederick A., Supervisory Accountant, Civil A ccounting and

Auditing Division, General Accounting Office-- _______________ 41

Savage, Simmons B., Jr., Associate Director, Accounting and Auditing

Policy Staff, General Accounting Office________________________ 41

Seidm an, Harold, Acting Assistant Director, Office of Managemen t

and Organization, Bureau of the Budget_______________________ 14

Additional inform ation submitted for the record by—

Federal Aviation Agency:

Distribu tion of airc raft arrivals and departures at Midway and 

O’Hare Airports in Chicago, calendar years 1956-60, total 

airc raft arrivals and departu res __________________________ 34

Information on payments received by the Gov ernm ent for the 

ground transportation service con trac t a t W ashington National 

Airpo rt_______________________________________________ 30

Letter from James T. Pyle requestin g legislation______________ 64

Ran k order of Washington National Airport, calen dar year I960- 31

in

reference

LIBRARY

DEPARTMENT

NATIONAL CAPITAL AIRPO RTS

TUESD AY, JU LY 18, 19 61

H ous e of R ep re se nta ti ves ,

S ub co mmitte e on T ra ns po rt at io n an d A er on au tics

of t h e C om m it te e on I nt er st at e an d F or eign C om me rc e,

W ash ing ton, D.C.

The subcommittee met at 10 a.m., purs uant to call, in room 1334, 

House Office Building, Hon. John Bell Williams (chairman of the 

subcommittee) presiding.

Mr. Williams. The committee will be in order, please.

The Subcommittee on Transportation and Aeronautics is meeting 

this morning for hearings on H.R. 7399, a bill to create a National 

Airp orts Corporation introduced at the request of the Administrator 

of the Federal Aviation Agency. To complete the record, the bill 

together with Agency reports will be included at this point in the 

record.

(H.R. 7399 and related reports follo w:)

[H .R . 739 9, 87 th Cong., 1 st se ss .]

A B IL L To cr ea te th e N ati onal C apital A ir port s C or po ra tion , to pr ov ide fo r th e op er at io n 

of th e fe der al ly ow ne d civi l air p o rt s in th e D is tr ic t of Col um bi a or it s vi ci nity by th e 

Cor po ra tion , an d fo r o th er purp ose s

Be it enacted by the S ena te and House of Representative s of the United Sta tes

of America in Congress assembled, That this Act may be cited as the “National 

Capital Airp orts Corporation Act of 1961”.

Sec. 2. There is hereby created as an agency and instrumentality of the 

United States, subject to th e direction of the Admin istrator, Fed eral Aviation 

Agency (herein afte r, “Ad minis trator”), a body corporate to be known as the 

National Capital Airports Corporation (he reinaf ter, “Co rporation” ). The Corpor ation shall operate the Wash ington National Air port and such other federally owned civil air po rts in the District of Columbia or its vicin ity as may 

be tra nsfer red to the Corporation under this Act.

Sec. 3. The Corporation sha ll have perpetual succession unless sooner dissolved by Act of Congress.

Sec. 4. The Corporation shall have its prin cipa l offices in the District of 

Columbia or its vicinity, and at such other places as the Administrat or may 

prescribe, and shall be deemed, for purposes of venue in civil actions, to be a 

res ide nt of each of the ju risdic tions in which such offices have been established.

Sec. 5. In the exercise and performance of its powers and duties und er this 

Act, including the d ete rmination of rates and charges for use and services, the 

Corporation shall consider, among oth er things, th at it is in the public intere st 

to operate any air po rt tra ns ferred to i t by or und er thi s Act on a self-sustaining 

business enterprise basis, con sistent with sound commercial prac tice and with 

due regard to all costs and i nterests on the G overnment’s investment. The Corporatio n is accordingly authorized, except as provided in sections 12 and 13, to 

cha rge anv Government agency for space, facilities, and services at rat es based 

on the actu al cost to the Corporation of providing such space, facilities , and 

services, but in no ev ent gr ea ter than the rates charged to the public: Provided,

Tha t the Corporation and the using agency may agre e th at the agency shall pay 

to the Corporation, for the aggregate of the space, facilities, and services to be
2 NATIONA L CAPITAL AIR POR TS

provided during any fiscal year, a lump sum equal to the agreed estimated 

amount of the aggregate of the individual charges tha t would otherwise have 

been incurred by the agency.

Sec. 6. To carry out the specific powers herein authorized, the Corporation 

shall have the following general powers :

(1) To adopt, alter, and use a corporate seal;

(2) To adopt, amend, and repeal bylaws, rules, and regulations governing the conduct of its business and the performance of the powers and duties 

granted to or imposed upon it by law ;

(3) To sue and be sued in its corporate nam e;

(4) To have, in the payment of debts out of bankrupt, insolvent, or 

decedent’s estates, the priority of the United Sta tes :

(5) To acquire, by purchase, lease, condemnation, or in any other lawful manner, any property, real, personal, or mixed, tangible or intangible, or 

any interest the rein; to hold, maintain, use, and operate the sam e; to 

provide services in connection therewith, and to charge the refor; and to 

sell, lease, or otherwise dispose of the same at such time, in such manner, 

and to the extent deemed necessary or appropriate by the Administrator 

for the conduct of its business and to carry out the purposes of the Cor 

poration: Provided, That the authority herein granted shall not include 

authority for the acquisition of office space in buildings for use by the 

Corporation, suitable accommodations for which shall be provided by the 

Administrator of General Services: And provided further, That, except for 

airport and airway property and technical equipment used for special 

purposes of the Corporation, such disposition shall be made in accordance 

with the Federal Property and Administrative Service Act of 1949, as 

amended (63 Stat. 377; 40 U.S.C. 471). Proceedings for condemnation 

shall be instituted pursuant to the provisions of the Act approved August

1, 1888, as amended (25 Stat. 357: 40 U.S.C. 257), and the Act approved 

.Tune 25, 1948 ( 62 Stat. 869 ; 28 U.S.C. 1403). The Act approved February 

26, 1931, as amended (46 Stat. 1421: 40 U.S.C. 258a), shall be applicable 

to any such proceeding. All real property acquired under this Act shall 

be subject to the provisions of section 355 of the Revised Statutes, as 

amended (40 U.S.C. 255). However, nothing in this Act shall modify, 

alter, or terminate existing agreements between the United States and the 

Commonwealth of Virginia made pursuant to section 107 of the Act 

approved October 31,1945 ( 59 Stat. 553; D.C. Code. sec. 1-101) ;

(6) To construct, operate, and maintain buildings, facilities, and other 

improvements, including access roads, as may be required to meet the needs 

of the Corporation, and to charge fo r the use of the foregoing;

(7) To tran sfer to any Federal or State agency under mutually acceptable terms and conditions any access road to the additional Washington 

airp ort authorized by Public Law 762, Eighty-first Congress (64 Stat. 

770), which transfer any Federal agency is hereby authorized to accept. 

Any agency to which an access road or portion thereof may be transferred 

under this subsection may provide for the operation and maintenance of 

such road under such regulations as i t may prescribe.

(8) To accept gifts or donations of services, or of property, real, personal, or mixed, tangible or intangible, in aid of any of the purposes herein 

authorized;

(9) To enter into and perform such contracts, leases, cooperative agreements, or other transactions as may lie necessary in the conduct of its 

business and on such terms as it may deem appropriate, with any agency 

or instrumentality of the United States, or with any State, district, or 

possession, or with any political subdivision thereof, or with any person, 

firm, association, or corporation;

(10) To appoint, in accordance with the civil service and classification 

laws, such officers, attorneys, agents, and employees, to vest them with 

such powers and duties, and to pay such compensation to them for their 

services, as may be required by law ; to employ experts and consultants 

or organizations thereof, as authorized by section 15 of the Act of August

2, 1946 ( 60 Sta t 810; 5 U.S.C. 55a), at rate s not to exceed $100 per diem 

for individuals;

(11) To determine the character of and the necessity for its obligations 

and expenditures, and the manner in which they shall be incurred, allowed,
NATIONAL CAPITAL AIRPORTS 3

and pa id, su bj ec t to th e pr ov is io ns of th is Ac t an d o th er pr ov isio ns of 

la w spec ifica lly ap plica bl e to Gov ernm en t co rp ora tion s ;

(32) To ex ec ut e, in ac co rd an ce w ith it s by law s, ru le s, o r re gu la tion s, 

a ll in st ru m ents nec es sa ry or appro pri ate in th e ex er ci se of an y of it s 

p o w e rs ;

(1 3) To se tt le an d a d ju st clai m s he ld by it ag ain st oth er pe rs on s or 

p a rt ie s an d by oth er per so ns or part ie s again st th e C o rp o ra ti o n ;

(14) To ta ke su ch acti on as may be ne ce ss ar y or appro pri ate to carr y 

out th e po wers her ei n or h ere aft er spec ifica lly co nfe rr ed up on it.

Sec. 7. The Cor po ra tion sh all ha ve an d m ay ex er ci se su ch spe cific powe rs, 

in addit io n to th os e el se w he re co nf er re d in th is Act, as m ay be deem ed ne cess ary to pr ot ec t, op er at e, im pr ov e, an d m ain ta in it s a ir p o rt s and oth er pro pe rtie s, and ap purt en an ce s th ere to , as bu sine ss ente rp ri se s an d pu blic se rv ice 

fa cil it ie s.

Sec. 8. (a ) The m an ag em en t of th e Cor po ra tion sh all be ve sted in a G en er al 

M an ag er (h ere in aft er, “M an ager” ) who, su bje ct to th e civi l se rv ic e law s, sh all 

be ap po in te d by an d sh all be su bje ct to th e dir ec tion of th e A dm in is tr at or. 

The A dm in is tr ato r is au th o ri zed to fix th e co m pe ns atio n of th e M an ag er a t a 

ra te n o t to ex ceed th e m ax im um pai d to D irec to rs of B ure aus of th e F ed er al 

A via tion Agency.

(b ) Su bj ec t to th e sta n d a rd s a n d p ro ce du re s of sec tio n 505 of t h e C lass ifi ca tio n 

A ct of 1949, as am en de d (63 S ta t. 95 9; 5 U.S .C. 1111), th e A dm in is tr ato r is 

auth ori zed to plac e in th e C orp ora tion not to ex ce ed five po sition s in gr ad es 

16, 17, and 18 of th e G en er al Sch ed ul e es ta blish ed by su ch Ac t. Su ch po sitio ns 

sh all be in ad ditio n to (1 ) th e num be r of po si tion s au th ori zed to be plac ed in 

su ch gra des by sa id se ct ion 505, an d (2) th e nu m ber of po sition s aut hor iz ed 

by se ct io n 302 (j) of th e F ed era l Avi atio n A ct of 1958 (72 S ta t. 747 ).

(c ) T here is he re by est abli sh ed th e Adv iso ry B oar d of th e N at io nal C ap ital 

A ir port s C or po ra tion w hi ch sh all be comp osed of five m em be rs ap po in te d by 

th e A dm in is tr ato r w ithout re g ard to civ il se rv ice la w s and who sh al l co nt in ue 

in office as de si gn at ed by th e A dm in is tr ato r a t th e tim e of appoin tm en t th ro ug h 

th e la st da y of th e firs t, seco nd , th ir d, fo urt h, an d fifth cale ndar ye ar s, 

re sp ec tive ly , follo wing th e enactm ent of th is Act. A m ajo ri ty of th e Adv iso ry 

B oa rd sh all be from pri v ate li fe an d no t less th an on e su ch mem be r sh al l be 

ex pe rien ce d in a ir c a rr ie r oper at io ns . Upon th e expir ati on of his te rm of 

office a mem be r sh al l co nt in ue to se rv e unti l hi s su cc es so r is ap po inted. T he 

A dv isor y Boa rd sh al l m ee t a t th e ca ll of th e A dm in is tr ato r or th e M an ag er, 

wh o sh all re quir e it to m ee t no less of ten th an on ce ea ch six m o n th s; sh al l 

re vi ew th e ge ne ra l po lic ies of th e Cor po ra tio n, in cl ud in g b u t not lim ited to it s 

po lic ies in co nn ec tio n w ith ra te s an d ch ar ge s fo r it s se rv ices , desig n, an d 

cons tr uc tion of fa ci lities , an d th e ad m in is tr ati on of exis ti ng fa ci lities , an d 

sh al l ad vis e th e A dm in is tr ato r an d th e M an ag er w ith re si ie et th er et o. The 

m em be rs of th e B oa rd who a re in th e ex ec ut iv e bra nch of th e Gov er nm en t sh al l 

rece iv e no ad ditio nal co m pe ns at io n fo r th eir se rv ices on th e B oa rd . The me mbe rs fr om pri vate life sh all ea ch rece iv e fo r hi s se rv ices a ra te not in ex ce ss 

of th e per die m eq ui va le nt of th e max im um ra te of gra de 18 of th e G en er al 

Sch ed ule of th e Class ifi ca tio n A ct o f 1949, as am en de d. All mem be rs of th e 

B oa rd sh all be re im bu rs ed in ac co rd an ce w ith th e T ra vel Exp en se Act of 1949, 

as am en de d (63 S ta t. 16 6; 5 U.S.C . 83 5), fo r tr av el , su bs iste nc e, an d oth er 

nec es sa ry ex pe ns es in curr ed by th em in th e pe rf orm an ce of duties ve sted in 

th e B oa rd .

Sec. 9. (a ) The re is he re by es ta blish ed a N at io nal C apit al A irport s Fun d 

(h ere in aft er, “fund” ). T he c ap it al of th e fu nd s hal l co ns is t o f—

(1 ) su ch am ou nt s as m ay be ad va nc ed to th e fu nd up on th e re ques t of 

th e M an ag er f ro m appro pri ati ons mad e fo r th a t p u rp o se;

(2 ) th e un ex pe nd ed bal an ces of an y ap pro pri ati ons avai la ble fo r co nst ru cti on, op er at io n, and m ai nte nan ce of th e W as hi ng to n N at io na l A irport 

as m ay be de te rm in ed by th e A dm in is tr at or an d ap pr ov ed by th e D irec to r 

of th e B ure au of th e B u d g e t;

(3 ) su ch of th e un ex pe nd ed ba lanc es of appro pri ati ons av ai la ble fo r us e 

by t he F ed er al Avi atio n Age nc y fo r th e co ns truc tion , de ve lopm en t, op er at io n, 

or m ai nt en an ce of any a ir p o rt which is, or m ay be tr an sf err ed to th e 

C or por at io n un der th is Act, as may be de te rm in ed by th e A dm in is tr at or 

an d ap pr ov ed by t he D ir ecto r of th e B ur ea u of t h e B u d g et: a nd

(4 ) th e va lu e of th e ass ets of an y air p o rt th a t is, or m ay be, tr an sf err ed 

to th e C or po ra tion under th is Ac t, les s it s liab ilitie s, as of th e effecti ve
4 NATIONAL CAPITAL AIRPORTS

d ate of it s tr an sfe r to th e C o rp o ra ti o n ; th e va lue of th e as se ts sh al l be 

de te rm in ed by th e A dm in is tr ato r su bj ec t to th e ap pr ov al of th e D irec to r of 

th e B ure au of th e Bud ge t a fte r su rv ey an d ap pr ai sa l, ta kin g in to co ns id er ­

ati on or ig in al cost, less de pr ec ia tion , th e us ab le va lu e to th e air p o rt if 

cle arl y les s th an cost, ob so le te an d un us ab le fa cil it ie s an d eq uipm en t, an d 

oth er re as on ab ly dete rm in ab le fa cto rs which wo uld re duce th e val ue of 

th e ass et s of th e air port . Su ch det er m in at io n sh al l not be mad e by th e 

A dm in is tr ato r until he s hall ha ve giv en no tic e of hi s pr op os ed de te rm in at io n 

to th e ae ro nau tica l use rs an d oth er te nants of th e a ir p o rt an d afforded 

th em an op po rtun ity to be h eard ther eo n.

(b ) U nl es s th e Co ng ress oth erw is e di re ct s, th e Cor po ra tion sh al l pa y in to the 

T re asu ry of th e United S ta te s a s m isce lla ne ou s re ce ip ts a t th e clo se of ea ch 

fis cal y ear, i n te re st on th e capit al of th e fu nd a s f ollows :

(1 ) In te re st sh al l he pai d on th a t po rtio n of th e capit al of th e fu nd 

w hi ch th e A dm in is tr at or det er m in es to be th e eq uiv al en t to th e local sh are 

th a t wou ld ha ve be en su pp lied by th e pro je ct sp on so r had th e air port s been 

b u il t an d develop ed in th e ir enti re ty su bs eq ue nt to th e en ac tm en t of th e 

F edera l A irpo rt A ct an d un d er it s pr ov isions by a loca l pu bl ic ag ency w ith 

m ax im um F ed er al g ra nts -i n- ai d.

(2 ) The in te re st ra te on th e in it ia l po rtio n of th e fu nd sh al l be dete rmin ed by th e Sec re ta ry of th e T re asu ry a t th e tim e th e fu nd is es ta bl ishe d, 

ta k in g in to co ns id er at io n th e av er ag e yi el ds to m atu ri ty on m ar ket ab le 

ob liga tion s of th e U ni ted S ta te s, w ith a m atu ri ty d ate of fif tee n yea rs or 

more, outs ta ndi ng a t th e be gi nn in g of th e fis cal yea r in w hi ch th e ex pe nd itu re s w er e mad e fo r th e ass ets tr an sf err ed to th e fu nd purs u an t to su bse ct io n (a ) of th is se ction. T he in te re st ra te so es ta bli sh ed sh al l re m ain 

in effect fo r so long as an y p a rt of th e am ount to w hi ch su ch in te re st 

ap pl ie s re m ai ns in th e cap it al of th e fu nd .

(3 ) The in te re st ra te on th e su bs eq ue nt po rtio n of cap it al ad va nc es to 

th e f und o n whi ch i n te re st is t o b e pai d sh al l be de te rm in ed by th e S ec re ta ry 

of th e T re asu ry a t t h e ti m e su ch ad van ce is mad e, ta k in g in to c on si de ra tion 

th e av er ag e yield to m atu ri ty on outs ta ndin g m ar keta ble ob lig atio ns o f 

th e U ni ted S ta te s hav in g a m atu ri ty date of fif teen or m or e ye ar s. Su ch 

in te re st ra te sh al l re m ai n in effect fo r so long as an y p a rt of such ad va nc e 

re m ain s in th e capit al of th e fu nd .

(c ) W he ne ve r an y ca pital in th e fu nd is de te rm in ed by th e A dm in is tr ato r 

to be in ex ce ss of its cu rr en t ne eds, su ch capit al sh al l he cr ed ited to th e 

ap p ro pri ati on from which ad va nc ed , w he re it sh al l be he ld fo r fu tu re ad va nc es. 

T he capit al of th e fu nd sh all be co ns id ered redu ce d by th e n et am ou nt of such 

cre dit s. A pp ro pr ia tio ns or o th er fu nds rece ived sh al l be us ed solely fo r th e 

pu rp os es of th e C or po ra tion a s se t fo rt h in th e Act. W he ne ve r it is d eter m in ed 

th a t th e ap pr op ri at io n co nta in s fu nds in ex ce ss of th e ne ed s of th e Cor po ra tion 

th e ap pro pri ati on sh al l be re duc ed by an am oun t eq uiv al en t to su ch excess.

(d ) R ec eipt s from oper at io ns un d er th is Ac t sh al l be cr ed ited to th e fu nd . 

T he fu nd sh al l be av ai la ble fo r pa ym en t of al l ex pen diture s of th e Cor po ra tion 

un d er th is Act.

(e ) Su ch su m s as m ay be re quir ed to carr y out th e pu rp os es of th is Ac t 

a re au th ori ze d to be appro pri ate d w ithout fiscal year lim itat io ns. Adv ances 

sh all be m ad e to the fun d fr om t h e appro pri at io ns m ad e th ere fo r whe n requ es ted 

by th e m an ag er .

(f ) A pp ro pr ia tion s are here by au th ori ze d fo r pay m en t of su ch am ou nt s as 

m ay be show n in th e annual budget pr og ra m of th e C or por at io n as ne ce ss ar y 

to co ve r actu al los ses of p ri o r y ears su st ai ne d in th e co nduct of it s acti vit ie s 

u n d er th is fu nd . Amou nts appro pri ate d to th e fu nd un d er auth ori ty of th is 

su bs ec tio n sh al l no t be ad de d to th e am ou nt of ad va nc es an d sh al l no t re quir e 

paym ent of inte re st u nder su bs ec tio n (b ) of t his s ectio n.

Sec. 10. Th e Cor po ra tion is he re by au th ori ze d to us e it s fu nds from w hat ev er 

so ur ce s de riv ed , in th e ex er ci se of it s c orp ora te p ow ers and fu n c ti o n s: Pro vide d,

T h a t th e C or po ra tio n sh al l un d ert ak e n o ne w ty pe s of a ctivitie s, or sin gle ca pit al 

pro je cts in ex ce ss of $1,000,000, no t inc lude d in th e annual bud ge t pr og ra m pre ­

sc ri be d by se ction 102 of th e Gov er nm en t C or po ra tion C on trol Act of 1045, as 

am en ded (59 Sta t. 598 ; 31 U.S.C. 84 7).

Sec. 11. Th e Cor po ra tion sh all co nt ribu te , from th e re sp ec tive ap pro pri at io n 

o r fu nd use d fo r pa ym en t of sa la ri es, pa y, or co mpe ns atio n, to th e civ il serv ice 

re ti re m en t an d di sa bility fu nd , a sum as prov id ed by se ct ion 4 (a ) of th e Civil 

Se rv ic e R et ir em en t Act, as am en de d (70 Sta t. 747; 5 U.S.C . 2254 ( a ) ) , ex ce pt
NATIONAL CAPITAL AIR POR TS O

th a t su ch sura sh al l he det er m in ed by ap pl yi ng to th e to ta l ba sic sa la ri es (a s defin ed in th a t Act) pa id to th e em ploy ees of th e C orp ora tion covered by th a t Ac t, th e pe r ce nt um ra te det erm in ed an nual ly by th e Civil Se rv ic e Co mm iss ion to be th e ex ce ss of th e to ta l norm al co st per ce nt um ra te of th e civ il se rv ice re ti re m en t sy stem o ve r th e employ ee d ed uc tio n ra te spec ifie d in sa id section 4 (a ). The C orp or at io i sh al l also co n tr ib u te a t le as t q u art erl y fr om su ch ap pro pri at io n o r fu nd , to th e em ploy ee s’ co m pe ns at io n fu nd , th e am ount de te rm in ed by th e S ecre ta ry of Lab or to be th e fu ll co st of be ne fits an d oth er pay m en ts mad e from su ch fu nd on ac co un t of ca se s ari si n g fro m in ju ri es to it s em ploy ee s which may h ere aft er occur. Such C orp ora tion sh al l also pa y in to th e T re asu ry as m is­ ce llan eo us re ce ip ts th a t port io n of th e co st of adm in is tr ati o n of th e resp ec tiv e fu nds att ri b u ta b le to it s em ploy ee s, as de te rm in ed by th e Civil Se rvice Com ­ m ission an d th e Sec re ta ry of Lab or. Th e Cor po ra tion sh al l n o t be lia bl e und er th is se ct io n (1 ) fo r contr ib uti ons w ith re sp ec t to th e se rv ic e of an y offic er or em ploy ee fo r an y pe rio d p ri o r to th e effecti ve d ate of th is se ction, an d (2) fo r jiay m en ts fo r adm in is tr ati ve co st w it h re sp ec t to an y pe riod p ri o r to su ch effe ctive da te .

Sec. 12. All th e fa cil it ie s of an y a ir p o rt unde r th e ju ri sd ic ti on of th e Corpo ­ ra ti o n whi ch a re a na lo go us to th e fa ci li ti es develop ed w ith F edera l aid , p urs uant to th e F edera l A irpo rt A ct (60 S ta t. 170; 49 U.S.C. 1101 ), by co m pa ra bl e pu blic a ir p o rt s in th e S ta te in w hi ch th a t air p o rt is lo ca te d (o r in a S ta te adja cent to th e D is tr ic t of Co lumbia as th e ca se may be), an d al l th ose fa cil it ie s us ab le fo r th e la ndin g an d take of f of a ir c ra ft , in cl ud in g aid s to nav ig at io n, will a t all tim es be av ai la bl e w ithout charg e to th e United S ta te s fo r use, in comm on w ith o th er air c ra ft , by a ir c ra ft used o r ope ra te d by or fo r th e D epart m ent of D efe nse : 

Pro vi de d, T h at th e A d m in is tr ato r m ay cu rt ail or lim it th e use of th e fa cil it ie s of th e Cor po ra tion by a ir c ra ft of th e D ep ar tm en t of D ef en se if su ch use, in his ju dg m en t, un re as on ab ly im p air s or in te rf ere s w ith th e us e of thos e fa cil it ie s 

by ci vi l air cra ft .

Sec. 13. The Cori>oration w ill fu rn is h to an y ag en cy of th e Gov ernm en t, w ithout ch ar ge (e xc ep t fo r light, he at, ja n it o r se rv ice, and si m il ar fa cil it ie s an d se rv ic es a t th e re as onab le co st th ere of) , su ch sp ac e in air p o rt bu ildi ng s as m ay be r ea so na bl y ad eq uat e fo r us e in co nn ec tio n w ith any a ir p o rt tra ffi c co nt ro l acti vit y, or w ea th er re port in g acti vit y an d co m m un ic at io ns acti vit y re la te d to a ir p o rt tra ffi c co ntro l, w hi ch su ch ag en cy an d th e A dm in is tr ato r may de em 

it n ec es sa ry to e stab lish an d m ain ta in a t th e ai rp ort .

Sec. 14. No in di vi du al , as so ci at io n, p art ners hip , or co rp ora tion sh al l us e th e na m e of any air p o rt oper at ed by th e Cor po ra tio n, or an y nam e si m il ar th er et o, as th e na m e or a p a rt th ere of under which he or it do es bu sine ss , w ithout th e 

co ns en t o f th e Cor po ra tio n.

Sec. 15. (a ) The re is her eb y tr an sf err ed to th e C orp ora tion all pr op er ty , re al, pe rs on al , an d mixed , no w oper at ed by th e A d m in is tr ato r a s t h e W as hi ng to n N ational Airj> ort, to get her w it h all sums du e or to be co me due to th e U ni ted S ta te s by vir tu e of an y se rv ic e re nd er ed or fa cil it ie s fu rn is hed in co nn ec tio n w ith th e op er at io n of th e W as hi ng to n N at io nal A irpo rt , or under an y contr act ex ec ute d by or on behalf of th e A dm in is tr ato r in co nn ec tio n w ith such ac tivi ties , to g eth er w ith th e tr act of la nd de sc ribe d in th e Act of Ju n e 29, 1940 ( 54 Sta t. 68 6: D.C. Code, sec. 7-13 01 ), as th e W as hi ng to n N at io nal A ir port (e xc ep t th a t po rt io n of su ch tr a c t of la nd ad ded to th e M ou nt Verno n Mem orial Hig hw ay by Exe cu tive O rd er N um be re d 9851 of May 15. 1947), an d th os e pa rc el s of la nd in A rlin gt on Co un ty, V irgin ia , cond em ne d by pr oc ee di ng s m isce lla ne ou s num be re d 618 an d m isce llan eo us nu mbe re d 621 in th e U nited S ta te s D is tr ic t C o u rt fo r th e E ast ern D is tr ic t of V irg in ia, A le xan dri a Division, to get her w ith all th e st ru ctu re s, im pr ov em en ts, an d oth er fa cil it ie s lo ca te d th er eo n, ex ce pt th e buildin g de si gn at ed as “T -7 ” loca ted on Ab ingd on D ri ve on th e air p o rt , no w us ed an d op er at ed by th e A dm in is tr ato r of G en er al Se rv ices . The C o rp o r­ ati o n sh all as su m e th e perf orm an ce on beh al f of th e United S ta te s of all exis ti ng contr ac ts here to fo re ex ec ut ed by, or on behalf of, th e A dm in is tr ato r in co nn ec tio n w ith th e ca re , op er at io n, m ai nt en an ce , and pro te ct io n of th e W as hi ng to n N at io na l A ir port , an d sh all fu rth e r as su m e al l li ab ilitie s of th e U nited S ta te s in co nn ec tio n w it h sa id air p o rt . The C orp or at io n sh al l as su m e an d be bo un d by all th e te rm s of ex is ting in te ra gen cy arr angem ents re gard in g th e use, occupancy, ca re , op er at io n, an d m ai nte nan ce of re al an d per so nal p ro pert y a t th e air p o rt , in cl udin g al l pr ov isio ns re la ti n g to al lo ca tion of co sts 

re la te d to su ch p ro pe rty. (b ) The A dm in is tr ato r is au th or iz ed an d dir ec te d to tr a n sfe r to th e C or por a­ tio n, effecti ve on su ch d ate as th e A dm in is tr ato r sh all sp ec ify , an y air p o rt o r

74134—61----- 2
6 NATIONAL CAPITAL AIRPORTS

other property heretofore or hereafter acquired or constructed for use as, in 

connection with, or to serve, any airp ort (including any interest in real, personal, and mixed property, obligations and rights under contracts, and accounts 

receivable) which the Administrator is or may be authorized to construct, or 

acquire and operate in the District of Columbia or its vicinity, and he may 

provide for partial transfers where separable parts or facilities become substantially operational at different times.

Sec. 16. The Corporation is authorized to make payments to State and local 

governments in lieu of property taxes upon real property which was subject 

to State and local taxation before acquisition by the United States or the 

Corporation. Such payments may l>e in the amounts, at the times, and upon 

the terms the Corporation deems appropriate, but the Corporation shall be 

guided by the policy of making payments not in excess of the taxes which would 

have been payable for such property in the condition in which it was acquired, 

except in cases where special burdens are placed upon the State or local government by the activities of the Corporation or its agents. The Corporation, its 

property, franchises, and income are hereby expressly exempted from taxation 

in any manner or form by any State, county, municipality, or any subdivision 

thereof.

Sec. 17. (a) The Manager shall have power to make and amend such reasonable rules or regulations as he may deem necessary in the interest of public 

safety, or to carry out the purposes of this Act, governing the protection of 

property and the conduct of persons on premises within the jurisdiction of the 

Corporation.

(b) Any person who violates any rule or regulation prescribed under this 

section shall be guilty of a misdemeanor, and. upon conviction thereof, shall 

be fined not more than $500 or imprisoned not more than six months or both.

Sec. 18. (a) Employees of the Corporation appointed to protect life and property on area s within the jurisdiction of the Corporation, when designated by 

the Manager are hereby authorized and empowered (1) to arrest under a warrant within the limits of the jurisdiction of the Corporation any person accused 

of having committed within the jurisdictio n of the Corporation any offense 

against the laws of the United States, or against any rule or regulation prescribed pursuant to this Act; (2) to arrest without warran t any person committing any such offense within the jurisdiction of the Corporation, in their 

presence; or (3) to arrest without warran t within the jurisdiction of the 

Corporation, any person who they have reasonable grounds to believe has committed a felony within the jurisdiction of the Corporation.

(b) Any individual having the power of a rrest as provided in the subsection 

(a) of this section may carry firearms or such other weapons as the Manager 

may direct or by regulation may prescribe.

(c) The Secretary of the Inte rior may at the request of the Manager assign 

members of the United States Park Police to patrol any area of the airports. 

Any member of the United States Park Police while so engaged shall be subject to the supervision and direction of the Secretary of the Interior and is 

authorized to make arrests within the areas under the jurisdiction of the 

Corporation for the same offenses and in the same manner and circumstances 

as are provided in this section.

(d) The officer on duty in command of those employees of the Corporation 

designated as provided in this section may accept deposit of collateral from 

any person charged with the violation of any rule or regulation prescribed under 

this Act, or the Act of March 17, 1948, as amended (62 Stat. 81), for appearance 

in court or before the appropriate United States Commissioner; and such collateral shall be deposited with the clerk of the United States court or with 

the appropriate United States Commissioner.

Sec. 19. The right to alter, amend, or repeal this charter is expressly reserved.

Sec. 20. (a) Section 101 of the Government Corporation Control Act of 1945, 

as amended (59 Stat. 597; 31 U.S.C. 846). is hereby amended by inserting therein 

the words “National Capital Airports Corporation”.

(b) The Act of June 29, 1940 ( 54 Stat. 686; D.C. Code, sec. 7-1301), as 

amended by the Act of May 15, 1947 (61 Stat. 94: D.C. Code, sec. 7-1304), and 

section 1402(f) of the Federal Aviation Act of 1958 (72 Stat. 807), is furth er 

amended by deleting sections 2. 3, 4. 5, and 6 thereof.

(c) The Act of October 9, 1940. making supplemental appropriations for the 

support of the Government for the fiscal year ending June 30. 1941, and for 

other purposes (54 Stat. 1030), is amended by deleting the proviso in the first
NATIO NAL CAPITAL AIR POR TS 7

pa ragraph of the section in title I, headed “Department of Commerce, Administrat or of Civil Aeronautics”. (d) Section 3 of the Act of March 17,1948 (62 Stat. 81) is amended by striking out “an d” immediately preceding “Fa irf ax ”, and inserting “, and Loudoun” 

imm ediately after “Fa irfa x”. (e) The Act of September 7, 1950 ( 64 Stat. 770; D.C. Code, sec. 7-1401), shall be repealed, effective the date as specified by the Administrator when jurisdiction of the air po rt to be constructed under its term s shall be tran sfe rre d 

to the Corporation. (f) All laws or pa rts of laws, inconsistent with this Act are repealed to the extent of such inconsistency. Nothing in this Act shall be construed to exempt the Corporation or its ope ration s from the application of the Act of Jun e 25, 1948 ( 62 Stat. 869, 984 ; 28 U.S.C. 507(b), 2679), or of section 367 of the Revised 

Statu tes (5 U.S.C. 316).

Sec. 21. If any provisions of this Act or the application of such provision to any person or circumstances shall be held invalid, the rem ainder of the Act, and the application of such provision to persons or circumstanc es other tha n those to which it is held invalid shall not be affected thereby.

Sec. 22. This Act shall tak e effect upon its enactment.

E xecutive Office of the President,

Bureau of the Budget,

Washington, D.C., July 14,1961.

Hon. Oren Harris,

Chairman, Comm ittee on In ter sta te and Foreign Commerce, House of Representatives, Washington, D.C.

Dear Mr. Chairman : This is in response to your letter of Jun e 12, 1961, requ esting the views of the Burea u of the Budget on H.R. 7399, a bill to create the National Capital Airports Corporation, to provide for the operation of the fed ara lly owned civil airports in the District of Columbia or its vicinity by the Corporation, and for other purposes. H.R. 7399 provides for the cr eation of a National Capital Airpo rts Corporation which would be subject to the dire ction of th e A dministra tor of th e Federal Avia­ tion Agency. The Corporation would operate the Washington National Airp ort and such other fede rally owned civil air ports in the Di str ict of Columbia or its vicin ity as may be tra nsferre d to the Corporation. It is expected that the new Intern ational Airpo rt at Chantilly, Va., would be tra nsfer red to the 

Corporation. The bill confers upon the Corporation the powers and financial flexibility customarily accorded, and necessary for the operations of, Government corpor­ ations. The bill also applies to the Corporation the types of controls which the Congress has in the past determined are best suited to business activities. The Corporation would be require d to operate on a “self-sustaining business ent erp rise basis, consistent wi th sound commercial practic e.” Its rat es and charges would have to be established with due rega rd to all operating costs and inte res t payments which would be required on the Government's investment. The management of the Corporation would be vested in a General Manager, who would be appointed by, and subject to the direc tion of the Administrator of the Federal Aviation Agency, and there would be established a five-member Advisory Board to review the general policies of the Corporation and advise the Manager and th e A dm inistrato r with respe ct th ereto . The Bureau of the Budget strongly favo rs the objective of making the Washington National Airport and the new Int ern ational Airpo rt self-sustaining business enterprises. We believe that the use of the c orpora te form of orga n­ ization and financing provided in H.R. 7399 will greatly fac ilitat e the accomplishment of tha t objective. Under present law, the Washin gton National Airport has no autho rity to use its receipts, must obtain all of its funds from annu al appropriations, cann ot sue or be sued in its own name, and is generally subject to the provisions of law with respe ct to budget, accounts, audit, exp end iture of fund s and pro per ty applicable to Gov ernm ent agencies which do not conduct business- type operation s and whose costs are borne by the general taxp ayer. Many of those laws are not sui tab le to the most effective operation of a commercial ent erp rise such as the air port, and we believe the application to the airport of controls and autho rities espe cially designed for Feder al business-type activ-
8 NATIONAL CAPITAL AIR POR TS

Itie s is nec es sa ry an d wo uld be mos t ad van ta ge ous. Furt her m ore , th e us er s 

of th e a ir p o rt ’s se rv ices will find it difficu lt to dis ting ui sh be tw ee n th e a ir p o rt 

an d oth er who lly tax- su pp or te d G ov er nm en t se rv ices so lon g as it is no t 

or ga ni ze d as a bu sine ss ente rp ri se an d is no t de pe nd en t on re ve nu es to fin an ce 

its op er at io ns . W hile th e N at io na l C apit al A irport s Cor po ra tio n wou ld ha ve 

to ob ta in appro pri ati ons to fin an ce ne w m ajo r ca pi ta l ex pe nses, it wo uld be 

au th or iz ed to uti li ze it s reve nu es fo r th e pay m en t of all ex pen diture s in cu rr ed 

in c arr yin g o ut it s bu dg et p ro gr am as ap pr ov ed by th e Congre ss.

Ther e has been an incr ea sing aw ar en es s, both in th e Co ng ress an d th e 

ex ec ut ive br an ch , th a t form s of org an iz at io n, fin an cia l pro ce du re s an d co nt ro ls 

ap plie d to tr ad it io n al Gov ernm en t acti vit ie s are no t nec es sa rily su it able to 

co mmercial oper at io ns such as civ il air port s. T hat view w as refle cted in th e 

en ac tm en t in 1945 of th e Gov ernm en t C or po ra tion Co ntrol Act which pr ov id ed 

fo r ne w ty pe s of co nt ro ls ad ap te d to th e ne ed s of Fed er al bu sine ss op er at io ns . 

In re po rt in g on th e Con tro l Act, th e Sen at e Com mitt ee on Ban ki ng an d C ur re nc y 

recogn ize d th a t “the co rp ora te fo rm of org an iz at io n is a us eful de vice fo r 

carr yin g out a var ie ty of Gov ernm en t se rv ic es an d pr og ra m s, of a co nt in ui ng 

as we ll as em erge nc y chara cte r” ( S. K ept. (‘>94, 79th Cong.,1st se ss .).

The B ur ea u or t h e Bud ge t be lie ve s th a t pro po sa ls to es ta bl is h new Gov er nm en t 

co rp or at io ns sh ou ld be su bj ec t to sc ru pu lo us an al ysi s an d review in te rm s 

of th e reco gn ized cri te ri a fo r th e us e of th e co rp or at e de vi ce whi ch w er e se t 

fo rt h in th e P re si dent’s 1948 bu dg et m es sa ge (pp. M57 -6 2). C ur an al ysi s 

in di ca te s th a t th e pr op os al em bo died in H.R. 7399 is w’holly consi st en t w ith 

th os e cri te ri a. We are conv inc ed th a t enac tm en t of H.R. 735)9 wou ld benefit 

th e us er s of th e air p o rt s an d th e ta x p ay e r by pl ac in g th e oper at io ns of th e 

a ir p o rt s on a so un d bu sine ss ba sis w ithout in an y way w ea ke ni ng es se nt ia l 

co ng re ss io na l co nt ro ls.

Th e B ure au o f t he B ud ge t ur ge s fa vora ble co ns id er at io n of H.R. 7399.

Sinc er ely yo urs,

P h il lip S. H ug he s.

A ss is ta n t D ir ec to r fo r Leg is la tive Ref er en ce s.

Dep ar tm en t op th e I nterior,

Off ic e of th e Secre tary,

W as hi ng to n D.C., J u ly 18, 1961.

Ho n. Oren H ar ri s,

Cha irman , C om m itte e on In te rs ta te a nd F or ei gn Co mm erc e,

Hou se o f R ep re se nt at iv es , W as hi ng to n, D.C .

Dear Mr. H arris : Yo ur co mm itt ee has re qu es te d a re port on H.R . 7399, a bil l 

to cre ate th e N ational C ap ital A ir port s C or po ra tion , to p ro vi de f or th e op er at io n 

of th e fe dera ll y ow ne d civil air p o rt s in th e D is tr ic t of Colum bia or it s vi ci ni ty 

by th e C or po ra tion , and fo r oth er pur po se s.

We h av e no o bj ec tion to the enactm ent o f th e bi ll.

The pri m ary pu rp os e of H.R. 7399 is to cre ate th e N at io nal C apit al A irpor ts 

C or po ra tion to o per at e th e W as hi ng to n N ational A irpo rt an d su ch o th er fe der al ly 

ow ne d civil a ir p o rt s in th e D is tr ic t of Colum bia or vic in ity as m ay be tr a n sfe rr ed to it on a se lf-s us ta in in g ente rp ri se b as is.

The re is on e pr ov isio n in th e bill th a t m ay affe ct th is D ep ar tm en t. It is 

su bs ec tio n 6 (7 ). T his su bs ec tio n em po w er s th e N at io nal C ap ital A ir port s Corport at io n to t ra n sfe r its ju ri sd ic ti on o ve r ac ce ss r oa ds to th e a ddit io nal W as hi ng ­

to n A irpo rt auth ori ze d by Pub lic Law 762, 81 st Con gress (64 S ta t. 77 0), to 

an y F edera l o r S ta te agency. How ev er, any tr an sfe r m ad e und er th e auth ori ty 

of th is su bs ec tio n m ust co nform to m utu all y ac ce pt ab le te rm s an d co nd iti on s 

arr iv ed a t by tr an sfe ro r an d tr ansf ere e.

Su bs ec tio n 18(c ) does affe ct th is D ep ar tm en t. I t pr ov id es th a t th e Sec re ta ry 

of th e In te ri o r m ay a t th e re ques t of th e M an ag er of th e C orp or at io n as sign 

mem be rs of th e U.S. P ark Po lic e to p atr o l an y are a of th e air port s. Alth ou gh 

a mem be r of th e U.S . P ark Po lic e m ay be as sign ed to th is du ty , th e bi ll fu rt h er 

pr ov id es th a t he is a t al l tim es su bje ct to th e su pe rv isio n an d dir ec tion of th e 

Sec re ta ry o f th e In te ri or.

The B ure au of th e Bud ge t has ad vi se d th a t it has no ob ject ion to th e pre ­

se nt at io n of th is re port from th e st an d p o in t of th e adm in is tr ati on’s pr og ra m .

Since re ly y ou rs,

J oh n M. Kelle y,

A ss is ta nt Sec re ta ry o f th e In te ri or.
NATIONAL CAPITAL AIR POR TS 9

U.S. Depar tm en t of Labor,

Washington, J uly 26, 1961.

Hon . Oren H arr is,

Chairman, Committee on Interstate und Foreign Commerce,

House of Repre sentative s, Washington, D.C.

Dear Cong ressman H arris : Thi s is in fu rth e r re sp on se to you r re ques t fo r 

th e view s of th is D ep art m ent on H.R. 7399, a bil l to cre ate th e N at io nal C ap ital 

A ir p o rt s Cor po ra tio n, to pro vid e fo r th e op er at io n of th e fe dera ll y ow ned civ il 

a ir p o rt s in th e D is tr ic t of Colum bia or its vi ci ni ty by th e C or po ra tion , an d fo r 

o th er pu rpos es.

Se ctio n 11 of th e bi ll co nta in s th e on ly pr ov isio ns w hi ch a re pert in ent to 

an y pr ogra m adm in is te re d by th is D ep ar tm en t. I t wou ld re quir e th e prop os ed 

C or po ra tion to m ak e q u art erl y co ntr ib utions to th e Em pl oy ee s’ Com pe ns ation 

F und fq r th e fu ll co st of be ne fits pai d from su ch fu nd on ac co unt of in ju ri es 

to em ploy ee s of th e C orp or at io n. I t wou ld al so re q u ir e pa ym en t in to th e 

T re asu ry of th e U ni te d S ta te s as m isce lla ne ou s re ce ip ts th e co st of ad m in is ­

tr a ti o n o f benefits att ri b u ta b le to suc h cases .

As you kno w, th e Federa l Empl oy ee s’ Com pe ns ation A ct w as am en de d duri ng 

th e 86 th Co ng ress by th e a c t of Se ptem be r 13, 1960 (P ublic La w 86-767. 

74 S ta t. 90 6). As a re su lt of th e pa ss ag e of th es e am en dm en ts , th e prop osed 

C orp ora tion wo uld be re quir ed to m ak e pa ym en ts to th e Em ploy ee s’ Compen sa ti on F und an d to t he T re asu ry und er t he F edera l Em pl oy ee s’ Com pe ns ation 

pro gra m . The sp ec ia l pro vis io ns co nt ai ne d in th e bill al so re quir in g su ch pay ­

m en ts are th er ef ore un nec es sa ry . Und er th e ci rc um st an ce s, we wou ld su gg es t 

th a t th e b ill be mo dif ied to e li m in ate t his d up lica tion .

E xce pt fo r th is su gg es ted mod ifi ca tio n, we ha ve no co m m en t to off er w ith 

re sp ec t to th is pr op os al and wou ld ha ve no ob ject io n to it s en ac tm en t.

T he B ure au of th e B ud ge t ad vi se s th a t th ere is no ob je ct io n to th e pre se nta ­

tio n of th is re port fro m th e st andpoin t of th e ad m in is tr ati o n ’s pr og ra m , 

l'o u rs sinc erely,

Ar t h u r J. Goldberg,

Sec retary of Labor.

Comptroller Genera l of th e U nited States.

Washington, July 11,1961.

Hon . Oren H arris,

Chairman, Committee on In terstate and Foreign Commerce,

House of Representatives.

Dear Mr. Cha irma n : F u rt h e r re fe re nc e is m ad e to you r le tt er of Ju ne 12, 

1961, ac kn ow ledg ed on Ju n e 13, re qu es ting th e c om m en ts of th e G en er al Acc ou nting Office co nc erning H.R. 7399, 87 th Co ng res s, 1s t session, enti tl ed ‘‘A bill to 

cre ate th e N at io na l C ap ital A ir port s Cor po ra tion , to pr ovid e fo r th e op er at io n 

of th e fe der al ow ned civil a ir p o rt s in th e D is tr ic t of Colum bia or it s vic in ity by 

th e C or po ra tion , a nd fo r oth er pur po se s.”

The prop os ed legi slatio n wou ld cre ate a who lly ow ned Gov er nm en t co rp ora ­

tion w ithin th e Fed er al A vi at io n Ag enc y to oper at e th e W as hin gto n N at io na l 

A irpor t, th e Dulles In te rn ati o n al A irpo rt, now unde r const ru cti on a t Cha nt illy . 

Va ., an d any ot he r civil a ir p o rt s which th e F edera l G ov er nm en t may here aft er 

acq uir e in th e D is tr ic t of Colum bia or it vi ci ni ty . Th e C orp or at io n wo uld be 

ve sted w ith th e po wers an d re sp on si bilitie s us ua l to G ov er nm en t co rp or atio ns , 

in cl ud in g pe rm an en t au th o ri ty to fin an ce it s ope ra tion s w ith re ce ip ts ge ne ra te d 

by a ir p o rt ac tivi ties . At pre se nt, th e W as hi ng to n N at io nal A irpo rt, which is 

th e o nly fe de ra lly ow ned civi l a ir p o rt now o per at in g in th e v ic in ity o f th e D is tr ic t 

of Co lumbia, is a re gula rl y est ab lish ed G ov er nm en t org an iz at io nal uni t of th e 

Fed er al Aviatio n Agency w ith fin an cing prov id ed by th e Con gr es s th ro ug h re gu la r budg et ar y an d appro pri ati on processes . Rec eipt s of th e air port , aft er 

cert ain ad ju st m en ts , are dep os ited in th e T re asu ry as m isce llan eo us rece ip ts.

Th e A dm in is tr at or , in tr a n sm it ti n g th e d ra ft bi ll to th e Con gres s (C on gr es ­

si onal R ec ord. J une 1 7, 19 61 ; p. 9021) st at ed :

“T he pri m ar y pu rp os e of th e le gi sl at io n is to plac e th e oper at io ns of th e fe dera ll y ow ned civil air p o rt s in th e W as hi ng to n m et ro polita n are a on a so un d 

bu si ne ss b as is so th at th ey m ay b ett er se rv e th e tr aveli ng p ub lic , th e ai rl in es , an d 

oth er use rs of air cra ft , a t a m in im um co st to th e ta xpay er. Su ch legi slat io n wi ll 

fa cil it ate i m pr ov em en ts in th e efficie ncy of th e a ir p o rt oper at io ns an d will pe rm it
10 NATIONAL CAPITAL AIR PORTS

sw ift action to correct conditions where the saf ety or convenience of the public 

is involved.”

The Admin istrator, Fede ral Aviation Agency, advan ced several reas ons for 

inco rpor ating the airport. In analyzing the reas ons advanc ed, we have applied 

the sta nda rd th at the public intere st is bes t served when congressio nal control 

over acti vities is exerci sed throu gh annu al reviews and affirmative action on 

plann ed programs and financing require men ts which att end the app rop riat ion 

processes, and the appli catio n of sta tut es and regu latio ns which usu ally govern 

the operation s of Government agencies.

In our opinion, departu re from thi s sta nd ard should be perm itted only on a 

clea r showing th at an activ ity cannot be successfully operated in the public 

int ere st within thi s frame work. Any contem plat ed change which may diminish 

thi s congressional contro l should be car efu lly considered as to its need. All 

pra ctic al means avai labl e with in the reg ula r str uc tur e should be fully explored. 

In the absence of special circumstances, changes in orga niza tion al str uct ure , 

aut hor ity, and financing methods, with the resulting lessening of congressio nal 

control, such as are contemplate d by H.R. 7399, should be made only if the ir 

demo nstrable me rits in term s of more efficient operation of the activ ity clea rly 

outweigh the disa dva ntages of reduced cong ressi onal control. We do not believe 

th at such a show ing h as been made with respe ct to th e local airpor ts.

The reasons adva nced for inco rporating the air po rts by the Ad min istrator, 

Fed eral Aviation Agency, are sta ted below and are followed by our comments 

on each of the seve ral reasons.

1. The exis tence of a corporation wi th business-type budg et and accou nting 

practic es will make it easier for the Federal Aviation Agency, the Pre side nt, 

and the Congress to review and eva luate th e effectiveness of air po rt operations 

and manag ement.

The claim th at a corporation, or for th at matt er any change in financing 

methods, is nece ssary to achieve improved budgeting, accounti ng, and repor ting is not cons istent with the cu rre nt concepts which underlie continuing 

efforts to bring abo ut improvements in finan cial manag ement in the Fed eral 

Government. These concepts are set fo rth in Bureau of the Budget Bulletin 

No. 57-5 , “Imp rove men t of Fin anc ial Managem ent in the Fed eral Government.” 

in which we concu r in basic princip le. Ne ither is such a contention consonant 

wit h the accounting principles, standard s, and rela ted requ irem ents which we 

have presc ribed und er autho rity of the Budge t and Accounting Proc edures Act 

of 1950, and in which the Director of the Bu rea u of the Budget and the Secreta ry of the Tr ea sury concurre d. As has been freq uen tly pointed out, budgeting, 

account ing, and reporti ng may be designed to su it the individu al and pa rti cu lar 

needs of any act ivi ty under any method of financing. Ther efore, we do not 

believe th at the claime d need for improve men t in these area s is a valid reason 

for i ncorporating the a irpo rts.

2. The dem ands posed on air po rt ope rati ons by rap id development in aviatio n 

req uire th at the air po rt orga nization hav e the capability of responding swif tly 

to changing circumstances which dire ctly affec t the safe ty and convenience of the 

public and the efficient operation of ai r carri ers . The norma l budge t processes 

are simply not capab le of respon ding to such unforeseen demands and, as a 

resu lt, inadequa cies constitu ting serio us ha zards to safety and int erf ering with 

efficient operations have pers isted for prolonged periods of time at the Wash ­

ington National Airport. Under the corpo rate form of organization , the revenues of the airp or t can be ut ilized in the p rom pt correc tion of most inade quac ies 

in air po rt servic es and facilities.

We recognize th at the airp orts , as well as any other Governm ent acti vities, 

may be faced wit h some demands on th ei r resource s due to rap id developm ents 

and chang ing conditions w’hich they wer e unab le to predict. However, we do 

not believe th at thi s fac t will itself serv e to jus tify any reduc tion in congressiona l control. We agree th at some flexibility may be needed whe re it can 

be dem onstrated th at an acti vity by its very na ture must be so imm ediately 

respo nsive to economic changes or any othe r changes th at any delay in taking 

necessary action would defe at the prim ary purpose for which the act ivi ty was 

crea ted. However, even in such situat ion s, it does not necess arily follow th at 

inco rpor ation is the only solution.

Fina ncin g mechanics are avai labl e to conven tional agencies which can provid e 

essenti al flexi bility in financing while a t th e same time reta ining an appro pri ate 

and desirable degre e of congressional control. One such altern ative is for the 

Congress to autho riz e an app rop riat ion in a sta ted amo unt for a perm anently
NATIONAL CAPITAL AIRPORTS 11

availabl e sep ara te emerg ency fund. Such a fun d could be replenishe d in the am oun ts disbursed the ref rom by annual app rop riations based on an accou nting by the agency to be included and justified in the annual budg et request. Wi th specific refe renc e to the prolonged existence of hazar ds to safety at the Was hington National Airpor t, which the Ad minis trator attri bu tes to the ina de­ quacy of reg ula r bud getary processes, attentio n is invited to the Senate hearing s on the Inde pend ent Offices App ropr iatio n Act, 1960, page 428. These hea ring s con tain an exten sive discussio n of ma tters of pa rti cu lar urgency. In response to inq uiri es as to the action taken to correct the deficiencies, the Admin istrator sta ted th at a requ est for th e necessary fun ds had been pres ente d to the Bureau of the Budget. However, a requ est for an app rop riation was not subm itted fo r cons idera tion of the Congress unt il the submission of the budget for the following fiscal year. The Ind epende nt Offices App ropriation Act, 1961, au tho r­ ized a no-year app rop riation for use in elim inat ing the exi stin g safeta y haz ard s an d to und erta ke oth er improvem ents at the air por t. Thus, any delay in obtain­ ing the needed appro pri ation would app ear to have been occasioned by adm inis ­ tra tiv e delay in reques ting the app rop riat ion ra th er than any inadeq uacy of 

the reg ula r b udg etar y p rocesse s. We believe th at airp or t man agem ent ha s the responsibility to see to it th at saf ety haz ard s ar e removed wit hou t delay. To the exten t th at exis ting condi­ tion s can be recognized or foreseen as haz ard s to safe ty, we thin k they are m atters which lend them selves to proje ction wit hin the reg ula r budget clycle. However, even where saf ety haz ard s are not recognized or are unpredicta ble, we believe th at inco rpo rati on is not necessary for their correct ion. A remedy may be provided thro ugh th e used of an emergen cy fund, such as we sugge st ab ov e: if not, thro ugh th e suppl emental app ropriation processes. 3. The corporation will also be able to conduct busi ness neg otiat ions wit h oth er commercial entities on a more sat isfact ory basis tha n is possible und er the cu rre nt system in whic h revenues ar e deposited dire ctly in the Tre asu ry 

and are n ot available to pr ovide services or to meet obligations. In our opinion, a Feder al act ivi ty does not req uire corp orat ion sta tus in orde r to per mit it to deal effectiv ely with pri vate busin ess organ izatio ns. Many Feder al agencies which are not incorpor ated deal reg ula rly w ith p riv ate busin ess org aniz atio ns and we have no info rmation th at they ar e hampered in such 

dealing s by lack of cor poratio n stat us. In the specific are a of fee s and rents, many agencies of Government supply services and supplies to the public and only a min ority of these are auth oriz ed to retain all of the collec tions so realized. Pres umably the buye rs need the supp lies and services fur nis hed and recognize th at they mu st meet the seller’s term s. With specific r efe ren ce to the airports, the Ad minis trator has autho rity und er section 3 of the act of Jun e 29, 1940 ( 54 Sta t. 68 8) , to deter mine and fix ren ts for the use of serv ices and facilit ies at the Nation al Airpo rt. Sim ilar au thor ity with resp ect to th e Dulles Inter na tio na l Airpo rt is gra nte d by the act of September 7, 1950 (6 4 Stat. 77 0). The autho rity of the air po rts to use th eir reven ues should not, in our opinion, be a fac tor in setting the level of rents. Whil e sta nd ard s for rents ar e not set by the cited acts , the re are other legal reg ula tor y and congressio nal policy expressio ns ava ilab le for guidance. For example, titl e 5 of the Independe nt Offices App ropriation Act, 1952 (6 5 Stat . 290 ; 5 U.S.C. 14 0), sta tes it to be the inte ntio n of the Congress th at service s to the public shall be self -sustai nin g to the ful les t exten t possible and thi s not ­ withst and ing the add itio nal provision in the ac t tha t, unless othe rwis e provided, receipt s realized from the fur nis hin g of servic es and supplies shall be deposited in the Tre asu ry as misc ellaneous receipts. Another exam ple is the Bureau of the Budget Bulletin No. 58 -3 which sta tes th at full costs should he recovered for servic es furn ished and th at fa ir marke t valu es should be realiz ed from the sale or use of fede rally owned resou rces or propert y. The bulle tin recommends th at sound busine ss man agemen t principles and co mpar able commercial prac tice s should be followed as fa r a s p rac tica ble and advisab le. We believe th at the Ad minis trator now has ample guidance to deal effectively wit h the airl ines and c once ssion aires in setting a nd adjus tin g fees and rents. In any event, the approval of cha rge s to be made by the airp or ts or the congre s­ sional policy with resp ect the ret o can be establish ed by a specific legis lative require ment withou t need fo r incorporat ion. A number of unin corp orated activities are requ ired by law to esta blish ra tes and p rices fo r goods and servic es furnis hed sufficient to reco ver costs, and in some cases an amount for rep ay­ men t wit h int ere st on the Government’s inves tment. In our rep ort to the Congress on the au dit of the Washingto n Nation al Air por t fo r the fiscal years
12 NATIONAL CAPITAL AIRPORTS

195 6-58, w e disc us se d th e ne ed fo r a long -ran ge official po licy go ve rn in g fe es 

an d ch ar ge s fo r air p o rt fa ci lities and se rv ic es (pp. 8- 13 ) an d reco mmen de d th at 

th e F ed er al A vi at io n Agenc y es ta bli sh s uc h a policy.

Ther e a re oth er as pe ct s to th e g re ate r fle xibility in contr acti ng metho ds 

whi ch is a tt ri b u te d to th e co rp ora tion st ru ctu re . The se re la te to ex em pt ions 

fr om sta n d ard re qu irem en ts of la w pert ain in g to Gov er nm en t co nt ra ct s, su ch 

as th e au th o ri ty to mak e co ntr acts or oth er co mm itm en ts w ithout re fe re nc e to 

fis cal y ear lim it ati ons an d to neg oti ate co ntr ac ts w ithout ad ver tisi ng. The 

Co ng res s, under th e cited ac ts of Ju n e 29, 1940, an d Se ptem be r 7, 1950, al re ad y 

has co nf er re d bro ad cont ra ct in g au th o ri ty on th e A dm in is tr at or, part ic ula rl y 

w ith re sp ec t to th e leas ing of fa cil it ie s an d arr an gem en ts w ith co nc es sion aires. 

Also, under au th o ri ty of se ction 302(c ) of th e F ed er al Pro pert y and Adm inistr ati v e Ser vi ce s Ac t of 1949, as am en de d (41 U.S.C . 25 2), th e G en er al Se rvices 

A dm in is tr ati on has de lega ted to th e A dm in is tr ato r (G SA D eleg at io n No. 361, 

Ja n. 27, 195 9) auth ori ty to negoti ate w ithout ad ver ti si ng cert ain co ntr ac ts 

fo r su pp lies an d se rv ices in co nn ec tio n w ith air p o rt ac ti vit ie s oth er th an th e 

adm in is tr ati v e pro gr am co nd uc ted by th e F ed er al A vi atio n Ag ency. We are 

no t aw are of an y re as on f o r g re ate r leew ay . If a ddit io nal free do m is ne ce ss ar y, 

it may be gra nte d by th e Con gress ev en if th e air p o rt s a re not in co rp or at ed .

The in dic at ed need fo r th e re te nti on of re ve nu es to co nd uc t busi nes s ne go tia ­

tion s on a sa ti sf acto ry ba sis see ms to la ck va lidi ty . We a re of th e op inion th a t 

m an ag em en t off icia ls of all G ov er nm en t ag en ci es shou ld, in carr y in g out th eir 

as sign ed re sp on sibi lities , en de av or to co nd uc t th eir o[> erations in an efficient 

an d ec on om ical m an ner ir re sp ec tive of w heth er th e oper at io ns a re fin anced ou t 

of appro pri ati ons by th e Con gr es s o r out of re ve nu es re ta in ed fo r th a t pu rpose.

4. A co m m er ci al air port op er at io n is pr ec isel y th e ki nd of pre dom in an tly b us ine ss -ty pe acti v it y fo r wh ich th e Con gr es s has mad e pr ov isio n by en ac ting th e 

G ov er nm en t C or po ra tion Con tro l Act o f 1945.

Thi s st ate m en t seem s to su gg es t th a t re co gn iti on by th e Con gress of th e co rpo ra tion str u ctu re as an ac ce pt ab le m ea ns of co nd uc tin g cert ain Gov ernm en t 

ac ti vit ie s m ay lie re ga rd ed as a decla ra ti on of co ng re ss iona l in te nti on th a t th e 

co rp or at io n st u ctu re fo r cert ain ty pes of ac ti vit ie s is to be pre fe rr ed ov er th e 

co nv en tion al or ga ni za tion al an d fina nc in g st ru ctu re . We be lie ve th a t th is conclus ion is not co mpa tib le w ith th e G ov er nm en t Cor po ra tion C on trol Act an d 

re la te d circ um st an ce s. In st ea d, th e ba si c in te ntion of th e Con gress in en ac ting 

th e ac t w as to giv e it th e mea ns to ex er ci se co ntro l ov er, an d oth er w is e re st ri ct, 

pr ev io us ly in co rp or at ed ac tivitie s, ra th e r th an to cre ate ne w co rp or at io ns . Thi s 

vie w is su pp or te d by se ction 304 of th e Gov er nm en t C or po ra tion Con trol Ac t (31 

U.S.C. 869 ) which ab olishe d al l th en ex is ti ng co rp or at io ns un le ss th ey wer e re ­

chart ere d by th e Co ng ress be fo re Ju n e 30, 1948. On ly a few ne w co rp or at io ns 

ha ve been chart ere d sin ce en ac tm en t o f th e ac t an d th e to ta l nu m be r of such organ iz ations which now a re opera ti ng as go ing co nc erns re pre se nts a dra st ic 

re du ct io n fr om th e nu mbe r in ex is te nce when th e ac t was en ac te d. Mo reo ver, 

a nu m be r of ac ti vit ie s which ha ve chara cte ri st ic s si m il ar to th os e co rp or at io ns 

ap pr ov ed un d er th e ac t are now opera ti ng as co nv en tio na l org an iz at io ns w ith 

fin an cing pr ov id ed th ro ug h re gula r ap pro pri ati on an d bu dge ta ry proc esses.

Our a naly si s of t he r ea so ns a dv an ce d fo r th e in co rp or at io n of th e loc al ai rj io rts 

le ad s us to c on clud e th a t th e pr op os ed ch an ge is nei th er ne ce ss ar y nor de sirable. 

In vie w th er eo f, we are un ab le to reco mmen d fa vor ab le co nsi der at io n of H.R . 

7399. How ev er, sh ou ld th e co mm itt ee , a ft e r co ns id er in g all of th e ab ov e com ­

men ts, co nc lude th a t in co rp or at io n of th e air port s wo uld bett er se rv e th e pu blic 

in te re st th an th e pre se nt org an iz at io n an d fin an cin g metho ds , we su gg es t th e 

need fo r re vi si ng ce rt ai n of th e specific pr ov isio ns of H.R. 7399, as in di ca ted 

below.

Se ct io n 6(1 1 ). — We rec om men d th a t th e wor d “s pe cific ally” b e de le te d sin ce it 

pr es um ab ly wou ld cre at e a bla nke t ex em pt io n from al l th e sta tu te s en ac te d by 

th e Con gress from tim e to tim e w ith re sp ec t to th e bu si ne ss tr ansa cti ons of th e 

United S ta te s un less such sta tu te s w ere, by th eir te rm s, mad e ap pl ic ab le specif ica lly to G ov er nm en t cor po ra tion s.

Se ct io n 6 (5 ).— Thi s se ction ap p are n tl y wo uld au th ori ze th e A dm in is tr ato r 

to disp os e of sign ifi ca nt po rtio ns of a ir p o rt pro per ty even to th e ex te n t of se lli ng 

or re lo ca ting an enti re air port. We be lie ve th a t m aj or di sp os itio ns of th is characte r sh ou ld re quir e pri or co ng re ss io na l ap pr ov al an d th ere fo re su gg es t th at th is 

se ction b e a m en de d to s o pr ov ide.

Se ction 6 (6 ).— This se ction wou ld au th ori ze th e co rp or at io n w ithin th e lim its 

of its av ail able fin ancin g, to m ak e capit al ex pen di tu re s— co nst ru ct io n of im ­

pr ov em en ts, ad di tion s, be tter m en ts , and re pair s as we ll as m aj or alt era ti ons an d 

re pair s— w it hout ha ving th e spe cific ap pro val of th e Con gress unle ss th ey w er e
NATIONAL CAPITAL AIRPORTS 13

fo r a new type of activity or a single capital project involving an expenditure 

in excess of $1 million and included in the ann ual budget program, as provided 

for in section 10.

While section 10 would preclude new activities or single cap ital projects involving an expenditure of more than $1 million from being under taken with out 

prior congressional approval, it would not preclude the und ertaking of major 

improvements th at in the aggregate could greatly exceed th at dollar ceiling 

withou t prior congressional approval.

Section 6( 9) .—This section would grant broad autho rity to the corporation 

to enter into contracts. This provision, together with the provisions of section 

20 (c) and (e), would repeal certa in sta tutory time lim itations on the existing 

con tractin g autho rity of the air ports , and would have the effect of authorizing 

the corp oration to enter into contr acts and other agreements without time 

limitation.

Although the airport manage ment should have la titude in c ontracting to permit 

effective operations, we believe th at there should be imposed such general restriction s as are necessary to avoid situ ations where the airports ente r into longterm co ntracts without a deq uate provision for protecting the Government against 

the rising costs of airport op erations. Such an instance is discussed at page 14 of 

the General Accounting Office rep ort to the Congress on the au dit of the Wash ­

ington National Airport, fiscal ye ars 195G-5S.

Section 9 (c )— In addition to its initi al capital, financing will be available to 

the Corporation from other sources, such as advances from app ropriations which 

would be indefinitely available fo r thi s purpose, redu ctions of inventories, net 

profits, and recoveries of depreciation and other noncash costs. This section 

provides only for reductions of excess financing realized throug h advances to 

the Corporation from an appro priation and of the balance in the appropriation 

itself. Excess financing can be gen era ted through oth er sources, such as those 

mentioned above. No provision is made for draining off excesses from these 

sources. Accordingly, we suggest th at the bill be revised to req uire specifically 

th at the Administrat or will review periodically —at lea st every 2 or 3 yea rs— 

the financial needs of the Corporation in relation to all sources of financing 

available to it, including the unadvanced balance of the appro priation and, 

based on such reviews, to rep ort to the Congress whether the existing and 

ava ilable financing is in excess of need. It should also require the Adm inistrator, with the approval of the Burea u of the Budget, to establish crite ria for use 

in dete rmining amounts of excess financing. Furthermo re, we recommend that 

the bill be revised to requ ire th at excesses so determined shall be retu rned to the 

Treas ury .

Section 9 (f ). —This section app ears to contemplate a permanen t authorization 

for subsidy appropriations which app ear s to be inconsistent with the objective 

as sta ted in section 5 of the bill th at it is in the public inter est to operate the 

airports on a self-sustaining business ente rprise basis. If it is inten ded th at 

the self-sustaining objective expressed in section 5 be one of the governing 

factors in operatin g the Corporation, we recommend th at the hill provide that 

all losses sustain ed shall, to the exten t practicable, be recovered from fut ure 

operations. The bill could provide th at the recovery may be accomplished over 

a period of yea rs if not pra ctic able to accomplish it in a short er time. We 

suggest th at the Congress may wish to consider whether there is any need to 

autho rize appropriations to cover prior yea rs’ losses since sectio n 9(e) of the 

bill author izes the appropriation of such amounts as may be necessary to carry 

out the purposes of the bill. Also, substantial amounts of cash could be generated by the recovery of costs such as depreciatio n of all fixed assets for which 

financing would not be required durin g the loss years. Ba rring the possible 

accumulation of losses of ma jor proportions which were not susceptible to 

advance projectio n—and which in any case would require rem edia l action by 

the Congress—the financing ava ilable by the Corporation revenues, as supplemented by appropriations made un der section 9( e) , would app ear to be ade quate 

for the continuance of ai rport operations.

Amounts advanced under the au thority of section 9( f) would be exempt from 

the paymen t of inte rest provided for by section 9( b) . Irre spe ctive of the concepts on which the provisions of sectio n 9(f) are based, we are not aware of 

any valid reason why the Corporation should not be required to pay interest 

on am ounts appropriate d under such a uthority.

Sincerely yours,

F r a n k H. W eit zel,

As sis tant Comptroller General of th e United States.

74 13 4— 61 ------3
14 NATIONAL CAPITAL AIRPORTS

Mr. W illiams. Our first witness will be the Adm inistrator of the 

Federal Aviation Agency, Mr. Ilalaby , who will explain the purposes 

and need for the legislation.

Mr. Halaby.

STATEMENT OF HON. N. E. HALABY, ADMINISTRATOR, FEDERAL

AVIATION AGENCY; ACCOMPANIED BY ALAN L. DEAN, ASSISTANT ADMINISTRATOR FOR MANAGEMENT SERVICES; G. WARD

HOBBS, DIRECTOR, BUREAU OF NATIONAL CAPITAL AIRPORTS;

DAGGETT H. HOWARD, GENERAL COUNSEL; DAVID M. MUNSON,

DEPUTY DIRECTOR, BUREAU OF NATIONAL CAPITAL AIRPORTS;

AND HAROLD SEIDMAN, ACTING ASSISTANT DIRECTOR, OFFICE

OF MANAGEMENT AND ORGANIZATION, BUREAU OF THE BUDGET

Mr. H alaby. Mr. Chairman and members of the committee, I wish 

to take this opportunity to thank you for the privilege of appearing 

before you to express the views of the Federal Aviation Agency on 

II.R. 7399 to create a National Capital Airports Corporation to operate 

the federally owned civil airports in the District of Columbia area.

Before I proceed with my prepared statement, I would like to 

introduce the members of my staff who have accompanied me and are 

here to help explain such technical questions as the members of this 

subcommittee may have.

They are Mr. G. Ward Hobbs, the Director of the Bureau of 

National Capital Airports; Mr. Alan Dean, Assistant Administrator 

for Management Services; Mr. Daggett H. Howard, General Counsel; 

Mr. David Munson, Deputy Director of the Bureau of National Capital Airports, all FAA; and Mr. Harold Seidman, Acting Assistant 

Director of the Office of Management and Organization of the Bureau 

of the Budget.

It seems to me, Mr. Chairman, that we are looking toward a kind 

of new horizon in aviation. All our projections show’ that the volume 

of traffic and air operations for this region, will expand very, very 

greatly over the next 5 to 10 years, and tha t if any problem arises in 

this region, we are going to have less, rather than too much, airport 

capacity over the 1960’s. In other words, all projections of the public demand for air transportation suggest that we should be worried 

not about an overabundance of a irp ort capacity, but a shortage in the 

19G0’s.

The second point I w ould like to emphasize is tha t we are trying 

very hard in this Administration to design and create a national 

aviation system. Aviation has grown rapidly in all directions. It 

is now’ time to take the lead in setting goals and in devising a system 

of national aviation that w ill rationalize and provide the best economy 

and safety in all of the national aviation activities. We will soon 

be coming to the public and the Congress with a plan and a concept 

for a national aviation system.

Pa rt of this system is a new thought, that instead of a passenger 

thinking of a flight from the airport to the airpo rt, we would like 

to be able for the average citizen to think o f an airway beginning at 

his office or at his home, and that airway would take him from where
NATIONAL CAPITAL AIRPORTS 15

lie is to where he wants to go in a safe and predictable and efficient 

way.

If you think of an airway as beginning at the doorstep and leading 

to another doorstep, you then have to begin to think of regional planning of airports, and highways, and access roads, and you have to 

think of not only surface transportation from the doorstep to the 

doorway of the airplane, but you have to think of heliports and other 

means of rapid and convenient mobility, so a background for this 

bill, as I see it, is a national aviation system where we are trying to 

work a system of airports, highways, and access roads th at will enable 

a person to get from his office o r home to where he is going with a 

minimum of cost and a maximum of safety and speed.

Why we need a National Capital Airports Corporation in this context is clear in my mind a fter studying it fo r the 4 or 5 months I have 

been in office. It is p rimarily to make this a businesslike operation. 

It seems to me that the operation can be held more accountable by me 

as Adm inistrator if I have a general manager and a corporate contain er for Washington National Airp ort and Washington Inter ­

national Airport, and that if at any later time other airports are 

added they also would be in this container.

I think from the congressional point of view, it is good to have 

one container for the Fede ral airpo rts which is clearly visible and 

which lets you see whether or not the Federal servants who manage 

this airport are being businesslike. It is a fish bowl within a fish 

bowl, and i t gives you, it seems to me, much more control and requires 

of us much greater accountability.

There are many precedents, most of them good, some of them poor, 

for such an arrangement. Fo r so businesslike and finite an operation, 

H.R. 7399 provides for the operation of the federally owned civil 

airports in the Washington metropolitan area throu gh a corporation 

subject to the direction of the Administrator of the Federal Aviation

purpose of this legislation is to place the management 

owned civil airports serving the D istrict of Columbia

and its vicinity on a sound business basis for the purpose of affording 

better service to the traveling public, the airlines, and other users of 

airc raft at a minimum cost to the taxpayer.

The corporate form of organization will also facilitate improvements in the efficiency of airport, operations and will make possible 

prompt action to correct conditions involving the safety or convenience of the public.

As you are aware, we are about fo enter a crucial phase in the 

preparatory arrangements for operation of the new International Airport at Chantilly, and I feel most strongly tha t it is of the utmost 

importance to do so on a solid, businesslike basis.

This bill has the backing of the President, the Bureau of the Budget, 

and other members of the administration who are concerned.

Fo r the most important world capital, it is essential to have, in 

the District of Columbia and its vicinity, airp orts which keep pace 

with our needs and are responsive to the traveling public, the airlines 

and other users of airc raft in providing safe and efficient services. I 

think parenthetically that it is also imp ortant tha t this airport be a 

model for the rest of the country and perhaps for the rest of the

Agency.

The primary

of the federally
16 NATIONAL CAPITAL AIR POR TS

world. It will, over the years, become more like New York Harbor with a S tatu te of Liberty and a clear channel for foreign dignitaries and immigrants, as well as our own citizens. The establishment of a government corporation to operate the federally owned civil air­ ports in the Washington metropolitan area as proposed by H.R. 7399 would, in our opinion, make available that kind of control and management which will insure the attainment of such results. Unlike many governmental activities, airport operation is revenue- producing and potentially self-sustaining. The airport has a large volume of commercial-type transactions which require grea ter flexi­ bility than that required in the usual governmental activity. The characteristics of an airport as a business enterprise are clearly dis­ tinguishable from the general run of Government programs, in tha t (1) the Government is dealing with the public as a businessman, rather than as a sovereign, (2) the users, r ath er than the general taxpayers, are to pay for the cost of goods and services, (3) the expenditures necessarily fluctuate with consumer demand, (4) the expenditures to meet increased demands should not in the long run result in an increase in the net outlay from the Treasury, and (5) the operations are in excess of well-established commercial tra de practices. To handle these peculiarities of airp ort activity, insofar as the Government is concerned, and to cope with the essentially business characteristics of such an operation, use should be made of the concept of the Government corporation which has evolved over a long period 

of time. In passing the Government Corporation Control Act of 1945, Con­ gress made provision for the proper handling of predominantly busi­ ness activities which need greater flexibility than is provided for under the customary appropriation budget. The Federal airports in the District and its vicinity are precisely that type of an activity. The desirability of creating a corporation to operate the National Capital area airpo rts has long been recognized. The first Commission on Organization of the Executive Branch of the Government (Hoover Commission) in 1949 recommended tha t the operation of the Wash­ ington National Airport be placed under a Government corporation. In his 1955 budget message, the President recommended that legis­ lation be adopted to provide for the establishment of a corporation to operate the Washington National Airport, Again in his 1962 bud­ get message, the President in recommening the establishment of a Federal corporation to operate the Washington National and Dulles 

Internationa l Airports state d:

This arrangem ent will provide g reate r management flexibility to meet changing 

require ments and permit more business-like operations.

The need for a corporate form of organization has been carefully reviewed and is strongly supported by the present administration. In its repo rt to the Congress on the audit of the Washington Na­ tional Airport, for the fiscal years 1956-58, the General Accounting 

Office observed that—

there has been growing support in the Congress and the execu tive branch for operating the ai rport as a self-sustaining business ente rprise— 

with which observation this Agency is in entire accord. We believe tha t such an objective is enhanced through the use of corporate organization and financing as provided by H.R. 7399.
NATIO NAL CAPITAL AIR POR TS 17

Bills similar to II.R. 7399 were introduced in both the House and Senate in the last session of the 86th Congress. Hearings were held before the Senate A viation Subcommittee, but no f urt her action was 

taken. Prior to this, bills to create such a corporation were introduced in both the House and Senate in the 83d Congress, and the Senate Com­ mittee on Intei’State and Foreign Commerce unanimously recom­ mended enactment of the corporation legislation. At t ha t time, the committee, in its repo rt to the Senate, stated tha t in its opinion the legislation was necessary and advisable to provide more effective management for the Washington National Airport. It cited the essentially business n ature of the airpor t operation. It also took note of the difficulties which had resulted from (1) the a p­ plication of customary budgetary and fiscal practices designed for conventional Government agencies; (2) the requirement th at the a ir­ port r etu rn all of its income to the Treasury as general receipts; and (3) various problems which had arisen in connection with contracting and the acquisition of property under requirements applicable to 

regular Government agencies. The extensive business activities at Washington National Airp ort currently produce revenue to the Government of approximately $4 million annually. These activities go beyond those associated with the provision of aircraft and passenger accommodations. The air­ port’s commercial activities require negotiation and supervision of approximately 190 contracts, including airp ort use agreements, hangar and other space leases, and contracts covering wide and varied concession activities. The airp ort currently serves about 5 million passengers annually and an even greater number of public visitors who utilize the airport facilities. In many ways, the airport is comparable to a city, with its own fire and police departments. It must maintain and operate its own utility systems. It provides heat, water, power, a ir conditioning, and sewer services not only for passengers and public visitors, but also for a irpo rt tenants who employ about 12,000 people on the airport reservation. During calendar year 1960, Washington National Airp ort was the second busiest airport in the Nation in terms of total itine rant aircra ft operations. With the approaching completion of the new interna­ tional airp ort at Chantilly, Va. where business activities ultimately will be even more extensive and complex than at Washington National Airport, we will be required to provide efficient, integrated operation 

of two of the largest civil air ports in the nation. Therefore, the need for the form of organization most suitable for the conduct of large-scale, business-type operations has become increasingly urgent. The demands posed on airport operations by rapid developments in aviation require tha t the airp ort organization have the capability of responding swiftly to ch anging circumstances which directly affect the safety and convenience of the public and the efficient operation 

of air carriers. The normal budget processes are simply not capable of responding to such unforeseen demands, and as a result, inadequacies constituting serious hazards to safety, and interfering with efficient operations,
18 NATIONAL CAPITAL AIRPORTS

have persisted for prolonged periods of time at the Washington National Airport.

Und er the corporate form of organization the revenue of the airports can be utilized in the prom pt correction of most inadequacies 

in airport services and facilities.

The business-type budget procedures provided by the Government 

Corporation Control Act will assure essential congressional control, 

but permit the operating and financial flexibility required for the 

most efficient conduct of airp ort operations and management. The 

Corporation will also be able to conduct business negotiations with 

other commercial entities on a more satisfactory basis than is possible 

under teh current system in which revenues are deposited directly in 

the Treasury and are not available to provide services, or to meet 

obligations.

The Corporation will continue to he under the strict scrutiny of 

the Congress in accordance with the provisions of the Government 

Corporation Control Act. Therefore, it will he possible both to 

achieve the operating and managerial advantages of the corporate 

form of organization and at the same time assure that the activities 

of the Corporation are properly subject to congressional surveillance.

To illustrate the safety and operational improvements which would 

result, as well as the difficulties tha t would be overcome by enactment 

of this legislation, we would like to cite a few simple but real examples.

The air transport industry is quite dynamic and is experiencing 

tremendous growth in all its aspects. The introduction of an increasing number of high-powered aircra ft by many airlines brought an 

immediate need for new electric power distribution facilities. This 

urgent operational demand was only partially met by emergency reprograming of funds from other necessary items in fiscal year 1960. 

Funds to install and construct the balance of these electrical facilities were included in the fiscal year 1961 program. Actual provision of the total required power capability was therefore delayed 

for 1 year.

The huge quantity of electrical power and other utilities required 

for airport operations must be purchased from fixed appropriations 

based on estimates developed from 18 months to 2 years in advance. 

With operational growth frequently outstripping budget estimates, 

extreme difficulty is often encountered in meeting unpredictable requirements even though the increased utility costs would willingly 

be paid for by the airlines and other users.

Suddenly developed needs for relatively small but essential items 

present a constant problem to management. The inability to meet 

such requirements promptly has a definite impact on safety. These 

items may be changes in the ra mp configuration, alteration to aircraft 

gates, small bypass taxi wavs and runway extensions, major roof repairs, sewage disposal, repair or replacement of defective water mains, 

emergency installation of a water purifier plant, and countless other 

items involving passenger protection, or safety of aircraft operations.

Othe r unpredictables, like unexpected blizzards, heavy and frequent 

snows such as we experienced last winter which were far in excess 

of the normal pattern for this region, or hurricanes can cost us many 

thousands of dollars, and have a severe impact on equipment and 

facilities.
NATIO NAL CAPITAL AIR POR TS 19

Emergency expenditures for such things as replacement of storm 

damaged hangar roofs, walls, and doors, or boiler repairs deplete 

limited maintenance funds and preclude other badly needed repairs.

It mav be helpful to make specific reference to certain sections of 

II.R . 7399.

Section 5 constitutes a declaration of congressional policy tha t it 

is in the public interest to operate any airp ort transferred to the 

Corporation by or under this act on a self-sustaining business enterprise basis. This means tha t such operations will be consistent with 

sound commercial practice and with due regard to the Government’s 

investment. Rates will be set at levels which will assure the recovery 

of the appropriate portion of the Government’s investment over the 

period of the useful life of the airport. Section 8 vests the management of the Corporation in the General 

Manager who, subject to the civil service laws, would be appointed 

by and be subject to the direction of the Administrator. The salary 

for the Manager may be fixed by the Adm inistrato r at a rate not to 

exceed the maximum permissible by section 302(f) of the Federal 

Aviation Act of 1958. We want to emphasize tha t all of the personnel to be employed by 

the corporation will be subject to the civil service laws and to the 

Classification Act of 1949, as amended. The Corporation would re ­

quire no personnel in addition to those who would be needed to operate 

the airports under present arrangements. We are not, Mr. Chairman, proposing a Corporation in the full 

sense of the word where we would hire outside the civil service and 

set up, as do most other airport corporations of the United States, 

salary scales competitive with private enterprise. I find that on examination men with responsibilities comparable to the General Man­ ager of this Corporation are earning between $4,000 and $10,000 a 

year more than would this General Manager, so the point here is tha t 

this is within the civil service, subject to the Classification Act, with 

no additional personnel over those tha t would be required under other 

forms of management. Subp aragraph (c) of th is section establishes an Advisory Board of 

the National Capital Airports Corporation to be composed of five 

members to be appointed bv the Administrator. A majority of the 

Advisory Board shall be from private life and not less than one mem­ ber shall be experienced in air carrier operation. This Board will 

meet at the call of the Adm inistrator or the Manager no less than 

once each 6 months to review the general policies of the Corporation, 

and to advise the Adm inistrator and the Manager with respect thereto.

Section 9 of the bill establishes policies and procedures governing the 

financing of the Corporation which will afford maximum protection 

of the Federal investment and at the same time promote sound fiscal 

management. This section establishes a National Capital Airpo rts 

Fund to consist of (1) such amounts as may be advanced to the fund 

from appropriations made for that purpose; (2) the unexpended balance of any appropriations available for Washington National Airport 

and the international airport at Chantilly, Va .; and (3) the value of 

the assets of any airp ort tha t is or may be tran sferred to the Corporation under this act, less its liabilities.
20 NATIONAL CAPITAL AIR POR TS

Under subparagraph (b) of this section, the Corporation shall pay 

into the Treasury of the United States as miscellaneous receipts interest on the capital of the fund.

Under subparagraph (c) of this section, there is a provision that 

whenever any capital in the fund is determined bv the Administrator 

to be in excess of its current needs such capital shall be credited to the 

appropria tion from which advanced where it shall be held for future 

advances, and the capital fund shall be considered reduced by the net 

amount of such credits. It should be noted, further, tha t by this particular subparagraph whenever it is determined that the appropriation 

contains funds in excess of the needs of the Corporation the appropriation shall be reduced by an amount equivalent to such excess.

Mr. Chairman, we urge the adoption of this legislation in the interest of efficient and businesslike operation of the Federal civil airports 

of the Washington metropolitan area. The taxpayers and all airport 

users will benefit from such action.

Mr. Williams. Thank you very much, Mr. Halaby.

Mr. Friedel?

Mr. Friedel. Mr. Halaby, I was much impressed with your statement, but a few things remain cloudy in my mind. If you formed 

this Corporation, could be Corporation, if you had funds left over, use 

the matching basis formula and get money from your discretionary 

fund under the Airpor t Act ?

Mr. Halaby. Would they ?

Mr. Friedel. Could they ? Would they be eligible ?

Mr. Halaby. Under the Federal A irport Act of 1961 ?

Mr. F riedel. If you had a $35 million discretionary fund, and the 

Corporation today had about $5 million left over-----

Mr. Halaby. The answer is “No,” Mr. Friedel.

Mr. Friedel. It is not clear in my mind. I sent you a letter, dated 

July 12, and I asked a few questions about the discretionary fund. 

I wondered whether any of the funds under the Airpo rt Act, from 

the $375 million budget over a 5-year period, could be transferred to 

Dulles or to Chantilly Airport or to the Corporation.

Mr. H alaby. The Federal Air por t Act does not contemplate aid to 

the Corporation or any one of the airports in the Corporation.

Mr. Williams. Will the gentleman yield at this point ?

Mr. F riedel. Yes.

Mr. Williams. Is it not a fact, Mr. Halaby, tha t under our present 

law and under the contemplated renewal of the Airport Act, in either 

case it is necessary for local interests to match your fund, even including the discretionary funds?

In other words, you would not have authority under the Airport 

Aid Act to use any of the funds made available to you for the purposes 

of operating this Corporation in any way?

Mr. Halaby. That is right, Mr. Chairman.

Mr. Friedel. T would like to pursue that just a little further.

Fo r instance, let’s say you needed $20 million to improve Chantilly 

or Washington National Airp ort, and you went to the Appropriations 

Committee and said, “If you will appropriate $10 million we have 

$10 million in the discretionary fund that we could use instead of 

your appropriating $20 million.” Can you get $10 million from the 

Appropriation s Committee on a matching basis? That is one thing I
NATIONAL CAPITAL AIRPORTS 21

wanted to get clear in my mind, tha t none of these funds can be transferred to either Washington National or Chantilly, or any of these airports, under this Corporation. That is one thing I wanted 

to have cleared up. If this can be done, I would like to offer an amendment to the A ir­ port Act that none of the funds shall be transferred.

Mr. Halaby. We have no such idea in mind, nor is it incorporated in either the Federal Airport Act of 1961 or in this act.

Mr. F riedel. Supposing, in my example, you needed $20 million, or say, you needed $10 million, and you went to the Appropriations Com­ mittee and said, “Instead of our asking for $10 million, give us $5 million and we can get $5 million from the discretionary fund.” 

Would tha t ever happen ?

Mr. II alaby. No, sir.

Mr. Friedel. And could not happen ?

Mr. II alaby. Not under any legislation that is now in effect or 

proposed by the administration.

Mr. F riedel. I am glad to hear that. There is one thin g th at wor­ ries me, frankly, being so close to Washington National and Chan­ tilly. Every State contributes to Chantilly and to Washington National Airport. Maryland contributes, the same as California and Oklahoma. I want to know if there is any way th at Friendship •could get some of this money, because we are so close and overlap the District. Could any of tha t money go to Friendship? We are float­ ing a $5 million bond issue right now for improvements to Friend­ ship. We also are app ropriating money out of the city budget each 

yea r for Friendship. It is not on a paying basis yet, and we are still appropriating money. I want to know if any of these funds could help Friendship out, other than under the formula tha t we use un der the Airport Act.

Mr. II alaby. Sir, there is no provision for any aid to any airports under H.R. 7399. It does not authorize any additional funds to be appropria ted and, of course, it does not appropriate any funds, so it relates only to a corporation to operate and manage federally owned civil airpo rts within the District of Columbia and its vicinity.

Mr. Friedel. I agree with you. I do not think it comes under 

H.R. 7399, but under the Federal Airp ort Act.

Mr. II alaby. Frie ndship Airport, like all other city and county and State-owned airports, will be eligible unde r a renewed Federal Airport Act, if the Congress passes one this session, it will be eligible under the formula basis and under the discretionary fund and under the new fund for general aviation airports, like other communities, and if the airport authority of F riendship presents a case th at meets the legislation of the Federal Airport Act and the criteria under which we administer it, then they would receive matching aid. At first, I thought perhaps you wished to have the Friendship Ai r­ por t incorporated into the District of Columbia, but I realize that was probably a misinterpretation.

Mr. Friedel. No; th at was not my intention. I want Friendship to grow bigger and better. We are in a bad position in a way. Tn other words, we in Maryland are contributing money for Chantilly like every other State. We are helping to build a great airport, and Maryland is paying its share. By the same token, you are cutting

741 34— 61------4
22 NATIONAL CAPITAL AIR POR TS

our throats at Friendship. That worries me. We are in a very 

bad way.

If you do not divert too much traffic away from Friendship or if 

you divert, more to it, we can get on a paying basis. Then we will 

be satisfied.

Mr. Halaby. As I said at the outset, Mr. Friedel, I believe tha t 

over a reasonably long term there is going to be such a public demand 

for air transportation that Friendship, Washington National, Washington International, and, I hope, additional arports, will be needed 

to their full capacity to accommodate the public demand for transportation. I think we have to face the fact that since the previous 

administration determined tha t they would build and locate a new 

international airport at Chantilly, Va., and build it in this time period, 

there is going to be some short-term competition between Friendship 

and that new airport. It is j ust inevitable.

But over the long term, in my judgment, we are going to need 

them both and probably some more, because tha t is the natu re of 

progress in the national aviation system.

Mr. Friedel. We understand that thoroughly.

Mr. Halaby. I do not think there is going to be any immediate 

sharp competition because it is going to take until next fall to complete 

Washington Internatio nal Airport. It is going to take the airlines 

some time to expand their operations, and they are going to feel out 

the public desire to board at Friendship or board at Chantilly, and 

tha t in the end is what determines the rate of growth and the place 

of growth of our air transportation system—the public.

Mr. Friedel. 1 am hoping when Chantilly is in operation tha t the 

cutbacks on Friendship Air por t will not be too drastic. Th at is my 

big concern.

Thank you, Mr. Chairman.

Mr. Halaby. The best way to do that is to generate air traffic demand in this whole region to such an extent that we need all these 

airports.

Mr. F riedel. You will find Friendship much closer to certain pa rts 

of Washington than Chantilly is. I know a lot of people that use 

Friendship and I think it is a wonderful airport. I think it is one 

of the greatest and best. It will not match Chantilly, of course, because Baltimore had to build its own airp ort with only a little bit of 

Federal funds. The new airpo rt at Chantilly, naturally, is going to 

be one of the greatest airports.

Mr. Halaby. The wisdom of your colleagues in building that a irport and the Federal Government in providing aid to tha t airport 

las been demonstrated in the last 2 years by the expanded use of it 

for jet operations.

Mr. Friedel. I am glad we had foresight and thought in planning 

it because it is not only a good airfield, but it is zoned properly all 

around the area and we do not have the complaints about noise like 

you do with the Idlewild in New York; and if you have too many 

complaints send them from New York to Friendship and we will take 

care of them.

Mr. Halaby. We would like very much to see Maryland take some 

initiative in developing a general aviation airport, for this region 

because in the last few years we have lost several of the small-businessplane airports, and if Maryland and Virginia and the District could
NATIONAL CAPITAL AIRPORTS 23

take more initiative in developing a small-plane airp ort, tha t would relieve the congestion at Washington National and late r Friendship and Washington Internationa l, this would be a great thing, too.

Mr. Friedel. I find that the Department of Agriculture at Belts­ ville objects to letting us have th at airport and they will not give it up.

Mr. Halaby. I gave tha t a good try, sir, at your suggestion, but the Department of Agriculture feels th at this would interrupt their 

agricultural research.

Mr. F riedel. Tha t is all, Mr. Chairman. Thank you very much.

Mr. Williams. Mr. Springer.

Mr. Springer. No questions.

Mr. Williams. Mr. Jarma n.

Mr. J arman. Mr. Halaby, do you know of any opposition to the 

bill?

Mr. Halaby. Sir, I think tha t there is a possibility of a feeling th at somehow this Corporation would relinquish congressional control over the operations and financial results, th at by following the precedent in several other areas, somehow Congress would lose control over this. I. of course, am not a member of the legislative branch, but in my view, you get more control. Before you came in, I stated th at I feel that this would lie a kind of fish bowl* w ithin a fish bowl. The whole Federal Aviation Agency, I find, after swimming around in it for 4 months, is a big fish bowl, and within that you would have a container tha t manages, the two airports, and any later airports. I can hold the General Manager responsible the way I would like to if I were presi­ dent of a corporation, hold a divisional manager responsible for profit and loss, and then look right a t his operation and say, “There is the responsibility for these two airports. There is the man whom we hold responsible for profit or loss operations.” So I th ink you would 

have more control, rather than less. I think there is some concern among the usd ’s of the airpo rts tha t the capital base of the airp ort, tha t is, the total cost, partic ularly of the Washington Internation al Airport, would be grea ter somehow if 

it were incorporated. We have thought very har d about this. For example, instead of charging into the cost of the airport the single purpose airport access highway which goes from th e Circumferential Highway out near the CIA building into the airp ort, it is our proposal to write this cost off as a cost of a special high-speed highway, rather than charge it 

into the capital base of the Corporation. We feel this is justified because this road has only its use as access to the airport. It has a national defense potential. It is to lie a national parkway. The Secretary of the Inte rior and I have been discussing how it could be made a very handsome, attractive national asset, because when you think about it this is going to lie the first view of the Capital of the United States of America that thousands of people visiting this country are going to the National Park Service and become a beautiful access to the Capital. We are also are going to try veiy hard to make this a irpo rt a h and­ some one, a source of national pride, r ather than a trashy one as some airports nave gotten to be. There are other costs that I think some sources fear we might load into this Corporation tha t I believe are not properly a pa rt of the capital base, and I think those fears are
24 NATIONAL CAPITAL AIRPORTS

not warranted. The only other source of difficulty I have heard is I 

think the genuine concern Mr. Friedel has, and that is tha t somehow 

this Corporation might make this international airport more competitive with Friendship, ra ther than less.

I do not see how the creation of the Corporation would affect competitiveness in any way. In fact, it might make it less competitive 

because you and I would be more able to hold it strictly accountable. 

However, so far as I know, sir, those are the points tha t I have heard 

discussed.

Air. J arman. I understand.

Another question, just fo r general information. About 2 years ago, 

as I remember, this subcommittee held hearings on the naming of the 

airp ort at Chantilly and my understanding was t hat the name was 

to be the Dulles International Airp ort. I notice your statment on 

page 10 refers to the International Airport. What is to be the official 

name of the airport ?

Air. Halaby. Air. Jarm an, the official name is the Dulles Inte rnational Airpo rt as proclaimed by President Eisenhower shortly afte r 

the d eath of the late Secretary of State. This was by the stroke of a 

pen a Presidentially proclaimed name. The legislatively official name, 

I believe, is the Additional Washington Airport. The Congress has 

not named the airport, except in tha t rather generic sense.

In law, I suppose, the airpor t could be named whatever the Pres ident then in office wished to name it. I have heard sentiment to the 

effect that it is better to name a national shrine of this nature after 

a location, rather than a person, but at the present time, the official 

Presidentially proclaimed name is Dulles International Airport.

The congressionally stated name is the Additional Washington A irport.

Air. J arman. Thank you, Air. Halaby.

Air. Williams. Air. Collier.

Air. Collier. Air. Halaby, I was greatly elated with the t hird p aragraph on page 2 of your statement, where you say :

Unlike many governmental activities, air po rt operatio n is revenue producing 

and p otentia lly self-sustaining.

How long would it be or what would be involved in making this 

Corporation a self-sustaining activity, in your opinion?

Mr. Halaby. Air. Collier, I wish I could give vou a day, month, and 

year on that.

Air. Collier. Even a decade is good enough, sir.

Mr. H alaby. Within that time span I feel t hat it can be made selfsustaining. The problem is th is : that at the beginning of this administration, the Washington National Airport experience was mixed. 

Aly recollection is that in recent months, Washington National has 

operated some months at a profit, some months at a deficit. I believe 

in the fiscal year 1960, there was a profit and I believe tha t for 3 years 

prio r to that, it had been in the black.

It is my understanding th at this year (fiscal 1961) it will probably 

be slightly in the red or break even. So we do not sta rt with a good 

high profit at Washington National Airpor t to absorb the startup 

costs of an international airport.

Of course, we have to run them both as nearly profitably as we can 

as early as we can. I would hope tha t the traffic projections for the
NATIONAL CAPITAL AIR POR TS 25

In te rn at io na l A ir po rt and the negotiations fo r user cha rge s and con­ cession cha rges would be fav orab le eno ugh to ge t th e In tern ationa l A ir port as well as W as hing ton Na tio nal in the bla ck wi thin 3 to 5 ye ars i n ter ms o f o ut- of-po cket costs and int ere st. I th in k th at would be a dam good record , bu t af te r 4 mo nth s my judg men t is not muc h 

be tte r th an yours, sir.

Air. Collier. If , as you say, t he Washing ton Na tio na l A irpo rt p resen tly is th e second busiest ai rp or t in the co un try —a nd using it regu ­

larly, I certa inly w ould no t even question such a sta tem ent.

Air. H alaby. Ac tuall y, you r airp or ts in the Chicago ar ea a re busie r, 

excep t in these it in er an t operat ion s. Tha t is a ra th er special statem ent .

Air. Collier. W ou ld it be an un fa ir qu estion to ask you where, basica lly, the inadequacies presen tly exist if the ai rp ort cu rre ntly with 

th is trem endous traffic is no t pres ently self-s us tai ning ?

Air. H alaby. I ha te to pa ss a question like th at , but I have to because 

I rea lly do no t know the answ er to the q uestion . Ab ou t 8 or 9 mo nth s ago, m y predecessor wa s able to obtain the s ervices of a vice p resid en t of one of our fine a irl ines a nd he m ade h im D ire ctor o f the Burea u of Nationa l Ca pital Airpo rts, an d he has h ad a l ittle mo re tim e and has, of course, devoted m ore a tte nt io n to th is question th an I ha ve ; so if I ma y ask Air. W ar d Ilo bb s to commen t on th at que stio n, I know you 

would get a be tte r an swer th an you w ould fro m me.

Air. H obbs. Air. Collie r, th e Wash ington Na tio na l A ir port has been 

op erating u nd er a 10-year lease. The new lease is now pres ently b ein g negotia ted . Th e present fees tha t we are ne go tia tin g fo r sho uld b rin g W ashing ton Na tio nal A ir port back to the level of reve nue it sho uld 

have.

Air. H alaby. Could you com par e t he c ur re nt c harges u nd er th e old 

lease w ith , l et’s say, c om parab le cha rges at O ’Hare o r Alidway, or a ny 

ty pica l a irp or t?

Air. H obbs. I do no t th in k I ha ve a compar ison, bu t I can certa inly 

tell th e C ongressman o f th e p resent rates here. Th e r ate s, fo r in stance, Air. Con gressm an, o f $1.80 per square foo t fo r the gr ou nd floor is the 

old ra te which is fa r below the average ra te of ai rp or ts tod ay. Th e first floor r ate as a comparis on is $3 a s quare foot, which is below th e prese nt rates being charge d elsewhere. AVe an tic ipate bringing 

these up to th e compar abl e rat es of other ai rp or ts of t he same size. AVe are also ne gotia tin g ou r leases so th at the rat es an d fees are subject to ren egoti ati on every 3 y ears, so t hat the tre nd can be watched and 

we can ta ke care of any increases.

Air. C ollier. Th an k you.

I have just one fu rther ques tion, Air. Ch air man. Di d I understand 

you to say , Air. Ha lab y, th at the establishm ent o f a c orpo ratio n would 

not entai l a dditional perso nnel?

Air. H alaby. Yes, si r; I guess, to be very precise, it wou ld not require ad ditio na l perso nnel over wha t wou ld be require d if t here were 

no corpo rat ion . In othe r words, we do h ave to hire peo ple to ma nag e the internationa l ai rp ort w hic h are no t now hired because we have no t needed them, but it w ould no t req uire ad ditio na l perso nnel over wh at 

would be req uir ed witho ut a c orp oration.

Air. Collier. In othe r words , generally speak ing , the person nel 

cu rren tly being employed wh ich opera te the air port at the prese nt 

tim e would be subs tantially t he same as the nu mb er of em ployees who 

would be employed in th is capacit y un de r a co rporati on .
26 NATIONAL CAPITAL AIR POR TS

Mr. Halaby. Yes, sir. There would not be any additional supernumeraries just because we created a corporation.

Mr. Collier. Have we had any experience, and I cannot think of 

any at the moment, where we have had a corporation operated by the 

civil service employees?

Mr. Halaby. We have here today, I guess, the leading authority 

on the subject of “Government Corporations,” Mr. Harold Seidman, 

of the Bureau of the Budget. I believe the answer is “Yes,” but if 

he would spell it out, I think it would be helpful.

Mr. Seidman. The answer is “Yes,” w’e have a number of variations, 

but to give one, the St. Lawrence Seaway Development Corporation 

is one which is entirely manned by civil service personnel. Of course, 

the Tennessee Valley Auth ority is composed of essentially civil service 

personnel. They have their own personnel system, but it is the merit 

system.

Mr. Collier. It is a little different type of management at the administration level; is it not ?

Mr. Seidman. And the Panama Canal Zone, but there are, as I said 

variations. This is by no means unprecedented. There are a number 

of them. In fact, some years ago, the Ramspeck Act provided authority for the President, at tha t time, to tran sfer Corporation employees into the classified civil service.

Mr. Collier. Except that this would be a litle different, would it 

not, in the respect th at actually the controlling management would be 

a civil service operation, whereas in these other areas you mentioned, 

there is established top level management which functions outside of 

civil service ?

Mr. Seidman. That, I think, is a question of structure. You are 

correct there; in the case of the St. Lawrence Seaway Development 

Corporation, the management is vested in the Administrator, who is 

a Presidential appointee. Of course, th at is an independent agency.

In this case, the General Manager is under civil service, but he is 

under the Federal Aviation Adm inistrator who is the top non-civilservice person concerned with th is operation. We have general managers in the other corporations, some of whom are, of course, in civil 

service.

Mr. Collier. Thank you, sir. That is all I have, Mr. Chairman.

Mr. Williams. Mr. Macdonald.

Mr. Dacdonald. Thank you, Mr. Chairman.

It is a pleasure to see you again, Mr. Halaby. Actually, my question 

is not an earth-shattering one, but it is one which has puzzled me for 

some time. I was wondering if you anticipated having the same 

system of transportation from the airport at Dulles tha t is now in, 

shall we say, use, for lack of a bette r word, here at Washington Airport. I never can understand how those cabs operate. I admit to a 

certain prejudice since I only live a little wav from the airpo rt in 

Arlington and sometimes I go up to a cab and I will say where I am 

going. When I tell them they usually will not take me, (a), and then 

(Z>), I call for a cab and it is from the District here, nobody is in it 

and it is going back my direction, and cannot get in it. The limousines 

do not go out, my way and so oftentimes, after I have been irritated by 

not, having my luggage catch up with me for a while, I get further 

irritated about those cabs. Maybe i t is just me. I do not know. I
NATIONAL CAPITAL AIRPORTS 27

was wondering, first, what the system is down there now, if you know and, secondly, what system are they going to use out at Dulles, which would be, I think, even more difficult to get to and from.

Mr. Halaby. I will give you a brief general answer, then I will 

ask Mr. Hobbs to go a little further. The principle involved here is tha t we sell concessions for selling books, magazines, food, and so forth, and one of the concessions is the taxi concession at Washington National Airport. After bids and proposals are received, you select one for the taxi concession. The reason is obvious. We want to get revenue to put the airport on a self-sustaining basis. We will have a somewhat different problem when it is a 30-mile trip instead of a 3- or 4-mile trip , and yet we do want to get as much revenue as we can in the new international airport, and one of the ways of getting it is through selling the limousine or taxi concession. I have had the same problem you have had. Ward, would you explain just why I had the same problem? The Yellow Airport. Cab cannot pick up passengers on a regular basis.

Mr. Hobbs. Airport Transport, Mr. Macdonald, is confined to the route of the airp ort to the city. He cannot pick up in the city. The reason why we have the one cab company at the airport is p ri­ marily for control. Most of the cabs in Washington, as you know, are privately owned. It would truly be a mess at the airport if we opened it up wide, plus the fact that we would lose a very good concession revenuewise.

Mr. Macdonald. How much do they pay for the righ t to operate 

out of the airport ?

Mr. Hobbs. We realize a minimum of $175,000 a year on tha t 

concession.

Mr. Macdonald. I s th at done on a licensing basis, or pro rata for so 

many miles of passenger haul ?

Mr. Hobbs. A minimum guarantee or percentage of his gross, whichever is higher.

Mr. Macdonald. Do you check their meters and all that?

Mr. IIobbs. We check their gross income and we get the percentage 

of their gross income.

Mr. Macdonald. Each individual cab, or the company as a whole?

Mr. II obbs. The company as a whole. There is a meter inspection 

pro gram; yes.

Mr. H alaby. In other words, he pays for the r igh t to carry airp ort 

passengers from the airport.

Mr. Macdonald. lie. pays you $175,000 ?

Mr. H alaby. As a concession fee he pays a percentage of his gross earned on the passengers from the airport, and tha t is the total figure 

Mr. Ilobbs gave you.

Mr. Macdonald. Wh at is the amount. What is the fee ?

Mr. II obbs. Mr. Munson, my Deputy Director.

Mr. Munson. The present contract calls for a guaranteed minimum or a percentage of gross business taken away from the airport, which­ ever is larger. The current payment is based on the percentage. This figures out at about 13.8 percent of his gross business. We do not collect anything on business delivered from downtown locations to the airport through his limousine service, so it is 13.8 

percent on total business.
28 NATIONAL CAPITAL AIRPORTS

Mr. Macdonald. I s he on perfectly sound legal ground in refusing 

to haul a passenger from the airpo rt to Arlington, Va. ?

Mr. Munson. No. Under the terms of his contract he must provide 

service at all times from the airport.

Mr. H alaby. If he refuses a common carrier request, then he is in 

violation of th at contract?

Mr. II obbs. Exactly. We should like to know about this.

Mr. Macdonald. I would have liked a couple of times to know 

whom to tell. What is the objection to having a cab t ha t comes in 

from town and discharges passengers; what is wrong if there are noother cabs around, what is wrong with them picking you up? I have 

never been able to understand tha t, either.

Mr. Hobbs. We have to protect him, Congressmen, in giving him 

the concession rights of carr ying the business from the airpo rt into 

town when he has the concession.

Mr. Macdonald. I suppose the riding public has a little bit of a 

righ t to be protected, too. They are in a hurry and they want to get 

someplace. Cabs are busy. The airlines seem to travel always at a 

peak hour. The cabs are fairly hard to come by and a cab zooms in 

and you hail it and the driver shakes his head, no, and keeps on going.

Mr. Hobbs. As long as he h as cabs on his stand, sir, we give him 

the righ t to the volume of traffic that does come in, but if he does not 

have cabs on the stand, this should not prohibit a passenger from 

hailin g the first conveyance that comes by. At the airport, I am 

speaking of.

Mr. Macdonald. We are talking about the Checker Cab or one of 

these independent cabs th at go to the airport. It is perfectly legal 

for them to pick up passengers at the airport?

Mr. II obbs. No, sir, it is not. He has the concession right at the 

airpo rt. What I said to you was if he did not have any cabs on his 

stan d-----

Mr. Macdonald. Who is this he you are talking about now ?

Mr. Hobbs. I am talking about the Airport Tran sport Co.

Mr. Macdonald. I am now talking about another cab that comes 

out of town and drops off a passenger and you are standing there with 

a bag, and here is a cab and you ask fo r the cab and driver says, no, 

it is illegal for him to pick you up ?

Mr. Hobbs. That is right, sir, as long as Air Transport has cabs 

available for you to use, sir. This is his concession right.

Mr. Macdonald. Whose duty is it to check to see that there are 

some available?

Mr. II obbs. Our airp ort manager should make sure that there are.

Mr. Macdonald. I am sure he has more important things to do than 

that, I hope.

Mr. Hobbs. He does. There are police officers there, the Washington Airpo rt police, who work for the manager tha t should see that 

that does not happen.

Mr. Halaby. In order to earn the concession revenue, we have to 

protect the concessionaire to the extent tha t whenever he has a cab 

on the stand ready to go our police will not permit a passenger to hail 

and hire another cab other than Airport Transit to pick up a fare. 

That is the only way we can protect our revenue source. Otherwise,
NATIONAL CAPITAL AIRPORTS 29

he says, ‘‘Wh at’s the concession worth ? Why should I pay 13.8 percent to have my cabs there ? ”

Mr. Macdonald. $175,000 seems to be worth quite a lot to him. Does 

he run the limousine service, too ?

Mr. Hobbs. Yes, sir.

Mr. Macdonald. And the Yellow Cab ?

Mr. Hobbs. Yes, sir; the yellow Airport Transport Cabs.

Mr. Macdonald. One operation ?

Mr. Hobbs. Yes, sir.

Mr. Macdonald. Wha t system is going to be used at the new airport '!

Mr. H obbs. At the new airport we will use the buses similar to those 

running bet ween Friendship and Washington. We will have the bus, 

1 imousine, and cab.

Mr. Macdonald. What if a cab goes 30 miles out to Chantilly and 

there is a passenger who wants to get back in ? He has to come back 

empty.

Mr. Hobbs. He is going on a one-way ride, yes, sir.

Mr. Macdonald. You are going to have an awful tough time getting these independents to take you out to Dulles, are you not ?

Mr. Hobbs. Yes, sir ; you certainly are.

Mr. Macdonald. Do you think that is something to give some 

thought to? It is tough enough to get out to this a irport.

Mr. Hobbs. I think, Congressman, if he took you he would charge 

enough to pay for his return. They do that now to Baltimore.

Mr. Macdonald. I know, bu t we are supposed to look toward the 

public interest. I am not sure that it is in the public interest. 1 do 

not know. I am just raising these questions because I do not know 

the answer, but I think it is something to think about, whether to 

use the same arrangement when it is 30 miles out there, because if 

you are in a hurry to call a cab to your apartment to make a plane and 

the fellow shows up in town and you tell him where you want to go, he 

will say, “I am sorry, I do not have a license to go there,” or something and you will be sittin g around waiting for a cab or missing the 

plane. I would think perhaps th is should be reviewed.

Mr. Hobbs. I think he will probably try to take you at that rate. 

Right now, from Washington they are charging $15 and $20 to take 

you to Baltimore. I well imagine that he will try to talk you into 

a high enough rate to take you out, but I think we are providing 

adequate transportation in our plans for the Dulles International 

Airport.

Mr. Macdonald. From downtown hotels, I suppose th at is true, but 

from private homes in either Georgetown or Virginia, you have a 

tremendous job.

Mr. Halaby. The same thin g occurs at Idlewild. If you have 

enough dough you take a cab rath er than go to either the Fast Side 

or West Side Terminal. It costs about $6.50 from Manhattan out 

to Idlewild. That cabdriver takes his chances on whether there is 

a fare there or whether the lineup, which might be up to 2 miles long, 

makes it worth while for him to come back empty.

Mr. Macdonald. I understand, but as a matter of fact, that is one 

reason there are all these cabs both at La Guardia and Idlewild, because they do not have these concessions, and 1 was wondering whether 

in the overall picture it would be worth while, once again, to give a

74 13 4— 61 ------5
30 NATIONAL CAPITAL AIRPORTS

monopoly to one company—1 do not use that in any bad sense—or to 

give a franchise to one company.

Mr. Hobbs. Mr. Macdonald, if I may, Mr. Administrator, at the 

Idlewild Airport it is an uncontrollable mess. Sir, I commuted before 

living down here, living on Long Island, and if you would ask the 

next man out to take you to the Jamaica station, your life is in danger, 

and the port, authority has no control and they will tell you tha t they 

have no control. They will only take you on a long haul. If you ask 

a cab to take you to the United Building, or any of the other buildings 

around that circle, you have your hands full, so there is no control 

and if you appeal to a policeman he will ask you to appear at a hearing so th at you can lift the man's license, which no one has the time 

to do.

I am only bringing it up as a matter of control.

Mr. Macdonald. I was wondering, do you anticipate giving the 

same franchise to the same person ?

Mr. Hobbs. We have, sir.

Mr. Macdonald. You have already done that ?

Mr. Hobbs. Yes, sir. We have negotiated at the Washington 

International.

Mr. Macdonald. Which is the line that got it ?

Mr. I Iobbs. Airp ort Transport, Inc.

Mr. Halaby. Is there a competitor?

Mr. Hobbs. We had four bidders, the Washington, Virginia, & 

Maryland Bus Line, the Gray Line sightseeing people, I).C. Transit 

System, and the Airport. Transport people.

Mr. Macdonald. I)o the other two outfits have cabs?

Mr. Hobbs. No, sir. We made our selection by weighting revenue 

to the Government with proposed service and the experience of the 

operator in providing this type of service.

Mr. M acdonald. Wa sthis a published bid ?

Mr. I Iobbs. Yes, sir.

Mr. Macdonald. Thank you.

Mr. Hobbs. Yes, sir.

Mr. Williams. Mr. Devine.

Mr. Devine. In the absence of this franchise, it would cost $175,000 

in the operation out there, is that correct? If you did not have a 

franchise with a limousine company or cab company, your revenues 

would be $175,000 less?

Mr. Halaby. Yes, sir; if they were open, uncontrolled operations, 

we would forego a minimum of $175,000. We will doublecheck that 

figure and put it precisely in the record.

(Info rmation referred to follows:)

I nforma tion on P ay me nt s R eceived by th e Gove rnm ent for th e Ground

T ranspo rta tion Service Contract at Was hing to n Nation al Airport

The con trac t with the ground transp ort ation operator provides for payment 

of a minimum g uarantee of .$175,000 anuall.v or a percentage of his gross receipts, 

whicheve r is higher. Under the term s of this contract, the Government lias 

received the following payments d uring the last 5 fiscal years :

Fiscal 1957___________________________________________________

Fiscal 1958________________________________________________

Fiscal 1959__________________________________________________

Fiscal 1960____________________ _

Fiscal 1961___________________________________

$221, 047

262, 832 

285, 838 

294, 458 

277, 899
NATIONAL CAPITAL AIRPORTS 31

Mr. Devine. Statistically, how does the Washington National Airport rate on takeoffs and landings during a 24-hour period with other 

airpo rts across the Nation ?

Mr. Halaby. The total number of takeoffs and landings, total 

number of aircraft operations?

Mr. Devine. Twenty-third, or fifth, or tenth, or what?

Mr. Halaby. It is in the first few. I think it is second or third and 

let us put a precise statement in. In other words, it is among the 

first three or four.

(Information referred to follows:)

Rank order of Washington National Airp ort, calendar year 1960

Airp ort

To tal instru men t op er at io ns : Total

1. Wa shi ngton Nationa l----------------------------------------------------------- 203,484

2. Chicago Midw ay____________________________________________ 199, 674

3. New York Idlew ild _________________________________________ 196,547

4. Los Angele s________________________________________________ 165, 448

5. Miami_____________________________________________________ 133,430

Total itin er an t air cra ft op erati on s:

1. Chic ago Midw ay____________________________________________ 347, 474

2. Washin gto n Nationa l_______________________________________ 315, 987

3. Los Angeles________________________________________________ 270, 956

4. New York Idlewild -------------------------------------------------------------- 270. 593

5. Da lla s ____________________________________________________ 247. 885

Air ca rr ie r ai rc ra ft o pe ra tio ns :

1. Chicago Midw ay____________________________________________ 298, 582

2. New York Idlew ild _________________________________________ 239, 617

3. Washin gto n Na tio na l_______________________________________ 226, 512

4. Los Angele s________________________________________________216, 086

5. New York La G ua rd ia______________________________________ 173, 611

To tal a ir cr af t o per at io ns:

1. Chicago Midw ay____________________________________________ 376, 030

2. Tam iam i. F la ______________________________________________ 321,605

3. Miami, F la __________________________________________________ 321,017

4. Washin gto n Nationa l_______________________________________ 316, 597

5. D enver____________________________________________________ 308,194

Mr. Devine. It is among the first five ?

Mr. II alaby. Yes, sir.

Mr. Devine. Can you give me roughly whether it is every 3 minutes 

or every 4 minutes, generally speaking ?

Mr. Halaby. It depends on the time of day, but if you are thinking 

of a 24-hour average, we will get you that figure. It is very frequent.

For example, under IFR conditions, it is often an average of 

slightly less than one each minute. At peak loads under visual 

flight rules, it is higher than that. It is about 300,000 a year.

(Information referred to follows:)

Du ring ca lend ar ye ar 1960 ai rc ra ft op erations at Wa shi ngton Na tio na l Ai rport totale d 316.597 or an a verag e of 1 o pe ratio n every 90 seconds.

Mr. Devine. Do you expect Chantilly to be in operation in the fall 

of next year ?

Mr. Halaby. Yes, sir.

Mr. Devine. We have Bolling here and we have Andrews here.

Mr. Halaby. Bolling Field will be phased out by the fall of next 

year and all military operations will have been concentrated at 

Andrews Air Force Base.
32 NATIONAL CAPITAL AIR POR TS

Mr. Devine. J was just wondering, and I do not suppose you can 

tell me when does (he air become saturated as far as traffic is 

concerned ?

Mr. Friedel was asking you questions, and you thought tha t when 

Washington National is in operation, and Washington International, 

there would be slowdown at Friendship, and then it would also 

pick up, and tha t you hope during the next 10-year period that you 

would have additional facilities in the area. I could see why, but 

when do we become saturated or supersaturated?

Mr. Halaby. It depends of what you mean by “saturated .” At 

the present time, our air traffic control system, which is not quite a 

system, but which is a pattern of facilities which we are trying to 

convert into a system, cannot accommodate all those who would like to 

take off and land in the Washington-Baltimore region, and therefore you and I and all other passengers are encountering delays while 

entrants to the air traffic control await their turn.

You have probably sat impatiently out on that Washington National Airp ort runway waiting for a takeoff clearance in some cases 

as long as 30 and 40 minutes; and that is because the system, with 

the safety standard that we require, is saturated at tha t moment, 

so we have to do two things, as I see it. One, we have to develop 

a much more capable system. That is, we must have more volume 

capacity in the air traffic control system, and we are working night 

and day on that, but it would not yield the capacity we need for at 

least 3 years. Secondly, we have to have an a irport system, because 

the true bottleneck will be the number of runways actively available 

to those aircraft seeking to land or take otf. Rather than having 

fewer runways available in this region, which we now have as compared with 5 years ago, for all airc raft, we are going to have to have 

more.

Mr. Devine. Chantilly is roughly what? Twenty-five air miles 

from Washington National?

Mr. II alaby. Maybe a little less as the crow flies. It is 29 ground 

miles from the White House to the new airport.

Mr. Devine. Is that sufficiently close to interfere with landing patterns each with the other?

Mr. IIalaby. No, sir; that is one of the principal reasons why it 

was located so far out, as I undersand it. I had no p art in the decision to locate if out there, but it is my understanding tha t one of 

the considerations was to provide a wide separation of traffic patterns.

Mr. Devine. In tracing these flights in on your radar screen in 

your terminal towers and picking up the blips, now far do you reach 

normally in bringing one i n ? Five miles? Three? Seven ?

Mr. II alaby. The onroute traffic control center has a long range, 

in the order of 100 miles as an average. The approach control radars 

in the tower have a normal range of 25 to 30 miles, but are also good 

at 5 to 10 miles.

Mr. Devine. I am wondering whether you will l>e having an overlapping at the international with th e national when it is in operation, 

picking up blips coming into the various airports.

Mr. Halaby. I^et us for the moment take 3 years from now as a 

base. We will then have Andrews A ir Force Base with Army, Navy, 

Marine, and principally Air Force aircraft operations. We would 

have Washington National, Which would then be concentrating on
NATIONAL CAPITAL AIR POR TS 33

accommodating short-r ange propeller and turboprop, and mayl>e a 

few pure jet operations, at tha t airport, and you would have the inter­ national airport accommodating primarily the long-range intercon­ tinental and transcontinental jets and a few turboprop and pure jet, medium-range aircraft, and those three patterns would have to be separated but integrated by a regional air traffic control system. We have underway the steps leading to such a system tha t will handle all of the volume of traffic contemplated for all three fields. Then, in between those we have to have some small plane airports tha t will relieve the big airports of the personal and business airc raft operations that can be accommodated at these general aviation fields.

Mr. Devine. As a layman, it seems to me we are fast approaching a 

saturation point in the Greater Washington area.

Mr. Halaby. Sir, I thin k you mean saturation the way I do, and tha t is that we have more and more aircra ft operations in this area and we have less runways with which to accommodate them, and we have an a ir traffic control system that is able to accommodate only through 

delays in order to achieve safety.

Mr. Devine. There are more and more aircraft in the same amount 

of air.

Mr. Halaby. Yes, sir; but this is not to say t ha t it is an insoluble problem. It is to say that the demand and the speed and the perform­ ance have exceeded our Government’s ability to plan and equip ahead. Now, the problem is to catch up for this airways lag and have the airports and the system ready when the aircra ft are demanded by the 

public.

Mr. Devine. And not sacrifice air safety.

Mr. Halaby. Yes, sir; so we now buy safety with delay. We buy both efficiency and safety with a modern system, and tha t is what we 

have to do.

Mr. Devine. Th atisa ll. Thank you, Mr. Chairman.

Mr. Williams. Air. Springer.

Mr. Springer. Mr. Halaby, (here are approximately 1,000 average flights in and out of Washington National Air por t per day. When Dulles is finished, how do you visualize the division will be of those 

thousand landings and takeoffs per day ?

Mr. Halaby. We have some very fine projections of operations of Washington National and international airports side by side each year. They have been prepared at some expense, and great effort, and (hey will he as good or bad as the public demand and convenience 

dictates. T can give you those figures.

Mr. Springer. Can you give me (he rough division percentagewise, with 1,000 in and out flights per day ? How is that going to be divided ?

Mr. Halaby. Do you want to look ahead as f ar as, say, 1965?

Mr. Springer. Well, the first year, and then the fifth.

Mr. Halaby. The first year is going to be a very high ratio of Wash­ ington National over the international, as they sta rt up. The fifth year is more of a balance. Let me just give you the projections made back in the spring based upon an October 1962 operating date. For the year 1963—that would be the first year—total aircraft movements into and out of Washington National, we can expect to be 310,000, inte r­ national 65,000 for the ye ar 1966, total Washington National 300,000; 

the inter na tio na l, 250,000.
34 NATIONAL CAPITAL AIR POR TS

Mr. Springer. Is it going to increase that much in the meantime? 

In other words, what you are actually doing is picking them up here 

and going out there. That is what, in effect, is happening.

Mr. Halaby. That is the project ion.

Mr. Springer. 300,000 as against 250,000 in 1966.

Mr. Halaby. Yes, sir.

Mr. Springer. For just a moment, change over to Chicago. When 

you built O’Hare, you had approximately 1,200 landings and takeoffs 

a day.

Mr. Halaby. Yes.

Mr. Springer. I think that is the highest in the world. What is the 

shift-over now?

Mr. Halaby. To Midway?

Mr. Springer. From Midway to O’l la re.

Mr. Hobbs. We would have to supply that.

Mr. Halaby. We will get those and give them to you.

(Information referred to follows:)

Distribution of aircraft arrivals and departures at Midway and O'Hare Airports

in Chicago, calendar years 1956-60—Total aircraft arrivals and departures

C al en dar ye ar O ’H ar o M id w ay

1956_____________ ____ ______________ _________ ________ ______ 157,360 372,177

1957__________ ____ _________________ ____ ____________ 209.954 408,059

1958____ ________ _________________ ______ 236,060 419, 473

1959_________________________________ ______ 234,983 431,600

1960__________________________ ______ _ ___ 244, 479 376,030

Mr. Springer. Does anyone have any idea what the percentage of 

shift is approximately ? Go haead, Don.

Mr. Durand (Air Transport Association of America). I will have 

to get them for you.

Mr. Springer. If you do not have them, that is all right. I would 

just like to find out how that is working out. There is resistance at 

Chicago. I am one of those, not that I exerted any official pressure. 

I just do not want to fly to O’Hare. I fly to Midway because I can get 

in easier and I do not take any flight to O’Hare.

How much pressure is that exerting as a result of this being 29 

miles as against 4 miles, which is very similar to the situation we had 

at Midway. You mentioned this in the sentence you used a moment 

ago.

Mr. Halaby. Yes, sir. We will not know the answer to that until 

we have had some experience in the operation. I spent all yesterday 

morning with Secretary Udall and Budget Director Bell in a helicopter trying to fathom just the answer to that question. We took off' 

from Washington National and pretended to come across the Memorial 

Bridge and go up the George Washington National Parkway along 

the river to where it ends about CIA. Then, we imagined t raveling on 

a limousine or bus to the Circumferential Highway, which is about a 

4-niile jog in there, and then out what I think of as the new inte rnational airport freeway, which is 14% miles, to the airport.

As you know, that is a single-purpose highway. It is deliberately 

planned and approved by Congress now for 2 years to be an expressway to the airport. You can only get on it a t three interchanges, and
NATIONAL CAPITAL AIR POR TS 35

you can only go to the airp ort, and coining back, you can only go off 

the freeway to the community. You cannot come from the com­ munity onto the freeway. It is deliberately designed not to be a com­ muter road and the only purpose in this is to make this a kind of an airway from downtown Washington through these parkways out to 

the airport, and into the sky. Even with all this, and it has been a very difficult thing to defend this single-purpose highway because some of the local folks out there would like to get access to it, regardless of how it would slow up a ir­ port traffic, it is going to be a good hard drive of, I would guess, 

30 miles in 40 minutes. Some say 30 minutes.

Mr. Springer. From the White House.

Mr. Halaby. Let us say from the White House to the airpo rt 

entrance.

Mr. Springer. In 30 minutes.

Mr. Halaby. I do not see 30 minutes. Some say this is possible. 

I would say 40 minutes or more. It takes some 50 minutes to 65 minutes to Friendship now and under certain conditions, the clog point on the route to Chantilly is going to be the Memorial Bridge, or the Key Bridge, and that portion of tlie George Washington Pa rk­ way to the Chain Bridge. Th at is going to be the choke point.

After you get beyond tha t you can go pretty fast.

Mr. Springer. Now we come to the third matter.

Mr. I Ialaby. But the public is going to decide.

Mr. Springer. The public is going to decide whether they want to 

fly in or not. I)o you visualize this then as an international airport? When I talk about international, I am talking about Mexico City to Washington, from Washington to Havana, from San Francisco-Los Angeles to Washington, Montreal to Washington, Paris to Washing­ ton. Are you thinking, in those 250,000 landings and takeoffs in 

1966, in those terms?

Mr. IIalaby. I think broadly, yes. It is transcontinental and international.

Mr. Springer. These are the big Hights, is tha t correct? Is that 

sort of the patterns as it looks, without declaring any policy here today? We are just trying to get some information. Is that what 

it looks like?

Air. II alaby. That is the general prospect, yes, sir. There will 

lie gateways at Boston, New York, Washington, and Miami as p rin­ cipal gateways into the Eastern Seaboard of the United States; perhaps Philadelphia.

Air. Springer. You are thinking in terms, I assume, then of P itt sburg to Washington and Chicago to Washington, St. Louis, and Columbus, and Atlanta to Washington, primarily out here at 

the Washington National Airport?

Air. II alaby. It depends on what kind of world we are living in, 

but there appear to be reasons to believe that from the Atlantic, from the North American Continent, Canada and so on, and from South America, people will enter the United States at Boston, New York, Philadelphia, Baltimore, Washington and Miami as principal inter­ national gateways on the eastern seaboard and tha t volume will be such when combined with transcontinental Hights such as Los Angeles- Washington, Seattle-Washington, San Francisco-Washington and by
36 NATIONAL CAPITAL AIRPORTS

then Honolulu-Washington, that there will be 250,000 aircraft movements a year.

Mr. Springer. That is all, Mr. Chairman.

Mr. Williams. Any further questions?

Mr. Macdonald ?

Air. Macdonald. No questions.

Mr. Williams. Mr. Devine?

Mr. Devine. No, sir.

Mr. H alaby. Mr. Chairman, I have one technical amendment if I 

might put it in the record. It is a minor matter, but I will read it.

Delete the phrase “paid to Directors of Burea us of the Federal Aviation 

Agency” in section 8(a ), lines 15 and 16, page 7, and ins ert in lieu thereof 

“permissible under section 302(f) of the Federal Aviation Act of 1958.”

The reason is that I have an allergy to bureaus and we have changed 

the names of bureau to services, so instead of being Director of the 

Bureau of Air Traffic Management, the man is now Director of Air 

Traffic Service, so this just, updates the language since the reorganization of the agency.

Mr. Williams. All right, sir. I want to join my colleagues in congratulating you on an excellent presentation. In the series of bills 

which were sen! up to the Hill by the Agency one was the so-called 

concession bill. You know the bill I am talking about.

Mr. Halaby. Yes, sir.

Mr. Williams. We have tentatively scheduled th at to be considered 

along with this legislation for tomorrow, but I would like to ask you 

today before we get into the consideration of it, in the event of the 

enactment of the corporation bill which is presently before the committee, assuming the enactment of this legislation, would that other 

be necessary ?

Mr. Halaby. No, sir.

Mr. Williams. It would not be necessary ?

Mr. Halaby. It would not.

Mr. Williams. I think you indicated in your statement tha t you 

anticipate eventually that you will realize a $4 million profit out of 

the operation of this Corporation.

Am I correct in that ?

Mr. Halaby. No, sir. Tha t was a sentence in the prepared statement that, we now realize $4 million in revenue from the Washington 

National Airport.

Mr. Williams. I see.

Mr. Halaby. I would like to be able to say that.

Mr. Williams. You do think it will be self-sustaining eventually?

Mr. ITalaby. Yes.

Mr. Williams. Of course, I realize that, is subject to the Government 

Corporation Act, but in the event it should realize a profit, what would 

happen to that profit ? Would tha t be placed into a reserve fund for 

the operation of the airpo rt to meet contingencies, or would it lx? 

covered into the General Treasury ?

Mr. Halaby. It depends on how7 you define profit, I guess. I am 

going to ask for a technical answer for tha t rather than give you 

a fuzzy, general one. Mr. Alan Dean, Deputy Administrator.

Mr. Dean. Any profits in excess of expenditures would go into the 

fund tha t supports the general operations of the Corporation, but
NATIONAL CAPITAL AIRPORTS 37

should tha t fund reach a size beyond that needed to support the 

Corporation, the excess would be returned to the appropriation for 

the Corporation and then into the Treasury as miscellaneous receipts. 

So there is a technique available here to assure that the Treasury 

ultimately gets any long-range net profits of the Corporation.

Mr. Williams. Do you anticipate that there will be a need fo r an 

annual appropriation to this Corporation?

Mr. Dean. The expectation is that there will be an initial app ropria tion shortly after the enactment of the legislation which will be 

large enough to meet the anticipated costs of operating the Corporation fo r several veal's.

Only if deficits run the appropriation down to the point where there 

is not an adequate fund would we come back for additional appropriations. The whole concept of the Corporation calls for having the 

bulk of the cost paid out of the current revenues from services 

rendered.

Mr. Williams. All right, sir. That answers that. I would like 

to ask you about two or three provisions in the bill.

On page 3, section 6, wherein you define the general powers authorized to be exercised by the Corporation, on line 16, subparagraph 

(4) of section 6, would you explain just what is meant by—

To have, in the payment of debts out of bankrupt, insolvent, or decedent’s estates,, 

the priority of the United States?

Wh at is meant by that, language and what is the purpose intended 

to be served by that language ?

Mr. Dean. Could you state where tha t is again ?

Mr. Williams. That is on page 3, line 16. It is a pa rt of section 6r

one of the powers listed under section 6.

Mr. H alaby. I am going to ask Mr. Harold Seidman of our Budget 

Bureau to answer that one, if I may.

Mr. Seidman. Normally, if the Government has a claim against a 

bankrupt estate, it has a priority lien. In other words, the first payment would have to be paid of any debts which are owed to the Government, and these will give the Corporation the same status as the 

Federal Government would have.

Mr. Williams. Would you give us an example of payment of debts 

out of bankrupt, or insolvent, or decedent’s estates? Would you give 

us just a hypothetical example of that?

Mr. Seidman. We could take an airline that went bankrupt and 

owed landing fees to the Airport Corporation, and that would be a 

prio rity lien.

Mr. Williams. I suppose this same situation would be true of an 

individual owner of an airline ?

Mr. Seidman. That is right.

Mr. Williams. All right, sir.

On page 6 of the bill, and this is one of the powers, the 10t,h subsection there rea ds:

To appoint, in accordance with the civil service and classification laws, such 

officers, attorneys, agents, and employees, to vest them with such powers and 

duties, and to pay such compensation to them for their services, as may be required by law.

How does that exercise control over this? What degree of control 

over, for instance, the number of employees that are hired, the number 

of persons who are paid this $100 per diem, and tha t type of thin g?
38 NATIONAL CAPITAL AIR POR TS

How does Congress, or does Congress, exercise any control over the 

hiring and firing policies other than tha t they be subject to the civil 

service classification law ?

Mr. Dean. In addition to this statute, the Corporation would be 

required to submit an annual budget which would set forth its entire 

program and would indicate for the current year and the coming year 

the ways in which the funds of the Corporation are to be used and 

the sources from which receipts are derived.

The Appropriations Committee with respect to other corporations 

frequently asks searching questions on just this type of point and the 

Congress does have the right of prescribing an administrative expense 

limitation of any type it chooses in the individual annual app ropriation bill. That has been done for many corporations.

Mr. Williams. I just want to get several points clarified tha t I 

noticed in going over the bill rather hurriedly.

On page 10, which is part of section 9 establishing the National 

Capital Airports Fund, it says tha t the capital of the fund shall consist of (1), (2), (3), (4), and so on. It provides this subsection (3) 

as follows:

Su ch of th e un ex pe nd ed ba lanc es of appro pri ati ons avai la ble fo r use by th e 

F edera l A vi at io n Agenc y fo r th e co ns tr uct io n, de ve lopm en t, op er at io n, or m ai nte na nce of any a ir p o rt w hich is, or m ay be tr an sf err ed to th e C orp or at io n unde r 

th is ac t, as m ay be de term in ed by th e A d m in is tr ato r an d ap pr ov ed by th e Dire cto r of t he B ure au o f t he B u d g et;

I am wondering if it would not be more proper to have that approved by the Congress, rather than the Bureau of the Budget. In 

other words, the question of congressional control enters the picture 

here, and I may be entirely mistaken in my interpretation of tha t 

language, but does that take this out of the hands of the Congress?

Mr. Dean. Mr. Chairman, this is largely an administrative provision. All the funds referred to in this provision will have been already reviewed and appropriated by the Congress under previous 

appropriation bills. It is simply an administrative device to lump in 

the fund the money which Congress has already supplied.

In order to assure that this is done in accordance with good financial 

practice, the Director of the Bureau of the Budget is required to 

approve what is done, but this does not provide new appropriations of 

any sort for the Corporation.

Mr. Halaby. In other words, the airport will be funded and authorized, and the approval of the value of the assets of tha t airp ort 

transferred into the Corporation determined by the Administrator 

would be reviewed by the Director of the Bureau of the Budget. It is 

more of an accounting review than a funds control review, because 

the money will have already been spent and will have become an asset 

of th at a irport which is transferred in.

Mr. Williams. All right, sir. I just wanted to raise tha t point. 

The committee, of course, will go into that later.

On page 15 there is a proviso beginning at the bottom of page 14 

with respect to the use of these airp orts by the Department of Defense, a proviso that would give the Administrator authority to curtail or limit the use of facilities by aircraft of the Department of 

Defense, the criterion being—

if su ch use , in his judg m en t, unr ea so nab ly im pai rs or in te rf ere s w it h th e us e of 

th ose fa cil it ie s by c ivil air cra ft .
NATIO NAL CAPITAL AIR POR TS 39

As far as I see it here, that is the only criterion to be followed by the 

Adm inistrator in his limiting the use of the airport by the Department 

of Defense. I am wondering if we should not add to tha t language 

which would provide essentially—

or unless such use should be essential to the needs of nation al defense.

In other words, how would this be handled in time of national emergency ? Would the needs of the national defense be a proper element 

to be taken into consideration here along with the element of unreasonably impairing or inte rfering with the use of the facilities by civil 

aircra ft ?

Mr. Halaby. Yes, I see your point.

Mr. Williams. I am wondering if the impairment of or inte rference with the use of those facilities by civil a ircraf t should be the 

only criterion to be followed in making this determination.

Mr. Halaby. We cleared this with the Department of Defense, 

but I think you have a p oint and certainly, the intention is tha t in an 

emergency or in war the use by the Department of Defense would, 

of course, be paramount and you would have to judge whether the 

use for national defense was necessary. It would not be ju st interference with civil operations.

Mr. Williams. Even though the needs for the national defense 

might impair or interfere with civil operations?

This is rather restrictive language it would appear to me and I 

wondered possibly if the Agency might give some thought to that and 

might get together with the Department of Defense and suggest some 

language for possible amendment to this legislation t ha t would clarify 

that point. I can foresee a situation where the national defense would 

require the use of tha t airport regardless of how it might affect the 

operation of the civil aircraft, and I think perhaps in the drafting 

of this legislation, the committee should make necessary provision for 

tha t, certainly in the case of emergency.

Mr. H alaby. Yes, sir.

In the positive portion here of section 12, it says it is to be used by 

Defense; and only if the Administrator curtails or limits it due to 

unreasonable interference. You could say th at th e wartime operation 

of Defense was a reasonable use and a reasonable interference with 

the facilities used by civil aircraft, but I think your point is a good 

one.

Mr. Williams. Would it be too much of an imposition to request 

the, Agency to furnish us with a memo on that?

Mr. Halaby. No, sir; we will do that. It is a very good point.

Mr. Williams. I believe those are all the questions th at I have.

Mr. Macdonald?

Mr. Macdonald. I just have one, and I do not mean to be taxihappy today, but, Mr. Hobbs, did I understand you to say, sir, tha t 

this company pays 13.8 percent of its gross to the airport?

Mr. II obbs. That is Airpo rt Transport Co.’s gross revenues; yes, 

sir.

Mr. Macdonald. And they pay $175,000 ?

Mr. Hobbs. Roughly.

Mr. Macdonald. And th at is gross ?

Mr. Hobbs. That is what they paid to us.

Mr. Macdonald. They must be doing fairly well then.
40 NATIONAL CAPITAL AIR POR TS

Mr. Hobbs. They are doing all right, sir.

Mr. II alaby. That is over a million dollars. Are you doing the 

mental calculations I am, th at the total gross revenues must be over 

a million dollars ?

Mr. Macdonald. It is staggering to me, and I suppose that will be 

double when the airport at I)ulles is open, would it not?

Mr. Hobbs. It should be with two airports. At the beginning, of 

course, it will not.

Air. II alaby. Let us lx? sure. Is tha t total just the taxicabs?

Air. JIobbs. That is the total operation.

Air. Halaby. Cabs and limousines ?

Air. Hobbs. Yes.

Air. II alaby. That does not include the buses over to Friendship 

or anything like that?

Air. II obbs. No, sir.

Air. II alaby. This is just the AVashington National cabs and 

limousines ?

Air. II obbs. Yes.

Air. Halaby. That is an annual gross revenue of more than a million dollars ?

Air. AIunson. At the current rate of payment.

Air. Halaby. Of which we get the $175,000.

Air. AIacdonald. How was the figure 13.8 percent arrived at?

Air. AIunson. There is a sliding scale. There is a certain percentage of the first $750,000 of company revenues. I cannot recall the 

specifics, bu t with the next increment of the company’s gross revenue, 

the percentage goes up another percent, so tha t based on the operators 

total revenues the current payment averages out about 13.8 percent. 

I recall this number because of a recent proceeding. Kates are approved by the recently established Washington Aietropolitan Area 

Transit Commission. There has been a rate proceeding and a determination just within the last few days on these rates. I can supply 

for the record the specific escalation of the percentage factor, but 

there is an escalation factor rega rding payments to the Government.

Air. II alaby. We do not determine his rate.

Air. AIunson. His rates are determined by the newly established 

AVashington Aietropolitan Area Transit Commission.

Air. AIacdonald. Duly licensed ?

Air. AIunson. Yes, sir.

Air. AIacdonald. Otherwise, he is under the jurisdiction of the 

District of Columbia ?

Air. AIunson. His rates are determined by this Commission, yes.

Air. AIacdonald. Are plates and tha t sort of thing, Virginia or the 

District ?

Air. AIunson. The Commission is composed of a representative from 

the State of Virginia, from the District of Columbia, and from 

Maryland.

Air. Halaby. He said license plates.

Air. AIunson. License plates are from Virginia and the District.

Air. AIacdonald. Thank you, Air. Chairman.

Air. Williams. Any other questions ?

Thank you very much, Air. Halaby.

Air. Halaby. Thank you.
NATIONAL CAPITAL AIRPORTS 41

Mr. Williams. We have a representative of the General Accounting 

Office who has a very short statement. If not interrupted by a quorum 

call, we might be able to hear your presentation. For the sake of the record, Mr. Savage, will you identify yourself 

and your associates?

STATEMENT OF SIMMONS B. SAVAGE, JR., ASSOCIATE DIRECTOR,

ACCOUNTING AND AUDITING POLICY STAFF, GENERAL ACCOUNTING OFFICE; ACCOMPANIED BY FRE DER ICK A. RANDALL,

SUPERVISORY ACCOUNTANT, C IVIL ACCOUNTING AND AUDITING

DIVISION ; AND ARCH B. BROWN, ATTORNEY, OFFICE OF GENERAL COUNSEL

Mr. Savage. Mr. Chairman, my name is Simmons B. Savage, Jr. , 

Associate Director of the Accounting and Aud iting Policy Staff of 

the General Accounting Office.

On my right is Mr. Frederick A. Randall, who is supervisory accountant in the Civil Accounting and A uditing Division of our Office, and on my left is Mr. Arch B. Brown, attorney with our Office of 

General Counsel.

Mr. Chairman and members of the committee, we appreciate the 

opportunty to appear here today to present our views on H.R. 7399, to create the National Capital Airports Corporation, to provide for 

the operation of the federally owned civil airports in the District of 

Columbia or its vicinity by the Corporation, and for other purposes. In our report of July 17, 1961, on this proposed legislation, we 

advised that we were unable to recommend favorable consideration of 

H.R. 7399, and explained our reasons for this conclusion in some detail. In the interest of brevity, we therefore plan at this time only 

to summarize the reasons for our conclusion. As an agent of the Congress, we are concerned with any lessening 

of congressional control which may result from incorporation or a 

change to revolving fund financing, which customarily is employed in 

the corporate form of organization.

In analyzing the bill and the reasons advanced for its passage, we 

have applied the standard that the public interest is best served when congressional control of Federal activities is exercised through the annual reviews and affirmative action on planned programs and financing 

requirements which attend the appropriation processes, and the application of statutes and regulations which usually govern the operations 

of Government agencies. We regard any proposal which does not provide for the equivalent 

of these safeguards as a lessening of congressional control which we 

feel it is our duty to call to the attention of the Congress. In our opinion, a lessening of congressional control is justified only 

when a net advantage to th e government, in terms of greater program effectiveness and efficiency and economy in operation, can be expected 

to result, or on a clear showing that an activity cannot be successfully 

operated in the public interest within the controls which usually apply 

to Government agencies. All practical means available within the 

regular structure should be fully explored.

In reaching a judgment as to the probable net advantage or disadvantage to the Government, we examine the pertient factors and
42 NATIONAL CAPITAL AIRPORTS

circumstances involved in each proposal and the reasons advanced for 

the change. Unless one of the foregoing conditions is apparent as a 

result of these analyses, we feel it is our responsibility to recommend 

against favorable consideration.

II.R. 7399 proposes to confer on the airports management a substantial amount of freedom from the restraints which are imposed on 

conventional agencies which are financed by appropriations. When 

we consider the reasons advanced to support the need for this change, 

it seems to us that some of the objectives, such as improved budgeting, 

accounting, and reporting, could be accomplished without any change 

in organization or financing method. Others, such as a justified need 

for financial flexibility to meet emergencies and unpredictable fluctuations in the demand for airport services, also, in our opinion, can be 

met throu gh the regular appropriation processes in the manner suggested in the Comptroller General’s letter of Jul y 17, 1961, to the 

committee.

The claim tha t a Corporation would be able to conduct business 

negotiations with other commercial entities on a more satisfactory 

basis does not seem to us to be well founded. Many unincorporated 

Federal agencies regularly conduct business with private commercial 

organizations, and we have no information that they are hampered 

in such activities by lack of corporate status.

The statement in the letter of the Administrator, Federal Aviation 

Agency, in transmitting the draft bill to the Congress, that a commercial airp ort operation is precisely the kind of predominantly 

business type activity for which the Congress has made provision by 

enacting the Government Corporation Control Act of 1945, does not 

agree with our understanding of the primary objectives of such act, 

and we would like to mention tha t our office played an important 

role in securing its adoption.

This statement seems to suggest tha t recognition by the Congress 

of the Corporation structure as an acceptable means of conducting 

certain Government activities may be regarded as a declaration of 

congressional intention th at the Corporation structure for certain 

types of activities is to be preferred over the conventional organizationa l and financing structure.

We believe that this conclusion is not compatible with the Government Corporation Control Act and related circumstances. Instead, 

the basic intention of the Congress in enacting the act was to give it 

the means to exercise control over, and otherwise restrict, incorporated 

activities, rather than to create new corporations.

Our analysis of the reasons advanced for the incorporation of the 

local airports leads us to conclude that the proposed change is neither 

necessary nor desirable. We are, therefore, unable to recommend 

favorable consideration of H.Ih 7399.

Should the committee, af ter considering all of the above comments, 

conclude that incorporation of the airports would better serve the 

public interest than the present organization and financing methods, 

we suggest that certain revisions in the provisions of H.R. 7399 be 

considered. These suggestions are contained in the Comptroller 

General’s letter to the committee dated July 17,1961.

This concludes our prepared comments on the bill. We will be 

glad to try to answer any questions which the committee may have.

Mr. Williams. Thank you very much, Mr. Savage.
NATIONAL CAPITAL AIRPORTS 43

In the event the committee should decide to approve this legislation, 

we will most certainly give consideration to the amendments which, 

are suggested in the lette r of the Comptroller General to the chairman.

Are there any questions of Mr. Savage?

Mr. Macdonald?

Mr. Macdonald. No questions.

Mr. Williams. Mr. Devine.

Mr. Devine. No questions.

Mr. Williams. I do not believe I have any questions, either.

Thank you very much.

The committee will adjourn until 10 o'clock tomorrow morning.

(Whereupon, at 12:05 p.m., the subcommittee was recessed, to reconvene at 10 a.m., Wednesday, July 19,1961.)

NATIONAL CAPITAL AIRPORTS

W ED N E SD A Y , JU L Y 19, 19 61

H ouse of Representatives,

Subcommittee on Transportation and Aeronautics

of th e Committee on I nterstate and F oreign C ommerce,

W ashington, D.C.

The subcommittee, met a t 10 a.m., pursuant to recess, in room 1334, 

House Office Building, Hon. Samuel N. Friedel presiding.

Mr. F riedel. The Subcommittee on Transportation and Aeronautics is meeting this morning to continue hearings on II.R. 7399, a 

bill to establish a National Capital Airports Corporation. Our witness this morning is Mr. J. D. Durand, representing the 

Air Transport Association. Mr. Durand.

STATEMENT OF J. D. DURAND, ASSISTANT GENERAL COUNSEL, AIR 

TRANSPORT ASSOCIATION OF AMERICA, WASHINGTON, D.C.

Mr. Durand. Mr. Chairm an and Mr. Devine, my name is J. D. 

Durand. I am secretary and assistant general counsel of the Air Transp ort Association of America, which is composed of substantially all of the U.S.-flag certificated airlines, and of all of such airlines 

operating at Washington National Airport. We appreciate this oppo rtunity of discussing with the committee 

H.R. 7399, which would provide for the creation of the National Capital Airports Corporation, to own and operate Washington National Airport, Dulles In ternational Air por t and such other federally owned civd airports in the District of Columbia or its vicinity as may 

be t ransf erred to it. Thirteen of our airlines operate into Washington National—Allegheny, American, Braniff, Delta, Eastern, Lake Central, National, Northeast, Northwest, Pan American, Piedmont, Tran s World and 

United. It is the principal office and operating base fo r Allegheny. Because H.R. 7399 would drastically affect the conditions under 

which the airlines use Washington National and Dulles International, 

it is of vital importance to them. Our review of this bill has been influenced by a number of considerations. First, tha t the industry’s experience with corporate author­ ities points up tha t in many instances th eir administrative costs are disproportionately high in comparison to the job they do. There is a 

tendency for such authorities to become larger and more expensive 

than necessary.

An airline lease negotiator told me that he had requested an airp ort 

authority to provide a certain needed service and was informed that while the airport management was willing to perfo rm the service,

45
46 NATIONAL CAPITAL AIRPORTS

it would be better for the airline to do so itself since the cost would be 

lower tha t way.

Our review of this bill also has been influenced by the fact that 

Dulles Internatio nal will not be an ordinary airport. It will be a 

national-interest airport—in a sense a national monument—serving 

as a symbol of the United States to official visitors of state from all 

over the world, and to the many to urists from this country and from 

foreign countries. This aspect of the airport was well characterized 

by Senator Payne during the Senate Commerce Committee’s hearings 

in 1955, on the need for an additional airport for the National Capital. 

Senator Payne stated, in pa rt :

* * * I think it ought to be the las t word here in the Capital so that 

when * * * people come from the States * * * etc., that they will take a look 

at this and say, “This is the last word.” * * ♦ (Hearing before a subcommittee 

of the Committee on Interstate and Foreign Commerce, U.S. Senate, 84th Cong. 

1st sess. on Washington National Airport facilities, July 21, 1955, p. 39.)

We certainly do not wish to be understood as saying that Dulles 

Internatio nal should not be a “prestige” airport, but we do believe 

tha t the airlines and other users should not he expected to bear the 

costs attributable to its development and operation as such an airport, tha t is, costs not attributable to the needs of the commercial 

users of the field.

Finally, our review of H.R. 7399 was influenced by a recognition 

of the large increases in traffic which will be necessary to support 

Washington National, Dulles Internationa l, and Friendship—all 

within a radius of 28 air miles of the White House—and the need 

for keeping the fees and charges at Dulles in line with those at the 

other two a irpo rts if the full potential of Dulles is to be realized.

Many of the carriers will find i t necessary to have personnel and 

facilities at Washington National, Friendship, and Dulles. This 

duplication is expensive and a m atter of deep concern to an industry 

which is in serious financial difficulties. The domestic trunk airlines 

had a net loss of $4,361,000 during May 1961, bringing their total 

losses for the first 5 months of this year to $19,670,000. These losses 

were substantially greateu than they were for the same period in 

1960, when the airlines ended up with a full-year profit of only 

$1,188,000. Revenue passenger-miles flown by the domestic trunk s 

during the first 6 months of 1961 totaled 1.9 percent less than the total 

for the corresponding period in 1960.

The airlines are under constant pressure to effect every operating 

economy. It is imperative, therefore, tha t fees and charges a t Dulles 

be kept in line with those imposed at Washington National Airport 

and Friendship if the large volume of operations needed to support 

the new airport are ever to be realized.

After intensive study of the bill, particula rly in the ligh t of considerations which I have summarized above, the industry has concluded that it cannot support this legislation in its present form. 

Amendments to the bill are needed i f the interests of the airlines and 

other airp ort tenants are to be adequately protected and the fullest 

utilization of Dulles Internatio nal is to be realized. I would like 

to summarize, in the order of the sections of the bill, the principal 

problems which the bill creates for the airlines, and our recommended 

solutions.
NATIONAL CAPITAL AIRPORTS 47

Section. 5.—This section states one of the basic policies of the 

legislation, namely, t hat in establishing rates and charges, the corporation shall consider that it is in the public interest to operate any 

airport transferred to it by or under the incorporation act, on a selfsustaining business enterprise basis, consistent with sound commercial 

practice and with due regard to all costs and interest on the Government's investment.

We believe this section should be amended to reflect a number of 

other policy considerations. First, fees and charges for the aeronautical use of the a irport and its facilities should be fair and reasonable.

Second, since it is likely that the airlines serving Washington 

National will not in all cases be the same as those serving Dulles International, it would not be fair or reasonable to the users of one 

airp ort operated by the Corporation to apply the “profits” from the 

airport against any deficiency at another airp ort belonging to the 

Corporation.

Third, while self-sufficiency is a worthwhile goal, it cannot be 

achieved for a considerable period of time at a new installation such 

as Dulles Internationa l, since it requires a traffic volume which will 

only be developed over a period of years.

Fourth, section 5 should reflect the fact that, as I stated previously, 

Dulles will be more than an airport: it will also be a national monument. This concept has greatly influenced its design, and has prevailed despite expressions of concern from the users.

Fifth, section 5 should reflect the overriding duty of the Administrator to promote, encourage, and develop civil aeronautics.

Finally, in order to insure fulfillment of these objectives, recourse 

to arbitration should be specifically provided for.

In view of the foregoing, we recommend that section 5 be amended 

to read substantially as follows:

Sec. 5. Notwithstand ing any other provision of law, in establishing rat es 

and charges for use and services, the Corporation shall be governed by the 

following policie s:

(1) Each airp ort und er the jurisd iction of the Corporation shall be considered 

as a s epa rate en tity : (2) Rates and charges sha ll be f air and reasonab le and shall not exceed r ates and charg es imposed a t com parable a irp orts at other po ints in the United Sta te s;

(3) Ultimately each such air port shall be operated on a self-sustaining basis so th at current exp end itures shall not exceed curre nt revenues after excluding 

an y costs attrib uta ble to— (a) Facilities and functions at such air po rt prov ided for purposes oth er 

than, or in excess of, the needs of the commercial use rs of the airport or (b) Facilities constru cted with funds regarded, for the purpose of Section 

9(b) (1), as F ede ral grants-in-aid, or

(c) Capacity in excess of cur ren t use of the a ir port ;

(4) Recognition should be given to th e fac t th at i t is the sta tut ory duty of the 

Ad ministrator to promote, encourage, and develop civil aero nautics; (5) In the event of the failu re of the Corporation and any airport user to agree upon the fairne ss or reasonableness of any ra te or charge proposed here­ under. the disagreem ent sha ll be subject to arb itration pursu ant to the provisions of the Federal Arbitration Act.

Section 6: This section confers upon the Corporation a number of 

general powers, one (subsec. (6)) being the auth ority to—

construct, operate, and main tai n buildings, facilities, and other improvements, 

inclu ding access road s” an d “to charge for the use of the foregoing.”

This strongly implies that the Corporation shall have authority to 

construct a public highway or highways leading to an a irport and to
48 NATIONAL CAPITAL AIRPORTS

charge the airlines therefor. It is not believed this was the intention of the drafters of this bill.

Obviously, the airlines could not pay the heavy charges which would 

result if the cost of such roads were assigned to them. The cost of 

access roads within the boundaries of the airpo rt is, on the other hand, 

a proper charge against those who use them. In view of the foregoing, 

it is recommended that the following proviso be inserted a t the end of 

subsection (6) (line 6, p. 5) :

Provided, hotvever, That the air carriers shall not be charged for access roads 

not located on the airport.

Furthermore, the provision in subsection (6) relating to charges 

for the use of airp ort facilities and improvements should be amended 

to reflect that such charges shall be fair and reasonable.

Accordingly, it is recommended tha t the word “charge’’ in subsection (6) (line 6, p. 5) be deleted and tha t there be inserted in lieu 

thereof the phrase “impose fair and reasonable charges.”

Subsection (9) of section v should be amended to make it clear 

tha t the fees and charges specified in contracts and leases with the 

airlines shall be arrived at on the basis of negotiations with such users, 

as they are at other airports in this country, and shall be fair and 

reasonable. Accordingly, we recommend tha t the following proviso 

be added at the end of subsection (9) (line 2, p. 6) :

Provided, however, That the fees and charges, and other terms and conditions 

contained in such contracts or leases with the air carriers, shall be arrived at 

by negotiation with such carriers and shall be fair and reasonable.

Our review of section 6 and of the remaining sections of the bill 

indicates tha t the Corporation would not be authorized to borrow 

money for the construction of airport facilities. It is believed the 

Corporation should have this auth ority with respect to self-amortizing, essential facilities, such as hangars. This type of structure is 

so im portant to airline operations and the cost is so substantial tha t 

we believe a specific amendment to section 6 to authorize the Corporation to borrow money to construct hangars is necessary. This authority could be qualified to make such borrowing depend on the 

existence of firm leases providing for the amortization of the loan.

Section 8: Subsection (c) of this section establishes an Advisory 

Board of five members to review and advise the Administrator regarding the general policies of the Corporation, including those relative 

to rates and charges, design and construction of facilities, and administration of the airports.

To give the Advisory Board the status to which we thin k it is 

entitled, we believe that subsection (c) should be amended to provide 

that, in each case where the Adm inistrato r or the General Manager 

disagrees with a recommendation o f the Board, he shall be required 

advise the Board in writing, in detail, of the reasons for his disagreement. Accordingly, it is recommended t hat the following sentence be added after the word “thereto” in line 23, page 8:

In the event tha t the Administrator or the Manager does not implement a 

recommendation of the Board, he shall, in each instance, advise the Board in 

writing, in detail, of his reasons for not doing so.

Section 9: This section provides for the establishment and administration of a National Capital Airports Fund. It includes a provision
NATIONAL CAPITAL AIRPOR TS 49

that the Corporation shall annually pay into the ILS. Treasury in­ terest on that portion of the capital fund which is equivalent to the share t hat would be supplied by the local government had the airpo rts been built and developed under the Federal Airport Act with maxi­ mum Federal grants-m-aid. We have a number of suggestions for 

amendments to this section. Fir st, although we understand tha t it is the intention of the FAA not to amortize tha t portion of the fund which is the equivalent of the Federal Government’s share of the investment in the airports, had they been built with maximum grants-in-aid under the Federal Airpo rt Act, there is no provision in section 9 which would accomplish this result. Because of the direct and important bearing this limitation would have on fees and charges at the airports in question, we urge tha t section 9 be amended to provide specifically that tha t portion of the fund which is the equivalent of the Federal Government’s share of the investment in the airports had they been built with maximum grants-in-aid under the Federal Airport Act, should not lie amortized. Second, since access roads beyond the boundaries of the airpo rts are not properly to be considered a part of those facilities, the cost or assessed valuation of such roads should not be placed in the capital fund. Accordingly, it is recommended tha t section 9(a)(4) be amended by adding at the end thereof (line 18, p. 10) the following:

Access roads not within the boundary of the airp ort shall not be considered 

as an asset of the airport. Furthermore, we believe amendments are needed to subsection (b) of section 9, which deals with the basis on which interest is to be computed and when it is to be paid. Subsection (b) provides, in effect, that interest shall be paid on that portion of the capital of the fund which is equivalent to the local share tha t would have been supplied by the local community had the airp orts been built under the Federal Airpo rt Act, and tha t interest shall accrue as soon as the fund is created and shall be paid each fiscal 

year. It is obvious that for a number of years after Dulles International commences operation the fees and charges properly assessable against airport tenants will, because of the comparatively light volume of traffic at the field, not cover operating and maintenance costs, let alone 

interest charges. Thus, the airport will not lie able to sustain any interest charge on tha t portion of the assets in the fund assignable to it. If subsection (b) is permitted to remain in its present form the unavoidable but unfortunate result will be the necessity of substantial deficiency ap­ propriations by Congress for a considerable number of years—with 

the end result tha t Congress will be taking money out of one pocket of the Federal Government to put it in another. This useless transaction should lie avoided by amending the section to provide, in effect, th at interest on the portion of the capital fund assignable to Dulles Airport, or any other airport acquired by the Corporation, shall not be due and payable until the revenues generated at that field exceed the maintenance and operating costs of the field. Accordingly, it is recommended that the following clause be inserted
50 NATIONAL CAP ITAL AIR POR TS

after the word “fund” in the first sentence of subsection (b) (line 22, 

p. 10) :

, ex clud in g th a t i>ortion of th e capit al of th e fu nd as si gn ab le to any air p o rt 

under the ju ri sd ic ti on of th e C orp ora tion w ith re sp ec t to which th e re ve nu es 

pr od uc ed fr om th e ope ra tion of th e a ir p o rt do not exceed th e co st of th e op er ation a nd m ai nte nan ce th er eo f.

Finally, it is recommended tha t subsection (b)(1 ) be amended to 

make it clear tha t the “local share” as that phrase is used in the said 

subsection refers to the local share of the depreciated cost of the airport as of the year in which the interest payment is made. To this 

end, it is recommended tha t there be added at the end of subsection 

(b) (1) the following provision (line 5, p. 11) :

Su ch loc al sh are sh al l be co mpu ted on th e de pr ec ia te d co st of th e a ir p o rt as 

of th e yea r in w hi ch th e in te re st p ay m en t is ma de.

Section 12: This section, in effect, would authorize military aircraft to use, without charge, the airp orts owned by the Corporation. 

Since this legislation is based on the concept of a self-sustaining airport operation, it does not appear that free use by the military can 

be justified. Accordingly, it is recommended that section 12 be revised to provide that if, in the judgment of the Administrator, military use is substantial, the military shall be charged the same fees as 

civil aeronaut ical users.

Section 15: This section, among other things, transfers to the Corporation all property, real, personal, and mixed, operated by the Administrator at the Washington National Airport. To take care of 

the situation where property at Washington National may lie operated 

by the Administrator but with respect to which title is not in the 

FAA or the United States, it is suggested that this provision lie 

amended by inserting after the word “mixed” in line 20, page 15, the 

phrase “title to which is in the United States.”

Section 17: This section authorizes the General Manager to make 

reasonable rules and regulations rega rding the operation of the airports. It is not believed th at it was intended by this section to authorize the General Manager to promulgate such rules or regulations 

as may impair or supersede any rights or obligations an airport tenant 

would have under Ins lease with the Corporation.

This possible source of future difficulty should be removed at this 

time by amending section 17(a) by adding thereto an additional sentence (line 11, p. 18) reading as follows:

Su ch ru le s or re gu la tion s sh al l not im pair an y contr act or le as e pr ev io us ly 

en te re d in to by th e co rp or atio n w ith any aero nauti cal use r of th e air port .

Mr. Chairman, I realize that portio ns of my statement have, necessarily, been rath er technical. If the committee desires us to do so, we 

would be glad to work with the committee's staff and the FAA in 

reviewing these amendments in detail.

May I add, Mr. Chairman, that while my statement has been very 

critical of the bill, the airline industry feels that there is much merit in 

an incorporation bill. We are not opposed to incorporation.

We do feel tha t the present bill is unsatisfactory. It needs to be 

amended to make clear certain righ ts and obligations of the tenants 

and rights and obligations of the FAA with regard to the corporate 

fund, and with regard to fees and charges, to the end tha t fees and
NATIONAL CAPITAL AIRPORTS 51

charges will be reasonable and tha t the airpor t will be used to its 

fullest extent. We would be very happ y to sit down with the committee’s staff and with the FA A and discuss these amendments. There have been some discussions with the FAA already within the limited time avail­ able, and we have reason to believe that some of our suggestions are 

not opposed by them. We think tha t there would be good reason to sit down with the FAA and try to work out the problems that we have raised and then hopefully to come back to the committee with a bill th at we would be more nearly in agreement on. If the record can be kept open for a short time, and the committee desires us to do so, we stand ready this afternoon to sit down with the FAA and the committee’s staff and try 

to iron out some of our problems.

Mr. Friedel. Tha t is a very good suggestion, but I would rather 

wait until the chairman of the subcommittee arrives and let him 

make the decision.

Mr. Jarman ?

Mr. J arman. Mr. Chairman, I think Mr. Dura nd has made an excellent and a thought-provoking statement. I for one on the com­ mittee would be very much interested in the Air Transport Associa­ tion having a conference with the FAA and getting detailed reaction 

from the FAA on these recommendations. One thing I would like to ask about is with re gard to the arbitratio n procedure pursuant to the provisions of the Federal Arbitration Act. You recommend that in the event of the failure of the corporation and any airp ort user to agree upon the fairness or reasonableness of any rate or charge proposed thereunder, the disagreement shall be subject to such arbitration. Wh at is the normal procedure under the arbitration provisions?

Mr. Durand. Mr. Jarm an, there is a provision in the United States 

Code which covers arbitration. Unfo rtunately, I am not this morn­ ing able to summarize all those provisions of law, but there is an existing provision providing for arbitration. It provides generally tha t you submit your dispute to an impartial panel and then you are 

bound by the decision. We would like tha t sort of a provision with regard to fees and charges at the airport. The arbitration provisions of the United States Code do not apply to the executive departments of the U.S. Government, but, as I understand the purpose of this bill, it is to set up an independent corporation. Admittedly, it would be an instru­ mentality of the United States, but it is a corporation with the rig hts 

and privileges of a corporation. Therefore, I do not think it would be a mistake or improper for compulsory arbitration to be established in this case. If it is a corporation, it should act like a corporation.

Mr. J arman. Tha nk you very much.

Thank you, Mr. Chairman.

Mr. F riedel. Mr. Devine.

Mr. Devine. Thank you, Mr. Chairman. Mr. Durand, re ferring to your statement on page 5, section 5, subsection (2), you say :

Rates and charges shall be fair and reasonable and shall not exceed rates and charges imposed at comparable airports a t other points in the United States.
52 NATIONAL CAPIT AL AIR POR TS

According to the sentiment or statement of Senator Payne, I do not 

know which—this new facility at Chantilly is supposed to be “out of 

this world” and there is nothing comparable with it, so would not that 

be a rather futile section? There are no other comparable airports.

Mr. Durand. Well, I see your point, Mr. Devine. Wh at we are 

tryin g to get at here, and possibly the language could be improved, is 

tha t we do not want to pay for costs which are attributable to making 

the field a national monument.

Mr. Devine. I can understand that.

Mr. Durand. So we think that a reference to other airports of cities 

of like size, with similar amounts of traffic and so forth , would be 

helpful in ju dging the reasonableness of these fees here.

However, I see what you mean. If you regard this as a national 

monument, then there is no other comparable airport. We would 

say, put those costs aside and re gard it as a commercial, international 

hub airport, and then look at the fees and charges at other airports of 

that class and see if the fees at Dulles would be out of line.

Mr. Devine. In order to set the record unmistakably clear, is it the 

position of A TA that you are opposed to the bill, but that if a bill is 

going to pass, you would recommend tha t these amendments be 

adopted ?

Mr. Durand. I would rather put it this way, Mr. Devine: tha t we 

think there is much merit in a Federal corporation to own and operate 

these fields, and we think tha t a bill can be written which would 

accomplish tha t and be quite acceptable and be supported by the 

commercial users of the field.

Mr. Devine. You would prefer the corporation approach rather 

than the manner in which it is presently being operated at, say, Washington National?

Mr. Durand. Let me say, first of all, tha t we think tha t the CAA 

did and the FAA is doing an excellent job in operating WNA.

The Administrator outlined some difficulties that he found with operating Washington National as an activity of the Bureau. We think 

that the fees have been reasonable and tha t the operation has been an 

excellent one. We have no criticism whatsoever of the overall operation of the field by the FAA.

With Dulles coming into operation, and with possibly a third airport to be owned and run bv the Federal Government, it becomes 

much more complicated, and it may well be that as those additional 

airpo rts come under the wing of the FAA a corporation would lx* a 

more flexible, more efficient, better way of running the fields. Therefore, we do not oppose incorporation of these fields provided th at certain statutory safeguards are written into the legislation.

Have I answered your question, sir?

Mr. Devine. You are skating all around it. I think perhaps it 

would be accurate to say that your association’s position is just about 

as flexible as your statement.

Mr. Durand. Yes, it is flexible, but it is affirmative, I think. It is 

affirmative to this extent: Tha t if legislation can be drawn the substance of our proposals, we would actively support it.

Mr. Devine. That is all, Mr. Chairman.

Mr. F riedel. Mr. Durand, can you tell us how Friendship compares 

with Washington National Airport as far as the rates are concerned 

to the airlines?
NATIONAL CAPITAL AIRPORTS 53

Mr. Durand. I cannot, sir. 1 believe perhaps there are gentlemen 

in the room who can answer it.

Mr. Friedel. The reason I asked that question is, I know just re­ cently they raised the fees at Friendship to bring them more in line with other airports. Naturally, the airlines, and 1 can understand, did not want to pay the higher fees. They finally agreed to a compromise. Is it true that no matter what they charge there is going to be a 

protest from the airlines that the rate is too high ?

Mr. Durand. Well, M r Friedel, there are airline officers whose sole duty it is to negotiate rates and charges at airports and, naturally, they want to do a good job for their corporation. Since fees and charges are established by negotiation, they, generally speaking, oppose any increases. In 99 cases out of 100, when increases are proposed, there is a nego­ tiation, a butting of heads, so to speak, when the landlord and the tenant negotiate, and then something is worked out and the lease is 

signed. Maybe both parties are not as happy as they might be, but generally 

there is an agreement.

Mr. Friedel. I know Friendship was in the red a long, long time.. They are just trying to get out of the red, but getting back to your 

statement on page 5 in subsection (3) (b) you sa y:

F acil it ie s co ns truct ed w ith fu nds re ga rd ed , fo r th e purp os e of section (9 ) 

(b ) (1 ) as Fed er al gra nts -i n-a id , or —

is it your interpretation tha t Chantilly and Washington National A ir­ port will come under this Federal A irpo rt Act and get funds?

Mr. Durand. It is my understanding of the Fede ral Airp ort Act, Mr. Friedel, that the a irpo rts owned by this Corporation, if this legis­ lation is approved, would not be eligible for Federal funds under the 

Federal A irport Act.

Mr. Friedel. Would not be ?

Mr. Durand. Would not be: no, sir. Tha t act provides for grants to sponsors, and I am p retty sure that by reference to the definitions in the act, sponsors are defined as local communities, State or local communities, so I do not believe th at these airports would be eligible 

for Federal Airport Act money.

Mr. Friedel. Why would you want section (b) then?

Mr. Durand. For this reason, sir. The policy of the Federal Gov­ ernment, the CAA and now the FAA, and the policy enunciated in the legislative history of the Federal Airport Act, is that when a local community negotiates fees and charges with the aeronautical userSj the rate base is determined with reference to the local money tha t is put into the airports. It does not include Federal-aid funds which are granted to the community and which should not be 

recovered by the community. In other words, if an airport cost a million dollars and $600,000 was put in by the local community and $400,000 by the Federal Gov­ ernment—and that is a little high on the Federal side; it is usually less than that—the FAA recommendation to local communities is that they should not amortize the $400,000. If they want to amortize the cost, they should amortize the cost to the local community, which is. the $600,000, and th at is what we are trying to say here.
54 NATIONAL CAPITAL AIRPORTS

Mr. F riedel. As I understand your proposal, you are proposing 

amendments relative to the Corporation?

Mr. D urand. Yes, sir.

Mr. Friedel. Do they get any Federal grants-in-aid ? You are 

speaking about local communities, but would Chantilly, or would this 

Corporation get any grants-in -aid ?

Mr. Durand. The Corporation will not get any grants-in-aid within 

the meaning of the Federal Airpo rt Act, or under the Federal Airport Act. These airports, of course, will be built entirely with Federal funds.

Now the legislation contemplates, however, tha t in assessing fees 

and charges you will regard the airp ort as having been built under 

the Federal Airport Act with a local share and a Federal share. 

This is a legislative assumption. The bill then provides tha t in 

charging interest to the airport tenants, the airlines and the concessionaires, the interest on the investment, you only charge interest on 

what would have been the local share had the airp orts been built 

under the Federal Airport Act.

Mr. Friedel. Under the corporation all of the money will be Fe deral funds.

Mr. Durand. It will, sir, but under this bill, say the airp ort cost 

$100 million and say that the Administrator determined tha t had it 

been built under the Federal Airpo rt Act there would have been, say, 

$000,000 of funds pu t up by the State of Virginia-----

Mr. F riedel. This bill will not do that?

Mr. Durand. No, it will not do that, but in assessing the amount of 

interest tha t the Corporation must pay to the Federal Government, 

you regard the airport as h aving been built under the Federal Airport Act.

Mr. Friedel. I understand your theory and what you are getting 

at, but I cannot see how that will have any effect on this bill because 

all of the money, if we ad opt this Corporation bill, will be Federal 

funds.

Mr. Durand. Tha t is right.

Mr. F riedel. All of it.

Mr. Durand. But no Federal funds from under the Federal Airport Act.

Mr. Friedel. Then I do not see the necessity of having this language in her e:

facilities constructed with funds regarded * * * as Federal grants-in-aid.

1 can understand if it is a local airport some other place, but under 

this Corporation bill, all moneys will be appropriated by the Ap propriations Committee for the Corporation.

Mr. Durand. To get i t started, yes, sir, and then hopefully it will 

be a self-sustaining operation thereafter.

Mr. Friedel, the purpose of the legislation is not to require the 

Corporation to pay interest to the Federal Government on the whole 

investment. The Corporation is only required to pay interest on a 

portion of the investment. It makes it a little easier for the Corporation to run the airport. It does not saddle the Corporation with 

quite the burden tha t it would have if it had to pay interest on the 

whole investment. We are for that.
NATIONAL CAPITAL AIRPORTS 55

Mr. F riedel. I want you to stay around because we are going to have someone from the FA A try to solve this problem, if we can.

Mr. Williams (presiding). Mr. Howard? Will you come around, please? Would you identify yourself for the record, please?

STATEMENTS OF DAGGETT H. HOWARD, GENERAL COUNSEL, FEDERAL AVIATION AGENCY? G. WARD HOBBS, DIRECTOR, BUREAU

OF NATIONAL CAPITAL AIRPORTS; AND ALAN L. DEAN, ASSISTANT ADMINISTRATOR FOR MANAGEMENT SERVICES

Mr. H oward. I am Daggett Howard, General Counsel of the Fed ­

eral Aviation Agency.

Mr. Williams. Mr. Howard, with respect to H.R. 7398, concerning concessions at the W ashington National Airport, are you prepared to give us testimony on behalf of the FAA?

Mr. Howard. Mr. Chairman, we are prepared to give testimony. However, in light of the fact that enactment of th e incorporation act would eliminate the necessity of concession legislation, I think tha t we would prefer to defer consideration of tha t at this time if tha t is 

acceptable.

Mr. Williams. The Chair thinks that is a reasonable request, and it will be so honored. I understand that you would like to present some additional testimony regarding the Corporation.

Mr. Howard. We would, Mr. Chairman.

Mr. Williams. Do you care to do th at this morning?

Mr. Howard. I thin k we would prefer to do it this morning if 

that is agreeable with the chairman.

Mr. Williams. All righ t. You may proceed.

Mr. Howard. Mr. Chairman, Mr. Dean, our Deputy Administrator for Administration, is here and Mr. Hobbs, (he Director of the Bu­ reau of National Capital Airports, is here, and I feel that it may be helpful if they could come to the table and participa te in the testimony. If I may, I would like to call upon Mr. Dean, who is the principal expert in the Agency on fiscal and corporation matters, management matters, to comment briefly on several of the points tha t were made this morning by the witness for the Air Transport Association be­ cause I feel that we are in a position to clarify many of these points 

for the committee rig ht now.

Mr. Williams. Before you recognize him, may I inte rrupt you just 

a moment ? It was stated by Mr. Durand in the last paragraph tha t his association, and I quote now—

would be glad to wo rk with th e com mittee’s sta ff and th e FAA in review ing 

th es e am end me nts in detai l.

They are the amendments which they have suggested. For the information of those present, the record on this legislation will be kept open for a reasonable length of time and I am sure that within tha t time the FAA will have an opportunity to discuss these with the ATA people and with members of our staff and members of the 

committee.

Mr. Dean.

Mr. Dean. Thank you, Mr. Chairman.
56 NATIONAL CAPITAL AIRPORTS

I would like at the outset to me ntion to the com mittee th at the 

Fe de ral Av iat ion Agency did not develop the proposed bill entirely 

in a vacu um. Dur in g the pr ep ar atio n of the bill as or iginally submitted to the preced ing Congres s an d the bill which is now before 

you, meetin gs were held with rep resentati ve s of the variou s airlines 

and officials of the Air Tr an sp or t Ass ocia tion, as well as rep resentatives of vario us inte rested Fe de ral agencies, in an effort to secure 

a bill which would most effectively serve the needs of the agency, 

and the taxp ay ers of the Un ite d St ates , and the users of the airp or t.

As a res ult of these discu ssion s, a num ber of amend me nts were 

inc orporat ed in the bill. Th ere rem ain the suggested amend ments 

which the A ir Trans po rt Associatio n has presen ted today.

Before di scu ssi ng them individu ally, I would like to say th at the re 

is no thing in the corpo ration bill, as prop osed, which wou ld enable 

the agency to charg e hig her fees or to be more ar bi trar y in its dealings with the users of the airp or t th an now would be possible un de r 

the existing authority .

Fu rth ermor e, some of the basic principles of the co rporati on bill, 

such as th at pr ov iding for self-susta ining opera tion, have ag ain and 

again been stressed by the Comm ittees on App ro pr iatio ns an d oth er 

com mittees of the Congress, and are gu iding princ ipl es now fo r the 

agency.

Basically , th e Co rpo rat ion bill sim ply esta blis hes a new ma nagement stru ctur e designed to con duct com mercial op era tio ns an d design ed to deal effectively with th e c omple xities of a situ ati on in which 

we will have two lar ge airp or ts with a very lar ge volume of business 

typ e tra nsactio ns.

I should also like to stre ss th at we un de rst an d the reason s fo r most 

of the am endm ents presented by th e A ir Tra ns po rt Assoc iation and' 

are very sympa theti c with the bas ic purpose whi ch th at associatio n 

has in mind, nam ely , that, it be protected from unr eas onable levels of 

of c harges and fees, and with th is we a re in complete accord.

To discuss specifically th e vari ous a me ndme nts which have been pr oposed, I might tu rn to page 5 of t hei r dra ft where signif ica nt am endments to section 5 of th e bill are sugge sted.

Mr. Will iam s. You are re fe rrin g to the testim ony of M r. Dur an d?

Mr. Dean . Yes, the testimony wh ich Mr. Duran d presented this 

mo rning.

The am end me nts to section 5, as pre sen ted on page 5 o f the AT A 

testim ony fo r t he most pa rt p resent no proble m as f ar as the Agency is 

concerned. Th ey recog nize the fact th at this ai rp or t should, in terms 

o f essential serv ices provided , be self-s ustainin g. We, ourselves, agree 

com pletely wi th the second point , th at is, tha t rat es and charg es shall 

be fa ir and reasonable.

Air. Will iam s. Did I un de rst an d you to say you agreed with the 

first po int ?

Air. Dean. Th e first poin t we do no t agree wit h, Air. C ha irm an , fo r 

th is reason.

Th e Co rporati on will have a single fu nd in w hich all the assets will 

be plac ed an d int o which all of the revenues will be dep osited . We 

will keep se pa rate acc oun ting of th e sources o f th ese reven ues, an d the 

nurpo ses of expenditures . So we w ill from an accou nting stand po int 

know what is invo lved in the in tern ationa l airp or t and wh at is in-
NATIONAL CAPITAL AIRPORTS 57

vol ved in t he na tio na l airp or t. However, the prop ose d statutor y la nguage could di srup t the use of a single fu nd an d could prev en t the 

effective use of th e t ot al revenues of th e C orpo ratio n.

We un de rst an d th at there is a fear th at we m ig ht use pro fits fro m 

W NA to subsidize the W ashin gto n In te rn at io na l A irpo rt, w hic h o bviously, will tak e some tim e befo re it is on a self- susta ining basis. We 

wou ld say as a m at te r of polic y, and we would hav e no objection to 

legisla tive histo ry m ak in g this clea r, th at we w ill no t r aise fees at any 

airp or t for th e p ur po se of b ail ing ou t an othe r a irpo rt, and we ar e q uite 

agreeable to any a pp ro ac h th at mak es th at c lear.

Now, pro cee din g to the second subsec tion of section 5 as pro posed by 

A TA . I f the lang ua ge were sli gh tly changed to say th at rates an d 

charg es shall be fa ir and reas onable and sha ll give due re ga rd to 

charg es imposed a t com parab le ai rp or ts a t ot he r po ints in t he U ni ted 

State s, we would accept th is either as lan gu ag e in the act o r as a com ­

me nt th at the comm itte e repo rt might wish to include for guida nce 

to t he C orp ora tion.

Mr. J arman. May I a sk a question, M r. Cha irm an ?

Mr. Dean. Su rely, Mr. Ja rm an .

Mr. J arman. Mr. Dean, would it be yo ur th ou gh t th at the fees 

an d charges at the Du lles In tern atio na l A irpo rt would be in line 

w ith those impose d at W ashing ton Na tio nal A ir po rt and Fr iend sh ip ? 

A t this time, do y ou an tic ipate th at the y will be hig her, or th at they 

will be com par abl y in line based on th e size of opera tion the re?

Mr. Dean. Mr. Ja rm an, at the pre sen t tim e the land ing fees at 

W NA are somewhat low er than those at Fr iend sh ip . Negotiations 

are now underway wh ich will raise the fees at WNA , and th is will 

occ ur under the exist ing org ani zat ion . We wou ld say th at in genoral, taking into accoun t the investment of th e Corporation, fees 

will not be noncom petitive, th at is, the y will not be ex trao rd in arily 

low or ex trao rd in arily high in com parison with o ther ma jor airp or ts.

I think thi s will be a guide t hat t he agency will use with comm onsense.

Mr. Ch airma n, re tu rn in g to the subsection (3) of section 5, we an d 

ATA a re in agree me nt on the s elf -su sta ining princ iple. We do have 

to tak e excep tion, how eve r, to some po rtion s of th ei r suggestions.

W ith respect to (3) ( a), we have wor ked fro m the o utset to atte m pt 

to assure th at the ca pi tal base of the ai rp or t will not be un fa ir an d 

will not include spe cial fea tur es which should no t norm ally be part 

of an airp or t base. Ye ste rday the Adm in istra tor, Mr. Ilal ab y, an ­

nou nced th at he and th e Secre tar y of the In te ri or have made pr og ­

ress in rea ching an agree me nt fo r the tr an sf er of the access road , 

which is a very subs tantial inv estme nt and is a unique fea ture, to 

the De partm ent of th e In terior .

Th e agency has desired from the outset to exclude special features 

of (his typ e and to assure th at the y do not fa ll in the ca pital base 

of the airport. We do ub t wh eth er the lan guage proposed by ATA 

is necessary, but the principle I hav e sta ted will guide the agency.

Mr. Williams. May I ask you a que stio n about th at roa d?

Mr. Dean. Yes, sir.

Mr. Williams. Is it conte mp lated th at th at will be a toll roa d?

Mr. Dean. The presen t thinking of the a gen cy is th at it w ould no t 

be a toll road . I f it goes to the De pa rtm en t of the In terior , as is now
58 NATIONAL CAPITAL AIRPORTS

probable, it will be maintained as an attractive parkway, as a part 

of the National Capital area parkway system, as a free road.

Of course, parking facilities at the airp ort will not be free.

Air. Williams. I understand.

Mr. Dean. With respect to the proposed subsection (3) (b) which 

would exclude grants in aid from the capital base, the act itself contemplates, and this will help answer Mr. Friedel’s e arlier questions 

to Mr. Durand, that the portion of the cost of the airpo rt which 

would be financed under Federal-aid to airpo rt legislation, if it had 

been an airport built by a local authority, will not be subject to the 

payment of interest as a part of the investment. This is clearly 

necessary, or there would not be a reasonable relationship between the 

capital base of the international airpo rt at Chantilly, and other 

airpo rts built with assistance under the Federal Airpo rt Act. The 

agency is encouraging local authorities not to depreciate investment 

financed by grants and they naturally do not have to pay interest on 

the portion of the cost of an airport that comes from a Federal grant.

I do not know whether this answers fully Mr. Friedel’s point.

Mr. F riedel. I think it does. I could not see how this section (b) 

would pertain to the corporation bill.

Do you think this amendment is necessary?

Mr. Dean. We do not, sir. We do not feel that it makes any par ­

ticular contribution to th e bill.

Mr. F riedel. That was my opinion.

Mr. Williams. Did I understand that this is surplus? In other 

words, you do not have too much objection to including it, but you 

see no necessity for it; is that right?

Mr. Dean. This would be exactly stating it, Mr. Chairman.

With respect to (3) (c), which would exclude capacity in excess of 

current use, we simply could not agree with such an approach. It 

would be so completely out of keeping with the general practice under 

which the other airports operate that the Congress itse lf would probably object if we tried to adopt the ATA proposal.

When a public authority builds an airport and secures financing for 

it, that public authority must pay for capacity which may not be 

used for several years, expecting tha t in future years the revenues 

will offset the losses during the early period.

We do not, therefore, feel tha t the bill should prohibit including 

capacity in excess of c urrent use, but we do recognize th is: that it is 

entirely possible that in spite of the projected increases in traffic there 

will be a period in which the Internationa l Airpor t at Chantilly does 

not have full use. If it should develop that deficits during this period 

make such a heavy drain on the fund of the Corporation that it would 

be unfair to make up for the losses from fees, there is authority in the 

bill for deficit appropriations. Any deficit appropriations would be 

requested of the Congress in the regular appropriations procedure. 

The Congress would review th e requests, study all the facts, and act 

on them. We thus feel that the users are completely protected from 

a situation in which the corporation in desperation would be forced to 

raise fees to an unreasonable level simply to make up for the cost 

of temporarily excess capacity of a new airport.

With respect to the proposal that appears at the very bottom of 

page 5, Mr. Chairman, we again would have to say this could not be 

agreed to by the agency or by the U.S. Government.
NATIONAL CAPITAL AIRPORTS 59

Mr. Williams. Are you speaking of Xo. (5) or Xo. (4) ?

Mr. Dean. Xo. (5), sir.

Mr. W illiams. Have you covered Xo. (4) ?

Mr. Dean. Xo. (4), relating to the duty of the Administrator to 

promote aeronautics, is covered already by the Federal Aviation Act 

which contains this language. We would certainly not object to a 

restatement of it in the Corporation Act. It is simply surplus 

language.

Xo. (5) would require the Corporation to submit disagreements 

over charges to arbitration. The Federal Arbitration Act, as we 

understand it, is available for persons who wish to use the legislation 

in connection with largely private matters. We looked into this at the 

time this was first proposed by th e A ir T rans port Association, and do 

not find comparable examples of an instrumentality of the United 

States subjecting itself to arbitration pursu ant to tha t act in connection with dealings with one of its customers in a corporate capacity.

We would feel tha t the Congress itself would not wish this. It 

would be exceedingly unusual as a provision of law. We do not think 

it applies to any of the other 15 Government corporations in existence 

and feel tha t the committee would not wish to accept that proposal.

Mr. Williams. Is there any precedent for this kind of provision? 

Do you know of any precedent in law, Mr. Howard?

Mr. Howard. Mr. Chairman, I do not know of any precedent for 

subjecting the Federal Government, as one of the pa rties to a dispute, 

to a determination by an outside-the-Government entity for the purpose of resolving the difference. There are obviously many applications of the Federal Arbitration Act, but as f ar as I know, they are 

confined to other entities than the Federal Government.

Mr. Williams. Inso far as you know, there is no precedent for this 

type of thing?

Mr. H oward. I know of none, personally.

Mr. Dean. Mr. Chairman, going to page 6 of the ATA testimony, 

that is, to the proposed amendment in the center of the page relating 

to access roads, I believe that this po int is now adequately covered both 

by the permissive transfer aut hority that is in th e present bill and by 

the announced intentions of the Secretary of the Interior and the 

Federal Aviation Administrator. It has been the position of the 

Agency from the beginning th at th e access road should not be included 

in the rate base.

We would not object to the ATA language being incorporated in the 

bill, but as a matter of course, as we have just noted, we expect tha t the 

access road will be taken out of the capital base of the airport.

The amendment which is proposed at the top of page 7 and discussed at the bottom of page 6 would require th at charges lie fair and 

reasonable and tha t contract terms be arrived at by negotiation with 

the carriers. We certainly wish to operate in the manner contemplated by this language.

The fees and charges applicable to the a ir carriers would be arrived 

at by negotiation, which is the method which is used at the present 

time. They will be fair and reasonable within whatever standards 

can possibly be stated in the legislative history, taking into account 

the self-sustaining objective and taking into account other airp ort 

practices throughout the Nation.
60 NATIONAL CAPITAL AIRPORTS

Mr. Williams. Is there anything in the bill, or would this kind of 

language be necessary, that would eliminate the possibility of making 

a distinction between the charges a nd fees among airlines? In other 

words, is there anything in the bill tha t would prevent you from 

charging, say, just to use a round figure, hypothetically speaking, a 

$10 landing fee for National Airlines and lettin g Allegheny oil with 

a $5 landing fee, or that type of thing ?

Air. Dean. Subject to further comment from our General Counsel, 

I believe it is fair to say th at the bill at the present time would permit 

the Corporation to distinguish, if it chose, between volumes of operations or other characteristics which might vary from airline to airline. 

It would be conceivable that, if the Corporation wished to adopt the 

policy of reflecting volume operations, there could be some differences.

I want to stress that we are only talking about the authority to do 

this. We would assume, and Air. Ilo bbs may wish to comment on the 

practices of the present Bureau of National Capital Airp orts, tha t 

the corporation will follow an equitable practice in the ligh t of the 

conditions under which they have to operate these two airports.

Air. H obbs. I have nothing to add to that, Air. Williams. That is 

a firm statement.

Air. Howard. On the specific question as to whether the bill now 

contains suitable language, I think Air. Dean is quite correct that there 

is nothing specific on this point. Frankly , our willingness to accept 

a standard of fairness and reasonableness would seem to me to cover 

the situation as to reasonable differences that might be justified by 

volume transactions or rates of use of certain facilities; so with the 

inclusion of a fair and reasonable standard, I think the problem is 

solved. AVe are certainly prepared to accept such a provision.

Air. Dean. Proceeding, then, Air. Chairman, to the amendment 

shown at the top of page 8 and discussed on the bottom of page 7, we 

have provided for this Advisory Board to assure tha t the General 

Alanager and the Administrator would have the benefit of advice from 

persons, including at least one fam iliar with airport operations, able 

to provide informed comment, guidance, and assistance to the Administrator and the Alanager.

We have not incorporated in the bill the ponderous requirement tha t 

the Adm inistrator or General Alanager be required to advise the Advisory Board in writing and in detail of reasons for not accepting its 

recommendations. AVe feel such a requirement would do much to 

destroy effective relationships between the Administrator and the 

Board. Fo r tha t Board to be highly effective it must be able to deal 

with the Administrator in terms of mutual confidence and a free exchange of ideas. To insert a prescribed form of w riting formally to 

the Board in detail might do more damage to the effective use of the 

Board in its advisory capacity th an it would help. This type of provision is not very fundamental to the Corporation, and we simply 

present our view on it to the committee fo r its consideration.

With respect to the access road provision appearing again a t the top 

of page 9 ,1 have already commented on it.

AVith respect to the amendment appearing at the top of page 10, I 

believe we have covered it in our previous remarks. AVe would simply 

not agree to this because this would be contrary to the general practice at most airports.
NATIONAL CAPITAL AIRPORTS 61

Fa rth er down on page 10 is another proposed amendment which 

reads as follows:

such local share shall be computed on the depreciated cost of the air po rt as of 

the year in which the intere st pay ment is made.

The way the fund will operate will permit the accomplishment of what A TA proposes. Any payments into the fund which are depreciation payments will reduce the amount of money tha t must be trans­ ferred to the fund from the appropriation. Since only money in the 

fund is subject to interest, this mechanism will in the long run take account of the depreciation payments, and the entire rate base of the 

airpor t will be affected accordingly. With respect to rules and regulations of the General Manager not 

impairing any contract or lease previously entered into by the Corpo­ ration with any aeronautical user of the airport, our General Counsel, Mr. H oward, may wish to comment on this. Basically, the Corpora­ tion is not operating in the sovereign capacity of the United States 

and will be bound by its contracts.

When it enters into a contract it can be be sued like any other business entity if an illegal breach of contract is attem pted by the Corpo­ ration. Moreover, the language proposed by ATA does not accomplish very much because the individual contracts could have written into them such provision for amendment as the Corporation found necessary or desirable.

Mr. Howard ?

Mr. Howard. Mr. Chairman, I might add one observation on this. 

As you and the committee are well aware, as experts in the field of aviation, many, many problems arise in operating an airpor t that are unforeseen at the time tha t a contract is entered into. We have all seen the noise problem evolve, for example, at an airport. As a land­ lord runn ing a piece of property, airp ort authorities find it necessary to control the use of the prope rty in certain ways tha t it is impossible to foresee in all their details at the time they enter into leases. This is the typical saving clause, you might say, for that kind of operational 

flexibility; and I think tha t the language tha t is proposed is accept­ able. But I think that the A ir Trans port Association and users would have to be prepared to have a clause in their lease saying that the lease is subject to such reasonable rules and regulations as are thereafter adopted, because otherwise, the owner or landlord is barred 

from managing his property.

Mr. Williams. I would think , and you correct me if I am wrong, if 

any rule or regulation is to be promulgated subsequent to the time a contract is entered into which should be in conflict with the terms of tha t contract, it would necessarily be null and void as to tha t particular contract, would it not ?

Mr. H oward. That is correct, unless the contract itself makes some 

provision for its being subject to such later rule or regulation, which a 

reasonable and effective management of an airport property would 

require, it seems to me.

Mr. Dean. Mr. Chairman, in closing, I have only two general comments, having gone over the individual amendments. The first refers to the statement at the bottom of the first page of 

Mr. Durand’s testimony rela ting to administrative expense. I wish the record to show, as we discussed with the committee yesterday,
62 NATIONA L CAPITAL AIR POR TS

the fact th at we will be bound by civil sen dee laws an d regula tions 

and th at we will opera te th is Co rporation with no gre at er adminis ­

trat iv e cost t ha n wou ld be requ ire d by an or dina ry agency o r bureau. 

Because of the flex ibility of co rpor ate manag ement, in th e long run 

we th in k we can do the job mo re economically un de r th e Co rporatio n th an we can under the presen t Bu reau of Na tio na l Ca pit al 

Ai rp orts.

Sec ondly, with resp ect to th e mo nume nta l ch aracter istics of the 

in tern ationa l airp or t, we wish to emp hasize t hat if t he re is an yth ing 

th at is identifiable in th is air port which is bein g bu ilt o r insta lle d fo r 

the purpose of giv ing it the ch ar ac ter of a na tio na l mo nument as 

opposed to effectively serv ing the use rs of the ai rp or t, we will be among 

the most aggressive in ur gi ng the Di rector of the Bu reau of the 

Bu dg et to app rov e exclusion of such fea tur es fro m th e ca pital base. 

We wo uld welcome any expre ssion of com mittee senti me nt in the 

com mittee repo rt a lon g these lines.

I do no t th in k it is some thing th at can easily be h an dled w ith legislat ive t ex t, an d this, Mr. Cha irm an , concluded our comments.

We would be gla d to ta lk fu rt her with the com mittee members, the 

com mittee s taff, and will, of cou rse, continu e to disc uss the se various 

po ints with the A ir T ra ns po rt A sso ciation an d airli ne repres entative s 

in an effort to ge t a large r m eas ure o f a greement on th e b ill.

Mr. W illiam s. Th an k you. Does th at conclude yo ur testimony ?

Mr. D ean. Yes, sir.

Mr. H oward. Mr. Ch airm an , I might br ing one final m at te r up.

In lin e with your inter est yeste rday in the que stio n of the A dm in istrat or ’s au thor ity to effect th e use of th e ai rp or t by the military 

in tim e of emergency, if it is acc ept able to the com mittee, we would 

lik e to offer an ame ndm ent w hic h would accomplish th is, w hich would 

be a ve ry simple matter of in se rtin g af te r section 12, line 25, at page 

14, of th e bill, the ph ras e “co nsistent with natio nal def ense req uir eme nts .”

I belie ve t hi s very sim ply an d effectively takes acc ount of th e p roblem th at you expressed an interest in yesterd ay.

Mr. W illiams. Mr. Fr iede l ?

Mr. F riedel. No questions.

Mr. William s. Mr. Ja rm an .

Mr. J arman. No questions.

Mr. W illiams. Th an k yo u v ery m uch.

Mr. Dean. Th ank you very muc h.

(W he reup on the com mittee proceeded to othe r bus ines s.)
NATIONAL CAPITAL AIRPORTS

W ED N E SD A Y , JU L Y 19, 19 61

H o u se of R epresen ta tiv es,

S u b c o m m it tee on T r a n spo rta tio n and A er o n a u tic s

of t h e C o m m it t e e on I n t e r sta te an d F oreig n C o m m e r c e,

Washing ton, D.G.

The subcommittee met, purs uant to other business, in room 1334, House Office Building, Hon. Samuel N. Friedel presiding.

Mr. F r ie d e l. The subcommitee has another bill relating to Wash­ ington National Airport on its schedule this morning. This is II.R. 7398, relatin g to concessions at the airport, introduced by Mr. Wil­ liams, chairman of the subcommittee, at the request of the Federal 

Aviation Agency. The proposed legislation would permit the making of a long-term lease for a hotel at the airport. If H.R. 7399, to establish an A irports Corporation, is enacted, H.R. 7398 would not be necessary, but the subcommittee desires to hear testimony regarding the need for long­ term leases on major construction projects, as proposed.

(H.R. 7398 and reports thereon follow:)

[H .R . 739 8, 87th Con g., 1st se ss .]

A B IL L To am en d th e Ac t of Octob er 9, 19 40 (54 S ta t. 103 0, 10 39 ), in ord er to in cr ea se th e per io ds fo r wh ich ag re em en ts fo r th e op er at io n of cert ain co nc es sion s may be g ra n te d a t th e W as hi ng to n N at io nal A ir p o rt , an d fo r oth er pur po se s

Be if enacted by the Senate and House of Representatives of the United States

of America in Congress assembled, That the Act entitled “An Act making sup­ plemental appropriations for the support of the Government for the fiscal year ending June 30, 1941, and for other purposes”, approved October 9, 1940 (54 Stat. 1030,1039), is amended as follow s: By striking the period in the proviso at the end of the first paragraph under the heading “Administrator of Civil Aeronautics” in the appropriations listed for the Department of Commerce (54 Stat. 1039), and by inserting the following phrase aft er the words “except the restaurant” : “, and concessions involving the construction or installation by the party contracting with the Government of buildings or facilities costing in excess of $50,000”.

Executive Office of th e P resid ent,

Bureau of th e B udget,

Washington, D.C., June 28, 1961.

Hon. Oren H arris,

Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D.C.

My Dear Mr. Chairman : This is in reply to your request of June 12, 1961, for a report on H.R. 7398, a bill to amend the act of October 9, 1940 ( 54 Stat. 1030, 1039), in order to increase the periods for which agreements for the operation of certain concessions may be granted at the Washington National 

Airport, and for other purposes.

63
64 NATIONAL CAPITAL AIR POR TS

The bill would exempt agreements for concessions at the Washington National 

Airp ort involving the construction or installation by the par ty contrac ting with 

the Government of buildings or fac ilities costing more than $50,000 from the 

provision of law limiting such agreem ents to 5 yea rs or less. The bill is designed to allow long-term leases of land for the construction of a hotel, rental 

car mainten ance buildings, in-flight commissary buildings, or sim ilar revenueproducing concessions.

The Burea u of the Budget has no objection to the enactment of the bill from 

the stand point of the adm inistration’s program.

Sincerely yours,

Phillip S. Hughes,

As sis tan t Director for Legislative Reference.

General Counsel of the Department of Commerce,

Washington, D.C., Ju ly 11,1961.

Hon. Oren Harris,

Chairman, Committee on Intersta te and Foreign Commerce,

House of Representatives, Wash ington, D.C.

Dear Mr. Chair man: This let ter is in reply to your request of June 12, 1961, 

for the views of this Department wi th respect to H.R. 7398, a bill to amend the 

act of October 9, 1940 (54 Stat. 1030, 1039), in order to increas e the periods for 

which agre ements for the operation of certain concessions may be granted at 

the W ashington National Airport, and for other purposes.

The bill is concerned with m att ers prim arily with in the purview of the Federal 

Aviation Agency. This Department’s intere st is too remote to supp ort any 

comments of substantive value.

Sincerely,

Robert E. Giles.

General Services Administration.

Washington, D.C., June 11,1961.

Hon. Oren Harris,

Chairman, Committee on In ter sta te and Foreign Commerce,

House o f Representatives, Washington, D.C.

Dear Mr. Chairma n: Your le tte r of Jun e 12, 1961, requested the views of 

the General Services Adm inistration on H.R. 7398, 87th Congress, a bill to 

amend the act of October 9, 1940 ( 54 Stat. 1930, 1039), in o rde r to increase the 

periods for which agreements for the operation of certain concessions may be 

gra nted at the Washington National A irport, and for oth er purposes.

The purpose of the bill is to amend the act of October 9, 1940, to permit the 

gra nting of concession agre eme nts for the provision of services at the airport 

with term s of longer tha n 5 years in cases where such agre ements involve the 

construction o r installa tion by the concessionaire of buildings o r facilities costing 

in excess of $50,000.

Although the enactment of H.R. 7398 would not affect the function s and 

operations of GSA, we believe in principle in the merit of long-term leasing 

au tho rity such as is proposed in the measure.

The Bureau of the Budget has advised that, from the stan dpo int of the 

administration's program, there is no objection to the submission of this report 

to your committee.

Sincerely yours.

John L. Moore, Adm inistrator.

Mr. F riedel. The letter from the Federal Aviation Agency to the 

Speaker of the House requesting tha t this legislation be introduced 

is as follows:

Federal Aviation Agency, 

W as hi ng to n, D.C ., Mag Jo, 1961.

Hon. Sam Rayburn,

Speaker of the House,

Washington, D.C.

Dear Mr. Speaker : It is requested th at the atta che d proposed bill to amend 

the act of October 9, 1940 ( 54 Stat. 1030, 1039), in orde r to increase the periods
NATIO NAL CAPITAL AIR POR TS 65

fo r which ag re em en ts fo r th e oper at io n of cert ain co nc es sion s may be gra nte d 

a t th e W as hi ng to n N at io nal A ir port , an d fo r oth er pu rp os es , be in tr oduce d i n th e 

Hou se a t your e arl ie st co nv en ienc e.

A t th e pr es en t tim e th e ne ed fo r first-clas s ho tel fa cil it ie s and se rv ices a t th e 

W as hin gt on N at io na l A ir port is becomi ng in cr ea si ng ly ev id en t. Se ve ra l pri vate 

in ves to rs we ll kn ow n an d est ab lish ed in th e ho te l in dust ry , a re ex trem el y in te res te d in pr ov id in g th is ty pe of fa cil it y. The se c on ce rn s ha ve al l m ad e long -te rm 

pr op os al s fo r th e co ns truc tion of a $3 to $5 mill io n ho te l to be loca ted adja cent 

to th e W as hi ng to n N at io nal A ir port . The y ha ve p ropo se d a le as e pe riod of from 

35 to 50 years fo r th e pu rp os e of bo rrow in g long -term cap ital .

U nd er th e pr ov isions of th e a c t entitled “An act m ak in g su pp le m en ta l ap pro ­

p ri ati o n s fo r th e su pp ort of th e G ov er nm en t fo r th e fis cal y ear en ding Ju ne 30, 

1041, and fo r ot he r pu rp os es ,” ap pr ov ed Octob er 0, 1040 (54 Sta t. 1030), ag re em en ts fo r th e op er at io n of any concessio n, ex ce pt th e re sta u ra n t a t W as hi ng to n 

N at io nal A irpo rt, a re pro hib it ed fo r a pe riod ex ce ed in g 5 ye ar s. Th e co nst ru ction of a pe rm an en t fa ci lity , su ch as a ho tel of th e siz e re quir ed by th is loca tio n, 

re pre se nts a pote ntial in ves tm en t of se ve ra l mill ion dollar s. Ob vio usly, th e 

5- ye ar le as e pe rio d is not su ffici en t to allow fo r am ort iz ati on of th e in ve stm en t.

I fe el cert ain th a t th e Con gr es s ca n ap pre ci at e th e ne ed fo r an ad eq uat e fir stcl as s ho tel wh ich wo uld se rv e th e la rg e nu m be r of tr avele rs arr iv in g a t an d dep art in g fr om W as hi ng to n N ational A irpo rt. The c onst ru ct io n of la rg e first-clas s 

hote ls a t ot her m aj or air p o rt s in th e United Sta te s, fo r ex am pl e th e ho tel loca ted 

a t New Yo rk In te rn ati o n al A ir port , is pr oo f th a t su ch fa cil it ie s are ne ce ss ar y 

fo r th e b enefit of th e tr aveli ng pu blic.

I t sh ou ld be po in te d ou t th a t th e gra nti ng of a lo ng -ter m le as e fo r th e const ru cti o n of such a ho tel co ul d be an ex trem el y pro fita bl e ventu re and wo uld 

pro vi de ad ditio nal fu nds to of fs et th e ope ra ting co sts of th e air port .

O th er im port an t are as m ay be ci te d in which it wou ld be ad van ta ge ou s to 

h ave lo ng er leas es th an a re no w pe rm itte d. Am on g th em a re re n ta l car m ai nte nan ce bu ildi ng s an d in flig ht co m m issa ry bui ld in gs whi ch re quir e co ns id er ab le 

cap it al in ve st m en t to ta li ng u pw ard o f a mill ion do llar s.

The re fo re , in th e be st in te re st of th e Gov ernm en t, th e 1940 Su pp lem en tal Aj>- 

p ro p ri ati o n s Act sh ou ld be am en de d as it p ert ain s to th e le ng th of tim e fo r 

w hi ch leas es an d co nc essio ns m ay be gr an te d, so th a t in cert ain ca se s long -te rm 

leas es co uld be mad e whe n it appears th a t a su b sta n ti al cap it al in ve st m en t fo r 

th e perm an en t co nst ru ct io n of bu ildi ng s of su bst anti al va lu e, su ch as a ho tel 

■or infl ig ht co mmissary, m ay be re qu ired . T his will be n ec es sa ry b efor e j>otential 

in ves to rs will sho w mor e th an a ca su al in te re st in th es e muc h- ne ed ed fa ci lities .

It is th e co ns id er ed op inion of th is Ag ency th a t th e pr op os al wi ll prov ide th e 

nec es sa ry st im ul us to en co ura ge th e co ns truc tion of a ho te l a t th e W as hi ng ton 

N ational A irpo rt, pr ov id in g firs t-cl as s fa cil it ie s fo r tr avel, an d a new m ea ns of 

re ve nu e to offset th e co st of opera ti ng th e air port . It w ill al so en ab le th e a ir ­

port to prov id e ne ce ss ar y im pr ov em en ts in it s in flig ht c om m issa ry fa cil it ie s w ith 

re su lt a n t ad de d reve nu es.

T he B ure au of th e Bud ge t h as ad vi se d th a t th ere w ou ld be no ob jection to th e 

su bm is si on of t his d ra ft bi ll to th e Co ngres s.

Sinc erely ,

J am es T. P yle

(F o r N. E. H al ab y, A dm in is tr ato r) .

Mr. Fiuedel. We have with us this morning our colleague from 

Florida , Congressman Dante Fascell, who has with him a constituent 

who has asked for time to testify on the need for H.R. 7398.

At this time we welcome our colleague, Congressman Fascell.

STATEM ENT OF HON. DA NTE B. FASCELL, A RE PR ES EN TA TIVE IN 

CONGRESS FRO M TH E STA TE OF FLORIDA

Mr. F ascell. Mr. Chairman and members of the committee, I appreciate your courtesy in giving me the opportunity to appear before 

you in liehalf of H.R. 3798.

I support the bill either individually or for incorporation in the 

legislation to create the Corporation. I think it is obvious, from 

my standpoint, that long-term authority is needed to do this job.
66 NATIONAL CAPITAL AIRPORTS

However, in better terms than I can tell you, one of my constituents 

is here, Mr. Burton Cohen, who is a young man I have known for 

many, many years. He is a very tine lawyer.

In addition to that, he represents Airway Hotels, Inc. They are 

probably one of the biggest operators of this type in the country. 

They have locations all over. He is completely fam iliar with the 

business aspect as well as the legal aspects of this problem, and therefore, can talk directly on all of the points in which the committee 

would be interested, if it is going to consider the long-term 

authorization.

So with that, Mr. Chairman, I would like to turn the matter over 

to Mr. Burton Cohen.

Mr. F riedel. Do you have a prepared statement ?

STATEMENT OF BURTON COHEN, AIRWAY HOTEL, INC., 

MIA MI, FLA.

Air. Cohen. No, sir.

Mr. Chairman and gentlemen, my name is Burton Cohen. 1 am 

the attorney for Airway Hotel, Inc., and for the period of the last 3 

years I have lived very closely with the problem of constructing hotel 

facilities directly on airports.

Our client was the successful proponent for the hotel facility to be 

constructed at Dulles Internationa l Airport. We have the hotel facility directly on top and contiguous with the terminal building in 

Miami, F la. We have under construction now and in preparation to 

open sometime in November, hotel facilities in Birmingham, Ala. We 

are bidding on hotel facilities to be constructed directly on terminal 

property at Orly Airport in Paris, France, and the same type of facility in London, England, and it has become more evident every day 

in modern air transportation travel that, the need and necessity of 

hotel facilities in close proximity to the terminal is no longer a luxury,, 

but a necessity.

This has been recognized in such places as Idlewild, Pittsburgh, 

Miami, Boston, San Francisco, A tlanta, San J uan, Birmingham, and 

Dulles Internatio nal Airport. These cities now have hotel facilities 

directly on terminal property, or in the planning stages.

At a recent airport managers’ convention in Miami, there was interest expressed for hotel facilities from Minneapolis-St. Paul; St. 

Louis; Denver; Amsterdam, Holland; Chicago, and Oklahoma City.

The way these hotel facilities are constructed, private capital is 

used. The entire cost of the construction is borne by private capital. 

Tax dollars are not exposed or utilized in any way, shape, or form.

At the present time, concession agreements at Washington National 

are limited under a p rior act to a period of 5 years. Fo r a concessionaire to come in and construct a hotel facility tha t will cost anywhere from $2 to $3 million and try to amortize his cost out of 

income in a period of 5 years is a physical impossibility as well as 

an economic impossibility.

Therefore, there is a vital need that a bill be passed to allow the 

Federal Aviation Agency to negotiate concession agreements in excess of the present 5-year limitation. Not only would tha t permit 

private industry to come in and build the facilities in question, but 

it would also generate income to the Federal Aviation Agency.
NATIONAL CAPITAL AIRPORTS 67

At the present time, in our operation in Miami, Fla., we are the 

highest paying concessionaire in the terminal. The Dade County Port 

Authority realizes more income from our hotel facility than any 

other concessionaire in the terminal.

We have found tha t where there are hotel facilities available in 

close, direct proximity to the m ain terminal building, travelers, tra nsients, interchange personnel, will use these facilities. They will 

not leave the terminal proper, take a cab, go downtown, or go off the 

facilities for fear of missing the ir flight, or for fear of oversleeping. 

We call it the capturing of the lost patron.

We do not cut economically into any other competing hotel facilities because these are the individuals tha t would not go to a hotel 

if they had to leave the airport complex. The way we work it is that 

we have direct phone connection with all of the airlines so th at when 

the flights are called the occupant of the room receives a call at least 

15 minutes before flight time. Their bags are all checked through 

and they go directly to th eir plane, and we have received income and 

they have received service.

We feel that the extension of the Concessions Act, as now recommended, would enable private industry to come in and construct hotel 

facilities at Washington National and create an income-producing 

concession for the authority.

I will be glad to answer any specific questions on this subject, if 

the committee has any.

Mr. Williams (presiding). Thank you very much.

Mr. Friedel, do you have any questions ?

Mr. Friedel. No questions. I am in favor of the bill, too.

Mr. Williams. Air. Devine.

Air. Devine. No questions, Air. Chairman.

Mr. Williams. Air. Jar man .

Air. J arman. No questions.

Mr. W ili .jams. As we understand it, this bill would not be necessary, if the legislation which is currently under consideration by this 

committee to form a National Capital Airpor t Corporation, should 

be enacted. We are very happy to have your testimony, however, 

and in the event the committee should decide against the Corporation 

bill, of course, the committee will give very serious consideration to 

this legislation.

Thank you very much.

Air. Cohen. Thank you very much, Mr. Chairman.

Air. Williams. I believe that concludes the testimony this morning.

The committee will adjourn.

(Whereupon, at 11:35 a.m., the subcommittee adjourned.)

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