Secretary Celebrezze indicated at the time of the 1965 hearings, the exact nature or size of a region could not be predicted; this, he indicated would depend primarily upon the institutions and health agencies in the States and localities. He said:

"Here I wish to emphasize a major point. Although the bill before the committee sets forth the essential components that comprise the concept of the medical complex, the form and manner in which these components will be developed regionally is entirely a matter for local determination.

Thus the legislation will encourage local imagination and initiative developing plans for and establishing the medical complexes proposed.

It is this opportunity for local determination and diversity in the conduct of this program that I believe to be of the utmost importance and value." (p. 16). "You could draw geographical areas much broader than that (Little Rock, Arkansas) under the provisions of the bill. You could transcend State lines in establishing complexes. It would be in your initial planning that the region would be defined." (p. 18).

The Surgeon General is, of course, required on or before June 30 of this year to submit a report to the Secretary for transmission to the President and to the Congress on the program established by P.L. 89-239. Included in that report will be recommendations with respect to extension or modification of the program, based on an appraisal of the effectiveness of the program. As the interested groups, institutions, and agencies get farther into the planning process, it is quite possible that some regions will find it necessary, as a result of their planning, to contract or expand; others may merge into a larger region, or find, as a result of planning, that the geographical area initially contemplated should be altered in other ways. The planning process is thus, I believe, producing exactly what the Congress hoped-a systematic, logical, and orderly organization of the regional medical programs. In addtiion to the 34 planning grants which have already been awarded there are 15 applications for planning grants now under review and we understand that 3 more are now being developed for submission. I hope that this information is useful to the Committee.

Sincerely yours,

PHILIP R. LEE, M.D.

Assistant Secretary for Health and Scientific Affairs.

(Whereupon, at 12:10 p.m., the committee adjourned, to reconvene

at 10 a.m., Tuesday, March 7, 1967.)

AGENCY HEARINGS

TUESDAY, MARCH 7, 1967

HOUSE OF REPRESENTATIVES,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C. The committee met at 10 a.m., pursuant to notice, in room 2123, Rayburn House Office Building, Hon. Harley O. Staggers (chairman) presiding.

The CHAIRMAN. The committee will come to order.

We are pleased to have with us today the Civil Aeronautics Board as we continue the series of examinations of the work of the various agencies which administer laws that are within the committee's legislative jurisdiction.

The committee is conducting this series of hearings in accordance with its responsibilities under section 136 of the Legislative Reorganization Act of 1946, to maintain constant watchfulness over the administration of these laws.

Inasmuch as this Board is one of the so-called independent agencies, which essentially act as "arms of the Congress" in their administration of the congressional powers which have been delegated to them, we naturally feel very close to it. The power delegated to such agencies are very broad, and the statutory standards to circumscribe and guide them in the exercise of these powers necessarily are very general.

Under these circumstances, it is most important for the Congress regularly to review the work of these agencies and to consider the problems which they encounter in administering these powers.

The Civil Aeronautics Board has been requested to tell us today something about (1) its jurisdiction, (2) its organization, and (3) some of the problems in the area of its jurisdiction.

In addition, it has been asked to review with us some of the fundamental issues and policies underlying the legislation which it administers and to indicate any recommendations it has for legislative change.

These meetings also serve to allow the committee to become better acquainted with the membership of the agencies and to allow you to become acquainted with our new members who are interested in learning of your activities.

In the limited time which we have for this overall examination of each agency, I trust that we may keep the presentation and the questioning on general consideration of major matters, and not engage in pinpointing some specific items or delving into the intricacies of an individual case.

Chairman Murphy, you may now proceed with your presentation, introducing the members of the Board and staff, and offering your statement in the manner which you deem best.

STATEMENT OF HON. CHARLES S. MURPHY, CHAIRMAN, CIVIL AERONAUTICS BOARD; ACCOMPANIED BY ROBERT T. MURPHY, VICE CHAIRMAN; G. JOSEPH MINETTI, MEMBER; WHITNEY GILLILLAND, MEMBER; AND JOHN G. ADAMS, MEMBER

Mr. MURPHY. Thank you, Mr. Chairman.

First, I would like to say that all of us welcome this opportunity to meet with your committee and to talk about the work of the Civil Aeronautics Board. We are grateful to you for asking us to come. If I might at this time, I would like to introduce my colleagues on the Board.

To my immediate left is the Vice Chairman, Mr. Robert Murphy, and just beyond him is Mr. Joseph Minetti.

On my immediate right, Judge Whitney Gillilland and beyond him Mr. John Adams.

We do have with us a number of our top staff people and, if it is agreeable to the committee, I would like to introduce them and ask them to stand when their names are called.

First we have Mr. Charles Kiefer, who is the Executive Director of the Board.

We have then Mr. Joseph Goldman, who is the General Counsel of the Board; Mr. O. D. Ozment, who is the Deputy General Counsel; Mr. Irving Roth, who is the Director of the Bureau of Economics; Mr. Alphonse M. Andrews, who is the new Director of the Bureau of Operating Rights; Mr. Joseph Watson, who is the Director of the Bureau of International Affairs; Mr. Robert Burstein, who is the Director of the Bureau of Enforcement; Mr. Warner Hord, who is the Director of the Bureau of Accounts and Statistics.

Our Chief Examiner, Mr. Francis Brown, is not able to be here because of an operation, but Mr. Tom Wrenn, an Associate Chief Examiner, I believe, is here.

Mr. Harold Sanderson, who is the Secretary of the Civil Aeronautics Board; Mr. John Dregge, who is the Director of our Office of Community and Congressional Relations; Mr. Jack Yohe, Director of the Office of Information; Mr. John Russell, who is Assistant Executive Director of Operations; and then Mr. Bobbie R. Allen, who is the Director of the Bureau of Safety, which on the 1st of April will be transferred to the new Department of Transportation.

That, I believe, Mr. Chairman, concludes the introductions. I do have a prepared statement which I would like to read if it is agreeable to the committee.

I might say that we also sent up earlier some background material which has been available to the committee and I did not propose to read that, but will refer to it from time to time as it may seem appropriate.

If I might start out with just this prepared statement which is in the nature of a general description of the Board's activities:

The Federal Aviation Act of 1958 provides the basic authority for the Board's operations. We are charged with the economic regulation and promotion of commercial air transportation within as well as to and from the United States. However, we do not regulate purely intrastate air transportation.

In the past, the Board has had important functions with respect to aviation safety. These safety functions are now being transferred to the new Department of Transportation.

At the outset, I wish to emphasize the fact that we are charged with responsibility to promote as well as regulate air transportation. We regard the promotional aspects of our work as very important.

I would also note that the act directs us to encourage competition to the extent necessary to assure the sound development of air transportation. This, too, is very important. The nature of the airline business is such that it is frequently possible to achieve the promotional and regulatory aims of the act by authorizing competitive services. Generally, we would regard this as preferable to the use of mandatory processes.

It might be useful at this point to outline the size and nature of the industry we regulate. The major part of it is comprised of air carriers operating under certificates of public convenience and necessity issued by the CAB. I will mention later foreign air carriers operating to the United States and some domestic operations that are not certificated.

The active U.S.-certificated air carriers are 57 in number, comprising the following groups:

1. Eleven domestic trunkline carriers. Most of these carriers also have some international routes, and for at least three of them international operations comprise a major part of their business. In our statistics on the different categories of operations, the business of these carriers is reported separately for domestic and international services. 2. Two U.S.-flag carriers operating only international and territorial routes and authorized to carry passengers and cargo.

3. Thirteen local service carriers whose systems are located in different regions of the United States. Among them, they blanket most of the country. Their principal purpose is to provide service to the medium-size and smaller cities and to connect these cities to their major communities of interest.

4. Thirteen supplementmental carriers who are basically charter operators within the United States and to designated areas outside the United States.

5. Three active all-cargo route carriers-one authorized to serve only domestic routes, one authorized to serve only certain foreign routes, and one with some domestic and some overseas routes. (6) Two certificated Hawaiian carriers.

(7) Seven certificated intra-Alaskan carriers, and two carriers serving between Alaska and the lower 48 States.

(8) One certificated carrier in the Caribbean.

(9) Three active certificated helicopter carriers.

There are in addition a few outstanding certificates under which operations are suspended at present.

The total operating revenues of the industry are about $5.7 billion a year (12 months ended September 30, 1966), broken down as follows: (1) Domestic trunks $3.5;

(2) International/territorial $1.4;

(3) Local service $0.3;

(4) Supplementals $0.2;

(5) All cargo $0.2;

(6) Others $0.1.

At present, the industry is characterized by extremely rapid growth in the range of 20 to 25 percent a year. This rapid growth puts rather severe stresses and strains on the industry-and therefore also on the CAB-in various ways. We try to adapt our procedures and methods to keep up with this fast moving industry. However, there are procedural requirements in many cases which require extended periods, and the Board is so handicapped by lack of personnel that much of its work is delayed and some desirable activities must be foregone altogether.

Despite these difficulties, we are very happy that the industry is growing rapidly, and that it is in a relatively healthy financial state. The Board's economic regulatory activities may be grouped thus: (1) Awards of operating authority.

(2) Regulation of rates and fares.

(3) Regulation of agreements and interlocking relationships among air carriers and between air carriers and other aeronautical enterprises.

(4) Support of air service through subsidy payments.

(5) Regulation of air carrier accounting and reporting. (6) Enforcement of applicable laws and regulations.

The Board has significant responsibilities with respect to international aviation matters which are interwined with the activities mentioned above.

AWARDS OF OPERATING AUTHORITY

Air carriers may not engage in air transportation within the United States, or to or from the United States, without a certificate of public convenience and necessity, or a permit, or an exemption from the CAB authorizing such air transportation. Air transportation for this purpose means the carriage by aircraft of persons or property as a common carrier for compensation or hire, or the carriage of mail by aircraft. Services by U.S. carriers are usually covered by certificates of public convenience and necessity, and services by foreign air carriers covered by foreign air carrier permits. Exemptions are used only in limited or special situations.

Certificates of public convenience and necessity are issued after notice is given and interested parties have had an opportunity to be heard. Frequently, the issuance of certificates is opposed by other air carriers who deem that they would be adversely affected. Frequently, also the Board in issuing certificates must choose between competing applicants.

The normal procedure includes a hearing before a hearing examiner and an initial or recommended decision by the examiner,