Public Law 74–530

That subsection (a) of section 3 of the Act entitled “An Act to revise air-mail laws, and to establish a commission to make a report to the Congress recommending an aviation policy”, approved June 12, 1934, as amended (48 Stat. 933, 1243), is amended to read as follows:

“Sec. 3.

(a)(a)

The Postmaster General is authorized to award contracts

Contracts for carrying air mail.

for the transportation of air mail by airplane between such points as he may designate, and for initial periods of not exceeding

Initial contract periods.

three years, to the lowest responsible bidders tendering sufficient guaranty for faithful performance in accordance with the terms of the advertisement at fixed rates per airplane-mile: Provided, That

Provisos.

Right of low bidder to appeal if refused contract.

where the Postmaster General holds that a low bidder is not responsible or qualified under this Act, such bidder shall have the right to appeal to the Comptroller General, who shall speedily determine the issue, and his decision shall be final: Provided further

Maximum base rate of pay.

That the base rate of pay which may be bid and accepted in awarding such contracts shall in no case exceed 33⅓ cents per airplane-mile for transporting a mail load not exceeding three hundred pounds. Pay

Basis of computation.

ment for transportation shall be at the base rate fixed in the contract for the first three hundred pounds of mail or fraction thereof plus one-tenth of such base rate for each additional one hundred pounds of mail or fraction thereof, computed at the end of each calendar month on the basis of the average mail load carried per mile over the route during such month, except that in no case shall payment exceed 40 cents per airplane-mile.”

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Sec. 2.

Subsection (c) of section 3 of such Act is amended to read

Vol. 48, p. 934.

as follows:

“(c)“(c)

If, in the opinion of the Postmaster General, the public inter

Route extensions.

est requires it, he may grant extensions of any route: Provided, That

Proviso.

Limitation.

the aggregate mileage of all such extensions on any route in effect at one time shall not exceed two hundred and fifty miles, and that the rate of pay for such extensions shall not be in excess of the rate per mile fixed for the service thus extended.”

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Sec. 3.

The first sentence of subsection (d) of section 3 of such

Classification of routes.

Vol. 48, p. 934.

Act is amended to read as follows:

“The Postmaster General may designate certain routes as primary

Primary or secondary may be designated.

or as secondary routes. He shall designate as primary routes at least three transcontinental routes, with such termini as he may deem advisable, and, in addition thereto, such other routes as he may consider in the public interest, but no route less than seven hundred and fifty miles in length shall be designated as a primary route: Provided,

Provisos.

Coastal routes.

That the present routes from Seattle to San Diego and from Newark (or New York, as the case may be) to Miami, Florida, may be held and regarded as other than primary routes: Provided further,

Designated transcontinental routes included as primary.

That the Southern Transcontinental Route from Boston via New York (or Newark, as the case may be) and Washington to Los Angeles, shall be designated as a primary route.”

Sec. 4.

Subsection (f) of section 3 of such Act is amended to read

Vol. 48, p. 934.

as follows:

“(f)“(f)

The Postmaster General shall not award contracts for air-mail

Mileage limitation, etc.

routes or extend such routes in excess of an aggregate of thirty-two thousand miles, and shall not pay for air-mail transportation on such routes and extensions in excess of an annual aggregate of forty-five million airplane-miles. Subject to the foregoing, the Postmaster

Schedules, etc.

General shall prescribe the number and frequency of schedules, inter mediate regular stops, and time of departure of all planes carrying air mail, with due regard for the volume of mail carried over each route and for connecting schedules, and he may, under such regulations as he may prescribe, authorize and, notwithstanding any other provisions of this Act, compensate for a special schedule or an extra

Emergency, etc., trips.

or emergency trip in addition to any regular schedule over air-mail routes or portions thereof at the same mileage rate paid for regular schedules on the contract route or routes, or at a lesser rate if agreed to by the contractor and the Postmaster General, and he may utilize therefor any scheduled passenger or express flight of the contractor between the terminal points or over a portion of any route whenever

Proviso.

Nonmail schedule or plane.

the needs of the service may so require: Provided, That the Postmaster General may, upon application by an air-mail contractor, authorize said contractor for his own convenience to transport air mail on any nonmail schedule or plane, with the understanding that the weights of mail so transported will be credited to regular mail schedules and no mileage compensation will be claimed therefor and the miles flown in such cases will not be computed in the annual aggregate of flown mileage authorized under this section.”

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Sec. 5.

Subsection (a) of section 6 of such Act is amended to read as follows:

“Sec. 6

(a)(a)

The Interstate Commerce Commission is hereby empowered and directed, after notice and hearing, to fix and determine by order, as soon as practicable and from time to time, the fair and reasonable rates of compensation within the limitations of this Act for the transportation of air mail by airplane and the service connected therewith over each air-mail route, and over each section thereof covered by a separate contract, prescribing the method or methods by weight or space, or both, or otherwise, for ascertaining such rates of compensation, and to publish the same, which shall continue in force until changed by the said Commission after due notice and hearing,

Conflicting clauses repealed.

Vol. 48, p. 934.

Vol. 48, p. 936.

and so much of subsection (g) of section 3 of this Act as is in conflict with this section is hereby repealed.”

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Sec. 6.

Subsection (e) of section 6 of such Act is amended by adding at the end thereof the following:

Determining fair transportation rates.

Losses resulting from maintenance of non-mail schedules.

“In arriving at such determination the Commission shall disregard losses resulting, in the opinion of the Commission, from the unprofitable maintenance of nonmail schedules, in cases where the Commission may find that the gross receipts from such schedules fail to meet the additional operating expense occasioned thereby. In fixing and

Burden of proof when insufficiency of compensation rate alleged.

determining such rates, if it shall be contended or alleged by the holder of an air-mail contract that the rate of compensation in force for the service involved is insufficient, the burden of establishing such

Rate restriction.

insufficiency and the extent thereof shall be assumed by him. In no case shall the rates fixed and determined by the said Commission hereunder exceed the limits prescribed in section 3 (a) of this Act.

Report to Congress.

“The Commission is hereby authorized and directed, after having made a full and complete examination and audit of the books, and after having examined and carefully scrutinized all expenditures and purported expenditures, of the holders of the contracts hereinafter referred to, for goods, lands, commodities, and services, in order to determine whether or not such expenditures were fair and just, and were not improper, excessive, or collusive, in the cases of the eight air-mail contracts which are allowed, by a previous report of the Commission, the rate of 33⅓ cents per mile, under the provisions of the Act of June 12, 1934, on routes Numbered 7, 12, 13, 14, 19, 25, 27, and 32, and the Commission shall make a report to the Congress, not later than January 15, 1936, whether or not, in its judgment, a fair and reasonable rate of compensation on each of said eight contracts, under the other provisions and conditions of said Act, as herein amended, is in excess of 33⅓ cents per mile; together with full facts and reasons in detail why it recommends for or against any claim for increase.”

Sec. 7.

Subsection (b) of section 6 of such Act is amended to read

Vol. 48, p. 938.

as follows:

“(b)“(b)

The Interstate Commerce Commission is hereby directed at

Examination of contractors’ records; purpose.

least once in each calendar year from the date of the award of any contract to examine the books, accounts, contracts, and entire business records of the holder of each air-mail contract, and to review the rates of compensation being paid to such holder in order to be assured that no unreasonable profit is being derived or accruing therefrom, and in order to fix just rates. In determining what may

Unreasonable profit; factors to be considered.

constitute an unreasonable profit the said Commission shall take into consideration the income derived from the operation of airplanes over the routes affected, and in addition to the requirements of section 3 (f) of this Act, shall take into consideration all forms of expenditures of said companies in order to ascertain whether or not the expenditures have been upon a fair and reasonable basis on the part of said company and whether or not the said company has paid more than a fair and reasonable market value for the purchase or rent of planes, engines, or any other types or kind, or class, or goods, or services, including spare parts of all kinds, and whether or not the air-mail contracting company has purchased or rented any kind of goods, commodities, or services from any individuals who own stock in or are connected with the said contracting companies or has purchased such goods and services from any company or corporations in which any of the individuals employed by or owning stock in the air-mail contracting company have any interest or from which such purchase or rents any of the employees or stockholders of air-mail contracting companies would be directly or indirectly benefited. Within thirty days after a decision has been reached upon such

Report to be submitted.

review by the Interstate Commerce Commission touching such profit a full report thereof shall be made to the Postmaster General, to the Secretary of the United States Senate, and to the Clerk of the House of Representatives.”

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Sec. 8.

The first sentence of subsection (c) of section G of such

Vol. 48, p. 935.

Act is amended to read as follows:

“Any contract (1) let, extended, or assigned pursuant to the provisions

Extensions of contracts if satisfactorily performed

of this Act, and in full force and effect on March 1, 1935, or (2) which may be let subsequent to such date pursuant to the provisions of this Act and shall have been satisfactorily performed by the contractor during its full initial period, shall, from and after such date, or from and after the termination of its initial period, as the case may be, be continued in effect for an indefinite period, and compensation therefor, on and after March 1, 1935, during such period of indefinite continuance, shall be paid at the rate fixed by

Rates and conditions.

order of the Commission under this Act, subject to such additional conditions and terms as the Commission may prescribe, upon recommendation of the Postmaster General, which shall be consistent with the requirements and limitations contained in section 1 of this Act; but any contract so continued in effect may be terminated by the

Termination, upon 60 days’ notice.

Notice and hearing.

Commission upon sixty days’ notice, upon such hearing and notice thereof to interested parties as the Commission may determine to be reasonable; and may also be terminated, in whole or in part, by mutual agreement of the Postmaster General and the contractor, or for cause by the contractor upon sixty days’ notice.”

Sec. 9.

Subsection (d) of section 7 of such Act is amended to

Vol. 48, p. 936.

read as follows:

“(d)“(d)

No person shall be qualified to enter upon the performance of,

Air mail contractors.

Qualifications and salaries of officers, etc., of.

or thereafter to hold an air-mail contract (1) if, at or after the time specified for the commencement of mail transportation under such contract, such person is (or, if a partnership, association, or corporation, has a member, officer, or director, or an employee performing general managerial duties, that is) an individual who has theretofore entered into any unlawful combination to prevent the making of any

Provisos.

Affidavits respecting activities in regard to bidding, etc.

bids for carrying the mails: Provided, That whenever required by the Postmaster General or Interstate Commerce Commission the bidder shall submit an affidavit executed by the bidder, or by such of its officers, directors, or general managerial employees as the Postmaster General or Interstate Commerce Commission may designate, sworn to before an officer authorized and empowered to administer oaths, stating in such affidavit that the affiant has not entered nor proposed to enter into any combination to prevent the making of any bid for carrying the mails, nor made any agreement, or given or performed, or promised to give or perform, any consideration whatever to induce

Salary, etc., provision.

any other person to bid or not to bid for any mail contract, or (2) if it pays any officer, director, or regular employee compensation in any form, whether as salary, bonus, commission, or otherwise, at a rate exceeding $17,500 per year for full time: Provided further,

Limitation on amount.

That it shall be unlawful for any officer or regular employee to draw a salary of more than $17,500 per year from any air-mail contractor, or a salary from any other company if such salary from any company makes his total compensation more than $17,500 per year.”

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Sec. 10.

Section 10 of such Act is amended to read as follows:

“Sec. 10.

All persons holding air-mail contracts shall be required to keep their books, records, and accounts under such regulations as may be promulgated by the Postmaster General, and he is hereby

Examination by Post Office Department.

authorized, if and when he deems it advisable to do so, to examine and audit the books, records, and accounts of such contractors, and to require such contractors to submit full financial reports in such form and under such regulations as he may prescribe.

By Interstate Commerce Commission.

“Whenever an audit of the books, records, or accounts of any air-mail contractor is made by the auditors of the Interstate Commerce Commission, a full and complete report thereof shall be made to the Post Office Department within thirty days, and that report shall contain all instances in which the contractor has failed to comply with any of the provisions of the uniform system of accounts prescribed by the Post Office Department; and the Postmaster General shall, upon request, have at all times access to the records and reports of

Auditing expenses.

the Commission concerning air mail and air-mail contracts. There is authorized to be used from the appropriations for Contract Air Mail Service for the fiscal year ending June 30, 1936, a sum not in excess of $25,000 for the purpose of auditing the books and records of air-mail contractors by the Post Office Department.”

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Sec. 11.

Section 13 of such Act is amended to read as follows:

“Sec. 13.

It shall be a condition upon the holding of any air-mail contract that the rate of compensation and the working conditions and relations for all pilots and other employees of the holder of such contract shall conform to decisions heretofore or hereafter made by the National Labor Board, or its successor in authority, notwithstanding any limitation as to the period of its effectiveness included

Collective bargaining.

in any such decision heretofore rendered. This section shall not be construed as restricting the right of any such employees by collective bargaining to obtain higher rates of compensation or more favorable working conditions and relations.”

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Sec. 12.

Section 15, as amended, of such Act is amended to read as follows:

“Sec. 15.

After June 30, 1935, no person holding a contract or contracts for carrying air mail on a primary route shall be awarded or hold any contract for carrying air mail on any other primary route, nor on more than three additional routes other than primary routes. In case one person holds several contracts covering different sections of one air-mail route as designated by the Postmaster General, such several contracts shall be counted as one contract for the purpose of the preceding sentence. It shall be unlawful for air-mail contractors,

Unlawful practices.

competing in parallel routes, to merge or to enter into any agreement, express or implied, which may result in common control or ownership. After June 30, 1935, no air-mail contractor shall be allowed to maintain passenger or express service off the line of his air-mail route which in any way competes with passenger or express service available upon another air-mail route, except that off-line competitive service which has been regularly maintained on and prior to July 1, 1935, and such seasonal schedules as may have been regularly maintained during the year prior to July 1, 1935, may be continued if restricted to the number of schedules and to the stops scheduled and in effect during such period or season.

“Upon application of the Postmaster General or of any interested

Inquiries as to alleged unfair practices authorized.

air-mail contractor, setting forth that the general transport business or earnings upon an air-mail route are being adversely affected by any alleged unfair practice of another air-mail contractor, or by any competitive air-transport service supplied by an air-mail contractor other than that supplied by him on the line of his prescribed air-mail route, or by any service inaugurated by him after July 1, 1935, through the scheduling of competitive nonmail flights over an air-mail route, the Interstate Commerce Commission shall, after giving reasonable notice to the air-mail contractor complained of, inquire fully into the subject matter of the allegations; and if the

Powers of Commission.

Commission shall find such practice or competition or any part thereof to be unfair, or that such competitive service in whole or in part is not reasonably required in the interest of public convenience and necessity, and if the Commission shall further find that in either case the receipts or expenses of an air-mail contractor are so affected thereby as to tend to increase the cost of air-mail transportation, then it shall order such practice or competitive service, or both, as the case may be, discontinued or restricted in accordance with such findings, and the respondent air-mail contractor named in the order shall comply therewith within a reasonable time to be fixed in such order. If the Commission shall find after like application, notice,

Additional service ordered if necessary.

and hearing that the public convenience and necessity requires additional service or schedules and such service or schedules do not tend to increase the cost of air-mail transportation, it may permit the institution and maintenance of such schedules and prescribe the frequency thereof. The compensation of any air-mail contractor

Withholding pay for violation.

shall be withheld during any period that it continues to violate any order of the Commission or any provision of this Act.

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Sec. 13.

Section 6 of such Act is hereby amended by adding at the

Vol. 48, p. 936.

end thereof a new subsection to read as follows:

“(f)“(f)

Each holder of an air-mail contract shall file with the Inter

Rebates and passes.

state Commerce Commission, in such form as the Commission shall require, on July 1st and January 1st of each year, a full statement of all free transportation hereafter furnished during the preceding semiannual period to any persons, including in each case the regular tariff value thereof, the name and address of the donee, and a statement of the reason for furnishing such free transportation.”

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