[House Report 107-77]
[From the U.S. Government Publishing Office]
107th Congress Rept. 107-77
HOUSE OF REPRESENTATIVES
1st Session Part 2
======================================================================
TO PERMIT AIR CARRIERS TO MEET AND DISCUSS THEIR SCHEDULES IN ORDER TO
REDUCE FLIGHT DELAYS, AND FOR OTHER PURPOSES
_______
June 28, 2001.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Sensenbrenner, from the Committee on the Judiciary, submitted the
following
R E P O R T
[To accompany H.R. 1407]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 1407) to amend title 49, United States Code, to
permit air carriers to meet and discuss their schedules in
order to reduce flight delays, and for other purposes, having
considered the same, reports favorably thereon with amendments
and recommends that the bill as amended do pass.
CONTENTS
Page
The Amendment.................................................... 2
Purpose and Summary.............................................. 3
Background and Need for the Legislation.......................... 3
A. Background.......................................................3
B. The Sensenbrenner Amendment......................................4
C. The First Conyers Amendment......................................5
D. The Second Conyers Amendment.....................................5
E. Jurisdictional Issues............................................6
Hearings......................................................... 6
Committee Consideration.......................................... 6
Vote of the Committee............................................ 6
Committee Oversight Findings..................................... 6
Performance Goals and Objectives................................. 7
New Budget Authority and Tax Expenditures........................ 7
Congressional Budget Office Cost Estimate........................ 7
Constitutional Authority Statement............................... 8
Section-by-Section Analysis...................................... 8
Agency Views..................................................... 11
Changes in Existing Law Made by the Bill, as Reported............ 12
Markup Transcript................................................ 13
The amendments are as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. AIR CARRIER DISCUSSIONS RELATING TO FLIGHT SCHEDULING TO
REDUCE DELAYS.
(a) Request.--An air carrier may file with the Attorney General a
request for authority to discuss with one or more other air carriers or
foreign air carriers agreements or cooperative arrangements relating to
limiting flights at an airport during a time period that the Attorney
General determines that scheduled air transportation exceeds the
capacity of the airport. The purpose of the discussion shall be to
reduce delays at the airport during such time period.
(b) Approval.--Notwithstanding the antitrust laws, the Attorney
General shall approve a request filed under this section if the
Attorney General finds that the discussions requested will facilitate
voluntary adjustments in air carrier schedules that could lead to a
substantial reduction in travel delays and improvement of air
transportation service to the public and will not substantially lessen
competition or tend to create a monopoly. The Attorney General may
impose such terms and conditions to an approval under this section as
the Attorney General determines are necessary to protect the public
interest and to carry out the objectives of this section.
(c) Notice.--Before a discussion may be held under this section,
the Attorney General shall provide at least 3 days notice of the
proposed discussion to all air carriers and foreign air carriers that
are providing service or seeking to provide service to the airport that
will be the subject of such discussion.
(d) Monitoring.--The Attorney General or a representative of the
Attorney General shall attend and monitor any discussion or other
effort to enter into an agreement or cooperative arrangement under this
section.
(e) Discussions Open to Public.--A discussion held under this
section shall be open to the public.
SEC. 2. AIR CARRIER AGREEMENTS RELATING TO FLIGHT SCHEDULING.
(a) Request.--An air carrier may file with the Attorney General a
request for approval of an agreement or cooperative arrangement
relating to interstate air transportation, and any modification of such
an agreement or arrangement, reached as a result of a discussion held
under section 1.
(b) Approval.--Notwithstanding the antitrust laws, and subject to
subsection (c), the Attorney General shall approve an agreement,
arrangement, or modification for which a request is filed under this
section if the Attorney General finds that the agreement, arrangement,
or modification is not adverse to the public interest, is necessary to
reduce air travel delays, and will not substantially lessen competition
or tend to create a monopoly and that a substantial reduction in such
delays cannot be achieved by any other immediately available means.
(c) Unanimous Agreement Among Carriers Required.--The Attorney
General may approve an agreement, arrangement, or modification for
which a request is filed under this section only if the Attorney
General finds that each air carrier and foreign air carrier providing
service or seeking to provide service to the airport that is the
subject of the agreement, arrangement, or modification has agreed to
the agreement, arrangement, or modification.
(d) Terms and Conditions.--The Attorney General may impose such
terms and conditions on an agreement, arrangement, or modification for
which a request is filed under this section as the Attorney General
determines are necessary to protect the public interest and air service
to an airport that has less than .25 percent of the total annual
boardings in the United States.
SEC. 3. LIMITATIONS.
(a) Rates, Fares, Charges, and In-Flight Services.--The
participants in a discussion approved under section 1 may not discuss
or enter into an agreement or cooperative arrangement regarding rates,
fares, charges, or in-flight services.
(b) City Pairs.--The participants in a discussion approved under
section 1 may not discuss particular city pairs or submit to another
air carrier or foreign air carrier information concerning their
proposed service or schedules in a fashion that indicates the city
pairs involved.
SEC. 4. CONSULTATION WITH SECRETARY OF TRANSPORTATION.
In making a determination whether to approve a request under
section 1, or an agreement, arrangement, or modification under section
2, the Attorney General shall consider any comments of the Secretary of
Transportation.
SEC. 5. DEFINITIONS.
In this Act, the following definitions apply:
(1) Air carrier, airport, air transportation, foreign air
carrier, and interstate air transportation.--The terms ``air
carrier'', ``airport'', ``air transportation'', ``foreign air
carrier'', and ``interstate air transportation'' have the
meanings such terms have under section 40102 of title 49,
United States Code.
(2) Antitrust laws.--The term ``antitrust laws'' has the
meaning such term has under section 41308(a) of title 49,
United States Code.
SEC. 6. TERMINATION.
(a) Approval of Agreements.--The Attorney General may not approve
an agreement, arrangement, or modification under section 2 after
October 26, 2003.
(b) Expiration of Agreements.--An agreement, arrangement, or
modification approved by the Attorney General under section 2 may
continue in effect until October 26, 2004, or an earlier date
determined by the Attorney General.
Amend the title so as to read:
A bill to permit air carriers to meet and discuss their schedules
in order to reduce flight delays, and for other purposes.
Purpose and Summary
H.R. 1407, as reported by the Committee on the Judiciary,
provides an antitrust exemption to airlines to conduct joint
discussions for the purpose of limiting flights to reduce
congestion and delay. Such discussions may only be conducted
with close Department of Justice scrutiny, and any agreements
must receive Department of Justice approval.
Background and Need for the Legislation
A. Background
Everyone who flies regularly knows the frustration of
airline delays and cancellations. Demand for flights has
exploded while the capacity of airports and the air traffic
control system has remained largely stagnant. Thus, the growing
number of flights that consumers demand increasingly strains
the system thereby causing delays and cancellations. We will
continue to face that strain, particularly on bad weather days,
until we increase the capacity of the system. Despite that
unalterable fact, some believe that a temporary antitrust
immunity can provide short term relief. The Committee believes
that if such discussions are to be attempted, they must be
carefully monitored by the Antitrust Division of the Department
of Justice.
The idea is not a new one, and it does not have a track
record of great success. Efforts to provide antitrust immunity
for airlines to discuss scheduling date back to at least 1968.
In that year, airline congestion had reached crisis
proportions, particularly in the so-called ``Golden Triangle''
between Washington, New York, and Chicago. Acting under its
authority to grant antitrust immunity to airline agreements,
the Civil Aeronautics Board authorized discussions among the
airlines to reduce this congestion. CAB Orders 68-7-138 and 68-
8-30. See also Federal Aviation Act of 1958, Pub. L. No. 85-
726, Sec. Sec. 412, 414, 72 Stat. 731, 770 (1958) (granting
authority to CAB to confer antitrust immunity on airline
agreements).
These talks led to two developments. First, the airlines
agreed to create a voluntary scheduling agreement. The CAB
approved the agreement and gave it antitrust immunity. CAB
Order 68-12-11. Second, the Federal Aviation Administration
created the high-density or slot rule which limited the number
of flights per hour at four major airports: Washington's Ronald
Reagan National, New York's LaGuardia and JFK, and Chicago's
O'Hare. 33 Fed. Reg. 17896. See 14 C.F.R. Sec. 93.121. Under
their voluntary scheduling agreement, the airlines agreed how
they would allocate the slots at these airports.
As an aside, it should be noted that last year's AIR 21 Act
phases out the slot rule over time. Wendell H. Ford Aviation
Investment and Reform Act for the 21st Century, Pub. L. No.
106-181, Sec. 231, 114 Stat. 61, 106 (2000). It is ironic that
many of the same observers who last year wanted to eliminate
the slot rule now seek to reinstate it through private
discussions.
Returning to the situation in the late 1960's and the
1970's, from the perspective of the airlines, the airlines'
voluntary agreement as to how to allocate slots worked fairly
well for several years. Then, in 1978, Congress deregulated the
airline industry. Airline Deregulation Act of 1978, Pub. L. No.
95-504, 92 Stat. 1705 (1978). Deregulation led to a large
number of new competitors, many of whom were demanding slots
thereby putting increasing stress on the voluntary scheduling
agreement. Finally, the situation came to a head in 1980 when
New York Air wanted to begin shuttle service between Washington
and New York. It demanded 20 slots at peak hours to offer the
service. The voluntary agreement was not able to accommodate
this demand, and the process fell apart.
In 1984, the CAB tried to reinstitute the process by
granting Eastern Airlines's request for authority to conduct
discussions. CAB Order 84-8-129. Those efforts made limited
progress. The Civil Aeronautics Board ceased to exist on
January 1, 1985. Its antitrust immunity authority was
transferred to the Department of Transportation to expire on
January 1, 1989. See Civil Aeronautics Board Sunset Act of
1984, Pub. L. No. 98-443, Sec. 3, 98 Stat. 1703 (1984).
After the 1984 effort, the FAA decided to allow airlines to
buy and sell slots issuing that rule in December 1985. 50 Fed.
Reg. 52180 (December 20, 1985). That system remains in effect
today although as noted above the slot system is being phased
out under the AIR 21 Act. With its new antitrust authority, the
Department made one last attempt to grant immunity in 1987. DOT
Orders 87-1-54, 87-3-39, and 87-5-82. The antitrust immunity
expired in 1989, and no further attempts have been made to
revive these discussions.
All agree that our airline delay problems can only be
solved by increasing the capacity of the system. Airlines
schedule flights at particular times because their customers
want to fly at those times. Indeed, the Committee understands
that although the airlines are not opposed to this bill, they
did not seek it either. This bill is, at best, going to provide
minimal short term relief. Its proponents do not argue
otherwise. On the other hand, the bill has a number of
safeguards in it to prevent any competitive harm. With the
Committee's insertion of the Justice Department as the watchdog
over these discussions, these safeguards are now sufficient.
The Committee believes the bill is likely to have little
effect, but also likely to cause little harm.
B. The Sensenbrenner Amendment
At the markup, Chairman Sensenbrenner offered an amendment
which made several relatively minor amendments to the bill.
First, the bill as reported by the Transportation Committee
provides that a representative from the Department of
Transportation would have to monitor airline discussions. The
Sensenbrenner amendment provides for a Department of Justice
monitor as well.
Second, the bill as reported by the Transportation
Committee provides that notice of a meeting would be sent to
all airlines currently providing service to an airport. The
Sensenbrenner amendment also requires that notice be sent to
airlines that are seeking to provide service at an airport so
that new entrants are not squeezed out.
Third, the bill as reported by the Transportation Committee
provides that the Department of Transportation may not approve
an agreement unless it meets several standards. The
Sensenbrenner amendment adds the requirement that any agreement
be unanimous among all of the airlines providing service or
seeking to provide service to an airport. Again, this will
prevent smaller or new entrant airlines from being squeezed
out.
Fourth, the bill as reported by the Transportation
Committee provides that the authority of the bill will expire
on September 30, 2003 and that agreements reached can continue
after that time at the discretion of the Secretary. At the
Transportation Committee hearing, the Air Transport Association
suggested that this date be moved to October 26, 2003--the date
on which the country switches from daylight saving time to
standard time--because that is when the airlines make their
major seasonal schedule change. The Sensenbrenner amendment
provides for the October 26 expiration date and puts a 1-year
limit on the continuation of agreements after the expiration
date.
The Committee adopted the Sensenbrenner amendment by voice
vote.
C. The First Conyers Amendment
At the markup, Ranking Member Conyers offered two
amendments. The first Conyers amendment struck all references
to title 49 and made the bill a freestanding new law. This
amendment struck out the antitrust exemption because it was
part of title 49. Pursuant to the staff's authority to make
technical and conforming changes, certain terms that are
defined in title 49 and would have applied absent this change
were added to the freestanding law. The Committee adopted the
first Conyers amendment by voice vote.
D. The Second Conyers Amendment
The second Conyers amendment made several important
substantive changes to the bill. First, it struck all
references to the Secretary of Transportation and inserted in
lieu thereof the Attorney General. Second, it added new
language requiring the Attorney General to consult with the
Secretary of Transportation concerning decisions to approve
discussions or agreements. Third, it added back the antitrust
exemption that was struck in the first Conyers amendment by
inserting the phrase ``[n]otwithstanding the antitrust laws''
in the appropriate places. Finally, it added an antitrust
standard--``will not substantially lessen competition or tend
to create a monopoly''--to the other standards that the
Attorney General considers when deciding whether to allow
discussions and to approve agreements. The Committee adopted
the second Conyers amendment on a voice vote.
E. Jurisdictional Issues
The Committee also wishes to note that it strongly
disagrees with the Speaker's decision to refer this bill solely
to the Committee on Transportation and Infrastructure at
introduction. Chairman Sensenbrenner believes that the bill
should have been referred primarily to this Committee with a
secondary referral to the Committee on Transportation and
Infrastructure. He set forth these views at length in a May 9,
2001 letter to Speaker Hastert, and they are summarized briefly
here.
First, based on the specific provisions of H.R. 1407,
Chairman Sensenbrenner believes that the fundamental purpose of
this bill is to provide the antitrust exemption. The conduct
that the bill authorizes represents a classic per se violation
of the antitrust laws--competitors joining together to limit
supply. Without the antitrust exemption, none of the airlines
would engage in these discussions. Thus, the antitrust
exemption could stand alone without the regulatory provisions,
but the regulatory provisions could not stand alone without the
antitrust exemption. In other words, the antitrust exemption is
a condition precedent for any airline meetings regulated by the
bill.
Second, Chairman Sensenbrenner believes that the most
relevant historical precedents are the recent efforts to repeal
the antitrust exemption for ocean carriers, H.R. 3138 in the
106th Congress and H.R. 1253 in the 107th Congress. These bills
are the opposite of this bill. Rather than creating an
antitrust exemption that is specific to a particular industry,
they repeal one. Both were referred to the Committee on the
Judiciary primarily and the Committee on Transportation and
Infrastructure secondarily. Chairman Sensenbrenner believes
that for jurisdictional purposes the two cases are the same.
For these reasons and the others set forth in his letter to the
Speaker, he believes that H.R. 1407 should have been referred
primarily to this Committee at introduction.
Hearings
The Committee held no hearings on H.R. 1407 because it is a
relatively simple bill and because the Committee received a
sequential referral with a short time limit.
Committee Consideration
On June 20, 2001, the Committee met in open session and
ordered favorably reported the bill H.R. 1407 with an amendment
by a voice vote, a quorum being present.
Vote of the Committee
During the Committee's consideration of H.R. 1407, it took
no rollcall votes. The Sensenbrenner amendment, the first
Conyers amendment, and the second Conyers amendment passed on
voice votes. The Sensenbrenner motion to order the bill
reported favorably with an amendment passed by a voice vote.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee reports that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
Performance Goals and Objectives
H.R. 1407 does not authorize funding. Therefore, clause
3(c)(4) of rule XIII of the Rules of the House is inapplicable.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of House Rule XIII is inapplicable because
this legislation does not provide new budgetary authority or
increased tax expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 1407, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 22, 2001.
Hon. F. James Sensenbrenner, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1407, a bill to
permit air carriers to meet and discuss their schedules in
order to reduce flight delays, and for other purposes.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Mark Hadley,
who can be reached at 226-2860.
Sincerely,
Dan L. Crippen, Director.
Enclosure
cc:
Honorable John Conyers Jr.
Ranking Member
H.R. 1407--A bill to permit air carriers to meet and discuss their
schedules in order to reduce flight delays, and for other
purposes.
H.R. 1407 would exempt air carriers from antitrust laws
through October 26, 2004, under certain conditions. Under the
bill, air carriers could cooperate to limit flights at airports
where scheduled flights exceed capacity if the Attorney General
determines that such agreements would reduce travel delays and
improve service to the public without lessening competition or
tending to create a monopoly. H.R. 1407 would require that a
representative of the Department of Justice (DOJ) monitor
discussions among airlines for this purpose, and that any
discussions be open to the public. The bill would not allow air
carriers to discuss fares, services, or the city pairs involved
with such flights. Finally, the bill would require the Attorney
General to consider comments of the Secretary of Transportation
before approving an agreement.
Based on information from DOJ and the Department of
Transportation, CBO estimates that the annual cost of
monitoring discussions between air carriers would be negligible
and subject to the availability of appropriated funds. H.R.
1407 would not affect direct spending or receipts; therefore,
pay-as-you-go procedures do not apply. H.R. 1407 contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act and would impose no costs on
State, local, or tribal governments.
On May 18, 2001, CBO transmitted a cost estimate for H.R.
1407, as ordered reported by the House Committee on
Transportation and Infrastructure on May 16, 2001. That version
of the bill would require representatives of the Department of
Transportation to monitor discussions among airlines and also
would result in negligible costs.
The CBO staff contact for this estimate is Mark Hadley, who
can be reached at 226-2860. This estimate was approved by
Robert A. Sunshine, Assistant Director for Budget Analysis.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in article I, section 8 of the Constitution.
Section-by-Section Analysis and Discussion
The following section by section analysis describes H.R.
1407 as reported by the Committee on the Judiciary.
Section 1. Air Carrier Discussions Relating to Flight
Scheduling to Reduce Delays. Subsection 1(a) allows air
carriers to file a request with the Attorney General to discuss
with other air carriers and foreign air carriers agreements to
limit flights at airports during time periods when the
Secretary determines that flights exceed the capacity of the
airport. Subsection 1(b) requires that, notwithstanding the
antitrust laws, the Attorney General shall approve a request
under Sec. 1(a) if he finds that the discussions will
facilitate voluntary adjustments that could lead to a
substantial reduction in travel delays and improvement of
service to the public. The Attorney General may impose
conditions on the approval. Subsection 1(c) provides that the
Attorney General shall provide 3 days notice of the proposed
discussion to all air carriers and foreign air carriers that
are providing service or seeking to provide service to the
airport that will be the subject of the discussion. Subsection
1(d) provides that the Attorney General or his representative
shall attend and monitor a discussion under this subsection.
Subsection 1(e) provides that any discussions held under this
section shall be open to the public.
Section 2. Air Carrier Agreements Relating to Flight
Scheduling. Subsection 2(a) provides that an air carrier may
file with the Attorney General a request to approve an
agreement, arrangement, or modification reached as a result of
a discussion under Sec. 1. Subsection 2(b) provides that,
notwithstanding the antitrust laws, the Attorney General shall
approve a request under subsection 2(a) if he finds that the
agreement or modification is not adverse to the public
interest; is necessary to reduce air travel delays; and will
not substantially lessen competition or tend to create a
monopoly; and that a substantial reduction in such delays
cannot be achieved by any other immediately available means.
Subsection 2(c) provides that the Attorney General may
approve an agreement, arrangement, or modification under Sec. 2
only if there is unanimous consent among each air carrier or
foreign air carrier providing service or seeking to provide
service to the affected airport.
Subsection 2(d) provides that the Attorney General may
impose conditions on approval of a request under Sec. 2 to
protect the public interest and to protect air service to small
airports.
Section 3. Limitations. Subsection 3(a) provides that the
participants in a discussion under Sec. 1 may not discuss or
agree on rates, fares, charges, or in-flight services.
Subsection 3(b) provides that the participants in a
discussion under Sec. 1 may not discuss particular city pairs
or discuss schedules in a fashion that indicates the city pairs
involved.
Section 4. Consultation with Secretary of Transportation.
Section 4 provides that in making a determination whether to
approve a request to conduct discussions under Sec. 1 or a
request for approval of an agreement, arrangement, or
modification under Sec. 2, the Attorney General shall consider
any comments of the Secretary of Transportation.
Section 5. Definitions. Pursuant to the staff authority to
make technical and conforming changes, Sec. 5 was added to
reinsert certain title 49 definitions that were lost when the
first Conyers amendment deleted the references to title 49.
Subsection 5(1) provides that the terms ``air carrier,''
``airport,'' ``air transportation,'' ``foreign air carrier,''
and ``interstate air transportation'' have the meanings such
terms have under 49 U.S.C. Sec. 40102. Subsection 5(2) provides
that the term ``antitrust laws'' has the meaning that such term
has under 49 U.S.C. Sec. 41308(a).
Section 6. Termination. Subsection 6(a) provides that the
Attorney General may not approve an agreement, arrangement, or
modification under Sec. 2 after October 26, 2003. Subsection
6(b) provides that an agreement, arrangement, or modification
approved under Sec. 2 may remain in effect until October 26,
2004 or an earlier date determined by the Attorney General.
Title. The title of the bill is amended to read as follows:
``A bill to permit air carriers to meet and discuss their
schedules in order to reduce flight delays, and for other
purposes.''
The following section by section analysis describes H.R.
1407 as reported by the Committee on Transportation and
Infrastructure.
Section 1. Scheduling Committees, Discussions, and
Agreements. Subsection 1(a) of H.R. 1407 creates a new section
Sec. 40129 of title 49 of the U.S. Code. Subsection (a)(1) of
the new Sec. 40129 allows air carriers to file a request with
the Secretary of Transportation to discuss with other air
carriers and foreign air carriers agreements to limit flights
at airports during time periods when the Secretary determines
that flights exceed the capacity of the airport.
Subsection (a)(2) of the new Sec. 40129 requires the
Secretary to approve a request under (a)(1) if he finds that
the discussions will facilitate voluntary adjustments that
could lead to a substantial reduction in travel delays and
improvement of service to the public. The Secretary may impose
conditions on the approval.
Subsection (a)(3) of the new Sec. 40129 provides that the
Secretary shall provide 3 days notice of the proposed
discussion to all air carriers and foreign air carriers that
are providing service to the airport that will be the subject
of the discussion.
Subsection (a)(4) of the new Sec. 40129 provides that the
Secretary or his representative shall attend and monitor a
discussion under this subsection.
Subsection (a)(5) of the new Sec. 40129 provides that any
discussions held under this section shall be open to the
public.
Subsection (b)(1) of the new Sec. 40129 provides that an
air carrier may file with the Secretary a request to approve an
agreement or a modification of an agreement reached as a result
of a discussion under subsection (a).
Subsection (b)(2) of the new Sec. 40129 provides that the
Secretary shall approve a request under subsection (b)(1) if he
finds that the agreement or modification is not adverse to the
public interest; is necessary to reduce air travel delays; and
that a substantial reduction in such delays cannot be achieved
by any other immediately available means.
Subsection (b)(3) of the new Sec. 40129 provides that the
Secretary may impose conditions on approval of a request under
subsection (b)(1) to protect the public interest and to protect
air service to small airports.
Subsection (c)(1) of the new Sec. 40129 provides that the
participants in a discussion under this section may not discuss
or agree on rates, fares, charges, or in-flight services.
Subsection (c)(2) of the new Sec. 40129 provides that the
participants in a discussion under this section may not discuss
particular city pairs or discuss schedules in a fashion that
indicates the city pairs involved.
Subsection (d) of the new Sec. 40129 provides that the
section shall cease to be in effect after September 30, 2003,
but that existing agreements on that date may remain in force
at the discretion of the Secretary.
Subsection 1(b) of H.R. 1407 contains a conforming
amendment to amend the table of contents of the code to reflect
the new Sec. 40129.
Section 2. Limited Exemption from the Antitrust Laws.
Section 2 of H.R. 1407 inserts the new Sec. 40129 into the list
of sections included in an existing antitrust exemption in 49
U.S.C. Sec. 41308. Under Sec. 41308(b), the Secretary may grant
antitrust immunity for some agreements. Under Sec. 41308(c), he
is required to grant antitrust immunity if he makes certain
findings. Section 40129 is inserted into both provisions. Thus,
under Sec. 41308(c), the Secretary must grant antitrust
immunity to a Sec. 40129 agreement if he finds that it ``is not
adverse to the public interest and is necessary to reduce air
travel delays and that a substantial reduction in such delays
cannot be achieved by any other immediately available means''
as provided in new Sec. 40129(b)(2). Because the Secretary
``shall'' approve any agreement if he makes these findings and
there is no other mechanism for approval, the operation of
Sec. 41308(c) will require him to grant antitrust immunity to
any agreement that he approves. In short, every agreement
reached and approved under this bill will receive antitrust
immunity.
Agency Views
The Committee received the following information about H.R.
1407 from the Department of Justice:
U.S. Department of Justice,
Office of Legislative Affairs,
Washington, DC, June 19, 2001.
Hon. F. James Sensenbrenner, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: This letter provides the views of the
Department of Justice on H.R. 1407 as reported by the Committee
on Transportation and Infrastructure.
This legislation would grant antitrust immunity to
competing airlines to permit them to coordinate scheduled
flight arrivals and departures. While the Department
understands the concerns over airport congestion and flight
delays, we have concerns about this legislation in its current
form.
In the face of strong public concern about competitive
problems in the airline industry, this legislation is likely to
exacerbate those problems, resulting in diminished service and
higher prices for the traveling public. Indeed, the proposed
exemption would cover conduct that is considered so harmful to
competition as to likely be deemed per se unlawful under the
antitrust laws.
Scheduling is a critical element of competition among air
carriers. Carriers compete to offer flights at convenient
times, especially for business passengers who pay significantly
higher fares. For 1-day trips, business passengers prefer
early-morning outbound flights and end-of-day return flights.
They also prefer carriers with a substantial number of flight
frequencies in the city-pair market, to give them flexibility
to change flights on short notice when necessary. Both these
factors can lead to airport congestion during peak travel
times.
If legislation is enacted permitting carriers to coordinate
reductions in output, they will predictably endeavor to do so
in the manner most profitable to themselves. It should be
expected that each carrier will hold out for agreements that
maximize its ability to obtain, exert, or protect its market
power in its ``home'' or ``hub'' airports--and they would have
little incentive to do otherwise. By their nature, output-
limiting agreements among competitors result in inflated
prices. In the current hub-and-spoke system, where most hub
airports are dominated by a few carriers at most and a
particular city-pair market is often more important to one
carrier than to another, carriers will have a strong incentive
to make anticompetitive ``trades'' where each agrees to reduce
service in markets important to the others. And they can
accomplish this without overtly doing so.
Experience shows that this concern is well-founded. Almost
10 years ago, the Department sued the major airlines for using
their electronic tariff publishing system to negotiate similar
``trades'' on fares. That is, one carrier proposed fare
increases in markets important to another carrier, in exchange
for the other carrier making fare increases in markets
important to the first carrier. Having condemned such
coordinated fare increases, it would be ironic to permit
coordinated output reductions, which can be just as harmful to
consumers.
Further, once the exemption is created it will be difficult
to avoid ``spill-over'' cartel effects. And if carriers do
begin to collaborate on other factors on which they should be
competing, the antitrust immunity will make it more difficult
for the Department to prosecute such conduct. Thus, the
proposed exemption could effectively immunize a broad range of
harmful anticompetitive conduct even beyond the legislation's
intended focus.
Although the bill's authors have included provisions
attempting to protect the public against anticompetitive abuse,
we believe these provisions will prove an inadequate substitute
for the antitrust laws. Merely prohibiting discussions of fares
or specific city pairs cannot begin to capture all the complex
ways carriers can potentially interact to achieve
anticompetitive ends behind the shield of an antitrust
exemption. And subjecting these agreements to approval by
Secretary of Transportation would simply turn us back in the
dangerous direction of fare and route regulation reminiscent of
the regime Congress wisely rejected two decades ago--due to its
inherent difficulty, uncertainty, and costs to the economy--in
favor of relying on competition.
In short, this legislation, as currently drafted, could
result in anticompetitive behavior. We believe that there may
be available to Congress remedies that do not conflict with the
enforcement of the antitrust laws.
Thank you for the opportunity to present our views. Please
do not hesitate to call upon us if we may be of additional
assistance. The Office of Management and Budget has advised us
that from the perspective of the Administration's program,
there is no objection to submission of this letter.
Sincerely,
Daniel J. Bryant, Assistant Attorney General.
cc:
The Honorable John Conyers, Jr.
The Honorable Don Young
The Honorable James L. Oberstar
Changes in Existing Law Made by the Bill, as Reported
The bill, as reported by this committee, does not make any
changes to existing law. The bill, as reported by the Committee
on Transportation and Infrastructure, does make changes to
existing law, which are shown in the report filed on the bill
by that committee (Rept. 107-77, Part 1).
Markup Transcript
BUSINESS MEETING
WEDNESDAY, JUNE 20, 2001
House of Representatives,
Committee on the Judiciary,
Washington, DC.
The Committee met, pursuant to notice, at 11:07 a.m., in
Room 2141, Rayburn House Office Building, Hon. F. James
Sensenbrenner [Chairman of the Committee] presiding.
Next on the agenda, pursuant to notice, I now call up the
bill H.R. 1407, as reported by the Committee on Transportation
and Infrastructure for purposes of markup, and move its
favorable recommendation to the House.
[H.R. 1407 follows:]
Chairman Sensenbrenner. Without objection, the bill will be
considered as read and open for amendment at any point. The
Chair recognizes himself for 5 minutes.
H.R. 1407 provides an antitrust exemption to the airlines
to allow them to conduct joint discussions to limit flights and
reduce delays and cancellations. Like everyone else who flies,
I would like to reduce delays and cancellations. However, I
believe the solution is to provide more airport capacity. I am
skeptical that this bill will work, but I believe that it has
enough safeguards so that it is unlikely to do much harm
either. I do have an amendment that makes some minor tweaks to
the bill and will have more to say on that in a moment.
At this time, I recognize the gentleman from Michigan, Mr.
Conyers, for an opening statement.
Mr. Conyers. Thank you, Mr. Chairman, for your
accommodations based on my schedule, and I also want to thank
you for protecting the Committee's jurisdiction in connection
with H.R. 1407, the ``Airline Delay Reduction Act,'' something
which probably every citizen in the country would support the
title of, but the problem is that the matter was referred
solely to the Transportation Committee, despite the fact that
it provides for an exemption to antitrust laws. And you have
worked tirelessly to secure a sequential referral and are doing
everything possible to restore the Committee's jurisdiction as
the bill moves along.
Now, I have certain reluctances about a new antitrust
exemption for the airline industry. It's not that I don't trust
them, but here we are confronted with a situation that would be
administered, an antitrust exemption to be administered by the
Department of Transportation, which at last observation, I
haven't noticed much antitrust expertise over there, and it's--
it's the impression of my staff working with me on this that
the bill misses the real problem and focuses on a solution that
may lead to fewer flights and higher fares.
Now, the last thing the airline industry needs is less
competition, which is another thing it seems that this bill
would move toward. And so, as things currently stand, the
competitive balance of the industry is in a state of
dysfunction.
Now, since the deregulation took place 20 years ago, we
have gone from a highly competitive structure to an oligopoly.
Most of this has occurred under the watch of the Department of
Transportation, as scores of airline mergers, too numerous to
mention, have been hastily approved. The three top airlines--
United, American, and Delta--control nearly 60 percent of the
United States' air traffic, and experts predict that that could
rise to as high as 90 percent in the, in the near future. This
is a speculation.
Now, consumers, as usual, have been left out in the cold.
Delays are on the increase, service is on the decline, and
prices are as high as ever. Fares are particularly outrageous
from the so-called hub airports, at which I've had some
experience, where consumers pay an average of 41 percent higher
fares than nonhub airports. And so in this context, it's hard
to believe that an antitrust exemption, which allows the
airlines to come together to reduce flights, will lead to the
inevitable increase in prices. And even if it didn't, I'm not
sure if I would be happy about them being given permission to
meet about anything at this point.
I would submit that what consumers need is more vigorous
antitrust enforcement not new antitrust exemptions. And, to my
surprise, the Bush Department of Justice appears to agree with
me, opposing this measure because it is likely to lead to
diminished service and higher prices.
I also have some reluctances about the measure because it
will do little to deal with the problem of flight delays. The
vice president of the Air Transport Association, James Casey,
has admitted that only 11 percent of all delays were
attributable to terminal area volume. What it means is that, at
best, this bill won't even touch the real cause of 90 percent
of the delays.
If we want to do something about airline delays, and I'm
sure everyone does, we need to authorize more funds for airport
improvements and airport infrastructure. We need to improve and
enhance the Federal Aviation Administration, which has been
reeling ever since the Government laid off all of the air
traffic controllers in 1981. I suggest to the Transportation
Committee that they might look at making changes to the
transportation law before they result to the antitrust law for
solutions.
And I thank the Chairman, and I yield to----
Chairman Sensenbrenner. The gentleman's time has expired.
Mr. Conyers. Okay.
Chairman Sensenbrenner. Without objection, all Members may
place opening statements in the record at this point.
Chairman Sensenbrenner. And the Chair has an amendment at
the desk, and the clerk will report the amendment.
The Clerk. Amendment to the Committee Print to H.R. 1407
offered by Mr. Sensenbrenner.
Chairman Sensenbrenner. Would you pull the mike up closer,
please.
The Clerk. Amendment to the Committee Print to H.R. 1407
offered by Mr. Sensenbrenner. Page 3----
Chairman Sensenbrenner. And without objection, the
amendment is considered as read and open for amendment at any
point.
[The amendment follows:]
Chairman Sensenbrenner. The Chair recognizes himself for 5
minutes, and won't use it.
My amendment makes several minor changes to the bill that I
believe will provide even more protection against potential
harms to competition.
First, the bill currently provides that a representative
from the Department of Transportation would have to monitor the
airline discussions, and my amendment would provide for a
Department of Justice monitor as well.
Second, the bill currently provides that notice of a
meeting would be sent to all airlines currently providing
service to an airport. My amendment would also require that
this notice also be sent to airlines that are seeking to
provide service to that airport so that new entrants are not
squeezed out.
Third, the bill currently provides that the DOT may not
approve an agreement unless it meets several standards. My
amendment would add the requirement that any agreement be
unanimous among all airlines providing service or seeking to
provide service to an airport. Again, this will prevent smaller
or new-entrant airlines from being squeezed out, and my fear
is, is that without this feature, the big ones would get
together and eat up the competition that was provided by the
smaller ones and the new starts.
Fourth, and finally, the bill currently provides that the
authority of this bill will expire on September 30, 2003, and
that agreements reached can continue after that time, at the
discretion of the Secretary. At the Transportation Committee
hearing, the Air Transport Association suggested that this date
be moved to October 26, 2003, the date on which the country
changes from daylight savings time to standard time in the fall
because that's when the airlines make their major seasonal
schedule change. This, to me, seems to be a reasonable
accommodation.
Finally, my amendment puts a 1-year limit on the
continuation of agreements after the expiration date, whereas,
the Transportation Committee bill makes them unlimited.
So, in sum, none of these changes are major, but I do think
they add to the competitive protections of the bill.
[The prepared statement of Chairman Sensenbrenner follows:]
Prepared Statement of the Honorable F. James Sensenbrenner, a
Representative in Congress From the State of Wisconsin
H.R. 1407 provides an antitrust exemption to the airlines to allow
them to conduct joint discussions to limit flights and reduce delays
and cancellations. Like everyone else who flies, I would like to reduce
delays and cancellations. However, I believe the solution is to provide
more airport capacity. I am skeptical that this bill will work, but I
believe that it has enough safeguards so that it is unlikely to do much
harm either. I do have an amendment that makes some minor tweaks to the
bill, and I will have more to say on that in a moment.
My amendment makes several minor changes to the bill that I believe
will provide even more protection against potential harms to
competition.
First, the bill currently provides that a representative from the
Department of Transportation would have to monitor airline discussions,
and my amendment would provide for a Department of Justice monitor as
well.
Second, the bill currently provides that notice of a meeting would
be sent to all airlines currently providing service to an airport. My
amendment would also require that notice be sent to airlines that are
seeking to provide service at an airport so that new entrants are not
squeezed out.
Third, the bill currently provides that the Department of
Transportation may not approve an agreement unless it meets several
standards. My amendment would add the requirement that any agreement be
unanimous among all of the airlines providing service or seeking to
provide service to an airport. Again, this will prevent smaller or new
entrant airlines from being squeezed out.
Fourth, the bill currently provides that the authority of the bill
will expire on September 30, 2003 and that agreements reached can
continue after that time at the discretion of the Secretary. At the
Transportation Committee hearing, the Air Transport Association
suggested that this date be moved to October 26, 2003--the date on
which we switch from daylight saving time to standard time--because
that is when the airlines make their major seasonal schedule change.
That seems to me a reasonable accommodation. Finally, my amendment puts
a one-year limit on the continuation of agreements after the expiration
date.
So, in sum, none of these changes are major, but I do think that
they add to the competitive protections in the bill.
Mr. Conyers. Mr. Chairman?
Chairman Sensenbrenner. I yield to the gentleman from
Michigan.
Mr. Conyers. I'm pleased to support the amendment.
[The prepared statement of Mr. Conyers follows:]
Prepared Statement of the Honorable John Conyers, Jr., a Representative
in Congress From the State of Michigan
At the outset, I want to thank the Chairman and his staff for their
diligent work in protecting our committee's jurisdiction on this
matter. When this bill was introduced, it was referred solely to the
Transportation Committee, despite the fact that it provides for an
exemption from the antitrust laws.
This was clearly and utterly erroneous, and Chairman Sensenbrenner
informed the Parliamentarian of that fact in no uncertain terms. The
Chairman secured a sequential referral, and I am hopeful that we will
fully restore the Committee's jurisdiction as this bill moves along.
It should come as no surprise to the Members that I vigorously
oppose a new antitrust exemption for the airline industry, particularly
one that is administered by the Department of Transportation, which has
no antitrust expertise. This bill misses the real problem and instead
focuses on a phony solution that will lead to fewer flights and higher
fares.
The last thing the airline industry needs is less competition,
which is what this bill would clearly lead to. As things currently
stand, the competitive balance of the industry is in a state of total
dysfunction.
Since deregulation first took effect 20 years ago, we have gone
from a highly competitive structure to an oligopoly. Most of this has
occurred under the Department of Transportation's watch, as scores of
airline mergers were hastily approved. The top three airlines--United,
American, and Delta--control almost 60% of U.S. air traffic, and
experts predict that could rise to near 90% in the near future.
Consumers have been left totally out in the cold. Delays are on the
increase, service is in decline, and prices are higher than ever. Fares
are particularly outrageous from so-called ``hub airports,'' where
consumers pay an average of 41% higher fares than non-hub airports.
In this context, does any one seriously believe that an antitrust
exemption which allows the airlines to come together to reduce flights
will do anything but further increase prices? I would submit that what
consumers need is more vigorous antitrust enforcement, not new
antitrust exemptions.
And guess what--the Bush Justice Department agrees with me,
opposing this bill because it is likely to lead to ``diminished
service'' and ``higher prices.''
I also oppose the bill because it will do little to deal with the
problem of flight delays. James Casey, the Vice President of the Air
Transport Association has admitted, and I quote, ``only 11 percent of
all delays were attributable to terminal area volume.'' That means that
at best this bill won't even touch the real cause of the delays in 90%
of the cases.
If we want to really do something about airline delays we need to
authorize more funds for airport improvements and airport
infrastructure. We need to improve and enhance the Federal Aeronautics
Administration, which has been reeling ever since our government laid
off all of the air traffic controllers in 1981. I would suggest to the
Transportation Committee that they ought to look at making changes to
the transportation law before they resort to the antitrust law for
solutions.
I was pleased to learn that the Department of Justice had done the
right thing and opposed this bill. I hope this Committee will join the
Department in either fixing this bill, or voting it down.
Chairman Sensenbrenner. If there are further--I yield back
the balance of my time.
The gentleman from Massachusetts, Mr. Frank.
Mr. Frank. Mr. Chairman, I don't object to what's in the
amendment----
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Frank.--but I did want to respond, particularly in your
opening statement when you said you thought, in addition to
expressing your very thoughtful skepticism about this
particular approach, you said there were other approaches, and
you, Mr. Chairman, said airport runway construction was your
preferred mode. I think that's undoubtedly a reasonable thing
to do in some places. I do not think it is in the major
metropolitan area that I represent.
And I want to say we should have on the record, and my--
part of my problem with this bill is that it approaches this
very difficult problem of congestion, exacerbated by the
congenital refusal of airlines to ever tell anybody the truth
about anything. I have never met a profession so addicted to
lying. Every one of us has had a situation of arriving, being
told by their equipment that the plane is about to take off,
only to learn later that it is not.
And apparently they have made technological advances which
they don't own up to. They have autonomous equipment. They have
self-programming boards. Apparently, the boards that tell you
what time the planes are leaving program themselves. No human
being is ever involved in putting these false times up there.
They apparently just auto-generate themselves, and it is a very
clever form of technology, which I wish they would put to more
social uses.
But there are a couple of other things they could be doing
that they're not doing. One, they could tell the truth. I think
what we need is a Passenger's Bill of Rights. We need to get
the information. Many of the troubles are not their fault, but
it is their fault that they are not more honest about it, and
that complicates people's lives unfairly.
Secondly, I believe that we should be requiring them to
engage in better scheduling through the pricing policies of the
airports. Airports can do a great deal. The notion that the
biggest plane in the world and the smallest plane in the world
should have equal access at all times of day or with only
slight differentials, I think causes a lot of the problem. So I
believe that there are some very significant approaches that
should be taken, both for the protection of consumer rights and
to encourage the use of the market mechanism of pricing to
better deal with congestion. And my skepticism about this bill
is based, in part, on the bill itself, but also on the notion
that with all of the things that could be done to improve
airline travel, the only one we do is to give an antitrust
exemption to the airlines. This is not the fault of this
Committee because the other issues are not within our
jurisdiction, but I am very, very unhappy at the notion that
our--this Congress's sole response will be to make their lives
a little bit easier with an airline antitrust exemption, which
the Justice Department, as the gentleman from Michigan has
pointed out, appears not to want to see happen and not to
address either the Passengers' Bill of Rights or the very
important issue of how to use the market mechanism to compel a
more rational scheduling.
Thank you, Mr. Chairman.
Ms. Waters. Mr. Chairman----
Chairman Sensenbrenner. The question is on the amendment--
--
Ms. Waters. Mr. Chairman?
Chairman Sensenbrenner.--that the Chair has offered.
The gentleman from New York?
Mr. Nadler. Thank you, Mr. Chairman. I have a question to
you, a real concern about this amendment. I thoroughly--I
thoroughly approve of what you're trying to do, but I'm just
wondering if one of the provisions here will work or will work
backwards.
We, obviously, the point of the bill is to facilitate an
agreement among air carriers so that one carrier doesn't hog,
you know, so that they don't schedule 50 flights for a time
period when they can only accommodate physically 25 flights,
and that makes sense.
You are concerned, and properly so, that this exemption
from the antitrust doesn't--isn't used to shut out the smaller
airlines or new entrants, and I agree with you. My question is
with your amendment, where you say any such time agreement
would have to be agreed to by every airline. Couldn't that,
assuming we enacted that, what would stop the big guy,
Continental, that dominates a given airport from blocking an
agreement that might help the smaller guys? I mean, why--why do
you think it would work to the advantage of the smaller guys,
as opposed to both ways, depending on----
Chairman Sensenbrenner. If the gentleman would yield, if
there is a huge plug-up in an airport, such as Continental
dominating the Newark Airport, it is to the advantage of
Continental's competitive situation to get their planes out on
time because any time there are huge delays at any hub airport,
it has a domino effect, you know, and the consequence is spread
out all throughout the country, where these planes are supposed
to fly to. So Continental, at the Newark Airport, if they want
to avail themselves of this, has, you know, a great incentive
to be able to get the other airlines to have an agreement.
The flip side of that is that it's usually the smaller
airlines that are the low-cost airlines. And once they enter a
market, like Southwest entering a market, you know, they drive
down the fares to all of the places that they fly if you're
flying on a big carrier. And without giving what essentially is
a veto power for the smaller and generally low-cost airlines,
the biggies could get together and say, ``Well, you're, you're
running a small-cost airline, Mr. Nadler. We've got a great
time slot for you at 2 a.m., you know, and good luck getting
enough people to go buy tickets so that you'd be able to make a
profit for coming in there.''
Mr. Nadler. Reclaiming my time now, aren't these--don't
these agreements, in order to be binding on the little guy,
have to be agreed to by the little guy under the terms of the
bill?
Chairman Sensenbrenner. The answer to the question is, no,
because under the Transportation Committee bill, the three big
guys, you know, could get together, you know, and divide up the
time slots and then use their, you know, marketing power to be
able to browbeat whichever governmental entity owns the airport
to say, ``Okay. You know, give us the good time slot and give
them the bad ones.''
Mr. Nadler. Reclaiming my time. The Chairman is very
persuasive, and logical, and has convinced me.
Ms. Waters. Mr. Chairman?
Chairman Sensenbrenner. I'll quit while I'm ahead.
[Laughter.]
Ms. Waters. Mr. Chairman?
Chairman Sensenbrenner. For what purpose does the gentleman
from--the gentlewoman from California, Ms. Waters----
Ms. Waters. Strike the last word.
Chairman Sensenbrenner. Recognized for 5 minutes.
Ms. Waters. Thank you very much.
I am going to support your amendment for a number of
reasons. First of all, I think it's very important for us to
understand that we must be a bit more assertive in dealing with
the problems of the airlines. Whether it is delays or air
quality or service, we have really got to get more involved
because the travelers and the citizens of this country are
being almost victimized by the practices of many of these
airlines.
Mr. Chairman, I support this, and I'm not concerned about
any discussions of antitrust concerns that some people have
identified as possible problems with the bill, but, Mr.
Chairman, I have an amendment that's going to come up. I'm not
going to talk about it now except to say this is not simply a
problem of airlines getting together to discuss scheduling so
that they can arrange the best schedules to accommodate all of
the carriers. This is about capacity of many of these airports.
They simply can't do any better because the airports are
overused. We need to have more regional responses to the
problems of overcrowding, to the problems of delays.
And just as you're moving here in a small way to force them
to have to get together and talk about their schedules, we're
going to have to do that, and forcing the airports to get
together to talk about regional responses to some of these
problems. So I'm pleased that you're moving in this direction.
I support it, and I'm going to have an amendment that's
somewhat similar to this coming up a little bit later.
I would yield back the balance of my time.
Ms. Lofgren. Mr. Chairman?
Chairman Sensenbrenner. For what purpose does the other
gentlewoman from California seek the----
Ms. Lofgren. To strike the last word.
Chairman Sensenbrenner. The gentlewoman is recognized for 5
minutes.
Ms. Lofgren. I was interested to find the letter from the
Department of Justice, dated June 19th. You know, the prior
administration used to annoy the heck out of me because they'd
always get their letters in at the last minute, and it's good
to see that that tradition carries on under the new
administration.
But I will say that, although I had been very interested in
the bill earlier, the points made by the Department of Justice
are persuasive ones, and I appreciate getting their letter and
getting their analysis. The question I have for the Chairman is
whether the Department of Justice has had an opportunity to
review his amendment and whether, in their judgment, the
amendment resolves the issue which----
Chairman Sensenbrenner. Would the gentlewoman yield?
Ms. Lofgren. I certainly would yield.
Chairman Sensenbrenner. I am informed by my staff that
there have been staff discussions with the Department of
Justice, but that the Department of Justice has not expressed
an opinion on my amendment.
You know, let me say that, you know, I agree with, you
know, all of these concerns that this bill misses the mark. And
as you know, there was not a joint referral to this Committee.
We had to argue with the parliamentarian to get it here because
of the antitrust exemption. You know, it seems to me that here
you are preaching to the choir, but in the Rules Committee and
on the floor, you might be preaching to the heathen.
[Laughter.]
Ms. Lofgren. Reclaiming my time, if I may, the--I do very
much appreciate the vigorous advocacy that the Chairman has
displayed over the rightful jurisdiction of this Committee, and
I think all of the Members on both sides of the aisle have that
appreciation and support the effort, but the question is as to
the content. On page 2, the Department of Justice talks about
the issue of trades and the development of cartels that would
be permitted under the underlying bill.
And looking at the amendment, and I credit the Chairman for
trying to address these issues, and I do not assign any
improper or unhealthy or unuseful motives to the amendment, but
I'm not sure that the amendment actually will prevent the
spillover cartel effects outlined by the Department of Justice
in their letter. And I just wanted to raise this question: If
the Chairman thinks that the amendment would prevent that
adverse result, in what way would it prevent that adverse
result?
Chairman Sensenbrenner. Would the gentlewoman yield?
Ms. Lofgren. I certainly would.
Chairman Sensenbrenner. The answer to your question is, no,
I don't think it would prevent the spillover cartels. You know,
I am just trying to improve what I believe is a very flawed
bill----
Ms. Lofgren. Right.
Chairman Sensenbrenner.--in a way that is germane and in a
way that we will not continue the jurisdictional hissy fit that
the parliamentarian's omission has caused. I think that the
gentlewoman's concerns are very valid ones. I would just urge
her to allow us to send this bill over to the Rules Committee
with a minor stamp on it that is very clearly germane, and we
can then fight the good fight and try to make it a little bit
more relevant and effective later on.
Mr. Frank. Would the gentlelady yield?
Ms. Lofgren. I certainly will.
Mr. Frank. I think you're strategically correct. Since, as
he puts it, we will have to go to the floor and preach to the
heathens, maybe we could get a grant from the faith-based
initiative to enhance our activity. [Laughter.]
Chairman Sensenbrenner. If the gentleman can yield, he can
send his application to the White House, where I'm sure it will
be favorably considered.
Ms. Lofgren. I'm sure it will. And having understood that
we will be making that application, I yield back the balance of
my time.
Mr. Weiner. Mr. Chairman?
Chairman Sensenbrenner. For what purpose does the gentleman
from New York, Mr. Weiner, seek recognition?
Mr. Weiner. I just would move to strike the last word, for
the purpose of asking----
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Weiner.--you, Mr. Chairman, a question.
First of all, let me just echo what some have said here. I
think that the efforts that the Chairman has made to ensure the
jurisdiction of the Committee are most appreciated and
laudable.
I'm a little bit concerned about the element of the
substitute that requires unanimous consent for any of these
scheduling changes to be approved. And what I would be
concerned about is a small, in my district, at LaGuardia, a
small airline that wants to, for example, get additional access
to gates or is concerned about the way their parking is being
assigned or essentially wants to be deleterious in some way
will be able to throw a wrench into any negotiations by simply
exercising their right to object under this.
Is there--now, it seems to me that there might be some
small airlines or there might be a bigger airline who just has
a bone to pick over the past negotiations and says, ``Forget
it. We're just going to bollix up the work on everything.'' Is
there any way, I mean, I guess you've obviously given a great
deal of thought to this, do you have some reservations that
that might be the effect of the unanimous consent requirement?
Chairman Sensenbrenner. If the gentleman would yield----
Mr. Weiner. I would gladly yield.
Chairman Sensenbrenner. The answer is, no, I don't. And
probably the most successful small airline that came about in
the first wave of deregulation is the Wisconsin airline called
Midwest Express that flies into LaGuardia several times a day.
You know, I'll be honest, I have talked to the CEO of Midwest
Express, and he is concerned that without the unanimous consent
agreement, you know, the biggies can stick them at 2 a.m. time
slots and take away any leverage he has in preventing his
gates, you know, from being, you know, a 3-mile hike out to the
end of the pier, to the detriment of the passengers that wish
to buy tickets on that plane.
So I think that the way this is drafted is that it gives a
bigger advantage to the big airlines--or to the small airlines,
when the big airlines need to do something to prevent the
domino effect of a meltdown from rippling out all throughout
their system as the planes that are flying out of an airline or
an airport that has had one of these gridlocks has on the
planes that they are planning on sending out all throughout the
country.
Mr. Weiner. Well, if I could just reclaim my time.
Chairman Sensenbrenner. Yes.
Mr. Weiner. In fact, under the bill, U.S. Air, for example,
and United can have negotiations about their own timing of
slots. It would not impact Northwest at all, theoretically, but
theoretically they could----
Chairman Sensenbrenner. Well, if the gentleman would yield,
at an airport like LaGuardia, where there are--where it is
slotted, and there are few airports around the country--very
few airports around the country, LaGuardia is one of them,
without the unanimous consent, the biggies could grab all of
the good time slots and leave the little ones, including the
cut-rate carriers, with the times that are not conducive to
selling tickets. And once the little ones get into those types
of time slots, then the impact of cut-rate airlines reducing
the biggies fares is reduced significantly.
Mr. Weiner. Well, just reclaiming the last moments of my
time, but the way I understand the base bill, if U.S. Air has
an 8:05 and United has an 8:05, they can negotiate to have one
go 8:00 and one go 8:15. It doesn't impact on Northwest's 2
o'clock in any way. Like they can't force Northwest to go at
9:00 if they're not part of those negotiations. That's the way
I understand the base bill.
Chairman Sensenbrenner. Well, and, you know, why would
Northwest or anybody else object to having a spread-out of 15
minutes between the United flight and the U.S. Air flight?
Mr. Weiner. Well, we're going to, I mean, under the--and
I'm inclined to vote in favor of this, I mean, my concern would
be, well, Midwest Express says, ``I have a 3 o'clock that I
sell based on the idea that people never leave on time at 8
o'clock. I fill that flight. I do very well with that flight
because I prey on the weaknesses of the other guys. Why do I
want them to fix their weaknesses?''
All of that being said, I mean, I think it's something that
will play out in the wash, but I think it's some cause for
concern, but I yield back my time.
Chairman Sensenbrenner. For what purpose does the gentleman
from North Carolina, Mr. Watt, seek recognition?
Mr. Watt. I move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. Watt. Thank you, Mr. Chairman. I want to join others
who applaud the Chairman for insisting on the Committee's
prerogatives to review this bill and to express support for the
Chairman's amendment, but very severe concerns that the
amendment seems to be kind of grabbing a hold to a runaway
train and doesn't go anywhere near addressing a number of the
problems with the bill.
Let me ask a question about the first part of the
Chairman's amendment, Mr. Chairman, if I may. The monitoring
part, is there some precedent for this kind of language in any
other situation?
Chairman Sensenbrenner. If the gentleman would yield----
Mr. Watt. I'd be happy to yield.
Chairman Sensenbrenner.--the answer is, not to my
knowledge. But the base bill has a representative of DOT
monitoring these negotiations. If we're dealing with antitrust,
it seems to me we ought to have somebody who knows something
about antitrust, and that's the DOJ----
Mr. Watt. I absolutely agree with the Chairman, but I'm
just--I guess the concern I have is we have the regulators, the
reviewers or anybody from the Federal Government in the room
monitoring discussions that could be very easily inappropriate
discussions----
Chairman Sensenbrenner. Well, if the gentleman will yield
further, where this bill will have an impact, if any--I'll
qualify that--is at airports where the FAA controls slots right
now because there is so much demand to fly in there. I'm
talking about airports like Washington National, like
LaGuardia, O'Hare, L.A. So the FAA has got its finger on the
slots to begin with, and----
Mr. Watt. Why wouldn't it have implications in Charlotte,
where there's not slotting? I mean, we have a major problem
with managing flight arrivals and departures. Why wouldn't this
bill have the same kind of----
Chairman Sensenbrenner. Sir, isn't Charlotte kind of a one-
carrier town?
Mr. Watt. It is, but there are several other carriers who
are trying to get in, and they are subject to the same kind of
discussions that this bill would provide for.
Chairman Sensenbrenner. The answer is that this bill would
be very helpful to the other carriers because, with the
amendment, they have a seat at the table, even if they aren't
in there yet because they're applying to get in there. Whereas,
with the Transportation Committee bill, if an airline is not
going into Charlotte, they don't get a seat at the table until
they actually have their plane land on the ground there.
Mr. Watt. Let me just ask the Chairman a more direct
question. Is the Chairman concerned about--and this is not a
second-guessing of the Chairman's amendment, understand I
support the Chairman's amendment. I think my concerns are about
the base bill--is the Chairman concerned about the Department
of Justice's concerns expressed at the bottom of page 1 and the
top of page 2 of this letter?
I mean, it seems to me that airlines, even in the absence
of this sanctioning that we are giving them to talk, have used,
according to the first full paragraph on page 2 of the
Department of Justice's letter, ``the Department sued the major
airlines for using their electronic tariff publishing system to
negotiate'' and advantage themselves on fares----
Chairman Sensenbrenner. Would the gentleman further yield?
Mr. Watt. Yes.
Chairman Sensenbrenner. Of course, the Chairman is
concerned about that. However, the Chairman plays with the
cards that he is dealt, and the cards that we were dealt on
this one aren't very good cards. I would, also----
Mr. Watt. So the gentleman would understand if I voted for
his amendment and against the bill then.
Chairman Sensenbrenner. I would not be upset with you at
all on that. The point I would like to make is that if you read
Congress Daily, as I do upon occasion, 2 weeks ago, right after
we got this sequential, the Chairman of the Transportation
Subcommittee of the Appropriations Committee chastised us for
not dealing with this very important issue and said if we
didn't do it, he would stick this, the unamended version, in
the Transportation Appropriations bill and get it protected by
the rules.
Mr. Watt. Sounds like I was right, that the Chairman has a
way--has a hold to a runaway train.
Chairman Sensenbrenner. No, it's a runaway plane.
Mr. Watt. Plane, I'm sorry. [Laughter.]
Mr. Watt. That's even worse, I guess. I yield back.
Chairman Sensenbrenner. The gentleman's time has expired.
The question is on the adoption of the amendment offered by
the chair.
Those in favor will signify by saying aye.
Those opposed, no.
The ayes appear to have it, and the ayes have it, and the
amendment is agreed to.
Mr. Conyers. Mr. Chairman?
Chairman Sensenbrenner. For what purpose does the gentleman
from Michigan seek recognition?
Mr. Conyers. I have a, well, now two amendments at the
desk, and I'd like to call up the first one, please.
Chairman Sensenbrenner. The clerk will report the first
amendment.
The Clerk. Amendment to the Committee Print to H.R. 1407
offered by Mr. Conyers.
Mr. Conyers. I ask unanimous consent the amendment be
considered as read.
Chairman Sensenbrenner. Without objection, so ordered.
[The amendment follows:]
Chairman Sensenbrenner. And the gentleman is recognized for
5 minutes.
Mr. Conyers. Thank you.
The first amendment that I am now offering merely strikes
at page 2, lines 3 through 7, to make this bill a freestanding
amendment rather than an amendment to the transportation laws.
Now, why?
First of all, it helps establish our jurisdiction by
pointedly bringing to the parliamentarian's attention that this
is not something that automatically goes to the Transportation
Committee. It sends a message to other Committees that we will
protect the integrity of antitrust proposals and not allow them
to be amended----
Chairman Sensenbrenner. Will the gentleman yield?
Mr. Conyers. Of course.
Chairman Sensenbrenner. I support the amendment. I think
the gentleman from Michigan makes a very good point, and this
may help the parliamentarian not to forget about us when the
Transportation Committee deals with this issue again.
Mr. Conyers. And so I urge the Members to support this
first amendment. I return my time.
Chairman Sensenbrenner. Is there further discussion on the
Conyers No. 1?
Hearing none, all of those in favor of agreeing to the
amendment will signify by saying aye.
Opposed, no.
The ayes appear to have it. The ayes have it. The amendment
is agreed to.
Mr. Conyers. Mr. Chairman?
Chairman Sensenbrenner. For what purpose does the gentleman
from Michigan seek recognition?
Mr. Conyers. Mr. Chairman, my second amendment I'd like to
call up now.
Chairman Sensenbrenner. The clerk will report the
amendment.
The Clerk. Amendment to the Committee Print to H.R. 1407
offered by Mr. Conyers. page 2, strikes lines 3 through 7.
Strike the initial quotation marks each place they appear in
the bill.
Chairman Sensenbrenner. Without objection, the amendment is
considered as read.
[The amendment follows:]
Chairman Sensenbrenner. And the gentleman from Michigan is
recognized for 5 minutes.
Mr. Conyers. Thank you, Mr. Chairman.
Originally, I start by asking unanimous consent to strike
clause 1 of this amendment, which is the measure we have just
taken care of.
Chairman Sensenbrenner. Without objection, the modification
is agreed to.
Mr. Conyers. Now, what we do in this provision, ladies and
gentlemen, is to substitute the Attorney General for the
Secretary of Transportation in each place of the existing bill.
The Justice Department, not the Transportation Department, is
the authority on competition and antitrust laws, and the
Justice Department already has the authority to rule on airline
mergers and other transportation antitrust disputes. And so I'm
confident that the Antitrust Division will have no problem
ruling on competition issues, as they relate to airline
congestion.
To the extent any specific air transportation expertise is
needed to consider these issues, my amendment does provide the
Secretary of Transportation with a consultative role. This is
similar to the role that the Secretary now plays in airline
mergers.
Chairman Sensenbrenner. Will the gentleman yield?
Mr. Conyers. Yes, sir.
Chairman Sensenbrenner. I'm happy to support this part of
the amendment, too, and would urge that it be adopted.
Mr. Conyers. I am surprised, and delighted, and pleased.
In other words, what we're doing, Members of the Committee,
is making a bill that may be unacceptable to most of us. We're
giving--we're making it work, and I thank the Chairman for his
support, and I ask that the rest of my statement be put in the
record----
Chairman Sensenbrenner. Without objection.
Mr. Conyers. And I return my time.
[The statement of Mr. Conyers follows:]
Prepared Statement of the Honorable John Conyers, Jr., a Representative
in Congress From the State of Michigan
My amendment makes three straightforward changes.
First, the amendment makes the bill a freestanding law, rather than
an amendment to the Transportation laws. This sends a message to other
committees that we will protect the integrity of the antitrust laws and
not allow them to be amended in unrelated vehicles. It will also help
insure that any future changes or modifications to the law are referred
to this committee, rather than tucked away in obscure reaches of the
U.S. Code which are not readily apparent to the Parliamentarian. I
believe that is the reason the Parliamentarian made a mistake on the
initial referral.
Second, we substitute the Attorney General for the Secretary of
Transportation in each place in the bill. The Justice Department, not
the Department of Transportation is the authority on competition and
the antitrust laws. The Justice Department already has the authority to
rule on airline mergers and other transportation antitrust disputes,
and I am confident the antitrust division will have no problem ruling
on competition issues as they relate to airline congestion. To the
extent any specific air transportation expertise is needed to consider
these issues, my amendment provides the Secretary of Transportation
with a consultive role. This is similar to the role the Secretary now
plays in airline mergers.
Third, my amendment specifies an antitrust test for granting the
exemption, rather than the more amorphous public interest standard in
the underlying bill. The test in my amendment--``substantially lessen
competition or tend to create a monopoly'' is drawn verbatim from the
Clayton Act, and should not present any new or difficult
interpretational issues for Antitrust Division. The proponents of this
measure claim it will not harm consumers. There is only one way to make
sure that is the case is to require a competitive antitrust review.
Otherwise there will be risk that the consumer's interest in lower
prices will be trumped by the airlines argument for less flights.
My amendment is modest and straightforward and builds on the very
worthwhile changes made in the Chairman's amendment. It restores the
Committee's jurisdiction over the antitrust modifications. It restores
the role of the Attorney General, and it provides an real antitrust
test. I urge the Members to vote for protecting the consumers and
protecting competition.
Chairman Sensenbrenner. Is there further discussion on the
second Conyers amendment?
Hearing none, all of those in favor of the amendment
signify by saying aye.
Opposed, no.
The ayes appear to have it. The ayes have it, and the
second Conyers amendment is agreed to.
For what purpose does the gentlewoman from California, Ms.
Waters, seek recognition?
Ms. Waters. Mr. Chairman, I have an amendment at the desk.
[The amendment follows:]
Mr. Smith of Texas. Mr. Chairman, may I reserve a point of
order?
Chairman Sensenbrenner. A point of order by the gentleman
from Texas, Mr. Smith, is reserved, and the gentlewoman from
California is recognized for 5 minutes.
Ms. Waters. Thank you very much, Mr. Chairman and Members.
Today I offer an amendment to H.R. 1407 to deal with what I
consider one of the most serious problems we have in the Los
Angeles area with a severe impact on my district. We're all
aware of the increase in passenger flights in recent years.
Part of this is due to an increase in competition, which offers
passengers more options and which also will drive down,
perhaps, prices. However, many airports are more greatly
affected by this increased passenger demand than are other
airports. And when we rush to make flights available to more
and more people, we must not forget the great effects those
flights have on our passengers and our communities, everything
from delays--which we're attempting to deal with today, Mr.
Chairman, with your amendment--congestion, pollution, and
disruption to the communities surrounding these airports.
I'm offering an amendment out of strong concern with what's
happening at the airport in my district. The Los Angeles World
airports, the organization that controls Los Angeles
International Airport, has proposed an expansion of that
airport. And while I am well-aware of the benefits of new
flights, I'm strongly opposed to any expansion of this land-
locked LAX.
This attempted expansion is simply an expansion that is
trying to squeeze into LAX a new runway to be able to
accommodate more flights, despite the fact we don't have any
more land there, we don't have any more capacity there. As a
matter of fact, the disruption and the negative impact on the
surrounding communities has become very severe. The schools
under the flight path must stop many times during the day
because they cannot hear, and they cannot discuss their lessons
because of the noise that's produced by the ever-unending
flights coming over those schools going right into the airport.
The traffic congestion in some of the smaller cities around the
airport is just unconscionable and cannot--cannot be supported
any longer.
I am asking that this amendment be adopted that would
simply say--and, first, let me just say this: Currently, we are
accommodating 68 million--we're at 68 million capacity, and
they want to go to 80 million. They can go to 80 million.
They're allowed by the Feds to go to 80 million, but they want
to expand up to 90 million. As far back as 1998--and I don't
have the most recent figures--we were accommodating like almost
3,000 flights a day.
The Environmental Impact Study is out, and it absolutely
identifies that the communities near and around the airport
will bear a higher burden of the impacts of the airport
expansion. LAX is an environmental monster. It is already the
single largest producer of smog-inducing pollution in Los
Angeles County. Air quality in the area surrounding LAX will
decrease as emissions from the airport increase with the growth
in these activities.
Every elected official in and around that airport is
opposed to this expansion. Most of the Southern California
elected officials, both Democrat and Republican, are opposed to
this expansion.
We are trying to force all of our airports to get together
similar to the way you're talking about the airlines getting
together to deal with delays, to talk about a regional
response. We're not trying to stop air traffic. We're not
trying to limit growth. We're just trying to rearrange it so
that the region is involved in the polling rather than trying
to simply squeeze more flights into this very land-locked area.
So I am presenting this amendment that would simply say
that LAX would not be able to expand beyond the allowable
capacity that could take it from 68 million up to 80 million,
but the expansion that is being requested to take it to 90
million should not take place, and they should be encouraged by
my amendment----
Chairman Sensenbrenner. The time has expired.
Does the gentleman from Texas insist upon his point of
order?
Mr. Smith of Texas. Yes, I do, Mr. Chairman.
Chairman Sensenbrenner. The gentleman will state his point
of order.
Mr. Smith of Texas. Mr. Chairman----
Chairman Sensenbrenner. Please use the mike so the reporter
can----
Mr. Smith of Texas. Mr. Chairman, I believe that the
gentlewoman from California's amendment is nongermane, and I'll
stand on my point of order.
Chairman Sensenbrenner. Does anybody wish to speak on the
point of order?
[No response.]
Chairman Sensenbrenner. The Chair is prepared to rule. One
of the----
Mr. Delahunt. Mr. Chairman?
Chairman Sensenbrenner. The gentleman from Massachusetts?
Mr. Delahunt. Yeah, I move to strike the last word.
Chairman Sensenbrenner. The question is confined to a
discussion of the point of order. Does anybody wish to speak on
the point of order?
Ms. Waters. Yes, Mr. Chairman, I wish to speak on the point
of order.
Chairman Sensenbrenner. The gentlewoman from California.
Ms. Waters. Mr. Chairman, I think that if the gentleman
from Texas is going to insist on this point of order, he owes
it to this Committee and the people from California, to me, and
people from Southern California to at least discuss with us why
he has better knowledge and understanding from Texas about what
is happening in Los Angeles. What is the point of order?
Chairman Sensenbrenner. Well, the question is, is that
the--the gentleman from Texas makes a point of order that the
amendment offered by the gentlewoman from California is not
germane to the bill. One of the tests of germaneness is the
jurisdiction of the Committee where the amendment would go to
should it be a freestanding bill. This is clearly within the
jurisdiction of the Committee on Transportation and
Infrastructure, not of the Committee on the Judiciary,
consequently, the Chair sustains the point of order.
Are there further amendments to the bill?
[No response.]
Chairman Sensenbrenner. Hearing none, the question is on
reporting favorably the bill, as amended.
Those in favor will signify by saying aye.
Those opposed, no.
The ayes appear to have it. The ayes have it, and the
motion to report favorably is agreed to, and the Chair notes
the presence of a reporting quorum.
Without objection, the bill will be reported in the form of
a single amendment in the nature of a substitute, reflecting
the amendments agreed to by the Committee here today.
Without objection, the staff will be authorized to make
technical and conforming changes.
Without objection, the Chair is authorized to go to
conference, pursuant to House rules, and all Members will be
given 2 days in which to file dissenting additional
supplemental or minority views.