The Board demonstrated, as we have indicated in the first part of this opinion, that the supplemental carriers have a place in the national transportation system and that they should be authorized to operate. But the question now under consideration is whether they should be authorized by certificates, premised upon public convenience and necessity and specifying in some fashion the service which such carriers will be obligated to perform, or whether their operation may be authorized by a simple exemption from all the certification requirements of the statute. To validate an order of exemption the Board must comply with the statute; i. e., it must find what the statute requires it to find, not in conclusory fashion in the statutory language but in such fashion that a reviewing court can test the validity of the finding.

The petitioners' third main point is that the order finally issued was not within the scope of the proceeding instituted by the Board's initial orders. We agree with the Board upon this point, basing that conclusion upon the view of the order here under review which we have heretofore described in this opinion.

The cases will be remanded for further proceedings.

Senator MONRONEY. Senator Schoeppel?

Senator SCHOEPPEL. I would like to ask a question.

Whom do you represent, Mr. Beitel?

Mr. BEITEL. I am counsel for the Aircoach Transport Association in this proceeding.

Senator SCHOEPPEL. What companies make up the Aircoach members?

Mr. Cox. We just submitted a list.

Senator SCHOEPPEL. Is the United States Airlines one of them?

Mr. Cox. The United States Airlines; no, sir; there is a United States Overseas with them.

Senator SCHOEPPEL. Is the Conner Airlines one of them?

Mr. BEITEL. Yes, I believe Conner is.

Senator SCHOEPPEL. Is Consolidated one of them?

Mr. BEITEL. Yes, sir; I think so.

Senator SCHOEPPEL. Is Regina Cargo Lines one of them?

Mr. BEITEL. Yes.

Senator SCHOEPPEL. Is Southern Air Transport one of them?

Mr. BEITEL. Yes, sir.

Senator SCHOEPPEL. Is Regina Airlines one of them?

Mr. BEITEL. Yes, sir.

Senator SCHOEPPEL. Is Westair Transport one of them?

Mr. BEITEL. Yes, sir; that is Aviation Corporation of Seattle, it is called Westair.

Senator SCHOEPPEL. Is Great Lakes one of them?

Mr. BEITEL. Yes, sir.

Senator SCHOEPPEL. Is California Air Charter one of them?

Mr. BEITEL. I think so.

Senator SCHOEPPEL. Is Meteor Air Transport one of them?

Mr. BEITEL. Meteor Air Transport was but I believe now that Meteor is a member of the Independent Military Air Transport Association.

Senator SCHOEPPEL. Is Coastal Cargo Line one?

Mr. BEITEL. Yes.

Senator SCHOEPPEL. Is the SSW one of them?

Mr. BEITEL. Yes, sir.

Senator SCHOEPPEL. I remember a number of these companies from a number of proceedings in the Senate hearing on S. 2647 before the Interstate and Foreign Commerce Committee.

Senator MONRONEY. In 1946 or 1947 ?

Senator SCHOEPPEL. No, 1954. Do you recall in the spring of 1954 that the Armed Services Subcommittee held hearings on delinquencies in payments of commercial airlines to the military for aviation gasoline and materials which had been sold to these companies named? Mr. BEITEL. I, myself, did not see the transcripts of the hearings. I do not know anything about it. I can get that information for you. Senator SCHEOPPEL. Were you representing them at the time?

Mr. BEITEL. You see, my representation, Senator, is for the association in this proceeding, Docket 5132, before the Civil Aeronautics Board and before the courts. I might explain I practice law independently and handle cases for many clients and the Aircoach Transport Association is one of them. I do not do all of the legal work for the association.

Senator SCHOEPPEL. Thank you very much.

Mr. BEITEL. But, I will be glad to answer any questions and obtain the necessary information for you, sir.

Senator SCHOEPPEL. On page 1101 of the proceedings before the Senate on S. 2647 in April, May, June, and July, 1954, a number of these companies are listed here with delinquencies of thousands and thousands of dollars to the Federal Government.

Mr. BEITEL. Is that for gasoline that they had purchased at Air Force bases in the course of their CAM operations?

Senator SCHOEPPEL. I do not know, but the Armed Services Committee had quite an extensive hearing on it and that is part of this record and I wish that you would check this record on page 1101 and tell me, furnish it to the committee for a part of this record, whether the information there is substantially correct as set out in these proceedings. Of course, I think it is very important. It goes to the character and the ability and the integrity of some of these lines who are making up your association in their past history.

Mr. BEITEL. I can say that I do know there were disputes between the carriers and the military with respect to the amount of money which was owed for gasoline which was acquired at military bases and over the directives which permitted them to do it. Of course, the carriers also maintained that the Government owed them ferry mileage and between the two, there was an offsetting claim. I thought most of those matters had been settled with GAŎ but I will be glad to give you a full report.

Senator SCHOEPPEL. I wish you would. Now, who are the present directors of your association?

Mr. BEITEL. The present directors are Mr. Ralph Cox; Mr. Fred Atkins, Central Air Transport; Mr. George Patterson, of Great Lakes; Mr. A. J. Averman, of Regina-we just had an election and that is the reason for my hesitancy in giving you the members.

Senator SCHOEPPEL. Let me ask you this, is Mr. Robinson connected with one of your companies?

Mr. BEITEL. Mr. H. B. Robinson?

Senator SCHOEPPEL. Yes.

Mr. BEITEL. I believe Mr. H. B. Robinson is or was one of the partners, I think he still is one of the partners of Peninsular Air Transport, which is a member of the association.

Senator SCHOEPPEL. Was he a member of the directors?
Mr. Cox. Not for several years.

Mr. BEITEL. I do not think Mr. Robinson has been a director for

some years.

Senator SCHOEPPEL. Do you recall any other directors?

Mr. BEITEL. The fifth director is Mr. Mansfield from Westair. Senator SCHOEPPEL. Let me ask you this. Is Mr. H. B. Robinson any longer connected with your association?

Mr. BEITEL. H. B. Robinson is a partner in an airline which is a member of the association.

Mr. Cox. They have not been active for several months though. Senator SCHOEPPEL. IS A. J. Rome a member?

Mr. BEITEL. No, sir; Mr. Rome is a former employee of the association.

Senator SCHOEPPEL. Is Robert Jones a member of the directorate or connected with these companies?

Mr. BEITEL. No, sir. He is now a former employee. He was employed at one time.

Senator SCHOEPPEL. Is George N. Astras, who was then treasurer, is he still connected with you?

Mr. BEITEL. He is still secretary-treasurer.

Senator SCHOEPPEL. George H. Prill, technical director; is he still serving?

Mr. BEITEL. No, sir; Mr. Prill is no longer employed by the association. But, this is the same association that you are referring to because I recognize the names of the former employees.

Senator SCHOEPPEL. And Kendall Hoyt; is he one of them?

Mr. BEITEL. No, sir.

Senator SCHOEPPEL. Is Mr. Morrow connected with you?

Mr. BEITEL. Mr. Morrow was a director but when Meteor joined the Independent Military Air Transport Association he, of course, disassociated himself from the Aircoach Transport Association. Senator SCHOEPPEL. Weren't the carriers in the North American Combine members of the Aircoach Transport Asssociation? Mr. BEITEL. Yes, sir.

Senator SCHOEPPEL. They still are, are they not?

Mr. BEITEL. To the best of my knowledge, they are; yes.

Senator SCHOEPPEL. That is the organization that the CAB had a series of proceedings against for intentional, flagrant violations of the Civil Aeronautics Act; is that not true?

Mr. BEITEL. Yes, sir; that is the case that is now on appeal. Senator SCHOEPPEL. Now, was Air America also a member of the association?

Mr. BEITEL. Yes, Air America was.

Senator SCHOEPPEL. Now, wasn't Air America's operating authority similarly revoked by the CAB for intentional and flagrant violations of the act by flying regularly scheduled operations without permission of the Board?

Mr. BEITEL. The examiner in that proceeding had recommended that the license not be revoked by that one particular stockholder dispose of his stock and that agreement has been worked out with the Enforcement Section of the Board in Air America's case. But the stockholder refused to go through with the agreement and, consequently, the letter was revoked.

Senator SCHOEPPEL. It was revoked, however?

Mr. BEITEL. Yes, sir; but I thought I would explain that the flagrant violations were not such they could not have been settled if the voting trust that had been agreed upon had been created. I was counsel in that particular case during the trial of that proceeding and that is the reason I am familiar with the background.

Senator SCHOEPPEL. Was Arthur Curry connected with Aircoach Transport?

Mr. BEITEL. I do not know, sir. There is a Curry Air Transport. I do not know if there is an Arthur Curry connected with it. Would you like me to obtain that information for you?

Senator SCHOEPPEL. Yes. I wish you would, please. If you can furnish that information, I would appreciate it for the record here. Now, I wonder for the record, I think you have answered that you do not know whether Curry Air Transport and Great Lakes Airlines were members of the transport group here in 1954?

Mr. BEITEL. They were in 1954 and they still are today.

Senator SCHOEPPEL. They still are?

Mr. BEITEL. Yes.

Senator SCHOEPPEL. Now, the CAB has enforced proceedings against them, have they not?

Mr. BEITEL. There has been a complaint filed against them in a proceeding and a proceeding of some sort started but has never been concluded.

Senator SCHOEPPEL. Do you know very much about the Great Lakes group? Did you represent them?

Mr. BEITEL. No, sir; I did not.

Senator SCHOEPPEL. Can you find out for me and supply it for the record whether the Great Lakes carrier group admitted in a CAB enforcement proceedings that they maintained secret bank accounts for the express purpose of evading creditors?

Mr. BETTEL. I can tell you now, sir, that I read a report which I understand is an accurate report of a partial transcript in Docket 5132 in this hearing in this case we are discussing and in that particular case, one of the officers of Great Lakes did admit that a bank account was maintained and it was described as a secret bank account. Senator SCHOEPPEL. It was so demarcated and found to be a secret bank account; was it not?

Mr. BEITEL. It was so admitted, I think, by the witness on the stand; yes, sir. I do not know the purpose of it, but I am happy to report to you that the transcript does contain the statement.

Senator SCHOEPPEL. Do you have in the record now or can you furnish the names of the present officers of ACTA for us? Mr. BEITEL. The Aircoach Transport Association?

Senator SCHOEPPEL. Yes.

Mr. BEITEL. I can give it to you. Mr. Cox is president and can give it to you right now.

Senator SCHOEPPEL. I think we ought to have that for the record. Mr. Cox. We have Mr. Astras

Senator SCHOEPPEL (interposing). You just recently had a new election of officers?

Mr. Cox. Yes.

Senator SCHOEPPEL. I think it would be helpful if you could furnish this list for the committee.

Mr. Cox. Do you want it in writing or do you want me to give it offhand?

Senator SCHOEPPEL. If you have it, now.

Mr. Cox. Well, there is vice president of operations, S. E. Spicher; vice president of sales, Irving Mansfield; vice president of finance, A. J. Averman; secretary-treasurer, George N. Astras, and I am president of the association.

Senator SCHOEPPEL. Has Mr. Langdon Marvin ever worked for the ACTA?

Mr. Cox. Has he worked for them?

Senator SCHOEPPEL. Yes, or any members of the association here in Washington?

Mr. Cox. I do not think he has worked for them. I think he has been a consultant at times for them. He has not worked for them. Senator SCHOEPPEL. What were his duties, do you know?

Mr. Cox. I do not think he had any duties-they would have been economic research.

Senator SCHOEPPEL. Just on a consulting capacity basis?
Mr. Cox. Yes.

Senator SCHOEPPEL. Thank you very much. That is all.
Senator MONRONEY. Senator Smathers?

Senator SMATHERS. No question.

Mr. BAYNTON. I have some questions, Mr. Chairman.
Your suggestion would involve grandfather rights?
Mr. Cox. Yes, sir.

Mr. BAYNTON. I believe you said you had 30 members?
Mr. Cox. Correct.

Mr. BAYNTON. How many of those members would receive grandfather rights under your proposal?

Mr. Cox. We would propose that all that have been in the proceedings and have been prosecuting their rights or their desires under the 5132 case, all those that have been in that proceeding be given grandfather rights, except those that have been convicted of safety violations, unless they were cleared.

Mr. BAYNTON. As I recall the proceedings, about 18 were recommended for approval by the examiners. Can you give us approximately how many were involved in proceedings as against that 18? Mr. Cox. Against the 18?

Mr. BEITEL. If I may answer that question, there were originally some 100 carriers. At the time the case started, there were some 60 carriers. At the present time there are approximately 38 carriers.

Mr. BAYNTON. You would say about 38 carriers out of which the examiners recommended that 18 be given

Mr. BEITEL. That is right. I do not recall the 18 figure but I am quite sure that is right.

Mr. BAYNTON. Without too much detail, could you, for the record, tell us why it was cut down to the 18?

Mr. BEITEL. Yes, sir, there are several reasons. One would be the failure of a carrier to prosecute its application in the case. For example, Royal Air Service, which did not present any evidence or testimony when his case was called in Docket 5132. Another reason that the examiners gave in their initial decision was the financial inability