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Senator CANNON. My next question. Relating to your chart on page 11, or your listing on page 11, your recommendations of a phaseout of the subsidy through fiscal 1970, do you believe that the phaseout can be accomplished sooner than the method you have outlined and still have these companies stay in business?

Mr. BOYD. Obviously, at some stage of the game they are going to be right on the fence. What we are trying to do with this proposal is to bring them down to the end in good financial health.

Senator MONRONEY. A healthy, lingering death.

Mr. BOYD. I cannot say, categorically, if this exact program is not followed they will be unable to continue.

Senator CANNON. Then, relating to your program for 1966, inasmuch as you have only requested $2.1 million-you have requested, we will say, inasmuch as the budget message contained only $2.1 million and you indicated that $42 million would be required-do you think this $2.1 million, if approved, would be just to continue a sort of lingering death this next year for the carriers?

Mr. BOYD. No, sir. The language in the budget message, as I recall, is to provide subsidy to or through December 31, 1965. So, the sense of the budget message is to terminate as of December 31.

Senator CANNON. So that you would be going on the same rate that you have requested, only terminating December 31 of this year.

Mr. BOYD. Yes, sir.

Senator LAUSCHE. That would be a 6-months period?

Mr. BOYD. Yes, sir. There are three statutes involved here, Senator, if I may outline them, that are the sources of our discomfort.

One is the Federal Aviation Act, which has the licensing and the payment provisions; section 401 for licensing, section 406 for payment. Another is the Appropriations Act. And the third is the Administrative Procedure Act.

Under the Administrative Procedure Act, a carrier may file an application for renewal of a certificate where there is a temporary certificate involved. Under the law it is entitled to the payment of subsidy, whatever subsidy it requires under section 406, pending final determination of the application; which means, in the simplest terms, that each one of these carriers will be fully entitled to go to court and, as long as they can stay in court, receive subsidy regardless of what has been appropriated to the Civil Aeronautics Board in the way of money payment for subsidy.

Senator CANNON. But you could change the rate.

Mr. BOYD. Only within certain limits. The operative provisions of the law are that the carrier is entitled to its need based on honest, efficient, and economical operation. As long as it is operating within that framework, we have got to pay it a relative amount of subsidy.

Senator CANNON. Do you believe that if this phaseout by December 31 of this year is accomplished-that is, that there are no additional funds appropriated-do you think that these carriers can remain in existence and continue service at the two principal locations now: the Los Angeles and New York locations?

Mr. BOYD. I don't know the answer to that. As to what I think, Senator Cannon, I think that they would make a strenuous effort to maintain some sort of an operation. But I do not believe it would be the kind of an operation that the Board would call a meaningful operation.