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B-103841, JAN. 16, 1956

B-103841 Jan 16, 1956
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CIVIL AERONAUTICS BOARD: REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 2. REPRESENTING OVERPAYMENTS RESULTING FROM THE ESTABLISHMENT OF FINAL RATES WHICH WERE LOWER THAN THE TEMPORARY RATES PREVIOUSLY ESTABLISHED BY THE BOARD. HAS RESULTED IN THE BOARD OWING THE CARRIER MORE UNDER SUCH RATE FOR THE PAST PERIOD COVERED BY THAT RATE THAN WAS PAID TO THE CARRIER FOR THE PAST PERIOD UNDER A TEMPORARY RATE. WITH RESPECT TO THESE CASES YOU ADVISE THAT A NUMBER OF SMALLER CARRIERS ARE SEEKING TO REFUND THE AMOUNTS INVOLVED BY OFFSET AGAINST FUTURE SUBSIDY BILLINGS UNDER THE FINAL RATE OVER AN EXTENDED PERIOD OF TIME. IT IS POINTED OUT THAT THE PRINCIPAL REASON ADVANCED BY THE SMALLER CARRIERS IN REQUESTING THIS METHOD OF REFUND IS A VERY TIGHT WORKING CAPITAL POSITION AND.

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B-103841, JAN. 16, 1956

TO HONORABLE ROSS RIZLEY, CHAIRMAN, CIVIL AERONAUTICS BOARD:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 2, 1955, REQUESTING AN EXPRESSION OF OUR VIEWS WITH RESPECT TO CERTAIN PROCEDURES ESTABLISHED BY THE CIVIL AERONAUTICS BOARD PERTAINING TO THE COLLECTION OF AMOUNTS DUE FROM CERTAIN AIR CARRIERS, REPRESENTING OVERPAYMENTS RESULTING FROM THE ESTABLISHMENT OF FINAL RATES WHICH WERE LOWER THAN THE TEMPORARY RATES PREVIOUSLY ESTABLISHED BY THE BOARD.

IN BRIEF, YOU POINT OUT THAT ORDINARILY THE FIXING OF A FINAL MAIL RATE FOR A SUBSIDIZED CARRIER UNDER SECTION 406 OF THE CIVIL AERONAUTICS ACT OF 1938, AS AMENDED, HAS RESULTED IN THE BOARD OWING THE CARRIER MORE UNDER SUCH RATE FOR THE PAST PERIOD COVERED BY THAT RATE THAN WAS PAID TO THE CARRIER FOR THE PAST PERIOD UNDER A TEMPORARY RATE. HOWEVER, IN SOME INSTANCES A REVERSE SITUATION HAS RESULTED, AND WITH RESPECT TO THESE CASES YOU ADVISE THAT A NUMBER OF SMALLER CARRIERS ARE SEEKING TO REFUND THE AMOUNTS INVOLVED BY OFFSET AGAINST FUTURE SUBSIDY BILLINGS UNDER THE FINAL RATE OVER AN EXTENDED PERIOD OF TIME. IT IS POINTED OUT THAT THE PRINCIPAL REASON ADVANCED BY THE SMALLER CARRIERS IN REQUESTING THIS METHOD OF REFUND IS A VERY TIGHT WORKING CAPITAL POSITION AND, IN VIEW OF THIS SITUATION, THE CARRIERS EITHER DO NOT HAVE THE CASH ON HAND OR ARE CONFRONTED WITH OTHER PRESSING OBLIGATIONS SUCH AS PAYMENTS DUE ON EXISTING BANK LOANS. THEREFORE, YOU ADVISE THAT THE BOARD PROPOSES TO ESTABLISH THE FOLLOWING GENERAL ULE:

"/A) TO PERMIT PAYMENT OF THE REFUND DUE BY OFFSET AGAINST FUTURE BILLINGS UNDER THE CURRENTLY EFFECTIVE RATE WITHIN NOT TO EXCEED 6 MONTHS WHERE THAT CAN BE ACCOMPLISHED BY WITHHOLDING UP TO 50 PERCENT OF THE AMOUNTS DUE MONTHLY; OR

"/B) WHERE PAYMENT WOULD NOT BE ACCOMPLISHED WITHIN 6 MONTHS BY WITHHOLDING UP TO 50 PERCENT, TO PERMIT PAYMENT OF THE REFUND DUE BY OFFSET AGAINST FUTURE BILLINGS UNDER THE CURRENTLY EFFECTIVE RATE WITHIN NOT TO EXCEED 12 MONTHS BY WITHHOLDING UP TO 100 PERCENT OF THE AMOUNTS DUE MONTHLY (WITH CASH PAYMENT OF THE BALANCE, IF ANY, DURING THE 12 MONTH PERIOD).'

HOWEVER, AS EXCEPTIONS TO THE PROPOSED GENERAL RULE, YOU REFER TO THE CASES OF THE FOLLOWING CARRIERS:

"/C) HAWAIIAN--- REFUND DUE IN THE AMOUNT OF $ 135,000 FOR THE PERIOD 10/1/53 TO 3/31/55, WHICH THE CARRIER PROPOSES TO PAY OVER A 24 MONTH PERIOD BEGINNING WITH APRIL 1955, BY OFFSETTING AGAINST CURRENT BILLINGS WHICH AVERAGE $ 20,200 PER MONTH, THE SUM OF APPROXIMATELY $ 5,600 PER MONTH.

"/D) TRANS PACIFIC--- REFUND DUE IN THE AMOUNT OF $ 149,964 FOR THE PERIOD 10/11/53 TO 6/30/55, WHICH THE CARRIER PROPOSES TO PAY OVER A 35- MONTH PERIOD BY OFFSETTING THE ENTIRE AMOUNT OF CURRENT BILLINGS WHICH AVERAGE $ 4,300 PER MONTH; (IN OTHER WORDS, TRANS PACIFIC WOULD RECEIVE NO SUBSIDY PAYMENTS AT ALL FOR APPROXIMATELY 35 MONTHS).'

SINCE YOU CONSIDER THESE TWO CASES AS BEING UNIQUE, YOU PROPOSE TO PERMIT A PERIOD OF 24 MONTHS WITHIN WHICH TO MAKE PAYMENT OF THEIR RESPECTIVE REFUNDS, POINTING OUT THAT ON THIS BASIS HAWAIIAN WOULD RECEIVE APPROXIMATELY $14,600 OF SUBSIDY PER MONTH FOR 24 MONTHS INSTEAD OF $ 20,200, ESTIMATED TO BE DUE MONTHLY UNDER THE CARRIER RATE; AND TRANS PACIFIC WOULD RECEIVE NO SUBSIDY FOR 24 MONTHS AND, IN ADDITION, WOULD MAKE CASH PAYMENT DURING THE PERIOD OF APPROXIMATELY $ 48,000.

AS SET FORTH IN GENERAL REGULATIONS NO. 120, DATED SEPTEMBER 28, 1953, REPORTED IN 33 COMP. GEN. 667, IT IS THE RESPONSIBILITY OF EACH AGENCY OF THE GOVERNMENT TO TAKE ALL STEPS POSSIBLE TO COLLECT AMOUNTS DUE THE UNITED STATES, TAKING INTO CONSIDERATION, AMONG OTHER FACTORS, THE AIMS OF THE ACCOUNT AND THE COST OF PURSUING DIFFERENT TYPES OF COLLECTION EFFORT. THE REGULATION FURTHER PROVIDES, HOWEVER, THAT ALL COLLECTION EFFORTS SHOULD BE DOCUMENTED FOR FUTURE REVIEW BY THIS OFFICE, AND THAT IN THE EVENT ANY AMOUNTS SHOULD SUBSEQUENTLY BE ADMINISTRATIVELY DETERMINED AS UNCOLLECTIBLE, SUCH DEBTS SHOULD BE PROMPTLY REPORTED TO THIS OFFICE FOR FURTHER COLLECTION ACTION. THE CASES TO WHICH YOU HAVE REFERRED ARE NOT, STRICTLY SPEAKING, UNCOLLECTIBLE DEBTS.

INASMUCH AS THE PROCEDURES PROPOSED BY YOUR BOARD DO NOT APPEAR TO BE INCONSISTENT WITH THE POLICY SET FORTH IN THE REGULATION, AND SINCE IT IS OBVIOUS THAT VIGILANT EFFORTS ARE INTENDED TO BE MADE IN PROTECTION OF THE GOVERNMENT'S INTERESTS, WE PERCEIVE NO OBJECTION TO THE GENERAL RULE ADOPTED BY THE BOARD OR THE ACTION PROPOSED IN THE CASES OF HAWAIIAN AND TRANS PACIFIC AS EXCEPTIONS TO SUCH RULE.

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