[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2135 Introduced in Senate (IS)]


109th CONGRESS
  1st Session
                                S. 2135

    To direct the Secretary of Transportation to report to Congress 
  concerning proposed changes to long-standing policies that prohibit 
  foreign interests from exercising actual control over the economic, 
competitive, safety, and security decisions of United States airlines, 
                        and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           December 16, 2005

 Mr. Inouye (for himself and Mr. Lautenberg) introduced the following 
 bill; which was read twice and referred to the Committee on Commerce, 
                      Science, and Transportation

_______________________________________________________________________

                                 A BILL


 
    To direct the Secretary of Transportation to report to Congress 
  concerning proposed changes to long-standing policies that prohibit 
  foreign interests from exercising actual control over the economic, 
competitive, safety, and security decisions of United States airlines, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. FINDINGS.

    Congress finds the following:
            (1) Under current law (49 U.S.C. 40102(a)(15)), only an 
        airline that qualifies as ``a citizen of the United States'' 
        (commonly referred to as a United States airline) may provide 
        service between cities in the United States or on international 
        routes obtained by the United States through international 
        agreements. The law further provides that an airline will 
        qualify as a citizen of the United States only if the airline 
        is ``a corporation or association . . . which is under the 
        actual control of citizens of the United States''.
            (2) Throughout its 47-year history (1938-1985), the Civil 
        Aeronautics Board interpreted the governing law as requiring 
        that United States interests be in ``actual control'' of all 
        operations of the airline. The Department of Transportation 
        continued these policies when it took over the responsibilities 
        of the Civil Aeronautics Board in 1985.
            (3) To ensure that these long-standing policies remained in 
        effect, Congress in 2003 passed an amendment specifically 
        adding to the definition of ``citizen of the United States'' a 
        requirement that the airline be ``under the actual control of 
        citizens of the United States''. When this ``actual control'' 
        test was specifically added to the law, it clearly was intended 
        to codify the policy developed by the Civil Aeronautics Board 
        and the Department, which required that United States interests 
        control economic and competitive decisions of the airline, as 
        well as safety and security decisions.
            (4) Congress has repeatedly refused the Department's 
        requests to pass legislation to allow foreign interests to gain 
        increased control of United States airlines by changing the 
        statutory requirements that United States citizens must own 75 
        percent of the voting stock of United States airlines. The 
        Department now seeks to accomplish increased foreign control by 
        other means.
            (5) On November 7, 2005, the Department issued a Notice of 
        Proposed Rulemaking (70 Fed. Reg. 67389) that proposes to 
        change the Department's long-standing interpretation of 
        ``actual control''. Under the proposed rules, United States 
        citizens would be required to control decisions of a United 
        States airline concerning commitments to the Civil Reserve Air 
        Fleet, transportation security, safety, and organizational 
        documents. However, United States citizens would not be 
        required to control the airline's basic economic and 
        competitive decisions, such as the cities to be served, the 
        fares to be charged, the aircraft to be purchased, and the 
        nature and size of the aircraft fleet.
            (6) The proposal to review long-standing policy and law 
        through a new interpretation of ``actual control'' is contrary 
        to the clear intent of Congress.
            (7) The proposed new interpretation would change long-
        standing policies and legal interpretations that ``actual 
        control'' means control over all operations of the airline, not 
        only decisions concerning security, safety, the Civil Reserve 
        Air Fleet program, and organizational documents.
            (8) The Department's rulemaking is a major impairment of 
        the policies and legal interpretation that Congress 
        specifically required by statute in 2003, and that have been 
        followed for over 60 years. Any major change in the definition 
        of ``actual control'' should only be accomplished through the 
        legislative process and should not be unilaterally imposed by 
        the executive branch.
            (9) The development of an equitable ``open skies'' 
        agreement between the United states and Europe is central to 
        opening up markets, including access to Heathrow if 
        commercially viable slots and facilities are available there 
        and key rights beyond Heathrow, and both entities will benefit 
        by moving the world's 2 largest aviation markets closer 
        together.

SEC. 2. LIMITATION ON CERTAIN ACTIONS.

    (a) In General.--For a period of one year after the date of 
enactment of this Act, the Secretary of Transportation shall not issue 
a decision on the notice of proposed rulemaking referred to in section 
1(a)(5), issue any final rule, or make any fitness determination under 
section 41102 of title 49, United States Code, that would change the 
Department of Transportation's long-standing interpretation concerning 
what constitutes ``actual control'' of an airline for purposes of 
section 40102(a)(15) of such title. The Secretary may not submit a 
final rule to the Congress under chapter 8 of title 5, United States 
Code, before the date that is 180 days after the date on which the 
Secretary submits the report required by subsection (c).
    (b) Congressional Review.--Any final rule described in subsection 
(a) issued by the Secretary shall be treated as a major rule for 
purposes of chapter 8 of title 5, United States Code.
    (c) Report.--Not later than 180 days after the date of enactment of 
this Act, the Secretary shall submit to Congress a report that assesses 
the impact of the proposed rules referred to in section 1(a)(5). At a 
minimum, the report shall include the following:
            (1) An assessment of the consequences of permitting greater 
        participation of foreign interests in the direct operations of 
        United States airlines, including the impact on national 
        defense, competition between foreign and United States 
        airlines, the growth of international air services performed by 
        United States airlines and of the United States aviation 
        industry manufacturers, and access of United States citizens, 
        especially those living in rural communities, to aviation 
        service.
            (2) If the Department interprets the proposed rules as 
        allowing foreign owners of 25 percent or less of a United 
        States airline's stock to gain control of the airline through 
        supermajority voting requirements or other means, or as 
        allowing agreements under which United States shareholders will 
        vote their shares the same way as minority foreign 
        shareholders, an analysis of the potential effects of such 
        supermajority voting requirements or agreements on--
                    (A) national defense;
                    (B) competition between foreign and United States 
                airlines and aviation industry manufacturers;
                    (C) access to domestic aviation services; and
                    (D) whether such agreements would be consistent 
                with the statutory requirement that permits an airline 
                to qualify as a citizen of the United States only if at 
                least 75 percent of the voting interest in the airline 
                is owned or controlled by persons that are citizens of 
                the United States.
            (3) An analysis of how the Department will ensure that 
        United States citizens maintain control over matters having an 
        impact on issues concerning Civil Reserve Air Fleet 
        participation, safety, and security if foreign interests are 
        allowed to exercise control over issues concerning a United 
        States airline's day-to-day operations, market strategy, and 
        fleet management.
            (4) An analysis of the portion of the proposed rules that 
        provides that the new interpretation of ``actual control'' 
        would apply only in cases in which a foreign country grants 
        United States interests ``reciprocal access to investments in 
        their carriers'', and an analysis of--
                    (A) how the Department can adopt an interpretation 
                that will permit a definition of ``actual control'' to 
                vary depending on policies followed by a foreign 
                country;
                    (B) how the Department would define ``reciprocal 
                access'';
                    (C) how the Department would determine that the 
                home country of a foreign airline does not deny United 
                States citizens reciprocal access to investments in its 
                own airlines; and
                    (D) whether, as part of ``reciprocal access'', the 
                Department would require control by United States 
                interests over economic decisions by a foreign airline.
            (5) An analysis of whether under the proposed rule the 
        Federal Government will have adequate ability to review the 
        source of foreign capital.
            (6) An analysis of the effects the proposed rules would 
        have on the wages, working conditions, and job opportunities of 
        United States airline employees, including job opportunities in 
        international air transportation.
            (7) An analysis of whether under the proposed rules 
        interested parties would be notified of and have an opportunity 
        to comment on an application submitted to the Department under 
        which a foreign interest could gain effective control of a 
        United States airline.
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