Senator HARTKE. You present a person such as myself with a very difficult decision, because, generally speaking, the call throughout the country is for elimination of governmental interference with private business. And here you have asked for continuation of what regulation there is at the present time plus the possibility of an increased authority through two other bills which are before this committee. Mr. FRANTZ. I think I might explain that somewhat further. In general I think with the general American public and their enterprises that is generally true, that less regulation is more advisable. But the great part of American business is not in the field of the public utilities in which they are required to serve all comers. And I think that therein lies a tremendous difference. They are required not to discriminate against anyone, any shipper or receiver of freight, to hold out to service all of the American public wherever they are and whoever they are. That is, insofar as the authority that has been granted a carrier.

Senator HARTKE. Even assuming that is true, rate regulation and control in and of itself cannot be done in a vacuum. It has to be done, generally speaking, by people.

Mr. FRANTZ. That is right.

Senator HARTKE. We are subjected to the continuing charge about the increasing number of Federal employees. I am not admitting to the factual truth of what they are saying, but to the charge itself. And as long as this country grows, even the present regulation would necessarily imply that you are going to have to have more employees to continue to regulate what you are doing particularly if you are going to have a growing transportation industry. Is that not right? Mr. FRANTZ. It is if it is done completely and adequately. I am afraid that is true.

Senator HARTKE. And with more employees paid by the Federal Government there have to be taxes. And this raises the criticism of an expanding Washington bureacracy at an increased cost to the taxpaying public.

I wonder if your industry is prepared to defend the action of the Congress on a broad basis in the event that such a program would be continued as it is now. Or does your industry feel that this is in the realm of public responsibility because it is materially benefiting from the present system which is in existence?

Mr. FRANTZ. I think it is beneficial to all modes of transportation, not just limited to the trucking industry. But I think our industry has in all areas where it has taken up the torch been prepared to carry its share of the burden.

Senator HARTKE. That is all I had, Mr. Frantz. I want to thank you for your testimony here today.

At this time the committee will recess until 10 a.m., tomorrow in this same room.

(Whereupon, at 12:23 p.m., the subcommittee recessed to reconvene at 10 a.m., Tuesday, June 11, 1963.)

TRANSPORTATION ACT AMENDMENTS-1963

TUESDAY, JUNE 11, 1963

U.S. SENATE,

COMMITTEE ON COMMERCE,

SUBCOMMITTEE ON SURFACE TRANSPORTATION,

Washington, D.C.

The subcommittee met at 10:02 a.m., in room 5110, New Senate Office Building, the Honorable Strom Thurmond (chairman of the subcommittee) presiding.

Senator THURMOND. The subcommittee will come to order.

Our first witness is Mr. L. A. Odom, attorney, of Odom, Nolen & Foster, Spartanburg, S.C.

Will you come around, Mr. Odom?

Mr. Odom comes from the best State in the Nation. We are delighted to have you with us, Mr. Odom.

STATEMENT OF L. A. ODOM, ATTORNEY, ODOM, NOLEN & FOSTER, SPARTANBURG, S.C., ON BEHALF OF THE SOUTH CAROLINA OIL JOBBERS ASSOCIATION, THE SOUTH CAROLINA PETROLEUM HAULERS ASSOCIATION, THE SOUTH CAROLINA MOTOR TRANSPORTATION ASSOCIATION, AND THE ASSOCIATED PETROLEUM CARRIERS

Mr. ODOм. Thank you, sir.

Senator THURMOND. You have a reputation of being one of the ablest lawyers in the State and one of the finest gentlemen in the State, and we are glad to have you here and to hear you testify.

Mr. ODOм. After all that, I do not know whether I can testify or not. [Laughter.]

Mr. Chairman, gentlemen of the committee, it becomes very awkward for me to read anything, because I never write anything. Always whatever I say, I say as I go along. But I will attempt to

Senator THURMOND. Would you like to put your statement in the record and talk off the cuff?

Mr. ODOм. I think probably in this instance I can do it more quickly and more satisfactorily by reading it.

Senator THURMOND. Whichever you wish. That will be all right.

Mr. ODOм. If you care to ask me questions as we go along, I will be happy to be interrupted.

My name is L. A. Odom. I am engaged in the general practice of law in Spartanburg, S.C., and have been so engaged for the past 40 years. I am appearing as a representative of the South Carolina Oil

99-564-64-pt. 1-34

Jobbers Association, the South Carolina Petroleum Haulers Association, the South Carolina Motor Transportation Association, and the Associated Petroleum Carriers.

The South Carolina Oil Jobbers Association consists of approximately 150 oil jobbers located in the various counties of South Carolina. Through their marketing facilities, approximately 331 percent of the total gasoline gallonage in South Carolina passes. All the members of this organization are small independent businessmen. They own various tractors and trailers suitable for such bulk transportation of petroleum products as is handled in their own business operation. These petroleum products are purchased from the various major oil companies.

The South Carolina Petroleum Haulers Association represents a sizable number of small businessmen engaged in the transportation of petroleum products in bulk for hire. These are mostly not engaged in the merchandising of petroleum.

The South Carolina Motor Transportation Association has a membership composed of various people owning and operating trucks of one kind of another throughout South Carolina.

Associated Petroleum Carriers is a company engaged in the bulk transportation of petroleum products in tank trucks in the States of South Carolina, North Carolina, and Georgia. This company is certificated by the Interstate Commerce Commission, the North Carolina Utilities Commission, the South Carolina Public Service Commission, and the Georgia Public Service Commission. They operate approximately 450 truck-trailer units hauling petroleum products in bulk exclusively.

I have been connected with the marketing of petroleum in various capacities for the past 30 years. I am president of Odom Oil Co., a South Carolina oil jobber, and am chairman of the board of directors of Associated Petroleum Carriers. I am a past president of the South Carolina Motor Transportation Association. During World War II, I served as a member of the National Office of Defense Transportation Advisory Committee on petroleum transportation.

My apprehension about this legislation is that the passage of this bill will have acute and adverse effect on small businessmen engaged in transportation and on the oil jobbers marketing petroleum and utilizing trucks in their operation.

The average small trucker transporting petroleum products in bulk has only trucks and tanks equipped to haul petroleum products. This equipment is not suitable for the handling of general commodities or any other products, and their entire revenue is and must be derived from the hauling of petroleum products in bulk.

If the rates for which these products are hauled is permitted to vest entirely in railroad managerial discretion without any supervision from the Interstate Commerce Commission or other regulatory body, it will be possible for the railroads to haul petroleum products in bulk at an abnormally low rate and even if they lose money on it they can make it up on the other products which they are equipped to haul.

The small trucker is not financed as well as the railroads, and since he has no way to fight back this destructive competition, his very existence is doomed.

This will have a further adverse effect on small businessmen selling petroleum whose finances are limited, and, therefore, they cannot carry large inventories, because if and when the trucks serving them are out of business and the railroads take over their business, they are not equipped to deliver in sufficiently small quantities to serve the small dealers with small storage and limited financial resources. The small trucker and the small petroleum merchant will, therefore, be squeezed out of business just to enable the powerful railroads to exercise their managerial discretion in an unbridled manner.

The oil jobber or small distributor is reluctantly allowed by the oil company to use a transport truck in the first place, and I emphasize that, and this legislative windfall to the large supplying company will be welcomed by the large oil companies.

Another method of applying the pressure on the small trucker and the small oil jobber or distributor even though the railroads do not ever obtain the business with reduced rates is for them to reduce the rates on business which they never haul or never hope to haul. The oil companies always insist on moving their products at the lowest available rate, and even though a rate may be published on such a low basis and may at the same time be only a paper or fictitious rate where they do not get the business, it nevertheless results in the small trucker having to reduce his rate to such a low paper rate as may have been filed by the other form of transportation.

This proposal has more than Federal implications as it will destroy State rights to establish rates on intrastate traffic.

Incidentally, in our State I would say, or in the three States that I am talking about, approximately 333 percent moves in interstate commerce, and approximately 65 percent in intrastate commerce, but by switching it around and using discretions the tool this thing will give them is they can run it up to 50/50 or worse than that.

Much of the traffic can be routed interstate or intrastate, and it will go the Federal nonregulated route.

Shortly, a State public service commission, insofar as bulk commodities are concerned, will be of no further use, because they will normally lose their discretion in these rates.

In the case of bulk petroleum any savings or reductions made in freight rates will not be passed on to the consuming public-I would like to emphasize that every way that I know-but will go into the coffers of the railroad or the large oil companies or their large distributors.

Neither the railroads nor the large oil companies have an effective method of fixing the retail price on these products and giving the hundreds of thousands of customers buying oil to heat their homes and gasoline to run their automobiles and farms the benefit of these proposed reductions.

As I understand it, it is absolutely illegal for a major oil company to fix a retail price, or at least that has been the practice that is followed in marketing areas that I am familiar with.

The talk about savings to the general public insofar as petroleum is concerned on these reduced freight rates is, therefore, a myth and practically an impossibility.

The small independent jobber, the small truckers, and the hundreds of thousands of consumers buying oil on the installment plan-and