of the Seaboard Airline Railway Co., or the Georgia, Florida, & Alabama Railway Co., which is also operated under receivership. I am confident that Mr. Kerr would not make a willful misrepresentation and it is, therefore, quite obvious that he has been misinformed and the statement, which he makes relative to the crossing at Bainbridge is the conclusion of the railroad officials and not a statement of fact. I am familiar with the incident to which he makes reference and was present on the occasion. The pipe-line company to which he refers is the Southeastern Pipe Line Co. The crossing to which he refers was incidental to the construction of a pipe line between Port St. Joe, Fla., and Chattanooga, Tenn., via Atlanta, Ga. In order to construct this line it is necessary for the pipe line to cross railroad rights-of-way at numerous points. Assuming that construction began at the origin of the line at Port St. Joe, Fla., and proceeded northwardly, the first railroad crossing would be the one to which Mr. Kerr makes reference. On January 5, 1940, the pipe-line company was for the first time notified that the railroad companies would not voluntarily permit the line to be constructed across rights-of-way. The General Assembly of Georgia in 1937 passed a law which purported to authorize pipe-line companies to exercise the right of eminent domain. In most instances the railroad rights-of-way in Georgia are owned in fee simple and the pipe-line company recognized that where the title was a fee-simple title it would be necessary to condemn the property of the railroad company. But in some instances it was ascertained that the railroad held a mere easement or surface right. In those instances where the railroad owned a mere easement or surface right, the attorneys representing the pipe line were of the opinion that it would not be necessary to condemn but that if an easement was secured from the owner of the fee-simple title the crossing could be legally effected. These attorneys were of the further opinion that since the pipe was installed beneath the roadbed and placed underground it could not possible interfere with any railroad purpose including the operation of the trains and that since the easement acquired by the railroad to its right-of-way in Bainbridge, Ga., limited its enjoyment insofar as the railroad was concerned to proper railroad purposes, the railroad company had no right to deny the exercise of the privilege acquired by the pipe-line company from the owner of the fee-simple title. The crossing was made at night, but whatever may have been the reasons of the pipe-line company in undertaking to effect a crossing at night, it was realized that the crossing could not be made in secrecy because the railroad company had anticipated the effort and was aware of the point at which the crossing would be undertaken and had there maintained watchmen both day and night. We anticipated that the railroad companies would immediately undertake to secure an injunction, but when the construction crew arrived at the site it was determined that the railroad companies would rely upon the order appointing the receivers for the Seaboard Airline Railway Co., which company had no property interest in the right-of-way, but was only concerned with the operation of trains over the right-of-way because of a lease entered into some years before with the Georgia, Florida, & Alabama Railway Co., and prior to the time when both railroad companies were placed in the custody of receivers. The attorney for the railway company took the position that since this order appointing the receivers enjoined anyone from interfering with the custody of any property taken over by the receivers that the pipe-line company was enjoined from disturbing the right ofway that belonged to another railroad company. The attorney for the Seaboard Airline Railway Co. was of the further impression that title was owned to the right-of-way in fee simple and before the crossing was made a copy of the conveyance from the property owner to the railway company was exhibited to this attorney and he was thus informed that the Seaboard Airline Railway Co. had no property interest in the right-of-way and that the Georgia, Florida and Alabama Railway Co. had a mere easement of surface right. The attorney inquired as to whether we would undertake the crossing and he was informed that the pipe-line company would do so immediately. By this time a considerable crowd had been attracted to the point in question and in view of numerous threats on the part of representatives and employees of the railroad company to tear out the pipe, to bring an engine to the point at which the crossing was being undertaken and to cause it to emit steam upon the workmen, it was determined that the pipe-line company would undertake to secure relief from the courts and during the course of the construction an order was obtained from the State court judge enjoining the individuals who had made the statements from in any way interfering with the workmen installing the pipe or the completed installation. The work began at about 6 o'clock on the evening of Saturday, January 5, and was completed prior to midnight on that date. A Federal district court in Florida had assumed jurisdiction over the receivers of the Seaboard Airline Railway Co. and upon the following Monday a petition was presented to the court to adjudge the pipe-line company in contempt for having proceeded as heretofore stated. Judge Alexander Akerman signed an order requiring the pipe-line company to show cause why it should not be adjudged in contempt. The pipe-line company officials appeared in Orlando, Fla., and after a lengthy hearing the corporation was adjudged in contempt. The attorneys for the pipe-line company announced an intention to appeal and requested a supersedeas of the order adjudging the corporation to be in contempt and requiring it to purge itself of the contempt by removing the pipe within 7 days' time. Judge Akerman refused the supersedeas. The following day the attorneys for the pipe-line company appeared in New Orleans and presented a motion for a supersedeas to the United States circuit court of appeals. The supersedeas was granted but the order provided that the attorneys for the railroad company might move to vacate the same and if so would be given a hearing. The attorneys for the railroad company did not see fit to do this. The appeal was duly filed and was heard on argument at New Orleans on May 15. date the case has not been decided and the superdedeas is still effective. At this The crossing in question was obviously made for the purpose of raising the legal issues so that these issues might be speedily determined. The pipe-line company had no intention of undertaking other crossings until these issues were determined and no other crossings of railroad rights-of-way have been undertaken. Hon. EDWIN C. JOHNSON, STANDARD OIL CO., Louisville, Ky., June 10, 1940. United States Senate, Washington, D. C. DEAR SIR: Our attention has been called to some recent testimony before your committee in connection with Senate bill 3753, which testimony referred to certain statements by our Mr. Arthur M. Stephens. Mr. Stephens is traffic manager of our company and, in that capacity, is not familiar with the basis on which we establish our normal markets or with the many influences that are taken into consideration when arriving at these prices. We are taking the liberty of writing you and outlining the marketing policy of the Standard Oil Co. (Kentucky) pertaining to the manner in which it arrives at its normal prices on petroleum products, using gasoline as an example, and to indicate the influence upon such prices by the company's capital investment in water terminals, barges, etc., all of which results in lower transportation costs not only to water terminals but to points supplied therefrom. The Standard Oil Co. (Kentucky) is a marketing company; it operates no refineries or gasoline pipe lines. It does own and operate water terminals along the Mississippi Gulf Coast, South Atlantic Seaboard, and on the Mississippi and Ohio Rivers. In addition to these water terminals the company also operates many bulk station plants at interior points, located in the States of Kentucky, Mississippi, Alabama, Georgia, and Florida. From all of these bulk station plants and water terminals the company sells, ships, or delivers gasoline in tank cars or tank trucks and other methods of delivery. In arriving at its prices, for instance on gasoline, it is necessary to take into consideration many things, not only the company's costs, both transportation and marketing, for various methods of delivery, but also competitive prices from competitive water terminals; refineries located within or without the company's marketing area, and freight rates. We desire to show, however, in a few concrete examples, which are indicative of our general marketing policy, that our lower transportation costs, water terminals, etc., are reflected in our delivered prices. In the following examples we have used as a basis our present normal tank-car prices on Crown gasoline; this is our major brand of motor fuel and, incidentally, represents about 75 percent of the company's total sales of motor fuel. It is our policy to add to the delivered tank-car price a reasonable amount to cover marketing costs, when arriving at tank-truck deliveries of Crown gasoline to dealers and to consumers. In the examples indicated below, we have shown the tank-car rate of freight in cents per gallon from Group 3, Oklahoma, and from Shreveport, La., and have added to the lower of these two freight rates a price of 4.75 cents per gallon, which we believe is a fair competitive price in tank cars f. o. b. Either Group 3, Oklahoma, or Shreveport, La., on a motor fuel of approximately the same specification as Crown gasoline. We have shown the resultant delivered price, excluding all taxes, and against this have shown our present normal tankcar price on Crown gasoline, delivered at the same point, based upon our making shipment from one of our water terminals: Atlanta, Ga.: Tank-car freight from Group 3, Oklahoma, 4.29 cents per gallon; from Shreveport, La., 3.56 cents per gallon. Adding to the latter a price of 4.75 cents, f. o. b. Shreveport, La., would make a delivered tank-car price of 8.31 cents per gallon-against our company's present tank-car price on Crown gasoline delivered, Atlanta, Ga., of 7.50 cents per gallon on basis of our making shipment from Savannah, Ga. Columbus, Ga.: Tank-car freight from Group 3, Oklahoma, 4.29 cents per gallon; from Shreveport, La., 3.43 cents per gallon. Adding to the latter a price of 4.75 cents, f. o. b. Shreveport, La., would make a delivered tank-car price of 8.18 cents per gallon-against our company's present tank-car price on Crown gasoline delivered, Columbus, Ga., of 7.05 cents per gallon on basis of our making shipment from Panama City, Fla. Athens, Ga.: Tank-car freight from Group 3, Oklahoma, 4.55 cents per gallon; from Shreveport, La., 3.83 cents per gallon. Adding to the latter a price of 4.75 cents, f. o. b. Shreveport, La., would make a delivered tank-car price of 8.58 cents per gallon-against our company's present tank-car price on Crown gasoline delivered at Athens, Ga., of 7.60 cents per gallon on basis of our making shipment from Savannah, Ga. Birmingham, Ala.: Tank-car freight from Group 3, Oklahoma, of 4.03 cents per gallon; from Shreveport, La., 3.10 cents per gallon. Adding to the latter a price of 4.75 cents, f. o. b. Shreveport, La., would make a delivered tank-car price of 7.85 cents per gallon-against our company's present tank-car price on Crown gasoline delivered, Birmingham, Ala., of 6.40 cents per gallon-based on shipment being made from Mobile, Ala. The following are some of the points where the Standard Oil Co. (Kentucky) has water terminals, and we desire to show the influence on prices by watertransportation rates to these water-terminal points: Savannah, Ga.: Tank-car freight from Group 3, Oklahoma, of 4.88 cents per gallon; from Shreveport, La., 4.22 cents per gallon. Adding to the latter a price of 4.75 cents per gallon, Shreveport, La., would make a total delivered cost of 8.97 cents per gallon, against our present tank-car price on Crown gasoline delivered, Savannah, Ga., of 6.50 cents per gallon. Panama City, Fla.: Tank-car freight from Group 3, Oklahoma, of 4.82 cents per gallon; from Shreveport, La., 3.89 cents per gallon. Adding to the latter a price of 4.75 cents per gallon, Shreveport, La., would make a total delivered cost of 8.64 cents per gallon, whereas our present tank-car price on Crown gasoline, f. o. b. Panama City, Fla., is 6 cents per gallon. Louisville, Ky.: Tank-car freight from both Group 3, Oklahoma, and Shreveport, La., is 3.17 cents per gallon; adding to this a price of 4.75 cents per gallon Shreveport, would make a total delivered cost of 7.92 cents per gallon-against our present tank-car price on Crown gasoline, f. o. b. Louisville, Ky., of 6.50 cents per gallon. We believe the data contained herein indicate conclusively that, notwithstanding any statement to the contrary, the company's lower transportation costs into and through water terminals have a very definite and direct bearing on the company's established normal prices. We sincerely trust that the contents of this letter will be given due consideration by your committee. We are taking the liberty of sending a copy to Hon. Clyde M. Reed and to Hon. H. H. Schwartz. Yours very truly, W. G. VIOLETTE. INDEPENDENT PETROLEUM ASSOCIATION OF AMERICA, To the SUBCOMMITTEE OF THE COMMITTEE ON INTERSTATE COMMERCE, UNITED The Independent Petroleum Association of America desires to present its opposition to S. 3753. We believe that the proposals in this bill are especially unwise at the present moment when all phases of essential industry are being urged to prepare themselves for the most effective action for the national defense should an emergency arise. Of primary importance in such defense is the transportation of petroleum products. Pipe lines are the most economical mode of such transportation over long distances. Their use relieves other transportation facilities from the burden of the movement of petroleum products. Any restrictive legislation which would interfere with this rapid and economical form of transportation would not be to the best interest at the present time. If S. 3753 should become law and if thereafter no new pipe lines nor extensions of existing pipe lines could be constructed without the approval of the Interstate Commerce Commission serious delays would be created to the harm of the national welfare as well as to the damage of the petroleum industry. This would be especially true in the case of the opening of new fields or pools of oil whose output might be of great importance in effectuating a national-defense program. One effect of this law would be to give to existing pipe lines in any field a general monopoly of the pipe-line transportation of oil moving from that field until such time as competing companies might be able to obtain from the Interstate Commerce Commission the required certificate of convenience and necessity. Under the definition of necessity, it cannot now be known whether the Interstate Commerce Commission might hold that a second or a third pipe line would be desirable in a field served by one or two pipe-line companies. This would create a condition of uncertainty among producers of petroleum who might hesitate to develop some field in which a single pipe-line company had a monopoly as the only purchaser since no additional purchasers would be admitted to the field without the Interstate Commerce Commission certificate. Development of the proposed program for national preparedness will probably place upon our existing transportation facilities, exclusive of pipe lines, greater burdens than they have borne in recent years. If the petroleum industry is compelled to rely upon railroad facilities for transportation of the production from new fields or pools, this would add to the burden railroads are already called upon to bear and might seriously conflict with the movement of other materials important in our national-defense program. Furthermore, should the petroleum industry be compelled to rely in a larger degree upon railroad transportation rather than make use of new pipe-line facilities that might be developed, the additional cost of such transportation would necessarily fall upon the consumer as well as the producer. It is important that the extension of pipe line transportation facilities to new oil fields should be encouraged and made as simple as possible. It is easy to build a new pipe line or to extend an old one to new production centers but who would think of building a railroad for that purpose? For these reasons and for many others which might be developed in times of less stress, the Independent Petroleum Association of America respectfully requests your committee to adversely report S. 753. INDEPENDENT PETROLEUM ASSOCIATION OF AMERICA, By RUSSELL B. BROWN, General Counsel. AMENDING INTERSTATE COMMERCE ACT AS TO PIPE LINES THURSDAY, JUNE 13, 1940 UNITED STATES SENATE, SUBCOMMITTEE OF THE COMMITTEE ON INTERSTATE COMMERCE, Washington, D. C. The subcommittee met at 10:30 a. m., pursuant to call, in the Interstate Commerce Committee room in the Capitol, Senator Edwin Carl Johnson of Colorado (chairman of the subcommittee) presiding. Present: Senators Johnson of Colorado (chairman of the subcommittee), Schwartz, and Reed. Senator JOHNSON of Colorado. Let us proceed. Just go ahead, Commissioner, in your own way. STATEMENT OF JOSEPH B. EASTMAN, CHAIRMAN, LEGISLATIVE COMMITTEE, INTERSTATE COMMERCE COMMISSION Mr. EASTMAN. My name is Joseph B. Eastman. I am chairman of the legislative committee of the Interstate Commerce Commission. The legislative committee has made a report under date of May 15, to Senator Wheeler, as chairman of the Committee on Interstate Commerce, in regard to Senate 3753, which provides in substance for the requiring of certificates of convenience and necessity from the Interstate Commerce Commission prior to the construction of new pipe lines for the transportation of petroleum and its products. In this report by the legislative committee we ended with a conclusion to the following effect: As above indicated, evidences of an important demand for such legislation as is proposed in S. 3753 have not heretofore been brought to our attention, and for that reason we have made no such inquiry into the situation as would enable us to express positive and definite conclusions as to the desirability of statutory provisions of this character. Obviously public hearings should be a preliminary to their serious consideration. We did make a distinction in the report between pipe lines which are used for the transportation of crude oil and those which are used for the transportation of refined products of petroleum. With respect to those which are used for the transportation of crude oil, we stated as follows: So far as the railroads are concerned, the greater economy of pipe lines in the transportation of crude oil has long been recognized. It is possible that under certain conditions the railroads might be able to compete on more nearly equal terms, if permitted to make rates applicable to the movement of trainload quantities, but this is still to be demonstrated. In the construction of pipe lines for such transportation, also, the time factor may be of considerable importance, particularly in the construction of gathering pipe lines out of newly developed oil fields. The time consumed by formal proceedings before the Commission to |