and the Comptroller of the Currency and the Commerce Department and every department of the Government recommends this kind of legislation, then why can't you make a case for it?

Why do you have to come back to us? That's the thing that I can't understand.

Mr. WEBB. Because we think that we are confronted by a court decision which holds that we do not possess the authority under the

act.

Mr. YOUNGER. No; they didn't say that. Now if I am informed properly, and I think I am, the court merely said that you hadn't made a sufficient case for an increase on a per diem basis. It didn't say that you didn't have the authority on that side. They said you couldn't fix a rate on the basis of penalty.

Mr. WEBB. Well, the court bottomed its opinion on two grounds, really. They said first our order was not supported by adequate findings.

Second, as I read the opinion, it said that we may not use our authority to prescribe per diem rates to accomplish regulatory objectives.

Mr. ROGERS of Texas. Would the gentleman yield to me?

Mr. YOUNGER. Yes.

Mr. ROGERS of Texas. Mr. Webb, with regard to the recent order that you issued, now what procedures of enforcement do you have for those?

Mr. WEBB. The orders to which I referred, Mr. Chairman, are issued under paragraph 15 of section 1. These are emergency car service rules and orders which we may issue when there is an emergency, without any hearing.

Mr. ROGERS of Texas. Suppose the road says, "Well, we are not going to do this"?

Mr. WEBB. Well, paragraph 17 of section 1 of the act does provide for penalties. We are authorized to proceed against those who violate our orders, and the penalty is not less than $100, nor more than $500 for each offense, and $50 for each and every day of the continuation of the offense.

So, if the emergency car service orders are violated, we may proceed against the carriers in court.

Mr. ROGERS of Texas. I thank the gentleman.

Mr. Younger?

Mr. YOUNGER. I am very glad, Mr. Webb, to hear you say that that is the amendment to 14(a) instead of 14(b). It might have been far more controversial.

One other thing that is hard for me to understand, where this is considered such a vital issue, and the information that you say you could obtain by hearings, and this goes back a long time over all these years I think it is 3 years ago we had these hearings-why hasn't the ICC proceeded under their own authority to hold hearings?

The court didn't say that you couldn't hold hearings and to develop all of these facts, before you come to us for the legislation. Now why hasn't that been done?

Mr. WEBB. Well, we instituted this comprehensive investigation, as I pointed out, Congressman Younger, in December of 1963. We felt that we needed it, in view of the fact that the car shortages were

growing progressively worse, and we also appreciated that if legislation such as we proposed were enacted, that the information would be most valuable in carrying out our responsibilities under the legislation that we seek.

Mr. YOUNGER. I agree with you, but that is clear back in December 1963 and you recognized then that you ought to develop all of these facts which you mention in your testimony here of preparing a case, so that you could go to the courts or to anybody with a substantial amount of evidence, supporting your views, we come up here now, we do not have the evidence, and you say now we have to have a hearing again, probably lasting and continuing for another year or so, and if the problem-and it is no different now than it was a year ago, and it is no different a year ago than it was 3 years ago—if it is that important, I can't understand why, on your own initiative, the ICC hasn't proceeded with these hearings to develop all the facts that you say now you would develop if this bill were passed and you would hold hearings, because you have had the authority to hold hearings all the time.

Mr. WEBB. Well, as I say, we are proceeding with our investigation to develop more detailed information.

Mr. YOUNGER. Well, that was in 1963. We are now closing 1965. That's closing the gap to December 1965 shortly, and we still do not have the facts which you say you have to develop if you were granted the authority and held new hearings.

That's the thing that I can't understand.

That's all, Mr. Chairman.

Mr. HARRIS (presiding). Mr. Pickle?

Mr. PICKLE. Mr. Chairman, you say that the problem comes about because of an inadequate car ownership, and then failure to utilize existing equipment efficiently, and you go on to say that though you have established certain car service rules, there is a basic weakness in it because of the lack of authority.

How do we, the Congress, need to give authority to enforce these car service rules, or do you have a law within your own ICC regulation that would permit you to enforce these car service rules?

Can you enforce them? It seems to me like that would come nearer settling it than even the per diem approach, if you require the carriers to move these cars at a regular schedule.

Mr. WEBB. Well, we have, we think, sufficient authority with respect to car service rules, Congressman Pickle. But the problem there is that while we can redistribute the available car supply, there is an overall shortage which we think is a basic and a chronic problem. Mr. PICKLE. Well, perhaps the overall shortage is something that you still must try to find an answer for, but it seems to me that from the immediate standpoint, if you would just put some teeth into what regulations you have, requiring these cars to move at regular schedules, it would help you more than any other one factor.

The thing that comes back to me is that if we do give you the right to increase these per diem rates, we might get some more cars, but what assurance do you have that the carriers, the railroads themselves, will get into the ownership field? I would think, human nature being what it is, that the railroads have already found out that it would be cheaper to rent than it would be to buy, the increased per diem is just

simply going to go to the rental people, and not to the railroads, and I can't see how the railroads are going to build any cars.

What assurance, or do you feel that you have assurance that they will get into the ownership business?

Mr. WEBB. We think that they would respond to the incentive because it would then be less attractive to rent cars than it is today, and those carriers which do have adequate car ownership would be encouraged, I think, to build even more cars.

Mr. PICKLE. Of course, it may develop that way. I have got a feeling it won't. I have got a feeling all it will do is just mean the people in the rental service are just going to get that much more for it, and you are still going to have the same problem with movement, and even availability.

Mr. WEBB. Well, the lessors, those in the rental service, are the railroads, by and large.

Mr. PICKLE. One and the same?

Mr. WEBB. Yes, sir.

Mr. PICKLE. Just set up different entities, different companies? Mr. WEBB. No; there are some private car lines, but by far the great majority of railroad cars are owned by the railroads. So, they are in the position of both renting freight cars and leasing freight cars to each other.

Mr. PICKLE. Now, I raised the question earlier with Senator Magnuson, with respect to the tank car, primarily, rail tank car carriers of petroleum products. Is there a shortage in this particular field? Mr. WEBB. I don't believe so, but I would like to have Director Pfahler comment on that, Congressman.

Mr. PFAHLER. I am not aware of any. Railroads generally do not hold themselves out to supply tank cars to shippers, and tank cars for the most part are owned either by private car companies, or by the people who are doing the shipping, like Shell Oil, or somebody like that.

We have had no cases recently come to our attention where people have been upset about lack of tank car supply.

Mr. PICKLE. Is most of this hauled by truck?

Mr. PFAHLER. No; there is considerable rail shipment. Of course, the largest quantities of petroleum products, I presume, would go by pipeline, but for going into areas where there are no pipelines, or to distribute it from pipeline sources, why it goes by both rail and truck. Also, a large chemical shipment by tank car.

Mr. PICKLE. Of course, if it goes by pipeline, it will go from a distribution point to another distribution point, from which point there has got to be further distribution.

Mr. PFAHLER. That's right.

Mr. PICKLE. That will, of course, cure part of the problem, but not all of it. I am advised that the tank carriers, the cars that were in existence 20 or 30 years ago, which consisted of 8,000-to 10,000-gallon tanks have more or less gone out of existence, they are going into the larger tank, but still the other gallonage capacity had been materially reduced so that there still is a deficiency. I wish you to check

on that.

Please see if there is a shortage, because in times of a national emergency, we will have to be able to move petroleum products even more importantly than wood or even grain.

Now is this shortage of cars, is this a seasonal shortage, or is this just a year-round shortage?

Mr. WEBB. The shortage exists sometimes throughout the entire year at various places, and on various types of equipment. The shortages of cars have become more severe in recent years, and in the Far West, they have been persistent, throughout this entire year. Mr. PICKLE. I believe one of the Congressmen who testified earlier said that each fall, there will be a hue and cry of "where are our boxcars?" And this seemed rather unusual to me, that you would be cutting timber all together in the summer. I am not familiar with the Northwest, but it looked like to me you could cut a tree down in February as well as you could in November.

Mr. WEBB. Well, the most severe shortages, of course, are usually occurring right after harvest time. But the lumber shippers in the West, I know, have been plagued throughout this year by car shortages.

Mr. PICKLE. I was very impressed by one of the gentlemen's statements. He said, if I understood him, that 85 percent of his products were shipped by rail. This was out of the Midwest area, and that means, then, I assume, only 15 percent by truck.

Mr. WEBB. Yes; that is correct. The lumber which is produced in the West moves predominantly to the East and to other sections of the country by rail.

Mr. PICKLE. The gentleman who made this statement, Mr. Chairman, was a grain man from North Dakota, representing an agricultural State, and this is true in that area also?

Mr. WEBB. Yes; I am sure that is correct.
Mr. PICKLE. That's all, Mr. Chairman.

Mr. HARRIS. Mr. Chairman, I am sorry I wasn't here to hear all of that which has been said. I was unavoidably detained in another important meeting.

Let me ask you some questions on the shortage, and a little different way could be figured out here, I suppose, but to get the general picture, you have a table here, don't you?

Mr. WEBB. Yes, sir; there were three tables attached to my statement.

The CHAIRMAN. I think they should go in the record with your statement, and they will be included.

(The tables referred to will be found on pp. 47-50.)

The CHAIRMAN. Now, let me ask you this question, and get it down to the 30-day monthly basis.

In 1964, how many cars were produced, approximately?

Mr. WEBB. About 65,000, Mr. Chairman.

The CHAIRMAN. 65,000 produced, or built in 1964? How many in 1964 were retired?

Mr. WEBB. Retired from service?

The CHAIRMAN. Yes; that is the word I was trying to think of, "retired from service."

Mr. PFAHLER. In the neighborhood of 80,000, 86,000, or something of the sort.

The CHAIRMAN. A little more than 80,000. In other words we had a deficit of approximately 21,000 cars in 1964? Is that right? Mr. WEBB. Yes, sir.

The CHAIRMAN. Per month, how many cars now are being built? Mr. PFAHLER. I would say about 72,000, about 6,000 a month.

The CHAIRMAN. About 6,000 a month, and today, how many would you say are being retired per month?

Mr. PFAHLER. I would say close to 6, between 6,000 and 7,000. We can furnish specific data by month.

The CHAIRMAN. You may. You may furnish that information more specifically, but for the purposes of the record, that means that over 25 percent are being retired a month? Is that right?

Mr. PFAHLER. You mean 25 percent more retired than being introduced?

The CHAIRMAN. Right.

Mr. PFAHLER. Yes, sir.

The CHAIRMAN. That obviously can't go on continuously.

Mr. WEBB. No; that's quite true.

The CHAIRMAN. Without drastic results.

Mr. WEBB. Over the past several years, we have been incurring a net loss of about 2,000 boxcars per month.

The CHAIRMAN. 2,000 boxcars per month.

Mr. WEBB. Yes, if the computation is made in terms of boxcars, I think that has been about the rate of loss. However, there has been some improvement shown thus far in 1965. But we will be glad to supply all of those figures for the record, in the number of cars added to the fleet, retired, and also those on order. (The information referred to follows:)

Freight cars delivered, retired, and ordered, 1964 and 1965

The CHAIRMAN. Now, our established and traditional procedures for the railroad are to produce or by contract, build and own their

cars?

Mr. WEBB. Yes, sir.

The CHAIRMAN. You say about one and a half million, or approximately a little over a million and one half total cars today?

Mr. WEBB. That is correct.

The CHAIRMAN. Would you say that 90 percent of those are owned by the railroads?