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The original documents are located in Box 59, folder "1976/06/23 - William Walton (1)" of
the James M. Cannon Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 59 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
MEETING WITH WILLIAM WALTON
VICE-CHAIRMAN OF THE BOARD,
HOLIDAY INNS
Wednesday, June 23, 1976
5:30 p.m.
Re: FEA
MEETING WITH WILLIAM WALTON
VICE-CHAIRMAN OF THE BOARD,
HOLIDAY INNS
Wednesday, June 23, 1976
12.00 - 12:30 p.m.
Re: FLA
Holiday
WORLD
-
- - OFF
WILLIAM B. WALTON
VICE CHAIRMAN OF THE BOARD
HOLIDAY INNS, INC.
3742 LAMAR AVENUE
MEMPHIS, TENNESSEE 38118
PHONE 901/362-4602
file
MR. CANNON:
M
Do you want to do anything further with this?
j
6/25
forward to
Central files
FORD LIBRARY & GERALD
THE WHITE HOUSE
WASHINGTON
June 23, 1976
MEMORANDUM FOR JIM CANNON
FROM:
LARRY SPEAKES
8
SUBJECT:
BILL WALTON APPOINTMENT
Here is some background on the appointment with Bill Walton:
Mr. Walton is Vice Chairman of the Board of Directors of Holiday Inns,
Inc., next to Kimmons Wilson, he is their top man.
His problem breaks down this way: During the original Arab Oil Embargo,
the President blocked FEA's plans to ban weekend gasoline sales. This
was widely received in the tourism-travel industry, which is now largely
supportive of the President.
Now FEA has published a set of contingency regulations in event of a
second Arab Embargo. Included in this is the ban on Sunday gasoline
sales.
Mr. Walton says the industry understands it will have to bear the brunt
of any conservation effort if another Embargo is imposed. "This goes
without saying, " he says, "but do they have to rub our nose in it?"
The FEA is holding hearings in Washington today and will follow with a
series of similar hearings around the country. Mr. Walton says this is
spreading throughout the industry and will be disastrous for the President.
He would like for the President to say to FEA: "This is not what I want.
The tourism-travel industry will have to bear their share of the load, but
not all of it. 11
Mr. Walton asked for a meeting with the President either today or Friday.
I told him that would not be possible but you would hear him out and convey
this immediately to the President.
He has met at least twice previously with the President. Bill Baroody brought
in the Holiday Inn leadership a year ago and when the President was in Memphis
last month, we brought him in the Holding Room for a brief conversation.
CRALO FORD LIBRA
STATEMENT
of
HOLIDAY INNS, INC.
at the
HEARING ON ENERGY CONSERVATION CONTINGENCY PLANS
of the
FEDERAL ENERGY ADMINISTRATION
June 23, 1976
Washington, D.C.
Philip F. Zeidman
BROWNSTEIN ZEIDMAN SCHOMER and CHASE
Suite 900
1025 Connecticut Avenue, N.W.
Washington, D.C. 20036
Telephone: (202) 457-6500
Special Counsel to
Holiday Inns, Inc.
FORD is LIBRARY
My name is Philip F. Zeidman. I am an attorney with the
Washington law firm of Brownstein Zeidman Schomer and Chase
and am appearing today on behalf of Holiday Inns, Inc.
Holiday Inns' interest in the proposed Energy Con-
servation Contingency Plans under discussion today stems
from its recognition of. the central role that energy con-
servation must occupy in business as well as government
planning. As the nation's largest food and lodging concern,
Holiday Inns was an early and vigorous proponent of aggressive
energy management programs. We continue to believe that
voluntary conservation policies are to be preferred, and are
likely to pay the greatest conservation dividends. We
nonetheless acknowledge that in cases of urgent national
need, mandatory programs may play a necessary - if limited -
role in overall energy policy. My comments today will be
directed at the necessity, and the limits, of the plans now
under study.
It is with a mixture of gratification and disappoint-
ment that Holiday Inns assesses the proposed Contingency
Plans --- gratification for those aspects of the proposed
Plans that would enforce sensible measures with tolerable
adverse effects on economic well-being, health or safety -
such as reasonably limited restrictions on heating, cooling
and hot water; and grave disappointment at the elements of
the Plans that would be economically destructive despite
their apparently marginal contribution to energy savings -
the weekend gasoline distribution restrictions and limitations
on illuminated advertising and outdoor lighting.
DALO FORD
In particular, the potentially devastating impact of
the gasoline distribution restrictions demands closer
questioning of the rationale for such restrictions, which
appear to dismiss the lodging industry as an inconsequential
element of the nation's economy. The advertising and light-
ing restrictions, while threatening a less severe impact,
nevertheless ignore legitimate considerations of safety,
convenience and practicality related to the use of such
signs.
Emergency Weekend Gasoline and Diesel Fuel Retail Distribution
Restrictions
This Plan would make unlawful the pumping of gasoline
or diesel fuel during the period of time between Friday noon
and Sunday midnight, or any hours within such period as are
established by the Administrator.
The voluntary ban on Sunday sales of gasolines that
followed the oil embargo produced a disastrous effect on
lodging operations. According to data from the American
Hotel and Motel Association, occupancies for highway-oriented
accomodations during the ban declined 26% from the prior
year. Weekend occupancy dropped from 65-75% to 20-25%.
Some lodging chains shut down on weekends and some smaller
motels were forced out of business. Related tourist busi-
nesses suffered similarly severe impacts. One can only
speculate, but can hardly doubt, the even more devastating
effect of a weekend-long ban on sales of gasoline to passenger
cars as proposed by the Contingency Plan.
- 2 -
ERALO + FORD
If the sharp loss in volume for lodging and other
travel-related enterprises were a necessary result of
drastic economy-wide restrictions imposed on many industries
in a period of a national energy crisis, Holiday Inns would
not shirk from "taking its lumps" along with everyone else.
It is, however, the singling out of the travel industry for
sacrifice, as a seemingly "non-essential" industry, that
renders this proposed Contingency Plan SO objectionable.
In its discussion of the proposal, the Agency noted
that certain types of vehicles, such as trucks and taxis,
would be permitted to purchase fuel on weekends "[i]n order
to avoid disrupting the normal flow of business and commerce,
" 41 Fed. Reg. 21909 (May 28, 1976). The severe impacts
of the proposed restrictions outlined below show that the
Plan would dramatically disrupt normal business and com-
merce -- in the tourist industry. Employees of the travel
industry work on weekends, and many drive to work - they
apparently would not be able to purchase gasoline. Even
more clearly, consumers of travel services, - Holiday Inns'
customers - would simply be unable to purchase gasoline on
weekends, and thus as a practical matter unable to purchase
those services.
In this connection, we note the prohibition of Section
202 (a) (2) of the EPCA that no energy conservation contingency
plan may impose petroleum rationing. Yet the weekend gas-
oline restrictions appear to do just that by establishing
end-user classes by type and number and crudely purporting
FORD
- 3 -
GIVE
to distinguish between essential and non-essential uses.
Of course, they are the worst sort of rationing plan --
especially when measured against FEA's implicit proposed
gasoline rationing plan which spreads out the burden among
all users --- for they select arbitrarily a single class of
users and industry to bear the burden of rationing.
Aside from the apparent prohibition against such a
Contingency Plan, there are persuasive considerations of
policy opposed to one-sided regulation of the travel industry.
Congress has already noted - and firmly rejected -- the
impulse to turn first to travel as a target when imposing
conservation measures. For example the Conference Report
to the Energy Emergency Act of 1973 (S.2589) noted:
there must be a realization by those in
authority that the public good is not served
by denying allocations of fuel for certain uses
which have the appearance of being non-essential
(such as recreational activities or various aspects
of general aviation) if to do so would result in
significant unemployment and economic recession
for some regions of the country. There are, of
course, many areas in this nation where recreation
and tourism provide the base of the local economy.
Careful attention must be given to the needs of
these as well as other areas.
* * *
Access to adequate supplies of fuels is basic to
the survival of virtually every commercial enter-
prise and, accordingly, government must act with
great care to assure that its actions are equit-
able and do not unreasonably discriminate among
users.
* * *
The Committee intends the term equitable to be
applied in its broadest and most general sense.
As such, the term denotes the spirit of fairness,
justness, and right dealing. No user or class of
FORD
and
- 4 -
users should be called upon during this shortage
period to carry an unreasonably disproportionate
share of the burden. This is fundamental to the
traditional notion of fairness and equal protection.
The Committee expects the President and the Ad-
ministrator of the Federal Emergency Energy Ad-
ministration created under this Act to assiduously
observe these requirements in the conduct of their
functions. (pp. 43, 44)
Later, in April of 1974, the Senate unanimously passed
Senate Resolution 281, expressing the sense of the Senate
that any federal program dealing with the energy shortage
should give appropriate consideration to the provision of an
adequate supply of energy for the travel industry. Preceded
by extensive hearings and a consideration of the contributions
of the industry to the nation's economy, the accompanying
Report of the Commerce Committee (S. Rep. 93-791) found that
the needs and interests of the tourism industry appeared, in
many cases, to be either overlooked or assigned secondary
importance. One of the dominant themes during the hearing
was that an adequate supply of gasoline is absolutely
essential for a viable tourism industry.
Your Committee was told, for example, that of the 25
million visitors to Florida in 1973, 80 percent
came in passenger cars of which one in five was a
recreational vehicle. Reports indicate that automo-
bile travel to Florida during the winter 1973-74
was down 30 to 50 percent.
Country-wide attractions such as theme parks, historical
sites, national parks, and recreational areas reported
losses of attendance and revenues from 20-70 percent.
Motels and motor hotels along the highways, where
occupancies in the 50-55 percent ranges are required
to make a profit, reported occupancies of less than
5 percent on weekends and 30 percent during the week.
According to Discover America Travel Organizations,
Inc. (DATO), during the four-month period, November 15,
1973 to March 15, 1974, because the energy crisis
caused reduction in the number of automobile tourists
- 5 -
an estimated $716,800,000 in tourism expenditures was
not realized, 179,000 jobs were placed in jeopardy, and
90,000 people were dropped from payrolls. These figures
do not include losses of employment in air transport
and other inter-city passenger services segments of the
industry.
* * *
The Committee Report cited other estimates,
that had the Sunday ban on gasoline continued,
.
had the actual shortages due to reduced allocation of
fuel for automobile use continued, and if the fear and
uncertainty concerning the availability of fuel and
services along the highways continued, loss of ex-
penditures by tourists in excess of $2.8 billion would
have occurred, and the employment of 716,000 people
would have been affected.
The Recreation Vehicle Council estimated the payroll
cutback throughout its industry attributable to the
energy crisis at $415 million.
Further indication of Federal recognition of the sig--
nificant role played by the travel industry is a report
prepared at the request of the Chairman of the Subcommittee
on Transportation and Commerce of the Committee on Interstate
and Foreign Commerce by the Department of Commerce, Impact
of the United States Energy Policy on the Tourism Industry. */
The report emphasized that the travel industry is important
to the American economy as it: (1) supports small businesses,
(2) assists local economies, (3) generates employment, (4)
contributes to foreign exchange earnings, and (5) provides
the necessary infrastructure to accommodate business travel.
The report disclosed that while out-of-town or travel over
*/ U.S. Department of Commerce, Commerce Today, February 4,
1974, pp. 8-9.
REFORD
- 6 -
50 miles uses 5 percent of the total U.S. energy consumed,
it contributes nearly an equal proportion of the goods and
services produced by the nation (over 4 percent of the gross
national product).
I refer you to The Importance of Tourism to the U.S.
Economy, a study by the United States Travel Data Center.
That study buttresses the foregoing analysis and provides
substantial data as to the contribution of the industry
to the economic well-being. One of the most important
conclusions of the Commerce Department report was that
station closings, odd/even day sales and gas rationing cause
misallocations of resources, create inequities which result
in disruptions of the economy, and directly or indirectly
bring about grave effects within the travel industry.
In view of the severe effect of the proposed restrictions
on Holiday Inns and the prevailing notion that the travel
industry is in every sense a true and contributing partner in
our economy, I believe you can understand our dismay at
FEA's blithe acknowledgment that the proposed plan will have
a "measurable impact on certain regions and sectors of the
economy", principally "tourism, recreation, hotels and
restaurants, recreational boating and aviation, retail gas
sales." 41 Fed. Reg. 21910 (May 28, 1976). Although we do
not have the benefit of the "microeconomic analysis" that
FEA is preparing to analyze the impact of gasoline dis-
tribution restrictions, we submit that unless the Agency
- 7 -
FORD
area
first undertakes to examine alternative distribution re-
strictions --- and shows them to have an even greater ad-
verse impact on the economy -- there can be no justification
for such arbitrary treatment of the tourism industry.
Indeed, the failure to prepare this economic analysis in
time for consideration at these hearings suggests that it
will simply seek to provide a rationale for decisions already
made, rather than represent a contribution to a thoughtful
decision-making process. In view of FEA's statutory obli-
gation to consider the economic impact of its Contingency
Plans, the absence of the analysis at this crucial juncture
in the regulatory process appears to make serious consider-
ation unlikely.
In the FEA news release accompanying the publication
of the Contingency Plans, Administrator Zarb noted that
implementation of the Plans might cause "inconvenience"
but would be necessary "to preserve jobs." While the Plans
generally seem to fit this criterion (providing for limitations
on commuter parking, for example), the restrictions on week-
end gasoline distribution strike an altogether different
note. As I have suggested, the restrictions promise to
produce not mere inconvenience but severe hardship for the
multitude of small and large businesses that make up the
travel industry.
We think the wiser course would be to withdraw the
third proposed contingency plan, at least until the Agency
has had an opportunity to analyze fully the drastic effect
- 8 -
that would follow the implementation of the Plan. While
we are mindful of the statutory timetable for submission
of these plans to Congress, we do not think that administrative
delay, which has already truncated the opportunity for public
digestion and analysis of these proposals, can justify sub-
mission of a Plan which is both unnecessarily arbitrary and
of dubious effectiveness.
As noted above, the impact of the weekend restrictions
is closely akin to that of a gasoline rationing plan, which
is acknowledged by the Energy Policy and Conservation Act to
be a far more severe, last-ditch measure. But for the
tourism industry, the contingency plan may be worse than an
explicit rationing plan, which aims to spread the impact
across all segments of the economy. Indeed, the Contingency
Plan amounts to the most inequitable rationing plan imaginable.
While Holiday Inns by no means endorses FEA's proposed
Gasoline Rationing Contingency Plan --- with its cumbersome
regulatory scheme -- there are at least two aspects of that
Plan that are conspicuously absent from the proposed gasoline
distribution restrictions. First, FEA at least recognizes
that "[m]andatory rationing would be implemented only if all
other options for managing a petroleum shortfall proved
inadequate, including the conservation contingency plans.
" 41 Fed. Reg. 21918 (May 28, 1976) Second, the gasoline
rationing plan was drafted "to avoid extreme hardship for
any group or region" (id.). The gasoline distribution plan
could not survive application of either of the foregoing
tests; yet it seeks to achieve conservation through a
- 9 -
regulatory scheme very close in its effects to outright
rationing. The tourism industry and the economy would be
better served by withdrawal of this drastic proposal, and
its imposition, if at all, only if the same preconditions
for triggering of a comprehensive gasoline rationing plan
are found to be present.
Emergency Restrictions on Illuminated Advertising and Certain
Gas Lighting
The Plan would forbid the use of electricity or natural
gas for illumination of advertising signs and the use of
natural gas for outdoor lighting.
While Holiday Inns can, however regretfully, appreciate
the necessity of regulating truly "non-essential" lighting,
it appears that the usefulness of much advertising and
outdoor lighting has been ignored in this proposed Contingency
Plan.
Holiday Inns has already reduced by 75% the electrical
consumption of its "Great Signs" by turning off the blinking
incandescent lights and cutting off neon lighting on the
signs at midnight each night. Twenty-five percent of the
lights illuminating Holiday Inns' highway billboard signs
have been turned off.
We believe that darkening these signs would be a positive
disservice to travelers, who rely upon them for directions -
especially at night and often in unfamiliar territory. The
Priority of Quality, the Summary Report of the Commission on
Highway Beautification, recognized these values of outdoor
- 10 -
advertising. It concluded as follows:
The Commission suggests that Congress may wish to
consider making some distinction between outdoor ad-
vertising signs which simply advertise products and
those which provide information of potential useful-
ness to motorists regarding services and facilities
in which highway travelers may be expected to have
specific interest. In the latter category, it has
been indicated that motorists frequently desire in-
formation containing directions, descriptions and
distances concerning such traveler-oriented services
and facilities as lodging, eating, automobile servic-
ing, camping, tourist attractions, truck stops, and
possibly other facilities for motorists. The need
for such businesses to get information to motorists
is important to the safety and convenience of motor-
ists as well as to economic well-being of the businesses.
Further, it would certainly be energy-ineffecient to
force travelers to drive further in search of lodging or
other services. Particularly objectionable is the failure
of the Plan to provide for reductions in the lighting of
particular signs so as to permit, where possible, illumination
of small portions of a sign that advertise the name of a
business, for example. Many companies - Holiday Inns
included, as noted above - have accomplished energy savings
in precisely this fashion. By heavy-handedly barring all
such lighting, the Plan robs businessmen of the incentive
to engage in conservation measures which may hold out con-
siderable promise.
As to outdoor lighting, most businesses have already
reduced such lighting to that necessary for safety and
security purposes. While we recognize that the Contingency
Plan would prohibit only natural gas outdoor lighting --- and
thus largely aims at decorative lighting -- some such uses
may be necessary for safety or security.
11 -
Finally, the candid disclosure that this Plan is designed
in large part, not for true conservation, but rather to
"lend credence" to the overall energy conservation program,
ill befits a regulatory agency charged with responsibility
for substantive conservation measures. The limitations on
freedom of advertising for businesses and the inconvenience
to travelers are heavy prices to pay for negligible con-
servation results.
If such restrictions are to be proposed we suggest
that the Contingency Plan should be modified to permit the
owner or operator of a business to reduce the energy con-
sumption of an advertising sign, where possible. Further,
a provision should be made for a good faith determination
by the operator as to whether any particular advertising or
outdoor lighting serves a useful purpose related to safety,
security or conveying necessary information. Such standards
would be the mark of an enlightened conservation program,
which recognizes that businessmen have substantial incentives
to conserve energy and will undertake substantial efforts to
do SO.
I will be pleased to answer any questions you may have,
or to submit material for the record if time does not permit
further discussion. Thank you.
- 12 -
STATEMENT
of
HOLIDAY INNS, INC.
at the
HEARING ON ENERGY CONSERVATION CONTINGENCY PLANS
of the
FEDERAL ENERGY ADMINISTRATION
June 23, 1976
Washington, D.C.
Philip F. Zeidman
BROWNSTEIN ZEIDMAN SCHOMER and CHASE
Suite 900
1025 Connecticut Avenue, N.W.
Washington, D.C. 20036
Telephone: (202) 457-6500
Special Counsel to
Holiday Inns, Inc.
FORD in LIBRARY
My name is Philip F. Zeidman. I am an attorney with the
Washington law firm of Brownstein Zeidman Schomer and Chase
and am appearing today on behalf of Holiday Inns, Inc.
Holiday Inns' interest in the proposed Energy Con-
servation Contingency Plans under discussion today stems
from its recognition of the central role that energy con-
servation must occupy in business as well as government
planning. As the nation's largest food and lodging concern,
Holiday Inns was an early and vigorous proponent of aggressive
energy management programs. We continue to believe that
voluntary conservation policies are to be preferred, and are
likely to pay the greatest conservation dividends. We
nonetheless acknowledge that in cases of urgent national
need, mandatory programs may play a necessary - if limited --
role in overall energy policy. My comments today will be
directed at the necessity, and the limits, of the plans now
under study.
It is with a mixture of gratification and disappoint-
ment that Holiday Inns assesses the proposed Contingency
Plans -- gratification for those aspects of the proposed
Plans that would enforce sensible measures with tolerable
adverse effects on economic well-being, health or safety -
such as reasonably limited restrictions on heating, cooling
and hot water; and grave disappointment at the elements of
the Plans that would be economically destructive despite
their apparently marginal contribution to energy savings -
the weekend gasoline distribution restrictions and limitations
on illuminated advertising and outdoor lighting.
In particular, the potentially devastating impact of
the gasoline distribution restrictions demands closer
questioning of the rationale for such restrictions, which
appear to dismiss the lodging industry as an inconsequential
element of the nation's economy. The advertising and light-
ing restrictions, while threatening a less severe impact,
nevertheless ignore legitimate considerations of safety,
convenience and practicality related to the use of such
signs.
Emergency Weekend Gasoline and Diesel Fuel Retail Distribution
Restrictions
This Plan would make unlawful the pumping of gasoline
or diesel fuel during the period of time between Friday noon
and Sunday midnight, or any hours within such period as are
established by the Administrator.
The voluntary ban on Sunday sales of gasolines that
followed the oil embargo produced a disastrous effect on
lodging operations. According to data from the American
Hotel and Motel Association, occupancies for highway-oriented
accomodations during the ban declined 26% from the prior
year. Weekend occupancy dropped from 65--75% to 20-25%.
Some lodging chains shut down on weekends and some smaller
motels were forced out of business. Related tourist busi-
nesses suffered similarly severe impacts. One can only
speculate, but can hardly doubt, the even more devastating
effect of a weekend-long ban on sales of gasoline to passenger
cars as proposed by the Contingency Plan.
-- 2 --
If the sharp loss in volume for lodging and other
travel-related enterprises were a necessary result of
drastic economy-wide restrictions imposed on many industries
in a period of a national energy crisis, Holiday Inns would
not shirk from "taking its lumps" along with everyone else.
It is, however, the singling out of the travel industry for
sacrifice, as a seemingly "non-essential" industry, that
renders this proposed Contingency Plan so objectionable.
In its discussion of the proposal, the Agency noted
that certain types of vehicles, such as trucks and taxis,
would be permitted to purchase fuel on weekends "[i]n order
to avoid disrupting the normal flow of business and commerce,
" 41 Fed. Reg. 21909 (May 28, 1976). The severe impacts
of the proposed restrictions outlined below show that the
Plan would dramatically disrupt normal business and com-
merce --- in the tourist industry. Employees of the travel
industry work on weekends, and many drive to work - they
apparently would not be able to purchase gasoline. Even
more clearly, consumers of travel services, -- Holiday Inns'
customers - would simply be unable to purchase gasoline on
weekends, and thus as a practical matter unable to purchase
those services.
In this connection, we note the prohibition of Section
202 (a) (2) of the EPCA that no energy conservation contingency
plan may impose petroleum rationing. Yet the weekend gas-
oline restrictions appear to do just that by establishing
end-user classes by type and number and crudely purporting
FORD
- 3 -
to distinguish between essential and non-essential uses.
of course, they are the worst sort of rationing plan ---
especially when measured against FEA's implicit proposed
gasoline rationing plan which spreads out the burden among
all users ---- for they select arbitrarily a single class of
users and industry to bear the burden of rationing.
Aside from the apparent prohibition against such a
Contingency Plan, there are persuasive considerations of
policy opposed to one-sided regulation of the travel industry.
Congress has already noted - and firmly rejected - the
impulse to turn first to travel as a target when imposing
conservation measures. For example the Conference Report
to the Energy Emergency Act of 1973 (S.2589) noted:
there must be a realization by those in
authority that the public good is not served
by denying allocations of fuel for certain uses
which have the appearance of being non-essential
(such as recreational activities or various aspects
of general aviation) if to do SO would result in
significant unemployment and economic recession
for some regions of the country. There are, of
course, many areas in this nation where recreation
and tourism provide the base of the local economy.
Careful attention must be given to the needs of
these as well as other areas.
* * *
Access to adequate supplies of fuels is basic to
the survival of virtually every commercial enter-
prise and, accordingly, government must act with
great care to assure that its actions are equit-
able and do not unreasonably discriminate among
users.
* * *
The Committee intends the term equitable to be
applied in its broadest and most general sense.
As such, the term denotes the spirit of fairness,
justness, and right dealing. No user or class of
FORD
- 4 -
users should be called upon during this shortage
period to carry an unreasonably disproportionate
share of the burden. This is fundamental to the
traditional notion of fairness and equal protection.
The Committee expects the President and the Ad-
ministrator of the Federal Emergency Energy Ad-
ministration created under this Act to assiduously
observe these requirements in the conduct of their
functions. (pp. 43, 44)
Later, in April of 1974, the Senate unanimously passed
Senate Resolution 281, expressing the sense of the Senate
that any federal program dealing with the energy shortage
should give appropriate consideration to the provision of an
adequate supply of energy for the travel industry. Preceded
by extensive hearings and a consideration of the contributions
of the industry to the nation's economy, the accompanying
Report of the Commerce Committee (S. Rep. 93-791) found that
the needs and interests of the tourism industry appeared, in
many cases, to be either overlooked or assigned secondary
importance. One of the dominant themes during the hearing
was that an adequate supply of gasoline is absolutely
essential for a viable tourism industry.
Your Committee was told, for example, that of the 25
million visitors to Florida in 1973, 80 percent
came in passenger cars of which one in five was a
recreational vehicle. Reports indicate that automo-
bile travel to Florida during the winter 1973-74
was down 30 to 50 percent.
Country-wide attractions such as theme parks, historical
sites, national parks, and recreational areas reported
losses of attendance and revenues from 20-70 percent.
Motels and motor hotels along the highways, where
occupancies in the 50-55 percent ranges are required
to make a profit, reported occupancies of less than
5 percent on weekends and 30 percent during the week.
According to Discover America Travel Organizations,
Inc. (DATO), during the four-month period, November 15,
1973 to March 15, 1974, because the energy crisis
caused reduction in the number of automobile tourists
- 5 -
an estimated $716,800,000 in tourism expenditures was
not realized, 179,000 jobs were placed in jeopardy, and
90,000 people were dropped from payrolls. These figures
do not include losses of employment in air transport
and other inter-city passenger services segments of the
industry.
* * *
The Committee Report cited other estimates,
that had the Sunday ban on gasoline continued,
had the actual shortages due to reduced allocation of
fuel for automobile use continued, and if the fear and
uncertainty concerning the availability of fuel and
services along the highways continued, loss of ex-
penditures by tourists in excess of $2.8 billion would
have occurred, and the employment of 716,000 people
would have been affected.
The Recreation Vehicle Council estimated the payroll
cutback throughout its industry attributable to the
energy crisis at $415 million.
Further indication of Federal recognition of the sig-
nificant role played by the travel industry is a report
prepared at the request of the Chairman of the Subcommittee
on Transportation and Commerce of the Committee on Interstate
and Foreign Commerce by the Department of Commerce, Impact
of the United States Energy Policy on the Tourism Industry. */
The report emphasized that the travel industry is important
to the American economy as it: (1) supports small businesses,
(2) assists local economies, (3) generates employment, (4)
contributes to foreign exchange earnings, and (5) provides
the necessary infrastructure to accommodate business travel.
The report disclosed that while out-of-town or travel over
*/ U.S. Department of Commerce, Commerce Today, February 4,
1974, pp. 8-9.
RAFORD
- 6 -
50 miles uses 5 percent of the total U.S. energy consumed,
it contributes nearly an equal proportion of the goods and
services produced by the nation (over 4 percent of the gross
national product).
I refer you to The Importance of Tourism to the U.S.
Economy, a study by the United States Travel Data Center.
That study buttresses the foregoing analysis and provides
substantial data as to the contribution of the industry
to the economic well-being. One of the most important
conclusions of the Commerce Department report was that
station closings, odd/even day sales and gas rationing cause
misallocations of resources, create inequities which result
in disruptions of the economy, and directly or indirectly
bring about grave effects within the travel industry.
In view of the severe effect of the proposed restrictions
on Holiday Inns and the prevailing notion that the travel
industry is in every sense a true and contributing partner in
our economy, I believe you can understand our dismay at
FEA's blithe acknowledgment that the proposed plan will have
a "measurable impact on certain regions and sectors of the
economy", principally "tourism, recreation, hotels and
restaurants, recreational boating and aviation, retail gas
sales." 41 Fed. Reg. 21910 (May 28, 1976). Although we do
not have the benefit of the "microeconomic analysis" that
FEA is preparing to analyze the impact of gasoline dis-
tribution restrictions, we submit that unless the Agency
- 7 -
first undertakes to examine alternative distribution re-
strictions -- and shows them to have an even greater ad-
verse impact on the economy -- there can be no justification
for such arbitrary treatment of the tourism industry.
Indeed, the failure to prepare this economic analysis in
time for consideration at these hearings suggests that it
will simply seek to provide a rationale for decisions already
made, rather than represent a contribution to a thoughtful
decision-making process. In view of FEA's statutory obli-
gation to consider the economic impact of its Contingency
Plans, the absence of the analysis at this crucial juncture
in the regulatory process appears to make serious consider-
ation unlikely.
In the FEA news release accompanying the publication
of the Contingency Plans, Administrator Zarb noted that
implementation of the Plans might cause "inconvenience"
but would be necessary "to preserve jobs." While the Plans
generally seem to fit this criterion (providing for limitations
on commuter parking, for example), the restrictions on week-
end gasoline distribution strike an altogether different
note. As I have suggested, the restrictions promise to
produce not mere inconvenience but severe hardship for the
multitude of small and large businesses that make up the
travel industry.
We think the wiser course would be to withdraw the
third proposed contingency plan, at least until the Agency
has had an opportunity to analyze fully the drastic effect
FORD
- 8 -
that would follow the implementation of the Plan. While
we are mindful of the statutory timetable for submission
of these plans to Congress, we do not think that administrative
delay, which has already truncated the opportunity for public
digestion and analysis of these proposals, can justify sub-
mission of a Plan which is both unnecessarily arbitrary and
of dubious effectiveness.
As noted above, the impact of the weekend restrictions
is closely akin to that of a gasoline rationing plan, which
is acknowledged by the Energy Policy and Conservation Act to
be a far more severe, last-ditch measure. But for the
tourism industry, the contingency plan may be worse than an
explicit rationing plan, which aims to spread the impact
across all segments of the economy. Indeed, the Contingency
Plan amounts to the most inequitable rationing plan imaginable.
While Holiday Inns by no means endorses FEA's proposed
Gasoline Rationing Contingency Plan -- with its cumbersome
regulatory scheme -- there are at least two aspects of that
Plan that are conspicuously absent from the proposed gasoline
distribution restrictions. First, FEA at least recognizes
that "[m]andatory rationing would be implemented only if all
other options for managing a petroleum shortfall proved
inadequate, including the conservation contingency plans.
" 41 Fed. Reg. 21918 (May 28, 1976). Second, the gasoline
rationing plan was drafted "to avoid extreme hardship for
any group or region" (id.). The gasoline distribution plan
could not survive application of either of the foregoing
tests; yet it seeks to achieve conservation through a
- 9 -
regulatory scheme very close in its effects to outright
rationing. The tourism industry and the economy would be
better served by withdrawal of this drastic proposal, and
its imposition, if at all, only if the same preconditions
for triggering of a comprehensive gasoline rationing plan
are found to be present.
Emergency Restrictions on Illuminated Advertising and Certain
Gas Lighting
The Plan would forbid the use of electricity or natural
gas for illumination of advertising signs and the use of
natural gas for outdoor lighting.
While Holiday Inns can, however regretfully, appreciate
the necessity of regulating truly "non-essential" lighting,
it appears that the usefulness of much advertising and
outdoor lighting has been ignored in this proposed Contingency
Plan.
Holiday Inns has already reduced by 75% the electrical
consumption of its "Great Signs" by turning off the blinking
incandescent lights and cutting off neon lighting on the
signs at midnight each night. Twenty-five percent of the
lights illuminating Holiday Inns' highway billboard signs
have been turned off.
We believe that darkening these signs would be a positive
disservice to travelers, who rely upon them for directions -
especially at night and often in unfamiliar territory. The
Priority of Quality, the Summary Report of the Commission on
Highway Beautification, recognized these values of outdoor
FORD
- 10 -
advertising. It concluded as follows:
The Commission suggests that Congress may wish to
consider making some distinction between outdoor ad-
vertising signs which simply advertise products and
those which provide information of potential useful-
ness to motorists regarding services and facilities
in which highway travelers may be expected to have
specific interest. In the latter category, it has
been indicated that motorists frequently desire in-
formation containing directions, descriptions and
distances concerning such traveler-oriented services
and facilities as lodging, eating, automobile servic-
ing, camping, tourist attractions, truck stops, and
possibly other facilities for motorists. The need
for such businesses to get information to motorists
is important to the safety and convenience of motor-
ists as well as to economic well-being of the businesses.
Further, it would certainly be energy-ineffecient to
force travelers to drive further in search of lodging or
other services. Particularly objectionable is the failure
of the Plan to provide for reductions in the lighting of
particular signs so as to permit, where possible, illumination
of small portions of a sign that advertise the name of a
business, for example. Many companies - Holiday Inns
included, as noted above - have accomplished energy savings
in precisely this fashion. By heavy-handedly barring all
such lighting, the Plan robs businessmen of the incentive
to engage in conservation measures which may hold out con-
siderable promise.
As to outdoor lighting, most businesses have already
reduced such lighting to that necessary for safety and
security purposes. While we recognize that the Contingency
Plan would prohibit only natural gas outdoor lighting --- and
thus largely aims at decorative lighting -- some such uses
may be necessary for safety or security.
- 11 -
Finally, the candid disclosure that this Plan is designed
in large part, not for true conservation, but rather to
"lend credence" to the overall energy conservation program,
ill befits a regulatory agency charged with responsibility
for substantive conservation measures. The limitations on
freedom of advertising for businesses and the inconvenience
to travelers are heavy prices to pay for negligible con-
servation results.
If such restrictions are to be proposed we suggest
that the Contingency Plan should be modified to permit the
owner or operator of a business to reduce the energy con-
sumption of an advertising sign, where possible. Further,
a provision should be made for a good faith determination
by the operator as to whether any particular advertising or
outdoor lighting serves a useful purpose related to safety,
security or conveying necessary information. Such standards
would be the mark of an enlightened conservation program,
which recognizes that businessmen have substantial incentives
to conserve energy and will undertake substantial efforts to
do so.
I will be pleased to answer any questions you may have,
or to submit material for the record if time does not permit
further discussion. Thank you.
is
FORD
- 12 -
Special Travel Industry Council
On Energy Conservation
Suite 920
1100 Connecticut Avenue
Washington, D.C. 20036
(202) 293-1433
Comments and Analysis
on
THE CONTINGENCY GASOLINE AND DIESEL FUEL
RATIONING REGULATIONS
Published by
The Federal Energy Administration
in
The Federal Register
Vol. 41, No. 105 - Friday, May 28, 1976
(Pages 21918 - 21934)
June, 1976
FORD & 938470 LIBRARY
Air Transport Association
Discover America Travel Organizations, Inc.
National Innkeeping Association
American Automobile Association
Florida Caribbean Cruise Association
National Ski Areas Association
American Hotel and Motel Association
Gray Line Sight-Seeing Companies
National Tour Brokers Association
American Society of Travel Agents, Inc.
Associated, Inc.
Recreational Vehicle Industry Association
AMTRAK
International Passenger Ship Association
State Government Travel Offices (CORTE
Car & Truck Renting & Leasing Association
National Air Carrier Association
Trans-Pacific Passenger Conference
Conference of National Park Concessioners
National Association of Motor Bus Owners
TABLE OF CONTENTS
Summary
i
Preface
iv
Definition
1
Expenditures
1
Employment
3
A Small (and Large) Business
4
Adequate Supplies of Energy Needed
5
Contingency Rationing Regulations
7
General Comments
7
Specific Comments and Recommendations
9
(1) Car Rental Firms
9
(2) Towing or repair and other emergency
services for automobile travelers
10
(3) Foreign Visitors
11
(4) Business Travel
12
(5) Household Vacation Travel
14
(a) Accumulate Ration Coupons
14
(b) Provide Assurances of Continued
Validity of Coupons
15
(c) Issuance of Coupons in Another State
15
(6) The Ration Rights Exchange Market
(the "white market")
16
(a) General
16
(b) Distribution of Ration Rights
17
(c) Availability of Gasoline Coupons on
the "white market"
18
(d) Proposal
18
FORD
SUMMARY
This analysis and comment sets forth the economic importance of
travel to the economy in terms of expenditures and employment using 1974
data produced by the Travel Economic Impact Model.
It points out that the travel industry depends entirely on energy to
operate. The critical need is for fuel for the modes of passenger transport
used by travelers.
The public modes of passenger transport are allocated needed
fuels under mandatory petroleum allocation and price control regulations.
If the recommendation that all forms of public passenger transport providing
out-of-town transportation receive 100% of current requirements (including
air carriers and passenger car rental firms) is accepted, then adequate
fuels will be received by them.
The private modes of passenger transport receive fuel through the
gasoline allocation and fuel ration regulations and the diesel fuel rationing
regulations.
Almost 70% of all travel expenditure by all modes of transport
is made by automobile travelers. These expenditures provide the major
financial support for the industry as a whole and directly sustain 2.5 million
of the 3.7 million jobs involved.
-i-
FORD LIBRARY give
The gasoline allocation and rationing regulations do not deal
adequately or equitably with elements of the travel industry. The inadequacies
and omissions in the rationing regulations and proposals with respect to them
are:
(1) Passenger car rental firms are not included, as they should
be, as part of the public passenger transportation system needing
100% of current fuel requirement.
(2) Firms providing emergency repair towing and related services
for automobiles on out-of-town travel are not included, as they
should be, with other emergency services needing 100% of current
fuel requirements.
(3) There is no provision dealing specifically with the gasoline
requirements of foreign visitors traveling in the United States.
A procedure for them to receive a gasoline ration is recommended.
(4) The regulation dealing with business travelers require
clarification; the regulations only contain specific and clear
provisions on how one type of business user -- the commissioned
outside salesman -- can obtain fuel for sales activities.
(5) The importance of household vacation travel by automobile
should be recognized in the regulations since 64% of all travel
expenditures for all purposes are made by automobile travelers.
The regulations make it possible to accumulate ration coupons
however they should contain assurances that accumulated coupons
FORD & LIBRA are
-ii-
will not be declared invalid capriciously.
A procedure should be introduced in the regulations to
permit residents of one state to obtain coupons during stays
of long duration in another state to permit planning of vacations.
The ability of household members to compete in the "white
market" with other classes of users in a short supply of coupon
situation is questioned.
(6) The entire operation of the "white market" as a mechanism to
provide an equitable distribution of fuel for travelers using the
automobile as the mode of passenger transport is questionable. The
industry is largely dependent on the expenditures of automobile
travelers and it recommends more data be provided concerning
gasoline availability at various levels of gasoline shortfall and under various
household gasoline consumption patterns to permit proper analysis.
is LIBRA
-iii-
I. PREFACE
The Special Travel Industry Council on Energy Conservation
(STICEC) was established in 1973 to develop energy conservation
policies and programs and to represent the energy policy interests
of travelers, travel employees, and the various businesses that are
major components of the travel industry. STICEC seeks equitable
treatment, not special consideration, in connection with legislative
and administrative actions taken in response to our national energy
requirements.
STICEC also believes that the interests of the nation and the
travel industry are best served by a national policy to reduce
dependence on foreign energy supplies by developing U.S. resources
and to stimulate conservation of energy among all users in both
business and government. If such a policy is not effectively
implemented, America and its travel industry will become even more
vulnerable to disruption by foreign petroleum suppliers in the years
ahead. Its efforts over the last two years have focused attention on
the industry's need for a new conservation ethic and for concrete
programs 'to save energy.
The purpose of these comments and analysis is to present the
views of the Special Travel Industry Council on Energy Conservation
with respect to the Proposed Gasoline and Diesel Fuel Rationing Plan
of the Federal Energy Administration, published in the Federal Register
on May 28, 1976. We hope that the comments and analysis provide
some perspective in the Administration's effort to reduce fuel con-
sumption while preserving economic stability and growth. The inter-
- 2 -
locking dependence of the travel industry and transportation is of
critical importance. During a period of severe fuel shortage, the
travel industry is concerned that the total transportation system
remains viable.
We do not advocate contingency plans to allocate additional
fuel to passenger cars at the expense of public transportation. But
we do seek emergency plans that will permit reasonably normal patterns
of use of the passenger car, even at significantly reduced levels.
The Council comprises leaders from major components of the travel
industry -- transportation, food, lodging and recreation. The member-
ship reflects the varied nature of the industry, and is listed below.
William D. Toohey
Chairman
Special Travel Industry
Council on Energy Conservation
June 23, 1976
Air Transport Association of America
International Passenger Ship
American Automobile Association
Association
American Hotel and Motel
National Air Carrier
Association
Association, Inc.
American Society of Travel
National Association of Motor
Agents, Inc.
Bus Owners
Amtrak
National Innkeeping Association
Car & Truck Renting & Leasing
National Ski Areas Association
Association
National Tour Brokers
Conference of National Park
Association
Concessioners
Recreational Vehicle Industry
Discover America Travel
Association
Organizations, Inc.
State Government Travel Offices
Florida Caribbean Cruise
(CORTE)
Association
Trans-Pacific Passenger
Gray Line Sight-Seeing
Conference
Companies Associated, Inc.
FORD
- 1 -
Definition
Our concern is the effect of the proposed rationing regulations on the
travel industry of the United States. When we speak of the travel industry we
mean an interrelated amalgamation of those businesses and agencies which
totally or in part provide the means of transport, goods, services, accom-
modations and other facilities for travel out of the home community for any
purpose not related to local day-to-day activity. 1/
Americans take trips within their country for many reasons. The
U. S. Bureau of the Census collects data concerning trips by mode of
transport according to the following purposes (1) to visit friends and relatives;
(2) for business and attending conventions; (3) for outdoor recreation; (4) for
sightseeing and entertainment; and (5) for other purposes such as personal
and family affairs.
Expenditures
All travel for all purposes involves expenditures -- spending which
generates jobs.
1/ The terms "tourism" and "travel" are used interchangeably as are
"tourism industry" and "travel industry" and "tourist" and "traveler".
2/ U. S. Bureau of the Census, Census of Transportation 1972. National Travel
Survey, Travel Durin g 1972, TC72-N3. U. S. Government Printing Office,
Washington, D. C. 1973
-2-
In 1974, travelers in the United States spent almost $72 billion as
follows:
$9.5 billion on public transportation services including air,
bus, rail, ships and mixed mode transportation.
$13.5 billion on personal motor vehicle transportation including
automobile, truck, camper and other recreational vehicles.
$10. 6 billion on lodging at hotels, motels, motor hotels,
resorts and campgrounds.
$20. 9 billion on food at restaurants, taverns, cafeterias, fast
food and other eating and drinking places.
$4.9 billion on entertainment and recreation at sports events,
movie and legitimate theaters, attractions, theme parks, outdoor
recreation areas including skiing and other indoor/outdoor
amusement and recreation facilities.
$8.5 billion on gifts and incidentals at department stores,
souvenir stands, drug stores, gift shops and similar establishments.
In addition to the spending by Americans, visitors from foreign
countries spent $4.032 billion traveling throughout the United States.
3/ "Travel in America", a research report published by Discover America
Travel Organizations, Inc. Its findings are based on estimates produced by
the Travel Economic Impact Model designed and operated by the U.S. Travel
Data Center for use of the U.S. Department of Interior. Report available
from Discover America Travel Organizations, Inc., 1100 Connecticut Avenue, N. W.,
Washington, D.C. 20036.
SEAL R. FORD
-3-
Employment
This $72 billion expenditure generated about 3.7 million jobs directly
of which
341, 000 were in public transportation,
250, 000 were in personal motor vehicle sales and service,
683, 000 were in lodging,
1,551,000 were in eating and drinking places,
310,000 were in entertainment and recreation,
279,000 were in miscellaneous retail trade,
61,000 were in travel arrangement,
207, 000 resulted from spending by foreign visitors
in the United States.
It has been estimated- that for every two jobs generated in the industries
serving travelers directly, one job is indirectly generated in the industries
supplying goods and services to tourist facilities. Thus 5.5 million jobs will be
affected through any disruptions to the travel industry caused by the lack of
adequate supplies of fuel.
Employment in the industries serving travelers directly has three
distinguishing characteristics which should be taken into account when considering
the effect a gasoline rationing plan will have on employment in the United States:
4/ "Destination U.S.A. " Report of the National Tourism Resources Review
Commission. Vol. 1, Pages 93-99, June 1973. U. S. Government Printing Office,
Washington, D. C.
- 4 -
On the average, traveler serving businesses employ more
people per dollar of payroll than most other types of employers.
The travel industry employs more people per dollar of
consumer spending than many other spending categories.
Declines in traveler spending affect relatively more jobs
than comparable declines in retail spending for most other
commodities or manufactured items.
Travel serving industries employ relatively more low-skilled,
hard-to-place workers than other types of employers.
Employees in these industries who are laid off or not hired
have comparatively few alternative job options.
A Small (and Large) Business
A c haracteristic of the industries serving travelers is that they are
dominated by small business firms. According to the U.S. Travel Data Center,
of the 1.4 million travel-related business firms, 99% are classified as 'small
businesses" under the federal government's definitions.
If fuel is not provided for people to travel, these businesses will
suffer accordingly. Those depending primarily on automobile travel will be
damaged severely. Table 1 attached indicates the proportion of small
business firms in travel serving industries.
RAI RALZ STATE FORD
Table 1
Small Businesses
Dominate the Travel Industry
and Prosper with it.
Number of Firms (thousands)
100
200
300
400
500
600
General merchandise and misc. retail stores: 530,378 firms, 528,547 are small businesses
Eating and drinking places: 327,190 firms, 324,990 are small businesses
Gasoline service stations: 201,528 firms, 200,221 are small businesses
Amusement and recreation services: 129,831 firms, 128,547 are small businesses
Number of Firms (thousands)
10
20
30
40
50
60
Hotels, motels and tourist courts: 55,431 firms, 54,080 are small businesses
Trailer parks and camps: 20,881 firms, 20,871 are small businesses
Intercity highway transportation: 950 firms, 870 are small businesses
Air transportation: 45 firms, 23 are small businesses
Small Business Firms
Source: U.S. Census Bureau figures for 1972.
Other Firms
* Source: "Travel in America". See footnote 3%
FORD it LIBRARY GERALD
-5-
Adequate Supplies of Energy Needed
The travel industry is entirely dependent on fuel to operate. The critical
need is adequate fuel to operate the several modes of transport used by travelers,
not only for the passenger transportation services serving the public including air
carriers, intercity bus lines, tour and charter bus companies and trains but also
the private motor vehicles (automobile and recreation vehicles) used for transport.
Utilizing a technical definition of tourism as "travel to places 50 miles
or more away from home for any purpose except commuting to and from work",
the U.S. Travel Data Center calculated that in 1974 all modes of transportation
connected with tourism accounted for only 10% of domestic petroleum consumption. 5/
The FEA has assumed that any supply interruption severe enough to
initiate implementation of the proposed gasoline and diesel fuel rationing regula-
tions would cause the FEA to put into effect current Mandatory Petroleum
Allocation and Price Regulations or regulations closely resembling them in
concept. These regulations would control all fuels consumed by the modes of
passenger transportation services utilized by travelers.
Tourism consumed 10% (7% was by automobile, 2.9% was by air, and 0. 1%
was by bus and train;
Local automobile travel under 50 miles one way
used 22.4% (9.3% To/from work, Other 13.1%; Other transportation 21.0%;
Other fuel and power use 34. 9%; Non-fuel use 11. 7%. U. S. consumption
of petroleum in 1974 was 6,080.8 million barrels (preliminary). "The Importance
of Tourism to the U.S. Economy" Pages 26-27 U.S. Travel Data Center.
A reproduction of Page 27 is attached as Table 2.
6/ 10 CFR Chapter II Part 211 Subpart B Definitions
"Passenger transportation services" means (a) air and surface facilities and
services, including water and rail, for carrying passengers whether publicly
or privately owned, including tour and charter buses and taxicabs which
serve the general public; and (b) bus transportation of pupils to and from
FORD
school and school sponsored activities.
Table 2
Tourism* Uses Only IO% of
Domestic Petroleum Consumption
Auto 7.0%
Air 2.9%
TOURISM 10.0%
Bus, train 0.1%
To/from work 9.3%
LOCAL
AUTO 22.4%
TRAVEL
Other under
13.1%
50 miles
OTHER TRANSPORTATION 21.0%
OTHER FUEL AND POWER USE 34.9%
NON-FUEL USE 11.7%
Tourism = travel to places 50 miles or more away from home, as defined by
the National Tourism Resources Review Commission, op. cit., Vol. 2, p.4.
U.S. consumption of petroleum in 1974 was 6, 080.8 million barrels (preliminary).
Source: U.S. Travel Data Center based on data supplied by the Air Transport
Association; Bureau of Mines, U.S. Department of the Interior; Federal Highway
FORD
Administration; Federal Energy Administration, National Association of Motor
Bus Owners; National Railroad Passenger Corporation (Amtrak).
- 6 -
Gasoline consumed by passenger motor vehicles would be controlled
by the proposed set of rationing regulations (Part 700). Diesel fuel sales
other than at retail would be regulated in accordance with current Subpart G
of the Mandatory Petroleum Allocation and Price Regulations dealing with
middle distillate.
It should be recalled that during the December 1973 - March 1974
period of embargo which caused a shortfall in petroleum supplies there was
a greater utilization of the public modes of intercity transport caused by
shifts from the automobile mode. The travel industry believes that a similar
shift would occur in any future period of shortfall and urges that provision
be made to accommodate this when new allocations are being determined for
all modes of public surface or air intercity transport.
The travel industry also continues to hold the view that all types of
public passenger transport, including tour and charter bus companies, serving
the general public should receive 100% of current fuel requirements.
The travel industry continues to believe that the car rental firms
are a vital link in the public transportation system and must be provided
with 100% of current fuel requirements in order to encourage more use of
airlines, trains and buses between cities. Car rental firms provide an
FORD THE
- 7 -
important public passenger transportation service and should be included in
the definition of "passenger transportation services" of the Mandatory
/
Petroleum Allocation and Price Regulations.
CONTINGENCY RATIONING REGULATIONS
General Comments
The FEA has stated that rationing is an attempt to spread the
available gasoline equitably among all users, giving priority to certain activities
which are considered essential to public health, safety and welfare, and
preventing hardship from falling disproportionately on any region or on any
class of gasoline consumers.
It is believed to be consistent with Section 201 (f) of the Energy
Policy and Conservation Act of 1975, rationing under a contingency plan
should also be based on a consideration of the impacts of such a plan on
employment (on a national and regional basis); on the economic vitality of
states and regional areas; and on the gross national product.
With regard to the impact of a gasoline rationing plan on employment,
it has been estimated that the $72 billion expenditure generated by trips
7/ 10 CFR Chapter 11 Part 211 Subpart B Definitions. See footnote 6%
8/ Federal Register, Vol. 41, No. 105 - Friday, May 28, 1976, Page 21918.
FORD
-8-
within the United States sustains 3.7 million jobs. Almost 70%
of the $72 billion, or $54 million, is spent by travelers using the automobile
as the mode of transport. This spending generates 2.5 million jobs directly.
If rationing plan regulations do not provide adequate fuel for out-of-town
travel, these jobs eill be adversely affected.
In considering the effect of the rationing plan regulations on the economic
vitality of states and regional areas, it should be noted that the travel industry
ranked among the top three industries in most States, according to testimony
given on Senate Resolution 281 by the Assistant Secretary of Commerce for
Tourism.
/ Table 3 attached sets forth the distribution of expenditures of
U.S. travelers by State. Expenditures by foreign visitors can not be
distributed by State but are included in the total $72 billion spending estimate.
With respect to the impact on the Gross National Product in 1974 the spending
by U. S. travelers and foreign visitors in the United States - $72 billion -
was about 5. 1% of the total GNP.
The travel industry depends on a viable transportation system
with adequate fuel supplies to carry on efficient operations. It realizes
that during periods of substantial shortfall of energy, particularly of petroleum,
9/ Hearings before the Subcommittee on Foreign Commerce and Tourism on
S. Res. 281 To Express the Sense of the Senate with Respect to the Tourism
Industry March 29-April 1, 1974 Serial No. 93-75. U. S. Government Printing
Office, Washington, D.C.; 1974
FORD
Table 3
1974 U.S. Travel Expenditures by State Visited *
(Millions)
Total
Alabama
$ 581
Montana
S 440
Alaska
325
Nebraska
534
Arizona
855
Nevaca
951
Arkansas
587
New Hampshire
452
California
8,158
New Jersey
2,011
Colorado
1,552
New Mexico
483
Connecticut
698
New York
4,049
Delaware
175
North Carolina
1,252
Florida
5,576
North Dakota
269
Georgia
1,373
Ohio
2,295
Hawaii
897
Oklahoma
776
Idaho
358
Oregon
1,026
Illinois
2,747
Pennsylvania
2,707
1,072
Rhode Island
170
Indiana
lowa
567
South Carolina
974
Kansas
566
South Dakota
294
Kentucky
863
Tennessee
1,054
Louisiana
1,021
Texas
3,396
Maine
596
Utah
676
Maryland
1,037
Vermont
312
Massachusetts
1,836
Virginia
1,280
Michigan
2,600
Washington
1,394
Minnesota
1,944
West Virginia
575
Mississippi
469
Wisconsin
1,567
Missouri
1,433
Wyoming
313
District of
Columbia
S608
Total U.S. Travelers
$67,746
4,032
Total Foreign Visitors
Grand Total
$71,778
.
Does not include traveler expenditures on gaming
* Source: "Travel In America". See footnote 3%
GERALD FORD LIBRARY
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it would be adversely affected along with other vital industries. All
that is asked is that the economic importance of its expenditures and employment
be taken equitably into account, that it not be assigned a disproportionate share
of the burden.
Specific Comments and Recommendations
The travel industry has made a preliminary review of the proposed
Mandatory Gasoline Allocation and Rationing Regulations and Diesel Fuel
Rationing Regulations with the foregoing in mind and has comment and recom-
mendations concerning (1) car rental firms; (2) emergency services for
passenger motor vehicles; (3) foreign visitors; (4) business travel; (5)
household vacation travel; and (6) the "white market" ration rights exchange
market.
(1) Car Rental Firms
Subpart A, para. 700. 4 of the proposed regulations contains a definition
of a vehicle rental company which would include passenger car rental firms.
Para. 700. 45(c)(2), concerning the issuance of ration rights, makes provisions
for vehicle rental companies to obtain ration credits according to the base period
volume used by its employees on firm (the company) business. Volumes of
gasoline used by customers are not included in the firm's base period use. The
result is that those using passenger rental cars for non-business travel as a
link in the public transportation system would be required to provide personal
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gasoline ration coupons for the fuel used. This is considered to be inequitable
since personal ration coupons are not required for use of taxicabs, limousines
and other forms of public transport. The travel industry recommends that
passenger car rental firms by regulation be permitted to include the gasoline
used by its renting customers in the base period volume and that para.
700. 45(c)(2) of the proposed regulations be amended accordingly.
Another solution to this issue would be to amend para. 700. 4 General definitions
by including passenger car rental companies as "Passenger transportation
services" to give them the same recognition as taxicabs and entitle
such car rental firms to the ration credit level accorded passenger transporta-
tion services.
(2) Towing or repair and other emergency services for automobile
travelers
The availability of towing, repair and other emergency services for
passenger vehicles (automobiles and recreation vehicles) is necessary to assure
the safety and welfare of travelers whose automobiles have become stalled,
damaged or otherwise inoperative on trips out-of-town. Firms which provide
such services to automobile travelers should be entitled to 100% of current
requirements. This could be accomplished either by including such services in
the definition of Emergency Services contained in para. 700. 4 of the proposed
regulations, or by establishing a new definition in that paragraph to include
PORD
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firms providing such services in para. 700. 45(d) dealing with ration credit
levels which provide 100% of current requirements.
(3) Foreign Visitors
It is current federal policy to encourage and promote travel to the United
States by foreign visitors, among other reasons, to improve the commerce and
foreign currency earnings of the nation. In 1974, all foreign visitors spent $4.032
billion in the United States which generated 207, 500 jobs. Accord-
ing to the United States Travel Service of the U. S. Department of Commerce, the
government agency mandated to promote travel to and within the United States, 10/
in 1974 there were 6.8 million total arrivals of visitors by automobile from Canada
and Mexico. The expenditures of these visitors in the United States were $1.4 billion,
or 34 percent of total receipts from all foreign visitors, which generated 70, 985
jobs.
As we understand it, the gasoline rationing regulations contemplate that
foreign visitors would be provided an allotment of ration coupons only if they hold
drivers licenses issued by a state of the United States. Otherwise they would deal
in the "white market" for ration rights to meet all their gasoline requirements.
Obtaining coupons in a "white market" at the time of arrival at border ports is
obviously impractical, would act as a severe deterrent to travel to the United States,
and would adversely affect our foreign exchange earnings. A specific provision is
needed to accommodate foreign visitors' gasoline requirements.
FOR
It is suggested that foreign visitors with foreign drivers licenses
arriving in automobiles bearing foreign license plates be issued the same
RAID
allotment of ration rights (8 coupons of 5 gallons each) as would be issued to
10/ Public Law 87-63 the "International Travel Act of 1961" to strengthen the domestic
and foreign commerce of the United States by providing for a United States Travel Servic
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other eligible individuals during a ration period. These coupons would be
issued at the border port of entry and would be non-negotiable.
It is recommended, therefore, that para. 700.44, concerning the
issuance of ration rights to eligible individuals, be amended to provide that
either U. S. Customs Service inspectors and/or U. S. Immigration and
Nationality Service inspectors issue ration coupons to foreign visitors upon
application by them at the border port of entry.
This would permit a trip of reasonable distance within the United States.
Those planning longer trips, or stays of more than a month, might utilize
the "white market" to obtain additional ration coupons.
(4) Business Travel
Of the $72 billion spent in 1974 by all business travelers 18% or $13 billion
was spent on business trips by travelers making sales calls, attending meetings of
firms or professional societies and conventions. Of the $13 billion spent by
business travelers, $5 billion or 43% used the automobile as the mode of transport.
Unless fuel is available for such travel the industries serving the automobile
traveler will be damaged and 244, 000 jobs will be jeopardized.
We note that para. 700.4 45 (c) (3) states that the needs of commissioned
direct sales representatives shall be considered part of the firm's base period
use even though the cost of the gasoline was borne by the salesman and not
reimbursed by the firm. In such a case, the salesman would apply to the firm
for ration rights for his sales activities requiring the use of the automobile.
It would appear that automobile business travel by other than direct
sales representatives would depend upon access to the ration rights issued to
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the firm by which they are employed, if it is a firm entitled to a ration credit
level under para. 700. 45 (d) of the proposed regulations. As we understand
it, the FEA will establish ration credit accounts at its regional processing
centers or at participating banks. The FEA deposits ration credits in these
accounts which may be used directly for gasoline by ration credit checks or
exchanged for coupons at coupon issuance points. It thus appears that firms
can supply individuals with credit checks or coupons to enable them to undertake
a trip for business pruposes for that firm.
If the foregoing is correct, it is believed that the needs of the business
traveler will largely be accommodated. However, the language of the regulations
should specify that the volume of gasoline required for business trips be included
in the calculations for all ration credit levels, be it 100% of current requirements,
100% of base period use or 90% of base period use.
If the ration for firms is less than 100% of requirements, we are mindful
of the fact that it may be necessary to utilize the "white market" (ration rights
exchange market) in order to accommodate some business travel of individuals in
some firms. This will put additional demand on the market and probably
lessen the supply of gasoline available for travel for purposes other than business
and conventions.
FORD
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(5) Household Vacation Travel
11/
According to the U. S. Travel Data Center , in 1974 64% of all travel
spending was accounted for by vacation travel and 74% of such travel used the
automobile as the form of transport.
The result is that $34 billion was spent for all purposes on automobile
vacation trips. This spending generated 1. 8 million jobs which are
jeopardized unless the rationing plan contains a solution to the problems of
providing gasoline for this type of travel.
(a) Accumulate Ration Coupons
The rationing plan must contain regulations which will permit
individuals to accumulate ration coupons in anticipation of taking a vacation
during a future ration period.
Subpart C of the proposed regulations dealing with the rationing of
gasoline in effect provides that individuals will normally be alloted 8 coupons
from a series redeemable for 5 gallons of gasoline for each ration period of
4 to 6 weeks. Para. 700. 43 concerning the validity of the coupon states that
ration coupons of any series will be valid from the first day of the ration period
for which they were issued through the end of the Mandatory Gasoline Allocation
and Rationing Program. The program can continue in operation for 9 months.
11/ 1974 NATIONAL TRAVEL EXPENDITURE STUDY SUMMARY REPORT
Page 24. U.S. Travel Data Center, 1100 Connecticut Avenue, N.W.
Washington, D. C. 20036
BERALD FORD LIBRARY
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It thus appears that it will be possible for individuals to accumulate
coupons to obtain gasoline for a vacation trip. However, an element of real
uncertainty which would damage the effectiveness of the market to make vacation
travel possible is introduced by the fact that the FEA can, at any time, declare
any portion of a series of coupons invalid and by notice to holders of any particular
ration coupons held by that holder to be invalid and require such ration rights to
be surrendered to FEA.
(b) Provide Assurances of Continued Validity of Coupons
It is recommended that the regulations provide more explanation of the
conditions under which the coupons might be declared invalid to assure individuals
that it is unlikely that any coupons they have accumulated for their household
vacation travel will be declared invalid.
(c) Issuance of Coupons in Another State
Another proposal relating to household vacation travel is administrative
in nature. The travel industry recommends that a procedure be included
in the regulations that would permit licensed drivers in one state to obtain
gasoline coupons while they are on extended visits in another state. For
example, there are significant numbers of residents of northern states who
spend several months in southern states during the winter. Another situation
would be students attending out-of-state universities.
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One solution would be to amend para. 700.44 (d) (1) (2) and (e)
concerning the issuance of ration rights and authorization cards to permit
eligible individuals holding drivers licenses in one state or their agents to
apply for and obtain ration allotments in another state.
(6) The Ration Rights Exchange Market (the "white market")
(a) General
The travel industry has attempted to assess the operation of the ration
rights exchange market, or the "white market" on separate forms of transport
in relation to the fuel requirements of individual travelers.
If our positions and suggestions relative to the Mandatory Petroleum
Allocation and Price Regulations and the Mandatory Gasoline Allocation and
Rationing Regulations and Diesel Fuel Rationing Regulations are accepted,
it would appear that forms of public passenger transportation utilized by
travelers could be supplied with adequate fuel.
However, about 70% of all travel expenditures are made by travelers
using private vehicles, largely the automobile, for travel out of the
home community. 12/ Such expenditures generate 2.5 million jobs. Only
one category of automobile traveler seems clearly assured of reasonable
treatment under the rationing program - commissioned direct sales repre-
sentatives traveling for their business sales activities. All others depend on
the availability and use of gasoline coupons.
12/ U.S. Travel Data Center, 1974 National Travel Expenditure Study
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(b)
Distribution of Ration Rights
Under its proposed regulations, the FEA would issue ration rights
equal to the total estimated supply available for the period as follows:
(i) 1% to be reserved for distribution by the FEA to meet national
disaster relief needs or emergency replenishment of State Hardship Reserves
or other emergency need;
(ii) 3% to be reserved for distribution to the States based on
population and other relevant factors for distribution through State Rationing
and Local Rationing Boards to administer the State Hardship Reserve for
handicapped persons, low income long distance commuters, migrant workers
and other hardship needs;
(iii) The FEA will issue ration credits for all firms entitled to a
credit level to meet their requirements at three levels:
)
100% of current requirements, for example, for firms providing
Passenger Transportation Services
100% of a base period use, for example, for firms providing
Sanitation Services
90% of a base period for firms which report gasoline as a
business expense and all uses for religious, charitable, educational
or other eleemosynary purposes not otherwise accorded a ration
credit level.
(iv) Finally, the remaining ration rights will be issued to eligible
individuals, largely those holding state drivers licenses.
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(c) Availability of Gasoline Coupons on the "white market"
In 1974 there were more than 125 million drivers licenses issued
by all the states and the District of Columbia. It is estimated that
in the same year over 105 million automobiles were registered.
Unless past consumption patterns of households change, it would
appear that most gasoline would be consumed for trips to and from
work and other trips less than 50 miles. However, the "white market"
might provide a solution to the problem of obtaining gasoline for trips
of 50 miles one way or more, including vacation travel.
Unless past gasoline consumption patterns of households change, it
would appear that only those households with more than one licensed
driver (each entitled to 40 gallons of gasoline per month) would obtain
sufficient coupons to provide for some out-of-town travel and to
accumulate coupons for vacations.
It is also from the individual licensed drivers in such households
that ration coupons would likely emerge in the "white market".
These coupons, which might be purchased for out-of-town travel,
would compete with those being purchased for other uses by firms
and others at prices not affordable by most households.
(d) Proposal
The travel industry asks that further data be supplied to permit analysis
and an evaluation by the FEA and the industry on the adequacy of the "white
market" in operation to meet the needs of that part of the travel industry
dependent on the automobile as the transport mode.
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The travel industry believes that too much is at stake, in terms
of travel expenditure and employment which impact on the economy of the
nation, states and regions to leave this a matter of pure conjecture. It
recommends that sufficient data be provided to perform in-depth analysis.