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to my knowledge, individuals in our Association, and others, thought there was something wrong with the arrangement, but I personally have not received any such contacts.

Senator TUNNEY. One of the things that I'm curious about is that you have 100 percent allocation for current requirements, why is there need to have additional fuels made available to the tuna fleet at substantially higher black market prices?

Mr. FELANDO. Well, of course, these reports were received just prior to the first of the year, you know, when there was a lot of press on it.

We had vessel owners when-when everyone in the association became a little concerned, we had vessel owners that actually scouted the Carribean.

I mean, we had vessel owners that made personal trips to Curacao, for instance, to Venezuela, to other islands to try to locate fuel, and they could not locate the fuel.

Senator TUNNEY. In other words, the allocation program was not working? Although you had the allocation, you didn't have the fuel coming from the supplier?

Mr. FELANDO. Right. At that time, they-like I say, the preference was given out in the advisory notice; however, there was a little time lag in getting an understanding of that preference. The vessel owners felt it was necessary for them to really put their own efforts behind to get some fuel.

This is particularly true for vessels that were operating in the Canal-let's say in the Canal Zone area.

The Canal Zone was exempt from the mandatory fuel allocation programs and so were we.

Now, as to what is going to happen in the future, about what 100 percent of our fuel requirements are, I'm sorry. I don't know. I don't know whether that answers your questions or not, but

Senator TUNNEY. Well, even before the January 15 regulations guaranteeing 100 percent of requirements, there was a moratorium, as you know, on restriction of fuel for fishing. Fishing, therefore, was to get all that it needed. I agree that you were in a position for a few days after the first regulations came out where there was a degree of vagueness as to what the allocation formula would be for the fishing industry, but, certainly, for the last couple of months you've known that you were supposed to get 100 percent. Yet, the suppliers, as I understand it, have not in all instances had the supplies, and, as I understand it, there have been offers giving you needed supplies through a special arrangement in which you pay a much higher price.

Mr. FELANDO. Well, our vessels became fueled. All of our vessels in San Diego here received enough fuel ready to go. The problems of some vessels prevailed a little bit longer for those who were depending on fuel sources in the Caribbean or the Canal Zone.

I think that it was just the general publicity-my opinion was it was just a general publicity given to our problem about a fuel shortage that gave rise to a lot of these offers.

Senator TUNNEY. A lot of these offers were from people that had fuel and wanted to make a quick profit?

Mr. FELANDO. I guess that was their intent, yes.

Senator TUNNEY. All right. Well, thank you very much, Mr. Felando, Mr. Bolin. I appreciate your being here today and we look forward to working with you in the future so long as this allocation program and this shortage exist to insure that the fishing industry gets what it needs to do the job. I want to thank

Mr. FELANDO. Thank you very much.


Senator TUNNEY. I call as our next witness David H. Carsten, Texaco Oil distributor, San Diego.

Please proceed, Mr. Carsten.


Mr. CARSTEN. Thank you. I'm David Carsten, president of the Harbor Boat and Yacht Co.

I'm here at the request of August Felando to enlighten the Senator of some of the problems that businesses such as ours are encountering during the energy crisis.

The Harbor Boat and Yacht Co. is primarily a shipyard providing services and supplies to the American commercial fishing fleet operating out of San Diego.

Harbor Boat and Yacht Co. directly employs from 35 to 65 persons. In conjunction with this operation, we operate a marine fuel facility, 90 percent of which business is with the commercial fishing fleet. We have had a contract with Texaco since 1946.

Texaco has handled all large fishing vessel credits on a trip-to-trip basis since 1946.

The Harbor Boat and Yacht Co. has been Texaco's only marine outlet south of Los Angeles.

We call your attention to the Federal Register dated October 16, 1973, section 3, "However, a supplier may not require or impose discriminatorily more stringent credit terms or payment schedules on whole sale purchases than the supplier's normal business practice during the first half of 1972."

Shortly after this was published in the Register, Texaco, San Diego officers, informed us that all fishing boats operating out of San Diego would be handled on a C.O.D. basis only.

The instruction was given verbally, and after considerable difficulty, we did obtain a copy of the wire which we have submitted to your office with this instruction.

Today, January 18, the same credit practice continues.

Senator TUNNEY. You mean, in other words, it's cash on delivery? Mr. CARSTEN. Cash on delivery; however, now, they have relaxed it to the extent that we must get credit approval for each delivery, each field delivery for each trip, and with a 30-day time limit condition which never has existed in the past.

Senator TUNNEY. Don't those seem to be more stringent credit requirements?

Mr. CARSTEN. Much more stringent, yes.

Senator TUNNEY. I though the requirement was that they were not supposed to impose more stringent credit requirements.

Mr. CARSTEN. Well, that was our understanding, also.

It imposes a hardship on these vessels if they won't agree and sign a statement to the effect that they will pay this trip in 30 days, well, they're in trouble.

Senator TUNNEY. Well, as I read the Federal Register, as, in your testimony, you quote:

However, supplier may not require or impose discriminatorily more stringent credit terms or payment schedules on wholesale purchases than the supplier's normal business practice during the first half of 1972.

Mr. CARSTEN. That's correct.

Senator TUNNEY. And apparently, despite that, there has been an effort made to require more stringent credit requirements.

Mr. CARSTEN. That is correct.

Senator TUNNEY. The January 15 regulations read in section 210.62 :

However, no supplier may require or impose more stringent credit terms or payment schedules on purchases than normal business practice of the supplier or that class of purchaser, e.g., C.O.D. purchases during the base period nor may any supplier modify any other normal business practice so as to result in circumvention of any provision of this chapter.

So, that is the existing rule as well as the law that pertained during the time period since last October that you're talking about. Mr. CARSTEN. Well, they certainly modified their method of operation.

Senator TUNNEY. They modified it.


Senator TUNNEY. Please continue.

Mr. CARSTEN. We are told verbally that Texaco plans to discontinue all credit to industrial farm users, farmers, fishing vessels and so forth.

In fact, a senior representative of the company informed us just last week that the U.S. Navy is now on a C.O.D. basis with Texaco. Very recently, a larger tuna vessel, the Cape Beverly, who was on a C.O.D. basis, was told he could not have any product because of his being C.O.D. even though he was to pay cash for the current purchase.

My purpose is to show you some of the problems, Senator, that the consumers are encountering.

As recent as January 17, insofar as San Diego Texaco was concerned, the San Diego fishing vessels would get no gasoline.

Now, they will use anywhere from maybe 300 gallons to as high as 3,000 gallons in a trip on some of the larger vessels, that is, of gasoline.

Then, on January 18, we were told that they would get 80 percent of the requirement.

There was no indication that the product was not available. physically.

We've been contracted with them since 1946 and their representatives tell us, of course, that this will put them in a position where they can adjust prices on a day-to-day basis.

That means you could order a product today and perhaps it's delivered tomorrow, and you wouldn't know what the price would be until tomorrow when you actually take delivery.

Further, they feel that they won't be in a position where legally they have an obligation to supply the product to the consumer, even though under the Mandatory Allocation Act, he does qualify for the product.

Another tactic that has been somewhat obvious to us-I can't refer to the Federal Register as to the date, and so on, but there is a paragraph in there that relates to activities that may delay delivery, postpone delivery of the product, and thus delay sailing the vessel.

We find it very obvious that in the case of the company with whom we're contracted to that perhaps one person is delegated the responsibility to say whether you can or you cannot have the product, and, very conveniently, they're out of town for several days at a time or at meetings so this could mean sometimes that a vessel might have to even though he's entitled to the product he would have to sit there for 2 or 3 days, whatever it might be, until this person gets back from Los Angeles or wherever they supposedly are holding their meetings so that he can tell the delivery representative that they can deliver the product to us, so we can in turn put it aboard the ship.

Senator TUNNEY. Then, in the meantime, the price has gone up frequently?

Mr. CARSTEN. It does happen like that, yes.

In our instance right now, till our contract expires, they've already notified us that they're cancelling the contract-they have to give 30-day notice plus, very shortly now, it will be on a day-to-day basis, we're told.

Senator TUNNEY. From your own information and belief, then, do you feel that there is fuel available even though it has been indicated that there just is not enough product to supply your ships with the fuel they need?

Mr. CARSTEN. Very definitely. I have been told by local management that there is no fuel available and then when I call his superiors in Los Angeles, they tell me that if the Government says we must supply you with the product, you will get the product.

This has actually happened just a few weeks back.

Senator TUNNEY. It appears that, in some instances at least, representatives of the company are saying that there is no fuel available where other representatives of the company at the same time are saying that fuel is available if the Government forces us to make such fuel available to you?

Mr. CARSTEN. That's about what it amounts to, yes.

Senator TUNNEY. Please go ahead with the rest of your testimony. Mr. CARSTEN. We further are informed verbally that the company who, historically, has been supplying fuel containers on construction sites, elimination of tank trucks or petroleum dispensers at airports, and deliveries to dockside insofar as vessels is concerned, that the practice that has prevailed will be discontinued, and, of course, that means to all of us that our costs are going to be increased substantially.

For example, the Texaco Co., since 1946, if vessel A happens to be at the B Street pier and he needs 3,000 gallons of lube oil, that

would be delivered in drums. The oil would be unloaded alongside of the vessel and our people will place the oil aboard the vessel with pumps, et cetera.

Now, they tell us that that will no longer be the case, that they're going to deliver it to our shipyard, for example, and that means there's an additional cost factor which we will have to absorb and move it down to the vessel, so they're either either going to discourage us or they're going to try to force us out of the business and take it over themselves.

Senator TUNNEY. I'd like to have a better understanding of that point.

You say it appears that they either want to discourage us or force us out of the business and take it over themselves.

Could you amplify how that could be done? If it's happening to you, it must be happening to other people similarly situated, and I'd like to have a better understanding of it.

Mr. CARSTEN. Well, what it amounts to is if they drop 3,000 gallons in drums at my facility in Point Loma, I'm going to have to hire additional labor, and additional equipment that I can move it another 112 miles down the waterfront and place it aboard the vessel.

It's to me, it's more or less just a pressure tactic, and, of course, to them, it doesn't mean a thing, because they could route it and deliver it to the vessel side as easily as they can to our facility at our plant, and it's not uncommon in the tuna industry that, in the interest of saving time, that lube oil for these vessels will be delivered to the vessel location.

Sometimes they maybe have already taken aboard their diesel fuel or maybe they're preparing to change the oil in the machinery, et cetera, before they do come to take their diesel.

Senator TUNNEY. Now, if they eliminated you, you went out of business because you felt that there just was not an adequate profit in it for you.

Mr. CARSTEN. That's right.

Senator TUNNEY. Would they then be in a position to deliver the fuel to the ships themselves and then make the profit that would have accrued to you?

Mr. CARSTEN. Absolutely correct, absolutely right.

Senator TUNNEY. I see. So by eliminating you, it means more profit to them.

Mr. CARSTEN. That's right.

Senator TUNNEY. It's rather interesting, you know, that regulations make it illegal to do that.

Mr. CARSTEN. I have pointed these things out to them.

Senator TUNNEY. And when you point out that it is illegal, what do they say?

Mr. CARSTEN. Well, I've been told things like, "If you don't like the way we do business, go someplace else."

Senator TUNNEY. Well, what about reporting it, or is that bad business from your point of view?

Mr. CARSTEN. I'm telling you.

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