District of Davidson County, Tenn., which organization holds membership in the American Water Works System and the National Institute of Municipal Law Officers. I am vice chairman of the committee on municipally owned utilities of the latter organization. I served for 14 years in the legal department of the city of Nashville, Tenn., and held the position of director of that department during 1949, 1950, and 1951.

I appear today representing my own utility district, a municipal corporation organized under the general laws of the State of Tennessee, and I also appear for the National Institute of Municipal Law Officers at the request of the Honorable Henry C. Curtis, city attorney of New Orleans, La., the president of our organization. The National Institute of Municipal Law Officers is an organization composed of the legal advisers of approximately 900 leading American municipalities. At the December 1952 meeting of this organization held in Louisville, Ky., a resolution was unanimously adopted urging the Congress to enact legislation providing that publicly owned utilities be relieved of the costly burden of relocating utility facilities when caused by Federal-aid projects.

This action was prompted by the need for relief by many municipalities in connection with the ever-increasing expense of relocating their utility facilities to accommodate Federal-aid highway construction. Municipalities operate water, sewer, electric, and other utility services. These respective utility facilities have been carefully located and are perfectly adequate, and in many instances are relatively new, having been financed initially by bond issues, and they are operated and maintained through current budget allocations.

The relocation of these facilities cannot be accomplished without substantial destruction, and in many States the burden of relocating these facilities to accommodate Federal-aid highway construction falls squarely on the municipalities without any reimbursement or benefits. The average citizen and user of municipal utility services is a heavily taxed individual. He pays income taxes, excise taxes, and automobile gasoline taxes to the Federal Government. At the State level he pays very high gasoline tax. He feels that when he does these things he has contributed his fair share of any Federal-aid road-building program The leaders of our municipalities agree with him, and hesitate to impose any additional burden on this taxpayer, especially in connection with road-building of a character susceptible to use by travelers from faraway places. This problem serves to compound the difficulties confronting the municipalities under today's conditions. While sources of municipal revenue constantly dwindle, demands for various services by the people continue to pile up. In most municipalities it is a very difficult proposition to get through any budget year. Most municipalities have reached the danger point in their lawful debt limi

tation.

As in the case of other utilities, this problem did not plague the municipalities in the early days of limited Federal participation in highway construction. As the modern, enlarged programs became a reality, however, the municipalities that were called on to relocate their utility facilities to accommodate Federal-aid highway-construction projects began to feel the pinch.

The stepup in Federal appropriations for highway purposes, as indicated in pending legislation, carries with it the inevitable threat

of increased burdens on those municipalities which, under present laws, practices, and regulations, will be called on to pay the full bill for utility facility relocations. As a matter of fact, this increasing tempo of urban highway construction greatly aggravates the problem already faced by the utilities at all levels and especially the municipal utilities. Every municipality in America, I am sure, is grateful for the assistance it gets through the program of Federal-aid highway construction. The municipalities, however, feel that these huge urban projects, with divided lanes, cloverleaves, overpasses, and underpasses, are beyond the pale of local improvements; are national in character and are designed to move traffic at the interstate level and in aid of the national defense. We respectfully suggest that such an ambitious program of Federal-aid construction transcends the scope and extent of local responsibility.

The municipalities are not troubled over contractual rights in and to the use of their streets by their utility services. They hold their streets in trust for their people. They recognize that the public needs all of the uses of the street or highway, and that in the public interest, and to furnish services more economically, the streets must be utilized for the accommodation of utility facilities.

The fact remains, however, that while the municipalities of some States receive assistance in relocating their utility facilities, the municipalities of many States are not so fortunate. Even a casual examination of the tables appended to the utility relocation report of the Secretary of Commerce indicates the truth of this statement. The lack of uniformity in the treatment of the problem has created confusion and misunderstanding.

As its resolution demonstrates, the municipalities who are members of the National Institute of Municipal Law Officers believe that it is most desirable to put an end to the present lack of uniformity of the program in different States and the steadily mounting volume of litigation and delays occasioned thereby.

It has been said that the effect of the change which we are advocating would be to slow up the highway program. We believe the contrary is true. The existing practice has led to inequity, confusion, litigation, and delay, and unless remedied, will continue to do so.

I have heretofore tried to point up the problem faced by munici palities in connection with construction in urban areas. In the smaller communities the discrimination evident under present laws and practices is most severe. I want to point to a particularly inequitable feature. The cost of relocating utility facilities which occurs in any one year is not borne equally by all utilities and the users of their services. This cost is paid entirely by the relatively few utilities which are unfortunate enough to be in the path of the highway improvements which occur in that year. I have a chart which will help to illustrate wat I am trying to say. This chart shows three towns and I ask you to assume, as is often the case, that the utility services are furnished by the individual cities and private companies serving only the individual towns. The highway passes through town A but does not touch towns B and C, although their citizens use the highway through access roads. Because the utility facilities in town A are relocated at great expense, the users of utility services in town A-the taxpayers bear that expense. Because the facilities in town B and

C are not disturbed the utility users in B and C are not burdened. Perhaps their time will come next year or 5 years from now. No municipal utility or municipality can plan its budget to provide for these expenses which can be disastrously high because there is no certain way of knowing when the highway department will build a highway through its facilities.

Last year, in hearings before this committee, Mayor William Hartsfield, of Atlanta, testified that these Federal-aid projects can bankrupt some municipalities with the demands made upon them to relocate utility facilities. In directing the preparation of this exhibit, recalled the statement of Mayor Hartsfield, as I considered the plight of the small utility district I represent, which lies in the area south of the city of Nashville. As in the case of the little community indicated on the exhibit, a Federal-aid project extends for 2 miles through the area in which my client furnishes water to its customers and rate payers. We have been called upon to relocate our facilities at our own expense, and, under a mandatory injunction of the courts, we have done so. The cost has amounted to $93,000, which represents 12.5 percent of the total investment of this small utility district. I do not know how we will ultimately finance this burden. In whatever manner the relocation of these facilities is financed, payment for a part of this project to accommodate interstate traffic must be borne by our 5,100 local water subscribers. They will not be able to stand it without in increase in rates, and it would not be fair if they could. In other words, our rate payers are called on to subsidize a heavy portion of a road-widening project for 2 miles south of Nashville on a Federal-aid highway leading to Atlanta and furnishing necessary access to the Arnold Engineering Development Center, a highly important testing laboratory under the supervision of the Department of Defense. Surely this was a nonlocal project. This illustration, so close to home that it hurts, is given to you solely because it is illustrative of a situation which exists in many, many States.

It is beyond dispute that our problem stems from the Federal interest in highway improvement. The President's Advisory Committee on a National Highway Program in its January 1955 report to the President states unequivocally that a safe and efficient highway network is essential to America's military and civil defense, and to the economy; that the existing system is inadequate for both current and future needs and that it must be improved to meet urgent requirements of a growing population and an expanding economy.

I do not think there is any doubt in anybody's mind as to the truth of the need for the expansion of the highway program.

Thus it may be seen that the problem attendant upon highway expansion is a national one that is receiving primary attention at the national level. This being true, the Federal obligation with respect to the cost of relocating utility facilities on Federal-aid highways should not be made to turn on considerations of local law or contractual obligations or the exercise of police power by States or municipalities. We know from past experience that this can only result in a complete lack of uniformity of treatment of the users of utility services, and can only be productive of much confusion and delay on vitally needed projects.

I do not want to limit this next statement to the Bureau of Public Roads. I do not want you excellent gentlemen to think I was just

jumping on them. This is in answer to a criticism they have made, and of course others who feel their position is proper.

It is my considered opinion that the position of the Bureau of Public Roads and those who support its position-that this problem should be handled by the States at the local level is untenable. It is an old argument that is out of step with present-day developments in highway construction, based on national needs and national defense.

No city attorney from whom I speak desires a subsidy for his municipality. They likewise are not seeking a subsidy for private utility companies. However, we emphatically do not want the financial condition of struggling and inadequately financed municipalities worsened by an unfair and inequitable contribution to a program nonlocal in character. We are likewise opposed to placing the burden of relocation on our local utilities, who in turn must recoup this expense from our citizens who are the rate payers.

In behalf of the National Institute of Municipal Law Officers, I wish to thank the chairman of this committee for his kindness and consideration in extending to us this opportunity to be heard, and I wish to thank each member of this committee for his courteous attention and interest. You are busy men. Your responsibilities are tremendous, and we appreciate the time you have allocated to us.

I would like to say, Mr. Chairman, on behalf of the National Institute of Municipal Law Officers, that I want to thank you and your committee for permitting our organization to be represented at this hearing.

Mr. FALLON. Thank you very much.

Mr. MILES. Mr. Chairman, the next witness who intended to appear here today was unfortunately taken ill this morning. That is Mr. Harold R. Peterson, president of a small independent telephone company. He asked me if I would ask the committee if I could read this page, which would constitute what he was going to say had he been present.

Mr. Peterson says:

I appear in my own behalf as president of the New State Telephone Co., located in southwestern Oklahoma. Our company is an independent telephone company providing service in portions of the counties of Jackson, Kiowa, and Washita, Okla.

Our company is, I believe, typical of numerous independent telephone companies serving rural areas throughout the Southwest and in most of the States. The company of which I am president was organized in 1903 and purchased by me and members of my family in 1947. We have 4 exchanges and a total number of 918 subscribers. Our area includes 3 small towns-the largest of which has a population of 750.

Although we serve a total of only 918 subscribers we have 423 miles of telephone lines all of which are located on and occupy public roads and highway right-of-way. We serve less than two subscribers per mile of line and the average cost of our lines is approximately $1,000 per mile.

For the purpose of rendering improved service to our subscribers, we obtained an REA loan in the amount of $490,000. In order to service our debt we have increased our rates to the point where I do not see how we could raise them further without a drastic decrease in the number of rural subscribers. Our rates, of course, are regulated by the Oklahoma Corporation Commission. Despite the high rates our company has made practically no profit since 1947. If the use of public roads right-of-way had not been available for our lines a large portion of the service which our company renders could never have been undertaken. Our lines occupy right-of-way on about 57 miles of United States and State highways. One State highway program which is about to

be undertaken will require us to relocate approximately 22 miles of line. It is not unlikely that the new Federal highway program will require us to relocate many additional miles of line.

The cost of relocating our lines may run into thousands of dollars and I am down here before you gentlemen today for the reason that I do not see how my company can raise the necessary money for such relocation. We have no reserves to meet such contingencies nor do we have resources from which to raise additional capital. My family has put all available funds into this company already and we just have no money left. Our State regulator commission does not allow us to obtain funds in advances from subscribers to take care of such a contingency.

I can assure you that if no provision is made for reimbursement of utility relocation costs in legislation for the Federal-aid highways now under consideration, there will be many, many independent telephone companies which will be in the same position. I urge this committee to take steps now to see that we are not faced with financial crisis and threatened bankruptcy in order to pay costs resulting from highway construction that gives no special benefit to independent telephone companies and their rate payers.

It has been the policy of Congress to encourage the development of rural utility service through the REA. I and many others like me have availed themselves of this opportunity and are rendering rural service in keeping with this policy. I believe it is absolutely necessary for Congress now to protect our industry and its subscribers against unreasonable expenses in connection with the Federal highway program in order that we may continue to render an essential service to the public.

Mr. DEMPSEY. I would like you to tell me the number of miles you have there.

Mr. MILES. 57 miles.

Mr. DEMPSEY. What is the cost of it?

Mr. MILES. About $1,000 a mile. He says.

The average cost of our line approximates $1,000 a mile.

Mr. DEMPSEY. What is the total loan made by the REA?

Mr. MILES. $490,000.

Mr. DEMPSEY. All right.

Mr. MILES. Mr. Chairman, our next witness is Mr. E. C. Houck of Warriors Mark. Mr. Houck is the manager of a small independent telephone company known as the Huntingdon & Centre County Telephone Co.

STATEMENT OF C. E. HOUCK, MANAGER OF THE HUNTINGDON & CENTRE COUNTY TELEPHONE CO., WARRIORS MARK, PA.

Mr. FALLON. Mr. Houck, we are very happy to have you. Mr. Houck. Mr. Chairman, my name is C. E. Houck, from Warriors Mark, Pa. I am manager of the Huntingdom & Centre County Telephone Co. I am also the postmaster of Warriors Mark.

Our telephone company operates 2 exchanges with a total of 700 subscribers. We are strictly a rural company, owned by local people. We cover about 200 square miles of territory.

We have had a very unhappy experience in the last few years with highway projects. In the past 8 years we have had 8 major highway relocation jobs.

In the 12-month period of June 1952, to June 1953, we had 2 jobs which were federally aided highway projects that cost us approximately $8,300 to move our facilities. One job required moving 182 poles and the other 125 poles.

At the time these jobs started, our annual gross revenues were only $27,000 per year. As a result of this work we had to borrow