At the 1960 Session of the General Assembly bills were offered to increase the tax on motor fuels and to compensate service station owners for losses in handling motor fuels due to evaporation and shrinkage. After extended discussion, the gasoline tax increase was adopted; the General Assembly was of opinion that more information should be obtained concerning the equity of such an allowance to service station operators. Senate Joint Resolution 57 was adopted directing the Virginia Advisory Legislative Council to make a study and report to the 1962 Session upon the advisability of providing such an allowance to service station operators.

At the meeting of the Council following the 1960 Session, the Council requested Charles K. Hutchens, member of the House of Delegates, Newport News, to serve as Chairman of a Committee of the Council to make the initial investigation and report. The Council selected the following to serve with Mr. Hutchens upon this Committee: Claiborne D. Gregory, former member of the House of Delegates, Hanover; Lyman C. Harrell, Jr., member of the House of Delegates, Emporia; Chester H. Lamb, Commissioner, Division of Motor Vehicles, Richmond; Julian H. Rutherfoord, Jr., member of the House of Delegates, Roanoke; Richard C. Shadyac, Arlington; and Landon R. Wyatt, member of the Senate of Virginia, Danville.

The Committee organized by electing Senator Wyatt as Vice-Chairman. John B. Boatwright, Jr., and F. W. Harkrader, Jr., were appointed Secretary and Recording Secretary, respectively, to the Committee.

The Committee obtained a great deal of information on the subject. of allowances to various handlers of motor fuels for losses in handling. It studied the bills which had been offered at the 1960 and earlier sessions to provide an allowance to service station operators and the amendment to the 1960 bill which would have required those seeking a refund to pay a fee of $5 in order to be eligible therefor.

A public hearing was set and the service station trade associations were notified of the time and place thereof by stories in the daily newspapers. Shortly before the hearing was scheduled the Committee was notified that these associations and their officials had prior engagements which prevented their attendance upon the meeting. The Committee held a hearing, the publicity therefor having been distributed throughout the State, and heard from the members of the public present. No one requested an allowance as such but one individual, representing a transit company, urged that if an allowance were made to service stations that a like allowance be made to the transit companies. The Association of Highway Users appeared at the hearing and subsequently filed a statement to the effect that in view of the demands upon the funds available for the construction and maintenance of highways they would not advocate an allowance for shrinkage and like losses. In order to afford the service station representatives the amplest opportunity to present their case, a second hearing was set and publicity given thereto.

At the second hearing the Virginia Gasoline Retailers Association, Incorporated, and the Metropolitan Retail Gasoline Dealers Association, which are hereinafter referred to as the Associations, appeared and made statements urging the allowance of a refund to service station operators. They were accompanied by a large number of operators of service stations many of whom appeared before the Committee and urged allowance of the refund. Statements were filed seeking to prove the contentions of the Associations.

The Committee considered the practices of other states, the present refund practices in Virginia for shrinkage, evaporation and handling, the marketing structure of the petroleum industry, the fiscal requirements of the highway systems of the State and local governments, and the equities of the situation. All of this material and the arguments of those who desire such an allowance were maturely considered.

At the conclusion of its study, the Committee reported to the Council.