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Can you tell me why you think you can make a valuable contribution to the Government by virtue of service on the ICC?

Mr. BREWER. Yes, thank you Mr. Chairman. I am delighted to have this opportunity to appear before you and to answer your questions.

I believe and hope that my experience in Government, many years of which was dealing directly with transportation problems, 10 years as a postal inspector throughout the United States and Alaska, as an investigator, and as an administrator for many years, as regional director of the Post Office Department with 1,400 post offices, 18,000 employees in the Rocky Mountain area that was facing very many difficult problems in the transportation of mail, I have ridden many RPO's, talked to many railroad people, negotiated contracts with many star route carriers, buses, and other means of transportation.

Following that, in the financial area as president of a corporation I can see it from the shippers' view point, I know the problems of the small shipper, I know some of the problems of trying to get your products moved and in my company we had a fleet of our own common carrier trucks, private carrier trucks, which seems to me to be some indication of understanding of their problems.

In the last year I have spent a considerable amount of time dealing with transportation problems, particularly in the Four Corners area. I was able to develop a comprehensive plan, a long-range comprehensive plan for the Four Corners Commission.

Among the top priorities of that Commission was development of better transportation system for the underdeveloped areas of the 92county area.

Based upon that I think maybe I would be able, hopefully, to gather together the right kind of information and assess it and make a judgment from it.

Senator HARTKE. Mr. Brewer, have you made any special studies concerning the recent circumstances surrounding the ICC's hearings we had here concerning oversight?

Mr. BREWER. Yes, I have read the hearings you presided over, and I certainly have looked into it as carefully as I could in the time I have had.

Senator HARTKE. Have you come to any conclusions about what changes, suggestions, or proposals, if any, you might have for the Interstate Commerce Commission ?

Mr. BREWER. Well, I think it would be probably a little presumptious at this time to say I have come to any definite conclusions.

I have been trying to get an input, as much information as I could. I do believe in all sincerity you have made a valuable contribution in your hearings, from the consumer view point, from the shipper viewpoint, from all viewpoints. I think we are in a crisis in transportation and I would hope that working with the other commissioners I would be able to make a contribution by finding solutions to some of these vexing problems.

Senator HARTKE. Have you studied the ICC staff study on conglomerates?

Mr. BREWER. No, I have not. I do have some views on conglomerates which I will later on try to use when I get on the Commission.

Senator HARTKE. What are some of those views?

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Mr. BREWER. I think very careful studies have to be made as to whether conglomerates are good or bad, whether they solve anything or whether they don't. I am reminded, as just a background thought, of the Bank Holding Act of 1956, which was created when I was with Western Bancorporation and I have some feeling of whether or not a carrier company should have other interests.

I would want to find out whether there was disinvestment in the railroads, diverting funds into other areas. I don't know this. But these are some of the problems we have, some of the questions I would want to ask. I do not pose as being knowledgeable in this area at all, but I would want to ask those questions and try to get the answers.

Senator HARTKE. Have you read the Nader report on the ICC?

Mr. BREWER. The testimony. I have not read the report in detail, but I read the transcript of his testimony.

Senator HARTKE. Do you have any views as to whether or not there should be a public counsel for the ICC?

Mr. BREWER. The ombudsman type thing?
Senator HARTKE. Well, public counsel, call it what you will.

Mr. BREWER. Well, that is what we use. I don't have any strong views on that. I would like to find out a little bit more about it.

It is my impression that the ICC should be the advocate of the consumer first, and the shipper and of the carrier, keeping in mind all the philosophy of the national transportation policy, which seems to cover rather well and very broadly.

I cannot say at this point whether I have a strong opinion, I do not have, as to whether or not it should have a public counsel.

Senator HARTKE. This appointment is for 7 years, although the vacancy has been open since the first of January of this year, so that means probably a little less. But it is your intention to serve out the complete term?

Mr. BREWER. Yes, sir.

Senator HARTKE. I might remark that the same would apply to Mr. Whitman about the Federal Railroad Administration. I understand he is leaving very shortly.

Mr. BREWER. In view of Senator Baker's statement a few moments ago, I might not be able to serve out the 7 years.

Senator BAKER. Let me hasten to say to the witness that I was being partly facetious. I think as you probably know, that the bill I introduiced was to authorize the creation of a commission to consider the feasibility of a consolidation of functions of the CAB, the Maritime Commission, and the ICC. I couldn't resist that jibe, because I have such an admiration for this witness, Mr. Chairman, having had him before other committees.

Senator HARTKE. Senator Cotton, do you have any questions? Senator Cotton. Yes, I have a few questions, Mr. Chairman. First may I say that I have gone into your record with some care Mr. Brewer, and had an interesting conversation with you. I am personally very much impressed by your background and capability.

Mr. BREWER. Thank you, Senator.

Senator Corton. Now I assume you have filed with the committee, a list of your investments. As is our custom, that list will not be put into the record of this proceeding but will be retained in the files of the committee.

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Mr. BREWER. Yes, sir.

Senator Cotton. That listing of course is open to the inspection of anyone desiring to do so. I have it here.

First, may I ask you if from your point of view you have any investments that might embarrass you or might be regarded as a possible conflict of interest in relation to your duties as an Interstate Commerce Commissioner?

Mr. BREWER. The answer to that is no at this time. I need to qualify that by saying I have looked into this very carefully and in my letter to the Chairman of May 22, 1970, I detailed all of my holdings.

In that I said I would sell Williams Bros. upon my confirmation and I will, because it is almost exclusively a pipeline company.

Senator COTTON. A what?

Mr. BREWER. Williams Bros., a small company in Oklahoma. I will sell that. Senator COTTON. What did you у

the nature of that company was? Mr. BREWER. It is a pipeline company. It deals with oil pipelines as well as gas. I will sell that as I stated in my letter promptly upon confirmation.

The other one has to do with Ashland Oil and Refining Company of Ashland, Ky.

I have looked into that very carefully and I have discussed the matter with the General Counsel of the Interstate Commerce Commission as well as my own private counsel. And the answer is that there is not sufficient holdings here to have any great impact. In fact, the de minimus rule as articulated by the ICC General Counsel's office upholds this.

The shares of Ashland Oil are traded on the New York Stock Exchange, and as of September 30, 1968, there were 5,335 holders of shares of preferred stock, 47,992 holders of shares of common stock. Based on public information available to me, and upon examination of Moody's Industrial of July 1969, Ashland Oil, İnc. had on September 30, 1968, a total of 789,148 shares of $2.40 cumulative convertible preferred stock outstanding of which I hold 2,733 shares and that would indicate that my holdings are very very low. In fact my total holdings of Ashland Oil would be .0001.

The company had outstanding as of September 30, 1968, 20,426,749 shares of common stock of which I hold 1,465 shares and this would again be very de minimus, far less than 1/10 of 1 percent. Accordingly describing my holdings in that company as minimal could be considered as an overstatement.

Examination of the statements of the Ashland Pipe Line Company, the pipeline subsidiary of Ashland Oil, Inc. for the year ended December 31, 1969, as submitted to the Interstate Commerce Commission, indicates that it had net assets of $70,310,861. As to total net assets reported by Ashland Oil, Inc. on a consolidated balance sheet as of September 30, 1969, they were $846,412,000. This would indicate the pipeline company contributes to the consolidate company approximately 8 percent of the total assets of all the companies. The parent company reported in a consolidated income account for the fiscal year ended September 30, 1969, net sales and revenues of $1,151,499,000 and net income after taxes of $52,343,000. The subsidiary reported for the year ended December 31, 1969, operating revenues of $14,326,709 and net income after taxes of $4,628,375.

Accordingly it would appear that the subsidiary pipeline company contributes to the consolidate company approximately 1 percent of the revenues and 9 percent of the net income of all the companies.

So I am not aware of any other holdings that are subject to the Commission and I would disqualify myself immediately should Ashland Oil Company or any of its subsidiaries become involved in anything before the Commission.

The pipeline regulation, I am told by members of the Commission, is mostly evaluation. Since 1961 only nine pipeline rate adjustments have been protested amounting to 0.00037, so it is mostly evaluation. But the advice I have from the General Counsel of ICC, who talked about the de minimus rule, is there is no way I could benefit myself by casting any kind of a vote in the matter.

Senator COTTON. I don't like to go into these matters too deeply because I think unfair inferences may be drawn, but I gather from your answer that: First, a very, very minimal part of the Ashland Company's activities are regulated by the Commission?

Mr. BREWER. Yes.

Senator Cotton. Second, your stock ownership is a very minimal amount proportionately to the outstanding stock of the corporation?

Mr. BREWER. Right.

Senator Cotton. And, third, it would be your intention to disqualify yourself from participating in any case which the Commission might have under consideration involving a pipeline?

Mr. BREWER. Right.

Senator Cotton. I think that attitude is entirely commendable. Howerer, I don't like to see the situation arise where we start having members of a commission in a position where they must disqualify themselves from participating in certain classes of cases. I am not thinking of your situation, because it would be so infrequently that you would have to do it. But a Commission could get into a situation where this or that Commissioner would have to disqualify himself from almost every decision, which could develop into a situation that would be administratively intolerable.

I also gather that although your holdings in Ashland are very minimal compared with the total amount of stock outstanding in the company, they are rather substantial compared with your other holdings?

Mr. BREWER. Precisely.

Senator COTTON. And if you had to dispose of that stock, it would be a great personal sacrifice.

Mr. BREWER. A very great sacrifice at this point.

Senator Cook. May I say, Mr. Chairman, along that line, that in all fairness to Mr. Brewer, we Kentuckians are kind of partial to Ashland Oil, a Kentucky-based corporation. I have no idea at what price Mr. Brewer bought his stock, but knowing the activities of the market, he could be in a position that if he were forced to dispose of it, it would mean a very substantial loss at this time.

Senator Cotton. I wasn't suggesting that he dispose of his holdings in Ashland. I am sure that if we need any assurance about the respectability of the company it has been furnished by the Senator from Kentucky.

I am not suggesting this, but if it were suggested by any member of the committee or anybody else, would you consider putting this particular block of stock in a so-called “blind trust" ?

Mr. BREWER. Yes, I have considered that, and I would be amenable to doing that. In my letter to the chairman I stated if the committee has other thoughts, I would be glad to get them so I could follow their advice. I would put it in trust if considered necessary.

I would like you to consider again that my ownership in Ashland Oil is 0.0001. And I do know that I, to answer your question directly, would put it in a bond trust. Senator Cotton. If the committee when it considers your nomina

COTTON tion in executive session, or if any appreciable number of the committee, not necessarily the majority, were to feel that you ought to put that stock in a "blind trust,” you would have no objection?

Mr. BREWER. That is correct.

Senator COTTON. I believe you have an admirable background and broad general experience, which, although perhaps not pointed particularly at transportation, must have caused you to have a good deal to do with transportation.

Mr. BREWER. Precisely.

Senator Cotton. I understand that during your years as postal inspector, that when the field service of the Post Office Department was reorganized, you were one of a very few persons called in from the field to handle that reorganization?

Mr. BREWER. That reorganization was a recommendation of the Hoover Commission. Prior to that time there had been a Penrose Overstreet Commission report dating back to 1908 which recommended the Post Office Department be decentralized to the field.

Prior to that time even purchase of lead pencils had to come into Washington. And Washington was getting bogged down completely with letters and communications.

Postmaster General Summerfield called in 10 postal inspectors from the field

Senator COTTON. Out of how many?

Mr. BREWER. Out of a thousand, to set up the first region in Cincinnati, Ohio, comprising the States of Indiana, Kentucky, and Ohio.

We operated that region for 5 months, getting the bugs out of it, and from then on we put in one region a month until we got the entire 15.

I served as decentralization officer of the Post Office Department in charge of that program for a while, before I took over as regional director in Denver. I served as acting regional director in Boston, San Francisco, and Atlanta and Denver and in Memphis during the days when we were training the new people.

It was the largest reorganization ever undertaken in the Post Office Department until that time, and probably the largest reorganization ever taken in Government with the exception of the military.

As a result there were 15 regions created throughout the country, a whole new concept, and I think it worked rather well.

Senator COTTON. Thank you. Now let me say this—this is no reflection upon you in any way, shape, or manner, because I am impressed with your record, and I certainly expect to heartily support your con

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