Evening star., 1952-06-25
D. T.. Committee
Backs Flanagan
For New Term
Senate Approval
Of PUG Chairman
Seen This Week

Jdu1eS II. Cldudgdu, chairman
of the District Public Utilities
Commission, has received the
unanimous approval of the Senate
District Committee for another
term on the commission.
Full Senate approval is expected
later this week.
Thus ended quietly the sound
and fury that began when Mr..
Flanagan appeared last week be-
fore the Senate District Commit
tee to seek approval of his NOM
ination by President Truman.
Yesterdays session was the Sec
ond held on Mr.. Flanagan's con-
f1rmation.
At his first appearance, Mr..
Flanagan got a thorough going
over by committee members, as
they questioned him on the PUG
handling of the controversial
transit situation here. Some Of
the members had just seen copies
of the much publicized Lands re-
port.
This report was prepared by
James M. Lands, former chair
man of the Securities and Ex-
change Commission. He drafted
it for a House District subcom-
mittee that is looking into the
affairs Of Capital Transit Co. The
report blasted both the transit
company and the PUG.
Session Set on Report.
The subcommittee. headed by
Representative Kennedy. Demo-
crat, of Massachusetts,, has sched-
uled a closed session at 10:3O am.
tomorrow to decide what to do
about the report.
At the time Of Mr.. Flanagan's
first appearance before the Senate
group, he had not seen the Lands
report. He released a statement
Monday. defending the PUG
against a number Of the Lands
charges.
When he appeared yesterday for
the resumption of the hearing, he
supplemented this with another
statement.
He commented that Senator
Hunt. Democrat. of Wyoming had
expressed a perfectly natural in
terest in the fact that the Capital
Transit Co. had declared a special
dividend Of $40 share Chased on
share before four to one split in
stock) last January as the PUG al
lowed an increase in bus and
streetcar fares.
Considered for Months.
He pointed out the PUG had
been considering the request of
the company for rate increase
for five months, adding:
II had no advance notice of the
action to be taken by the directors
OF the company in declaring the
extra dividend. The directors had
no information as to when the
order of the PUG would issue.
Even If had known that the
directors Of the company planned
to declare an extraordinary divi-
dend, it could have made no diff
ference in the decision of the
lPUC. The dividend was declared
and paid out of earnings which
had been accumulated over a
Iperior of years"
Mr.. Flanagan pointed out that
the PUG did not control the divi-
dend policy of the transit COM
pany
Comments on Refund.
Commenting on the tax refunds
of some $3.3 million which the
company got back for the war
years, due to a decision in 1945
to amortize certain equipment
rapidly as then allowed, Mr.. Flan-
agan said:
"Mr. Lands contends that the
PUG should have employed powers
Of clairvoyance in 1912 and arrived
at the decision in that year that
World War II would end in 1945;
that President Truman would de-
clare the emergency at an end, for
certain purposes, in 1945, and that,
in the latter year, the manage
ment of Capital Transit Co. would
make up it's collective mind and
elect to avail itself of the acceler-
ated amortization provisions of a
Congressional statute"
He added:
Having been guilty Of lack Of
this supernatural gift, the PUG
is blamed for many hypothetical
disastrous results in the Lands
report and is accused of laxity."
Mr.. Flanagan explained tho
PUC's rate base on which the
transit company is allowed a re-
turn. The base represents the
original cost Of the property when
it was first devoted to public serv-
ice, less accrued depreciation.
1t amounts to about $23.5 million.
"The legitimacy of deprecated
original cost rate base has been
decided by the Supreme Court" he
said. There is no fairer way to
determine rates that has ever come
to my notice"
Mr.. Flanagan was questioned at
length about various other phases
Iof the PUG dealings with the
transit firm. The committee then
heard from half dozen citizens
who all backed Mr.. Flanagan"s
affirmation with one exception.
One lady said she opposed Mr..
Flanagan, opposed radios in the
buses and streetcars, opposed
signs advertising beer and liquor,
as well as the poor ventilation in
the vehicles.