Indicates Matter Stricken
Indicates New Matter

The Senate assembled at 11:00 A.M., the hour to which it stood adjourned and was called to order by the ACTING PRESIDENT, Senator SETZLER.

TO: CLERK OF THE SENATE

CLERK OF THE HOUSE
FROM: THE JOINT LEGISLATIVE COMMITTEE TO REVIEW CANDIDATES FOR THE SOUTH CAROLINA PUBLIC SERVICE COMMISSION
DATE: APRIL 1, 1993

In compliance with the provisions of Act 119 of 1975, and Act 167 of 1979, it is respectfully requested that the following information be printed in the Journals of the Senate and the House.

Donald H. Holland, Chairman

Pursuant to Act 119 of 1975, this committee was organized to consider the qualifications of two candidates nominated by the South Carolina Public Service Merit Selection Panel (hereinafter "Merit Panel") to fill the unexpired term of The Honorable Fred A. Fuller, Jr., Public Service Commissioner for the Fourth Congressional District. In considering the nomination of Robert G. Rowell and James W. Schempp for the Public Service Commission, this Committee encountered several complex legal issues which resulted in the Committee's extensive consideration of its statutory charge and led it to the inevitable conclusion that the screening process as outlined in S.C. Code Section 2-19-10 et seq. and Section 58-3-10 et seq. is seriously flawed, effectively tying the hands of this Committee in its efforts to bring to the General Assembly's attention the candidates most qualified for service on the Public Service Commission. If this Committee were to simply fulfill its statutory mandate to render its findings of fact and reasons for its determination of the qualifications of the Merit Panel's nominees, it would be remiss in not delineating to the General Assembly its concerns as to how the current screening law hobbles its effectiveness.

Recommendations for Changes in Statutory Mission and Powers of Committee

The Joint Legislative Committee to Screen Candidates for the Public Service Commission (hereinafter "Screening Committee") is unique among the General Assembly's screening committees in that its ambit of screening, review, and investigation is controlled by two statutory frameworks: S.C. Code Section 2-19-10 et seq., the screening provisions generally relating to legislative screening committees, and S.C. Code Section 58-3-10 et seq., providing for, in part, the duties and powers of the Merit Panel and the coordinating role of this Screening Committee. While the charge of Section 2-19-10 charges the Screening Committee with "consider[ing] the qualifications of the candidates. . .," it provides no guidance as to the scope of the inquiry to be made by the Screening Committee. Historically, the Screening Committee has limited its review as to whether the nominees proposed by the Merit Panel meet all objective legal requirements for service on the Public Service Commission: (1) residence in the appropriate Congressional District; (2) nomination by the Merit Panel; and (3) the candidates' eligibility for election as determined by Section 58-3-24 (restrictions on election of former members of the General Assembly and the Merit Panel). Within the Screening Committee's past reports, the issue of qualification has been denominated one of "legal qualification" and the Screening Committee has limited its questioning of nominated candidates to their meeting the legal requirements for service on the Commission.

In organizing for its deliberations this year, the Screening Committee conducted an extensive review of the role it was accorded not only under Section 2-19-10 et seq., but also the responsibilities and powers accorded it under Section 58-23-10 et seq. The Screening Committee's research of the legislative history of the Merit Panel Act (Act 167 of 1979) clearly indicate that the determination of a nominated candidate's qualifications was not restricted to a determination of compliance with the statutory requirements for service on the Public Service Commission. In point of fact, when the Screening Committee's mandated role of "screen[ing] and review[ing]" those persons nominated by the Merit Panel is coupled with the Merit Panel's statutory obligation to forward the "most qualified persons" (emphasis supplied), that the Screening Committee should review more than legal qualification is an inescapable conclusion. To conclude otherwise would find the General Assembly assigned the impossible, and somewhat ridiculous, task of determining the most qualified nominated candidate on the simple, unambiguous issues of legal residency, nomination by the Merit Panel, etc.

Satisfied that our mandate includes a determination of such qualification issues as experience, temperament, and sensitivity to legal and ethical constraints on public service, this Screening Committee instructed its counsel to prepare for and conduct questioning of each nominated candidate using a pro forma list of questions designed to elicit responses to assist the Screening Committee in gauging qualification in all its facets.

In the interest of fairness to those two candidates encountering a committee who has determined that an expansion of its historical scope of inquiry is required by law, the Screening Committee has issued the report on these candidates with bifurcated conclusions: (1) a determination of the legal qualification of each candidate; and (2) a review of each candidate's fitness for service on the Public Service Commission.

The Screening Committee's decision to bifurcate its report on candidate qualification and fitness is limited to this immediate report. All future screening reports will treat the determination of qualification and fitness as a consolidated issue requiring a finding by the Screening Committee of whether the candidate is qualified or not qualified and the reasons therefor.

While the Screening Committee finds sufficient authority within the screening statutes to expand its inquiry of nominated candidates, it remains hampered by several other features of the law:

(1) The Screening Committee believes that it should be able to rate candidates on a broader spectrum of qualification than simply "qualified" or "not qualified." The Screening Committee asks the General Assembly to allow it to rate candidates as Highly Qualified, Qualified, or Unqualified.

(2) The Screening Committee has found the current system of nomination by the Merit Panel, review by the Screening Committee, and election or rejection of Merit Panel nominated candidates by the General Assembly unwieldy and very time consuming. During the pendency of these nominations, the Public Service Commission has dealt with many important and complex issues which could have benefitted from the involvement of a new Commissioner. Unfortunately, this Screening Committee has had to labor through a screening process fraught with legal ambiguity and an apparent lack of effective screening by the Merit Panel. The transcript of the Merit Panel's deliberations indicates that many important issues addressed by the Screening Committee should have been given more in-depth treatment by the Merit Panel. This Screening Committee's desire to comply fully with the Merit Panel's statutory mandate to provide two qualified candidates for the General Assembly's consideration, absent a super-majority vote, has been frustrated by its inability to take any action other than reporting to the General Assembly. The Screening Committee recommends that its powers be expanded to allow it to return a slate of nominated candidates to the Merit Panel for the Panel's further consideration upon a finding by the Screening Committee that the Merit Panel has not complied with its screening mandate.

(3) The Screening Committee would request the General Assembly to consider amending the provisions of S.C. Code Section 58-3-23 which prohibit contact between the Merit Panel and the Screening Committee. While originally envisioned to serve the laudable purpose of maintaining the independence of the Merit Panel, this prohibition on communication has reinforced the inefficiency of the screening process and has prevented the Screening Committee from communicating its intention to screen nominated candidates for qualification and fitness in any manner other than this Journal report, which hopefully will be read by the members of the Merit Panel or their staff.

Screening of Messr(s) Rowell and Schempp

A transcript of the Screening Committee's extensive examination of the two candidates on February 24, 1993, is appended to this report as required by law. In its examination of Robert G. Rowell, the Screening Committee found the candidate to be very knowledgeable on matters likely to be considered by the Public Service Commission. The candidate's past service as Chairman of the City of Spartanburg Commission of Public Works was evident in his answers to the Screening Committee's inquiries regarding the regulation of public utilities. The candidate also demonstrated a sensitivity to matters of concern to the general public such as the role of the consumer advocate, environmental effects of power generation, and the elements to be considered in determining a fair rate of return. The Committee also finds that Mr. Rowell is a resident of the appropriate Congressional District.

Testifying before the Screening Committee in opposition to Mr. Rowell's candidacy was Mr. Marlin Griffin of Spartanburg, who had filed a December 18, 1988 State Ethics Complaint against Mr. Rowell in his capacity as Chairman of the City of Spartanburg Commission of Public Works alleging that an interest free loan given to Commission employee, Mr. Billy G. Turner, in the amount of $120,000.00 was improper. The Committee heard Mr. Griffin's testimony and Mr. Rowell's response, reviewed the records of the State Ethics Commission, and determined that the Ethics Commission had adjudicated with finality the matter in its Order of September 20, 1989, wherein it found no wrongful conduct on Mr. Rowell's part and dismissed the Complaint as it related to him and the other Commissioners. Further, the Screening Committee found that Mr. Griffin had no knowledge of any evidence arising subsequent to the Ethics Commission's Order which might impact its Order. Mr. Rowell was most forthright in his testimony regarding the incident and the Screening Committee finds that no issue, of either legal qualification or fitness for service in this incident.

The Screening Committee's questioning of the second nominee, Mr. James W. Schempp, was confined to matters contained within his Personal Data Questionnaire (appended to the transcript of the February 24, 1993 hearing), the transcript of the Merit Panel's deliberations of Mr. Schempp's qualifications, and Committee Counsel's inquiries regarding the candidate's fitness to serve on the Public Service Commission. No member of the public asked to appear to testify against Mr. Schempp's candidacy.

The Screening Committee finds Mr. Schempp to be a dedicated public servant, currently active within the Governor's Initiative for Work Force Excellence, with an unblemished and decorated twenty-five year career with the Federal Bureau of Investigation. The Screening Committee further finds that Mr. Schempp is a resident of the Fourth Congressional District and otherwise legally qualified for service on the Public Service Commission.

The Screening Committee is concerned with Mr. Schempp's lack of familiarity with issues likely to be considered by the Public Service Commission. Under questioning by Screening Committee Counsel, Mr. Schempp provided little in the way of experience or knowledge to convince the Committee of even a passing familiarity with issues such as cross-subsidization of non-regulated holding company expenses by a wholly owned, regulated utility, the environmental consequences of Public Service Commission decisions, or of any other emerging issues in the area of utility regulation. In the Screening Committee's view, Mr. Schempp's unfamiliarity with Public Service Commission affairs was compounded by his admission that he would seek guidance in his tenure on the Commission from an attorney who often practiced before the Commission. Mr. Schempp's failure to recognize the conflict of interest inherent in such a course of conduct coupled with his seeming inability to understand the significance of establishing a truly blind trust for his significant utility holdings as opposed to his mere transfer of current stock holdings to a trustee for continued investment (despite repeated questioning on this issue by the Screening Committee and the Merit Panel) raises questions as to Mr. Schempp's judgment in such matters.

In consideration of these findings of act, the Screening Committee has found Mr. Rowell and Mr. Schempp to be legally qualified for service as Public Service Commissioner for the Fourth Congressional District. The Committee notes with emphasis its reservations as to Mr. Schempp's fitness for service on the Commission in view of the candidate's marked unfamiliarity with the operation of the Commission and his apparent inability to recognize serious conflict of interest issues.

Senator Donald H. Holland, Chairman
Senator Thomas L. Moore
Senator C. Tyrone Courtney
Senator Darrell Jackson
Representative Thomas E. Huff
Representative Richard M. Quinn, Jr.
Representative Timothy C. Wilkes
Representative Kenneth Kennedy

I concur with all of the findings and recommendations of the Screening Committee, but wish to express my concern over the action of the entire City of Spartanburg Commission of Public Works and its Chairman, Robert Rowell, in offering an interest free loan to a Commission employee. While this matter was apparently investigated by both the State Ethics Commission and the Solicitor and no wrongdoing was found, I find the practice to be abhorrent to the spirit of Section 6-5-10 which limits investments of certain public bodies to investment grade securities not personal loans secured by a real estate mortgage.

Representative Kenneth Kennedy

The Proceedings before the Joint Legislative Screening Committee for Candidates for the Public Service Commission, at Gressette Senate office Building, room 105, and the State House, third floor conference room, Columbia, South Carolina, on the 24th day of February and the 3rd and 25th days of March, 1993, before Regina C. Taylor, Certified Verbatim Reporter and Notary Public in and for the State of South Carolina.

Committee Members in Attendance:
Senator Donald H. Holland, Chairman
Senator Thomas L. Moore
Senator C. Tyrone Courtney
Senator Darrell Jackson
Representative Thomas E. Huff
Representative Kenneth Kennedy
Representative Timothy C. Wilkes
Representative Richard M. Quinn, Jr.

Also in Attendance: Michael N. Couick, Director of Research and Attorney to the Senate Judiciary Committee (Serving as Counsel to the Joint Legislative Screening Committee for Candidates for the Public Service Commission)
Ms. Debra D. Hammond, Administrative Assistant

Chairman Holland: Members of the committee, I'm going to call the meeting to order. This is the Joint Screening Committee of Candidates for the South Carolina Public Service Commission. This committee screens those candidates which have been sent to us by the Merit Selection Panel. Our basic duties are set out by statute. Over the years we have asked basic questions to comply with the statute which set up the screening process for this particular commission. But today we might deviate from that in some aspects because of the recent ethics laws, which I'm sure all of you are familiar with. Also because of some recent exposure we have had from a matter of screening a candidate who later went on to the Public Service Commission. Of course, I did not do that, and I had no part of that. That is brought to our attention that maybe we should give more attention to some things that has necessitated because of that.

This hearing will basically be conducted by the Chief Counsel for the Judiciary Committee, and later the members of the committee will ask questions they have of the two candidates which have been certified to us by the Merit Selection Panel. I understand from Mr. Couick, who is Chief Counsel for the Senate Judiciary Committee that there are certain questions that we must discuss before we start this meeting in Executive Session. If you want to elaborate on the reason for the Executive Session, I don't want anybody to misunderstand why we need to do that, Mr. Couick, you might briefly tell them what it's all about.

Mr. Couick: Mr. Chairman, the statute section 2-19-30 is very specific as to how a person might furnish a complaint regarding a candidate to the Committee. There are certain requisites that are set out in that statute. We have had a letter forwarded to the Committee that met our deadline of 9:00 a.m. Monday. The letter was not in the form of the affidavit that was required by the statute and as had been specified by me to the person that was a complainant. I think it is incumbent upon this committee to determine whether it is willing to accept that letter which has been converted into an affidavit this morning. I think in order to do that , you may have to actually look at the letter and the affidavit. I think because the statute is so specific that it ought to be done in Executive Session. If the affidavit is acceptable, its actual contents would be submitted later in open and public session to both the committee and to everyone present. But I think that initial determination needs to be handled in Executive Session.

Chairman Holland: Does the committee entertain a motion at this time for Executive Session, if that be the will of the committee.

Representative Kennedy: I so move, Mr. Chairman.

Chairman Holland: Opposed? Then this committee will go into Executive Session. Is there any objection into going into Executive Session? (none opposed) Gentlemen, we are going to be as brief as we possibly can and get you back in here. We'll ask everyone to be excused.

Chairman Holland: Mr. Couick, I'm going to ask you to proceed.

Mr. Couick: Mr. Chairman, each member has been given a notebook this morning in front of you. Tab #1 of that notebook is a copy of the agenda for this morning's proceedings. We have already had a call to order by yourself. We have just come out of Executive Session. If I could brief those persons now in Open Session attendance. The purpose of this Executive Session as was mentioned earlier, was to consider whether an affidavit that was received this morning, which was more or less the same letter that was received prior to our deadline of 9:00 a.m. Monday, was acceptable to the committee for the purposes of allowing Mr. Marlin T. Griffin of Spartanburg to testify to the committee. The committee has voted in Executive Session to allow the acceptance of Mr. Marlin Griffin's affidavit to allow him to testify as to the contents of the affidavit this morning.

Chairman Holland: Mr. Couick, you probably need a motion to ratify the actions of Executive Session.

Senator Moore: Mr. Chairman, I would move to ratify the actions of the Executive Session.

Chairman Holland: Are there any objections? (no objections) The actions of the committee in Executive Session are thereby ratified.

Mr. Couick: Mr. Chairman, there have been questions from members of the committee that we review the process for the selection of candidates for election by the General Assembly. As you may recall in the late seventies, the Public Service Commission Merit Selection Panel was created by the General Assembly and was charged with the selection of two or more persons to be nominated to this committee and to the General Assembly for election to the Public Service Commission.

This section was later changed to allow the Merit Panel to forward only one name, if appropriate. It was most recently amended in 1992 to allow by a 75 percent vote of the total membership of the Merit Panel for one, three, or four names, to be sent over to the General Assembly for consideration of election. The Panel is chaired by Mr. Cartha DeLoach of Hilton Head, met this year and we have a copy of the transcript of those proceedings in your notebook, Tab #7. The portions that are in your notebook are the portions that relate to the screening of Mr. Rowell and Mr. Schempp, who are the two nominees from the Panel.

Present at the hearing on that date, were nine members of the Merit Selection Panel. During the course of the hearing that day, it was noted by the Chairman, Mr. DeLoach, that in order for the committee to submit less than two names or more than two names, they would need a unanimous vote of those persons, in that that would be 75 percent of the total membership. The Merit Panel in its voting that day chose to submit two names which required a majority of those present of 8 votes of Mr. Rowell and Mr. Schempp. Those names were submitted to you as Chairman of this Joint Legislative Screening Committee.

This Screening Committee is charged with reviewing the qualifications of the names submitted by the Merit Panel. Today we are reviewing the qualifications of submissions for the 4th Congressional District. On February 10th, at the direction of this committee and its chairman, a press release was mailed to all newspapers in the state advising of the date, time and place of today's hearing. It included a procedure for a person to present testimony or statements to the committee. As prescribed by law, the press release was mailed two weeks prior to this hearing. In addition it was advised that complaints had to be received hours prior to this hearing, or Monday at 9:00 a.m.

On February 12th, 1993, a letter was mailed to each candidate, Mr. Rowell and Mr. Schempp, advising them of the committee's procedures and enclosed a personal information sheet which they were required to fill out so that SLED and credit check could be conducted on each person, a personal data questionnaire, which is an extensive review of all business ethical matters for each candidate, a statement of economic interest form. These forms as completed are in your notebooks.

Both candidates complied with committee's deadlines for filing these documents. On February 24, 1993, a notice of this hearing was posted in the appropriate places throughout the Gressette Building and the State House to insure that the press was advised of the meeting.

Mr. Chairman, our first candidate as nominated by the Merit Panel, if we go in alphabetical order, would be Mr. Robert G. Rowell of Spartanburg, South Carolina. Counsel would recommend that in the interest of insuring the Committee's ability to ask questions as to Mr. Rowell's knowledge of Public Service Commission operations and later as the same or similar questions to Mr. Schempp, that we be allowed to have Mr. Rowell present now ask Mr. Schempp to leave. Then he could return once we finished the questions with Mr. Rowell.

Chairman Holland: What you are anticipating is the one applicant listening to the other man answer that one's questions?

Mr. Couick: Yes, sir.

Senator Courtney: Mr. Chairman, I move that we sequester the applicants.

Chairman Holland: Any objection that we sequester the applicants? (No objections) Gentlemen, I would ask that, Mr. Rowell, you stay here and the other gentleman, the applicant, Mr. Schempp excuse himself from the room at this time. We're going to sequester you just for the questioning process. (Mr. Schempp exits.)

Examination of Mr. Rowell:

Mr. Couick: Mr. Rowell, if you would come to the microphone. If this questioning tends to be lengthy, you may choose to take a seat at the table, but I'm not sure how long it will take now. So you are welcome to stand there for at least the present. I ask you to raise your right hand, please. Do you swear to tell the truth, the whole truth, and nothing but the truth, so help you God?

Mr. Rowell: I do.

Mr. Couick: Thank you. Mr. Rowell, we've given you a copy of your personal data questionnaire summary that was prepared by our office. Have you had a chance to review it here this morning?

Mr. Rowell: Yes, I have.

Mr. Couick: Is there anything that needs to be corrected or clarified on that summary?

Mr. Rowell: No. It appears to be correct.

Mr. Couick: Is there any objection on your part to making the summary part of the transcript of this hearing that will appear in both the House and Senate journals of this hearing this morning?

Mr. Rowell: No, not at all.

1. Robert G. Rowell

Home Address: Business Address:

162 Henson Street 145 N. Church Street

Spartanburg, SC 29307 Suite 124

P.O. Box 2766

Spartanburg, SC 29304

2. He was born in Branford, Florida on December 6, 1932.
Social Security Number: ***-**-****.

3. S.C. Driver's License Number: *********;

S.C. Voter Registration Number: 1-367-349.

4. He filed his "Application for Nomination to the Public Service Commission" with the Public Service Commission Merit Screening Panel on December 14, 1992.

5. He was married to Edith Marie Gorlick in 1956. He has three children: Craig G. Rowell, MD, age 33; Calla Rowell Savon, age 32; and Christopher P. Rowell, age 29.

6. Military Service: 1955-1957--US Army Finance Corp., Captain; 1957-1966--Reserves, Honorably Discharged.

7. He attended Lafayette High School (Mayo, FL) from 1946 to 1950; University of Florida (Gainesville, FL) from 1950 to 1955, BSBA degree; Florida Trust School (University of Gainesville, FL) from 1961 to 1963, completed one week course each year for three years; National Graduate Trust School, Northwestern University (Evanston, IL) for two weeks each summer plus correspondence courses between sessions from 1976 to 1978, plus written thesis in 1978.

8. He served as Chairman of the Spartanburg County Council from 1975 to 1982; on the City of Spartanburg Commission of Public Works from 1988 to 1989; and as Mayor of Spartanburg from 1990 to date.
9. He lost his 1974 bid for Spartanburg County Commissioner.

10. He served as a Sales Representative for Illinois Mutual Life Insurance Company from 1960 to 1961; as a Trust Officer for Commercial Bank and Trust, Co. (Ocala, FL); and as Vice President and Trust Officer for South Carolina National Bank and First National Bank of SC (Spartanburg) from 1966 to 1987.

11. He is now Vice President and Secretary, Director and Co-owner of Spartan Mortgage and Investment Corporation (a small, part-time business).

12. He has never been arrested, charged, or held by federal, state or other law enforcement authorities for any violation.

13. To his knowledge, he has never been under federal, state, or local investigation for possible violation of a criminal statute.

14. No tax lien or other procedure has ever been instituted against him by federal, state, or local authorities.

15. He has been sued in his capacity as County Council Chairman and as Mayor of Spartanburg along with other Council Persons several times.

He has not been sued in a personal capacity.

16. An ethics complaint regarding an interest-free loan to a general manager in connection with the manager's employment was filed against him in his capacity as Chairman of the City of Spartanburg Commission of Public Works. The complaint was investigated and dismissed by the State Ethics Commission.

17. Health is very good.

18. He has not been hospitalized during the past ten years for more than ten days or incapacitated from work for more than ten days.

19. He suffers from acute myopia, corrected with contact lenses.

20. He is currently under treatment for mild hypertension with:

Dr. Joseph Walton

Spartanburg Regional Medical Doctor

Spartanburg, SC 29303

21. He has never been treated for or suffered from any form of mental illness.

22. He has never been employed as a lobbyist.

23. As a member of the Board of Directors of the Municipal Association of South Carolina, MASC, and as a member of the association's legislative committee, he received snack lunches following the November 1992, December 1992, and January 1993 meetings. As a board member of the Appalachian Council of Governments, he received the meal furnished after each meeting.

24. He was employed as Deputy Insurance Commissioner, State of Florida (Orlando, FL) from 1957 to 1960.

25. He has no knowledge of any formal charges or informal allegations involving S.C. Code Section 8-14-700 (use of official office for personal gain).

26. In November he made two or three telephone calls on watts line to other mayors telling them of his intention to apply for the PSC position. (See S.C. Code Section 8-13-765 concerning use of government personnel or facilities for campaign purposes).

27. Other than travel, room, and board, his expenditures made in seeking the office of Public Service Commissioner total $624.71.

28. He has made no contribution to any member of the General Assembly since his announcement of his intent to seek election to the Public Service Commission.

29. He has received no pledge or assurance of pledges regarding his election from any member of the General Assembly.

30. He has not solicited or collected funds to aid the promotion of his candidacy for the position of Public Service Commissioner.

31. To his knowledge, no contact with any member of the Merit Panel has been made on his behalf. Two or three people have offered to make such contact, but he requested that they not do so.

32. He has not had a problem with alcoholism, any condition associated with the consumption of alcoholic beverages, or drug addiction/dependency.

33. Professional organizations: Board of Directors, Municipal Association of SC; Immediate past President, Spartanburg County Municipal Association; Executive Committee, Appalachian Council of Governments.

34. Civic, charitable, etc. organizations: Spartanburg Rotary Club; Central United Methodist Church; Carolina Country Club; Piedmont Club.

35. He has been involved in community activities that go beyond what is reflected in his questionnaire.

36. Five letters of reference:

(a) William S. Jones

P.O. Box 4187

Spartanburg, SC 29305

(b) Roy McBee Smith

P.O. Box 5306

Spartanburg, SC 29304

(c) Edward P. Perrin

P.O. Box 1655

Spartanburg, SC 29304

(d) John S. Poole

P.O. Box 5029

Spartanburg, SC 20304

(e) Wayne E. Iseman

P.O. Box 251

Spartanburg, SC 29304

Mr. Couick: Mr. Chairman, it is behind tab #2 that you will find a copy of these summaries for Mr. Rowell. Mr. Rowell, we have also had an opportunity to review your credit reports, and these reports have been reported as being satisfactory. There were no negative entries on your credit report. The records of all applicable law enforcement agencies, being those in all states where you have lived have also been checked by the State Law Enforcement Department and they have come back as being indicated negative, no reports of criminal activity. The records from the South Carolina Department of Highways and Public Transportation also indicate being negative, no activity.

The judgment roles of your resident county are also negative in terms of the entry of any judgments against you. Your statement of economic interest as reviewed by staff indicates that you have no conflicting ownerships, associations, or transactions that would directly impact upon you serving as a Public Service Commissioner.

Since you have filed your personal data questionnaire about a week ago, is there anything else you would like to offer to the Committee that may be important in terms of considering your nomination as to whether you have any conflict of interest?

Mr. Rowell: No. If I may, there is one other matter on the questionnaire that doesn't deal with conflict but that I have a more precise figure.

Mr. Couick: Yes, sir.

Mr. Rowell: The question came up about using government property for advancing your candidacy and I indicated that before I was candidate, but in early November, I did make some phone calls from the City Hall on the watts line to call some friends about the possibility. I put an estimate of $10.00. I have since gone back and checked all the phone calls for October, November, December, and January and have reimbursed the city $11.24 covering the cost of those calls I did make in November, which is the only ones I did make from that facility. The accurate figure on the amount spent should be $11.24, rather than the $10.00 estimate.

Mr. Couick: Mr. Chairman, what I would like to do next after we handle these preliminary matters is ask the Committee to turn to tab #3 and you will find there a copy of the personal data questionnaire completed by Mr. Rowell, and this was forwarded to all committee members yesterday. For those who have not had a chance to review it, you will note that it is a full, personal history of the candidate. You will note that he filed his application with the Merit Panel on December 14, 1992. You will note that Mr. Rowell is married and resides in Spartanburg, has had past military experience, has served in several positions within the banking and financial community in his career. Item #8 in terms of holding public office, Mr. Rowell is currently the Mayor of the city of Spartanburg. He has also served on the Commission of Public Works for the city, and was Chairman of the Spartanburg County Council for the period 1975 through '82. Actually he had served as the Chairman, Spartanburg County Commissioner in November 1974.

Mr. Rowell: Excuse me --

Mr. Couick: Excuse me, he was an unsuccessful candidate for that office in November of 1974. Mr. Chairman, he is currently employed as Vice-President and Secretary, and also as a Director and Co-owner of Spartan Mortgage and Investment Corporation. This is a private mortgage placement company with investment.

Mr. Rowell: It's a private investment company, very small in nature.

Mr. Couick: If you will note from item #15, Mr. Chairman, Mr. Rowell has been sued in his capacity as Chairman of the Spartanburg County council and as Mayor of Spartanburg along with other council members several times. Attached to the personal data questionnaire is correspondence from attorneys for the city of Spartanburg and for the county indicating that the suits were brought in his official capacity, that they had no relationship to any misconduct on the part of Mr. Rowell or in his official capacity any conduct that would relate to claims such as a section 19-83 claim or whatever.

Mr. Chairman, item #16 is a matter that counsel would like to inquire to a bit more, and if we could do that at this time. The question asked, "Have you ever been disciplined or cited for a breach of ethics or unprofessional conduct by, or been the subject of a complaint to any court, administrative agency, bar association, disciplinary committee, or other professional group? If so, give the details." Mr. Rowell responds that an ethics complaint was filed against him in his capacity with the Sewer and Water Department regarding an interest-free loan to the general manager of that department as the terms of his employment. He indicates that this was investigated and dismissed. He notes attached to his personal data questionnaire an affidavit from Mr. Ed Perrin regarding this matter. We have removed Mr. Perrin's affidavit from the personal data questionnaire so as to pass it out along with some other material which appear with Mr. Perrin's affidavit.

Mr. Rowell, would you give us a brief explanation of just generally what happened with the interest-free loan, when it occurred, and the nature of the complaint that was brought against you?

Mr. Rowell: Sure, I would be glad to. Let me give you a little background leading up to it because I think that's helpful to know why the loan was made. I don't remember the exact dates, but while I was on the Commission of Public Works, we had a long-time general manager retire from the Water and Sewer System which the Commission of Public Works operates both of those. In an effort to obtain the best qualified person to serve as a replacement, we engaged a search firm to screen out those and encourage those that might not otherwise be in the marketplace to look for jobs with us. As a result of that a number of applicants were obtained and it was narrowed down to five that we interviewed. The Commission agreed unanimously that Billy Turned was the best qualified of the group.

We had some reservations at that time because he was in private consulting work and was making more money than we were allowed -- that we were able to pay him because of our restrictions that we felt was appropriate as a public body. The consultant said that he was anxious to get off the road and stop traveling and settle down in a town like Spartanburg, that he might be agreeable to less than his current salary. So we negotiated through the consultant his salary and his benefits to come to Spartanburg to be the general manager of the Spartanburg Water System and the Spartanburg Sewer System District. Part of that consideration was to assist him in moving from Atlanta to Spartanburg, and we provided for him a housing allowance in order to allow him to rent an apartment until he could sell his home in Atlanta. Of course, we also provided a company car, which was tradition through the prior general manager, and he was allowed to use that to commute to Atlanta over the weekends until he could sell his house and resettle.

Once he was employed and once he got his apartment and once he was going to get settled -- He left his wife in Atlanta, who worked, I think, three days a week to try to sell the house. It was a very weak real estate market in Atlanta and the house didn't sell. He recarpeted the house, he repainted it, he reduced the price, he changed realtors. He did everything within reason to try to market the house and move his family to Spartanburg during that period of time. But this dragged on for close to a full year and he was getting completely exhausted working full time in Spartanburg, driving to Atlanta for the weekend to be with his wife, and sometimes she would drive from Atlanta to Spartanburg during the week to be with him. At this time I was Chairman of both the Water and Sewer Commission. We rotate Chairman, so I was Chairman of both of them and he came to me -- It was a year because he was up for salary review -- and said that he had found a house in Spartanburg that he was able to buy below the appraised value, but he really couldn't afford to carry the mortgages on both houses, was there anything that we could do to assist him in that regard?

So I said, "Let me look into it and see what we can do." We could have raised his salary, without limitations. I mean, we had the authority to raise it $6-, 8-, 10-, 12,000 to cover the second mortgage or the mortgage he would have if he had bought the house. But in my judgment that would have been a mistake because once he sold his house we couldn't very well take the salary increase back. So the possibility of making a mortgage loan available to him from funds within the Sewer and the Water District to allow him to buy this house in Spartanburg, allowing him to move his wife to Spartanburg until he could sell his house in Atlanta so he would only have the one mortgage payment rather than two seemed like an appropriate way of going about it.

We discussed it with the accountant and auditor of the Sewer District and he agreed and we agreed, and we understood and discussed with Mr. Turner that this would be imputed interest that he would have to report on his income tax that value of the interest received on an interest-free loan based on governmental tables. We really communicated with the attorneys for the Districts and of both systems and they agreed that if it was done with an open session that if we took a mortgage on the property, that this would be an appropriate action to take. So based on those facts, we voted to allow $120,000.00 interest-free loan to Mr. Turner to buy a $125,000.00 home. The terms, I don't know if you remember exactly, but it was due upon the sale of his other home and within a certain period of time, so that he could refinance, get a new mortgage once he sold his home in Atlanta.

It was also due within a time frame if he left your employment, like, I think it was 60 or 90 days following our employment it would be due and payable. So we looked upon, to some extent, like an employment contract to help keep him there. He bought the home, moved his family down, settled in, continued to do a good job for us. Things were fine, of course, until some people in the community felt that this was an inappropriate action and began to stir up some information and letters to the editor and different things of this nature.

At any rate, if I remember the correct sequence, Mr. Turner was not looking for employment elsewhere, but at this time he was approached by Columbus, Georgia, and was made an offer with a substantial salary increase to go with them. He accepted the offer, moved to Columbus, paid our loan off within the time frame of 60 or 90 days and all the money was placed back into the Water System and Sewer District funds. From our perspective, we felt that we were saving money because, one, we were saving the cost and wear and tear on a company vehicle going to Atlanta each week, we eliminated the housing allowance which I think was something like $500.00 a month, and what we gave up was the interest we were earning on Treasury Bills on some reserves that the Sewer District and Water System tries to keep on hand for contingencies. So we looked upon it as a cost savings, as an effort to assist an employee, a good employee, to keep from losing him. I think at that point he may have been in the possibility of going back to his job in Atlanta because it was still open for him. Having to go through the whole process of rehire which would be at considerable cost.

So it was done in good faith. Looking at not a public body so much as a business, coming from the banking community, I know that our bank will move people from town to town, we would frequently have the company appraise the property and then buy your house at that price and let you take your equity and buy somewhere else and then the bank would sell the house and take the profit or the loss. Had we done that it could have cost the district as much as $35,000.00 because he ultimately sold the house at about $35,000.00 below what it was appraised for when he accepted the job. That's the circumstances surrounding it.

In retrospect, some people in the community felt that it was an improper thing to do. We certainly didn't do it for personal gain. We did it to try to save money and keep a highly qualified manager on track and keep him or have him and his wife in Spartanburg where they were working and doing the job.

Mr. Couick: Mr. Rowell, the mortgage loan was repaid, was it not?

Mr. Rowell: Yes, it was, in its entirety.

Mr. Couick: It was originally not paid within the original terms of the loan. There was an extension that was requested and it was granted by the board for several weeks, right?

Mr. Rowell: I'm sorry. I don't remember that. It was paid soon after he left our employment.

Mr. Couick: But, before he left your employment, before you were notified of his employment -- This is based on the records of the Ethics Commission -- the term of the loan came up and there was some problem in terms of the sale of his house. Were you aware at that time that you renegotiated that loan, giving him some additional time that he was going to leave your employ and go to Columbus, Georgia?

Mr. Rowell: No. Mr. Couick, first of all, I have not seen any of the records of the Ethics Commission and it was thoroughly investigated. A lot of this was handled by staff. I do remember we extended his housing allowance one time. It was really for six months. I do not have any recollection that we extended the loan because I didn't think we had it that long. He was only with us for about two years and this happened during the second year of employment.

Mr. Couick: Your attorney, or the attorney for your commission, Mr. Perrin, answered a question on your behalf, the release of all files held by the State Ethics Commission relative to this so that this committee would have access to them. Was that at your request?

Mr. Rowell: Yes, it was.

Mr. Couick: Mr. Chairman, if I could, I would like to have passed out to the committee now, copies of the letters from Mr. Perrin to Mr. Gary Baker, and also a letter from Mr. Gary Baker back to Mr. Perrin waiving the confidentiality of the ethics file and the complaint and the determination made by the Ethics Committee.

Mr. Rowell: Mr. Couick, may I add one part about the transaction?

Mr. Couick: Yes.

Mr. Rowell: First of all, Mr. Turner had come from the private sector to the public sector and the ethics requirements were somewhere new to him. We learned later, not at that time, that when he filed his ethics report that he did not report the value of the interest-free loan on a separate form. He did, we believe, report it on his income tax that was forwarded to him on a 1099. But when he did his ethics form, he simply put down his salary. I don't think he mentioned the company car or the interest-free loan, but it was part of his 1099 reported to him for income tax purposes. That was an oversight on his part and I believe the ethics people did, in fact, offer him an oral reprimand for failure to do that. That was a personal action taken apart from any knowledge I had or the Commission had regarding how he reported his own ethics form.

Mr. Couick: Mr. Chairman, I also ask Ms. Hammond to pass out a letter of November 2nd of 1989 from the Ethics Commission containing their decision -- I believe it's actually September 20th -- it's item #1 under available for distribution, and also the Ethics Commission press release of October 2nd, 1989, regarding the public reprimand of Mr. Billy D. Turner, who was the Executive Director of Spartanburg Water and Waterworks Commission in the Spartanburg Sanitary Sewer System District Commission.

Mr. Rowell, you were just saying the complaint filed was bifurcated. There was certainly allegations made against Mr. Turned that were personal as to his failing to file certain income benefits. There was also a complaint made against the Commission and you and other members of the Commission, that you had done something improper in allowing the interest-free loan in violation of the section of the South Carolina Code that says all you can give an employee for his services is the salary which he is entitled to. It seemed to be determinative to the Commission that you had negotiated with Mr. Turned to come to Spartanburg, South Carolina, and part of that negotiation was that you were going to give this interest-free loan in order that he could sell his house in Atlanta and have some place to live in Spartanburg. Is that true? Is that part of his compensation?

Mr. Rowell: Not in that sense. At the time we hired him, we had no idea that his house wouldn't sell. What we negotiated with him at his employment time was that we would provide a housing allowance for a period of time until he could get resettled and sell his house. The inability of him to sell his house during that period of time precipitated the action we later took. That was of course the one thing that the ethics investigator said, if this had been part of the original employment there would have been no question. Well, we didn't know when we hired the person that he couldn't sell his house for over a year. This was actually taken after the fact to deal with the situation that we thought was appropriate to keep and retain a qualified person and to eliminate the housing allowance or apartment.

Mr. Couick: So you terminated a housing allowance when you gave the loan?

Mr. Rowell: Yes, simultaneous, correct.

Mr. Couick: As I asked earlier, all monies were repaid at the time of his selling this house in Spartanburg?

Mr. Rowell: Correct, yes.

Mr. Couick: Mr. Rowell, are you aware that in this opinion the Ethics Commission did note that while they were without jurisdiction that perhaps section 6-5-10 of the South Carolina Code relating to authorized investment by political subdivisions may have been violated?

Mr. Rowell: No, I was not aware of that.

Mr. Couick: Mr. Chairman, we have copies of this code section for all the members.

Mr. Rowell: As I said earlier, we depended on the advice of counsel regarding the appropriateness of the loan and based on that information we made the loan. I was not aware of the findings or the statute.

Mr. Couick: Mr. Chairman, as a matter of housecleaning, if I could ask the committee's permission that all matters that we've introduced so far by reference, we have not asked the court reporter to tag these as exhibits, but if she would be authorized to do so, so the record would be complete.

Chairman Holland: So moved.

Mr. Couick: Mr. Rowell, I believe the committee members have been given a copy of this. As I said the Ethics Commission noted that they had no jurisdiction over this matter, that they could not determine whether it was proper or not. I believe you mentioned that you sought counsel from attorneys and CPAs as to the propriety of this investment?

Mr. Rowell: In advance of the action, yes.

Mr. Couick: No one at that time led you to believe there was anything improper about it?

Mr. Rowell: That is correct.

Mr. Couick: Mr. Chairman, staff counsel for this committee has reviewed the file of the Ethics Commission. I do have it present. It is fairly voluminous. It is several hundred pages long. Most of the investigation by the Commission revolves around Mr. Turner and his failure to report the income on his form. I have covered, I believe, everything that relates to the action of the Commission with regard to Mr. Rowell. I would like to ask some more questions of Mr. Rowell, both about his personal data questionnaire and about his qualifications. But it may appropriate that we stop now and allow the Committee to ask questions about this matter, since it is a major matter. Then I can come back and move on to the other questions.

Mr. Rowell: If I could add one comment first, if you would.

Chairman Holland: Yes, sir.

Mr. Rowell: You asked about the illegality of the action. Mr. Griffin who filed the ethics complaint later attempted to take this to the solicitor's office and alleged some violation of law. The solicitor threw it out for whatever reason. Again, that's not of record and I don't know the reason for that. If you want to check with the solicitor, he might give you some additional information regarding this.

Mr. Couick: As I said, Mr. Chairman, earlier, we had checked all records in terms of suits being brought against Mr. Rowell and there was nothing that was indicated. So we assume there has been no action brought against you or the Commission on that.

Chairman Holland: Let me ask you this. Do you have any desire to introduce the record from the Ethics Commission into the record?

Mr. Couick: Mr. Chairman, the only things I would like to introduce are the things I am passing out to Committee members. The other record and this will be printed in the journal of Senate, is quite voluminous and it really revolves around Mr. Turner. I realize why it was a public reprimand. Mr. Turner probably does have a privacy interest in having his record not produced again some several years after the actual event. That's why I've chosen only to present the matters into record that really relate to Mr. Rowell to the Commission. I think it probably gives a full scope of the thing. The only other matter which you may wish to use is a copy of the Ethics Committee opinion which I believe -- Ms. Hammond, did we pass around the Ethics Commission's decision in order and the press release?

Chairman Holland: I would like that in the record.

Mr. Couick: Yes, sir. That would be all the matters that I would like to have entered, Mr. Chairman.

Mr. Rowell: Could I have a copy of that, the Ethics Committee report, as well. I don't believe I have one in my file.

Senator Moore: Mr. Chairman, I have a question for Mr. Rowell.

Chairman Holland: Senator Moore.

Senator Moore: Well, the action regarding the loan, the $120,000.00 loan, the interest-free loan, was that unanimously approved by the Commission?

Mr. Rowell: It was, by both bodies. There are two different governing bodies, the Water System, which is a three-person body, and the Sewer District is a Seven-person body. It was unanimously agreed by both groups and the cost was shared between the two organizations because he was general manager over both.

Chairman Holland: Mr. Rowell, when did there first become any dissent in regard to what you had done?

Mr. Rowell: I beg your pardon.

Chairman Holland: When did you first hear of any dissent as to what the Commission had done?

Mr. Rowell: I don't have the dates. It's hard to imagine, but it was several months after it occurred when certain people in the community came down and began to ask for minutes of your board meetings for the last year. It was close to approaching election, I believe, and I was not in it. And it was sometime after that that the --

Chairman Holland: All done in public?

Mr. Rowell: Pardon me?

Chairman Holland: All done in public?

Mr. Rowell: Yes, it was in a public meeting.

Chairman Holland: It was not done in any executive session?

Mr. Rowell: No.

Chairman Holland: Any other questions by any other members of the Committee solely about this matter at this time?

Representative Wilkes: Yes, sir.

Chairman Holland: Representative Wilkes.

Representative Wilkes: Mr. Rowell, you made the statement and it's in the affidavit, but there was an imputed interest that was recorded by Mr. Turner on his income tax returns. At least you filed the proper documents with the Internal Revenue Service?

Mr. Rowell: Correct.

Representative Wilkes: How would that have been treated on the books of the Commission? In other words, if you was going to have a one-sided entry where you are either increasing this man's salary through his W-2 form or giving him a 1099, then every transaction has two sides. So would there have been a corresponding entry on the books of the Commission for additional compensation?

Mr. Rowell: Representative Wilkes, I don't look at the books and I am not involved with record keeping. I do know that the auditor looked at it. I knew from my experience that imputed interest would be from his standpoint. I knew from his standpoint on income tax, he would have imputed receipts and imputed expenditures because of the home loan. So from his standpoint, I was aware that it was a wash entry. From the Commission's standpoint, how it was handled I'm not sure. But it was handled through our regular finance department and with the approval and review of our auditors. But what the contra entry was on it, I wouldn't know.

It was probably added as an expense of employment and the other entry would have been the loss of income, which we didn't get from the money which we would have invested in treasury bills. So it really was not necessarily a wash. It was simply an additional expense of employment. But how it was reported, I'm not sure.

Chairman Holland: Representative Kennedy.

Representative Kennedy: Mr. Rowell, $120,000.00 interest free. Mr. Turner got a great deal, one that he couldn't refuse. Did you feel that what was happening there with that loan looked good?

Mr. Rowell: Mr. Kennedy, let me put it in perspective. The man had a house of $175,000.00 value in Atlanta. He was making $75,000.00 or so of income. A $125,000.00 home made out on a mortgage was not out of line with what was his ability to pay. Our concern was if we had to foreclose on the mortgage, would we, in fact, be protected with the value in the house. We knew the house was already appraised. It was appraised, I think, for $125,000.00. We thought that was sufficient equity to protect our interest, if in fact, there was some reason to take over the assets. In hindsight, we probably didn't look at the appearance as it might be seen from hindsight or from the public view. We looked at it terms of dealing with an employee and trying to dissolve a problem that was eminent and do it in a way that was fair both to the employee and to the commission we represented. From that standpoint, we looked at it as being a very fair of trying to avoid a salary increase, avoid the cost of wear and tear on a car, and avoid the cost of a housing allowance and giving up only the interest we were earning on treasury bills at that time, which would have been in the four and a half to five percent range. So the amount of income we lost was no more than and perhaps less than -- We were actually saving dollars that were going out. So looking at it at that close view it looked proper. I can see on hindsight where the public might look at it and do it differently. That is obviously a reason that we are dealing with it. But the point I would like to clarify is that there was no personal gain on the part of any member of the Commission, certainly on myself, in any way other than this except to do what we thought was best to serve the community by maintaining and keeping a valued employee that we worked hard to hire in the first place.

Senator Jackson: Mr. Chairman.

Chairman Holland: Senator Jackson.

Senator Jackson: Mr. Rowell, you stated earlier that this transaction with Mr. Turner was during an open session. Was it covered by the media soon after the transaction?

Mr. Rowell: The media comes to our meetings with some frequency, but not at all meetings. It was -- I don't remember the exact timing -- It was obvious a lot of the details were worked out with the accountant and the attorney and discussed individually, knowing that this was something we were working on. When we came to it, it was an agenda item and it was acted on.

Senator Jackson: In your opinion, do you feel that those who made the complaint were aware of this transaction immediately after it was done?

Mr. Rowell: I think they were aware of it when they read the minutes, as anybody else would, on any public body if they are not in attendance.

Senator Jackson: Which was sometime later?

Mr. Rowell: It was sometime later, yes. I don't know what prompted it or why, but it was obviously -- I suspect there may be a hidden agenda behind this, but I don't know that. But it came about when they began to search the records for it. But the mortgage was recorded also. The term of the mortgage was shown on the public records.

Senator Jackson: The complaint was lodged approximately a year afterwards or --

Mr. Rowell: Senator Jackson, I cannot give you the reference there. Maybe the records, I'm sure, definitely will show that. I remember that it was about a year when we agreed to the loan because that's when he was coming up for salary review. I remember that it happened shortly before Christmas because he had a party for the department heads and for the Commission and for the first time began to be part of the community around Christmastime of that particular year. Then he left sometime the following year. Is it was over about a year period, sometime after -- Well, within a two-year period.

Senator Jackson: Was it during an election time?

Mr. Rowell: My recollection it would have been somewhere close to one. Again, I don't remember who was coming up. It wasn't me. I'm a six-year term and I was in the middle of my term. So again, I can't tell you what the verdict was for the people that looked after it, but they were looking for something and they found it and they made the most of it.

Mr. Couick: Mr. Chairman, the complaint was actually filed on December 28, 1988. Mr. Turner left employment with the Commission on January 6, 1989. So this was fairly soon after they had extended the payment, but I believe the actual earlier transaction was agreeable before this.

Mr. Rowell: I think it was the prior year, because the Christmas party was the end of the first year which would have been '87, I guess. But we were not aware that he was considering leaving when we extended the loan.

Chairman Holland: Any other questions by any member of the Committee in regard to this matter? (No response.) Proceed, Mr. Couick.

Mr. Couick: Mr. Chairman, continuing on with the personal data questionnaire, item #17, perhaps this is a more pleasant question, the state of your health. You answered it as very good. Is there anything else that you would like to tell the Committee about the state of your health and how active a member you could be on the Public Service Commission?

Mr. Rowell: Well, let me go back, the Merit Selection Panel had a question where you circled the thing where it had "good" or "excellent". I wrestled with that question and I finally said, I'm going to circle "good" because at that time, which goes back into December, I had a couple of appointments with doctors, one to examine my eyes and one to have a small cancer removed on the bridge of my nose. This is routine, you know, but it's not excellent. I would have marked very good at that time. There some questions asked in the Merit Selection Panel regarding health and I think that may be prompting your question. But I am in excellent condition for a man of 60 years of age. I play racquetball. I play golf. I play tennis. I am not restricted in my work in any way. I do have severe nearsightedness. It's correct with contact lens. I have mild hypertension. I take 20 milligrams of Prinivil daily when I don't forget it and I did this morning. But it's precautionary medicine, not something that is at risk. I had a complete physical fairly recently. He said, other that a basal cell carcinoma on the bridge of my nose, which is not life threatening. That's been taken care of. So I'm in great shape.

Mr. Couick: Mr. Chairman, several questions that are new to the applications here dealing with the new Ethics Act of 1991. One of the questions deals with accepting things of value -- This is item #23 on your personal data questionnaire -- accepting things of value from a lobbyist or lobbyist principal. Mr. Rowell does list that he is a member of the Board of Directors of the Municipal Association and that he is a member of our Legislative Committee and that for travel time he has come to Columbia in November, and December, and January of this year and had a snack lunch with those folks. As a candidate for office, he is restricted in some ways for his relationships accepting things of value from lobbyist or lobbyist principals. He does disclose that. He also says as a Board Member of the Appalachian Council of Governments, a meal is furnished after each meeting. I'm not sure if they are a lobbyist or a lobbyist principal.

Mr. Rowell: I do believe they are because a number of legislators also served on that board and there was an ethics inquiry as to whether or not the meal that is provided after the meetings would be available to them and they ruled it was. It was available to everyone.

Mr. Couick: They are certainly not listed by the Secretary of State's office as a lobbyist or lobbyist principal.

Mr. Rowell: The meetings are generally 10:00 or 10:30 in the morning, and when you get through you have a light lunch served to the people before they return home in both instances.

Mr. Couick: Mr. Chairman, item #26, the applicant notes that he has made two or three telephone calls from City Hall on a watts line to other mayors telling them of his intention to apply for the Public Service Commission position. He indicates the mayors to which he's called. He testified earlier this morning that the value of those calls was $11.24. I believe you said that you had either reimbursed that or were in the process of that?

Mr. Rowell: No. It's been paid.

Mr. Couick: It's been paid. That is pertinent because of the statutory provision you see there about use of governmental personnel, equipment, et cetera. Mr. Chairman, item #27, is his filing of expenditures for things other than travel, room, or board. The ethics act requires you to disclose these matters if they are in excess of $100.00 His total there is $624.71. Is there anything else you need to disclose at this time other than what is listed?

Mr. Rowell: I believe that fully covers the costs to date. I put some estimates now because I have some folks who do some occasional telephone calls. Most of the costs is being in Columbia, which is simply room and board.

Mr. Couick: Mr. Rowell, you indicated that you had not requested a pledge of any member of the General Assembly, nor have you gotten assurance of any public official or public employee that they will seek pledges on your behalf. Does that continue to remain to be the case?

Mr. Rowell: It does, but let me add this caveat. I had tried to meet as many of the members as I could. I have been offered maybe one or two that I could give them a resume and information and tell them of my interest and that I was one of the nominees and that I would be meeting with them. I would tell the when the screening date was. I did have one person that said, "you can count on me." I said, "Thank you, but not yet." I mean, I have not asked for any, nor do I consider that anybody is pledged or bound to me at this time.

Mr. Couick: Under #31, it deals with contact with the Public Service Merit Panel prior to your filing of your application for nomination. You indicate that you filed it on December 14, 1992.

Mr. Rowell: Correct.

Mr. Couick: You put there that you had no contact, but some folks volunteered and you asked them not to make that contact. Are you now, since you have filed this personal data questionnaire aware of any contact made on your behalf --

Mr. Rowell: No.

Mr. Couick: -- with any member of the Merit Panel?

Mr. Rowell: I am not. As far as I know, the only people that I talked to said, who's on it? I said, "I don't know." Somebody said, well, you know, they have a legislative manual. I said, "Please don't contact them. That's a no-no." So I went out of my way to be sure that they did not. So if it was done, it was done without my knowledge or permission, or in fact, against my request, if you will.

Mr. Couick: Mr. Chairman, items #33 through 35 indicate Mr. Rowell's active involvement in various social, charitable, religious organizations. Item #36 indicates five individuals and a banker, I believe, who have forwarded letters of recommendation. The Committee has received those. They are right after the personal data questionnaire in your notebook. They are from a Mr. W.S. Jones, a Mr. Roy McBee Smith, a Mr. Wayne E. Iseman, from Mr. Edward Perrin. The banker is Mr. John Poole.

Chairman Holland: So you have received all the information for the questionnaire of Mr. Rowell?

Mr. Couick: Yes, sir. We sure have. Included under tab #4 is a copy of Mr. Rowell's statement of economic interest form, which he filed with both the House and Senate Ethics Committees --

Mr. Rowell: And the State Ethics Commission, as well.

Mr. Couick: And the State Ethics Commission, pursuant to the statute. We have discussed all the items included here in probably a little bit more depth than what they requested there.

Mr. Chairman, counsel has a number of questions that deal with qualification. Would you like to proceed with that?

Chairman Holland: He has met the residence requirement?

Mr. Couick: Yes, sir, Mr. Chairman, he is a resident of Spartanburg County.

Chairman Holland: And of the District for which he's --

Mr. Couick: Yes, sir. He's a resident of the 4th Congressional District. Mr. Rowell, what prompted your interest in serving on the Public Service Commission?

Mr. Rowell: It goes back for some time. In fact, I even considered running in 1990 when the seat was up, because at that time I had served on the Commission of Public works, both for water and sewer. I became keenly aware of the importance of utilities to our area, both from an economic development standpoint and from a quality of life standpoint. More recently as we develop with BMW, I know that an adequate, dependable and economic source of utilities is important to the growth and development of this state.

I was fortunate enough to be able to take early retirement from the bank when I was 85 years old and I expected to be active in government for some period of time. I considered whether or not I would want to pursue that on a state or national level or whatever. So I was sort of looking at an area of the state that I might serve for some period of time. Toward the end of my career, I had been in local government for 17 years, I have at this point. In looking at the different boards and agencies, I felt that the Public Service Commission was probably the one that both utilized my experience and background in finance and financial matters, among them balance sheets and return on equity and things of this nature. Part of me questioned the ABC Commission, for example, or some of the organizations that might have been available. So I looked at this in '90 and probably would have filed then, except the Mayor seat came open and I decided instead to run for that. When I was elected, of course, I dismissed the possibility. So I have sort of been looking at the possibility for some time. Then when the vacancy occurred, I decided it was either providential or either a curse, depending on how this thing comes about.

It is simply an area that I would feel comfortable, I think, in trying to deal with the questions. Now, if it's appropriate, let me give you a background or reason why I think my background is particularly critical -- Well, not critical, but suitable to this. In trust work, those of you who have dealt in law and trust work understand, as I understand very well from my training, that a fiduciary's total responsibility is to the people you serve, the beneficiaries you serve. That's the training and the mind set I have brought to all my public service. But more important there is an analogy, I think, between a complex trust where you have a current group remaining and that is the incumbent beneficiaries, and the future beneficiaries, excuse me, the future beneficiaries or the current or incumbent beneficiaries. And while we have a duty to the beneficiaries, we have to balance between the two classes of beneficiaries. In a sense I see the public service work being that balance between being fair to the utilities with a reasonable return and being fair to the consumer. So I think being able to objectively serve, if you would, two classes of beneficiaries and serve only those classes of beneficiaries is something that through training you develop in trust work.

Mr. Couick: Let me ask you a couple of questions that may follow up on that. I may have misheard you. What age were you when you retired?

Mr. Rowell: Fifty-four.

Mr. Couick: I thought you said 85. I'm sorry. I was going to say you wear your age well.

Mr. Rowell: I think it was 1987. If I used a date it should have been '87.

Mr. Couick: What improvements would you make at the Public Service Commission, if you were elected?

Mr. Rowell: Mr. Couick, this, of course, is a question the Merit Selection Panel asked me and I think I have to be careful in answering that because I recognize I am one of seven. Changes can be made only when you win the support of others on the Commission.

Mr. Couick: Let's presume for a moment, though, that you can exert your will and you get a majority vote?

Mr. Rowell: I don't know until I get there, but there are certain areas that I would be concerned about and look at it and want to seek answers to my --

Mr. Couick: What are those areas?

Mr. Rowell: One, of course, is making sure there is a clear delineation between the role of the staff and the role of the Commissioners. You know, who runs the show, who is in charge. The other is whether or not there is some kind of long-term planning or strategic planning as we refer to it or is it just simply run by tradition. This is the way we've done it. This is how we always do it. Are there ways that it might be improved? So I would be looking at ways that you might improve the process, make it less expensive for the small filers, moving quicker. But, until you get there and see it, I really couldn't be specific.

The other area, just in visiting there on a couple of occasions, and I haven't been through the office and staff, would be to what extent have they aggressively pursued Affirmative Action. I know all government agencies have it on paper, but sometimes unless you really seek out qualified minorities when they are vacancies, you don't have the results you would like to have.

Mr. Couick: In terms of strategic planning, what specifically do you think would benefit the Public Service Commission through strategic planning?

Mr. Rowell: I would think a work session, either at the Commission face or a remote area where you begin to say what are your goals, what do you want to accomplish and how do you go about those and what specific and what objectives do you want to establish. I mean, what goals can you establish for those? How do you become more efficient? How do you deal with potential reorganization that the state is dealing with? How can you cut your costs, but try to look at complaints? How do you narrow those complaints?

Another area of concern is -- I know there is some constituent service that is required. I want to be sure there is a clear distinction between what is proper for you to do on behalf of the constituent and what is improper by the sense that I don't think you need to use your position to threaten somebody to do something that they should not otherwise do. By the same token, I think you need to make them do all that they should do in terms of service. So just like the ethics question, I want to be sure there is some clear rules to follow and I will follow the rules. Those things I think I need answered to my satisfaction before I see what changes could be made.

Mr. Couick: In the area of the environment, some folks have commented that perhaps the Public Service Commission could take a more active role in insuring that South Carolina's environment was kept cleaner and greener. How would you view this? What would the role of the Public Service Commission be? How could they effectuate that if it were to be a goal? What would you focus on and what interest would you see that would have to be balanced if you were to take that on as a goal?

Mr. Rowell: First of all, I would need more information, I think, to give you a full answer. But my initial reaction is that you look at the different fuel sources and how it might pollute the air and sometimes a cleaner source of fuel might be more expensive than a dirty source. I think that you would want to recognize that if you push for the more expensive and cleaner source of fuel that it ought to be recognized in the rate structure. But you want to have a balance there to some extent. I would go beyond that certainly in the area of waste water, making sure that the private users meet the requirements of the EPA and DHEC and the others would be appropriate. Beyond those two that come to mind, I'm not sure. I would just have to have some suggestions or at least hear what's behind the question and then look into it further.

Mr. Couick: You are familiar with the concept of "generational mix" what fuel sources are used to generate power. What kind of comment would you make on utilities in South Carolina's generational mix now?

Mr. Rowell: I guess when you ask that, you are asking primarily of the major utilities because they are the ones who provide most of the service, not the Co-Ops, I think, are there to some extent. But the generational mix has been restricted to some extent by the inability to develop and expand the use of nuclear generation. The other question, of course, is trying to get your basic load limits on your least pollutant sources and use your peaking for the ones that might be more harmful to the environment.

Mr. Couick: What's your impression of what the Public Service Commission has done to date in that area? Acceptable? Effective?

Mr. Rowell: I have no knowledge that they have done anything in that regard. I think that would probably be important at a staff level. At this point, I am not aware of anything.

Mr. Couick: There has been a lot of commentary on restructuring state government lately.

Mr. Rowell: Yes.

Mr. Couick: Where would the Public Service Commission fit in if you were be the one that was restructuring the state government? To whom would they be accountable? How would they be set up? Who would make up the Commission?

Mr. Rowell: I would leave that to the good judgment of the General Assembly. Having said that, let me add that I think there is a need to have an independent group that deals with utilities. Some states have popular elections, some states elect by legislature, as you do here. So however you establish the hearing authority which is primarily what the commissioners do, rather than be administrators within the staff. I would think there is something for an independent group. I have heard some discussion whether the administrative judges could probably handle that. Perhaps they could, but the nature of rate studies and rate hearings, I think, is a little different from other judicial matters. I would think it would be appropriate to have a separate group that dealt just with this question. The question of the law enforcement aspect of the Public Service Commission as it relates to the transportation part. I see no reason why that should be part of other law enforcement agencies. But final analysis is whatever you gentlemen and your colleagues decide is fine with me. If you don't need the Public Service Commission, I'll go back home. If you do need it, I'll do the very best I can to serve the state.

Mr. Couick: Mr. Rowell, the Public Service Commission does not regulate the rates of electric cooperatives; propane and model gas distributors; municipal gas, water and electric distributors; wholesale operations that sell electricity from utilities in this state; nor cable television. Do you agree or disagree with this level or lack of level of regulation? Why or why not? Are any of those things that you would choose to regulate?

Mr. Rowell: I think there is probably some need to have some review process for all monopolistic utilities. Cable TV, of course, is one that we get a lot of complaints on, and FCC is dealing with that. There are alternate sources of receiving cable signal. So whether or not that is appropriate or not would depend, I guess, on negotiations between the state and federal levels. But as relates to public utilities serving outside the district, I have expressed a view that while I don't think every rate should come before the Public Service Commission because of the voluminous number of hearings. I think it may be appropriate to have some method dealing with exceptions or ones that go beyond the certain predetermined parameters to determined that there is some overview as to the adequacy and reasonableness of those rate structures. So I guess what I'm saying is that I don't object to the possibility, but clearly if you do it on every routine matter, then it's going to add a great deal of cost to doing business to the people you are serving directly or indirectly.

Senator Moore: Mr. Rowell, let me follow up that question a little bit. You said under certain circumstances you see the need for some independent overview or review?

Mr. Rowell: Yes.

Senator Moore: Are you saying that the Public Service Commission in those particular instances should be the body for that review or overview?

Mr. Rowell: I would think that they are the ones that are best equipped to do that, yes.

Senator Moore: That is a public utility serving outside of its limits or boundaries. Is that what you are saying?

Mr. Rowell: Yes.

Senator Moore: In that particular instance?

Mr. Rowell: Yes. But I'm also saying it shouldn't be on every rate case, but only on an exception basis and I can elaborate on that if you would like.

Mr. Couick: Mr. Rowell, we talked a little bit earlier about what you would do if you could come in and make improvements at the Public Service Commission. What is your impression now of the two or three "hot" topics. Please just list them. There is no need to explain your position. What are the "hot" topics right now at the Public Service Commission or ought to be the "hot" topics? Two or three "hot" topics?

Mr. Rowell: There are at least two "hot" rate increases that are coming up that I am aware of. One dealing with a public water system and a body of water, and the other being a major rate setting for SCE&G. Beyond that, I haven't been made aware of any "hot" topics or particular concerns that they are not doing a reasonably adequate job over there.

Mr. Couick: What is the proper role for the consumer advocate before the Public Service Commission?

Mr. Rowell: I think he has a role to make sure that the public and their views are brought to any rate hearing. It is in that sense adversarial proceeding in that you have one side put against the others. While the Commission, I think, has the duty to ask the questions they can to make sure both sides are heard. I think having somebody to simply represent that other side only to bring out additional questions is appropriate and I think they should be there.

Mr. Couick: How does that compare to the role of the Public Service Commission staff? What is their role?

Mr. Rowell: I think their role would be to gather all the information that is appropriate, to look for errors, for misleading information or to help develop questions that ought to be asked as you have done for this hearing. More importantly to dig into the summary balance sheets and projections and make sure that they are based on valid assumptions. Then, to make the Commission asks the hard questions, not to make the decisions.

Mr. Couick: Many utility companies are diversifying their business interests now. What responsibility do you think the Public Service Commission has as to a company's efforts in this area?

Mr. Rowell: I think the company's efforts to diversify is good business, but I think you need to be sure that the rates are based on the costs of utilities and is not a using of excessive utility profits for the capital investing in things that aren't utility related. Going to go out of other services. For example, many of the utilities have some type of recreational programs. I think the rate questions ought to be based on utility efforts only, not on what it costs or run transportation, or other recreational functions that the company might be involved in.

Mr. Couick: What kind of information would be necessary to make sure there wasn't a cross-subsidization? What would you have to look at?

Mr. Rowell: I think you've got to look at not the actual report, I mean, you was a pro forma of what you need to do, what the rates come from and how it is to be expended. Instead it may be integrated in the company books, but in terms of what you are looking at, you want to be sure that that is separate and valid from all the expenses associated with non-utility functions and are not part of the rate-study question.

Mr. Couick: Do you think it would be appropriate to look at the books of the holding company?

Mr. Rowell: I think it would be appropriate if there was some reason to think that you weren't given good information. I think in every instance it would be an excessive work load and perhaps an invasion of areas that you don't need to get into. But if there is any question that any of the information was vague or not adequately answered, then I think you should have the authority to go beyond the information to the full holding company's records, yes.

Mr. Couick: What your understanding of the PSC's regulation of motor carriers? Basically, what types of motor carriers do they regulate?

Mr. Rowell: This is probably the area that I am least familiar with. I know that they regulate the intra-state transportation, which would be primarily haulers of cargo. But I guess to some extent haulers of passengers within the state and what those rates are. There is some reference in the statute, I believe, dealing with railroad information, but that seems to me removed from it in the most part. The transportation aspect is one that I probably am the least familiar with.

Mr. Couick: You mentioned in your presentation that you felt prepared to rule on matters of return on investment. What legal standards are you aware of that govern the Public Service Commission's determination of fair return on investment? Historically, what type of levels of return have been accorded in South Carolina?

Mr. Rowell: Well, the statute, I believe, simply says a reasonable rate of return. I think there may be some court cases that I happened to look into that helped to identify some parameters. To deal different cases, I think you've got to look at what would other businesses be willing to invest in and to what level of profit to make that is an attractive investment as against other business activities. That will change to some extent based on your interest rate factors. So I don't have a specific answer, but certainly most businesses would expect to have a return capital somewhere between 8 and 15 percent. If it's less than that they may seek other businesses that could do more.

Mr. Couick: What types of water and sewer utilities does the Commission regulate?

Mr. Rowell: What type?

Mr. Couick: What type.

Mr. Rowell: The privately owned unless the statutes have changed to include some other side of the publicly owned.

Mr. Couick: Mr. Rowell, are you familiar with what a LATA is in the telephone industry and what would be the impact if you had full intra-LATA competition?

Mr. Rowell: You got me on that one. I pass. You said LATA, not ladder?

Mr. Couick: LATA, L-A-T-A.

Mr. Rowell: That's a new term for me. If I come back before you next year, I will try to answer that question for you.

Mr. Couick: What items do you understand make up the rate base of the utility?

Mr. Rowell: What items should make up the rate base?

Mr. Couick: What would be included and what would be excluded?

Mr. Rowell: All of your direct expenses including regional management fees and there again, you are talking to a holding company. That's where you decide how much of the holding company's overhead should be allocated to utility. But certainly your direct costs of lines and generation equipment, and in the case of sewer the maintenance on the lines, the pump stations, the direct costs of maintenance and service to those areas. The interest cost factors in terms of leveraging your capital to expand systems in the future, to some extent build capacity for future, but with some limitations. I know this came about, I think, with nuclear generation and things where it took so many years to get serviced that there was a question on whether you capitalize those costs or whether you put it in your current rate structure. For the most part, the direct and indirect costs of providing service.

Mr. Couick: Are you familiar with the term "construction work in progress"?

Mr. Rowell: Yes.

Mr. Couick: What does that refer to?

Mr. Rowell: That's the construction of plant equipment or a building that has not yet been completed and put into service but where you have expended money towards the completion of that project.

Mr. Couick: What type of treatment is that generally given by a utility commission, or should be given?

Mr. Rowell: As I said earlier, if it's a long term in coming into service, then I think it ought to be capitalized with all the costs and put in the rate structure in the future. If it's a routine matter of lines that's probably within a certain limited time, say, under a year, then it ought to go ahead and be considered in and they should move forward. There is a lot of capital required, I would think, that is ongoing, that every year you've always got a certain amount. That should be part of the normal cost of doing business, as against the major projects it might take multi-millions of dollars and several years to get it in production.

Mr. Couick: Realizing that the divestiture of AT&T was really a federal matter in terms of being called. What would you do to lessen its impact on South Carolinians that mainly rely on local phone service?

Mr. Rowell: The only thing that I am aware that you could do, of course, is to watch the rate structure very carefully and try to work with the utilities and make sure that the rates are as low as they could possibly be and still give a fair return, so that you remain competitive. Clearly the larger utilities, like the telephone companies, are going to be very competitive and very aggressive. I would think you would like to have the rate structure between the user of a small system and the user of a large be fairly close to the same.

Mr. Couick: Mr. Chairman, I have one last question and that is as to the current system of screening for election to the Public Service Commission, do you have any recommendations for improvement?

Mr. Rowell: I think if there was a clearer delineation or maybe a simple written statement that could be given out to the candidates telling them that there is a dual review process, when you are eligible to contact the legislature and what can you say to them that is appropriate, when can you look for commitments. I think something that sort of puts the rules out rather than having to learn as you go through them would be helpful. The other thing is that I am used to playing by the rules and don't mind playing by the rules. But it's awkward when it appears a rule might be changing or shifting as you go into the process as we see happening now to some extent. I don't need to go into that. But tell me what the rules are and I will play by them. But it's awkward when you don't know what they and you are trying to learn as you go. For example, I think both of the candidates thought that once we were nominated by the Merit Selection Panel that we were then nominated and eligible to contact and seek votes from the legislature. It's almost making the error that you find out that no, you've got to still go through the joint committee. It was here.

So I think something in writing that says, "Here's the steps you go through. You go through Merit Selection. When that's done you go through this. Here's what you can do and here's what you can't do. Here's the process that you go through to set the election date." This would be helpful to understanding in sort of a simple time line form of what's involved. It has been a learning experience for those people who haven't been in the legislature.

Mr. Couick: Mr. Chairman, that's it.

Chairman Holland: Gentlemen of the Committee, we go in session, I believe, at 11:00 promptly this morning. I am just wondering if we might not complete any question by the members of the Committee so we can be through with Mr. Rowell.

Senator Moore: I've got a couple.

Chairman Holland: We'll adjourn at five till 11:00. If we are not completed with your questions by that time we will set a time then when to come back this afternoon. If we come back, of course, we'll go with Mr. Griffin, I believe he's next up on the tentative schedule.

Senator Moore: Excuse me, Mr. Rowell, I was reading the transcript from the Merit Selection Screening. You have been talking about your background and your service to the local level. I'll just read this. "I would like to serve on a state level. I have served local government for 17 years and I think that I would find it challenging and interesting to serve on the state level. Quite frankly, I prefer to serve the local boards where you feel that you can give coalitions and understandings and have a stronger input and you are not hampered by committees or seniority to the extent that you might be in larger bodies." Do you want to elaborate on that a little bit?

Mr. Rowell: First of all, I didn't realize you would be reading that. Clearly I have to say --

Senator Moore: Surely, you didn't think that I was going to come in here without reading it?

Mr. Rowell: I have thought in the past whether I should run for a legislative seat and I had thought about it. While I like to think I have a great deal of patience in dealing with individuals, I probably have less patience in dealing with governmental process. Even at the local level things that should take six months take six years. I suppose what I am really trying to say is that in going back to Mr. Couick's question, what changes would you make? If you see some changes you would like to make and once you could win the confidence of four or five other individuals, you could make those changes. I understand the legislative process which does take a long time. It has to and rightly so it has to go though committees and subcommittees and back through the system and it just takes a long time. I'm inpatient. I would like to either see my idea shot down as being invalid or put into play within a shorter time frame than you have with the legislative process. It wasn't intended as any offense to the --

Senator Moore: I don't take it as any offense to the General Assembly. Your preference is to serve on local boards and then, of course, this is a statewide agency.

Mr. Rowell: I was thinking of not local, but of a smaller board in number. I was thinking of a five to seven member board is where I have had my experience as against a body of 124 or 450 or whatever the amount happens to be.

Senator Moore: One other question, Mr. Chairman. You have in the transcript here today mentioned Affirmative Action and that you would like to see that in the Public Service Commission. Do you have any knowledge as to the current numbers. I see where you say you are not in favor of quotas. But do you know any percentages as far as minority employment?

Mr. Rowell: Senator Moore, the preamble to that was that I didn't know the answers. Those were questions I would ask as I got over there. I've only been there on two occasions and I was only in part of the building, but I did not notice any minorities present in my brief visit. How the statute is made up or what the numbers are, I don't know. Excuse me. Except there is obviously one commissioner that is a minority.

Chairman Holland: Senator from Spartanburg.

Senator Courtney: Mayor Rowell, I noted also in reading the transcript from the Merit Selection Screening that you show that you are, and in your economic interest statements also, that you are part owner, I believe, of a mortgage investment company?

Mr. Rowell: The title is mortgage investment. It is really a private investment company. We buy mortgages from individuals. I am really fading out. It is fairly inactive at this point. I probably spend less than five or six hours a week on it at this time. We have a little bit of real estate that is a small partnership interest in real estate. We have a couple quit leases, but it is primarily a private investment company with two of us involved and I run it. As against, we don't originate mortgages outside to other people.

Senator Courtney: Does it develop properties?

Mr. Rowell: No. I've got one piece I've tried to develop, that I would love to let you have if you would like it. No. We are not in real estate development.

Senator Courtney: You've stated also in your documents and you just said that you receive income from mortgages that you invest in. I believe the part of your current income besides being Mayor of the city of Spartanburg is derived from mortgage investments that you have made personal with the retirement fund that you are receiving --

Mr. Rowell: My --

Senator Courtney: Let me go ahead because I am not asking about your income and so forth. What I want to ask is those mortgages that you own and so forth, are they properties that are regulated or served by public utilities?

Mr. Rowell: No, absolutely not. If I've got a minute I'll elaborate. Our company buys primarily small second mortgages that have a fairly short term to run. Occasionally we have people that have a first mortgage. This is on a financed property that would like to sell the first mortgage. Fortunately by being in the business and taking it in, when I found a first mortgage of good quality and lesser yield, sometimes I can place it in my IRA, a self-directed IRA account as against with the company itself, with the full knowledge of my partner. So most of my individual retirement account which was the proceeds from my retirement from the bank is a self-directed IRA and 90 percent of that is individually owned mortgage or bought from individuals. There is no utilities anywhere close to it in any particular form.

Senator Courtney: Any of the mortgages given by industries or commercial business or anything like that?

Mr. Rowell: No. There are all from individuals and were bought from individuals.

Senator Courtney: That's it.

Representative Kennedy: Mr. Chairman.

Chairman Holland: Representative Kennedy.

Representative Kennedy: Maybe I have three questions. I would like to piggyback on Senator Moore's questions about Affirmative Action. If you were elected to this Public Service Commission position, would you work aggressively to help establish some type of Affirmative Action program?

Mr. Rowell: Yes, I would. If I could elaborate, Mr. Kennedy, this is where we're talking about planning and setting goals. If your goal is to do certain things, then you try to make that a priority to do it. That's what I was really trying to say, that all government agencies have it on paper, but unless you actively seek to do it, it doesn't get done. We did this in our police department. We really had to work hard to get more minority males in the police department because it's not an area they come to voluntarily. So we took action and really went out and recruited and made a special effort to do that. I think you've got to work at it to make it work and that's what I'm saying. I think you've got to do that. Maybe they've done it, but if they haven't then you've got to work at it.

Representative Kennedy: Question #2, I would like to ask you, what is your salary as Mayor of Spartanburg?

Mr. Rowell: $12,000.00 is the Mayor's salary and $4,000.00 on the sewer district. So $16,000 salary, there is some secretary allowance and car allowance in addition to that.

Representative Kennedy: Do you know what the Public Service Commissioner's salary is?

Mr. Rowell: Yes. I believe it's $62,380.00 or something of that nature.

Representative Kennedy: My third question and last, How do you feel about the privatization of Santee Cooper?

Mr. Rowell: What part of the state are you from? I sat on part of the hearing the other day. My answer to that is that I think any new idea needs to be explored fully and objectively either before it's either accepted or rejected. It may be a bad idea when all the facts are out. It may be a good idea if all the facts are out. So I would say you ought to look at it before you make a decision. Secondly, if, in fact, it is privatized, then as a member of the Public Service Commission I would be pleased to regulate it.

Representative Kennedy: Thank you.

Representative Wilkes: Mr. Chairman.

Chairman Holland: Representative Wilkes.

Representative Wilkes: Mr. Mayor, as Mayor of Spartanburg, what utilities does your city operate now?

Mr. Rowell: We operate the sewer collection system only. The water system is operated by an independent group of elected commissioners. This sewer treatment and transportation is operated by the Sewer District. Electricity is provided by Duke Power. Piedmont Natural gas and the like. So we have no utility except for the collection system lines within the city. My rating experience and my budget experience on utilities was when I was on the commission of Public Works where we did both water and sewer. The sewer collection line system is set, piggy-backing, if you would, the collection lines, the rates for the sewer district itself.

Representative Wilkes: Is that set up as an enterprise fund?

Mr. Rowell: Yes, it is.

Representative Wilkes: Does it make a profit?

Mr. Rowell: No. It's all plowed back into expansion. it's an enterprise fund. It does allow us sometimes some revenue that can move some lines into areas for future growth, but it is not part of the general fund.

Representative Wilkes: As a general rule, do you take any capital expenditure excesses that you had and strategically use them to put into your sewer lines?

Mr. Rowell: Yes, we do.

Representative Wilkes: Or are you depending on other sources like rent money or --

Mr. Rowell: No. One, we are not able to expand aggressively our sewer system because we are part of a sewer district, so to speak, a special purpose district because we can only go outside the city under contract. We do that where we can serve it cheaper than the sewer district can serve it and with their prior approval. We haven't been able to do much in that area except maybe where there is an airport, industrial park, or something within the city. But we do seek to go outside where we can serve cheaper than the sewer district can serve the collection line system.

Representative Wilkes: As Mayor and as a commissioner, what has been your interaction politically, personally, or in business with the major utility companies?

Mr. Rowell: Politically, none. Personally, I am rotarian with Southern Bell, with Duke Power and other executives. Professionally, as the city of Spartanburg, we negotiated with Duke Power to have them pay us to take over their bus line systems. So I have had some negotiations in terms of the city being the provider of mass transit system in Spartanburg, where we basically had them buy, well, they paid us to get out of the business. Nothing beyond that. I know them. I know people that do business. I know a good many people that work for those companies and I have respect for their abilities, but nothing beyond the personal relationships with others.

Chairman Holland: Senator Jackson.

Senator Jackson: Thank you. Mayor, let me ask two questions first. What is your opinion of the possibility of the Public Service Commission regulating municipalities as it relates to utilities?

Mr. Rowell: Well, I believe I said earlier and I said I think if it's done across the board it's going to create a great deal of added work and added costs to the user. But to tell you how I think it could be done, the utilities -- well, the Commission of Public Works that we had in Spartanburg was a city-owned utility. There is a rate differential that is neither by contract or by tradition between inside and outside the city user rates, if those differentials remain fixed and you only came to the Public Service Commission to justify a change in that differential. Then I think you could say, "Okay, why would you charge more than you do now, because of the cost of service or for some other reason?" But as long as the rates are fixed and they go up and down together, then I see no reason for the Public Service Commission to deal with it. if you start keeping the inside rates down at the expense of raising the outside rates, then there should be some overview authority that deals with that. So I think you can deal with it by exception, rather than by dealing with every case. But if you decide to do it, and I'm there, we'll do the very best we can to get it done promptly and at the least possible cost.

Senator Jackson: Finally, you mentioned that you in favor of Affirmative Action, but you are opposed to quotas?

Mr. Rowell: Yes.

Senator Jackson: In your opinion, what is the major difference between Affirmative Action and quotas?

Mr. Rowell: The difference is that you have an opening and under a goal you say that can only be filled by a female or black or whatever. That seat stays open until you find somebody to fill it or you decide that this makeup for whatever reason, that this is the makeup that you have to have.

Under Affirmative Action you have an opening, you see we are clearly under-represented by females or minorities or whatever and we are going to aggressively seek someone who can fill the job and do the job. That doesn't mean that you just go out and get somebody that is going to take the job and can sit there and not perform it because I think that is a disservice to the minorities to get them a job that they can't pull their weight or be a responsible citizen.

So I think you need to aggressively recognize that there is a need to have more minorities when there is openings and even before there is openings. You seek to find those candidates and bring them in as qualified candidates, even to the point of some remedial work. We did this with the civil service exam. We set up some courses to help them take a pre-course to help them pass the civil service exam. But if they can't pass the exam and they can't pass the physical exams in public safety, I don't want to lower the quality of the services just at the expense of having minorities. This could work both ways. You could get to the point where you have too many and you may want more whites. I think you have got to aggressively seek to have a balance in the work force, but based on qualifications.

Chairman Holland: Senator from Spartanburg.

Senator Courtney: Let me just ask one kind of philosophical question, I guess, about the role of the Public Service Commissioner. In the court system, of course, the judge or jury are supposed to be neutral when you have two parties on either side, they present their facts and the judge makes a decision. The Public Service Commission on one hand has a private utility who is there asking for more money. On the other side you have consumers or the public that want to save, that won't have to pay that additional money if it's approved and you have some advocate who is there to try to represent the public but I doubt if he has the staff and resources to prepare to staff an attorney and so forth as with the utility staff. Where do you see the role of the Public Service Commission to be? Is it a neutral body, or is it there to protect the public, or how do you see that?

Mr. Rowell: I see the role as making sure that the utilities get a fair return on investment, but not a penny more. For that I think you would have to watch very carefully to make sure that there aren't some funny figures that got worked in, that they are trying to capitalize things that shouldn't be capitalized, that they have genuinely worked to keep their costs down, that they have in a sense been rewarded for their efficiencies, keeping in mind that the consumer is not presently represented, but it is not to arbitrarily say, "Well, if we do this, are people going to be upset with us?" So you aren't arbitrarily are going to say you don't get this, or you going to cut it in half or whatever. I think it's a balance and I think that the job is more to probe in behalf of the consumer to make sure that what is being asked is reasonable and if it is reasonable, use it to the point that it is reasonable.

Chairman Holland: Any further questions by any members of the Committee? (No response) You are excused.

Mr. Rowell: Thank you very much.

Chairman Holland: Thank you so much. I have decided, subject to the veto of the majority of the Committee, to ask Mr. Griffin if we can hear him now and try to conclude this part of Mr. Rowell.

Examination of Mr. Griffin:

Mr. Couick: Mr. Griffin, if you would come forward to the microphone and raise your right hand. Do you swear to tell the truth, the whole truth, and nothing but the truth so help you God?

Mr. Griffin: Yes, I do.

Mr. Couick: Mr. Griffin, as I had mentioned to you this morning, you had prepared an affidavit. If you would keep your remarks within the scope of the affidavit offered and not go behind the affidavit.

Mr. Griffin: Right. Well, I am here today, of course, to report on the credibility and ethical conduct of Mr. Rowell in regards to his application for a position with the Public Service Commission. Some of the comments which, of course, were made -- Mr. Rowell testified his actions alone to the gentleman in Spartanburg. However, I'm sure he must have known that the Spartanburg code under utilities under disposition of revenues, states clearly, "That revenues derived from the sewer service user charge shall be used exclusively" -- That's the key word, exclusively -- "to pay the costs of operating, maintaining, improving an adequate water collection system, including a provision of sufficient funds or reoccurring capital expenditures, bonds services, sewer replacement and reconstruction of sewer extensions." It says nothing about loaning money for personal use. Terribly, what has happened is that Mr. Rowell believes by simply holding a meeting that these codes can be changed to his benefit or the benefit of others. By ignoring these rules it put heavy burden on the public. Although he has qualifications, qualifications mean little if you cannot follow the rules of the state. That is certainly violated. According to the legislative manual. You probably are familiar with the rules there and according to the legislative manual, it states, if I may read this, "Suspension and prosecution of officers accused of a crime whenever it appears to the satisfaction of the Governor that probable cause exists to charge any officer of the state or its political subdivisions, who has the custody of public trust funds with embezzlement, or the appropriation of public trust funds for private use." Clearly stating it --

Mr. Couick: Mr. Griffin, you have made no allegation that Mr. Rowell has taken money for his private use within your affidavit.

Mr. Griffin: It wasn't his private use. It was for the private use, but he loaned the money for private use. That's what I'm talking about. It was loaned for a private use by him. That's what I'm stating and I think that should be very clear. I believe, too, what concerns us quite a bit is the fact that Mr. Rowell apparently believes that he is still on right to loan these funds, the public funds, for private use. I have a clipping here of a statement he made the first of the month to the press that he feels that the loan was an operational expense. So he could continue feeling that any loan, private loan, should be an operational expense, and that bothers us quite a bit.

Mr. Couick: Mr. Griffin, if you would supply that to the court reporter. Since you have referred to your article, if you would supply it to her now so that she can enter it into the record.

Exhibit #8, marked for identification and made a part of this transcript, one page, copy of newspaper article dated 2/4/93.

Mr. Griffin: So it is a concern of us that first of all he doesn't choose to follow the rules set by the city or the state and we wonder if that would continue. It bothers us quite a bit. The job of this immensity, we feel that it is a very big concern. So I believe all of you have the letter, or shall I read the letter that I had sent you?

Mr. Couick: Mr. Chairman, they have both the letter and the affidavit.

Mr. Griffin: All right. Then I will forego that. I do question -- I realize that the Sewer and Water Commission has their meeting but very few times the public actually attends and I wonder if any of the public did attend this meeting where this loan was approved. I don't know whether I should ask that as a question or whether someone else should.

Mr. Couick: I'm sorry. I didn't hear you, Mr. Griffin.

Mr. Griffin: I question whether or not any public was at the meeting, although it was a supposedly public meeting for the Sewer and Water Commission. I question whether any public was there at the time the decision was made to make the loan. I would like to know that. You may have to ask that question. So often the public does not attend those meetings and so they are free to make their decisions as they please.

Chairman Holland: Mr. Griffin, we want to thank you for coming here this morning and especially coming from Florida or wherever you were.

Mr. Griffin: Yeah, it was a quick trip.

Chairman Holland: Do we have any questions of Mr. Griffin?

Mr. Couick: Mr. Chairman, the staff of this committee has made an investigation of the complaint you filed with the Ethics Commission, I believe, in 1988.

Mr. Griffin: Yes.

Mr. Couick: We reviewed your allegations. We reviewed the investigation made by the Ethics Commission.

Mr. Griffin: Yes.

Mr. Couick: I take it that you gave them your full cooperation at that time in preparation of that investigation.

Mr. Griffin: I did and they gave me their full cooperation.

Mr. Couick: Is there anything else as it relates directly to this matter of the loan that you have come into knowledge of since the time of the investigation and the conclusion of that investigation by the Ethics Commission?

Mr. Griffin: No. Except there seems to be a question as to when it was discovered about the loan. Apparently no one I ever talked to knew about the loan except until I got the minutes for a whole year. Going through them I saw where at one point they had loaned $60,000.00 to Mr. Turner. Later on I see where they loaned another $60,000.00 to Mr. Turner. Immediately that ran up a red flag that this was illegal, that you cannot do this. So that's when I brought the charges and brought it to the attention of the Ethics Commission.

Mr. Couick: So the only additional information that may have come to your attention since the conclusion of the investigation is you are not sure as to when any member of the public reviewed the copies of the minutes to find out when the loans were made?

Mr. Griffin: Yes, my question -- I doubt if anybody knew it, except for the Sewer and Water Commission members.

Mr. Couick: Is there any other information relating to the impropriety of the loan that you are aware of since the investigation was concluded?

Mr. Griffin: The only impropriety would be that he made it.

Mr. Couick: Any other information, other than what you shared with the Ethics Commission?

Mr. Griffin: No. I believe not. The big question is, and Mr. Rowell being in the banking business certainly should have done like the rest of us. We all have problems with real estate. We go to the bank for the loans. We don't go --

Mr. Couick: Mr. Griffin, you had mentioned that thought to the Ethics Commission, giving them the benefit of your advice?

Mr. Griffin: Yes.

Mr. Couick: No other questions, Mr. Chairman.

Chairman Holland: Mr. Griffin, I'm going to open any questions to the Committee to ask you. We are going to try to conclude with you. I wanted to let you know that you might be called back. I can't tell you that. Would you be willing to come back if the Committee wants to hear from you further, maybe we can return later?

Mr. Griffin: Anytime. Are we talking about today as later?

Chairman Holland: We don't really know, but we think we can conclude it today. We hope so. Are you speaking today individually, or are you speaking for some group or some association?

Mr. Griffin: Not an organized group, no. But I have a lot of people encouraged me to bring these topics up, a lot of interesting people in Spartanburg and even Greenville called me and I have lots of calls, even they called me in Florida. I have a lot of people interested in what I am doing because somebody must represent the public and they encouraged me to do this. But there are a lot of people that I am working along with.

Chairman Holland: Representative Wilkes.

Representative Wilkes: Mr. Griffin, thank you again for coming and taking your time to spend with us. May I ask you what prompted you to investigate this matter and have you investigated other similar matters on behalf of the taxpayers in your county?

Mr. Griffin: Definitely. I do it all the time. I am unfortunately in town about half the time. I am out of the country quite a bit, but I am interested in user fees, taxes and this sort of thing. I have felt by reviewing the minutes of the City Council, County Council, which I do all the time. Although I'm not there all the time, I get the minutes and study them. I guess I do that continually. I am very interested in this area.

Representative Wilkes: You do this without compensation?

Mr. Griffin: Absolutely. I travel. I came up from Florida today or last night, no compensation. All my mailings I have done in regards to all this matter I foot the bill on them. All the telephone calls I've made to the various Representatives and all, I have a heavy phone bill, but I handle that. No compensation of any kind.

Representative Wilkes: In reading the Spartanburg city code and Section 22-73 which you have referenced where you have said the revenues derived from the Sewer Service user charge shall be used exclusively to pay the cost of operating, maintaining, et cetera. When Mr. Rowell was talking earlier and looking at the accountant's treatment of the imputed interest on this loan, it was treated as additional salary and compensation to his and reported properly on the W-2 form. Would you not say that the salary of the person in charge of running this system would not be a proper operating cost?

Mr. Griffin: I would certainly say it was not because you follow the rules. You don't make up the rules as you go along. There are other methods to handle that, yes.

Representative Wilkes: Sometimes we look at the spirit of the law and sometimes we look at the letter of the law.

Mr. Griffin: Yes.

Representative Wilkes: In looking at the Attorney General's opinions, it does say that those funds should not be loaned. So there seems to be some graying of the area. I am sure that you in your judgment can see that as well.

Mr. Griffin: I can, but it can be a dangerous precedent to be able to waive the rules or adjust them because the rules were set by people with the knowledge of knowing why they are doing it, doing it for the general public. To alter the rules or eliminate the rules is certainly a dangerous precedent.

Representative Wilkes: Thank you.

Chairman Holland: Any other questions?

Representative Kennedy: Yes.

Chairman Holland: Representative Kennedy.

Representative Kennedy: Mr. Griffin, other than this affidavit that you have issued, would you say that Mr. Rowell is a good man?

Mr. Griffin: I don't know Mr. Rowell personally. I would not question that at all. I assume that he probably is. I do and since it's also in the affidavit here I would like to comment again in regards to the city, now that he's been Mayor, if I may.

Representative Kennedy: It would be better to just answer the question, "yes" or "no"?

Mr. Griffin: What was the question?

Representative Kennedy: Do you consider him as being a good Mayor of Spartanburg?

Mr. Griffin: I would say that the City Council seems to be doing the work. I can't comment on that. As I say, I am out of the city about half the time.

Representative Kennedy: I take it that you don't spend a lot of time in Spartanburg?

Mr. Griffin: That's true. But I want it to be quality time while I'm there.

Representative Kennedy: You mentioned in the first part of your statement that there was two loans made. In the papers that I have here I just see a total of $120,000.00. How much more information can you give me on the loans? You said one was $60,000.00 and then later -- Can you be a little bit more specific with that? Was it a day later or a month later?

Mr. Griffin: I believe it wasn't a month later. Mr. Rowell I know could handle that, but it's in the minutes.

Representative Kennedy: Do we have those minutes?

Mr. Couick: Yes, we have all the information and we will be glad to make it available to you.

Representative Kennedy: Thank you, sir.

Senator Moore: Mr. Chairman.

Chairman Holland: Senator Moore.

Senator Moore: Mr. Griffin, are you a resident of Spartanburg during this time that the --

Mr. Griffin: Oh, yes. I've been a resident of Spartanburg for more than 20 years. I have property there. But I will tell you that I want to see that it's in good shape and good --

Senator Moore: Have you ever attended the City Council Meetings?

Mr. Griffin: The City Council and the County Council very often. However, very few people including me do not attend the Sewer and Water Commission. Maybe Mr. Rowell can be clear on that.

Senator Moore: Does the local media publish the meeting times and places for these meetings?

Mr. Griffin: Yes. Yes.

Senator Moore: So isn't it up to the individual, be it a group or single person in the public, isn't it their responsibility to attend?

Mr. Griffin: Absolutely it is. Absolutely it is.

Senator Moore: Whether anyone attended a meeting or not, it is still up to the individual, isn't it?

Mr. Griffin: Absolutely, and I hold no fault on the Sewer and Water Commission for the public not attending. I do not do that. However, simply because the public is not there it gives them a little more freedom if the public is not there. But I do fault the public for that. I don't fault the Commission at all.

Senator Moore: Thank you very much.

Chairman Holland: Any other questions?

Senator Jackson: One question.

Chairman Holland: Senator Jackson.

Senator Jackson: You mentioned that you did not represent a particular group, but you kept speaking the plural and saying we wanted to do this or that.

Mr. Griffin: We, the people who come to me and I talk to mostly while I am in town know that I am vitally interested in the welfare of the state and the city. They are the people I am talking about when I refer to we. They are the ones I am referring to.

Senator Jackson: Have you received any written correspondence from the people saying that they back you on this?

Mr. Griffin: Mostly telephone calls because they don't sit down and write letters. They call me and they call and say let's have a meeting. They want to sit down and talk. They just want to sit down and talk, have dinner or breakfast. No there is no formal meeting at all.

Senator Jackson: Thank you.

Senator Moore: Mr. Griffin, you said you had some contact from some folks in Greenville. You are aware that this is a competitive process. The other candidate is from Greenville. You don't reckon someone has called you on behalf of the other candidate, do you?

Mr. Griffin: No. They have never mentioned the other candidate. But they read in the paper what I'm doing and they call me and they congratulate me and a lot of people have that feeling that there is somebody interested in other words.

Senator Moore: Thank you, sir.

Senator Jackson: One other question as it relates to Senator Moore's question. Did you receive any calls in Florida from the folks in Greenville urging you to come back up to testify?

Mr. Griffin: I got in late last night about 10:00, so I talked to no one since I arrived.

Senator Jackson: But while you were in Florida --

Mr. Griffin: Yes, I have had people call me in Florida.

Senator Jackson: From Greenville?

Mr. Griffin: No. From Spartanburg and they are very anxious about this situation.

Chairman Holland: Any further questions, gentlemen? I intend, unless otherwise overridden by the Committee, to call this Committee back at 2:30. Any objections? I want to work around everybody's schedules the best I can, but we want to conclude this today.

Mr. Rowell: Mr. Chairman, would you like me to clarify the two loans? I can do that in just a minute.

Chairman Holland: Mr. Griffin, we are finished with you. Would the Committee like to hear Mr. Rowell's response to that before we adjourn? I prefer that. Come forward.

Mr. Rowell: Let me just clarify, the reason there were two $60,000.00 loans was because there is two different governmental entities. There is a Spartanburg Water System and there is a Spartanburg Sanitary Sewer District. The general manager serves both of them. His salary is paid from each of them and it was a decision by both groups that the costs of the loan would be shared between the two. So the minutes reflect a $60,000.00 loan here and a $60,000.00 loan here, but it was one lump of $120,000.00 on the same terms, the same mortgage, with both entities being shown on the mortgage loan.

The only comment I would make is that clearly I believe that it's an operational cost to provide for employee benefits. Cars are benefits. Salary is a benefit. I think in this case the interest-free loan. So I recognize a difference in opinion as to judgment. I respect a person whose judgment is different. I tend to take exception when they question ethics or legality because there was no personal benefit and certainly as I explained earlier I think the effort was to try to do what was best for the community, not personal gain. It involves a personal loan. It was a personal loan to an employee, the Chief Executive Officer, not to his wife, not to his son, not to a minister of the church. It was in connection with his employment at the Association and I would argue that it is a cost of doing business and providing water and sewer system to the area. Unless you have questions, that's all I have.

Representative Wilkes: Just to go back and clarify the loan. There is only one note signed for $120,000.00. I've looked in here and that's all there is.

Mr. Rowell: The note, I think, was the note to both the water system and the sewer system, each sharing an interest in it together, but the minutes had to reflect two different actions because each organization contributed $60,000.00 of the loan toward it.

Mr. Couick: I believe Mr. Kennedy has a copy of those minutes, Mr. Chairman, where it references that.

Chairman Holland: Let me ask you this. You have two different boards for the water system?

Mr. Rowell: Yes, sir. The Commissioner of Public Works is a three member board elected from within the city of Spartanburg that runs a water system. The Sewer District or the Special Purpose District was made up by a special act of legislature of the three Commissioners of public works from within the city, the three Sewer Commissioners who are elected from the Sewer District but outside the city and the Mayor of the city of Spartanburg. So it's a seven member Special Purpose District for the Sewer, a three member board for the water. But we have to keep our accounting separately and we have keep our revenues separate, the whole thing.

Chairman Holland: Representative Wilkes.

Representative Wilkes: Thank you, Mr. Chairman. I think probably to maybe let's summarize and complete this discussion of the loan. Looking at the Spartanburg City code and as I determine it, it does say that the revenues could be used for operating expenses given the fact that the imputed interest was included as part of Mr. Turner's salary. I don't really have a problem with that. But then looking at these Attorney General's opinions that say unless a valid statute authorizes it, no public agent has a right to loan the public funds. I would only ask you to reconcile that for us as best you can and not being adversarial but just give you an opportunity to express from a judgmental point of view.

Mr. Rowell: Mr. Wilkes, all I can do is blame it on the lawyers, if you pardon the reference to the lawyer. But clearly we have competent legal advice, legal opinions on both the Water and Sewer District and we did seek their advice and they said it was appropriate under the circumstances and they are the ones that drew the notes and made the loan. We only authorized it. So while you folks get blamed for a lot of good things, here's one I've got to hide behind. The lawyer did it. Clearly as a full-time employee at the bank at the time or associated, we depend heavily on our counsel, both the accountants and attorneys and we were very careful to seek their advice before we did this. This wasn't just something where we said, "Let's do it," in a meeting. It was thought through and reviewed and they missed the boat. I'm sure.

Representative Wilkes: So, in other words it did occur to you that there could be a problem and you did your best to get an opinion that you could stand on?

Mr. Rowell: It occurred to me that this was an exceptional type transaction. Before we did it, we just wanted to be sure the attorneys and the accountants refuted with us and gave us their best advice.

Representative Wilkes: Did they give you a written opinion? Do you remember, or would it be in the minutes?

Mr. Rowell: I don't remember, but it may well be, and we can seek to find that out if it's appropriate to.

Chairman Holland: Any further questions of the Committee of Mr. Rowell? We recess until 2:30.

Exhibit #1, marked for identification and made a part of this transcript, four pages, Personal Data Questionnaire Summary.

Exhibit #2, marked for identification and made a part of this transcript, four pages, Affidavit of Mr. Edward P. Perrin with attachments.

Exhibit #3, marked for identification and made a part of this transcript, sixteen pages, Personal Data Questionnaire.

Exhibit #4, marked for identification and made a part of this transcript, two pages, Correspondence between Mr. Edward P. Perrin and Mr. Gary B. Baker, in re: waiver of confidentiality.

Exhibit #5, marked for identification and made a part of this transcript, five pages, Decision and Order before the State Ethics Commission with attachment, in re: Marlin T. Griffin vs. Billy G. Turner.

Exhibit #6, marked for identification and made a part of this transcript, three pages, Photocopies of Sections 6-5-10, 20, 30 and 40 of the Investment of Funds by Political Subdivisions.

Exhibit #7, marked for identification and made a part of this transcript, eight pages, Statement of Economic Interests Form.

Exhibit #8, marked for identification and made a part of this transcript, one page, Photocopy of newspaper article in the Spartanburg Herald/Journal dated 2/4/93.

(Recess from 11:25 a.m. until 3:00 p.m. The Joint Legislative Screening Committee for Candidates for the Public Service Commission, Public Hearing, reconvenes in the 3rd Floor conference room of the State House, Representative Quinn in attendance)

Chairman Holland: I think we have two of the house members on their way. I do want to finish the examination or whatever you call it of Mr. Rowell as soon as we can. So I will go ahead and ask if there is any further questions from any members on the Committee of Mr. Rowell. If there is none I am going to accept it by order as Chairman unopposed to excuse Mr. Rowell. Let's do it by majority vote of this Committee. Any other questions of Mr. Rowell by any member of the Committee? Call your first witness.

Mr. Couick: Mr. Chairman, we would like to call the second candidate for the Public Service Commission, Mr. James W. Schempp of Greenville, South Carolina. Mr. Schempp, if you would take a seat.

Representative Kennedy: May I ask a question?

Chairman Holland: Yes, sir. Representative Kennedy.

Representative Kennedy: After this gentleman was asked to leave the room while you were interviewing him, would it be proper to ask this gentlemen to leave while --

Chairman Holland: Well, the question was of one hearing the other's questions answered. He's not going to be called back. But fearing you might be called back, we are going to ask you to leave.

Mr. Rowell: I would do that. The only question I might ask is when might a vote take place so I can come back for that.

Chairman Holland: That depends upon the conduction of the business this afternoon. We can call you.

Mr. Rowell: Well, he waited two hours for me. I can wait for him.

Mr. Couick: If you want to go somewhere, you leave a number and we will call you.

Mr. Rowell: No. I have a place to go, but I'll check back. Thank you.

Chairman Holland: Thank you so much.

Examination of Mr. Schempp:

Mr. Couick: Mr. Schempp, if you would raise your right hand, please. Do you swear to tell the truth, the whole truth, and nothing but the truth so help you God?

Mr. Schempp: I do.

Mr. Couick: Please be seated. Mr. Schempp, this morning I gave you a copy of your personal data questionnaire summary that we have prepared in the office of the Senate Judiciary. Did you have a chance to review it?

Mr. Schempp: Yes, I did.

Mr. Couick: Is there anything that needs to be corrected or clarified on that summary?

Mr. Schempp: No, there's not.

Mr. Couick: Is there any objection on your part to making the summary part of the transcript of this hearing?

Mr. Schempp: Not at all, no.

Mr. Couick: Mr. Chairman, at this point I would like to enter into record the transcript summary that is also in the member's notebooks as it was with Mr. Rowell this morning.

1. James W. Schempp

Home Address: Business Address:

216 Cape Charles Drive Greenville Technical

Greenville, SC 29615 College

P.O. Box 5616

Greenville, SC

29606-5616

2. He was born in Cleveland, Ohio on June 4, 1934.

Social Security Number: ***-**-****.

3. S.C. Driver's License Number: *********.

S.C. Voter Registration Number: 0-503-937.

4. He filed his "Application for Nomination to the Public Service Commission" with the Public Service Merit Screening Panel on January 4, 1993.

5. He married Jane Richardson Schempp in 1959.
He has two children: Kathleen Ann Graves, age 32 and David Andrew Schempp, age 26.

6. Military Service: 1957-1960--U.S. Army Europe, Rank First Lieutenant; 1961-1964--Reserves, Rank Captain; Honorable discharge on entry to F.B.I.

7. He attended Cleveland Latin High School (Cleveland, Ohio) from 1948 to 1952; John Carroll University (University Heights, Ohio) from 1952 to 1957, B.S. degree; Western Reserve University (Cleveland, Ohio) from June 1957 to August 1957; and then entered U.S. Army via the ROTC Program.

8. He has not held public office.

9. He has not been a candidate for elective, judicial, or other public office.

10. He served as a salesman and manager in a men's furnishing store from 1952 to 1957; in the U.S. Army on active duty from 1957 to 1960; in the U.S. Army Reserves from 1960 to 1964; as a Senior Sales Representative for A-M Corporation from 1961 to 1964; as an F.B.I. Agent in the Department of Justice from 1964 to 1988; as Operations Manager of American Security Corporation from March 1988 to April 1988; and in the Office of the Governor (Initiative for Work Force Excellence) from 1988 to the present.

11. He is not involved in the management of any business enterprise at the present time.

12. He has never been arrested, charged, or held by federal, state or other law enforcement authorities for any violation.

13. To his knowledge, he has never been under federal, state, or local investigation for possible violation of a criminal statute.

14. No tax lien or other procedure has ever been instituted against him by federal, state, or local authorities.

15. He has never been sued.

16. He has never been disciplined or cited for breach of ethics or unprofessional conduct. He has not been the subject of a complaint to any court, administrative agency, bar association, disciplinary committee, or other professional group.
17. Health is excellent.

18. He has not been hospitalized during the past ten years for more than ten days or incapacitated from work for more than ten days.

19. He wears corrective lenses and suffers from high frequency hearing loss due to military and Federal government service.

20. He is currently under treatment for arthritis of the knee joints with: Dr. Jeffery Lawson Piedmont Arthritis Clinic

317 St. Francis Drive

Greenville, SC 29601

21. He has never been treated for or suffered from any form of mental illness.

22. He has never been employed as a lobbyist.

23. Since the time of the filing of his "Application for Nomination to the Public Service Commission," he has not accepted lodging, transportation, entertainment, food, meals, beverages, or any other thing of value from a lobbyist or lobbyist's principal.

24. He was employed by the Federal Bureau of Investigation from 1964 to 1965 in Little Rock, Arkansas; from 1965 to 1968 in Columbia, SC; and from 1968 to 1988 in Greenville, SC. He investigated violations of over 250 federal statutes and had numerous supervisors.

25. He has no knowledge of any formal charges or informal allegations involving S.C. Code Section 8-14-700 (use of official office for personal gain).

26. He has no knowledge of any formal charges or informal allegations involving S.C. Code Section 8-13-765 (use of government personnel or facilities for campaign purposes).

27. Other than travel, room, and board, his expenditures made in seeking the office of Public Service Commissioner total $415.00.

28. He has made no contribution to any member of the General Assembly since his announcement of his intent to seek election to the Public Service Commission.

29. He has received no pledge or assurance of pledges regarding his election from any member of the General Assembly.

30. He has not solicited or collected funds to aid the promotion of his candidacy for the position of Public Service Commissioner.

31. Prior to January 27, 1993, he made two telephone calls to Cartha D. DeLoach. The first call was made to advise Mr. DeLoach of his interest in pursuing the PSC position and to indicate that an application was sent to his attention. The second call was made to inquire about the mechanics of the selection process.

32. He has not had a problem with alcoholism, any condition associated with the consumption of alcoholic beverages, or drug addiction/dependency.

33. Professional organizations: Society of Former Agents of the F.B.I., Secretary-Treasurer from 1989 to 1990; President-elect from 1990 to 1991; and President from 1991 to 1992.

34. Civic, charitable, etc. organizations:

Greenville Sertoma Club; Knights of Columbus; Department of Social Services Work Support Council; Literacy Partnership; BBB (Advertising Review Board.)

35. There is no other information which he believes should be disclosed in connection with consideration of his nomination.

36. Five letters of reference:

(a) Mr. Jack C. Ward

623 Altamount Road

Greenville, SC

(b) Mr. Patrick H. Grayson, Jr.

Bozeman, Grayson, Smith, & Price

301 College Street, Suite 800

Greenville, SC 29601

(c) Mr. Ernest Howard

Howard, Howard, Francis, & Reid

111 Pettigru Street

Greenville, SC

(d) Ms. Barbara B. League

Vice President, B.F. League Mfg. Co.

P.O. Box 3626

608 Furman Road

Greenville, SC 29608

(e) Mr. Glen Garrett

Vice President, First Savings Bank

301 College Street

Greenville, SC 29601

Mr. Couick: Mr. Chairman, we also enter into the record Mr. Schempp's personal data questionnaire, his statement of economic interest form.

Chairman Holland: If there is no objection it will be entered into the record.

Mr. Couick: All those items are in the notebooks, Mr. Chairman. If you have any difficulty in finding anything, Ms. Hammond will be glad to help you.

Mr. Couick: Mr. Schempp, we're had a chance to review your credit reports and all those reports were reported as being satisfactory. The records of all the Law enforcement agencies where you have had occasion to live were negative and there were no reports of any criminal conduct. In addition, the judgment roles of your resident county are negative, as well as judgments or suits being filed against you. Staff review of your statement of economic interests indicates that you have no conflicting ownerships, associations, or transactions. Since you have filed your personal data questionnaire approximately a week ago, is there anything else you would like to offer to the Committee that may be important in terms of considering whether you have any conflict of interests or any other violations?

Mr. Schempp: No, sir.

Mr. Couick: Mr. Chairman, now turning to your personal data questionnaire contained in the notebooks. Mr. Schempp, do you have a copy with you of the PDQ, your personal data questionnaire?

Mr. Schempp: Yes.

Mr. Couick: It may be helpful.

Mr. Schempp: Yes, I do.

Mr. Couick: I note that you are a resident of Greenville, South Carolina, which is in the 4th Congressional District, that your business is at Greenville Technical College. You were born in 1934 in Cleveland, Ohio. You are a registered voter in South Carolina and that you filed your application on January 4th, 1993. You are married, have two children. You have previous military service and your education includes graduate school at Western Reserve University in Cleveland. You have never held public office. You've never been an unsuccessful candidate for public office.

In terms of your business and profession, you have a lengthy career in law enforcement with the Federal Bureau of Investigation, and more recently and this is looking at your attachment, you have been employed with the Office of the Governor Initiative for Work Force Excellence. I believe you are located at Greenville Technical College in Greenville, South Carolina. You have had one private sector of employment experience other than this since retiring from the FBI and that was with American Security Corporation in Greenville for approximately one month back in 1988.

Mr. Chairman, his records also indicate that he is not involved in any other business enterprises at this point, has no record of criminal or traffic violations in excess of $50.00, or the fine within excess of $50.00. To his knowledge he has not been now or even under investigation by any federal, state, or local law enforcement authority. There are no tax liens or collection suits against him. He has never been sued. He states that his present state of health is excellent.

Mr. Schempp, have you had any incapacities perhaps that have not occasioned themselves within the last ten (10) years with your health that you would like to tell the Committee about. There is certainly nothing in the record, but is there anything --

Mr. Schempp: Nothing at all, sir. My health has been excellent.

Mr. Couick: You do wear corrective lenses. You have a high frequency hearing loss due to the military and federal government service. The only condition you list as being debilitative is arthritis to the knee joints. You have never had any treatment for mental illness, not have you ever served as a lobbyist or lobbyist principal, nor have you been employed by a lobbyist or lobbyist principal. Staff does have one question to this, Mr. Chairman. Your employment is a paid position with the Governor's office. Is that right?

Mr. Schempp: It's paid through a JTPA grant.

Mr. Couick: Does the paycheck come from the State Tech System or the Governor's office, or how does it come?

Mr. Schempp: The JTPA grant goes to Greenville Technical College, and the check comes from Greenville Technical College.

Mr. Couick: Who is your immediate supervisor? Who are you answerable to and who are they employed by?

Mr. Schempp: My immediate supervisor is Mrs. F.M. Rogers, and of course it goes on up from there. I do answer ultimately to Dr. Barton and then down to Columbia to people at State Tech.

Mr. Couick: The JTPA is the Jobs Training Partnership --

Mr. Schempp: Jobs Training Partnership, yes, sir.

Mr. Couick: That was federal legislation with former Vice-President Quale introducing the statute.

Mr. Schempp: That's correct.

Mr. Couick: So your employment is actually through the technical education system. You are not employed by the Governor's office. I know there is some question. The Governor is actually a lobbyist principal in South Carolina, individual technical schools are not. So there was some question about your answer. Since the time of filing your application you indicate you have not accepted anything of value from a lobbyist or a lobbyist principal. Do you have any reason to update that answer today?

Mr. Schempp: No, sir.

Mr. Couick: In listing your employment, as I have previously gone through it, you are now employed by the Initiative for Work Force Excellence. Could you please tell us a little bit about your position, what your responsibilities are, how long have you been employed with that, and once again, tell a little bit about who you are answering to in your employment.

Mr. Schempp: Sure. I would be happy to. In January of 1988, Governor Campbell in his State of the State speech formed his Initiative for Work Force Excellence. Subsequent to that, he hired 16 Work Force Specialists. the reason he hired 16 Work Force Specialists is due to the fact that there are 16 Technical Education Colleges in South Carolina. He had talked to each of the Presidents of the Technical Education Colleges for administrative support of this particular program. They all agreed that they would support the program for the Governor. Basically what we do -- the 16 of us, and we are placed in each of the colleges so that we cover the entire state -- is we market a program of basic skills building to business, industry, service organizations within the same area that the tech college covers. I've been that now for the past five years. Do you want to me expand any more on that?

Mr. Couick: Please tell a little bit about your relationship with that in terms of who your employer is, a little bit about who you work with in the community in terms of your job responsibility, do you raise funds and would you ever approach a regulated industry to attempt to raise funds for these programs, that sort of thing.

Mr. Schempp: Okay. Basically, what we do, we call on businesses and industries. I am an umbrella organization over three provider groups. The provider groups are the Literacy Association, the adult basic education in the county school district, and then Greenville Technical College. So what I do is, I market those three entities to business and industry. We place programs in the businesses, industries, and service organizations in order for the work force to build their skills so that they can stay competitive in their industry. When new technology comes on the plant floor, if the people who are in the work force don't keep up with that technology, they can put themselves at risk. So in order to prevent that, this is why we have the program. I might add that it has been extremely successful.

Mr. Couick: Mr. Schempp, do you go to the employer and look for employees he already has to come to Tech and be trained, or do you try to take Tech students who have no employment and take them to the employer for employment.

Mr. Schempp: No, sir, no at all. What we do is we go to the company and we train the employees of that company on-site. We build their skills. We have been doing this for five years. Presently, I have 66 programs that are ongoing right now in 42 different companies within Greenville County itself.

Mr. Couick: Are any of those regulated industries in terms of being public utilities?

Mr. Schempp: No, sir.

Mr. Couick: Your previous employment was with a security company there in Greenville and the name of that company was --

Mr. Schempp: -- American Security.

Mr. Couick: You were employed with them from March 1988 to April 1988, a relatively short period of time. Could you explain the circumstances of what you did there and why you were only employed for approximately one month?

Mr. Schempp: Sure. Just upon retiring from the FBI I was going to go to work for one of the large banks in the Greenville area. As secondary employment I had talked to Dr. Tom Barton, who is the President of Greenville Technical College indicating that I was also interested in working for Greenville Tech if that possibility ever came up.

During the time the particular bank decided not to hire anybody at that time and before there was an opening at Greenville Technical College, I had a friend who told me about American Security and I went there to work under Mr. Henry Harrison to help him reorganize and upgrade the organization. Then when Greenville Technical College came to me and there was an opening, then I took that job. I left American Security on very friendly terms. In fact, Mr. Harrison and I are still very good friends at this time.

Mr. Couick: Do you consider the Public Service Commissioner position to be a full-time or part-time position?

Mr. Schempp: Good question. Let me say this. Unlike my predecessor, I will be a full-time Commissioner unencumbered by any outside business interests. If I am elected by the General Assembly, this will be a full-time job. I know my predecessor had a business in Greenville and I don't. If I'm elected by the General Assembly, this will be totally full time and like I say totally unincumbered by any outside business interest.

Mr. Couick: So you would resign your position with the tech school there in Greenville?

Mr. Schempp: Yes, sir, and Dr. Barton is aware of that.

Mr. Couick: Mr. Schempp, I don't recall that you have any financial interests in any type of common stock or particularly any stock of a company regulated as a public utility. Is that right?

Mr. Schempp: That's incorrect, sir. I do have public utility stocks.

Mr. Couick: Please brief us on what stock you hold up.

Mr. Schempp: I don't have that -- I gave that information to the Merit Selection Panel. As I recall, I have approximately $51,000.00 in public utility stocks that I presently own. These will be placed in a blind trust if I am elected by the General Assembly.

Mr. Couick: When you say they will be placed in a blind trust, would you dissolve the amount of your investment and give it to a trustee to reinvest, or would you simply take the stock that you currently own in the same companies and give it to a trustee to hold?

Mr. Schempp: The latter. I would give it to a trustee to hold during the time that I'm --

Mr. Couick: So you would continue to have knowledge of what stock you have?

Mr. Schempp: If necessary I would sell it, if need be. Of course I would realize a lot of capital gains from it. I've had some of them for a long time, sir.

Mr. Couick: Mr. Schempp, item #25 on your personal data questionnaire inquires as to use of your official office, membership or employment to obtain an economic interest for yourself. The question asks you, "Do you have any knowledge of any activity on your part or any other candidate as to a violation of the section?" Your question is answered "No Knowledge". I would ask you for the record again today, starting, of course, with the other candidate first. Do have any knowledge of any violations on Mr. Rowell's part of this section of the code?

Mr. Schempp: No, I do not.

Mr. Couick: As to yourself, have you made any use of your official office, whether it be through contacts or public employees, public officials, that is largely dependent upon your position in order to influence this election?

Mr. Schempp: No, sir.

Mr. Couick: Under question #26, you say you have not made any use of a governmental personnel, equipment, materials, buildings, et cetera, in this campaign. Does that continue to be your statement?

Mr. Schempp: That's correct.

Mr. Couick: You have indicated that you have expended approximately $415.00 in costs, other than for travel, room, and board. Does that continue to be an accurate amount?

Mr. Schempp: That's correct, yes.

Mr. Couick: You have made no contributions to members of the General Assembly since your announcement of your intent to seek office?

Mr. Schempp: No, sir.

Mr. Couick: Mr. Schempp, you have also indicated that you have not asked any member of the General Assembly to pledge to you for this position. You also say that you have not sought the assistance of any public official or public employee in the seeking of pledges for this position from any member of the General Assembly. Does that continue to be the case?

Mr. Schempp: That's correct, yes.

Mr. Couick: Item #31, Mr. Chairman, the staff inquired as to whether any contacts had been made by applicants by themselves or on their behalf with any member of the Public Service Merit Panel prior to their filing of application for nomination to the Public Service Commission. That was one question. The second one was, please provide the details of any contact made by you or on your behalf with any member prior to January 27, 1993, that being the date of the screening. You indicate, Mr. Schempp, that you made two telephone calls to Mr. Cartha DeLoach who serves as the Chairman of the Merit Panel. You say one was a courtesy call to advise him of your interest in pursuing the position and to indicate that an application is being sent to his attention. The second was to inquire as to the mechanics of the selection process. Can you tell me the approximate dates that you made these calls?

Mr. Schempp: The best that I can recall, it had to be between the 5th and the 15th of January.

Mr. Couick: Did you know Mr. DeLoach before you made these calls? Had you ever spoken to him before in a private capacity to your knowledge?

Mr. Schempp: I believe I have met Mr. DeLoach on one or two occasions in the past at FBI functions or former FBI agent functions.

Mr. Couick: Are you aware of any person who made contact on your behalf, either before or after you filed your application with Mr. DeLoach indicating that you were a "good fellow", that you deserved fair consideration, any type of contact?

Mr. Schempp: I'm not aware of any.

Mr. Couick: Mr. Schempp, there seems to be a lot of interest in this election and what pressure folks have brought to bear in being nominated by the Public Service Commission Merit Panel. For fear of leaving something unquestioned and, therefore, folks thinking this body is not very deliberate, I will just kind of plow into a short series of questions. Have you had any contact with any member of the Governor's office or his staff asking for their assistance in securing the nomination by the Public Service Commission Merit Panel?

Mr. Schempp: Let me say that I have had telephonic contact with Mr. Gene Beckman, I guess, just to indicate to him that I -- as a courtesy call -- have made application. The reason being is because over a year ago I had written to the Governor indicating to him my interest in an appointment to a commission. So I thought that as a courtesy I should let Mr. Beckman know this.

Chairman Holland: We are going to recess here temporarily. We'll take role call and be right back.

Mr. Schempp: Yes, sir.

(Recess from 3:25 p.m. until 3:33 p.m.)

Chairman Holland: Call back to order.

Mr. Couick: Mr. Chairman, we were in the middle of an inquiry regarding Mr. Schempp's possible contact with the Governor's office and Governor's office staff relative to his position. Right before we broke Mr. Schempp had asked the question as I had told him he could, could he make his statement. I apologize. I missed that when we opened. He would like to make a brief statement at some point at the discretion of the Committee. Now may not be the appropriate time to do it. Maybe right after we conclude this line of questioning. I believe you said that you had made contact with Mr. Gene Beckman as a matter of courtesy because you had earlier made an application to the Governor for appointment to a position in State Government. Were you specific in the letter of inquiry to the Governor prior, I think you said a year prior to this, did you tell him what you were applying for, what you would like to be involved in?

Mr. Schempp: The letter, I believe, was written in January of 1992 to the Governor and I listed several commissions that I thought that I could serve very well on. Do you want me to see if I can -- Pardon and Parole, I think it was. Workmen's Comp.

Mr. Couick: Was the Public Service Commission one of those that you had listed?

Mr. Schempp: No, it was not. I was not aware of the fact that there would be a possible opening. It would have been, had I been aware of that.

Mr. Couick: Please tell me again your conversation with Mr. Beckman. What was the scope of it? What did you discuss?

Mr. Schempp: Basically, the same thing that I discussed with Mr. DeLoach the first time. As a courtesy, I called him up. I told him that I was going to make application to the Public Service Commission. He said that is fine. He wished me well and thanked me for calling him.

Mr. Couick: What was the date of this phone conversation? Do you recall?

Mr. Schempp: The best I can recall is between the 5th and the 15th of January of this year.

Mr. Couick: So this would have been after your application had been filed with the Merit Panel? I believe your date for filing was on the 4th of January.

Mr. Schempp: I believe so, but I am not exactly --

Mr. Couick: Right, I understand. Did you have any other conversations with any other member of the Governor's staff, whether it be here in Columbia or any other official attached to the Governor's office relative to this appointment?

Mr. Schempp: No, sir. Let me correct that and say that I know the Lieutenant Governor and of course I told him that I was running. He said the same thing. He is a personal friend.

Mr. Couick: Mr. Schempp, the reason I ask these questions is not to bring some type of partisan flavor to the questioning. In 1979 when the Merit Panel was created there was a specific effort within the statute to divorce the Merit Panel's proceedings from not only the General Assembly, but from the Governor himself. You bring up the Lieutenant Governor and that reminds me to bring this up. The Lieutenant Governor really has no impact upon that Merit Panel. He makes no appointments and really has no input. The General Assembly through the Senate and the House make three appointments each. The Governor makes some appointments. That's why this line of questioning is coming to you the way it is. It is not to say that anything is wrong with being a friend of the Governor.

Mr. Schempp: I had no contact with the Governor concerning this.

Mr. Couick: Your application indicates that you have been very active in the Society of Former Agents of the FBI and I believe during the course of your hearing before the Merit Panel, Mr. DeLoach mentioned that you were both active, but in different chapters.

Mr. Schempp: That's correct, sir.

Mr. Couick: You have been very active in numerous civil and service clubs in the Greenville area. You have forwarded or have your references for all five required letters including the one from the banker, that being the letters from Misters Ward, Grayson, Howard, League and Garrett. Is there anything else relative to your personal data questionnaire or your disclosure form that you would like to tell us at this time?

Mr. Schempp: No, sir.

Mr. Couick: I would be glad, Mr. Chairman, for Mr. Schempp to make his opening statement, prior to moving to the other line of questioning, if he would like.

Chairman Holland: Mr. Schempp, proceed.

Mr. Schempp: Chairman Holland, distinguished member of the Committee, ladies and gentlemen, I appreciate the fact that you are allowing me to appear today before you. The presentation that I'm going to make will be very brief. It will cover my personal qualifications for the position and what I hope to accomplish as a member of the Public Service Commission.

My qualifications, let me outline them for you, if I may. I have a high degree of honesty and integrity. I am extremely high in my ethical standards. I am very patient and understanding as a listener. I have a good, sound, common sense approach and I use good judgment in all of my decisions. I am sensitive to feelings and needs of the people of South Carolina. All of the above I practice daily in almost 30 years of public service to the people of South Carolina. I have had 24 years of service to the people of South Carolina in the FBI as a special agent of the FBI. I have had five years contact with the people of South Carolina with the Governor's Initiative for Work Force Excellence, as we have indicated in previous testimony.

What do I hope to accomplish as a member of the Public Service Commission. ne thing I want to do is I want to foster better public awareness of the duties and responsibilities of the Public Service Commission. There are a lot of people that don't know what the Public Service Commission does and I think they have a right to know this. I want to insure that the Public Service Commission continues to be a responsive and responsible commission to the people and to the utilities of South Carolina. I want to maximize the utilization of the Commission's safeguards to insure that the PSC acts in a totally fair and impartial matter, both towards the consumer and towards the utilities. I want to work in total harmony with others towards maximum efficiency of operation so as to continually promote the common good of the Commission.

Just to summarize this, serving, helping and caring about the people of South Carolina, the consumer and the utilities represented by promoting understanding, fairness and impartiality is paramount to my way of thinking and hopefully what the PSC epitomizes. That's my statement. Thank you for letting me put it in as a matter of record.

Mr. Couick: Thank you. Mr. Chairman, I have some other questions such as those that we discussed this morning. I would be glad to break now for any questions about the personal data questionnaire and other item there.

Chairman Holland: I going to let any member of the Committee now ask any questions it has of Mr. Schempp in regards to what has been disclosed as far as his personal data and his seeking the job. Then we will go on with other matters that we are required to ask of you. Any members of the Commission have any questions?

Senator Courtney: Mr. Chairman.

Chairman Holland: Senator from Spartanburg.

Senator Courtney: Mr. Schempp, I just wanted to ask you. You mentioned earlier that you own public utility stocks. That you at this time intend to hold onto those through some kind of blind trust or something. What companies do you own stock in?

Mr. Schempp: I own 200 shares of Duke Power. These are jointly held. I'm sorry, that's held by myself. AT&T, 100 shares, held jointly. Carolina Power and Light recently split, I have -- My wife has 1,200 shares of Carolina Power and Light. We have 200 shares of Public Service and enterprise and 100 shares of Texas Utility. The total amount would be approximately $55,000.00.

Senator Courtney: You intend to keep those stocks but let a trustee or somebody hold them for you. Is that what you plan to do?

Mr. Schempp: Yes, sir. I would prefer that for reasons that I outlined to you.

Mr. Couick: Do you own any mutual funds that specialize in utility investment, Mr. Schempp?

Mr. Schempp: No, I don't.

Senator Courtney: You also said in your capacity or your employment now that you from time to time call on industries and businesses to contribute funds to the tech system. Is that what you do?

Mr. Schempp: That contribute funds to me?

Senator Courtney: No, not to you, but to the Greenville Tech system. I misunderstood exactly what the relationship was between the industries and so forth that mentioned.

Mr. Schempp: Basically, what I do is I market a program for the Governor's office to businesses and industries and service organizations. Now this program is paid partially through a grant from State Technical College and also the companies pay a great portion of the cost of the program. We give them a very professional program and we do it at a minimum cost to them. I think it is just a wonderful program.

Senator Courtney: I think I understood you earlier, but did you say that none of those companies that you have worked with like that have been utility companies, such as Duke Power, AT&T , Southern Bell, anybody like that?

Mr. Schempp: Not that I have any knowledge of or recollection of. The majority of them, of course, are manufacturing plants. There are some service organizations, county government, this type of thing.

Senator Courtney: That's all.

Chairman Holland: Any other members of the Committee. Senator Jackson.

Senator Jackson: Two questions. One is a follow-up on Senator Courtney's question. Did I hear you say earlier that you would be willing to sell your stock in the utility companies, if necessary?

Mr. Schempp: That's correct. If necessary, I would. I would rather put it in a blind trust because there is a lot of capital appreciation in there and I would rather not pay the capital gains. I have had many of those stocks for several years. So if I could put it in a blind trust that would be much to my preference.

Senator Jackson: The second question involves the category #34, civic and charitable organizations. My question is what have you done in the past that demonstrates your understanding of the diversity of the culture of our state? Type of groups that you have worked with that shows a diverse group that you have actually worked with, underprivileged, low income?

Mr. Schempp: Well, one of the groups that I presently work with as indicated here, the Department of Social Services, where we work with the Work Support Council attempting to get underprivileged folks jobs. I have been on that for approximately two years now, that particular committee and I am active in that committee. Literacy Partnership, teaching people how to read. I think that is paramount because we have a real problem in South Carolina. Of course, I became aware of this through this Initiative that I am working with. So these are the diverse groups that I am working with. The BBB, Better Business Bureau, and the Advertise and Review Board to make sure that people when they advertise in the paper, advertise correctly. So this is my civic and social involvement in Greenville.

Senator Jackson: Finally a follow-up to that. Do you work directly with the clients of the Department of Social Services, or is your role basically trying to provide jobs for them and not working directly with the people?

Mr. Schempp: Exactly. Advisory in attempting to find jobs for them when asked, yes.

Chairman Holland: Representative Wilkes.

Representative Wilkes: Following up on the financial questions again, without giving me any dollar figures or disclosing anything that would be personal. Does your portfolio of securities, bonds that are related to the utility industry, is that a significant percentage of your investment portfolio?

Mr. Schempp: I would say that the utilities that I have, the stocks that I indicated to you, that is probably 35 to 40 percent of my portfolio.

Representative Wilkes: Did you mention any bonds?

Mr. Schempp: No, sir. I don't have any bonds.

Chairman Holland: Any other questions.

Representative Kennedy: Yes, sir.

Chairman Holland: Representative Kennedy.

Representative Kennedy: Mr. Chairman, I have maybe three or four questions if you don't mind.

Chairman Holland: Proceed.

Representative Kennedy: Mr. Schempp, did I hear that Mr. DeLoach, the Chairman of the Merit Committee and Mr. Schempp worked together previously or are former FBI agents together. Did I hear that?

Mr. Couick: Mr. Kennedy, I'm sure that he can explain it, but maybe to abbreviate it, they both were FBI agents. They were never located in the same location together. I believe that Mr. DeLoach said they might have taught a class you were in. But he did not necessarily recall if he did or didn't.

Mr. Schempp: Sir, let me explain that to you. Mr. DeLoach was the number two man in the FBI for years under Mr. Hoover. He was the second one in command. He was right up there. I was here in the Greenville resident agency as a special agent. He was an Assistant Director. I had no personal contact with Mr. DeLoach. I must say I am very proud of him, proud to have him as a fellow South Carolinian. Mr. DeLoach served under Mr. Hoover for years as I did. I served under Mr. Hoover from 1964 to 1972. Mr Hoover ran a very good, disciplined FBI office and agency. I could expand on that as far as what's happening now, but we don't have the time. But, in any case, that's the association. He's up here (indicating) and I'm down here in the resident agency out of the Columbia Division, sir.

Representative Kennedy: Maybe you can give me some indication as to how you feel in your capacity as Public Service Commissioner in dealing with Affirmative Action or in some capacity with trying to improve the services of minority situation in this state, Maybe you could expand some on that for me.

Mr. Schempp: Certainly. I am very cognizant of the situations with minorities. I am very fair and impartial in my dealing with minorities, with all people. I think that they should all, all the people within South Carolina should be treated fairly and impartially. I have deep feelings as far as being very fair, very impartial to people who are minorities and I want to have a utility, or I want to make sure that the utilities have services to these people that are very fair and very reasonable. I think that I can do this. I think that I can help this situation prevail. I hope that it is now.

Representative Kennedy: I think you have missed my -- I guess maybe I didn't expand enough. I am talking about in the Public Service employment of minorities, not the services, as a Public Service Commissioner.

Mr. Schempp: All right, sir, fine. I would certainly like to insure as much as I could that anybody who makes application for employment with the Public Service Commission is hired based on their background, based on what they are able to do for the Public Service Commission without regard to race, creed, or color. Absolutely.

Representative Kennedy: Do you believe in Affirmative Action?

Mr. Schempp: Yes, sir.

Representative Kennedy: I'm sorry?

Mr. Schempp: Do I believe in Affirmative Action?

Representative Kennedy: Yes, sir.

Mr. Schempp: Explain if you will, would you please --

Representative Kennedy: Do you believe that Affirmative Action has any place in the Public Service Commission?

Mr. Schempp: I think that Affirmative Action should be considered in employment practices in the Public Service Commission.

Representative Kennedy: Thank you, sir. I am sure that you have heard about the move to privatize Santee Cooper and I am interested in that. I would like to know, give me your feelings -- I don't know if at this time if the Public Service Commission has any direct association with it. But if it did, give me your feelings. Do you feel that is should happen, or how do you feel about that?

Mr. Schempp: If Santee Cooper is sold, what I would like to see happen is that it is sold to a public utility. That's my feelings at this time. I have not studied it any more than that. In just what I have read about, what I've talked about, I feel that certainly a public utility could certainly do a good job with Santee Cooper if they were allowed to purchase it.

Representative Kennedy: One last question and I don't know if this is getting too personal. You stop me if I am. You are retired from the FBI, Mr. Schempp?

Mr. Schempp: Yes, sir.

Representative Kennedy: What is your income, retirement -- Is that getting too personal?

Chairman Holland: Give me just one second. What does the statement that he filed say?

Mr. Couick: I don't recall him listing his income down.

Representative Kennedy: I don't remember seeing it unless I overlooked it.

Chairman Holland: Let me ask you. Did he adequately complete his questionnaire?

Mr. Couick: Yes, sir.

Chairman Holland: Mr. Kennedy, I think we are on the borderline with that. He adequately completed his questionnaire he filled out.

Mr. Couick: I believe he does receive a retirement pension from the FBI.

Chairman Holland: I'm sure you wouldn't have any fear of telling Mr. Kennedy.

Mr. Schempp: Telling what my retirement income is?

Chairman Holland: What I am trying to say to you is as far as I am concerned as Chairman of this Committee, you answered your financial declaration and I don't know that you --

Representative Kennedy: Okay. That's not important. I was just interested. Just one last question. As a FBI agent, did you ever investigate any civil right cases?

Senator Jackson: Under Mr. Hoover.

Mr. Schempp: May I expand on that?

Chairman Holland: We're going to give you open latitude.

Mr. Schempp: Thank you very much. Let me tell you about that, sir.

Chairman Holland: You might tell us something the documentary won't tell us.

Mr. Schempp: The reason I came south, I'm from Ohio -- When I joined the FBI I joined in Ohio. In 1964 the Civil Rights Act of '64 had just been signed. Mr. Hoover had found out that the agents who were in the south were biased in their civil rights investigations. He found this out from people such as Martin Luther King who talked to him at length about that. Mr. Hoover decreed at that time that northern agents would move south and southern agents would move north. I had the pleasure of moving south. When I came into Columbia in December of 1965, I was placed on the Internal Security Squad. The Internal Security Squad had one purpose, to neutralize the Ku Klux Klan. I worked three years doing that. They were difficult times, but we did the job. We neutralized them because we started running them out of our Spartanburg office. This isn't too well known but I want to tell you about it.

There were a lot of times when things were kind of tough out there. It was similar to Mississippi Burning, if you saw that movie, but we didn't have any things that were created such as the violence that they had in Mississippi because of what we did to neutralize those people whose very interests were going against the Federal Government's statutes and edicts. We did a bang-up job. We put ourselves -- Excuse me. I get a little emotional and I'm sorry. We put ourselves out of business and I was one of the fellows that did at that time a bang-up job. I received many quality increases and incentive awards because of the work I did against this organization.

They asked me to go to a resident agency and Greenville was open at that time, and I did. I had many opportunities to move from there, but I love South Carolina. I am a South Carolinian. I have no desire to move. Thank you for the opportunity to tell you about this. Three years of my life was devoted to taking this organization and neutralizing it and making it better for minorities.

Representative Kennedy: Thank you, sir.

Chairman Holland: Any other questions, Representative Kennedy?

Representative Kennedy: That's it, sir.

Chairman Holland: Representative Wilkes.

Representative Wilkes: Mr. Schempp, have you ever lived in a rural area, just out of curiosity?

Mr. Schempp: No, sir. I haven't. Mostly larger cities.

Chairman Holland: Representative Quinn.

Representative Quinn: Thank you. Mr. Schempp, I won't belabor these things. I just want to get one or two questions out of my mind and then I will set this to rest as far as I am concerned. In terms of Mr. DeLoach, a few minutes ago you characterized yourself as a close friend of Nick Theodore's. Would you think of yourself as a close friend of Mr. DeLoach?

Mr. Schempp: No, sir.

Representative Quinn: Personal friend?

Mr. Schempp: No, sir.

Representative Quinn: On the stocks, I am curious as to how you would handle yourself if and when you ever had a company that you, even though it is in a blind trust, you are going to know that you have stock in those companies. Are you going to abstain from the voting for those particular cases, or is your intention not to --

Mr. Schempp: I wouldn't think I could do that. What I am interested in is fair an impartial treatment. No matter whether the person is a consumer or whether it's a utility and the few stocks that I do have, I don't think that they would enter into the picture at all. I'm very ethical.

Representative Quinn: I am sure and you have me at a disadvantage. I'm not sure which stocks you would own that would have a case before the PSC. I'm sorry. It's right in front of me.

Chairman Holland: I'm sorry Representative Quinn. Are you through?

Representative Quinn: Yes, sir.

Senator Moore: Mr. Chairman, I would like to follow up on a question Representative Kennedy asked. Mr. Chairman, you said that his question regarding the sale of Santee Cooper, I believe you qualified it all by saying "if" it was sold, how you would like to see it go. You are not advocating one way or the other the sale of Santee Cooper?

Mr. Schempp: Not at all.

Chairman Holland: Any further questions with regard to this area?

Mr. Couick: Mr. Chairman, if the staff could follow up on Mr. Quinn's question, I believe, about the stocks being in a blind trust. Each member has available on page 26 the transcript of the hearing before the Merit Panel. I believe it's in the back of your notebook. There Mr. DesChamps, I believe, on page 26, is asking the question: "I also see that all the stocks you own are with utilities. If you are taking this job, I would lose a few of those stocks." Mr. Schempp: "I understand that, and I think a blind trust could possibly be set up for those stocks and I have looked into that." Mr. DesChamps says again, "That's all I have to say." Then Mr. DeLoach says, "Thank you, Mr. Deschamps. Mr. Stanley." Mr Stanley says, "Mr. Schempp, if a blind trust is not satisfactory, would you be willing to dispose of the stock?" And you said, "Yes, sir." Stanley says, "I have nothing further." As a matter of being elected to this position, if a blind trust is deemed to be insufficient by this committee in terms of fiduciary care, would you be willing to agree today that they make that a condition of your being qualified that you would be willing to dispose of those stocks, rather than putting them in a blind trust?

Mr. Schempp: Yes, sir.

Chairman Holland: Now proceed to the second line of questioning.

Mr. Couick: Mr. Schempp, I believe we mentioned a little bit this morning before you were asked to leave the room that the Chairman in consultation with some other members of the Committee have determined that perhaps our last several interviews of Public Service Commission candidates had not been thorough enough in terms of in determining their knowledge of utility regulation, and that there had been a good deal of criticism lately that screenings in general by the General Assembly were not thorough enough. In an effort to remedy that, they have asked me to prepare some questions regarding the Public Service Commission and each regulated industry.

First, aside from the things that you've already noted, what is your interest in serving on the Public Service Commission in terms of improving its operations?

Mr. Schempp: Well, sir, the things that I have noted in my prepared presentation to you, those four things, would stand as indicated. As far as anything further, what I would have to do is, of course, get on board and see if there was some changes that necessitated and that if was the case, then move toward that.

Mr. Couick: How large of agency is the Public Service Commission in terms of personnel and dollars annually budgeted? Are you familiar with that?

Mr. Schempp: I have no idea, sir.

Mr. Couick: Are you familiar with the concept of "generational mix" as it relates to the production of energy?

Mr. Schempp: No.

Mr. Couick: Generational mix refers to the amount of coal or oil or nuclear power that you use to produce the total energy output of a company. One of the topics that seems to be talked about a good bit today, particularly by environmentalists is reducing the amount of coal in the generational mix, so as to make energy more clean in terms of how it's generated. Obviously, there is some pros and cons to that. Briefly discuss you philosophy on that issue, improving generational mix.

Mr. Schempp: Well, if coal can burn and if it can burn cleaner, that would be fine. As far as nuclear energy, I think that nuclear energy is certainly here to stay. I think that the companies who are involved in nuclear energy do a fine job in producing power from that source. As far as anything else, that would be --

Mr. Couick: From a cost standpoint, if it were to cost maybe 5 or 10 percent more for utilities to generate energy from natural gas or some from type of clean-burning fuel, other than coal or soft coal, having to go to a harder anthracite type of coal, would you be willing as a Public Service Commissioner to impose that requirement on them as an environmental cleanup measure?

Mr. Schempp: If it had to be then I would support it.

Mr. Couick: Well, I say had to be. These all would be decisions by the Public Service Commission. Would that be a priority of yours, I guess, is my question?

Mr. Schempp: Certainly we want to clean up our environment and if that's the case if there were to be an added cost because of the cleanup, there would be no recourse.

Mr. Couick: Are you familiar, I believe you surely are in terms of having your own investment, but the general concepts of return on investment for regulated utilities? How would you figure a fair rate of return on investment for a utility company? What items would you include in the rate base or exclude from the rate base in doing that?

Mr. Schempp: That's a difficult question. As long as the particular utility gets a fair return and has value, then I think that would be certainly something that they would be responsive to. I think that if you have a utility that does get a fair return, you are not going to have any problems. Certainly the utilities are in the business to have a fair return and make money.

Mr. Couick: How do you benchmark what is a fair return for a utility company? What would you compare it to?

Mr. Schempp: I don't know what the yield is as far as the stocks, but I would say if that is what your question is, I would say, you know, if the stock yields, what, 4 to 6 percent then that would be a fair return on the money on a yield basis.

Mr. Couick: There has been a lot of talk about restructuring in the state government lately.

Mr. Schempp: Yes, sir.

Mr. Couick: If you were on the Public Service Commission and folks were to come to you and say we sure would appreciate your ideas on how we could include the Public Service Commission in our overall package of restructuring, what would you recommend?

Mr. Schempp: Well, right now, it is being recommended that it run as an independent agency and that would be fine with me and/or if they want to put it in as they initially had it in the restructuring in the regulatory board, as I remember reading. So either way it makes no difference to me at this point as long as there is a Public Service Commission.

Mr. Couick: In terms of how the method of election for Public Service Commissioner and how that may be impacted by restructuring, would you have any comment on that?

Mr. Schempp: The election of a Public --

Mr. Couick: The method of election by members of the General Assembly.

Mr. Schempp: Method of election, do you mean exactly what we are going through now?

Mr. Couick: Comment in terms would you like to change it and have the Governor appoint or have that be a cabinet position, the Public Service Commission or Utilities Commissioner have one person, or would you like to continue to see seven elected positions elected by the General Assembly? What would be your optimum --

Mr. Schempp: Seven elected positions elected by the General Assembly is fine. The only thing that I would like to see is that it be done in a shorter time frame. Right now we are almost into the third month. I feel that if it could be done possibly within a 30-day time frame that it would save a lot of time, a lot of effort and a lot of expense for people who are, in fact, candidates for the position.

Mr. Couick: In terms of the actual method of election though, do you have any criticism other than time element involved. Do you see it as a fair method having the General Assembly elect it?

Mr. Schempp: I see it as a very fair method. I just have a problem with the time element.

Mr. Couick: What two or three hot topics relating to the utilities industry and the Public Service Commission or energy consumption do you think are kind of the top items right now?

Mr. Schempp: I think one of the hot topics is the fact that people aren't giving a fair a shake to nuclear energy. I think nuclear energy does have a place in your utility companies. If it's accomplished correctly and done right and there are safeguards then it's a thing of the future. I think that to me is a hot topic.

Mr. Couick: Anything else that strikes you as being something that is kind of a topic of the moment?

Mr. Schempp: Nothing that I can actually put my finger on other than that.

Mr. Couick: What is the proper role of the Consumer Advocate before the Public Service Commission?

Mr. Schempp: To be treated fairly and impartially and to be able to state his or her position and to be listened to and then to --

Chairman Holland: I'll have to suspend the hearing for a
minute. We'll be right back.

(Recess from 4:12 p.m. until 4:21 p.m.)

Chairman Holland: I'm going to go ahead and call the meeting back in order. Proceed Mr. Couick.

Mr. Couick: I believe and I stand to be corrected that we were talking about the proper role of the Consumer Advocate for the Public Service Commission and you had mentioned that you wanted him to receive a fair hearing. What is the role of the Consumer Advocate before the Public Service Commission? What is he there to do?

Mr. Schempp: Let me say this. The prime responsibility of the Public Service Commission is to establish and maintain a sufficient service at a reasonable, fair price, and that's what you've got to look out for. You've got to look out for the consumer and you've got to look out for the utility in that regard. That's the prime responsibility and something that you should keep foremost in your mind at all times.

Mr. Couick: How does the Consumer Advocate contribute to that result? If we all agree that's the result that should happen, how should a Consumer Advocate contribute to that result?

Mr. Schempp: Well, you know, that's one thing that I see that maybe the Public Service Commission doesn't do a good job at and that's letting people know basically what they do and what they stand for and what they are. There is a lot of people that aren't aware of the Public Service Commission and its functions. This is one of the things that I would like to do. I would like to make people more aware of that and give them an audience if so desired. If they want to talk about it, if they feel they are being treated unfairly and not on an impartial basis, or rather there is partiality shown, I want them to talk to me about it. I want them to indicate that and let's do something about it. I want to be fair to everybody, especially consumers and of course utilities.

Mr. Couick: Is there anything that you have heard of that would tend to convince you that the role the Consumer Advocate is playing now is improper before the Public Service Commission? Is there anything improper about the role being played by the Consumer Advocate before the Public Service Commission now.

Mr. Schempp: Is it an improper role?

Mr. Couick: Is it improper? Would you keep his role the same, the role he is playing now? Would you expand it, contract it?

Mr. Schempp: I think that if it's not proper, it should be changed and I think the Consumer Advocate is -- I'm sure it is fair and impartial now, but if it's not, then it should be changed. But I have no reason to think it is other than that at this point? What my main concern is that people just don't know about it and there should be more -- It should he promulgated more so that people are more aware of it.

Mr. Couick: What role should Public Service Commission staff play in deliberations?

Mr. Schempp: Well, of course, the staff as I understand from reading title 58 and volume 26, is that the staff is technical, administrative and clerical. That's the continuing role that I think they should play.

Mr. Couick: Tell me in terms of technical and particularly legal staff, when it would come to hearing and you are a commissioner and you are sitting there trying to decide how to vote on a rate increase and these folks are at your beck and call, what do you want them to tell you. What do you not want them to tell you? What input do you want them to have on your decision making?

Mr. Schempp: Well, if there is something that needs clarification, of course, what I would do is I would ask them for the clarification of the particular matter, a clarification with statute possibly. Then in this way make a very fair an impartial judgment and decision. I've had to do that for 30 years and that's one thing that I'm going to bring to the Public Service Commission is the fact that I have made decisions based on good common sense and good judgment all my life, at least for the last 30 years.

Mr. Couick: Should a Public Service Commission staff person be an advocate for the public?

Mr. Schempp: Sure. Absolutely.

Mr. Couick: To the exclusion of being an advocate to the regulated utility industry?

Mr. Schempp: Both.

Mr. Couick: Can a staff person function in that dual role?

Mr. Schempp: Should they? Could they?

Mr. Couick: Can they or could they?

Mr. Schempp: Certainly, I think they can.

Mr. Couick: The Public Service Commission of South Carolina does not regulate the rates of the following types of energy producers: electric cooperatives, who account for about 26 percent of electricity generated and consumed in South Carolina; propane and bottled gas distributors; municipal gas, water, and electric companies, which account for about 9 percent of all the electricity generated and consumed, and wholesale operations of electric utilities in the state, and also cable TV. Those folk are not regulated by the Public Service Commission. Do you agree or disagree with that lack of regulation? What would you change?

Mr. Schempp: I would certainly look at it and see if they are abusing their deregulation, and if they are abusing it then I think what is fair for one is fair for all.

Mr. Couick: In terms of the lack of regulation in municipal, let's just take for example, electrical companies, why would you think they would need to be deregulated at all? Why would that be treated, let's say, different than SCE&G? What is the logic behind that lack of regulation?

Mr. Schempp: Why are they not regulated?

Mr. Couick: Right.

Mr. Schempp: I don't have any idea. I don't see why they shouldn't be regulated. As I indicated, if they abuse their or misuse their authority.

Mr. Couick: Many utility companies are diversifying or some people call it cross-subsidization their business interest. What responsibility does the Public Service Commission have as to overview of these companies' diversification activities? As an example, let me give one, let's say there is a large public utility company that operates under one name, but maybe under a corporate holding name owns a real estate development company. Profits are generated by both the holding company and by the wholly-owned subsidiary. If you were a Commissioner, when you were reviewing their rate request, what would you look at? What would be important?

Mr. Schempp: I don't think that that's germane because I don't think that there is any, to my knowledge, public utility in South Carolina that is in that situation.

Mr. Couick: Tell me what kind of regulation the Public Service Commission does of motor carriers.

Mr. Schempp: Basically what they do is set services, provide, you know, rate structures, indicate what practices are and are not suitable, that type thing.

Mr. Couick: There has been criticism of the Public Service Commission in that it does not provide adequate justification, both in terms of fact and law for its opinions as to rate requests. These opinions are reviewable under the Administrative Procedures Act. What would you do to assist the Public Service Commission in so-called beefing up its opinion so that they would really be upheld by a court upon appeal?

Mr. Schempp: Well, if the utility service is given at a fair and reasonable price, I think that that's germane and that is the way it should stay.

Mr. Couick: Are you familiar with what a LATA is in the telephone industry?

Mr. Schempp: Spell it, please.

Mr. Couick: LATA and that's an acronym, capital L, capital A, capital T, capital A?

Mr. Schempp: No, I'm not.

Mr. Couick: If I were to tell that a LATA is an area, such as like Greenville or Columbia and it is an operating area for a local phone company such as Southern Bell and that, I believe, there are four or five other LATAs in South Carolina, two of which are connected to -- One is connected to North Carolina and one is connected to Georgia in the Augusta area. In context with LATAs, if you were presented with the notions from phone companies that they wanted to have intra-LATA competition, what things do you think would be some down sides to that intra-LATA competition?

Mr. Schempp: You know, I'm not familiar with LATA. I would have to study what it is. I would have to look at all the facts involved in it and then from there discuss it. I can't discuss it now because I am not aware of it.

Mr. Couick: Taking it up a step and this is something that has been written about a good bit is the divestiture of AT&T and making baby Bells out of the one major phone company. What impact has that had on the cost of telecommunications in South Carolina?

Mr. Schempp: On the costs? I think, of course, competition is good. When you have a monopoly, you don't have much competition, but now that you have competition, it serves to hold rates down and still the utilities gets a reasonable price for their service.

Mr. Couick: Are you aware that any phone costs have gone up because of divestiture?

Mr. Schempp: Not that I am aware of.

Mr. Couick: Mr. Chairman, that's all the questions I have right now.

Chairman Holland: Any questions by any members of the Committee?

Representative Wilkes: Yes, sir.

Chairman Holland: Representative Wilkes.

Representative Wilkes: Mr. Schempp, I'm not going to ask you any specific or technical questions that relate to this very important job, but maybe I think it would be for the benefit of the Committee maybe if I were to just throw out some terms and some phrases that are more philosophical. Maybe we can just think for a minute about some of these issues that are important to me. Let's just pose this first phrase. I am just going to say the phrase and then you sort of respond to me: Economic Development versus Environmental Protection.

Mr. Schempp: You want me to respond to --

Representative Wilkes: I want you to respond as to what is your philosophy -- I mean it's a constant question that comes up in our everyday lives and it is something that we have to deal with and we all develop philosophies. We are either pro, against, or balanced or somewhere in between and have ideas about these things. I'm just trying to find --

Mr. Schempp: Okay. I'm sorry. Excuse me. As far as economic development, I see it all the time. One of the reasons I moved to Greenville is because of the excitement of the economic development within the particular Greenville area. I think the state is doing a fine job economic development-wise in bringing these corporations in here. The only thing that concerns me is the fact, that do we have a work force who is capable of filling the needs of these companies that come in. This is where we are really going to have to take a look at it and do something about it.

Representative Wilkes: I'm going to try to confine this in my mind just to the Public Service Commission's job though. if it came down to a question of a project that might have economic development potential for the state, but then there may be some questions of environmental damage, then philosophically, have you ever thought about where you might stand on such a question. I know this is hypothetical but the specific question, I really wasn't satisfied that I got a lot of information on that, so I am trying to be more philosophical. Do you consider yourself pro-environment, pro-economic development, or somewhere in between?

Mr. Schempp: I think they both have a place in South Carolina. Certainly we are interested in economic development and we are also interested in whether or not it's going to harm the environment. If it harms the environment to a great degree then we are going to have to look at that in terms of what we can derive from the economic development that would be of benefit to us.

Representative Wilkes: Okay. Another phrase, you know, we just went through a new census and reapportionment. You hear a lot of talk these days about Rural versus Urban issues. These are the kind of issues I think as a Public Service Commissioner, you are ultimately going to have to deal with, Economic Development versus Environment, Rural versus Urban. Have you thought on that particular philosophy?

Mr. Schempp: I haven't given it much thought but if the situation does develop again, I feel that I am reasonable. I use a good common sense approach and I think at that time we can certainly look at all the aspects and see whatever is good for the consumer and the state and the utility, whatever is best for them. That's the way I would go.

Representative Wilkes: How about on the issue of restructuring, most of the boards and commissions and agencies have desired to have some input into this decision making process. So I will say Restructuring Legislative versus the Executive versus Autonomous. Could you expound on that a little bit, please?

Mr. Schempp: I think that the Public Service Commission probably would be better served to be under a board, instead of being independent. When you are independent, autonomous, whatever, I think that that is probably not the way it should be structured. I would think that it would be better to be structured under a head of the regulatory agency or -- I can't come up with the exact terms. I have it in my briefcase and when it first came out, it looked like it was under a department of regulation or what have you. And then the next time I saw it, it was an independent agency. I think the former would be better.

Representative Wilkes: Do you have any ideas about the proposed federal Energy Consumption Tax? The Clinton Energy Tax, talking about issues like conservation of natural resources versus --I mean, certainly that is going to have an impact on the decisions that you are going to have to make in your capacity.

Mr. Schempp: Yes, it is. When that comes about I certainly will face it. We've got to do something to reduce the deficit and if that's one of the things that is necessary, if it's safe, again, if it's reasonable, then we will have to deal with it.

Representative Wilkes: That's all I have, Mr. Chairman.

Chairman Holland: Senator from Aiken.

Senator Moore: Mr. Chairman, one of the questions Mr. Couick gave you regarding public holding companies of utilities, I want to make sure I understood. I think he was leading to the area of real estate and real estate development of a public holding company of utilities and I think I heard you say that's not germane to PSC regulations, or you didn't think it was germane to PSC regulations.

Mr. Schempp: What I believe I said, Senator, is the fact that it is not germane to any of the utilities that I am familiar with within South Carolina because I don't know whether or not they -- I don't believe that they are involved --

Senator Moore: Let me ask it this way. You have heard of SCANA?

Mr. Schempp: Okay, sure.

Senator Moore: SCANA, South Carolina Electric and Gas?

Mr. Schempp: Uh-huh, certainly.

Senator Moore: Do you feel that as a Public Service Commissioner if SCE&G came with a rate consideration that SCANA, which is the public holding company, and their real estate ventures or developments, should that be a part of the rate consideration?

Mr. Schempp: I think the utility itself should be a part of the rate consideration. As far as the other, if they are in a development phase under SCANA, that should be separate from the utility itself. That's a separate entity.

Chairman Holland: Any other questions from any other members of the Committee? Back to you, Mr. Couick.

Mr. Couick: Mr. Chairman, --

Chairman Holland: I'm sorry. Did you have something Representative Kennedy?

Representative Kennedy: Yes. I wanted to just ask the gentleman. You are a pretty good holder of stocks in public utilities. And you have pined to become a member of the Public Service Commission. In doing your job as a Public Service Commissioner, would you be looking out for the best interest of your stockholders in these utilities or would you be looking out for the best interest of the public? How could you separate?

Mr. Schempp: I could separate it is easy, sir, because I don't have that much stock and I don't think that would come into play at all. I'm not a large, major stockholder in any of the utilities that I have. I, again, use good common sense and good judgment and good judgment always prevails as far as I'm concerned. I don't think I would ever make a decision based on what stock I have to favor the utilities over the consumer.

Chairman Holland: Are you through Representative Kennedy?

Representative Kennedy: For now, yes.

Senator Jackson: I had one follow-up question. Actually Senator Moore asked a question that I was concerned about and that is your answer to the subsidiary question. I guess I want to be clear. You are not familiar with the subsidiaries that are owned by SCANA Corporation?

Mr. Schempp: I am, of course, familiar with SCE&G. As far as SCANA and what they own, no, I am not familiar with that.

Chairman Holland: Representative Wilkes.

Representative Wilkes: Let me, if I may, Mr. Schempp, be a little bit more specific in that question. If you were making the determination on the rate of return of a regulated private utility company, publicly help stock, Duke Power, SCANA, whomever, and they have their utility operating sector. They have another enterprise system that does real estate development, say, on the lake. When you are making the determination about a fair rate of return for that utility company in a rate hearing, would you take into consideration the earnings and profits of the subsidiary companies?

Mr. Schempp: If they are not a utility, no. I don't see --

Representative Wilkes: So the rate of return of the total corporate entity is not going to have any bearing on the rate of return to the individual shareholder?

Mr. Schempp: Basically, we are interested in utilities.

Representative Wilkes: Hypothetically, would it be fair if the utility were to take its profits earned from selling electric and gas products to consumers and take those profits and move them over into a real estate development company, where they might be able to achieve greater earnings, let's say, after depreciation and other factors taking into consideration the real estate development than they would if they were to plow that money back into expansion of their utility company? Then would that be fair to the consumer not to take into consideration -- I mean, it seems to me as if you didn't, then the utility could take its profits and rather than putting it back into plant and equipment within the utility itself and expand services to the consumer around the state, but rather took that money and put it into a more profitable area that might not show on paper a significant rate of return, but we know real estate appreciates in value. I guess you are saying you really still don't think that that is relevant to the rate of return of I think I have heard the figure of 8 to 13 percent batted about. But I, as a CPA, I know what can be done with numbers and smoke and mirrors. My question would be the way I have phrased it in the example I have given, would the other operating entities of this corporation, the subsidiary companies in an unrelated business, but using the same pot of cash and the same investors, should it be held accountable for what those subsidiaries do with that money, which might be profits that have been diverted from the utility operations itself?

Mr. Schempp: Conversely, let say that the public utility is making money and their subsidiary companies are not making money, should that --

Representative Wilkes: Well, that's precisely the question I'm asking you.

Mr. Schempp: So this is my answer. That it should be the utility and the utility only that is being considered because that is our job.

Representative Wilkes: But if you took $10 million of utility products and planted $10 million worth of pine trees. And those $10 million worth of pine trees are appreciating in value at 10 percent a year. But it doesn't show up anywhere as income for that subsidiary. They ultimately cut that timber and sell it and make $100 million, which was a result of the $10 million in utility profits they invested in pine trees, then I'm not quite sure you can separate the two. I'm not asking you specific accounting questions about how one does that. I am just asking you in a philosophical sense, if a utility company is allowed to take profits from its operating company, and invest them in a subsidiary company, are those regulated or unregulated dollars and are those part of the rate structure or not? That to me, it's pretty much a basic question that comes up so many times in rate hearings. Because if I were smart and I were trying to -- I'm not saying that the utility companies do this but I think this is something that we would be aware of. If I were trying to take my profits and put them somewhere where they are going appreciate in dollars 25 years hence, but they don't show up on my income statement at the end of the year that I show to the Public Service Commission and say, "I'm not making any money," but it's all over pine trees that are growing and making phenomenal dollars for me down the road. Then I am just trying to philosophically ask you again, can you separate those two or are they to be integrated in the whole formula of rate of return.

Mr. Schempp: I think you separate them. I think they should be separated.

Representative Wilkes: Okay.

Chairman Holland: Any other questions by any other members of the Committee? (No response) Mr. Couick.

Mr. Couick: Mr. Chairman, not to belabor this too much longer, but I believe we all around this table don't know nearly as much about regulating utilities as we probably could know. But no one else around this table is in the position of having applied for a position with the Public Service Commission. If we all accept, including yourself, in admitting as that we are not as familiar as we need to be. And let's say you are elected to the position, how are you going to familiarize yourself with the jargon? What's going to be your plan of attack to educate yourself on how to be an effective Commissioner? Who are you going to rely on?

Mr. Schempp: Well, one of the things, of course, that I have already done as I indicated to you is review title 58 and volume 26 of the South Carolina Code, which involves public utilities and the Public Service Commission. I know that at the time that I am elected, then what I would do is I would take time to go to the Public Service Commission and become very familiar with what is going on with the steps taken in the hearings. Basically, what is done, what is necessary to be done and talk to the people as far as what is done in the meetings such as formulating decisions and composing orders that you do, planning your work.

Mr. Couick: You would do that through observation?

Mr. Schempp: Conference, conferring with others. Mr. Ballentine has -- and Charlie Ballentine is the Executive Director down there, and he indicated to me that whatever he could do he would be happy to do and I would certainly take him up on that by going down there and sitting with him on several occasions prior to coming on the board.

Mr. Couick: Mr. Schempp, it is hard to characterize individuals by temperament, but if you were to characterize yourself and your temperament, are you a leader, a follower, a consensus builder, how do you seek to go into the Public Service Commission? If you are going to make an improvement there, how would you achieve that?

Mr. Schempp: What I'm going to do and what I've done in any situation that's new to me, I go in there. I take a look at what's going on. I analyze things. Then eventually, gradually, what I would do is I will make suggestions as far as changes that I think should be made and could be made to better serve to the utility and the consumer. I don't go in there -- I'm not a hard charger that goes in there and says this is what we've got to do. That's what we've got to do. No, you don't do it that way. I think you have to go in there and you have to analyze, you have to look at things and then from there make suggestions as far as changes.

Mr. Couick: If you had the opportunity to spend time, other than with Mr. Ballentine -- Then let's say you were elected within the next week or so, or two weeks, to the Public Service Commission and you really wanted to educate yourself before you took office, other than going and listening to Public Service Commission hearings, what other resources do you think you might avail yourself in terms of understanding the issues out there, trying to get a handle as we talked about earlier, the "hot" topics. What are your resources and I ask that not for the standard questions like the library and that sort of thing. Do you have groups in your community that you are familiar with and you could go seek information from or seek their advice? Who would you go to?

Mr. Schempp: I have friends who are attorneys in the Greenville area who, I would seek out and talk to them as far as their proceedings before the Public Service Commission and their advice and see how they operate and how things are done as far as the Public Service Commission is concerned. There is one person down here that I have met since I have been down here that does a lot of work with the Public Service Commission who would be a very good source of information for me also.

Mr. Couick: Are there two or three interest groups in the Greenville area that are not legal in nature, that you could go to and seek advice on issues, whether it be rates or environmental matters? Are you affiliated or do you have any knowledge of any groups like that?

Mr. Schempp: I am sure there are groups, but I don't have any direct knowledge at this point.

Mr. Couick: That's all.

Chairman Holland: Senator from Spartanburg.

Senator Courtney: Mr. Chairman, based on one response that you made. You have met a gentleman here who does work with the Public Service Commission that you would call upon for advice, you said?

Mr. Schempp: There is a lady who is a lawyer.

Senator Courtney: She represents clients before the Public Service Commission?

Mr. Schempp: She indicated that she has practiced before the Public Service Commission and she would be an individual that I could go to to ask advice, gain knowledge, information.

Chairman Holland: Any other questions?

Representative Kennedy: Mr. Chairman.

Chairman Holland: Representative Kennedy.

Representative Kennedy: I would like to clarify something in my mind. I have read this transcript from the meeting that was held with Mr. DeLoach and I just need to clarify this in mind with Mr. Schempp. I want to read this to you.

Chairman Holland: What page are you on?

Representative Kennedy: I'm on page 21.

Mr. Schempp: I don't have a copy of that, sir. (Mr. Schempp is given a copy of the transcript.)

Representative Kennedy: Starting on page 21 about middleways through the paragraph. "Beginning your delivery of your presentation, I would like upon record....[inaudible]....to have certain questions I may please to clarify. You were a special agent and special agent supervisor in the FBI for many years. I was a Deputy Director of the FBI for many years. At no time do I recall having met you." He's telling you this. "I may have lectured in some of your classes or something of that nature, but just for the record I have never done any service for you and you have never done any service for me. We have never had a friendly relationship. We have not had an adversarial relationship to my knowledge, but I hope we've never had a friendly relationship. Is that clear?" Your response is, "That is correct, sir." My colleague next to me asked you, were you a friend of the President of the Senate, Nick Theodore, and you said yes. Then he asked you also were you also a friend of Mr. DeLoach, the same as your friendship with the President of the Senate. Can you clarify that in my mind?

Mr. Schempp: Sure.

Representative Kennedy: You said that you and Mr. DeLoach did not know each other, but then you responded to him in that way. Please clarify that for me.

Mr. Schempp: Mr. DeLoach in his position as Assistant Director, Deputy Director of the FBI at many times when we went to Washington for in-service training, we might meet him at some kind of a function, shake hands with him. I would remember that. He wouldn't remember that, sir, because he meets agents all the time. I would remember that because its just like meeting somebody rather famous. You don't forget those kind of things. Mr. DeLoach has, I'm sure, in his time met thousands of agents and he wouldn't remember meeting me. I can't remember any one specific time that I met him, but the relationship is certainly not one that is close. I know him to see him. He's been on national television. When he was the Director of the FBI, our house organization had him pictured there on many occasions. I'm sure when we had occasions to meet him in Washington, I would certainly shake his hand. That's the association that I had with him.

Representative Kennedy: That would be the difference in your relationship with Nick Theodore and Mr. DeLoach?

Mr. Schempp: Oh, yes, sir. You're right.

Representative Kennedy: So it wouldn't be the same?

Mr. Schempp: Not at all, no.

Representative Kennedy: So your response was not correct when you answered him?

Mr. Schempp: I think it was, sir. I know Lieutenant Governor Theodore. Certainly, I've seen him on social occasions on several occasions. Mr. DeLoach, I maybe met him once or twice in my life. So that's the association. Lieutenant Governor Theodore would be considered a friend, and I have seen him on social occasions.

Representative Kennedy: Just one other, maybe two more questions I would like to ask. What would you do if you were Public Service Commissioner to make the public more aware? I will admit to you until I became a member of the South Carolina General Assembly, I did not know very much of what the Public Service Commission did. What would you do to make the public more aware after you take office, especially down in any area like I come from, rural Williamsburg County, Florence, Georgetown area?

Mr. Schempp: In my 24 years with the FBI I have established, I think, a very good rapport with the media. What I would like to do is expand on that rapport that I have with them and let people know that this is what the Public Service Commission does. This is what we do. This is how we react. This is how we act. This is our responsibility. Through the media newspapers and let them know that if they wanted to respond in any way that they should. That's their prerogative as citizens of South Carolina. So I would use the media, sir.

Representative Kennedy: Would you make a commitment to me if it happens that you will do that down in the area?

Mr. Schempp: Yes.

Representative Kennedy: Thank you, sir.

Chairman Holland: Senator Jackson.

Senator Jackson: One follow-up about the question with the friendship with DeLoach or Nick Theodore. Do you consider Governor Campbell a personal friend of yours?

Mr. Schempp: No, sir. I don't. I have met the Governor on many occasions through my job. We have talked, that is my entire group, have sat down at a table such as this and discussed the initiative because it was his initiative. He started it and it wasn't until January of 1991 that it was placed under State Technical College. So I know the Governor in that regard. He does know me as a former FBI agent, certainly. He's from Greenville. I have met him on several occasions I think he knows my name.

Senator Jackson: Have you contributed to his campaign in any election, be it Congress, Governor?

Mr. Schempp: In his?

Senator Jackson: Yes.

Mr. Schempp: No.

Mr. Couick: Mr. Chairman, did your relationship with the Governor predate your going on the JTPA program? Did you know the Governor before he was Governor?

Mr. Schempp: On a casual basis, yes, sir, because we were located in the Federal Building when he was a United States Representative. He was on the first floor. We were on the second floor. I knew him in passing. I stopped in his office at times. So, it was a casual acquaintance, "How are you Governor?" "Fine. How are you?"

Senator Jackson: You mean Congressman.

Mr. Schempp: I'm sorry. Congressman. "How are you Congressman?" Yes. That's correct.

Chairman Holland: Any other questions? Anything else, Mr. Couick? I am going to adjourn.

Mr. Couick: Do we need to recess? If we could release the witness. And in terms of having deliberations, we could move to carry the meeting over to another date, whatever the body --

Representative Quinn: I think we need to recess.

Chairman Holland: I am going to ask the Committee to stand in recess. The reason for this is simply because there are two members who were not here earlier in the morning. I don't know what we are going to do about the testimony that was given. They might want to see the transcript.

Mr. Couick: We need to set a time to meet again, Mr. Chairman.

Chairman Holland: Just as quick as you can, would you do that and let us know. I guess we need to determine now whether we meet again. We'll meet just as quickly as possible to get through with you, sir.

Exhibit #9, marked for identification and made a part of this transcript, four pages, Personal Data Questionnaire Summary.

Exhibit #10, marked for identification and made a part of this transcript, sixteen pages, Personal data questionnaire.

Exhibit #11, marked for identification and made a part of this transcript, three pages, Statement of economic interests form.

Exhibit #12, marked for identification and made a part of this transcript, one page, Photocopy of number of utility stocks owned by Mr. Schempp.

(Recess from 5:05 p.m. until 5:15 p.m.)

Chairman Holland: I am advised that there is some members of the Committee that want to ask questions of our attorney and that would be a privileged relationship if we do that. I would entertain a motion that we go into Executive Session.

Representative Quinn: So moved.

Chairman Holland: Any objection into going into Executive Session to discuss some matters with the attorney. There is none?

Representative Wilkes: No, sir. Not just to discuss the matters with the attorney, yes, that's fine. I think if we get into matters other than legal questions and stuff maybe we will open the Committee back up.

Chairman Holland: We'll go back to open.

Chairman Holland: There are some questions that I want to ask him and I think some others need to be advised before we can make any final determination.

Senator Moore: We'll return to open session.

Chairman Holland: We'll return to open session.

Chairman Holland: We are back in public. The committee, after a right lengthy discussion, thought probably we should adjourn to have the staff explore some questions of law. Further, the main reason is that there were two members of this committee this morning who were not present when the testimony of one of the candidates was taken and they would like to see the transcript before voting or whatever the committee would be asked to vote on. Therefore I would entertain a motion at this time, a motion to adjourn. Before the motion is made I would like to see if we could determine a time positive to be set for the next meeting. The stenographer has advised us that she can probably have the transcript ready by Friday. I will entertain any suggestions and see what we can come with on a returning time so that we can state in the motion "to meet at".

Mr. Couick: I believe Mr. Kennedy had a conflict with Tuesday morning.

Representative Kennedy: Yeah. Tuesday afternoon would be fine with me.

Representative Wilkes: I've got a subcommittee meeting.

Representative Kennedy: What about Monday?

Representative Wilkes: How about Wednesday morning?

Chairman Holland: Let me ask the staff something. If you are to get the transcript prepared Friday, we need to get it in the hands of the members of the committee. About how long would it take you to do that?

Mr. Couick: When you say that your transcript it going to be ready, that is going to be typed, you are going have proofed it. I don't want to rush you into something.

Court Reporter: It may be very late Friday.

Chairman Holland: Then how long would it take for us to have the transcript in the hands of the members?

Mr. Couick: If we get it by lunchtime Monday, we could have it that afternoon for the members.

Chairman Holland: We certainly can't fax it.

Mr. Couick: We could certainly have it delivered by Monday afternoon.

Chairman Holland: Knowing the transcript will be in the hands of the members by Monday, let's now resolve a time we'll meet. We are shooting for Wednesday morning next week. What's the objections on that?

Representative Quinn: Sounds good.

Representative Wilkes: 9:00 o'clock?

Representative Kennedy: That's fine. We may be going in session at 10:00.

Chairman Holland: We are just going to have to ask you to forebear it like we did today, we didn't go.

Representative Quinn: Let's go over to the speaker's office over there next time.

Chairman Holland: The motion is?

Representative Wilkes: We adjourn the meeting and meet again on Wednesday morning, March 3rd.

Senator Jackson: Where? 105?

Chairman Holland: 105.

Mr. Couick: Mr. Chairman, If we could have the flexibility of staff if we find that the House is going to be in session at 10:00, that maybe it is easier to have it here at 10:00.

Chairman Holland: Just so we give adequate notice to the press. The meeting is adjourned.

(There being no further questions at this time the screening is adjourned at 6:15 p.m., to be reconvened at 9:00 a.m. Wednesday March 3rd in room 105 of the Gressette Senate Office Building)

Wednesday, March 3, 1993

(This hearing as scheduled on February 24, 1993 for March 3rd, 1993 at 10:00 a.m. commences at 10:15 a.m.)

Chairman Holland: I'm going to call the meeting to order. We are running a little bit late. I want to state at the outset for the record, if it's within my power as Chairman of this Committee, I don't intend to bring any conclusion to these hearings until such time as all the members are present and can at least hear some of the testimony or have read the transcript. We think it is important to us that we have them here to be involved in the discussions we have. That's going to be my intent unless the Committee instructs me otherwise. When we left here last week, we instructed our attorney to research some law and give it to us. From what I hear he has been digging over the weekend and subsequently will tell us what we can do and what we can't do and what is expected of us. So I am going to ask now that we go into Executive Session.

Chairman Holland: I'm am going to call the meeting back into a public meeting and I report to those here that this Committee after considerable discussion with the attorney seems to know what statutes and what laws we are working under, which has been a right complex question for us in many instances. But I think the Committee has basically agreed upon what the responsibilities are and under what code sections we are operating. I am waiting now for some motion by some member of the Committee as to what we should do at this point. Representative Wilkes.

Representative Wilkes: Mr. Chairman, I make a motion that we recess subject to the call of the Chair and instruct the staff to prepare tentative findings of fact and get a report back to each Committee member prior to our next time at which time we will take action as to the finding of facts.

Representative Kennedy: Second.

Chairman Holland: What you are asking staff to do is to begin to draft a tentative report and get it back to us from which we all vote?

Representative Wilkes: Yes. That's correct.

Chairman Holland: I want to say this to the press and to the public there have been no votes taken in this Committee on anything. There has been merely a discussion of our duties and our responsibilities and how we are going to go about fulfilling them. Am I right about that? Based upon that I now entertain a motion to adjourn the Committee.

Representative Quinn: So moved.

(These proceedings of the Joint Legislative Screening Committee of Candidates for the Public Service Commission is adjourned at 11:15 a.m., to be reconvened at a later time.)

Thursday, March 25, 1993, 10:35 a.m.

Chairman Holland: I would call the meeting to order. We have two members missing. They are on their way, but we have got to get started some time. I am going ask that we first go into Executive Session so that we can listen to a report from our attorney on the directions we gave him at our last meeting. If there is anyone in here that is not permitted to be, we ask you leave. We'll have you right back as soon as we can get a report from our attorney in those regards.

Chairman Holland: I would call the meeting back into order. For the benefit of the record, this Committee has discussed and proposed a report. Now is the time for this Committee to tell us whether they are prepared to sign the report. Is there any member of this Committee that has any reservations about signing it? There is none. I ask that you give the report to the press or whatever to be done. Are there any motions with regard to the conduct of the elections?

Senator Moore: Mr. Chairman, based on the hearings and the findings and the recommendations, I move that both candidates be found qualified under the statutory provisions.

Chairman Holland: Our report by adoption did that and I suggest a further motion to adopt the report. Any member of the Committee have any ideas in regard to the conduct of the election?

Senator Moore: Mr. Chairman, I would ask that staff review with the Clerk of the Senate and the Speaker of the House as to a possible election date, and upon his findings he report back to the Chairman, the Chairman notify the Committee members as to the best date for the election, as quick as possible, and that all members introduce a concurrent resolution on both sides to that effect.

Chairman Holland: I would further state for the record that I think it's the intent of this Committee to look at proposing certain legislation to correct certain problems as set forth in the report. I would ask that those actively support that legislation which is all encompassed in the report.

Senator Moore: I move we adjourn.

Chairman Holland: The meeting is adjourned.

(These proceedings of the Joint Legislative Screening Committee of Candidates for the Public Service Commission is concluded at 11:18 a.m.)

(By prior motion of Senator HOLLAND, ordered printed in the Journal of Friday, April 2, 1993)

At 11:12 A.M., on motion of Senator WILSON, the Senate adjourned to meet next Tuesday, April 6, 1993, at 12:00 Noon.

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