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Five transactions and five tax exemptions for Koch in Luxembourg

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In September, 2008, Koch Industries’ subsidiary, Invista B.V.  – the maker of Lycra-brand fiber and Stainmaster-brand carpet – embarked on a complex 26-step restructuring of its operations in Luxembourg and the Netherlands, where the company is incorporated. 

A document prepared by global tax advisory firm Ernst & Young and approved by the Luxembourg government details the restructuring and the tax consequences in Luxembourg of each transaction.

The documents are in the original French and were translated for the International Consortium of Investigative Journalists (ICIJ).

Here are five examples of transactions included in the restructuring that the Luxembourg government agreed would be exempt from tax. 

1) Invista B.V. transfers $300 million to another Koch subsidiary called Arteva Global Holdings B.V. on Sept. 19, 2008, and ten days later Arteva transfers $175 million back. The transaction is considered a “hidden distribution” and is deemed exempt from income tax and municipal business tax by Luxembourg officials.

2) Invista then transfers $175 million to a third Koch subsidiary called KoSa Lux Finance B.V. on Sept. 29, 2008. This step is called an informal contribution that will not generate any taxable revenue. For clarity, the document states that hidden distributions and informal contributions “will give rise to no written accounting” for Koch’s Luxembourg company. 

3) An Invista subsidiary in Luxembourg transfers a $177 million credit to a related company in the U.K. Luxembourg sees the distribution as a dividend and therefore exempt from income and municipal business tax, as well as withholding tax. 

4) A Koch company in Spain, Respa SGPS, is liquidated as part of the restructuring and its assets are incorporated into a Luxembourg company. All revenue from the liquidation realized by the Luxembourg company is exempt from tax as far as that country’s authorities are concerned.

5) Invista Technologies transfers its intellectual property, which may include patents and trademarks, from a Swiss branch to its headquarters in Luxembourg, and then, on the same day, moves them to another subsidiary in Mexico. Luxembourg officials determine that any capital gains on that property is attributable to the Swiss branch and exempt from tax in Luxembourg.

    

  

The "simplified schema" of Koch Industries' Invista division after restructuring.Alison Fitzgeraldhttp://www.publicintegrity.org/authors/alison-fitzgeraldKimberley Porteoushttp://www.publicintegrity.org/authors/kimberley-porteoushttp://www.publicintegrity.org/2014/12/10/16436/five-transactions-and-five-tax-exemptions-koch-luxembourg

Health worries pervade North Texas fracking zone

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DALLAS—Propped up on a hospital bed, Taylor Ishee listened as his mother shared a conviction that choked her up. His rare cancer had a cause, she believes, and it wasn’t genetics.

Others in Texas have drawn the same conclusions about their confounding illnesses. Jana DeGrand, who suffered a heart attack and needed both her gallbladder and her appendix removed. Rebecca Williams, fighting off unexplained rashes, sharp headaches and repeated bouts of pneumonia. Maile Bush, who needed surgery for a sinus infection four rounds of antibiotics couldn’t heal. Annette Wilkes, whose own severe sinus infections were followed by two autoimmune diseases.

They all lived for years atop the gas-rich Barnett Shale in North Texas, birthplace of modern hydraulic fracturing. And they all believe exposure to natural gas development triggered their health problems.

“I’ve been trying to sell my house,” said Williams, a registered nurse, “because I’ve got to get out of here or I’m going to die.”

Texas regulators and politicians have shrugged off such complaints for years. The leap from suspected environmental exposure to definitive proof of harm is a difficult one, and they insist they’ve found no cause for concern. Officials in other states have said the same thing as hydraulic fracturing — known as fracking — moved beyond Texas and opened up lucrative oil and gas deposits across the country.

But scientific research — coming out now after years of sparse information — suggests that proximity could pose risks.

Measurements taken near sites that residents identified as problematic in five states found spikes in air toxics such as benzene, which can cause leukemia. A Colorado study found more babies born with congenital heart defects in gas-well-intensive areas than in places without wells. Yale University researchers surveying Pennsylvania residents — without mentioning gas — determined that those living close to wells were significantly more likely to report having skin and upper-respiratory problems than those farther away. This year a 16-university group recommended substantially more research given the potential problems.

Dr. Anne C. Epstein, an internal medicine specialist who sits on the Lubbock, Texas, Board of Health, reviewed the research herself and saw it as a call to action.

“I think the level of evidence that we currently have is enough to invoke the precautionary principal and take precautions to protect the public who live close to oil and gas development against the potential health effects of toxic exposure,” said Epstein, whose city sits at the edge of another Texas shale play, the Permian Basin. “I think it’s enough right now.”

The Barnett boom kicked off about 15 years ago, the early wave of a new phenomenon: Millions of Americans, rather than a relative handful in remote places, living amid the work of getting oil and gas out of the ground. Fracking — pumping water, sand and chemicals into the ground to shake lose gas and oil — kick-started the shale boom that brought drilling into urban and suburban places.

That makes the Barnett region a laboratory of sorts, the longest-running experiment about what it means for people when fracked wells and their associated equipment move into neighborhoods on a large scale. The sorts of complaints first raised here are being echoed in the newer Eagle Ford Shale play in South Texas, where drilling has soared the past several years. The Center for Public Integrity and InsideClimate News have been reporting on air pollution in the Eagle Ford for more than a year and a half.

The Barnett Shale snakes under 25 counties, a region that includes Dallas, Fort Worth and dozens of suburban and exurban communities. More than 16,000 wells produce gas here, along with several hundred yielding oil.

Wells are tucked near homes, schools, parks, businesses and hospitals, sometimes less than 200 feet away. With them have come compressor stations, glycol dehydrators, storage tanks and other follow-on equipment — more than 6,000 sources of toxic emissions and thousands of others considered less significant. This infrastructure could run for decades even as the drilling boom fades.

Taylor Ishee lived within a mile and a half of 37 active gas wells before his Burkitt leukemia diagnosis at age 19, a Center analysis of state data showed. Half were drilled in the two years before he became ill. Wells were also sunk near his high school in Argyle, in Denton County, while he was a student there. Then compressor stations, which move gas through pipelines, popped up on residential streets in the area.

Ishee’s best friend, Justin Eaklor, was diagnosed with leukemia in May. Eaklor, 21, lives in another Barnett community with wells, including four just under two-thirds of a mile from his house.

For those who believe they’ve been harmed, proximity is troubling. For Texas as a whole, it’s a bonanza.

The state collected $5.8 billion in natural gas and oil production taxes last fiscal year, triple the amount in 2003, early in the Barnett boom. That’s after accounting for inflation. The technological advances that made the Barnett economical have spread to other plays in Texas, boosting not only taxes but also royalties for production on state land.

Politicians in Texas — many of whom receive campaign contributions from the oil and gas industry or have other financial ties — tend to focus on the economic implications of the boom, which are much simpler to quantify than health. More mineral owners getting payments. More jobs. Cheaper energy.

Asked about health concerns, Texas Gov. Rick Perry’s office did not respond. Neither did a spokeswoman for the governor-elect, state Attorney General Greg Abbott.

‘No cause for alarm’

It’s easy for Texas politicians to emphasize the positives, because the state’s environmental protection agency gives Barnett air a thumbs-up.

Air-toxics data from 26 fixed stations around the region flow to the Texas Commission on Environmental Quality, known as the TCEQ. These monitors sample air either around the clock or once every six days, a network the agency said is unmatched in any other state.

TCEQ spokesman Terry Clawson said by email that the agency can’t determine the cause of residents’ health problems when complaints arise, but “it is highly unlikely that chemicals are being emitted at levels high enough to cause adverse health effects such as cancer, kidney damage, or liver damage.”

“Since 2008, the TCEQ has heavily monitored the oil and gas activities in the Barnett Shale,” he said. “Monitoring millions of measurements each year, the TCEQ has found no cause for alarm.”

But air-emissions experts and other scientists say the state doesn’t have enough information to make broad judgments about safety. Emission levels can be widely variable, they say, and the vast majority of the region goes un-sampled.

The Barnett spreads across 5,000 square miles, an area more than twice the size of Delaware. The 26 air-monitoring stations there can’t quantify typical conditions near 16,000 wells and more than 6,000 compressor engines, tanks and other equipment, let alone determine where the highest emissions are.

Even right beside many of the state’s monitors, it’s difficult to get the full story on air quality. Samples are taken every six days at 11 of the stations.

“We don’t really have the experience to be able to say, ‘Oh, there’s nothing to worry about,’” said Eduardo “Jay” Olaguer, program director for air quality science at the Houston Advanced Research Center, a nonprofit research group.

Given the measurement challenges, “traditional methods are really inadequate for the task at hand,” he said.

Olaguer uses a newer, mobile measurement method that can chase pollution plumes. What he’s finding suggests that emission “events” — significant releases of air pollutants — are larger and more frequent than expected.

Critics, meanwhile, contend that the TCEQ’s policies are too lenient to ensure public health or force improvements when residents complain.

Since 2009, the year after Barnett drilling permits peaked, people in the four counties with the most gas development have filed more than 1,370 air complaints related to the industry with the TCEQ. It’s a laundry list of woes. Vertigo. Unbearable headaches. Chest pain. Hives. Vomiting. Seizures. Dead pets.

“Complainant stated that most of us in this area believe that someone will have to die from benzene exposure before the government does anything,” a TCEQ employee wrote in one summary.

In only 2 percent of those complaints did the TCEQ issue violation notices, according to a Center analysis of data from 2009 through September of this year. Ninety-four percent were closed without violations. The rest were either referred to other agencies or were pending.

A complaint doesn’t necessarily mean there’s any violation to find, TCEQ’s Clawson said.

“These types of occurrences are rare and demonstrate that many of the operations within this state are compliant with state and federal regulations and pose no negative impact to human health and the environment,” he said by email.   

TCEQ detractors see it differently — as a lack of appropriate enforcement from an agency whose mission is to protect public health and natural resources “consistent with sustainable economic development.” Two residents of the Barnett were so fed up that they started a nonprofit called ShaleTest to take independent samples of air and water.

“The average person in Texas would not know if TCEQ just simply dissolved and went away,” said co-founder Calvin Tillman, who stepped down as mayor of the tiny Barnett town of Dish in 2011 so he could move his family off the shale. “They’re there to protect the oil and gas industry, not to protect the people being harmed by the oil and gas industry.”

‘We have decided to close our file’

When the TCEQ does issue violation notices, the consequences sometimes amount to nothing.

Sandy DenBraber, a nurse so chemically sensitive she spends almost all her time in her home or yard in Arlington, Texas, prevailed upon the TCEQ in 2010 to find the operator of nearby gas wells in violation based on her medical records.

Because she doesn’t get the everyday exposure to contaminants that most Americans do, TCEQ investigators were struck by the presence of chemicals such as ethylbenzene, xylene and hexane in her blood. They detected the same chemicals in the air near the gas pad, though not at levels the agency deems concerning to health.

DenBraber’s doctor, the TCEQ report notes, detailed her health problems during three years of drilling: “exacerbation of asthma, frequent migraines, increased fatigue, elevated white blood cell count, nausea, decreased appetite, aching joints, flu-like symptoms, low temperature, sleep disturbance, elevated blood pressure, nasal congestion, coughing, airway spasms, and shortness of breath.”

DenBraber, who compared the odor outside her house to that of an oil refinery, waited for action. After almost a year, the TCEQ sent her a letter informing her that none would come.

“After thoroughly reviewing all available sources of information including the investigator’s report, medical records, affidavits and monitoring data, we have decided to close our file on this matter and will not be pursuing formal enforcement action,” the letter said, not specifying why.

Jim Tarr, a chemical engineer who worked in enforcement for the TCEQ’s predecessor agency in the 1970s, said Barnett complaints over the last five years have been so numerous that it would be difficult for TCEQ staff to fully investigate them all.

But Tarr, who evaluates toxic chemical exposure for residents across the country, said the bigger problem is that the agency puts industry above public health.

His exhibit A: In 2007 the TCEQ raised the amount of benzene it considers an acceptable level of exposure for permitting purposes, doubling it to 54 parts per billion for brief periods and increasing it 40 percent for longer durations, to 1.4 parts per billion. For air-monitoring purposes, the agency’s brief-exposure guideline is even higher, at 180 parts per billion.

The World Health Organization’s guidelines say “no safe level of exposure can be recommended.” As far back as the 1940s, research separately produced for the American Petroleum Institute and Shell — later introduced in court proceedings — also concluded that no amount of benzene was safe.

The confidential Shell report in 1943 said “prolonged exposure to low concentrations may be most dangerous.”

Tarr sees the raised benzene guideline as just one example of problems with the yardstick the TCEQ uses to conclude that the air in the Barnett is fine.

“They don’t develop these numbers to benefit people in Texas that live around these facilities,” he said. “They develop these numbers to benefit the entities that want to build.”

The TCEQ’s Clawson said the method the agency uses to set exposure guidelines went through two rounds of peer review and “multiple rounds of public comments.” For benzene, Clawson said, the agency calculated numbers aimed at the mid-range of what the U.S. Environmental Protection Agency considers an acceptable level of risk for cancer. (The TCEQ’s long-term exposure guideline barely falls within the mid-range.)

“Other states and countries use our values,” Clawson said by email. “We are continually improving our processes.”

Even after the TCEQ increased its benzene guidelines, it found the carcinogen at levels that exceeded them. During a Barnett monitoring project in 2009, agency employees discovered benzene above that yardstick in nearly a third of the 64 sites where they arrived to test for it.

Most of the problem samples exceeded the guideline for exposure over an extended time. Tests at two of the sites came back so high they were above the 180-parts-per-billion level deemed safe for brief exposure — including a 15,000 parts-per-billion measurement at a well pad. Thirty-four other chemicals there exceeded TCEQ’s short-term guidelines, too.

That prompted repairs at the two sites with the highest levels, bringing benzene down to a fraction of a part per billion there, the TCEQ said.

Clawson said the focus should be only on those two sites because the agency does not consider it scientifically appropriate to compare brief air measurements to long-term exposure guidelines. The agency’s toxicology division made that comparison in its report at the time because of a “concern about long-term cumulative exposure levels,” but Clawson said the stationary monitors installed afterward allay those concerns.

He wrote in an email that “we can confidently say that emissions from natural gas operations in the area haven’t significantly affected ambient levels of air toxics like benzene.”

Another benzene finding prompted an internal investigation.

The agency told the Fort Worth City Council in 2010 that a mobile monitoring effort showed no benzene in the air. Not explained was the fact that the measurement techniques weren’t sensitive enough to make that determination.

A TCEQ follow-up with more sensitive equipment found benzene above the agency’s guidelines for longer-term exposure at four locations, but no one hastened to alert city officials. David Manis, a quality-assurance manager at the TCEQ, was so upset that he filed an internal fraud complaint, according to documents released in a public information request from state Sen. Wendy Davis, D-Fort Worth.

An investigation by the agency’s chief auditor’s office concluded that the original information, “while technically accurate, could be considered to be misleading.”

Reached at home last month, Manis referred questions to the TCEQ.

The TCEQ’s Clawson said by email that there had been a miscommunication about the data, but he defended its use because the measurements were brief.

“Samples collected over short time frames are not appropriate for comparison to long-term [exposure guidelines],” Clawson wrote.

A challenging task

Determining a safe level of exposure, as it happens, is extraordinarily tough — fraught with bizarre twists worthy of science fiction.

Take the endocrine system. It controls important functions such as growth, reproduction and energy levels, and it can be affected by very low levels of chemicals, including ones used in fracking, said Carol Kwiatkowski, executive director of the nonprofit Endocrine Disruption Exchange.

Kwiatkowski said her group doesn’t trust that government safe-level standards for endocrine-disrupting chemicals are actually safe. These substances are tricky. Years of research shows that at least some can damage health at high and low doses — but not in the doses in between.

That’s a problem given that government researchers have typically stopped testing once they hit the dose where they observed no effects. In 2012 the director of the National Institute of Environmental Health Sciences called for more low-dose testing to fill the void.

Then there’s the difficulty posed by so-called chemical soups.

Air sampling near natural gas sites typically detects multiple substances. A grab bag of nasties showed up in TCEQ tests taken around sites not far from Taylor Ishee’s home in Argyle, for instance.

The carcinogen benzene. Another carcinogen linked to leukemia called 1,3-butadieneToluene, which can cause dizziness and headaches. Xylenes, associated with those problems plus respiratory and cardiovascular effects.  And a long list of additional chemicals, the cancer and other health impacts of which are in some cases unclear or unknown.

The effect of those chemicals when people are exposed to them together in low doses — frequently — is anyone’s guess. Scientists typically study chemicals one by one, not in mixtures. But researchers have found that a blend of toxics can be more dangerous than the individual substances alone.

In a study published last year, prostate cells exposed to supposedly safe levels of arsenic and estrogen for six months turned cancerous. Co-author Kamaleshwar Singh, an assistant professor at Texas Tech University’s Department of Environmental Toxicology, sees broad implications for chemical standards.

His research wasn’t focused on chemicals common in natural gas work. But given the wide variety associated with such sites, it doesn’t strike him as unreasonable to be concerned about those mixtures.

“You should worry,” he said. “In my view.”

An unexpected diagnosis

Taylor Ishee started college and his first real job in late August 2011, and by the end of that first week, he knew something was wrong. He felt so terrible he had to call in sick that Friday, as much as it embarrassed him to do it.

He dragged himself to a clinic for tests. The results went to his family doctor, who sent him straight to the emergency room.

His white blood counts were elevated. His platelet levels were in the basement. His entire family was in shock when they learned why.

“The worst thing I’ve ever had to do in my whole life was to tell Taylor that he had cancer,” said his father, Joe Ishee.

Until that August, Taylor’s family had no concerns about his health. He played basketball in high school, landing a spot on the Argyle High School varsity team his junior and senior year.

But now he had Burkitt leukemia, a rare and aggressive form of a blood cancer his doctors told him is typically found in patients with compromised immune systems. As with many cancers, they couldn’t tell Taylor what caused it, only that he didn’t have the risk factors such as HIV.

He went through four rounds of chemo and had several weeks blessedly cancer-free. Then it roared back, this time as Burkitt lymphoma.

As the family battled through it all, they thought of Taylor’s cancer as simple bad luck. Then in May, Taylor’s best friend, Justin Eaklor, was diagnosed with acute lymphoblastic leukemia.

“It was just shocking,” said Taylor’s sister, Nicole, 25. “I thought, ‘This has got to mean something.’”

Eaklor, Taylor’s high-school basketball teammate, lives in another Barnett community. So Nicole went digging into natural gas development, a common link between Eaklor’s suburban Highland Village and the semi-rural Argyle, where her brother lived with their father and stepmother from 2009 to 2013.

She had thought of natural gas extraction as safe, when she’d thought of it at all. Now she found reports of carcinogens being used in the extraction process and coming up out of the ground, naturally occurring, with the gas. She read with alarm about benzene, which can damage the immune system and trigger leukemia.

The family knew drilling was common in their region but didn’t realize how many sites Taylor had lived near until the Center did its analysis.

Taylor’s mother, Anita Ishee, gave a deep sigh when she heard the number, 37 in all. “No wonder we are where we are,” she said.

As she sat with her son at the Baylor T. Boone Pickens Cancer Hospital in Dallas in October, she put into words what had weighed on her for months.

“Some people can bring cancer on of their own actions,” she said. “But to think that he’s been like this because of something completely out of his control that could have been prevented, if it was regulated in the right way—”

She had to pause to compose herself. “It’s hard to accept,” she said.

The family also has had to accept that they might never have the information they need to conclusively prove their suspicions or rule them out. It’s not just that research on cancer risks from living near gas development is sparse. It’s also the lack of specifics about what Taylor was exposed to — if anything — before he got sick.

Argyle has no stationary air monitors. The clues to air quality from when he lived there are scant, primarily brief samples taken by TCEQ investigators after other residents complained about bad odors and health problems.

Between the time Taylor moved in and his diagnosis, the agency tested the air on 21 occasions within about a mile and a half of his home, according to online TCEQ records. The 30-minute samples offer insight into conditions in certain parts of the area for a total of less than a dozen hours during those two years.

Frequently when investigators arrived, whatever the residents had smelled was gone — at least, the investigators couldn’t smell it.

Only three of the samples near wells were taken at times when the closest one could have been in the midst of drilling, fracking or the “flowback” that follows, when air-emission spikes are likely.

And none of the tests were on the Ishees’ property. What wafted their way, and in what range of concentrations, is unknown.

The tests detected low levels of individual chemicals, generally measured in less than one part per billion. But each sample contained anywhere from a dozen to more than three dozen substances. Benzene and xylenes without fail. Toluene almost as frequently. 1,3-butadiene once. And  other chemicals the Endocrine Disruption Exchange identified as affecting the immune system, including 1,2,4-trimethylbenzene, n-decane, n-nonane and n-octane.

The air samples were tested for a range of volatile organic compounds, but not every possible harmful substance. Formaldehyde and acetaldehyde, the former a carcinogen and the latter a probable one, are among the chemicals not on the list. They’ve been detected near wells and compressor stations in other locations.

Eaklor thinks it’s “just so crazy” that both he and his best friend developed cancer — and that he keeps finding more people from the area who are their age and in the same situation.

“That’s why I’m thinking it has to be something chemical,” he said.

Joe Ishee, a self-described conservative, believes the U.S. should tap its resources to be less dependent on foreign sources. He can see the impact that work has on the Texas economy. But he doesn’t think enough effort had been put into determining whether people and wells should coexist.

He sees potential parallels in history, people exposed to dangerous substances that were thought at the time to be safe. Both his parents died from cancer after working with asbestos.

“I would just like to see a nonbiased review of the process,” Joe Ishee said.

Last year Taylor, his father and stepmother moved to Denton, a city whose residents voted November 4 to ban fracking locally. He’s been in remission for two-and-a-half years.

But the battle is far from over. The stem-cell transplant that saved his life prompted graft-versus-host disease, the new cells turning on him and attacking his body. He’s been in and out of the hospital with complications ranging from infection to coma. His skin has thickened painfully, his face is periodically swollen from steroids and his teeth were undermined by radiation — he’s lost five and required a dozen root canals.

Taylor, 22, wants to restart the life he had to pause three years ago. He dreams of going back to college to become a physician assistant and help people fight off cancer.

While he lay in his hospital bed in October, though, his own struggle was top of mind. 

“I wouldn’t wish it on my worst enemy,” he said.

The industry’s view

Gas-extraction companies in Texas aren’t generally eager to talk about health concerns. None of the five largest operators in the Barnett region agreed to be interviewed. One referred questions to the Barnett Shale Energy Education Council, but that industry trade group did not respond to repeated calls.

Still, the council’s statements on its website make its position clear.

“While some activists would lead the public to believe that shale gas development, particularly through hydraulic fracturing, is a threat to public health, numerous scientific studies prove otherwise,” the council said.

One industry executive willing to talk directly is Chris Faulkner, CEO of Dallas-based Breitling Energy and a passionate defender of fracking.

“With proper setbacks, proper monitoring … I see absolutely no problem with fracking,” he said. “Managed properly, the process is safe.”

Some companies don’t do a good job coexisting with residents in populated areas, in his view, but he contends that health concerns have been fueled by environmentalists with an ax to grind. He summed up the arguments he’s heard as “everyone’s going to get cancer,” whether through contaminated air or water.

“I just don’t believe it,” said Faulkner, who lives atop the Barnett near two wells. “If that was the case, I wouldn’t drink tap water every day and I wouldn’t live where I live.”

He’s similarly skeptical of complaints about asthma and other non-cancer health woes that nearby residents have blamed on natural gas. In the case of Denton, the city that just banned fracking, Faulkner argues that air pollution from cars “far outweighs” what comes from the approximately 270 gas wells there.

Where’s the evidence, he asked, that gas development is to blame for anybody’s bad health?

Regarding the studies that suggest links — to respiratory problems, for instance, or birth defects — he said, “Look, I’m not a scientist, nor do I pretend to be.” He said the state and federal government would step in if there were a problem. Surely if there were any proof of health effects, he said, the Obama administration “would be all over us.”

“Obama does not like oil and gas,” Faulkner said.

But states are the industry’s primary regulators. After several decades of congressional action, the EPA has less control over oil and gas development than other industrial activities.

The agency says those limits include exemptions to parts or all of several major federal environmental laws, including the Clean Water Act, the Superfund law and the hazardous-waste Resource Conservation and Recovery Act.

The EPA’s efforts to control air pollution in Texas have been met with pushback — not only from the industry but also from the state. Texas is suing the EPA over ozone regulations in the Barnett region. And the TCEQ saw little to like in the EPA’s first effort to reduce nationwide emissions from oil and gas wells after appeals for help from residents, including ones from Texas.

“EPA has seriously underestimated the impact of these rules on industry,” the TCEQ said in comments for standards that were instituted in 2012 and are being phased in. “From a regulatory perspective these rules will significantly increase the permitting and enforcement workload for TCEQ.”

Chasing air

The reason it’s so tricky to quantify oil and gas emissions, let alone potential health impacts, is that they vary. A great deal, in fact.

Rob Jackson, an environmental scientist at Stanford University, said he’s seen many well pads with low emissions but some “leak a lot.” Even near a single site, two families could have very different experiences if one is typically upwind and the other downwind, he said.

“I’m not trying to generate a crisis,” Jackson said. “But I think air quality for people living near any industrial operation is a potential issue, and … air quality and human health issues are likely to be very important for a minority of people living near oil and gas operations. We just don’t have a good idea of who they are.”

When Texans suspect they fall in that group, they can contact the TCEQ and have an investigator come out to do brief testing. Bob Parr, whose family called the agency frequently in 2010 and 2011, has a term for that: “trying to chase air” — hours or days after the problem started, at which point the wind, the emissions or both might have changed.

It took two days on average for investigators to respond to air complaints related to oil and gas the last two fiscal years in the Barnett, Clawson said, though the agency prioritizes health complaints when those come in.

In some of the cases in which investigators found violations, they did so by arriving on the weekend or in the middle of the night — times when problems often seem to crop up, residents say.

Parr’s wife, Lisa, said she prevailed on the TCEQ to send an employee one particularly bad Sunday evening in 2010. The Parrs raise cattle in Wise County, a more rural part of the Barnett, and they’re ringed by wells. Investigators showed up in time to get a whiff of the fumes sickening the Parrs — 30 seconds in the plume of toxic compounds was enough for one of the men to feel dizzy and develop a sore throat.

The report described “very strong, offensive odors.” The air test came back with chemicals over the TCEQ’s guidelines. Contractors were just finishing up work called a nitrogen lift on one of the wells, and Lisa Parr doubts an investigation the next day would have done much good.

After another bad evening a few months earlier, she said, the TCEQ found nothing of concern in the air. That time, the investigator arrived the following morning.

David R. Brown, a public health toxicologist working for the nonprofit Southwest Pennsylvania Environmental Health Project, said his group’s measurements show emissions from wells and compressor stations typically have big fluctuations. Any monitoring that isn’t continuous can miss the irregular spikes reaching nearby residents, he said.

“The exposures are very high exposures for short periods of time,” said Brown, an official at the federal Agency for Toxic Substances and Disease Registry in the 1990s. “And so a person can get a tremendous dose in an afternoon.”

One problem after another

Annette Wilkes was sitting in her backyard in Flower Mound in 2004 when she got her first clue that a natural gas well had been drilled in the North Texas community, less than half a mile from her property.

“We saw them flaring,” said Wilkes, now 43. “We wondered what it was.”

She had to stop taking her children to the elementary school playground beside the field with the gas-well pad because her eyes would swell up in what seemed like severe hay fever. But she didn’t spend much time thinking about the new neighbor. She had other matters on her mind.

Her sinus issues rapidly worsened, eventually prompting two surgeries to try to get the infections under control. Around the same time, she lost much of her hair. Alopecia areata, her specialist said — an autoimmune disease.

“He put me in the allergy category,” she said, meaning she was reacting to something — what, no one knew. “He could not believe I’d never had alopecia before because it was such an extreme case.”

In 2006 her then 3-year-old son was diagnosed with a type of periodic fever syndrome that doesn’t have a known cause. His temperature would spike as high as 104 degrees for several days straight every few weeks, requiring frequent doses of medicine to keep the fever from turning dangerous.

Then Wilkes was diagnosed with Hashimoto’s disease, a thyroid-attacking autoimmune disorder. It was so advanced that she needed surgery to remove her thyroid.

Early on in this parade of bad news, Wilkes — who had previously been healthy — went searching for external explanations. Mold in the house, maybe? Her husband was having “bizarre skin reactions,” after all. But a mold test found nothing.

Others in her immediate neighborhood fell ill, too.

A next-door neighbor died of leukemia. Within a block, one woman developed a brain tumor and another was suffering from what turned out to be multiple myeloma.

Lorrie Squibb, diagnosed in 2010 with that blood cancer, said the first words out of her doctor’s mouth were, “What have you been exposed to?”

“I was 40 years old,” said Squibb, a stay-at-home mother who had just moved from Flower Mound to Michigan. “I was the second-youngest my oncologist has ever seen with multiple myeloma.”

Like Wilkes, Squibb is convinced gas development made her sick. As children in the neighborhood developed cancer, others had the same thought.

In 2010 and 2011, the Texas Department of State Health Services responded to the concerns by tallying several types of cancer in the two ZIP codes that cover most of Flower Mound to see whether the cases were higher than expected.

The state calculated its figures using a 99-percent confidence interval. That meant the number of cancer cases had to be so elevated that there was only one chance in 100 that happenstance alone was responsible.

Using this standard, staffers concluded that only breast cancer was higher than expected, and they thought population growth could explain that.

This spring an article in an environmental law journal said that if the state had used a 95-percent calculation, more typical in such cases, it would have found clusters of blood cancers among boys — lymphoid leukemia in one ZIP code and non-Hodgkin lymphoma in the other.

The attorney who wrote the article, University of Texas at Austin researcher Rachael Rawlins, also suggested that studying a smaller area than broad ZIP codes might have better addressed people’s fears about specific neighborhood exposures.

The state health agency responded with another analysis — this time using a 95-percent calculation with more recent cancer data, but still focused on the two ZIP codes that bisected the town. Christine Mann, a spokeswoman for the state health department, said it wasn’t possible to analyze the cases in neighborhoods because the numbers would be too small to produce statistically valid results.

Again, only breast cancer was higher than expected. Again, the agency suggested that problems other than environmental exposure could explain it.

“Relative to other risk factors, the chance of a person developing cancer as a result of exposure to an environmental contaminant is small,” the July report said. It cited an estimate, drawn from 1981 research, that exposure to environmental contaminants is to blame for only 2 percent of cancer deaths.

But that figure is far from universally accepted. A presidential advisory panel declared in 2010 that “the true burden of environmentally induced cancer has been grossly underestimated.”

When asked about that, Mann said the point of the Flower Mound study wasn’t to evaluate “environmental or other risk factors,” simply to look at the number of cancer cases there.

Flower Mound now has among the most restrictive gas-development rules in the Barnett, including a setback preventing drilling within 1,500 feet of homes. Wilkes, who moved her family out of Flower Mound in 2006 after deciding gas-extraction was the root of her problems, returned three years later to a neighborhood where she felt comfortable no drilling would occur.

Her health has improved. Her son’s fevers stopped.

Like other residents, she sees no way to definitively prove why it all happened in the first place. 

“That’s what drives me crazy,” Wilkes said.

Going to court

That definitive-proof problem hampers residents who want legal redress. Health impacts by their very nature are hard to prove, said Ilan Levin, a Texas-based attorney who is associate director of the Environmental Integrity Project, a nonprofit research and advocacy group.

“So, of course very few people bring suits for injuries,” he wrote in an email. “Of those who do, the vast majority settle and sign gag orders.”

Those gag orders — called nondisclosure agreements — pose a problem for people researching health effects.

“We’ve had sites where we were monitoring 14 people and the industry came in and paid each one $50,000 to get out of the study,” said Brown, with the Southwest Pennsylvania Environmental Health Project. “We can’t follow them anymore.”

A rare case that went forward without settling — and succeeded — was brought by the Parrs, the Wise County couple who live near the spot where the TCEQ investigator was sickened by fumes in 2010.  A Dallas jury awarded them $2.9 million in April, a verdict the company has appealed.

Aruba Petroleum said in a statement that the award “represents an attempt by the jury to compensate the plaintiffs for alleged toxic tort injuries that fail for lack of causation evidence required under the law.” The company owns wells near the Parrs, including the one the TCEQ found in violation, but is not the only operator in the vicinity.

“No evidence was presented that proved that plaintiffs’ alleged injuries resulted from Aruba’s operations,” the company said in its statement.

The Parrs, whose suit alleged the company had created a nuisance, came with documentation that most people who suspect health impacts can only wish they had.

At a doctor’s suggestion, Lisa Parr started a health diary of her mounting symptoms in the hopes of figuring out a cause. Soon after, the Parrs discovered that a family on their street was keeping another detailed log — of emission events from nearby wells. Those events matched up with times Lisa Parr felt particularly bad, including occasions when she ended up at the emergency room, she said.

The neighbors had also hired a scientist to test their air. Bob Parr, on hand to fix a fence when the consultant arrived with the results, listened in dawning comprehension as she explained the implications of the chemicals she’d found.

Health problems had already hit the entire family by that point, including Lisa’s daughter, then in elementary school. All three of them and some of their horses had nosebleeds. Cows were giving birth to calves that weren’t right — tiny, hairless and in some cases dead.

Bob Parr’s blood pressure rose. Daughter Emma Duvall was diagnosed with asthma. And Lisa Parr, a stay-at-home parent at the time, could barely function.

She had trouble speaking and walking. Rashes broke out over her body. Several times a week, she’d wake up and vomit something that looked like foam. In July 2010 an environmental health specialist tested her blood and found many of the chemicals the TCEQ had just detected in the air four days earlier.

The specialist urged them to move. The family squeezed into the small house that serves as Bob Parr’s office.

After the TCEQ violation and the lawsuit, Aruba shut down the well the Parrs suspected was the worst offender. That helped, they said. They’re back in their home.

But Lisa Parr, 46, worries about the long-term effects. And she doesn’t know whether the shut-down well might someday be restarted.

“I have asked in depositions,” she said. “They won’t answer us.”

New neighbors

The new neighborhood in Denton, a city of 123,000 north of Argyle and Flower Mound, looked perfect. Maile Bush and her husband just wanted to know the plan for the empty land nearby. Homes and a future park, the builder told them.

They bought in four years ago — missing, as many neighbors did, the paragraph buried in closing paperwork that warned how else the land could be used.

The rigs went up in August 2013. Drilling was about to commence 450 feet from Bush’s house in one direction and 750 feet away in another.

Another family of four, the Ogletrees, calculated that they were just 182 feet from the closest site.

The work stretched to April, an industrial operation amid suburban brick homes and beautiful lawns. Heavy equipment arrived, along with too many vehicles to count — a single shale-gas well can demand hundreds of truck trips.

Bush tracked the noise with a monitor, getting readings on her property consistent with a kitchen blender on high. “Frac sand” — which releases fine particles that can cause the lung disease silicosis — sat in big piles and blew everywhere, she said. Now there’s a compressor station in the neighborhood, too, its equipment sending out emissions that another North Texas resident picked up on an infrared camera.

Bush, who said she’s not prone to sinus infections, had one this year so bad that four rounds of antibiotics didn’t help. She had surgery in October and still isn’t back to normal.

She’s more worried about her son, though. Before the work started, his asthma was under control. Now, she said, he frequently needs two inhalers a day rather than one. He went from a no-nosebleed kid to a boy who develops them weekly.

“I understand that correlation is not causation, I understand that, but it’s kind of suspicious,” said Bush, 41, who keeps both her children indoors as much as possible now. “If there is a chance, a tiny chance — if there is a 1 percent chance — that fracking is contributing to my child’s problem, then there is a problem. And we need to stop and take a step back and figure out what the impacts are before we just go off willy-nilly making people sick.”

The state Railroad Commission, which despite its name regulates drilling, said it sets no minimum distance between gas wells and homes. The TCEQ-mandated minimum in the populated Barnett is 50 feet. Cities can establish setback rules if they wish.

Denton had passed a 1,200-foot setback seven months before the rigs came to Bush’s neighborhood. But operator EagleRidge Energy contended that it was grandfathered under older rules, and Denton officials said their hands were tied. EagleRidge, which didn’t respond to calls seeking comment for this story, moved ahead.

Residents who’d pushed for the bigger setback now consider it toothless because so much of the city had already been permitted for wells. They said they saw only one option left. They gathered signatures to force a vote on a fracking ban.

Locals and the activists who helped them were outspent nearly 10 to 1 by the industry, but the ban passed by a wide margin last month — 59 percent to 41 percent.

That made Denton the first Texas city with such a ban. The lawsuits hit the next morning.

One came from the Texas Oil & Gas Association, which argued that the rule unconstitutionally treads on regulatory ground reserved for the state. The ban would effectively stop drilling in Denton because Barnett wells aren’t economical without fracking, the trade group said.

The other suit targeting the ban was filed by a state agency, the Texas General Land Office.

“If it were allowed to be enforced it would hurt the schoolchildren of Texas, who earn hundreds of millions of dollars a year on oil and gas production on Permanent School Fund lands,” Texas Land Commissioner Jerry Patterson said in a statement.

Some state legislators have suggested they’ll seek a law to ban such bans. But Denton Councilman Kevin Roden has called on legislators to treat the vote as a different sort of wake-up call.

He’d like cities to get a share of the production taxes now flowing to the state, and he wants locals to have more regulatory authority, such as the explicit ability to limit gas development to industrial areas. Otherwise, he said, legislators risk “turning the hearts of your citizens away from this industry.”

Trying to get out, and already gone

Rebecca Williams’ health began its U-turn from good to bad last year. Her husband’s followed a few months later. Some of their problems are identical: migraines, respiratory problems, nosebleeds, vomiting, forgetfulness, rashes. One of their dogs gets rashes, too.

“I try not to go outside of my house, because when I do, I get sick,” said Williams, 45, who lives northwest of Fort Worth just outside Azle, near a compressor station and heavy gas-well development.

She’s had pneumonia three times within the last year and a half, despite a vaccination against it, and twice her lips and fingers turned blue. The last time, suspecting the pneumonia was chemically induced, she thought to ask whether her white blood cell count indicated a viral or bacterial cause. Neither, her doctor said.

In addition to pneumonia, she’s had one respiratory infection after another. Antibiotics don’t seem to help. She’s had to get a nebulizer, which turns medication into a mist to be inhaled.

Williams is a nurse who works for a health insurer, reviewing multiple cases a day, and said she’s seeing certain diseases increase in gas-well-intensive areas. Leukemia, heart attacks among people in their 30s and 40s, respiratory illnesses, certain autoimmune disorders.

“Something’s not right,” she said.

She wants to sell her spacious house and get out, but it was on the market for more than six months this year with no offers. She plans to cut the price substantially and try again.

Jana DeGrand did move — after her gallbladder attached itself to her small intestine, after the appendix her surgeon described as “obliterated” was removed, after her heart attack at age 50. She moved from her town straight off the shale.

DeGrand lived in Argyle, about a mile from the Ishees. She was fine until late 2007, after several years of drilling.

“It kind of snowballed after that — lots of things that the doctors were scratching their heads [over], saying, ‘We don’t know why,’” said DeGrand, now 53.

Only two TCEQ air samples were taken near her during the years her health worsened, neither on her property. Both tests picked up chemicals with known cardiovascular and gastrointestinal effects, though in very low concentrations.

Like Taylor Ishee, DeGrand lived near numerous wells. For several months a sludge pit for a well pad that residents ultimately fought off sat 100 feet from her back fence, filled with an oily substance that smelled like diesel. And she was about two miles north of the Argyle Central Facility, a compressor station built in 2010 that people nearby repeatedly complained about.

Compressors push gas along pipelines to keep it flowing. Emissions ranging from methane to volatile organic compounds can come from multiple sources on site: the compressor engines, the dehydration units removing water from the gas, the tanks holding that waste.

The Argyle Central Facility, surrounded by homes, had all that equipment — four engines, a dehydrator and 19 tanks at the time it was built.

It falls into a regulatory category called “permit by rule.” If operators estimate their facility’s emissions will fall under a certain level — including no more than 25 tons per year of volatile organic compounds and some other types of air contaminants — they can simply get cracking. Registration is required in some cases but not all.

When the TCEQ did a one-time tally of Barnett compressors and equipment authorized under that rule and similar ones in 2009, they topped 8,600.

No other oil or gas site in Denton County received as many air complaints in the last five years as the Argyle Central Facility, according to the Center’s analysis. None of the 63 complaints prompted the TCEQ to issue a violation notice.

But the EPA did so in 2011 after inspecting the site. Investigators found five tank hatches releasing methane, which the EPA described as “an extremely hazardous substance.” (It’s a flammable and potent greenhouse gas, though the operator said the amount released was so minor that it posed no danger.)

Separately in 2011, the facility’s operators documented 510 “blowdowns,” the venting of gas and potentially dangerous chemicals. Forty-five percent of those events happened in the lead-up to the day that March that DeGrand collapsed in her garage, face numb, heart no longer functioning properly. Whether one had any connection to the other, DeGrand can’t know, but she’ll always wonder.

The operator at the time, a subsidiary of energy firm Williams Cos., estimated that the 2011 blowdowns emitted a total of 43,000 pounds of gas and 43 pounds of volatile organic compounds, known as VOCs. That’s well below permit-by-rule limits and didn’t constitute a violation, the TCEQ said. All told, the company emitted about 6.3 tons of VOCs that year, the agency said.

Tom Droege, a spokesman for Williams, which no longer owns the facility, attributed many of the complaints to the high level of activity on the site during construction. Of the blowdown emissions, he said, “residents would likely get more of an exposure from VOCs by living close to any of the local highways.”

Without clear information on what she was breathing, DeGrand can only say how she felt while she lived in Argyle. And what happened after she moved north of the Barnett in July.

“Time will tell how lasting and permanent the effects are, but I do know I’m better since I got out of there,” she said. “I know several people who’ve left. They all got better.”

Jim Morris of the Center for Public Integrity and Lisa Song and David Hasemyer of InsideClimate News contributed to this article.

Taylor Ishee with mother Anita Ishee at the Baylor T. Boone Pickens Cancer Hospital in Dallas in October as he recovered from an infection. His cancer is in remission, but its ripple effects continue to haunt him.Jamie Smith Hopkinshttp://www.publicintegrity.org/authors/jamie-smith-hopkinshttp://www.publicintegrity.org/2014/12/11/16396/health-worries-pervade-north-texas-fracking-zone

Smoke, odors and drifting foam in Fort Worth suburb stir frustration over fracking

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MANSFIELD, Texas—The 15 natural-gas wells near a high school, a daycare, a performing arts center and a neighborhood might be hard to see, but they’re difficult to ignore.

Smoke, foul odors and strange substances have come from them, according to residents’ complaints to regulators. Foam from one of the sites floated into the neighborhood a year ago, falling on trees and lawns. Another time, the well operator vented gases and chemicals directly into the air without attempting to contain them or burn them off, drawing a violation notice from the state. An accidental gas leak in September was fixed only after a neighbor heard the hissing sound as she stood at her back door.

It’s taken months for a handful of citizens in this suburb of Fort Worth to gather information about these events, cobbled together through open-records requests and persistent emailing. Each new piece of the puzzle makes them more upset.

Now they’re pressing for tougher local regulations, hoping their city of 61,000 will join the growing number of North Texas communities that have tightened their public-safety rules in this birthplace of modern hydraulic fracturing.

“They’re just going to have to be more protective of people,” said Tamera Bounds, a 33-year resident of Mansfield who’s active in the regulation push.

Her city sits atop the Barnett Shale, a gas-rich formation that stretches across populous areas, including Dallas and Fort Worth. Hydraulic fracturing — “fracking,” the process of shaking loose gas and oil with water, sand and chemicals — made it possible to tap what had previously been all but trapped.

Now the Barnett has more than 16,000 gas-producing wells and thousands of engines, tanks and other necessary infrastructure, all helping get fuel to consumers but also emitting air pollutants ranging from methane to the carcinogen benzene. Their proximity to people — and the mounting evidence that such proximity can carry health risks — has driven grassroots efforts in some communities to get more control over how or where the sites operate.

Residents typically focus on local rather than state rules. Texas is an enthusiastic supporter of oil and gas, reaping billions of dollars a year from taxes and royalties paid on that production.

When the Barnett city of Denton banned hydraulic fracturing last month, one of the lawsuits filed the next morning came from the state’s land commissioner.

The ban — approved 59 percent to 41 percent by voters — is the first in a Texas city. Other types of local rules are more common, such as buffers separating wells from homes and other buildings.

State environmental regulators require only a 50-foot cushion in the Barnett, leaving it up to towns and cities to decide if that’s sufficient.

Mansfield has a 600-foot buffer between well sites and residential property lines, though homeowners can agree to halve it. When homes are built after the wells, the minimum distance is 100 feet.

That’s similar to rules in the cities of Fort Worth and Arlington to the north. Bounds’ Mansfield Gas Well Awareness group wants to take a cue from two other Barnett communities — Dallas and the upscale town of Flower Mound, which both set 1,500-foot buffers.

The group also asked for mandatory emission controls on existing wells less than 1,500 feet from sites such as homes.

The Mansfield City Council held a work session last week to hear those residents’ concerns and get feedback from energy companies and state regulators. Mayor David Cook said city staff will look at other cities’ ordinances and present proposed revisions to the council.

Many Texas communities are having similar discussions, said Mansfield spokeswoman Belinda Willis.

“I think for a lot of cities, there was a learning curve with all of this activity,” Willis said.

Downwinders at Risk — a North Texas group that presses for cleaner air — sees Mansfield as a significant battleground in the war over oil and gas regulations.

Mansfield is “more blue collar, and more pro-industry than any other city that’s been challenged over their old drilling ordinance in the last several years,” Downwinders’ Jim Schermbeck said in a call-to-action blog post last week. One of the city’s councilmen, he pointed out in another post, heads government-relations efforts for a major Barnett gas-exploration firm.

Drilling in Mansfield began almost a decade ago as the Barnett boom intensified. Now there are 206 natural-gas wells here — an average of five per square mile — with 306 more approved. With them has come infrastructure such as the Mansfield Compressor Station, which keeps gas moving through the pipeline.

The pace of new well activity slowed in the last few years, as it has throughout the Barnett. Lower gas prices pushed energy firms to shale plays with more oil. But residents who want Mansfield to institute a 1,500-foot setback expect a fight.

Dallas passed its ordinance a year ago to sharp criticism from the industry, which said it amounted to a de facto ban.

Chris Faulkner, chief executive of Dallas-based Breitling Energy and an outspoken advocate of fracking, summed up his thoughts on what constitutes a reasonable buffer: “Between 600 and 1,200 feet — let’s just call it an average of 1,000 feet. I don’t think any of us would have a problem with that.”

Some residents think that’s plenty. In Texas communities that considered bigger setbacks, criticism came not only from operators but also from residents concerned about the potential effects on royalty checks. Some homeowners hold the mineral rights on their property; some don’t.

And the industry is such a part of everyday life in Texas that most residents who press for more gas-well regulation say they’ve been criticized by neighbors. What if new rules affect someone’s job? What if drawing attention to problems decreases property values?

“There’s a big division out here,” Bounds said of her neighborhood. “And I’m sure people have that in other neighborhoods.”

Digging for clues

When Lance Irwin moved to Mansfield 2 and a half years ago, he noticed the school and performing arts center south of his neighborhood of handsome brick houses and felt good about the location. He had no idea about the gas wells and infrastructure in between.

The Mansfield Compressor Station is the most visible of the sites, perched on a hill overlooking the two well pads, the school, the center and the neighborhood, but it’s no wonder he didn’t know what it was. The station looks like a couple of barns.

Then EagleRidge Energy drilled and fracked more wells on both pads last year, bringing the complex to the entire neighborhood’s attention.

The Texas Commission on Environmental Quality, known as the TCEQ, sent investigators several times in response to complaints about diesel odors and a white plume rising from the pad sites in October 2013. They didn’t find any violations, and the residents who’d complained were duly informed.

But a separate “reconnaissance investigation” on one of those well pads that same month did end with a violation notice.

Irwin, whose son was at the nearby day-care center the day the air-quality violation occurred, discovered it only after he filed open-records requests for all documents associated with the sites. He wasn’t happy that the TCEQ hadn’t said anything to residents.

An agency spokesman, Terry Clawson, said by email that residents are notified about investigations into their complaints, but the overlapping reconnaissance effort was not associated with the complaint investigations.

The investigator showed up while EagleRidge was conducting “flowback” operations on a well, when the pumped-in water and chemicals come back up along with volatile organic compounds from the formation. That’s a point at which air pollutants can spike if not handled carefully, and the investigator found EagleRidge didn’t follow rules intended to reduce those emissions.

The company could have captured the flowback, a process known as a “green completion” that will be required of gas-well fracking or refracking operations in the country starting Jan. 1, or could have burned the emissions to destroy most of the chemicals. Instead, EagleRidge handled flowback from several wells on site by venting the emissions directly into the air, the TCEQ investigation found.

EagleRidge, which did not return calls seeking comment, told the TCEQ that Mansfield did not allow flaring — a method of burning emissions. It wasn’t clear from the report why the company didn’t opt for another combustion method, which the investigator said is permitted in the city, or a green completion.

When EagleRidge brought in a combustion device to deal with future flowback operations, the TCEQ investigator considered the violation resolved.

Irwin went looking for help. Sharon Wilson, perhaps Texas’ best-known drilling-reform activist, blogged about what Irwin had found, commenting that “breaking the law in Texas is actually cheaper” than getting required equipment.

“That’s how we roll in Texas!” wrote Wilson, who joined environmental group Earthworks’ Oil and Gas Accountability Project after her own bad experience on the shale.

Irwin kept digging. He gathered information about potentially hazardous ingredients in the foaming agent EagleRidge used that landed in his neighborhood last year. About the gas leak Bounds discovered in September, five hours after it had started. About an oily substance neighbors found on their properties in May.

Some of his requests produced conflicting information. The material-safety data sheet provided to the TCEQ about the foam incident referred to one foaming agent, described as a skin and respiratory irritant in cases of a single overexposure. The sheet Irwin received from the local fire department referred to another product, that one “toxic to the reproductive system.”

Other efforts led to dead ends.

The TCEQ said the oily substance didn’t appear to come from an oil or gas facility, based on a microscope analysis that found plant and insect material in it. But the analysis also found a substantial amount of unidentified particles, and Irwin wondered if the compressor station could have been the source.

So he asked for documentation on whether the complex had a “blowdown” that day, a process by which gas and a mixture of compounds are vented. The TCEQ directed then-owner Texas Energy Midstream to produce the records operators are required to keep.

What Irwin got back was a blank spreadsheet.

“It very well could have been just some weird, anomalous thing that happened that has nothing to do with them,” Irwin said of the oily substance, “but the fact that they can’t produce a record … is ridiculous.”

Texas Energy Midstream, which sold the compressor station this fall, did not respond to requests for comment.

As he dug deeper, Irwin connected with other concerned residents, including Bounds. Mansfield Gas Well Awareness was born. The group’s year-long efforts to get more protections picked up steam in the last several weeks after Cook, the mayor, asked the council to hold the work session.

Cook said city staff will look at other communities’ rules and develop proposed changes to the ordinance that could be ready for the council to see in mid-January. He’s not sure what would be an appropriate setback, but he’s on board with the idea that emissions-control equipment can help.

“The technology is better and better every day, so we have to take advantage of the technology to protect our citizens, protect our property values, while at the same time respecting the rights that [mineral] owners have,” Cook said.

He expects Councilman Stephen Lindsey’s expertise will be helpful there, given his day job with oil and gas exploration firm Quicksilver Resources. Downwinders at Risk sees that as a conflict of interest, but Cook, noting that Quicksilver doesn’t drill in Mansfield, compared it to the way the council turns to him with some legal questions — he’s an attorney — and to an accountant on the panel when an issue is number-heavy.

Lindsey said he sits on the city council for the same reason he served in the Army after college and the State Department during the Iraq war: “I wanted to serve my country.” He said he testified before the state legislature last year to help stop a bill that would have taken away much of the local control cities have to regulate the industry.

“I do realize the confluence of growing activity among urban/suburban areas, that’s the friction point,” he said, speaking not as a Quicksilver employee but as a councilman. “My perspective is the industry could and should be doing a lot more things. … It is a highly regulated process with room for improvement.”

For Irwin, it’s hard not to be distrustful. Because new rules in one city can prompt action in others, he’s concerned that Lindsey — as senior director of governmental affairs for Quicksilver — has incentive to work against major change in Mansfield. Irwin figures that what he sees as safer standards to protect families, operators see as extra costs.

Lindsey said that if he ever thought he couldn’t “fairly provide perspective in my role as an elected official,” he’d recuse himself or resign.

On one major point Lindsey sees no potential push-pull between his two jobs. Because the state protects mineral rights, a drilling ban would be a nonstarter for a Texas city, he said. Both lawsuits targeting Denton’s fracking ban contend it’s unconstitutional because it would effectively stop drilling.

Bounds, a physical therapist assistant, said her allergies and asthma were worse during the period wells were drilled and fracked beside her neighborhood. It seems to her that companies think they have the constitutional right to pollute in the pursuit of minerals.

“I say, ‘No, you don’t,’” Bounds said.

Jim Morris of the Center for Public Integrity contributed to this article.

A gas-well rig rises behind a middle school football field in Mansfield, a suburb of Fort Worth.Jamie Smith Hopkinshttp://www.publicintegrity.org/authors/jamie-smith-hopkinshttp://www.publicintegrity.org/2014/12/11/16402/smoke-odors-and-drifting-foam-fort-worth-suburb-stir-frustration-over-fracking

A long-term blank check for “war” spending

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The U.S. military's budget request now pending on Capitol Hill includes a particularly notable oddity inside the special fund meant to support combat operations in Iraq and Afghanistan: a new $810 million U.S. defense initiative to "reassure" Europeans of their security in the wake of Vladimir Putin's Crimean land grab.

This is not how America’s war budget – otherwise known as the Overseas Contingency Operations (OCO) fund – is supposed to work. The White House in 2011 reaffirmed that the OCO, originally established in 2001 under a different name, was for “temporary and emergency requirements” associated with U.S. combat operations in Iraq and Afghanistan. Now, many experts say its continued use is emblematic of a five-year collapse in Washington's fiscal discipline.

The OCO budget isn't subject to spending limits that cap the rest of the defense budget for the next seven years; it's often omitted altogether from tallies of how much the military spends each year; and as an "emergency" fund, it's subject to much less scrutiny than other military spending requests.

This sort of special war funding was supposed to decline and then disappear as combat operations in Iraq and Afghanistan wound down. But that target has receded, if not disappeared altogether, as the OCO fund has become a larger catchall -- a slush fund used by the military services, by lawmakers, and by the White House to escape budgetary constraints, officials and independent experts say.

Although President Barack Obama promised as a candidate in 2008 to “end the abuse” of wartime emergency spending, it’s now clear he will not do so before leaving office in 2016, these experts agree. This year, the main defense authorization budget is likely to come in at a cool $521.3 billion, snugly within the legal limits for federal spending in 2015. But the OCO includes an additional $63 billion. As a result, more than a tenth of all Pentagon spending will remain uncapped and subject to much less scrutiny than the remainder.

The European initiative is just one of many programs in the OCO budget that have little or nothing to do with the Iraq and Afghanistan wars. The new Defense Authorization Act for 2015, which may be signed by the president in coming days, includes $55 million to retain the “air superiority presence” of the U.S. Air Force. Another $351 million of OCO funds would go to Israel for its Iron Dome missile defense system.

In the OCO portion of the separate omnibus appropriations bill for 2015, which Congress is trying to pass before the holidays, another $1.2 billion is set aside for the military’s reserve components to buy “miscellaneous equipment” the Pentagon didn’t even seek. And $3.3 billion is allocated for classified Air Force equipment purchases.

The OCO budget — which is higher than the entire budgets for most federal departments — as a result has become one of those Washington abominations that makes advocates of fiscal discipline inside and outside the Beltway shake their heads in dismay, even as they forecast its continued existence as a supposedly necessary adjunct to the main, or so-called “base” Pentagon budget. It's valued because the OCO fund is able to absorb costs that would otherwise push the base budget over its limit, an event that by law would trigger a variety of punishing mew spending cuts for the Pentagon.

“We figure there’s about — well, there’s a lot of money in the OCO that should probably be in base. It’s not because we didn’t want it to be in the base; it’s just happened over twelve years,” said Deputy Defense Secretary Robert Work in September at a Washington meeting of the Council on Foreign Relations. Going forward, he said, the government has three choices: remove the spending caps on the base budget, combine OCO and base funding without removing the caps, or agree that OCO will continue into the future. He predicted the third option.

“With the crisis in Ebola, with all of these things, the European reassurance initiative, we’re going to have to have overseas contingency operations funding for some time,” Work said.

It’s not much of a secret anymore that OCO spending is only occasionally for emergency military tasks. Todd Harrison, an analyst at the Center for Strategic and Budgetary Assessments, estimates that about half of the OCO budget in the new authorization bill covers expenses that actually should be included in the base budget.

Harrison says that portion has grown since 2012, based on the simple fact that the number of troops deployed in Afghanistan is shrinking faster than OCO spending. The Defense Department’s budget request for 2015 anticipated that troop levels in Afghanistan would drop by two-thirds from the previous year — but requested only a 36 percent cut in OCO funding for Afghanistan. As a result, OCO spending per service member in Afghanistan has risen to more than double what it was last year.

Jamal Brown, deputy press secretary for the Office of Management and Budget, did not return calls for comment. But other sources said that the administration, faced with a $115 billion gap over the next four years between what the budget caps allow and what the Pentagon wants to spend, now appears to regard OCO as a permanent fixture.

The Government Accountability Office noted in a June 2014 report, for example, that most of the Pentagon’s spending for the Central Command is in the OCO budget, even though many of those costs will persist beyond 2016, when U.S. operations in Afghanistan are supposed to end.

In the report, entitled “Guidance Needed to Transition U.S. Central Command’s Costs to the Base Budget,” GAO analyst John Pendleton urged the department to craft that guidance quickly and set a deadline for completing the shift. Although the Defense Department promised to provide such guidance by the end of July 2014, it has not yet done so, according to the GAO.

“This is an iterative process, not a one-time bit of guidance. The question of migrating costs from OCO to Base is being discussed at length throughout the ongoing budget process,” said Bill Urban, Defense Department spokesman, in an emailed comment. He declined to elaborate.

New programs added with little scrutiny

Moreover, the OCO budget isn’t a fiscal salve only once a year. The Defense Department comptroller can — and often does — ask the House and Senate committees on appropriations and armed services for permission throughout the year to add new spending to the OCO budget if programs already in that budget wind up costing less than anticipated. Often, additional non-emergency expenses sneak in during that process.

Over the past four years, for example, the Defense Department’s comptroller has sought congressional approval to add roughly $20 billion worth of expenditures to OCO to cover costs not previously stated in the budget, including many that do not appear to be emergencies or directly related to combat operations, according to a CPI tally.

These “reprogrammings” are typically approved without a public hearing, based merely on written assent from the four chairmen of Congress’s defense-related committees. Their letters are rarely made public.

On occasion, however, the Pentagon submits a reprogramming request for OCO funding so outlandish that lawmakers reject it publicly. That’s what happened on September 8, when Comptroller Michael McCord requested $1.5 billion in OCO funds to purchase 21 Apache helicopters, eight F-35 Joint Strike Fighter planes, and assorted spares and repair parts to replace aircraft that the U.S. Army, Navy, and Air Force had lost in battles over the past two years.

The chairman of the House appropriations defense subcommittee, Rodney Frelinghuysen, R-N.J., responded in a letter that his panel was concerned that OCO funds, “which are provided by Congress specifically for ongoing combat operations and related efforts,” were being used to cover Pentagon purchases that had “only tenuous links” to current combat operations. The Apaches and F-35s were characterized as replacements for lost battle equipment, he said, but were already in the Pentagon’s base budget for future years.

Gordon Trowbridge, spokesman for the Senate Armed Services Committee, said he would try to supply copies of other such letters, but did not. Vince Morris, spokesman for the Senate Appropriations Committee, and Claude Chafin, spokesman for the House Armed Services Committee, said their committees never publicly release such letters and declined to explain why.

A close examination of OCO reprogramming requests that sailed through over the past three years reveals many that seem unrelated to core Iraq and Afghanistan emergency fighting needs: an $86 million request for unemployment compensation for ex-servicemembers; a $13.7 million request for funds to help prosecute alleged 9/11 conspirators; and a $104.5 million request to help test a bomb capable of destroying bunkers 200 feet underground.

Reprogrammings like these are technically allowed only if some of the OCO funding that Congress has already approved suddenly turns out to be greater than necessary. And this winds up happening fairly often. More than half of the nearly $20 billion in recent OCO reprogramming funding has “become available”  because Afghanistan combat or direct support costs were “lower than budgeted,” “overestimated,” “reduced,” “lower than forecasted,” and a host of other synonyms used by the Defense Department comptroller for “wrong.”

Using ongoing combat operations to expand the Pentagon’s budget is of course a time-honored tradition. Former President George W. Bush used “emergency supplemental” funding requests for the wars in Iraq and Afghanistan to add hundreds of billions of dollars to his annual defense budgets. He was able to do so thanks to a section in a budget statute that defined “emergency requirements” as whatever the president and Congress specified, and exempted those funds from the regular budget caps. 

After Obama’s election, many expected him to carry out his campaign pledge to end the abuse of emergency funding. In 2009, the Office of Management and Budget set some firm criteria for OCO expenditures, and in 2010, it tightened them further to restrict the geography, timeframe, and purposes of such spending, as well as to exclude soldier salaries that would be paid whether the soldier was deployed or not. The applicable areas are supposedly only those “in which combat or direct combat support operations occur.”

Defense Department spokesman Urban wrote that the criteria are currently “in force.” But he said the Pentagon sometimes includes “investment-type” funding in OCO. The budget office criteria allow such funding for research and development projects deliverable within 12 months, but Urban acknowledged that for some OCO programs, the funding stream could be used for longer periods.

“Getting an agreement on these criteria was a significant challenge, because OCO is effectively free money,” said Kathleen Peroff, who was the deputy associate director of national security at the Office of Management and Budget until July 2013. And afterwards, the Pentagon sometimes sought — and got — exceptions to the criteria, granted by political officials in the executive office of the president, Peroff said.

“Disciplined intentions sometimes weakened in the face of hard realities of what trade-offs had to be made,” she added.

She said that a $25 million reprogramming request approved in July – after she left – involving software upgrades to Army equipment is a good example of how the OCO budget has been used inappropriately to fund projects that would be needed even if no troops were in Afghanistan.

Gordon Adams, who served as associate director for national security and international affairs at the Office of Management and Budget in the 1990s and returned briefly to OMB as part of Obama’s transition team in 2009, said in an interview that “we had a sort of informal understanding with the Defense Department that they would follow those guidelines when submitting OCO requests. And if you detected that they’d been honored in the breach, you’d be right. Every year, that breach gets a little wider.”

“The trouble with OCO now is that all three stakeholders have discovered it,” he added. “The Pentagon discovered it first. Then the appropriators discovered, ‘Ahh, we’re operating under caps, but if I move some funds over to OCO, I make room for some stuff the Pentagon didn’t ask for.’ And then this year, the White House discovered it, with programs like the European Reassurance Initiative.”

In June, Reps. Mick Mulvaney, R-S.C., and Patrick Murphy, D-Fla., added an amendment to the 2015 defense bill to give the OMB criteria legal standing. But other lawmakers deleted the provision, citing the fact that the criteria had not been updated in more than four years and noting that “there have been significant fact-of-life world events which dictate a need to re-examine and update those criteria.”

“We’ve been told since we got here that OCO was going away. It was for extraordinary programs, it was not part of the base budget. And clearly now this administration wants to have the OCO money available to them as badly as the Bush administration did,” Mulvaney said in an interview.

Obama’s affinity for the spending dodge was evident in his 2015 request, which said OCO funding is necessary to “support DOD’s strong forward presence in the broader Middle East region,” including by “assuring our regional partners, deterring aggression, and working with our partners to counter terrorism.”

Far from the original OCO task of providing direct support for combat operations in Iraq and Afghanistan, the administration’s current OCO mandate anoints the Pentagon a global therapist, bodyguard, and trainer — and gives it uncapped funding to do all that those roles entail.

A group of selected Marines representing Camp Pendleton in California listen as Secretary of Defense Chuck Hagel answers their questions during a visit to the base, where he announced the deployment of another 130 U.S. troops to Iraq, in August of 2014.Julia Hartehttp://www.publicintegrity.org/authors/julia-hartehttp://www.publicintegrity.org/2014/12/11/16479/long-term-blank-check-war-spending

'Revolving door' spins between AT&T, GSA

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That AT&T just won an eight-figure contract to provide the federal government’s General Services Administration with new mobile devices isn’t itself particularly notable.

What is: Casey Coleman, an AT&T executive responsible for “delivering IT and professional services to federal government customers,” oversaw the GSA’s information technology division and its $600 million IT budget as recently as January.

Officials both at the GSA and AT&T say all federal rules and regulations limiting former government officials’ interactions with current government employees have been followed during the contract bidding process.

“We won the contract on the merits," AT&T spokesman Jim Greer told the Center for Public Integrity. "GSA has been a customer of ours for decades. As in the past, our work on the [request for proposal] adhered to all GSA and federal guidelines.”

Added GSA spokeswoman Jackeline Stewart: "Casey Coleman was long gone before we received any proposals and had no involvement with the evaluation of the proposals that GSA received ... She had no direct or indirect part or involvement in the procurement or subsequent award. AT&T was awarded the contract through a competitive process.”

While there’s no evidence anything illegal took place, the public still should be aware of, and potentially worried about, Coleman’s spin through the revolving door between government and companies that profit from government, said Michael Smallberg, an investigator at the nonpartisan watchdog group Project on Government Oversight.

“Someone in Coleman’s position can provide some really valuable advice and guidance behind the scenes that helps win a contract,” Smallberg said. “The concern is that this can give one company an advantage over another, and you want to make sure the government is getting the best deal for taxpayers.”

Federal government employees leaving public service for lucrative private sector jobs is commonplace. The Project on Government Oversight has called on the federal government to — among other actions — ban political appointees and some senior-level staffers from seeking employment with contractors that “significantly benefited” from policies they helped formulate during their tenure in government.

Former high-level government staffers, while generally prohibited from directly wrangling with their previous employer, may still play certain behind-the-scenes roles as private companies compete for lucrative contracts with government agencies.

For example, voluminous federal regulations state that “nothing … prohibits a former employee from providing assistance to another person, provided that the assistance does not involve a communication to or an appearance before an employee of the United States.”

Coleman, whose official title is client executive vice president of AT&T Government Solutions, could not herself be reached for comment. Upon joining AT&T, she said she looked forward to "helping federal customers achieve their mission in innovative, strategic ways by combining AT&T’s impressive solutions portfolio with my many years of experience in the federal IT sector.”

Greer, the AT&T spokesman, declined to comment on Coleman’s work at the company.

Verizon currently holds the contract that the GSA awarded to AT&T.

Stewart, the GSA spokeswoman, says the contract is worth $12.8 million and includes about 12,000 mobile devices.

Coleman’s successor at GSA as chief information officer, Sonny Hashmi, wrote in an email Monday to employees that the new contract with AT&T will help the agency manage “IT and telecommunications costs more efficiently while continuing to deliver the mobile phone services you need to work anywhere.”

Verizon spokesman Kevin King declined to comment on Coleman or AT&T’s new contract with the GSA.

The GSA, which employs about 11,500 full-time staffers, manages government real estate and leads government procurement and technology services efforts. As part of its responsibilities, it oversees about 9,600 federally owned or leased buildings.

   

Casey Coleman, client executive vice president for AT&T Government Solutions and former chief information officer of the General Services AdministrationDave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2014/12/12/16500/revolving-door-spins-between-att-gsa

Who's responsible for the CIA's torture policy?

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Following the 9/11 attacks, the United States government created a network of secret prisons outside its borders to interrogate suspected terrorists without the constraints imposed by international and domestic norms governing prisoners of war. 

Some of those who were imprisoned were subjected to extraordinarily brutal interrogations, because CIA officials in Washington believed they were withholding information about future attacks on the United States. As it turned out, some of those who were harshly treated had no such information  the CIA had, in effect, bad intelligence  and others cooperated more usefully when they were being treated well.

A report issued by Senate intelligence committee Democrats on Dec. 9, the most comprehensive look at the program so far, asserts that the intelligence community gleaned little militarily-significant intelligence from the most brutal of these interrogations — which President Obama on Aug. 1 called “torture”  and states that the CIA repeatedly and knowingly exaggerated how valuable they were, by making false statements to the media, to Congress, the White House and the Justice Department.

What follows is a gallery displaying those who played key roles in setting and supporting the CIA's policies and actions, along with highlights from the Senate report's disclosures about their involvement.

 

Douglas Birch contributed to this report. Layout by Chris Zubak-Skees.

James Pavitt photo by Joe Newman (licensed CC BY-SA 2.0)

R. Jeffrey Smithhttp://www.publicintegrity.org/authors/r-jeffrey-smithhttp://www.publicintegrity.org/2014/12/12/15221/whos-responsible-cias-torture-policy

Charities risked tax-exempt status with political ads

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The Internal Revenue Service prohibits charities from getting mixed up in politics, and those that do risk losing their tax exemption. Despite the threat, a handful of groups in the 2014 midterm elections paid for ads that appeared to be campaign-related.

The Natural Resources Defense Council, for example, is known as a 501(c)(3) organization, meaning it pays no income taxes and donations to the group are tax deductible. It is organized the same way as a charity, a hospital or university.

Despite the risk, the NRDC lambasted North Carolina Republican state Sen. Bill Cook in a $700,000 ad campaign this spring. The nonprofit paid for eight different ads that aired more than 2,600 times from mid-April through mid-July, according to a Center for Public Integrity analysis of data from media tracking firm Kantar Media/CMAG.

One ad opens with video of trash being emptied into a landfill, then turns to a shot of Cook.

“State Sen. Bill Cook voted for a bill that would encourage New York, New Jersey and other states to dump their trash in North Carolina,” the voiceover says. “Tell Bill Cook attracting New York trash doesn’t pass the smell test.”

The NRDC, whose mission is to promote environmentally friendly policies, said the ads had nothing to do with the Cook's re-election campaign. If the ads had been, the organization could face a fine or lose its tax-exempt status as a charity.

Politics ‘absolutely prohibited’

The IRS says 501(c)(3) groups are “absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office.”

Despite the restrictions, the NRDC and a few other charities chose to navigate the complicated web of IRS rules to air ads that criticized or supported politicians running for election in November.

In addition to the ads targeting Cook, the NRDC partnered with the Southern Environmental Law Center and seven other charities under the name North Carolina Environmental Partnership to air ads criticizing four other state senators and four state representatives. All told, the partnership's 20 ads — the majority of which were about the lawmakers’ support of fracking — ran more than 5,100 times from late March through mid-July and cost the groups an estimated $1.7 million to air, according to Kantar Media/CMAG. 

The ads aired both before and after the state’s primary election, but disappeared months before the general. None of the candidates had primary opponents.

Rob Perks, the campaign manager for NRDC’s North Carolina efforts, offered that as proof that the ads weren’t intended to influence the election.

“We were incredibly careful,” Perks said. “During primary season, we only chose subjects of the ads to be people who ran unopposed in primaries or had no primaries of their own so that we wouldn’t run afoul of any electioneering activity.”

The goal of the ads, representatives for both the NRDC and the Southern Environmental Law Center said, was to help North Carolinians hold legislators accountable.

“We definitely were not intending to ask people to do anything at the polls, and some of the ads were about folks that were unopposed so wouldn't even show up on a ballot," said Mary Maclean Asbill, attorney for the Southern Environmental Law Center.

Of the lawmakers targeted — all Republicans — two state representatives lost their seats in November, one representative and one senator were unopposed, and the others, including Cook, won re-election despite the ads.

Cook, who faced former state Sen. Stan White, a Democrat Cook unseated in 2012, told the Center for Public Integrity in an email that he doesn't buy the NRDC's claims.

"The ads were to keep me from getting re-elected," he said.

Nonprofit backed Hagan

Also in North Carolina, the Southern Alliance for Clean Energy, another charitable nonprofit aimed at protecting the environment, spent an estimated $500,000 airing an ad that expressed support for U.S. Sen. Kay Hagan, a Democrat who lost her seat in November.

“Who’s behind the attacks on Kay Hagan? Oil industry billionaires, that’s who,” the ad intones. “They want to undermine the air safety standards that protect us, and Sen. Kay Hagan is working to stop them.”

The ad aired roughly 1,450 times between March 24 and April 13, a few weeks before the primary when Hagan faced two other Democrats, both considered longshots.

Apparently adhering to a federal law that regulates “electioneering” communications, the group filed a report with the Federal Election Commission disclosing the spending because the last week of the ad’s run was less than a month before North Carolina’s primary election. Yet the group still maintains the ad wasn’t political.

“The ad never endorsed her as a candidate,” said the group’s executive director, Stephen Smith. “For all practical purposes, Kay Hagan had no candidate opposing her in that, so it was not at all meant to influence any election.”

Larry Noble, former FEC general counsel, said the ads aired by all the groups fall into a legal gray area but come dangerously close to crossing the line into election politics.

“They’re on a spectrum,” said Noble, who is now an attorney at the Campaign Legal Center, which advocates for tighter campaign finance regulation. “It’s a question in part of whether they’re focused on a person or whether they’re focused on an issue.”

Another ad that appeared to test the limits was produced by the nonprofit Change Agent Consortium. It aired in Michigan touting a September rally about Detroit’s bankruptcy amid Republican Gov. Rick Snyder’s ultimately successful re-election bid.

“When Gov. Snyder suspended home rule 18 months ago, he and his co-conspirators promised better jobs, safer neighborhoods and improved city services. Instead crime is up, our school system is under attack and our water’s shut off,” Change Agent Consortium founder the Rev. David Alexander Bullock says in the ad. “Join me Monday, Sept. 29, at 6 p.m. at Hart Plaza and say, ‘No,’ to Gov. Snyder’s takeover of Detroit.”

While the event may have been educational, the language used borders on telling people explicitly to vote against the Republican governor, Noble said after watching the ad.

But Bullock said the ad was not about the November election. 

"We did not mention [Democratic gubernatorial candidate] Mark Schauer. We did not tell people to vote for Mark Schauer,” he said. “We didn't even tell people, ‘Don’t vote for Snyder.’”

Political or not?

In examining ads by charitable nonprofits, the IRS looks for references to a candidate — whether by name or not — and positions on “wedge” issues that are expected to turn the tide of a race, said Marcus Owens, an attorney at the Washington firm Caplin & Drysdale who previously oversaw the IRS division that regulates charities.

His firm represents the NRDC, so he declined to comment specifically on any of the ads in this story.

The IRS also considers a variety of contextual details, such as the timing of the message and whether it is consistent with the charity’s overarching mission, he said.

Unlike the FEC, which requires groups to report ads that name candidates within a certain window before an election, the IRS does not rely on specific time frames to determine whether an ad influences an election.

“When someone has been identified as a candidate and that person begins making campaign-style presentations, identifies a position on the issues, that person is a candidate under federal tax law, and so the campaign has begun,” Owens said.

Still, the likelihood that a charity would actually lose its tax-exempt status over a few political ads is pretty slim, said Brett Kappel, an attorney with the Washington firm Arent Fox. Someone could file a complaint with the IRS, but the investigators there are unlikely to jump to action. 

"They're so afraid of their shadow right now — you know, because of congressional oversight — they'll put it on the pile and say, ‘Yep, we'll get to that in 2018, 2019, somewhere around there,’” he said.

A screengrab from an ad targeting Michigan Gov. Rick Snyder. The ad was sponsored by the Change Agent Consortium.Rachel Bayehttp://www.publicintegrity.org/authors/rachel-bayehttp://www.publicintegrity.org/2014/12/15/16480/charities-risked-tax-exempt-status-political-ads

High-stakes health care battle in the Green Mountain state

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Two weeks from now, Vermont Gov. Peter Shumlin will describe how he thinks the country’s first state-based single payer system will be financed. Whether the Green Mountain State keeps moving forward with its goal of achieving universal coverage while also reducing the growth of health care spending depends largely on how the state’s residents and businesses react to what Shumlin has in mind.  

Vermont lawmakers passed a bill in May 2011 that set the state on the path toward single payer, but the bill left it up to Shumlin to figure out the financing. Although everyone has known from the beginning that the cash needed to operate the new system—estimated at $2 billion in its first year— will have to come from tax revenues, no one knows exactly what combination of taxes the administration favors.

Earlier this month, vtdigger.org reported that Shumlin would propose both an employer payroll tax and an increase in the state income tax. The money generated would then replace the premiums that employers and residents currently pay health insurance companies.

Even though Shumlin signed the single payer bill into law almost four years ago, Vermont can’t implement its plan until 2017 because the Affordable Care Act prohibits states from making significant changes to their health care systems until then. The ACA also stipulates that states will have to persuade the feds that any structural changes they want to make will not reduce the number of people with health insurance or increase costs.

The release of the Shumlin administration’s tax proposal will represent the insurance industry’s biggest opportunity to derail the state’s plans. Health insurers have reason to be concerned. Even though Vermont has just 627,000 residents, successful implementation of a single payer system there would show the rest of the country that health insurance companies are unnecessary middlemen that add costs rather than value.

The goal of the insurance industry will be to generate fear, uncertainty and doubt among the state’s residents and business owners. While polls continue to show that the proposed new system enjoys wide support, that support will erode if the industry and its allies win the messaging war.

It’s not likely, though, that the industry’s involvement in that war will be evident. I know from experience that insurers use organizations like the U.S. Chamber of Commerce and the Federation of Independent Business to carry out their PR campaigns. And they go to great lengths to hide their involvement. We probably would never have known that America’s Health Insurance Plans, the industry’s main trade group, funneled more than $100 million to the Chamber to pay for TV ads designed to derail federal health care reform had it not been for diligent investigative reporters at the National Journal.

In anticipation of the unveiling of Shumlin’s plan, some of the state’s biggest employers are already expressing concerns. It gets complicated because large employers provide subsidized coverage to about 20 percent of the state’s population. The PR guy for National Life, a life insurance and financial services company, told Vermont Public Radio last week that “it’s difficult for us to imagine how this (single payer) works to the benefit of our employees.” 

Knowing that insurers could easily derail his blueprint unless he had a strategy to counter their strategy, Shumlin last year formed a Business Advisory Council on Health Care Financing. The 21-member council “provides the governor with advice and information on health care financing based on the business experience of its members,” according to its website.

But Shumlin also has to make sure his plan meets the approval of the many single payer supporters who helped elect him. Soon after vtdigger.org broke the story about the governor’s financing plan, James Haslam, executive director of the Vermont Workers Center, a nonprofit that advocates for “an economically just and democratic Vermont,” said his group is concerned about how the proposed payroll tax will be levied.

Still, the advocates understand that implementing a single payer system is complicated, far more so than any of them ever imagined.

“We are finding out just how hard it is to disentangle ourselves from the grip of all the payers and special interests that have infested our health care system,” Dr. Deborah Richter, president of the nonprofit single-payer advocacy group Vermont Health Care for All, told me. “People need to be reminded that we will pay for health care with or without reform, but  that we’ll in fact pay more without reform.

“This is our one chance to get this done,” she added. “This is our health care Halley’s Comet. The stars are aligned, and we won’t get another chance to fix health care in Vermont for a very long time.”

Sounds like something worth watching.

Wendell Potter is the author of Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans and Obamacare: What’s in It for Me? What Everyone Needs to Know About the Affordable Care Act.

Although Vermont has just 600,000 residents, the successful implementation of a single payer system there would show the rest of the country that health insurance companies are unnecessary middlemen that add costs rather than value.Wendell Potterhttp://www.publicintegrity.org/authors/wendell-potterhttp://www.publicintegrity.org/2014/12/15/16509/high-stakes-health-care-battle-green-mountain-state

Koch group's income plummeted in non-election year

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Revenue at the Center to Protect Patient Rights, once a nerve center of the Koch brothers-affiliated nonprofit network, plunged in 2013, a non-election year, according to new federal tax filings reviewed by the Center for Public Integrity.

The Center to Protect Patient Rights reported just $2.2 million in income during 2013, the group’s lowest haul ever for one year.

Comparatively, the group raised $146.6 million during 2012, when it helped fund numerous groups active during presidential and congressional elections.

The group is a “social welfare” nonprofit organized under section 501(c)(4) of the U.S. tax code. That means it is not required to reveal the identities of its donors. Likewise, while it may not have a “primary purpose” of engaging in political activity, it is allowed to engage in politics as part of its overall activities.

And engage in politics it has, albeit indirectly: the Center to Protect Patient Rights has given hundreds of millions of dollars to other nonprofits since its 2009 formation, much of which appears to have been spent on election ads and political activity.

In 2013, Center to Protect Patient Rights, which earlier this year changed its name to American Encore, reported receiving all its money from just four donors who gave $1.78 million, $265,000, $150,000 and $40,000, respectively.

It reported expenses last year totaling more than $9 million, far higher than its revenue, and gave $4.6 million, more than it raised, to other nonprofit organizations. 

Roughly a quarter of the grant money, about $1.33 million, went to a group called Prosper, Inc., another 501(c)(4) nonprofit.

Prosper Inc. was founded in 2013 by Kirk Adams, a former speaker of the Arizona House of Representatives, who this month was appointed as the new chief of staff to Arizona Gov.-elect Doug Ducey, a Republican.

The Center to Protect Patient Rights reported giving $529,000 to another Koch-affiliated nonprofit, the 60 Plus Association.

Both Prosper Inc. and the 60 Plus Association poured money into an Arizona campaign aimed at making customers who use solar power pay more.

In October 2013, Arizona Public Service Co., the state’s largest utility, publicly acknowledged funneling money to the two nonprofits as part of its campaign against solar and said it had given the money through consultant Sean Noble and his for-profit firm, DC London. The state’s energy regulator eventually adopted a compromise rate.

Noble in 2013 was Center to Protect Patient Rights’ president, treasurer and executive director, according to the group’s tax filing, and one of only three Center to Protect Patient Rights directors. He did not immediately respond to questions from the Center for Public Integrity.

The Center to Protect Patient Rights’ money appears to have made up nearly 85 percent of Prosper Inc.’s $1.57 million in revenue in 2013, according to a Center for Public Integrity analysis of the group’s 2013 tax filing, available on the Citizen Audit web site.

Center to Protect Patient Rights made a larger grant, $2.4 million, only to Americans for Responsible Leadership, another Koch-affiliated nonprofit headed by Adams that, in the past, has received almost all of its money from the Center to Protect Patient Rights.

The Center to Protect Patient Rights made smaller grants to other politically active nonprofits, including American Commitment ($45,000), Americans for Prosperity ($225,000) and the Republican Jewish Coalition ($15,500).

In addition, it paid Noble’s firm, DC London, $2.1 million, according to its tax filing.

In 2011, another non-election year, the Center to Protect Patient Rights reported raising $25.3 million — much less than it has during election years but significantly more than it generated in 2013.

 

 

Political consultant Sean Noble helped steer millions of dollars to conservative groups as the president of the Center to Protect Patient Rights, which is now called American Encore.Carrie Levinehttp://www.publicintegrity.org/authors/carrie-levinehttp://www.publicintegrity.org/2014/12/15/16511/koch-groups-income-plummeted-non-election-year

'I felt like I was getting pelted with excrement': Readers weigh in on political ads

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A few weeks ago, we started asking readers to think back to the months leading up to Election Day and share their thoughts on the flood of political advertising. 

(That flood of ads, by the way, grew to about 1.5 million TV ads— for state-level races alone. Based on rough estimates, those ads came at a cost of more than $855 million.)

Hundreds of you responded (scroll down to add your own response), and it was clear some feel passionately about this year's takeover of TV advertising slots. We've gathered a cross-section of your submitted thoughts here.

From Karla Dalley of Farmington, Connecticut:

It got so bad that my husband and I actually joked about them ads and made fun of them. I'm not quite sure that was the intention of the ad makers.

From Dave Doherty of Woodstock, Georgia:

They can be effective in countering Democrat propaganda pushed as "news" by the corporate media. Due to the overwhelming MSM bias toward their party, Republicans need political ads more than Democrats do, which is why Democrats want to restrict political advertising.

From Justin Locke of Waltham, Massachusetts:

It made me aware of what mainstream politicos think will work in terms of motivating voters or perhaps demotivating people to vote at all. No actual issue was ever raised, it was all about branding the opponent on a gut level of like or dislike. I guess that is what works generally.

From Ashley Vavasseur of Louisiana:

Tell me what your plans are, how you are going to make things better, where you stand on fiscal and social issues. It's pathetic that the only thing they have to say is "well at least I'm not that person."

From Peter Phelps of Portland, Oregon:

Anyone shouting so loud is probably employing bait and switch tactics, and I felt like I was getting pelted with excrement after the second or third ad.

From Sarah Wheatley of Colorado:

The ones funded by non-candidate groups were much more vicious in attacking the opponent and leveraging fear. They also seemed to stretch the truth quite a bit. The candidates' ads tried to be positive and non-threatening.

From Thomas Loomis of Maryland:

I don't believe that the political ads that I saw this election season made me support any candidate airing them more; rather they prompted me to investigate low-profile (and sometimes third-party) candidates who weren't flooding the airwaves with negative campaign ads.

From Sandra Holt of Florida:

All ads are promoting a product. Political ads are advertising a person or idea which to me is a product. I want to see all ads checked for truth by an independent group before being allowed to run on air just as a tube of toothpaste must meet truth in advertising before being aired. If a corporation can be a person, certainly a political ad can be tested as a product. I am dead serious about this. The television stations aren't going to change anything. Their income from ads is just too great. 

From Robert Boxold of Florida:

[Ads had a] very negative impact, I have voted since the '60s and this year seriously considered not voting as it was obvious unlimited funds were buying this election.

Do you agree with this feedback? Disagree? We're still accepting submissions to our query, and hope to eventually display more of your responses as part of an upcoming project. 

    

Sarah Whitmirehttp://www.publicintegrity.org/authors/sarah-whitmirehttp://www.publicintegrity.org/2014/12/16/16512/i-felt-i-was-getting-pelted-excrement-readers-weigh-political-ads

Jeb Bush explores White House bid — unconventionally

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Now that Jeb Bush has decided to “actively explore” running for president, all eyes will turn to his fundraising.

But instead of creating a presidential exploratory committee — the traditional organizing and fundraising vehicle used by potential White House hopefuls — Bush says he's forming a leadership political action committee.

The difference between these two kinds of committees isn't insignificant. The potential advantages for Bush aren't, either.

For instance, donors may give up to $5,000 per calendar year to a leadership PAC, and “none of the contributions will count against his campaign limits,” said Kenneth Gross, a former associate general counsel of the Federal Election Commission who leads the political law practice at Skadden, Arps, Slate, Meagher & Flom.

That means donors to Bush’s leadership PAC will still be able to give $2,600 per election to Bush’s presidential campaign committee if he eventually goes on to form one. Contributions to an exploratory committee would count against the limit if Bush goes on to run.

There’s also no limit on the total amount such leadership PACs can raise before Bush is officially a candidate, while Federal Election Commission regulations prohibit exploratory committees from raising “funds in excess of what could reasonably be expected to be used for exploratory activities.”

Brett Kappel, a counsel at Arent Fox’s government relations and political law practices, said there’s no defined upper limit for the amount an exploratory committee can raise, “but a complaint could be filed if the amount raised seemed disproportionately large.”

In announcing Tuesday he was considering a presidential bid, Bush wrote on Facebook that he formed a leadership PAC to “discuss the most critical challenges facing our exceptional nation” and “support leaders, ideas and policies that will expand opportunity and prosperity for all Americans.”

That stands in contrast to the approach taken last month by former Sen. Jim Webb, a Democrat, who says he'll form a standard presidential exploratory committee ahead of deciding whether to pursue his party's presidential nomination in a field that's likely to include Hillary Clinton.

PAC money can’t be used for political campaign expenses, though it can be used for any other legal purpose, including those that could indirectly help a person’s eventual presidential campaign.

Like Bush, Texas Gov. Rick Perry has also publicly declared interest in running for president in 2016, and last summer he established his own leadership PAC.

So far, it’s reported making more than $90,000 in contributions to state and federal candidates in Iowa and New Hampshire, early primary states—one way a potential candidate can make friends and build influence.

Lawrence Noble, a senior counsel at the Campaign Legal Center and former FEC general counsel, said potential candidates who use PACs typically want to pay as much out of them as possible, but must be careful about using it to pay for true campaign expenses or so-called testing the waters activities.

If Bush eventually sets up a campaign committee, it would have to reimburse his leadership PAC for any campaign expenses incurred during this exploratory period, he said.

“What’s interesting about this is that Bush has said he is exploring a run, and he is setting up a leadership PAC,” Noble said. “If he tries to run it all out of his leadership PAC, you’ll have to closely scrutinize what he is doing.”

Former Florida Gov. JebBush, right, speaks to reporters after an education rally at the Arkansas state Capitol in Little Rock, Ark., Tuesday, Jan. 29, 2013. Carrie Levinehttp://www.publicintegrity.org/authors/carrie-levinehttp://www.publicintegrity.org/2014/12/16/16526/jeb-bush-explores-white-house-bid-unconventionally

Advisory panel tells Congress the nuclear weapons complex is too big and too old

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A special panel appointed by Congress to examine the U.S.nuclear weapons complex reported in December that it is too big and too old, and recommended reorganizing the Department of Energy to give its weapons modernization work a larger political profile and a higher fiscal priority.

The panel that produced this recommendation was heavily weighted with experts affiliated with the private contractors that perform much of the country’s nuclear weapons work, and its list of suggestions for dealing with recurrent cost overruns and technical snafus in the complex hewed closely to the views expressed by those contractors for the past decade.

Instead of calling for stricter contract supervision — an idea long urged by the Energy Department’s office of inspector general — the study recommended the Energy Department reduce regulation, cut the number of DOE field office personnel who supervise the contractors and abolish the current system of tying part of the contractors’ pay to their performance.

The advisory panel, created by Congress as part of the Defense Department funding bill in 2013, said in its final report released in December that the management contractors were burdened with “onerous oversight,” muddled accountability and a “dysfunctional” management culture at DOE.

The 12 panelists were selected by the chairmen and ranking minority members of the Senate and House Armed Services Committees, and by the Senate and House leadership. The panel’s co-chairman Norman Augustine is the former chief of the Lockheed Martin Corporation, one of the largest defense industry donors to lawmakers.

Lockheed runs Sandia National Laboratories — one of the three U.S. labs that help produce nuclear weapons — and works with the Bechtel Corporation to manage the Y-12 plant in Tennessee and the Pantex plant in Texas, where key nuclear weapons components are made.

Panel co-chairman Richard Mies, a retired admiral and former head of the U.S. Strategic Command, serves on the board of directors of Babcock and Wilcox, a corporation that is part of the consortium that manages the nuclear weapons laboratory in Livermore, Calif. He also sits on the boards of both Los Alamos and Livermore.

Panel member Franklin C. Miller, a former defense department official and special assistant to President George W. Bush, also holds a seat on Sandia’s board. And former California Congresswoman Ellen Tauscher, now a strategic advisor with the Baker Donelson law firm in D.C., sits on both the Los Alamos and Livermore boards.

Another panelist, former New Mexico Congresswoman Heather Wilson, received nearly $450,000 from contractors at four of the U.S. nuclear complex sites — including Sandia — after leaving office in 2009.

A 2013 report by the DOE’s Inspector General said the four labs couldn’t document what she did for them. But according to a separate IG report released in November, some DOE officials concluded that Wilson was hired with federal funds to lobby for an extension of Lockheed’s contract to manage Sandia. Wilson denied working as a lobbyist, and her contract barred it, but the Energy Department ordered Sandia to return the funds it paid to her.

The panel faulted contractors mostly for failing to hire “top talent” for management teams at the DOE’s weapons complex.

Sandia National Lab, the advisory panel’s report said, needs to complete the purchase of new silicon wafer production equipment so that it can make microchips for warheads, but Congress hasn’t appropriated the $100 million needed to finish the project.

But the main culprit, the advisory panel found, was the government itself – especially the National Nuclear Security Administration, which owns the country’s nuclear maintenance and production facilities as a semi-autonomous arm of the Energy Department. The report called the NNSA’s oversight “expensive and counterproductive,” and “confusing.”

Contractors complain,the report said, that they have to hire two people to answer the questions of each federal official assigned to oversight.

The panel also recommended abolishing performance fees for management contractors, which account to up to ten percent of the total contract at Sandia and 70 percent at Los Alamos and Livermore. Instead, the report said, contractors would be rewarded with extensions or renewals of their contracts. 

The panel’s report said the complex needed to replace its aging processing plants, while trimming its payrolls. “In many respects, the weapons complex is both too old and too big,” the report said.

The advisory panel’s report said that this was no time for “complacency” about the U.S. nuclear stockpile, arguing that nuclear weapons are still important in an era of asymmetrical warfare even though, some defense analysts say, these weapons have become obsolete. “Nuclear forces provide the ultimate guarantee against major war and coercion,” the report said, “and America’s allies depend on these forces and capabilities” for their own defense.

The panel even suggested abolishing the NNSA, created by a Republican-controlled Congress in 1999, and folding its mission into the Energy Department — while renaming the DOE the “Department of Energy and Nuclear Security” in order to highlight its responsibility for the nuclear weapons complex.

The Obama administration’s reaction to the report was tepid. Frank Klotz, the current administrator of the NNSA, sent a statement to his staff calling the advisory panel’s recommendations “a useful roadmap for improving our performance as an organization,” and assuring them that management would “take a thoughtful and deliberate approach” to implementing them.

In a separate statement, Secretary of Energy Ernest Moniz emphasized the report’s conclusion that U.S. nuclear weapons are “safe, secure and reliable,” saying the very expensive work to modernize America’s warheads so far has helped the administration’s efforts to reduce the size of the stockpile.

He did not directly comment on the report’s recommendations, noting only that the report called for NNSA’s work to be “more integrated with those of the department as a whole.”

National Nuclear Security Administration Director Frank Klotz, center, talks about the challenges the agency will have as it tries to modernize some of its facilities during a new conference at Sandia National Laboratories in Albuquerque, N.M., in May, 2014. Douglas Birchhttp://www.publicintegrity.org/authors/douglas-birchhttp://www.publicintegrity.org/2014/12/17/16524/advisory-panel-tells-congress-nuclear-weapons-complex-too-big-and-too-old

Secretive nonprofits flourished — and succeeded — in 2014 state elections

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Sandra Kennedy expected a tough race this fall for a seat on the Arizona Corporation Commission, but the Democrat didn’t expect to get socked with a $1.4 million onslaught of TV ads from a mysterious group that dredged up a past legal dispute.

The race for a seat on the commission to regulate utilities and other businesses rarely attracts campaign ads. Kennedy herself hadn’t purchased any. The group called Save Our Future Now, however, flooded the state’s airwaves with ads running nearly 1,400 times.

“Times are tough in Arizona, but Sandra Kennedy voted to hurt Arizona families. Kennedy voted for higher sales taxes, but she didn’t even pay her own bills,” one ad said. “Kennedy owned a restaurant chain and didn’t pay the rent.”

The ad referenced a royalty infringement suit involving Kennedy and restaurant chain Denny’s Inc. over a franchise that she and her husband owned. Both parties settled the case in 2010.

“It was devastating,” Kennedy said of the ads. “Unbelievable.” 

State and federal law do not require the group to publicly disclose its funders because such politicking is not the group’s “primary purpose.”  So it’s nearly impossible for Kennedy or other Arizonans to prove who funded the attack ads that helped lead to her loss in November. The group, based in Phoenix, did not respond to the Center for Public Integrity for comment.

Save Our Future Now is just one of 40 nonprofit groups that together spent an estimated $25 million to buy TV ads about 2014 state-level elections while keeping their donors secret, according to a Center for Public Integrity analysis of data from media tracking service Kantar Media/CMAG.

That’s a small piece of the more than $850 million spent on TV ads in all state elections overall in the 2014 cycle. However, the number of ads from such groups — and the proportion they made up in political advertising for state contests — nearly doubled from levels in 2010, the last year in which a comparable number of state-level offices were in play. 

Such groups often appeared to have outsized influence on races from governor down to state senator this cycle. Most of them were successful, far more so than independent political groups overall: these secretive nonprofits either backed a winning candidate or, in the majority of cases, bashed the loser in 63 percent of the races in which they sponsored TV ads tracked by Kantar Media/CMAG. By comparison, all independent groups, including those that disclose their donors, were successful just under 50 percent of the time. 

And overall 51 percent of election advertisers, including candidates and political parties, on the state level were successful, according to the Center for Public Integrity’s analysis.

Citizens United’s impact

In 24 states including Arizona — where nearly one out of every seven ads was sponsored by such entities — these mysterious groups were boosted by the 2010 U.S. Supreme Court’s Citizens United ruling. The high court’s 5-4 decision freed corporations and unions to spend limitlessly to directly advocate for the victory or defeat of candidates. 

The ruling unleashed a wave of “social welfare” nonprofit corporations, which are supposed to spend the majority of the donations they receive to promote “social welfare,” not politics.

Attempts by the Internal Revenue Service to regulate tax-exempt groups — and allegations that the agency targeted conservative groups with its audits — resulted in the 2013 resignation of Lois Lerner, the director of that portion of the IRS. 

To be sure, such “social welfare” nonprofits and other nonprofits that function as trade associations are not the only groups that sometimes can keep their donors secret.  Lax disclosure rules in some states allow other types of groups to avoid registering with state election boards at all. 

Or sometimes groups can hide their donors from voters with lags in filing deadlines. In Kansas, a state where a tight governor’s race attracted more ads from such mysterious groups than in any other state, a nonprofit called Alliance for a Free Society Inc., ran ads against Democratic nominee Paul Davis, who lost to incumbent Republican Gov. Sam Brownback.

The group incorporated in Delaware only in July, so detailed information about its leadership, lobbying and political activity will not be released by the IRS until 2015 — months after Kansas voters saw the anti-Davis ads and cast ballots. Michael K. Morgan, a top government affairs consultant to Koch Industries who runs the group, declined to be interviewed by the Center for Public Integrity on the record. 

Some conservatives, including Supreme Court Justice Clarence Thomas, have argued that keeping donors secret is constitutionally protected anonymous political speech. And they have spent millions of dollars in recent years fighting the notion that social welfare groups and trade associations should disclose the source of money used for politics. 

These groups lend a “comfort level” to individual and corporate donors who want to influence state politics without giving up their identity, according to David Vance, a spokesman for the Campaign Legal Center, which advocates for tighter campaign finance regulation.

“The 501(c)(4)s and the 501(c)(6)s represent a way for anyone, but particularly corporations, to kind of fly under the radar and make an impact,” said Vance, referencing the sections of the Internal Revenue Code that regulate politically active nonprofits. “They can have a lot more impact at the state level than on the federal level.”

Cease and desist

In Wisconsin, where a competitive gubernatorial race helped attract more than $4 million dollars in ads from such politically active nonprofits, two groups spent more than $350,000 combined attacking Penny Bernard Schaber, a 61-year-old physical therapist and longtime Democratic assemblywoman running for state Senate. 

The ads started early, just after Labor Day, and painted her as a tax-and-spend liberal. They claimed that she took a pay raise while raising taxes for others.

Bernard Schaber sent a cease-and-desist letter to local TV stations demanding that they stop airing the ads because they were “factually untrue.” A legislative committee had voted to raise legislators’ pay to $49,943 before she was elected; her pay never rose while she was in office. 

But the groups countered that the Wisconsin State Journal newspaper first published the statements in an editorial, noting that some legislators had declined to accept the increase. The ads continued. 

The two organizations that paid for the ads, which ran nearly 750 times, were the Wisconsin Manufacturing and Commerce Issues Mobilization Council and the First Amendment Alliance Educational Fund

Because the ads didn’t specifically advocate for Bernard Schaber’s defeat, the groups didn’t have to disclose what they had spent — or the source of their funding — to the state’s ethics board, which regulates campaign finance. 

The Wisconsin Manufacturing and Commerce Issues Mobilization Council is a state-based group that is affiliated with the state chamber of commerce

The First Amendment Alliance Educational Fund, though, is a Virginia-based group that ran ads within Wisconsin only on her race. It says on its website it is “dedicated to educating Americans on transparency, waste, fraud, hypocrisy and best practices at all levels of government.” Its donors, and its interest in Wisconsin state Senate District 19, are not transparent.

Representatives of both groups did not respond to the Center for Public Integrity’s request for comment. 

Bernard Schaber lost, largely she believes due to the campaigns by those groups. And those behind the attacks remain largely unknown.

“That’s what makes it hard for the general public. They don’t pay attention to who is saying it,” she said. “They pay attention to the message.”

Leaving no footprints

Groups can drop in from afar, and then essentially disappear as they did in some state supreme court races.

At least four mysterious groups targeted candidates for state judicial races — contests historically removed from political blood sport. Such secretive spending is especially concerning within the judicial community because donors could come before a judge whom their dollars helped elect. 

In Arkansas, a group called the Law Enforcement Alliance of America spent more than $160,000 to air three ads aimed at influencing the nonpartisan race for state Supreme Court. Such third-party spending was unprecedented in an Arkansas Supreme Court election.

One ad claimed that candidate Tim Cullen had called child pornography a “victimless crime.” 

Cullen wrote that phrase in a 2006 brief while representing a sex offender who was appealing his sentence. However, Cullen said he was referring to his client’s conviction for enticing a minor — not the child pornography charge mentioned in the ad — and that he characterized that crime as “victimless” because his client engaged in sexually explicit Internet chat-room conversations with undercover police officers pretending to be young girls.

Cullen has repeatedly said the ad’s claims were false, and at the time, his campaign countered with an ad that aimed to exonerate him. But by the time of the election in May, Cullen was outspent, and he blamed his 4-percentage-point loss to Robin Wynne on the LEAA’s ads.

The LEAA, a Virginia-based nonprofit, does not have to publicly reveal its donors, nor is it required to file campaign finance reports with the Arkansas secretary of state. In the past, the group has been backed by the National Rifle Association and the U.S. Chamber of Commerce, though neither group has reported grants to the LEAA on recent years’ tax returns.

The LEAA has not made available its own tax returns from the past two years, keeping the public in the dark about the groups’ leadership and any of its recent donations to other organizations. Nor have representatives from the group responded to the Center for Public Integrity’s repeated requests for comment.

Cullen said he was troubled by the attack and pointed to the conflicts of interest such secretive support could create for elected judges in state courts.

“We don’t know where the money came from, so we don’t know when to ask Justice Robin Wynne who his benefactors are,” he said.

Following the disclosure trail of crumbs

Though the groups don’t have to report their donors, sometimes clues can be gleaned from other public records. 

Very often the donors to a nonprofit are other nonprofits, which are required to reveal their contributions. Or publicly traded corporations may voluntarily disclose donations in their corporate filings.

Ohio’s Supreme Court race attracted nearly $600,000 in TV ads from the ambiguously named Washington, D.C.-based American Freedom Builders. In one of the few positive ads aired by political nonprofits, the group supported Republican Justice Judi French’s successful re-election to Ohio’s high court.

Like the LEAA, little is known about who funds American Freedom Builders. However a document released by Reynolds American earlier this year shows the tobacco giant donated $15,000 to the group in 2013, as the Center for Public Integrity has previously reported

This debate has reached a fever pitch in Arizona, a breeding ground for some of the country’s most prolific political nonprofits. The secretary of state audited politically active nonprofits in July, including the group that attacked Kennedy in the corporation commission race, to make sure they met the state’s “social welfare” requirement as a nonprofit. Yet earlier this month, a federal judge threw out a provision in the state’s campaign finance law that required all other political committees to disclose their donors.

Kennedy believes the group that purchased the ads, Save Our Future Now, was financed by Arizona Public Service — the state’s largest electricity utility, which is regulated by the commission.  She has advocated for solar energy tax incentives opposed by the utility. 

The utility told the Center for Public Integrity it supports candidates and causes that are “pro-business and supportive of a sustainable energy future for Arizona,” but the utility declined to disclose specific political contributions or answer questions about alleged ties to Save Our Future Now.

Kennedy, devastated by the Save Our Future Now attack ads, said she’s hesitant to run for office again. She’s stopped reading newspapers or watching television and said her consulting business has been hurt by the bad press. Politics has strained her family life, too.  A classmate of Kennedy’s 16-year-old daughter bullied her about the group’s accusations, she said.

“I think it’s a deterrent for other good people who want to serve,” she said. “Why would I put myself and my family through it again?"

Rachel Baye, Kytja Weir and Ben Wieder contributed to this story.

Screenshot from an ad paid for by Save Our Future Now. Ads paid for by the group, a nonprofit that does not need to disclose its donors, aired nearly 1,400 times in Arizona during the 2014 election cycle.Reity O'Brienhttp://www.publicintegrity.org/authors/reity-obrienhttp://www.publicintegrity.org/2014/12/17/16516/secretive-nonprofits-flourished-and-succeeded-2014-state-elections

Florida homeowners catch a break in courts

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Florida homeowners may soon find a more friendly reception in the state’s courtrooms after a state Supreme Court panel found that some judicial practices designed to speed up the cases may be improper.

The Court’s Local Rules Advisory Committee said last week that a judge’s order in Palm Beach County that allows banks to defeat homeowners’ motions to fight foreclosures in court simply by ignoring them went beyond the judge’s authority. The committee referred the rule to the state Supreme Court for review.

At issue is an order by the chief judge in Palm Beach County, and an accompanying order from a foreclosure judge, that deems a motion in a foreclosure case abandoned, essentially expired, if it hasn’t been heard within 90 days. The effect is that homeowners who ask judges to dismiss their cases, or disallow evidence, will automatically lose if the bank trying to foreclose doesn’t respond to the motion. Other Florida counties have similar orders in place.

“What they’re saying is you don’t have to hear those motions, just deny them,” said Thomas Ice, a Florida lawyer who took his opposition to the orders to the Supreme Court’s committee as well as to two state appeals courts. “I’m going to wave my judicial wand and they are all gone.”

The Center for Public Integrity reported earlier this year that Florida’s legislature and Supreme Court have instructed judges across the state to clear what they say is a critical backlog of foreclosure cases from the court system. The state set up a parallel legal system in which judges hear only foreclosure cases — often more than 100 motions per day. The courtrooms operate under rules that differ from those that guide civil law in other types of cases.

Chief judges across the state issued orders on how to deal with foreclosure cases. Many counties set up separate courtrooms and hired retired judges to hear cases. The state Supreme Court tracks how many cases have been heard, how many have been cleared and issues monthly reports detailing the progress of each judicial circuit. The state set a goal of clearing 256,000 cases a year for three years.

Homeowners and defense lawyers said the result is a system in which judges regularly rule in favor of mortgage lenders, granting them leeway on rules of evidence and extensions when they don’t show up for trials and hearings — latitudes that aren’t typically granted to borrowers.

The judicial order to abandon motions was designed to prevent homeowners and banks from purposely delaying cases with endless motions. That particular rule, however, was an egregious overreach that would not be tolerated in legal cases outside of foreclosure, Ice said.

“If this is examined out in the light, I think the overall legal community will reject this hands down,” he said. 

The decision by the local rules committee essentially said the judges’ orders had exceeded their authority, because administrative orders are reserved for issues related to running the court system and not to legal proceedings. Rules that affect courtroom procedures require greater review, including comments from local lawyers and a Supreme Court examination.

The administrative order is now before the Supreme Court and no hearing date has been set.

Two appeals courts declined a request by Ice and other lawyers to review the judicial orders. The appellate judges, however, said an “aggrieved party” has the right to have a motion heard even if it’s deemed abandoned. 

The rules committee decision came days after foreclosure defense lawyers and consumer advocates met with the state’s newly appointed courts administrator, P.K. Jameson, to discuss problems with the state’s foreclosure courts. Courts administrators run the business of courts including budgets and assignments of judges but do not rule on legal issues.

“We made it clear that the foreclosure attorneys are seeing treatment that is different than the treatment that clients get in other types of actions,” said Alice Vickers, director of the Florida Alliance for Consumer Protection. “When they are having foreclosure cases heard, normal civil procedures seemingly don’t apply.”

She said Jameson asked “questions specifically related to judges ramming these cases through” but it was unclear whether the office had the authority to take action.

The group asked Jameson to review chief judges’ administrative orders, but Eric Maclure, the deputy state court administrator, said issues regarding such legal procedures are outside the purview of the his office. “We’re not planning at this point at the staff level a comprehensive review of the orders,” he said.

The lawyers also asked state officials to ensure that foreclosure judges are following federal regulations adopted last year to help people facing foreclosure keep their homes. The rules require banks to halt foreclosure proceedings if a person has applied for a loan modification.

Some judges in Florida have questioned whether they have to apply federal regulations in state courts.

Maclure said his office is planning, as a result of the meeting, to distribute to foreclosure judges throughout the state a one-page document explaining the new federal regulations. The court system held a training session last summer on the rules, which judges could attend for continuing education credit.

Wholesale changes to Florida’s broken foreclosure system won’t happen quickly, according to Lynn Drysdale of the Jacksonville Area Legal Services, who also participated in the meeting with state court officials.

“I wasn’t going into that meeting expecting there to be a huge change in the foreclosure process,” she said. “It’s a huge issue, and I don’t believe there’s an easy resolution.”

Still, she and the other attorneys are seeing incremental progress as the state responds to their concerns on several different fronts.

Lawyers wait to sign in for foreclosure hearings at the Palm Beach County Courthouse in West Palm Beach in July.Alison Fitzgeraldhttp://www.publicintegrity.org/authors/alison-fitzgeraldhttp://www.publicintegrity.org/2014/12/17/16529/florida-homeowners-catch-break-courts

New FEC chief on 'dark money' mission

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Democrats made sport of decrying, vilifying and crucifying the billionaire Koch brothers for injecting hundreds of millions of dollars worth of Republican-boosting “dark money” into the 2014 elections.

But newly minted Federal Election Commission Chairwoman Ann Ravel — a left-leaning Democrat and campaign finance reformer, by most any political measure — has no appetite for such theater. Even if, as chairwoman of the California Fair Political Practices Commission last year, she helped levymassive penalties on Koch-backed groups caught circumventing state political disclosure laws.

A pox on both parties’ houses, as far as she’s concerned, for using secretive cash to influence elections.

“The Kochs, they are not a problem to me, nor are their activities specifically anything I want to address,” Ravel said. “Dark money is a broader problem — a much broader problem. It’s a problem for those on the Democratic side as well as the Republican side. It’s not a partisan question for me.”

Expect Ravel, who this morning won the FEC’s top job by a 5-0 vote of her commission colleagues, to evangelize campaign transparency and disclosure for all political players during her upcoming term as chairperson. Her target audience: outside-the-Beltway folks who aren’t election lawyers or political practitioners, but are nevertheless concerned about big money’s influence in politics.

When reminded that she just spent the last year deadlocking with her Republican counterparts on virtually all political transparency matters, she smiled.

“I still have hope for this year,” said Ravel, who joined the FEC in late 2013 after leading the California Fair Political Practices Commission. “My goal is at least make some incremental change in the disclosure of dark money.”

Inheriting a 'dysfunctional' agency

Even that will prove a monumental task for Ravel.

While it doesn’t appear in the job description, a key qualification for leading the FEC, set up in the aftermath of the Watergate scandal as a check on political corruption and campaign law enforcer, is masochism.

Consider that the chairperson, who serves a one-year term before yielding to a colleague backed by the opposing party, wields little additional power compared to other commissioners.

Agency commissioners frequently fail to reach consensus, or even a voting majority, on anything more than perfunctory matters. Dozens of enforcement cases, some years old, remain unresolved.

And while pay isn’t bad — $155,000 annually — it’s less than some top agency staffers make and just a fraction of what commissioners could likely command at private law firms

Meanwhile, morale on the agency’s dwindling staff, which has been without a top lawyer since mid-2013, is notoriously low.

The FEC ranks among the worst places among small federal government agencies to work, according to a study published last week by the Partnership for Public Service, a nonprofit, nonpartisan organization “committed to improving the effectiveness of government.”

Out of 30 small federal agencies ranked for employee satisfaction and commitment, the FEC placed 29th, its score particularly affected by low marks in effective leadership, innovation, strategic management and support for diversity. Only the Defense Nuclear Facilities Safety Board earned a lousier grade.

Perhaps even more troubling for the FEC: The agency’s overall score has steadily slipped each year since 2009, bottoming out this year at 40.4 out of a possible 100 points.

“One of the most dysfunctional agencies in Washington, D.C.,” said Stephen Spaulding, policy council for reform group Common Cause.

“They haven’t done much,” said Larry Noble, a former FEC general counsel who's now senior counsel for reform group Campaign Legal Center.  “What they have done has not generally been good.”

To be sure, the FEC in 2014 took some noteworthy action under current Chairman Lee Goodman, a Republican.

For example, it finally updated, after nearly five years, its outdated rules to align with the Supreme Court’s Citizens United v. FEC decision.

It made progress on promises to strengthen its IT systems after Chinese hackers whacked its computer systems and hire new staffers — seven and counting, Goodman says — to help cull a massive backlog of unprocessed campaign disclosure reports.

It also tackled some election law exotica, such as approving limited Bitcoin contributions to political committees.

But on issues that top Ravel’s agenda, such as the influx of nonprofit groups together spending hundreds of millions of dollars advocating for and against candidates without revealing who funds them, the FEC has repeatedly punted.

Even when it did update its rules to address the Citizens Unitedv. FEC decision, which allowed corporations, unions and nonprofits to raise and spend unlimited funds to advocate for and against politicians, it didn’t address disclosure matters.

That’s not good enough, says Ravel, who intends to be “outspoken” about dark money, while acknowledging she doesn’t yet have specific plans for pushing rules or regulations at the commission level.

Part of Ravel’s plan is accelerating what, by FEC standards, has been an aggressive “listening tour” schedule that this year has taken her to Denver, Atlanta and Chicago.  

“Dark money — it’s an issue that’s been of grave concern to me for the past two years,” said Ravel, who has served as FEC vice chairwoman this year. “The dynamics of political campaigns have changed so much, and we have to keep up. We have to talk about it.”

Overhauling agency technology

Part of Ravel’s challenge is helping the agency find its voice.

To a casual observer, the FEC’s website, its public repository for millions of records and documents, doesn’t look much different than it did at the end of President Bill Clinton’s administration. Finding documents about a specific FEC case, or a political committee’s financial filing, might range from difficult to maddening.

The agency’s presence on Twitter — a social media tool used to engage the public with great success by government agencies such as NASA and the Environmental Protection Agency— is comparatively pathetic: It averages one tweet about every three days, the tweets often pointing to a already published press releases.

Only Ravel and fellow Democratic Commissioner Ellen Weintraub use personal Twitter handles.

Ravel, who last decade served as the top government lawyer in Silicon Valley’s Santa Clara County, intends to infuse the agency with her techie sensibilities.

She already teamed with Goodman this year to host a well-attended forum on improving the FEC’s website.

The agency, however, will likely grapple this year with more existential tech issues, such as how to regulate political communications made strictly on the Internet, mobile devices and social media.

Earlier this year, for example, commissioners deadlocked on whether to require disclaimers on political messages displayed on smartphone and other digital screens. The practical effect: political committees aren’t required to include disclaimers, meaning people reading them can’t easily know who is behind the messages.

“My passion is transparency. I’m frustrated that there hasn’t been the same willingness on the part of some of my colleagues” to tackle such issues, Ravel said.

Weintraub, who served as chairman during 2013, also lamented what she considers the agency’s opaque and ineffective enforcement efforts. Last year, the FEC levied about one-tenth the fines that it did during 2006, agency records show.

“The real problem is that people conduct themselves out there without a serious enforcement agency, a cop on the beat, keeping watch,” Weintraub said.

Goodman says he has “great respect for Commissioner Ravel” and considers her an honorable counterpart. He’s pledged to work closely with Weintraub and independent Commissioner Steve Walther, as well.

They’ll disagree on plenty of issues this year, Goodman acknowledged. He believes, for one, that political actors should be free of what he considers “unnecessary political regulation,” and that the FEC’s default stance should be protecting their rights to communicate. 

But gone is much of the personal hostility that plagued the commission earlier this decade, when Weintraub and former Republican Commissioner Don McGahn fought openly at agency meetings and rarely spoke outside of them.

“I expect [Ravel] to use her bully pulpit to advance issues she cares about,” Goodman said. “That’s fine. We’ll debate respectfully and enthusiastically. I’m not expecting things to fall apart.”

Brad Smith, a former FEC chairman who now leads pro-campaign deregulation group Center for Competitive Politics, says the agency might have some measure of success next year.

“Commission Ravel and Commissioner Goodman deserve solid marks for trying to get the commission moving,” Smith said. “There are many, many small items on which agreement ought to be attainable in 2015, items that don't draw public passion but that are important to practitioners and politicos.”

But do Obama, Congress care?

Regardless of what the FEC sets forth for itself in 2015, it shouldn’t expect much support or attention from Congress or the White House.

Congress largely ignored the FEC during 2014, even after the agency made a series of bipartisan requests at the end of 2013.

For example, commissioners unanimously asked Congress to require senators to file campaign finance reports electronically. Senators today still file them on paper, which takes time to process. Reports sometimes aren’t available for days after they’re filed.

Commissioners also unanimously petitioned Congress to ban all political committees — including congressional leadership PACs — from using funds for personal expenses. Lawmakers took no action.

And when Congress actually gave the FEC a new power in late 2013 — the ability to automatically punish more kinds of political committees and nonprofit groups for tardy financial filings — the agency failed to create a rule implementing the power.

In separate interviews, Commissioners Caroline Hunter, a Republican, and Weintraub said the commission has no immediate plans to address the issue.

Also of note: Ravel and Goodman are the only two FEC commissioners whose official terms have not expired.

The other four commissioners continue to serve despite the ends of their terms because President Barack Obama has not nominated, and the U.S. Senate has not approved, people to replace them. Ravel declined to comment on whether she believes Obama should float new commissioner nominees in 2015.

Republican Commissioner Matt Petersen, for example, joined the FEC in 2008, and took a turn as commission chairman in 2010. While his official term as an FEC commissioner expired in early 2011, he will serve as agency vice chairman in 2015.

Obama swept into the White House on an agenda headlined by political accountability and fighting against powerful special interests.

Today, he rarely speaks of reforming campaigns, corralling political dark money or the FEC as an agency.

Ravel says she’d welcome Obama’s support for her efforts as FEC chairwoman.

“The one thing that I’ve learned in my year in Washington is that this is a really complicated place. And if it’s complicated for me, it’s a million times — maybe more than a million times — more complicated for the president,” Ravel said. “I can’t be one of those people out there criticizing him for his failure to do this thus far. But I certainly would welcome his strong statements about some of the issues, in particular about the issues of disclosure that I care about.”

Regardless of whether she gets it, Ravel says joining the FEC has been worth a certain level of personal sacrifice, which includes commuting cross-country to California to visit her family, including a new grandchild and beloved family dog.

“I hear from people now about how important campaign issues are, about how they feel,” Ravel said. “It makes me realize people are really concerned about the issues that the FEC has oversight over. They care that there’s someone here speaking on behalf of the public. That makes me realize it’s worth it.”

Headquarters for the Federal Election Commission in Washington, D.C.Dave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2014/12/17/16527/new-fec-chief-dark-money-mission

Sex, drugs and political money

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You smuggle marijuana in the handbag of a leading Democrat's wife.

You pass out drunk underneath your desk when the House of Representatives' minority leader comes looking for you.

You even blow off a campaign event for the late Sen. Ted Kennedy, D-Mass., to play video games.

And yet, you still go on to become the Democratic National Committee's head of fundraising.

These are just a few of the many revelations about political fundraising chronicled in the latest episode of C-SPAN's "After Words," a BookTV program guest hosted by Center for Public Integrity Senior Political Reporter Dave Levinthal.

The program's subject: the new book Political Mercenaries by Lindsay Mark Lewis, who last decade rose to the top of Democrats' fundraising structure before abruptly quitting.

He's now executive director of the Washington, D.C.-based Progressive Policy Institute and a strong advocate for campaign finance reform that would limit the amount of time politicians spend raising money.

Watch the hour-long program, which first aired last weekend.

Dave Levinthal (left), senior political reporter at the Center for Public Integrity, interviews Lindsay Mark Lewis on C-SPAN2 program "After Words" about his new book on political fundraising.The Center for Public Integrityhttp://www.publicintegrity.org/authors/center-public-integrityhttp://www.publicintegrity.org/2014/12/17/16510/sex-drugs-and-political-money

Citing health risks, New York State bans fracking

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New York State will ban hydraulic fracturing — fracking — within its borders, officials announced Wednesday, citing potential health risks.

At Governor Andrew Cuomo’s year-end cabinet meeting, acting state Health Commissioner Howard Zucker said there need to be more studies on the health effects of fracking -- pumping water, sand and chemicals into the ground to dislodge natural gas and oil -- before the practice is allowed in New York.

 “We cannot afford to make a mistake,” Zucker said, according to The Journal News. “The potential risks are too great. In fact, they are not fully known."

The Center for Public Integrity and InsideClimate News have conducted a 20-month investigation into air pollution associated with fracking in Texas, the epicenter of a massive drilling boom. Some South Texas residents who live atop the Eagle Ford Shale say drilling and related activities have taken a toll on their health with little notice from state regulators.

A recent story in the series focused on the Barnett Shale in North Texas and highlighted new research suggesting proximity to fracking sites and oil and gas infrastructure could pose health risks.

New York’s Department of Environmental Conservation (DEC) will issue a legally binding statement to ban fracking early in 2015, the Journal News reported. Environmentalists praised the New York ban while many in the industry decried it as irresponsible.

“This is the wrong direction for New York,” Karen Moreau, executive director of the American Petroleum Institute’s New York State Petroleum Council, said in a prepared statement. “A politically motivated and equally misinformed ban on a proven technology used for over 60 years – throughout the country to great success – is short-sighted and reckless, particularly when New York depends on safely produced natural gas just over the border in Pennsylvania.”

Kate Sinding, director of the Natural Resources Defense Council’s Community Fracking Defense Project, said Cuomo’s decision was based on science rather than “pressure from powerful oil and gas companies.”

“Mounting scientific evidence points to serious health risks from fracking operations,” she said. “New Yorkers have made it loud and clear that we want to keep this reckless industry at bay. With this announcement, the governor has listened—and he has demonstrated both courage and national leadership on this critical issue.”

Paul Hartman, Northeast director for America’s Natural Gas Alliance, called the ban “ill-advised” and said it has “always been a political, rather than a public health decision” that would keep New Yorkers from taking advantage of the environmental and economic benefits of natural gas. 

New Yorkers have been waiting a long time for a decision on fracking.

The state implemented a de facto moratorium in 2008 while the DEC began reviewing the potential impacts of the practice. That study will be released in 2015.  In 2012, the state Department of Health also began studying the health impacts of fracking — a report Cuomo said he would release by the end of the month.

The New York ban could prove more symbolic than anything else. While the Marcellus Shale extends into the southern part of the state, most of the formation lies beneath West Virginia, Pennsylvania and Ohio, all of which allow fracking.

Dave Spigelmyer, president of the Marcellus Shale Coalition, an industry group, pointed to Pennsylvania as “proof-positive that with strong and common sense regulations” and new technology, “shale development is a win-win” for the environment and economy. The New York State Petroleum Council’s Moreau said the economic benefits that neighboring states have realized now won’t be seen in New York.

“This is a missed opportunity to share in the American energy renaissance, and for New York’s future prosperity,” she said.

Some environmentalists, like Sierra Club Executive Director Michael Brune, said the New York ban could have national significance.

“Today’s decision will shake the foundations of our nation’s flawed energy policy, and we can only expect that it will give strength to activists nationwide who are fighting fracking in dozens of states and hundreds of cities and counties,” Brune said.

In November, voters in Denton, Texas, Athens, Ohio, and San Benito and Mendocino counties in California decided to ban fracking. Youngstown, Ohio, and Santa Barbara County, California, voted against a ban.

New York Gov. Andrew Cuomo watches a presentation on hydraulic during a cabinet meeting at the Capitol in December, 2014, in Albany, N.Y.Talia Bufordhttp://www.publicintegrity.org/authors/talia-bufordhttp://www.publicintegrity.org/2014/12/17/16534/citing-health-risks-new-york-state-bans-fracking

Texas weakens chemical exposure guidelines, opens door for polluters

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AUSTIN— In 2007, Texas regulators quietly relaxed the state’s long-term air pollution guideline for benzene, one of the world’s most toxic and thoroughly studied chemicals. The number they came up with, still in effect, was 40 percent weaker, or less health-protective, than the old one.

The decision by the Texas Commission on Environmental Quality (TCEQ) was a boon for oil refineries, petrochemical plants and other benzene-emitting facilities, because it allowed them to release more benzene into the air without triggering regulatory scrutiny. But it defied the trend of scientific research, which shows that even small amounts of benzene can cause leukemia. The American Petroleum Institute, lobbyist for some of the nation’s largest benzene producers, privately acknowledged as early as 1948 that the only "absolutely safe" dose was zero.

It’s "the most irresponsible action I've heard of in my life," said Jim Tarr, an air-quality consultant who worked for the TCEQ’s predecessor agency in the 1970s. "I certainly can't find another regulatory agency in the U.S. that's done that."

The benzene decision was part of Texas’ sweeping overhaul of its air pollution guidelines. An analysis by InsideClimate News shows that the TCEQ has loosened two-thirds of the protections for the 45 chemicals it has re-assessed since 2007, even though the state’s guidelines at the time were already among the nation’s weakest.

The changes are being supervised by TCEQ toxicologist Michael Honeycutt, who began updating the way Texas develops its guidelines in 2003, when he was promoted to division chief. A genial, bespectacled man who takes great pride in his work, Honeycutt is a trusted advisor to top TCEQ officials and often acts as the agency’s scientific spokesman. He is also a frequent critic of federal efforts to reduce air pollution.

Honeycutt's actions reflect Texas’s pro-industry approach to air quality, which InsideClimate News and the Center for Public Integrity have been examining for the past year and a half.  Most of the air-quality guidelines the state’s oil and gas producers are supposed to meet are not legally enforceable regulations. That means violators are rarely punished, and residents who complain about foul air near drilling sites have few places to turn for help.

Texas has made its anti-regulatory stance known on the national front. Attorney General Greg Abbott, the state’s governor-elect, has taken legal action against the U.S. Environmental Protection Agency 19 times since 2010, arguing that overly restrictive regulations stifle business growth, cost jobs and threaten the state’s economy.  The EPA is “a runaway federal agency that must be reined in,” Abbott said last year when he challenged greenhouse gas regulations.  

Honeycutt has publicly criticized the EPA for being overzealous in its regulation of ozone, which exacerbates asthma; particulate matter, a known respiratory hazard; and hexavalent chromium, the cancer-causing chemical that launched the Erin Brockovich case. In testimony before a congressional committee in 2011, he said the EPA had been overly cautious in evaluating the toxicity of mercury, a powerful neurotoxin known to lower IQ. Mercury is particularly harmful to developing fetuses.

"EPA ignores the fact that Japanese eat 10 times more fish than Americans do and have higher levels of mercury in their blood, but have lower rates of coronary heart disease and high scores on their IQ tests," Honeycutt said in a letter responding to written questions from one of the committee members after the hearing.

State Rep. Lon Burnam, a Fort Worth Democrat who has tried for years to strengthen Texas public health regulations, said Honeycutt's role as chief toxicologist is more political than scientific.

"I consider him an apologist for the polluters," Burnam said. "I think he doesn't give a tinker's dam about public health."

Honeycutt said the toxicologists on his staff are good scientists who take their jobs seriously.

“Our friends and family live in this state, too,” Honeycutt said. “My son wants to go to school in Houston, and I want him to be just as protected as every other kid in Houston."

Scientists interviewed for this story agree that Texas needed to update the process it uses to set air quality guidelines. When Honeycutt took over, he introduced formalized methods of risk assessment, an interdisciplinary field of science that includes toxicology, epidemiology and biostatistics. Risk assessment has become the most widely used method of determining the health risks chemicals pose to the public.

But scientists say the process has inherent uncertainties that open the door to bias.

"This is done across the spectrum, not only from those more inclined to have higher permissible standards, but also by those that would like to have lower ones," said Maria Morandi, a private consultant who formerly worked as a health scientist at the University of Texas School of Public Health in Houston.

The problem, Morandi said, is that finding the scientifically "correct" exposure level for each of the thousands of chemicals industries release into the air is impossible because it would require exorbitantly expensive experiments, or illegal and unethical testing on humans. The best scientists can do, she said, is extrapolate data from existing studies and hope the numbers they produce are low enough to protect a majority of the population.

The potential for bias comes in when the risk assessment team chooses which studies to include or exclude, and how to weigh the available evidence. Some scientists lean toward the side of public health and believe many existing standards aren’t strong enough. Others tend to be more lenient, taking the view that overly protective standards place needless and expensive burdens on industry.

It's "about what questions you ask, what uncertainties you leave alone and which ones you decide to focus on," said Ruthann Rudel, director of research at the Silent Spring Institute, a research center in Massachusetts. Bias in risk assessment is rarely a product of fraudulent science, she said, but rather a reflection of how scientists choose to frame their analysis.

The InsideClimate News analysis shows that in Texas, the bias tilts toward industry.

As of September, nearly 60 percent of the new guidelines Honeycutt’s team derived for outdoor air quality are less protective than analogous numbers used by the EPA and by California, whose guidelines are among the strictest in the nation.

A year after its benzene announcement, the TCEQ released a new cancer risk assessment guideline for another high-profile chemical: 1,3-butadiene, which is  produced by the synthetic rubber industry and can cause leukemia. Texas is responsible for the majority of the nation's butadiene emissions.

Ron Melnick, a former scientist at the National Institute of Environmental Health Sciences, analyzed the TCEQ’s 139-page description of its butadiene decision-making process for InsideClimate News. When Melnick compared the Texas approach with the EPA’s, he said Texas “dismissed anything which might have made the risk seem higher than what they wanted."

The TCEQ’s new butadiene number is 60 times less protective than the EPA’s and 340 times less protective than California’s.

Such glaring discrepancies are possible—and perfectly legal—because the federal government rarely sets legally enforceable air quality standards for the chemicals it has assessed. That leaves each state to come up with its own approach for each chemical, which means people in different states are protected to different levels. A chemical release that could trigger a public-health alert in California, for instance, might not even be noticed by Texas regulators.

"It’s confusing, because you cross the state boundary and the toxicity of the chemical changes,” said Loren Raun, a health scientist who works for the city of Houston and teaches at Rice University. “That, right there, is a problem."

Few Texans are aware that Honeycutt’s department is changing the state’s air-quality guidelines. Because they are not legally enforceable standards, the toxicology department can update them without public hearings or approval from top officials, according to former TCEQ Commissioner Larry Soward.

When the TCEQ released its benzene proposal in 2007, the only person who submitted a public comment was a representative of a chemical trade group, who urged the TCEQ to further weaken the guideline. The agency refused.

Soward, who was one of the TCEQ’s top three officials when the benzene guideline was changed, said he didn’t learn of the revision until InsideClimate News asked him about it in July. Soward left the agency in 2009 and spent several years working for Air Alliance Houston, an environmental group.

When Soward was appointed a TCEQ commissioner in 2003, he said, he often met with Honeycutt to discuss public health issues and thought the toxicologist "was a very scientific-based, impartial person." By 2005, however, Soward felt Honeycutt was advocating for "positions he felt like he was supposed to advocate” for, regardless of the science.

"I think he really believes…that air pollutants don't really have a health effect unless there's such a toxic exposure to them that it leads to direct problems," Soward said. "I used to joke I didn't think there was a toxic pollutant he didn't like."

Burnam, the state representative, blames the TCEQ’s governor-appointed commissioners for the agency’s pro-industry bent.

"For the past 20 years, you’ve either had oil industry [George W.] Bush or oil industry apologist [Rick] Perry making all the appointments,” said Burnam, who was defeated in the March Democratic primary and leaves office this month. “…The good [employees] at the lower levels are totally frustrated and hamstrung."

'I love this job'

Honeycutt’s 15-member division is one of the largest state toxicology departments in the country. In addition to setting air-quality guidelines, it reviews air and water monitoring data, advises emergency crews after chemical accidents and provides scientific expertise to agency officials.

"We have probably one of the best toxicology departments in the world," Commissioner Toby Baker said at a TCEQ hearing last year.

The division's size remained relatively steady even when the TCEQ’s operating budget dropped 39 percent from 2008 to 2013. Its stature rose in 2012, when an agency-wide reorganization put Honeycutt’s department directly under the office of the TCEQ’s executive director. The toxicology division now occupies a suite of offices and cubicles in a gleaming blue building in Austin, on the same floor as the executive director and the TCEQ’s three commissioners.

"I love this job," Honeycutt said in November, during an interview in his spacious office. "This is the job I went to school to learn how to do. I get to sit on the side of the table opposite everybody. One thing we’ve learned is, usually when everybody’s mad at you you’re probably doing your job right."

Honeycutt, 48, studied toxicology at the University of Northeast Louisiana at Monroe, 30 miles from his hometown. His high school yearbook reveals he graduated with honors and was a leader, or "beau," of the library club.

He stayed at Monroe to get his Ph.D. in toxicology. David Roane, who now chairs the pharmacology department at East Tennessee State University, advised Honeycutt on his dissertation about how earthworms dispose of the element cadmium.

“I trusted his work more than most people and found him to be conscientious in a small town kind of way,” Roane said. “He was a real wholesome guy.”

Carey Pope was teaching in the toxicology department when Honeycutt was a graduate student. The two men still occasionally run into each other. Pope describes Honeycutt as “the kind of guy who was always the first in line to help you.” 

After graduation, Honeycutt worked three years as a researcher for the Army Corps of Engineers, where he focused on screening for contaminants in sediments and soils. He joined the TCEQ in 1996, when the agency was still known by its former name: the Texas Natural Resource Conservation Commission, or TNRCC. Critics called it "train wreck."

By the time Honeycutt was promoted to toxicology division chief, TNRCC had become TCEQ and the agency was under fire for the way it managed air quality guidelines. The problem was the haphazard way it set Effects Screening Levels, or ESLs, for thousands of chemicals.

ESLs are critical because the TCEQ uses them to draft the air permits it issues to oil and gas production sites, refineries, power plants and other industries.  Companies must show that chemical concentrations at the boundaries of their facilities will meet the ESLs. If they don’t, the TCEQ can require them to adjust their operations.  

Most chemicals have a short-term ESL (for hour-long exposures) and long-term ESL (for annual average concentrations). For example, the short-term ESL for benzene in 2003 was 25 parts per billion (ppb) of benzene in air. The long-term benzene ESL was 1.0 ppb.

When the Houston Chronicle reported in 2005 that the TCEQ’s ESLs were among the least protective in the country, Honeycutt told the newspaper his department was addressing the problem by changing the way ESLs are established.

The TCEQ hired a nonprofit consulting firm—Toxicology Excellence for Risk Assessment (TERA)—to convene a panel of outside scientists to review the new procedure. TERA was founded by Michael Dourson, a former EPA toxicologist and one of Honeycutt’s close friends. TERA often works for industry and runs a database that has raised the profile of industry-funded risk-assessment values.

Morandi, the consultant, sat on the TERA review panel and said she was comfortable with the TCEQ document.

But she said what also matters is how the protocol is applied to individual chemicals.

The TCEQ documents its risk assessments in long, complex reports that are posted online for public comment. Honeycutt said he has tried to encourage more feedback by extending the comment period from 60 to 90 days. But few people outside industry have the time and expertise to understand or critique the highly technical documents.

The Texas environmental community tends to rely on a single expert—Elena Craft of the Environmental Defense Fund—to weigh in on risk assessment science. Air Alliance Houston Executive Director Adrian Shelley said he often turns to Craft for help on these issues.

Of the 56 comments that have been filed for the 45 chemicals the TCEQ has assessed, only one came from the environmental community. About 80 percent of the comments came from industry groups, including the American Chemistry Council and ExxonMobil.

Adam Finkel, executive director of the University of Pennsylvania's Penn Program on Regulation and a former director of health standards programs for the Occupational Safety and Health Administration, said environmental groups could help level the playing field by hiring more scientists who understand risk assessment.

Some environmental organizations have multi-million dollar budgets, he said, but they're focused on other issues.

'This is crazy'

While the TCEQ was developing its risk-assessment strategy, air pollution was making waves in the Texas press. In January 2005, a TCEQ report linked 1,3-butadiene and benzene to elevated cancer risks in Harris County. The county is home to Houston and many refineries and petrochemical plants that emit both chemicals. 

The butadiene levels corresponded to two additional cancer cases per 10,000 people—20 times what the TCEQ considered acceptable at the time. Benzene levels were seven times higher than the TCEQ’s benchmark cancer risk.

That same month, the Houston Chronicle published "In Harm’s Way," a series by reporter Dina Cappiello. The newspaper had placed air monitors at 100 locations near large industrial sources and found 84 readings “high enough that they would trigger a full-scale federal investigation if these communities were hazardous waste sites."

Only a few measurements exceeded the TCEQ's cancer exposure guidelines, which the paper reported were "among the most lenient in the country." The Chronicle noted that the results "would be considered a serious health risk in other states."

The two reports hit a nerve with Bill White, a year into his first term as Houston’s mayor. A deputy secretary of energy during the Clinton administration, White made air quality a priority during his three terms as mayor.  But he found himself fighting the TCEQ as well as the industries that were polluting his city.

policy analysis article by Texas academics summed up the situation:

"The problem in Houston has been compounded by the reluctance of state and regional regulators to assume a strong role in pollution control and environmental enforcement, particularly concerning the chemical and refining industry, which is a key source of jobs and philanthropy in the region."

The TCEQ increased air monitoring in Harris County, but Houston wanted more concrete action. Honeycutt met frequently with Elena Marks, White’s director of health and environmental policy from 2004 to 2009.

Marks is now a fellow at Rice University, researching health care policy. She said she often came away from those meetings frustrated, because Honeycutt “always seemed to err on the side against human health."

When city and county officials hosted a town hall meeting to discuss the alarming reports, the TCEQ didn’t show up, despite its pledge to send at least two representatives. Honeycutt later criticized the TCEQ’s own report, saying it was "overpredictive" about the cancer risks.

When Houston threatened to sue Texas Petrochemicals, the main culprit behind the elevated butadiene levels, Marks said the TCEQ got "pissed off” and worked out a pollution-reduction plan with the company. But the agreement was voluntary, and Houston continued to threaten legal action. Texas Petrochemicals finally reached a legally binding agreement with the city to reduce its emissions, and butadiene levels began to drop.

To tackle the benzene problem, White tried to persuade local businesses and the TCEQ to work together on a regional benzene reduction plan, but he said the TCEQ wasn’t interested.

Benzene levels in Houston did begin to fall. But White, now senior advisor and chairman of the financial firm Lazard Houston, attributes the change to the city's aggressive leadership, which "created a tremendous incentive for compliance and put pressure on the TCEQ."

Marks put it more bluntly.  “Every time we found benzene emissions…we were just a pain in the ass—and the plants thought it was just easier to curb benzene."

When asked to comment on the TCEQ's role in Houston during those years, agency spokesman Terry Clawson said in an email: "The TCEQ works in partnership with local governmental [entities] to address environmental issues within their communities."

In 2007, as Houston was still struggling to remove benzene from its air, Honeycutt’s department weakened the long-term benzene guideline 40 percent, from 1.0 ppb to 1.4 ppb.

The new number was 13 times weaker than California’s guideline. It was at the least-protective end of the range recommended by the EPA, which last updated its benzene numbers in 1998.

Marks remembers her shock when she learned of the change.  

"My reaction was 'This is crazy. Why would you do that?'” she said. “The more you learn, the more likely you’d be to tighten any standards or screening levels."

An examination of the TCEQ’s decision on butadiene shows how its conclusions could differ so sharply from the EPA’s.

The EPA’s analysis, done in 2002, relied primarily on an industry-funded University of Alabama-Birmingham study from the 1990s that tracked leukemia rates in workers.

The TCEQ’s analysis used a 2004 study by the same researchers, also funded by the industry. They said their original study had vastly underestimated the amount of butadiene the workers were exposed to, which meant it had overestimated the risk.

Melnick, the former NIEHS scientist who analyzed the TCEQ's butadiene document, said it’s hard to tell which of the two University of Alabama studies is more accurate—but the discrepancies show the "murky" history of the reports.  

Because the TCEQ used the second study as its starting point, it began its analysis with numbers that showed butadiene was less toxic, Melnick said. It then made a series of subsequent decisions that made the number even less conservative, including using a different statistical model and not adopting some uncertainty factors used by the EPA.

Melnick said it’s impossible to say the Texas number is wrong. But it’s clear that "Texas tried to load it up to allow the highest exposure possible."

'The things they didn't like'

Texas has invested time and money to oppose two federal efforts that could lead to tighter chemical regulations.

Its first effort was to address a 2009 National Academy of Sciences risk assessment report authored by Finkel, the Penn professor, and 14 other scientists from academia, government and consulting firms. Among other things, the report recommended that scientists reconsider the long-held assumption that any chemical not known to cause cancer has a safety threshold—a level below which it is completely safe. If adopted by risk assessors, the recommendation could lead to additional regulations.

The following year, the TCEQ helped lead a series of workshops to discuss the National Academies’ report. They were sponsored by the Alliance for Risk Assessment, a spinoff of TERA—the consulting firm founded by Honeycutt's friend Michael Dourson. Both Dourson and Honeycutt sit on the alliance steering committee. Dourson said the TCEQ came up with the idea for the workshops.

The TCEQ has awarded TERA at least $700,000 in contracts since 2010, with $7,000 going to the alliance to help fund the workshops. Honeycutt said that to avoid conflicts of interest he recuses himself whenever the TCEQ proposes a project to the alliance.

Honeycutt chaired the first workshop, which was held at TCEQ headquarters. Commission Chairman Bryan Shaw gave the opening speech. The agency has hosted three of the eight workshops that have taken place so far. More than 50 groups from industry, government, consulting and research centers support the workshops, according to the alliance website.

Honeycutt and Dourson say the workshops are designed to expand upon the National Academies’ report and foster collaborations to develop practical risk assessment methods.  But Finkel and two other health scientists who work in risk assessment say the main focus was to criticize the report, especially the part about the non-carcinogen thresholds.

"They were essentially formed to respond to that report and the things they didn't like," said Tracey Woodruff, a professor at the University of California, San Francisco, who studies reproductive health and the environment.

Finkel said the workshops were so biased toward industry's point of view that he stopped attending them.

'He is our expert'

The TCEQ has also consistently opposed the EPA’s handling of ozone, one of six compounds with federal air standards. Ozone is created primarily by fossil fuel emissions and is known to exacerbate respiratory and cardiovascular disease. Exhaustive reviews by EPA scientists and independent agency advisors have urged that the federal standard of 75 parts per billion be lowered.

In November, the EPA proposed a new standard of 65-70 ppb, which the agency predicted would prevent thousands of premature deaths and asthma-related emergency room visits each year.

Just minutes after the EPA’s announcement, the TCEQ issued a press release in which chairman Shaw described the decision as "shortsighted."

A lowered standard would create serious problems for Texas’ three largest cities—Houston, San Antonio and Dallas—which are out of compliance with the current standard.

Honeycutt has criticized the EPA’s ozone science at public hearings, in comments submitted to EPA’s ozone panel, in presentations at scientific conferences and his own scientific analyses posted on the TCEQ’s website.

In the TCEQ’s October newsletter, he said his agency’s "in-depth review" of the EPA’s scientific analysis found that "further lowering of the ozone standard will fail to provide any measurable increase in human health protection."

"The fervor with which they’ve been critical of the ozone standard…is unprecedented," said Craft, the Environmental Defense Fund scientist. "I can’t think of another state where they’ve spent the amount of time and resources on this issue as Texas."

Last year, the TCEQ paid a Massachusetts-based consulting firm, Gradient, $1.65 million to examine the science behind EPA's air quality standards, which include ozone. Clawson, the TCEQ spokesman, recently told the Texas Tribune that the agency is developing a separate Gradient contract to "provide a comprehensive review" of the science "addressing potential impact of ozone on asthma."

One of Honeycutt’s main objections to EPA science is that it’s based on an eight-hour ozone exposure. He thinks the standard should be weakened because people are rarely outside for that long.

The problem with that reasoning, Craft said, is that some people, including construction workers, do spend most of their day outside. "And what if someone wanted to stay outside all day? I think most people want the option of being able to go outside and feeling like you're breathing air that is healthy."

Another of Honeycutt’s arguments relies on a 2009 study that projects a few dozen more deaths in Houston if the ozone standard is tightened. Those results were based on the assumption that Houston would use a particular cleanup strategy that targets only one class of ozone-forming chemicals, Craft said. The TCEQ can avoid the problem by choosing a different plan, she said.

Robert Haley, an epidemiologist at the University of Texas Southwestern Medical Center, grappled with the TCEQ’s position on ozone last year when he was lobbying for the shutdown of three coal-fired power plants that contribute to the ozone problem in Dallas. Haley is a member of the Dallas County Medical Society, which has petitioned for the closures.

Haley spoke with each of the TCEQ commissioners in back-to-back meetings and said Honeycutt sat in on all of them. The commissioners "all deferred to him, [saying] 'He is our expert.'…

"They consult him on everything."

Not long after those meetings, the TCEQ denied the petition.

"It does no one any good to go and require reducing ozone if we're not having a beneficial impact," Shaw said during the petition hearing. "And there's data…that suggests that [reducing] ozone may not be giving us that benefit."

'Does not necessarily indicate a problem'

The TCEQ’s critics say the agency’s industry-friendly ESLs are just part of the air-quality problem in Texas. The bigger problem, they say, is that violations of the ESLs don’t necessarily trigger regulatory action.

The Texas guidelines are "just a number that they picked, and they said that when the air pollution monitors hit that number, then they would investigate further,” said Marks, the former Houston environmental director. “There was no actual consequence to finding the air quality was above that particular number."

It's hard to tell when or how the TCEQ enforces the ESLs.

The agency’s toxicology website says if airborne concentrations "exceed the screening levels [ESLs], it does not necessarily indicate a problem but rather triggers a review in more depth."

The website also says ESLs are only used to screen companies that apply for air permits, and should not be used to gauge outdoor air quality. The TCEQ has a separate set of health-based guidelines to evaluate air-monitoring data, and those numbers can be up to three times less protective than the ESLs.

But even when these more lenient numbers are exceeded, the TCEQ doesn’t necessarily see a health risk.

When InsideClimate News asked the TCEQ what happens when air-monitoring data exceed guidelines, spokeswoman Andrea Morrow said the data are examined on a case-by-case basis. For example, she said,  if an air monitor showed 5,000 ppb of a chemical whose TCEQ’s guideline was 1,000 ppb, the toxicology department would say "there is a potential for adverse health effects."

In other words, even a number that’s five times the TCEQ guideline doesn’t automatically trigger enforcement action.  

InsideClimate News then asked if the agency had ever penalized or shut down a facility for violating ESLs or air monitoring guidelines. Clawson, the spokesman, said the TCEQ "does not collect and track information on enforcement actions” in a way that would enable him to answer that question. To get that information, he said, it would be necessary to examine individual investigation reports.

When Honeycutt was asked if he thought the ESLs should be turned into legally enforceable standards, he said that decision rests with the state legislature. A 2007 House bill that aimed to do that never made it out of committee.

Honeycutt defended the way his agency reacts when guidelines are exceeded. He said the TCEQ handles the problem by putting neighborhoods or regions with elevated chemical levels on an Air Pollutant Watch List. The agency then dedicates more resources to improving air quality in those areas, perhaps by investigating local industries or doing additional air monitoring.

"We don't just note [the problem] and go on with our lives," Honeycutt said. "We do do something about it."

But being added to the list doesn't guarantee a speedy solution.

In 1998, a neighborhood in Corpus Christi was placed on the list because annual benzene concentrations exceeded the TCEQ's 1.0 ppb guideline. The neighborhood was removed from the list 12 years later, in 2010—not because the annual benzene average had dropped below that level, but because the agency had weakened the guideline to 1.4 ppb.

The agency’s website cited the new guideline as the reason for the delisting.

A teenage girl walks near the Valero refinery in Houston, Texas in August, 2014. Lisa Songhttp://www.publicintegrity.org/authors/lisa-songRosalind Adamshttp://www.publicintegrity.org/authors/rosalind-adamshttp://www.publicintegrity.org/2014/12/18/16532/texas-weakens-chemical-exposure-guidelines-opens-door-polluters

Urban League parrots telecom donors' net-neutrality stance

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Last October, Marc Morial, the president of the National Urban League, wrote a column outlining his stand on the issue of “network neutrality” that aggravated activists but made providers of Internet services cheer.

Morial’s column in The Hill newspaper reflected a position on the issue — which is about whether all content sent over the Internet be treated equally — that was very much the same as that of David Cohen, executive vice president of Comcast Corp., the nation’s largest Internet service provider.

It’s not unusual that Comcast would make that argument, but it seemed a little odd that the Urban League — known for defending civil rights and fighting for economic equality for blacks — would take a position in a debate over such a seemingly arcane issue.

Critics say Morial’s decision to speak out had more to do with money and relationships than with Internet policy.

It turns out that Cohen has sat on the Urban League’s board of trustees since 2008. In addition, the Comcast Foundation, headed by Cohen, gave the National Urban League and some of its more than 100 affiliates almost $2 million from 2012 to 2013, according to an analysis of IRS tax filings by the Center for Public Integrity.

Cohen’s not the only representative of an Internet company to sit on the Urban League’s board.

Among its 33 trustees is Donna Epps, who manages Verizon Communications Inc.’s domestic public policy efforts. Epps formerly worked in the company’s federal regulatory group, which tracks government rules such as those that affect net neutrality. Verizon sued the Federal Communications Commission over its initial network neutrality rules issued in 2010 and won. Representing AT&T Inc. on NUL’s board is Charlene Lake, senior vice president of public affairs and chief sustainability officer.

The Verizon Foundation in 2012 and 2013 gave the Urban League nearly $590,000. AT&T’s foundation, however, gave nothing to the Urban League or any of its affiliates in 2012. AT&T didn’t provide a copy of its 2013 tax filing by deadline.

The Urban League says Cohen’s position and the donations from the foundation have had no bearing on its position on the network neutrality issue.

“While our partnerships absolutely support the work we do, the positions of the National Urban League on any issue are — and have always been — our own and uninfluenced by any corporate, foundation, government or individual supporter,” said the Urban League in an emailed statement to the Center.

Comcast, when asked about the financial assistance, was indignant. To suggest that the company’s more than 50-year commitment to the Urban League is in any way tied to governmental decisions is “offensive and also insulting to the hard work these organizations do in the community,” James Dunning, executive director of communications, said in an email.

Verizon said in an email that the company “sponsors and supports the National Urban League and its activities because we support the NUL’s core mission of promoting inclusion and diversity.”

Neither company answered questions about whether net neutrality was discussed at NUL board meetings or with senior executives.

Policies such as net neutrality “are certainly discussed at board meetings” and is why corporations such as Comcast and Verizon send regulatory experts to sit on boards such as NUL, said Rashad Robinson, executive director of Color of Change, which works on political and economic issues for blacks and supports stronger regulations of Internet providers. “That’s what they do,” he said.

A month prior to the publication of Morial’s article, Cohen wrote a blog about the network neutrality issue arguing against a strict regulatory approach that the FCC is considering in which the Internet would be categorized as a utility. Service providers contend that the approach would keep providers from investing in faster networks and impede innovation.

Under this regime, providers such as Comcast, AT&T and Verizon would be considered common carriers — like old-style phone companies — required to deliver all content at the same speeds and prohibited from charging Internet companies for faster delivery. President Barack Obama said the FCC, which is expected to unveil its proposed Internet rules early next year, should adopt this approach.

Cohen — and Morial — argued for a lighter touch. They called for rules that prohibit an Internet provider from intentionally blocking, degrading or slowing traffic from a website or content provider, but allow for providers to arrange for so-called paid prioritization, deals that would speed content more quickly to users, that weren’t judged by the FCC to be anti-competitive.

Other minority groups are in favor of the stronger regulatory approach and are skeptical of the Urban League as well as some other organizations representing minorities.

“If you follow the money, it becomes obvious that on this issue, the legacy civil rights groups are severely compromised,” Robinson wrote in an opinion piece for the Huffington Post in November.

If the FCC approves the lighter regulatory approach, Robinson says Internet providers will be allowed to manage the flow of traffic and provide faster content delivery for those who pay for it, impeding other services that minorities rely on to organize. For example, when Michael Brown was killed by a policeman in Ferguson, Missouri, Robinson said it was the minority community there using social media and other Internet platforms that created an alternate narrative that led to investigations.

“If the information on the Internet is not in the business interests of the Internet provider or for the companies that they have a business relationship with, they will have the incentive and the ability to discriminate, and the minority communities will be the ones that are hurt,” Robinson told the Center.

Jessica Gonzalez, general counsel for the National Hispanic Media Coalition, which works to improve how Latinos are portrayed in media and supports the stricter regulations , said the grants from firms like Verizon are frequently tied to an understanding of support for certain policies.

“What seems like what is happening is clearly happening,” Gonzalez said. “These organizations have lined up with the telecommunications companies and carry their water.”

The National Hispanic Media Coalition receives money from Comcast, but Gonzalez said the group makes it clear that their policy positions will frequently be in opposition to their donors’. When NHMC came out in support of net neutrality in 2009, Verizon pulled all donations to the group and has not funded any NHMC programs since, Gonzalez said.

“We’ve always been clear: They will not buy policy positions from us,” Gonzalez said.

Still, net neutrality has minority groups split. Besides the National Urban League, the NAACP and the Rainbow/PUSH Coalition support the lighter regulation because, they say, classifying the Internet as a utility would reduce broadband investment in underserved areas, which would disproportionately affect minorities, according to a New York Times article.

Morial argued in his article that fewer rules for Internet providers have led to more rural residents having broadband connections in the U.S. compared with Europe, where Internet regulations are stiffer, and has “created 945,000 jobs for workers of color in the broadband sector.”

Comcast chooses the organizations it funds based on whether they offer services in one of three areas: digital literacy, volunteerism and youth leadership development, according to the company. Many of the grants that were awarded to the Urban League and a portion of its more than 100 affiliates went to pay for computer literacy and leadership programs, as well as general operating support and the company’s National Achievers Society.

But those are the kinds of donations that eventually lead a nonprofit to consider policies that may not be in the best interest of the population they serve, Robinson said.

“A million dollars may not sound like a lot, but it’s the things that come along with it that matter more, like having access to top executives in a corporation that change the way an organization thinks of an issue,” Robinson said. “The money just tells a piece of the story.”

National Urban League President Marc Morial speaks at the Let Freedom Ring ceremony at the Lincoln Memorial in Washington in August, 2013, to commemorate the 50th anniversary of the 1963 March on Washington for Jobs and Freedom. Allan Holmeshttp://www.publicintegrity.org/authors/allan-holmesJohn Dunbarhttp://www.publicintegrity.org/authors/john-dunbarhttp://www.publicintegrity.org/2014/12/18/16539/urban-league-parrots-telecom-donors-net-neutrality-stance

FEC gets modest budget boost

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After several years of budget cuts, the Federal Election Commission will receive a modest funding boost.

Congress' government funding bill, signed Tuesday by President Barack Obama, allots $67.5 million for the agency, which enforces and administers the federal government's election laws.

That's about $1.7 million more than it received this year and more money than it's had during any year this decade.

The FEC's previous funding high water mark occurred during the 2011 fiscal year, when it received $66.7 million.

FEC Chairman Lee Goodman, a Republican, described the agency's 2015 funding as "adequate."

He noted the agency will heavily invest in improving its information technology systems, overhauling its website and hiring new staffers, especially those tasked with analyzing the millions of pages of campaign finance filings for which it's responsible.

Agency staffing levels had steadily declined since hitting a high of 385 in 2005.

Among the FEC's other challenges in 2015 will be addressing historically low morale among staffers still there: an annual Partnership for Public Service study released this month ranked the FEC No. 29 out of 30 small federal agencies for employee satisfaction.

The FEC in 2015 will be led by Ann Ravel, a Democrat. Ravel's commission colleagues on Wednesday voted 5-0 to appoint her FEC chairwoman.

 

 

Headquarters for the Federal Election Commission in Washington, D.C.Dave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2014/12/18/16538/fec-gets-modest-budget-boost
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