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Toyota forms new campaign money vehicle

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Toyota's North American subsidiary has formed a political action committee, a new Federal Election Commission filing indicates, meaning the Japanese automaker is adding another influence vehicle to its already sizable government outreach operation.

The PAC, which may raise up to $5,000 per year from eligible company employees, is officially named the Toyota Motor North America Inc. Political Action Committee, although it will informally go by Toyota/Lexus PAC.

"Toyota is establishing the Toyota/Lexus PAC which will allow employees, acting together, to support candidates who share the company's interests, values and goals," Toyota spokesman Ed Lewis said in a statement to the Center for Public Integrity.

Toyota, the world's largest automaker in terms of sales volume, already employs a sizable team of government lobbyists.

In recent years, it's spent between $3 million and $6 million annually on federally reportable lobbying efforts, including $3.35 million during 2012, U.S. Senate disclosures indicate.

That's consistently more federal lobbying than any other foreign automaker, including Honda and Nissan, although generally less than domestic car companies General Motors and Ford.

Toyota regularly lobbies the government on a variety of issues affecting the auto industry, although it faced its most significant government relations challenge in recent years during 2010, when Congressconducteddramatichearings on Toyota vehicle safety stemming from consumer reports of unintended acceleration. The company late last year begansettling a series of wrongful death lawsuits.

In all, 36 registered federal lobbyists worked on behalf of Toyota last year, most of whom have previously worked for the government in some capacity, according to the Center for Responsive Politics.

Among the outside lobbying firms with which Toyota contracted in 2012: BGR Group, Brown Rudnick, Capitol Hill Consulting Group, First Group, Glover Park Group, Greenberg Traurig and Hogan Lovells.

As for Toyota's new PAC, Tracey Doi, Toyota Motor Sales U.S.A.'s group vice president and chief financial officer, will serve as its treasurer, according to federal filings.

A regional division of Toyota — Gulf States Toyota— has for more than a decade maintained a separate PAC, federal records show.

While foreign companies aren't themselves allowed to form federal PACs, their U.S.-based subsidiary companies are, by law, allowed to do so. Only U.S. citizens and foreign nationals with permanent resident status may donate to the PAC, per federal law.

FEC rules state that a PAC may donate up to $5,000 to a federal political candidate per election and up to $15,000 per year to a federal political committee, such as the Democratic National Committee or Republican National Committee.

GM, Ford and several automotive industry trade groups, such as the National Auto Dealers Association and the Automotive Free International Trade PAC, have long operated federal political committees, federal records show.

 

 

 

The floor of the North American International Auto Show is shown in Detroit on Jan. 11, 2011. Dave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2013/03/10/12289/toyota-forms-new-campaign-money-vehicle

OPINION: taking advantage of Medicare Advantage

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Facing government cuts to one of their cash cows—private Medicare plans—health insurance companies have launched a multi-pronged campaign, financed by the customer premiums, to persuade Congress to keep the cuts from going into effect next month.

The industry’s big PR and lobbying group, America’s Health Insurance Plans, is deploying the tactics I described in Deadly Spin to scare seniors into believing that if the federal government stops overpaying insurers that offer Medicare Advantage plans (the private alternative to the traditional government-run Medicare program) seniors will “pay more, get less and lose choices.”

“U.S. Health Insurers Launch TV War Over Medicare Advantage Cuts,” read the headline of a Reuters story last week when AHIP’s ads started running.

At issue is a 2.3 percent cut in payments to Medicare Advantage plans by the Centers for Medicare and Medicaid Services (CMS) that are scheduled to go into effect on April 1.

The industry’s campaign, of course, conveniently leaves out the fact that the government has been overpaying private insurers for years and that the cuts being proposed starting next month are part of a broader effort to put a stop to those overpayments.

Members of Congress inserted a provision in the Affordable Care Act to reduce the overpayments by $200 billion over the next several years.  The 2.3 percent cut would be in addition to that.

It makes little sense for the government to overpay private insurers in the first place, but that is exactly what’s been going on for several years. During the administration of George W. Bush, which supported the privatization of the Medicare program, Congress passed legislation to provide incentives to insurers to offer private plans to compete with traditional Medicare. This enabled the plans to offer richer benefits than traditional Medicare at little or no additional cost to beneficiaries while also making a tidy profit.

It’s little wonder that the number of people enrolled in Medicare Advantage plans has increased rapidly. About one of every five Medicare beneficiaries are now enrolled in private plans. When the government enables you to offer plans with vision and dental benefits, lower copayments and discounts on gym memberships, all at no additional cost, you’re going to be able to lure a lot of seniors from traditional Medicare.

An agent for Humana Inc., one of the biggest Medicare Advantage companies, told me a few years ago that, thanks to the sweet deal insurers have been getting from the government, his job of enrolling healthy seniors in Humana plans was “like shooting fish in a barrel.”

AHIP’s campaign to kill the cuts includes intense lobbying on Capitol Hill as well as other tactics to influence public opinion, like paying for a survey to bolster its case that seniors are happy with their MA plans.

AHIP hired a polling firm to survey 800 seniors, half of whom were enrolled in MA plans and half in traditional Medicare.  The result, according to AHIP: “Seniors in Medicare Advantage are as satisfied with their plans as seniors in traditional Medicare.”

AHIP clearly hopes no one pays close attention to the survey. If you do, you’ll see that people enrolled in traditional Medicare were actually more satisfied with their coverage (92 percent satisfied/very satisfied with 5 percent unsatisfied) than people in MA plans (90 percent satisfied/very satisfied with 7 percent unsatisfied).

AHIP did not disclose the full results of the survey or the methodology used by the polling firm, North Star Opinions, used.  I asked for it, but no one has gotten back to me.

AHIP’s CEO, Karen Ignagni, has been quoted as saying that the MA program will go into a “tailspin” if the proposed cuts go into effect. She predicted that many people enrolled in MA plans will see their premiums go up and their benefits reduced and that many of them will actually be dropped by their MA insurers. That’s because some —if not many— of the private insurers will desert the market if the profit margins decrease on their MA business.

I can attest that that could indeed happen. Cigna, one of the companies I used to work for, used to operate private Medicare plans in several markets but left all but one several years ago, affecting more than 100,000 seniors, after the government adjusted payments to insurers. Aetna and a number of others insurers dumped thousands more. Shareholders were not happy that the business would be less profitable than before.

AHIP may have a hard time convincing the current Congress to take pity on insurers. Last week the Government Accountability Office released a report estimating that CMS overpaid private insurers between $3.2 billion and $5.1 billion from 2010-2012. Chances are, though, that far more people will see AHIP’s TV campaign than an obscure GAO report. And people won’t even know that insurers are behind the campaign. That’s because AHIP is using one of its front groups, the Coalition for Medicare Choices, as the sponsor of the campaign.

Insurers don’t want you to know they’re spending your money to mislead you in order to protect profits.  Can’t blame them for that.

A scene from a new TV commercial by the America's Health Insurance Plans Coalition for Medicare Choices.Wendell Potterhttp://www.publicintegrity.org/authors/wendell-potterhttp://www.publicintegrity.org/2013/03/11/12288/opinion-taking-advantage-medicare-advantage

Beyoncé concert irreplaceable as political fundraiser

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"Bey and Jay." Whatever.

Come July 29, it'll be "Beyoncé (and Bob)" at Washington, D.C.'s Verizon Center, as Sen. Robert Casey, D-Pa., is planning to rock out at a political fundraiser that pairs his name with the music megastar, according to an invitation obtained by the Center for Public Integrity.

For a yet-to-by-publicized (although almost certainly sizable) contribution, donors will be treated to seats in a suite over which the two-term senator will preside.

View the invitation here, along with come-ons for decidedly more traditional Casey fundraisers next week at Charlie Palmer's Steakhouse on Capitol Hill and in May at a Philapelphia Phillies baseball game. No matter that Casey doesn't face re-election again until 2018.

Amy Pfaehler, Casey's campaign finance director, said she's not authorized to comment on the events and directed questions to Casey's Senate office, a representative for which did not respond to requests for comment.

As for Beyoncé, well, Jay-Z's better half will be half an arena away on stage during Casey's fundraiser, so don't expect your contribution to include much face time with the 17-time Grammy Award winner who as of late has evermore increased her profile in the political and governmental realm.

But while it's hardly unheard of for politicians to use unwitting pop stars in bids to fill their campaign coffers, Beyoncé has recently become decidedly political on her own terms.

In September, she co-hosted a tony New York City fundraiser for President Barack Obama. After Election Day, she employed pen and paper to swipe at Mitt Romney. And then, of course, she sang— or didn't— the national anthem at Obama's inauguration.

So how steeped in politics is Beyoncé?

Political enough that Rutgers University Department of Women's and Gender Studies lecturer Kevin Allred last year taught a course titled — yes, indeed — "Politicizing Beyoncé."

"Beyoncé has become a more explicitly political figure recently," Allred told the Center. "In the past, I think she was hesitant to enter that arena, but since Obama has been elected, I think she has continued to embrace more political messages and images in her career and persona... She is a more political figure in that explicit way now than 5 or 10 years ago."

Even without actively trying to be political, Beyoncé is a political figure "just by being a black woman living in America, and especially being a prominent black women in all forms of media," Allred argued. "The ways black women must negotiate celebrity, and everyday life especially are already fully political because we still live in an unequal society — one where inequality is structural and no one person, i.e. Beyoncé, can overcome that by herself."

Casey's event may not be quite as existential.

"The fundraiser at her concert," he added, "is more a politician trying to harness some of her popularity for himself rather than Beyoncé trying to enter a political realm."

 

 

Beyonce sits courtside before the NBA All-Star basketball game Sunday, Feb. 17, 2013, in Houston. Dave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2013/03/12/12293/beyonc-concert-irreplaceable-political-fundraiser

John Bolton forms super PAC

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John Bolton, a former U.N. ambassador under President George W. Bush and a leading conservative voice on foreign policy issues, will lead a pair of newly formed political action committees, including a super PAC, two Bolton associates confirm to the Center for Public Integrity.

"The goal for the committees is restoring national security issues to their proper place on the political agenda," said Mark Groombridge, a long-time Bolton adviser.

Highlighting national security issues and U.S. policy in Asia and the Middle East will rank among the PACs' priorities, Groombridge said.

He added that the PACs' structure, staffing and fundraising goals haven't yet been formalized, and there's no timetable yet on when they'll enter the political fray — or how. 

"Those are details that are being worked out," Groombridge said. "For now, we just wanted to get the names registered."

Kelley Rogers, president of Virginia-based Strategic Campaign Group, which filed the committees' federal organizational paperwork, tells the Center: "We will have an announcement in a few weeks as to both entities."  

One committee is named Bolton for America PAC and is organized as a traditional political action committee, which may raise limited amounts of money and in turn donate limited amounts to political candidates and party committees, according to Federal Election Commission filings made public today.

The other, Bolton for America Super PAC, is also organized as a traditional PAC, although its establishment as such appears to be an easily corrected paperwork error.

Super PACs — technically known as independent expenditure-only committees — may raise unlimited amounts of money to advocate for or against political candidates, but may not donate directly to them.

The treasurer for both PACs is Scott Mackenzie, who serves as treasurer for numerous conservative political committees.

Bolton, a lawyer and State Department assistant secretary and undersecretary, currently works as a senior fellow at the American Enterprise Institute and is a frequent commentator on news talk shows as well as author of numerous foreign-policy opinion and analysis pieces is various print and online publications.

Most recently, Bolton made headlines late last year after criticizing then-Secretary of State Hillary Clinton for a "diplomatic illness" after canceling her testimony before Congress on the killing in Benghazi, Libya, of the U.S. ambassador to Libya. Clinton had sustained a concussion after taking a fall.

 

 

John BoltonDave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2013/03/12/12296/john-bolton-forms-super-pac

How industry scientists stalled action on carcinogen

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HINKLEY, Calif. – Ten days before Christmas 1965, Pacific Gas & Electric Co. station chief Richard Jacobs walked a half-block on a dusty road lined with scraggly creosote shrubs to check out a neighbor’s toilet.

Jacobs carried with him a secret, something he referred to as the “chromate problem.”

Starting in 1952, the power company began mixing a toxic form of chromium with water to prevent rust at a new pipeline pumping station in Hinkley, a remote desert community united by a single school and a general store. PG&E dumped the chromium-laced water into a pond.

Lately there had been reports of problems with the neighbors’ wells. PG&E had just drawn greenish water from one well and discovered high levels of chromium. Now, retired farmer John Speth was complaining of greenish deposits in his toilet bowl.

Jacobs took a look in the bowl but assured Speth that PG&E had nothing to do with it. “When I left Mr. Speth,” Jacobs later wrote in longhand, “he was satisfied but still concerned about his water.” Speth died of stomach cancer in 1974.

It wasn’t until Dec. 7, 1987 – 22 years after that visit to Speth’s house – that PG&E finally told the local water board that it had contaminated the underground water. The company claimed it had discovered the problem just one week earlier.

From here, the story is familiar to anyone who saw the hit film Erin Brockovich. The corporate polluter was taken to court. The victims got millions of dollars. Problem solved.

But in reality, the “chromate problem” has not gone away. Today, tens of millions of Americans drink chromium-tainted tap water. Yet the controversy over whether people like Speth are dying of cancer from it is still being hotly debated.

Some of the most powerful voices in the debate are companies with a stake in the outcome. They’ve hired scientists to convince regulators that the chemical compound is safe. The lawsuit that Brockovich championed was merely the beginning of an intriguing tale about corporate manipulation of science.

In 2008, the National Toxicology Program, part of the National Institutes of Health, published groundbreaking research detailing how mice and rats that drank heavy doses of a toxic form of chromium called chromium (VI) developed cancerous tumors. The findings prompted the Environmental Protection Agency to act.

EPA scientists evaluated hundreds of studies and concluded that chromium (VI) likely causes cancer in people who drink it. The agency in 2011 was on the verge of making its scientists’ findings official – a first step toward forming more stringent clean-water rules. But last year it bowed to pressure and announced it was going to wait for new studies being paid for by the chemical industry.

To lead those studies, the American Chemistry Council, the industry’s main trade group and lobbyist, hired ToxStrategies Inc., a Texas-based firm with scientists experienced in poking holes in research that links chromium to cancer. The company describes its business this way on its website: “We often interact and collaborate with regulatory, academic and industrial professionals to ensure that the most appropriate science is incorporated into each assessment.”

Mark Harris and Deborah Proctor, two principal scientists at ToxStrategies, have a history of attempting to delay regulatory action on chromium. Starting in 1996, they were both leaders in the chrome industry’s efforts to dissuade the Occupational Safety and Health Administration from setting stricter rules for airborne chromium in the workplace. OSHA pushed back action for years despite decades of research showing that workers exposed to chromium were dying at higher-than-expected rates of lung cancer. The agency finally adopted a stricter standard in 2006 under pressure from a court order.

Proctor also worked on revising a 1987 study that concluded that Chinese villagers who drank water polluted with chromium (IV) had higher than normal rates of stomach cancer.  With funding from PG&E, Proctor’s employer, ChemRisk, paid the Chinese author to help publish a new analysis of the data. In contrast to the earlier article, the new one concluded that chromium wasn’t the likely culprit.The revised study – which did not reveal the involvement of PG&E or its scientists – helped persuade California health officials to delay new drinking water standards for chromium.

Finally, with industry funding, Proctor worked to try to influence the makeup and findings of a scientific panel deciding whether California needed stricter drinking water standards for chromium. The panel concluded – to the surprise of many – that there was no scientific basis for believing that drinking chromium causes cancer. One-third of Californians have chromium in their water.

Proctor and Harris declined to respond to requests for interviews.

The use of science to delay regulation is part of a familiar pattern in the field of environmental science. Industry pays for research to address “data gaps.” Even when animals or people are believed to be getting cancer from exposure, industry scientists argue that the chemical in question is dangerous only at extremely high doses. Finally, they argue that you can’t determine a safe dose of a chemical unless you understand precisely how it causes cancer. Until all the questions are answered, they say, it’s not fair to ask industry to bear the cost of stricter rules.

“So now what is happening is the industry is trying to get scientists to slow down the EPA,” said Gary Praglin, one of the lawyers who sued PG&E on behalf of Speth and hundreds of others who had lived near the Hinkley pumping station.

David Michaels, an epidemiologist who now heads OSHA, has written extensively about this brand of science.

“Their business model is straightforward,” Michaels wrote in his book, "Doubt Is Their Product." “They profit by helping corporations minimize public health and environmental protection and fight claims of injury and illness. In field after field, year after year, this same handful of individuals come up again and again.”

Overwhelming evidence of lung cancer

Suspicions that chromium might cause cancer emerged in the late 19th century. In the 1950s, studies of factory workers exposed to airborne chromium showed much higher rates of lung cancer than expected. Thomas Mancuso, a pioneer in occupational medicine, continued to follow the workers at a chromate plant in Painesville, Ohio, for decades. In his final account in 1997, he reported that 23 percent of them had died of lung cancer. Other studies elsewhere confirmed Mancuso’s findings.

Given the overwhelming evidence that chromium particles in the air were killing people, PG&E’s challenge in the Hinkley case was to persuade judges on an arbitration panel that chromium traces in water were different. The company hired academic scientists, such as Steven Patierno at George Washington University, who testified that saliva and stomach acid render toxic chromium harmless, at least at levels that any human would drink.

Still, a few troubling studies at the time suggested that humans and animals may have developed cancer from drinking chromium. To address those studies, PG&E hired ChemRisk, a scientific firm that helped companies with legal or regulatory issues. The chief executive officer of ChemRisk was Dennis Paustenbach, a San Francisco scientist who has become the undisputed star of product defense.

Paustenbach declined interview requests. In a 2009 profile written by two University of Virginia professors, Paustenbach explains that he’s been driven since his modest upbringing to be financially successful, putting in 65-hour work weeks.

His work as a scientist has included advocacy from the start. Each week as a young toxicologist at a chemical company in Connecticut, he flew to the nation’s capital to lobby regulatory agencies such as the EPA. His relationship with the agency evolved and he later sat on numerous EPA advisory panels. For the past four years, he’s served on a panel overseeing EPA research.

A rare inside look at what Paustenbach does can be found in the minutes of a 1996 meeting in Pittsburgh of the Chrome Coalition, then the industry’s trade group. At the time, OSHA was proposing a big reduction in the amount of chromium dust allowed in the workplace. Paustenbach outlined a plan to prevent that from happening.

“Dr. Paustenbach suggested that … the Coalition may wish to approach the regulators with a program designed to fill a ‘data gap’ … to forestall the rulemaking,” the minutes read.

There was a discussion of ChemRisk possibly providing “confidential” and “pro bono” assistance to researchers at Johns Hopkins University to finish analyzing data for an EPA study of a Baltimore chromate plant. The EPA study was designed to answer questions left from Mancuso’s earlier work. At the same time, Paustenbach proposed writing an “anti-Mancuso manuscript” and critiquing all relevant workplace studies in an “effort of convincing OSHA not to go forward with what they presently have.”

Also attending the meeting were Proctor, who worked for Paustenbach at ChemRisk, and Harris, a former ChemRisk employee who at the time worked for Chemical Land Holdings, a company involved in a costly chromium cleanup. Both Proctor and Harris now work for ToxStrategies.

Paustenbach said in a recent statement to CPI and PBS NewsHour, “There is no evidence supporting any unethical conduct by ChemRisk scientist in regards to past work for the Chrome Coalition. The focus of ChemRisk scientists was solely on expanding the body of knowledge on which OSHA and other scientists could evaluate Chromium 6.”

In the end, the EPA study confirmed Mancuso’s findings that workers exposed to chromium were at a substantially higher risk of dying from lung cancer. Still, OSHA would wait more than a decade to tighten workplace standards for chromium under pressure from federal appeals court decision.

For the PG&E lawsuit, Paustenbach decided to conduct original research. Environmental science often lacks good human studies. Few people would volunteer to drink something potentially toxic to see if it would make them sick. Yet, that is precisely what Paustenbach did.

He and other scientists at ChemRisk sat for hours in Jacuzzis filled with chromium-laced water. They also drank chromium-contaminated water by the jug and then ran tests on their blood and urine.

ChemRisk scientist Brent Finley appeared on ABC News in 1996 to drink some of the yellow water, prompting correspondent Cynthia McFadden to say, “There are those who would say you drinking a gallon of this chromium-laced water doesn’t prove anything except that you — in some people’s minds — may be foolish.”

Paustenbach explained in his business school profile that he’s motivated in his work by what he sees as greedy lawyers using bad science to take advantage of corporations.

"Without a doubt, a large percentage of environmental and occupational claims are simply bogus,” he said, “intended only to extract money from those who society believes can afford to ‘share the wealth.’ "

Secrets of the 'Blue-Ribbon Panel'

Before the film Erin Brockovich even came out, the state of California was already taking steps to strengthen drinking-water standards for chromium. In 1999, scientists at the California Office of Environmental Health Hazard Assessment concluded that it was safe to assume that drinking chromium may cause cancer. They reasoned that breathing chromium was just another way the metal got into the body and caused damage. Plus, a 1968 study showed that 11 out of 66 female mice developed tumors after drinking chromium-laced water.

OEHHA’s next task was to figure out how much chromium a person could drink each day without exceeding a one-in-a-million chance of getting cancer from it. The agency computed a number that was 40 times lower than the existing U.S. drinking-water limit.

One industry consultant warned that if this standard became law, it would cost $11 billion to clean up California’s water, plus another $1.7 billion every year to keep chromium out of the water.

Before a new drinking-water standard could take effect, the state asked the University of California to set up a “blue-ribbon panel” of scientists to review the science. In August 2001, the panel issued a report that said there was “no basis” for concluding that chromium-contaminated water could cause cancer.

The panel dismissed the rodent study because an unrelated virus had killed many of the mice. It barely addressed the mounds of research on lung cancer.

The state agency concluded that it had little choice but to retract its chromium “public health goal” and wait. The state had asked the National Toxicology Program to do multimillion-dollar rodent studies on chromium. But the results wouldn’t be published for another seven years.

Questions soon arose about whether the blue-ribbon panel was biased. When the group held its only public hearing in July 2001, a lawyer for Hinkley residents, Brian Depew, attended. Depew said an environmental activist approached him afterward and later sent him a binder of documents that touched off months of investigation by Depew’s law firm.

The lawyers soon documented that Paustenbach initially served on the panel even though PG&E had paid ChemRisk at least $1.5 million during the lawsuits. Paustenbach said he didn’t appear at the public hearing and his name is not on the report.

The lawyers also learned from invoices and testimony that Exponent, the company where Paustenbach served as vice president and its most senior scientist, was being paid by an industry group focusing attention on the blue-ribbon panel. The Alliance for Responsible Water Policy was bankrolled by General Electric Co. and Lockheed Martin Corp., two companies entangled in chromium cleanups.

strategic action plan for the Alliance dated April 6, 2001, and later disclosed in court records, listed as its strategy to “participate in state panel’s review of chromium 6, influence selection of panelists [and] provide input and information to panel.”

Proctor acknowledged in a deposition that she drew up a wish list of panelists and gave it to a lobbyist, Eric Newman. One of her colleagues, Brent Finley, also asked how he could get on the panel. Newman, who declined to comment for this story, responded to Finley in a March 31, 2001, email: “We will be lobbying hard for balanced representation. … It is critical that we get you, Deborah Proctor and/or other folks on the non-alarmist side of things.”

According to Proctor’s testimony, one of the names on her list was Joshua Hamilton, a Dartmouth professor working as an expert witness for PG&E. In 2011, Hamilton would be named to an EPA peer review panel for chromium (VI) and urge the agency to wait for new industry-funded studies led by Proctor. Hamilton, in a statement, has denied that he had any conflicts of interest while he served on the EPA panel.

When Paustenbach was named to the panel, Finley sent an email to Newman saying, “So, it looks like we got ‘one of our own’ on the panel.”

When asked whether Exponent was being paid by an industry-funded group for work related to the blue-ribbon panel, Paustenbach told CPI through a public-relations firm, “I have heard that this is true, but I do not know specific details because I did not participate in any work for the Alliance.”

Proctor, Paustenbach and other Exponent scientists quickly penned a review article that could serve as a blueprint for the panel, and Paustenbach shared it with the group. The article was paid for by Merck, another company involved in a chromium cleanup. The panel chairman, Jerold Last, sent an email to the group on June 14, 2001, saying, “I copied the third chapter pretty much verbatim from a review Dennis and his colleagues have in press, so we will want to do some revisions to eliminate the verbatim aspect.”

Paustenbach denied that the blue-ribbon panel’s report was merely copied from Proctor’s article. He told a California Senate committee investigating the panel that only “4 percent — exactly 4 percent — of the report was, in part, borrowed from a published paper by my colleague,” Proctor. Last, who did not respond to requests for comment, told the committee that what “started out as cutting and pasting … ended up being material that one or all of us reviewed thoroughly before we put it into the report.”

The major conclusions reached in the ChemRisk article and the state report were the same.

Paustenbach said that he disclosed his involvement in the PG&E lawsuit to Last but that neither he nor Last considered the PG&E work to be a conflict of interest. Still, because of concerns raised by an advocacy group, Paustenbach said he stepped down from the panel before the panel held its public hearing.

When the blue-ribbon panel report came out, Paustenbach attached it to an email to a colleague at Exponent saying, “Buy a good bottle of wine, pull up a chair, and then read this. Then say to yourself, ‘Yep, I really finally did something good for society...’ The world is now a better place to live.”

When a lawyer read the email aloud during a deposition, another scientist who served on the panel called it “sad.”

“This [is] about winning. It’s not about truth,” John Froines, a toxicologist at the University of California, Los Angeles, testified. “The world isn’t a better place to live. The world is actually a poorer place to live because of this. It makes people cynical about trusting in the science, and I think that’s really too bad.”

Froines quit the panel before it finished its report, saying he was concerned about panelists with ties to industry. But also, Froines simply didn’t believe the panel’s findings.

Chinese study revisited

Meanwhile, the California Environmental Protection Agency also had suspicions about the blue-ribbon panel.

Two studies highlighted in the panel report came from China’s Liaoning province, northeast of Beijing, where a smelter began contaminating the water with chromium (VI) in 1965. A doctor in the area cared for the sick for years and eventually counted the deaths from cancer. He published an article in 1987 in a Chinese journal, concluding that villagers who drank the tainted water suffered higher rates of stomach cancer.

A decade later, the same doctor published a new article in an American journal concluding that chromium most likely wasn’t the culprit.

The head of California EPA’s Office of Environmental Health Hazard Assessment, George Alexeeff, asked a new epidemiologist on staff, Jay Beaumont, to look into the studies. In recent interviews, Beaumont said he quickly found things that didn’t seem to add up.

For example, the revised article said stomach-cancer rates for the province weren’t available. But Beaumont had a colleague quickly track down the data at the University of California, Berkeley, library. Beaumont said the numbers came from the same source the Chinese doctor used for other comparisons.

Within a few days, Beaumont ran his own analysis and found that villagers who drank chromium-laced water were 85 percent more likely to have stomach cancers than were those who lived in the surrounding province.

Beaumont tried to reach the Chinese author, Dr. Zhang JianDong, but he had died in 1999. However, there was still a website promoting a book Zhang had written. Something caught Beaumont’s attention. The site revealed that Zhang was a consultant to McLaren/Hart Environmental Engineering Corp., the company that at the time owned ChemRisk.

Putting the pieces together, Beaumont wrote an email to his boss, saying that “the money to pay Dr. Zhang likely came from the industrial clients of McLaren/Hart who have a strong financial interest in the health effects evidence for Cr6 . I don't know what Dr. Zhang was paid to do by McLaren/Hart, but republishing his study with different conclusions seems a possibility.”

PG&E now acknowledges it paid for the revised analysis, though records show only about $2,000 went to Zhang.

Two ChemRisk documents describe Zhang’s role as “research assistance” and “document review and consultation.” Meanwhile, a ChemRisk scientist named project coordinator was budgeted to be paid $13,500 to “interpret data” and “write reports” that were then to be edited by Paustenbach and Finley. The ChemRisk proposal linked the research to the PG&E lawsuit by saying that the new article “can be used as the foundation of a number of trial exhibits that summarize the absence of the association between cancer and groundwater exposure to Cr6.”

Proctor, the same scientist who recently conducted studies for the American Chemistry Council, billed for her time on the Chinese article as well, according to a deposition.

“What was important to PG&E at the time is that the science was accurate,” said Sheryl Bilbrey, now in charge of the cleanup in Hinkley for PG&E. “So we did fund that work, and I think it's unfortunate that when it was republished they didn’t acknowledge PG&E's involvement, because it really took away from the focus of the science and had more to do with the disclosure issue.

“PG&E's intention on any project is to make sure that we have the best science,” Bilbrey said. “These projects are incredibly important to us, and we want to get it right. So we looked to Dr. Paustenbach and his experts to make sure that the science was accurate.”

Paustenbach, through a public-relations firm, released a 9-page statement acknowledging that ChemRisk approached Zhang and another author to point out that “there were shortcomings in how these physicians interpreted their data.” The statement said that Zhang was surprised by the new ChemRisk analysis but agreed with it. The firm also released hundreds of pages of documents that included one signed by Zhang saying he agreed to the “editing and expanding of the original manuscript.”

Paustenbach’s recent statement says, “The record makes clear not only that Zhang prepared the report, but also that Zhang, fearful of political pressure from his government, indicated that acknowledgment of American researchers was not appropriate since it was his study.” Paustenbach testified in 2002, “We asked Dr. Zhang, in fact, to be coauthors on that paper for sake of transparency… Dr. Zhang, on his own decision, chose to keep that as a singular authorship.”

None of the documents Paustenbach provided CPI indicate that Zhang explicitly objected to other names being listed as authors.

Despite the question of authorship, scientists at California’s OEHHA said they took the new study at face value. Still, they rejected its findings.

“The ’97 study basically concluded that there was no association between chromium (VI) in the drinking water and cancer cases among the Chinese villagers, in large part because the villages that were more distant from the source of the drinking water contamination had higher cancer rates,” said Allen Hirsch, OEHHA’s deputy director, in a recent interview. “People closest to the facility may not have been drinking the water, because it was yellow and unpalatable.”

In a recent statement, Paustenbach characterized the California EPA's analysis as "flawed and incorrect."

The Journal of Occupational and Environmental Medicine retracted the article. Journal editor Paul Brandt-Rauf said in a recent interview with the CPI that the article violated its policies by not revealing all of the significant authors or the funding.

Paustenbach said through a spokesman that the rules did not require disclosure because the amount paid Zhang was so small. However, Brandt-Rauf rejected that explanation.

The Environmental Working Group, an advocacy organization, did its own investigation of the Zhang study and was troubled by what it found. "I mean, this really is a story about science for sale," said Heather White, executive director of the group.“It’s shocking.”

EPA faces industry pressure

In 2008, the National Toxicology Program published the results of its rodent studies. High numbers of the mice and rats developed tumors in their oral cavities and small intestines. The NTP concluded that there was “clear evidence” that drinking chromium (VI) causes cancer. At about the same time, the California EPA took the nearly unprecedented step of publishing its own findings on the Chinese study.

Both the federal and California EPAs began preparing scientific assessments based on the new research. Both would come to the same conclusion. Hexavalent chromium is safe only in miniscule doses.

Yet the American Chemistry Council planned to have a number of new studies ready just before the EPA was scheduled to issue its final assessment. The ACC urged the EPA to wait until the agency could digest the new data. The scientists at ToxStrategies proposed studies to address “data gaps” in the NTP study.

It was a move harkening back to the Chrome Coalition meeting in 1996 that Proctor and Harris attended. When she worked for Paustenbach, Proctor published a series of articles about workers in the same plant that Mancuso studied for decades, but her conclusion was quite different. Her studies concluded that OSHA did not need to tighten its standard to protect workers.

In the end, OSHA adopted a stricter standard, but critics argue that it’s still too high. By OSHA’s own calculations, 10 to 45 workers out of 1,000 are expected to get lung cancer in their lifetimes from the current exposure limit.

The California EPA, which had already delayed a chromium assessment for a decade, refused to wait for ToxStrategies’ studies, saying, “It would be very difficult for OEHHA to justify further delay.”

California’s assessment of chromium went through not one, but two peer-review panels. Some of the independent scientists questioned whether the safe-dose level was actually too high, so OEHHA lowered it. The agency issued its public-health goal on chromium (VI) in July 2011.

At first, the head of the EPA’s chemical-assessment program, Vincent Cogliano, also refused to wait for the ToxStrategies studies. But five of nine peer reviewers selected by a private contractor urged delay. One of the reviewers was Steven Patierno, a former PG&E expert witness who served as a consultant on the ToxStrategies’ studies.

In January, the NTP published new research from its rodent studies that challenges Patierno’s contention that saliva and stomach acids render chromium (VI) completely harmless, undermining the theory that chromium is dangerous only in high doses.

Celeste Monforton, a professorial lecturer at George Washington University’s School of Public Health who has written about industry scientists’ influence on chromium policy, said that, based on her own experience working with agencies, regulators are aware that research done by industry is often an attempt to delay.

“Some people at EPA understand that and know that,” she said. “It takes the political will to stand up to that.”

In the Hinkley lawsuit, judges more 16 years ago considered the scientific arguments and ruled against PG&E. In essence, they concluded that the contaminated water in Speth’s toilet was capable of causing cancer.

Froines, the UCLA scientist who resigned from the blue-ribbon panel, said it’s time for public health agencies to do the same.

“At this point, we shouldn’t be debating the carcinogenicity. … We should be at a place where we’re looking for alternatives to the use of chromium,” said Froines, who has evaluated more than 400 chemicals for a California advisory panel he chairs. “You’re dealing with people’s lives.”

Miles O'Brien, science correspondent for the PBS NewsHour, contributed to this story

For the past 60 years, water polluted with chromium (VI) has plagued Hinkley, Calif., the desert town made famous by the film "Erin Brockovich." Although residents there won their lawsuit against the polluter, Pacific Gas & Electric Co., there’s still a debate over whether the compound causes cancer in drinking water. The Environmental Protection Agency says yes, but industry scientists disagree. David Heathhttp://www.publicintegrity.org/authors/david-heathhttp://www.publicintegrity.org/2013/03/13/12290/how-industry-scientists-stalled-action-carcinogen

Education writers honor Center series

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The Education Writers Association has honored the Center for Public Integrity's Susan Ferriss this week with a first-place prize in the 2012 National Awards for Education Reporting, in the category of Investigative Reporting in a Medium Newsroom.

The series of pieces, by Ferriss, Krissy Clark, KQED and Vanessa Romo, KPCC, examined how students were being disciplined in the Los Angeles Unified School District.

"Great persistence. Great find. Great narratives of children caught up in system," wrote the judges.

The 62 winning entries in the contest were chosen from among hundreds of submissions. Winners will be honored at EWA’s National Seminar, to be held May 2-4 at Stanford University. 

Read the series:

A student from San Pedro High School in the Los Angeles area is detained for truancy in 2010 by Los Angeles city officers.The Center for Public Integrityhttp://www.publicintegrity.org/authors/center-public-integrityhttp://www.publicintegrity.org/2013/03/13/12305/education-writers-honor-center-series

Tackling the powerful chemical industry

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Tens of millions of Americans drink water contaminated with chromium (VI), a toxic compound the Environmental Protection Agency was poised in 2011 to conclude likely causes cancer. That finding would normally set the stage for setting stricter drinking-water standards. So far, the new standards have not been set.

If you want to know the story behind the delay, read our two-part investigation, Toxic Clout, including the latest report this week on how chemical industry scientists are able to stall action on a known carcinogen. Or, watch the excellent two-part PBS NewsHour series that documents how an industry uses its resources to raise questions, pay for studies and otherwise effectively block government agencies from taking action.

In some of our key findings, the Center for Public Integrity reported that the EPA’s delay was caused in part by waiting for new studies paid for by the American Chemistry Council, the chemical industry’s main trade group and lobbyist. And, some of the same industry-paid scientists involved in past efforts to stall government action on chromium worked on the studies delaying the EPA.

Chromium (VI), you may recall, is the same chemical compound featured in the movie Erin Brockovich. That Oscar-winning film did much to raise awareness of chromium pollution in drinking water.  Because of that pollution, the company involved, Pacific Gas & Electric Co., paid $333 million to the people of Hinkley,  Calif. But, as I’ve noted before, this story does not end with the Hollywood version of events. The EPA has still not acted.

The good news, however, is that after the Center for Public Integrity and the PBS NewsHour started asking questions about the delay, the EPA revised its timetable for completing its chromium (VI) assessment. Instead of waiting until 2015, the EPA now says it will move up its assessment by two years, to 2013. And EPA also plans to correct the problems with conflicts of interests that we exposed. Glacial but timely progress.

Until next week,

Bill 

 

 

Greeting card industry sending Congress special interest delivery

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Proposed cuts to the cash-hemorrhaging United States Postal Service, including eliminating Saturday delivery, are prompting outcries from lobbying interests as diverse as letter carriers to consumer groups.

Be sure to also include within their ranks the greeting card industry, which relies on the postal service for its business as much as any.

Hallmark Cards Inc. and the Greeting Card Association have both re-signed lobbyist Rafe Morrissey to advocate on their behalf for "all matters pertaining to reform and operation of the United States Postal Service," according to newdocuments filed with the U.S. Senate.

Morrissey, who has long lobbied for both entities, started his own firm government affairs firm March 1. Hallmark and the GCA "elected to remain with me as clients," he explained to the Center for Public Integrity.

"Both have weighed in on the importance of maintaining six-day mail service as well as the need to pass reform legislation to stabilize USPS finances for the last four years," Morrissey said. "I expect these activities to continue, but there is not an increase in activities this year compared to past years."

Hallmark spokeswoman Linda Odell told the Center for Public Integrity that the company was "skeptical of the estimate of savings to be realized from the proposed elimination of Saturday delivery" and that reducing service was "the wrong approach [for] the future viability of the USPS."

"While six-day delivery is the current issue in question, our concern is more about the long-term health of the USPS, which we believe is important not just to the 200-some businesses who belong to the GCA and individual consumers who use and value first-class mail, but also to the nation’s communication infrastructure," she added.

Hallmark typically spends between $200,000 and $350,000 annually on federal-level lobbying, and last year, it employed seven registered lobbyists, according to Senate records. The Greeting Card Association has spent $120,000 annually on lobbying during the past several years with Morrissey serving as its lone lobbyist during 2012.

 

 

Window of a Hong Kong Hallmark store decorated for Christmas.Dave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2013/03/13/12306/greeting-card-industry-sending-congress-special-interest-delivery

Mental-health study of U.S. kids affected by surge in deportations

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An unprecedented surge in deportations in recent years has affected tens of thousands, perhaps hundreds of thousands of American children. The traumatic experience of losing a parent for an entire childhood — or being forced to move abroad to remain with that parent — is certain to have a profound impact on the mental health of these U.S. citizen children, according to researchers who have begun a study of this population.

This week, researchers based in Texas, California and Mexico released a joint announcement about a project they began last year to survey deportees’ American-citizen kids. Lead researcher Luis Zayas, dean of the School of Social Work at the University of Texas at Austin, said he wanted to draw attention to his team’s work now because Congress has begun serious negotiations on immigration reform proposals. Zayas hopes legislators take into account the welfare of children whose parents face deportation.

“It’s disturbing because these children are citizens,” Zayas said. “Our country is not accustomed to turning people into exiles.”

The University of California at Davis’ Center for Reducing Health Disparities is also collaborating on the project, along with Mexico’s National Institute of Psychiatry.

The study, expected to be done by next year, is funded with a $182,000 grant from the National Institute of Child Health and Human Development of the National Institutes of Health.

Researchers are interviewing a total of about 80 children in the Austin, Texas, and Sacramento, Calif., areas, as well as children who’ve moved to Mexico to be with parents.

The investigators are asking community groups to help them identify children to interview, and they are promising confidentiality to participants. Two researchers in Missouri and Southern Illinois are also conducting interviews. Most children will probably be between 10 and 15-years-old.

Clinical internal medicine expert Sergio Aguilar-Gaxiola, director of the UC Davis Center for Reducing Health Disparities, said: “We know that family separation can be catastrophic for children in critical stages of their development. Childhood adversity is one of the strongest indicators for early-onset mental health disorders, as well as for the premature manifestation of chronic health conditions.”

In Mexico, researchers will interview children born and raised in America, who have since been uprooted.

A deportation-related move to Mexico “tears away” children from “peers, schools and communities they know. And it is done under government coercion,” Zayas said. “In all of the cases I’ve studied and evaluated, families would have gone to small towns and hamlets [in Mexico] with minimal schooling and to impoverished conditions.”

Zayas said he hopes the evidence researchers produce will be “considered by those who make immigration laws and those who implement them.”

Some of the children affected by deportations have parents who are both undocumented. Others have so-called “mixed status” families, with one parent who is a U.S. citizen or a legal permanent resident and one parent who is undocumented.

The Center for Public Integrity and KQED public radio in California recently reported on the circumstances of U.S. citizens, many with children, who thought they could sponsor their undocumented spouses for legal status with relative ease.

They do have that right to sponsor a spouse. But when they begin the process, their foreign spouses are eventually told that Congress requires them to stay out of the United States for 10 years, or more, as a punishment before they can become legal residents.

This form of mandatory punishment has resulted in many children being separated from parents. Bethany Gonzalez’s two sons, for example, won’t be able to live with their father Jimi in the United States until 2018. By then the Iowa boys will be adults.

Other Americans have moved with their children abroad, and are raising them with spouses in precarious surroundings. Margot Bruemmer of New Jersey, a mother of two, recently visited Congress to urge legislators not to forget the plight of Americans who’ve been forced to leave the United States to keep families together. She told the Center that she has faced kidnapping and extortion threats in Veracruz, Mexico, where she moved so her family can stay together.

Statistics on how many children are affected by deportation or parents being barred from the United States are hard to come by. In 2012, Congress began receiving periodic reports from immigration officials on deportees who claim to have U.S.-born children.

In March of 2012, a Department of Homeland Security report to Congress estimated that during the six months between January and June of 2011, more than 46,400 people claiming to have U.S.-born children were deported from the United States or were otherwise “excluded,” perhaps after losing a legal proceeding to remain here.

Last year, an immigration official told the Center for Public Integrity that 74 percent of this group of deportees had criminal records, but that claim was not included in the report to Congress and no details were released separately.

Academic investigators who have examined deportation records say that deportees’ minor traffic violations and prior immigration violations have cast them into the category of criminal offenders. The Arizona Republic reported in 2011 that 60 percent of all deportees turned over to immigration authorities by local law enforcement agencies had no criminal records or only low-level offenses.

According to more recent records obtained by the Applied Research Center, which focuses on immigration policies, between July 2010 and September 2012, more than 105,500 people claiming to have U.S.-citizen children were deported. More than 99,200 other people claiming to be parents of U.S. citizens were also excluded, found inadmissible or volunteered to leave.

The Pew Hispanic Center estimated that in 2008, the number of children in “mixed status” families— with an undocumented parent — grew from 2.7 million in 2003 to 4 million in 2008.

Waste, fraud and abuse commonplace in Iraq reconstruction effort

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After U.S. and allied warplanes destroyed a key bridge carrying 15 oil and gas pipelines in northern Iraq during the 2003 conflict there, officials in Washington and Baghdad made its postwar reconstruction a top priority. But instead of spending two months to rebuild the span over the Tigris River at an estimated cost of $5 million, they decided for security reasons to bury the pipelines beneath it, at an estimated cost more than five times greater.

What ultimately happened there tells the story — in a microcosm — of a substantial chunk of the massive nine-year U.S. effort to reconstruct Iraq, the second-largest such endeavor in history (only  the U.S. investment in Afghanistan has been larger).

Studies conducted before the digging of the new pipelines started showed that the soil was too sandy, but neither the Army Corps of Engineers overseeing the effort nor the main contractor at the site, Kellogg Brown and Root (KBR), heeded the warning.  As a result, “tens of millions of dollars [were] wasted on churning sand” without making any headway, as Special Inspector General for Iraq Reconstruction Stuart W. Bowen Jr., described it in his recently published final report on the U.S. occupation.

By the time the digging effort was halted, and the old bridge and piping repaired — more than three years later — the bill had reached more than $100 million. “Because of the nature of the original contract, the government was unable to recover any of the money wasted on this project,” Bowen said.  More than $1.5 billion in oil revenues may have been lost as a result of the delays. KBR did not respond to a request for comment.

The episode is, in short, emblematic of the contracting abuses and mismanagement that wasted at least $8 billion of the $60 billion spent by Washington on Iraq’s post-war recovery, under the guidance of what Bowen describes in his report as “adhocracy” largely controlled by the U.S. military — a structure  that never “coalesced into a coherent whole” and often failed to achieve its aims.

With the U.S. military now gone from Iraq and the 10th anniversary of the invasion only days away, Bowen’s retrospective summary of his audits offers useful insights into how well the U.S. government managed its occupation and the legacy it left behind. The mostly downbeat tone is set early, when the report summarizes final interviews Bowen conducted with 44 top U.S. and Iraq officials, who addressed the simple question of whether the decade-long project left Iraq in better shape.

Most of the Americans he spoke to were rueful, noting multiple miscalculations, poor planning, disorganization in Washington, and inadequate consultation with Iraqis. James Jeffrey, the U.S. ambassador in Iraq from 2010 to 2012, told Bowen that “the U.S. reconstruction money used to build up Iraq was not effective ... We didn’t get much in return.”

Only retired Army Gen. David Petraeus, who commanded U.S. forces in Iraq before shifting to Afghanistan and then briefly directing the CIA, was ebullient, claiming the effort had brought “colossal benefits to Iraq.”

Virtually every senior Iraqi, in sharp contrast, said the decade-long U.S. occupation was beset by huge misspending and waste, and had accomplished little. The biggest footprint Americans left behind, most of these Iraqi officials said, was more corruption and widespread money-laundering. Such a huge investment “could have brought great change in Iraq,” Prime Minister Nuri al-Maliki said, but the gains were often “lost.”

Billions here, billions there

The bill for Iraq is hard to divide into neat categories, but in rough terms: Washington spent more than $15 billion to try and improve Iraq’s power and water supply, revive its schools, and repair its roads and housing; it spent another $9 billion on health care, law enforcement, and humanitarian assistance; it spent $20 billion training and re-equipping Iraqi security forces; it spent roughly $8 billion to enhance the rule of law and battle narcotics; and it spent $5 billion helping to prop up the economy.

Bowen’s interviews with influential Iraqis reveal, howeverm that they don’t seem to have noticed all this investment or don’t seem grateful. One reason might be that households — as recently as 2011 — still got an average of only 7.6 hours of electricity a day, and a sixth of Iraq’s citizens lacked access to potable drinking water for more than two hours a day.

Both U.S. and Iraqi officials complained to Bowen that not enough was done during the occupation to stem corruption. An Iraqi government watchdog agency, the Board of Supreme Audit, noted last year that $800 million in profits from illicit activities was being transferred out of Iraq each week, effectively stripping $40 billion annually from the economy, according to Bowen’s report.

There are exceptions to the tales of fraud and waste. A State Department-funded childhood vaccination program helped cut the national infant-mortality rate by nearly three-quarters. The Baghdad rail station was repaired on time and under budget. And telecommunications repairs have enabled mobile phone use to climb from 80,000 to 23 million subscribers.

But U.S. dreams of fostering a thriving, Western-style economy in the Middle East have not been realized. Almost all of Iraq’s gains have come from oil production, which is now roughly a third greater than it was in 2003. The oil industry is not a big employer, however, and “Iraq is still far from having a vibrant, market-based private sector,” Bowen reports.

Moreover, its military still “lacks critical capabilities in logistics, intelligence,” and repair, Bowen’s report states. It cannot defend its airspace or its coastline, and is weak in counterterrorism.

Parceling blame

Bowen’s report indirectly assigns blame for mismanaging the endeavor to the Bush White House, which had the authority to force U.S. government agencies to coordinate their work but failed to exercise it. Instead, he points out, no single office was assigned to lead the effort, making  stovepiping — a myriad of narrowly focused efforts — “the apt descriptor,” the report said.

But the largest responsibility for the screw-up lies generally at the Pentagon and particularly in the Army, according to the report. The Defense Department  “held decisive sway over $45 billion (87 percent) of the roughly $52 billion allocated to the major rebuilding funds that supported Iraq’s reconstruction.”

The agencies formally charged with dispensing foreign aid — the State Department and the Agency for International Development — played only a minor role in these accounting shortfalls, because they spent less than a fifth of the reconstruction funds. “State’s role in managing the reconstruction … ebbed and flowed in cycles driven by the personalities involved, with State frequently on the losing end of arguments,” Bowen reports.

It was the Pentagon that failed to plan “for a lengthy occupation or a large relief and reconstruction program,” Bowen noted, under the tutelage of a Defense Secretary — Donald Rumsfeld — who famously said, “If you think we’re going to spend a billion dollars of our money over there, you are sadly mistaken.”

Defense officials have acknowledged that a substantial chunk of the Pentagon’s spending in Iraq went to repair the looting and other damage done by Iraqis in the immediate period after the war ended, when U.S. troops were not tasked with keeping order. They also have confirmed that billions of dollars were diverted from civil reconstruction to security efforts after the military abuses at Abu Ghraib helped stoke widespread hostility to the U.S. occupation.

It was the Pentagon that opened a contracting office in Baghdad that Bowen said was chronically understaffed — despite Defense’s peak presence in Iraq of more than 170,000 personnel. The office nonetheless shoveled money out the door at such a high rate and with so little accountability that by 2005, the U.S. embassy there was incapable of matching “projects with the contracts that funded them,” according to Bowen’s report.

Average U.S. expenditures for Iraqi reconstruction in 2005, for example, were more than $25 million a day. When Bowen’s auditors went looking for documents supporting billions of dollars of fund transfers to the Iraqi government in that period, they discovered the paperwork was “largely missing.”

Pentagon-funded fuel purchases were particularly problematic: When Bowen’s office asked to see a log book documenting $1.3 billion in fuel purchases by the Coalition Provisional Authority, “the log book could not be found.” Defense officials also could not produce documents supporting their expenditure of over $100 million in cash found in a vault at the Republican Palace, the gilded Saddam Hussein parlor that became a headquarters of the occupation.

In the crisis atmosphere pervading the reconstruction effort for most of the decade, Pentagon contracts were often open-ended, with vague demands and no precise deadlines. Although the contracts had provisions allowing their conversion to fixed-price awards after some of the work was completed, “the government failed to exercise these options,” Bowen’s report said.

A special system of urgent payments by military commanders — created to tamp down the Iraqi insurgency and known as the Commander’s Emergency Response Program — dispensed $4 billion without any formal oversight. Military officials say it worked well, at least at the outset, but no Defense Department office assembled a comprehensive picture of how the money was spent. As a result, Bowen calls the claims of success “suspect.”

Overcharging

Weak oversight predictably led to rampant overcharging. A firm based in Dubai managed to keep around $4 billion in Pentagon construction contracts, for example, despite routinely marking up the price of switches and plumbing parts between 3,000 and 12,000 percent, according to an audit Bowen conducted in 2011. Kellogg Brown and Root  was among a handful of large contractors that kept winning U.S. funds, despite repeated claims by the Pentagon and others of overcharging by the firm and its subcontractors. The firm has said it conducted its work with “integrity, transparency, accountability, and discipline.”

Some military officers and civilian defense officials participated in the looting. A probe by Bowen’s office of the American official overseeing early reconstruction in Hilla, for example, yielded evidence of widespread bribes, bid-rigging, money laundering, kickbacks and illegal gifts in a scheme that included four colonels, who all got prison terms. An Army major who was the main contracting official at a base in Kuwait oversaw fraud in the purchase of bottled water and warehouse construction that involved 21 others.

Perhaps Bowen’s most depressing conclusion is that the U.S. government is no better prepared for reconstruction work in other countries than it was in 2002. No single government office has responsibility for such operations, he notes, and no tracking system has been established to help oversee related contracting.

Bowen recommends that the Obama administration create a new U.S. office for “contingency operations,” and even includes draft legislation on it in his report. But in an austere fiscal climate, and with Obama’s team set against future military occupations, hopes for reform appear scant.

Clearly a number of lawmakers "have signed on to this solution," said Bowen's deputy Glenn D. Furbish, a top auditor in SIGIR for the past eight years. "Hopefully, we will not get into these things again ... [and] I hope people pay attention to what he has to say ... But it is questionable whether these [reforms] are going to go forward. Given the current political environment, I am not particularly optimistic."

This bridge over the Tigris River was supposed to be repaired in two months for $5 million, but it wound up taking more than three years and costing more than $100 million, according to the SIGIR.R. Jeffrey Smithhttp://www.publicintegrity.org/authors/r-jeffrey-smithhttp://www.publicintegrity.org/2013/03/14/12312/waste-fraud-and-abuse-commonplace-iraq-reconstruction-effort

CPAC panel: Shrink the Federal Election Commission

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NATIONAL HARBOR, Md. — Three conservative attorneys had harsh words for the Federal Election Commission, the government agency tasked with regulating elections, during a campaign finance-themed event today at the annual Conservative Political Action Conference.

Benjamin Barr, who specializes in First Amendment law, predicted that continued legal challenges would help "lessen the teeth" of the FEC, which, in an ideal world, he said, would be "shut down."

The agency's regulatory authority "is very small," he said, while lamenting that political activists have become "habituated" to "bowing in compliance with the federal government" by registering and reporting their financial activities to the six-member commission. The commission is now operating with five commissioners because of the resignation of Democrat Cynthia Bauerly in February.

Such talk comes during a week when the nonpartisan Center for Responsive Politics estimated that the 2012 election cost more than $6.3 million at the federal level.

While campaign finance reformers are also routinely critical of the FEC's performance and lament the commission's frequent deadlocked votes on key cases, they've typically argued that the federal government should strengthen, not weaken it.

But the regulatory environment today, Barr told the Center for Public Integrity, is that "six unelected bureaucrats in Washington" are creating "Rube Goldberg machines that weigh and balance eleven different factors that nobody gets."

Fellow panelist Dan Backer, the principal attorney at DB Capitol Strategies, which offers campaign finance reporting and compliance services, called the current FEC commissioners "sweethearts," but also offered some tough love.

"I don't think anyone here is going to shed a tear if the FEC goes away," he said. 

"I just don't think they behave like a federal agency should," added panelist Allen Dickerson of the Center for Competitive Politics. "I see a very big difference between the FEC and other agencies."

Dickerson argued that many of these problems could be "solved by a change in culture." Barr said that the agency could improve by "liberalizing" its rules, even without disbanding.

The three men also agreed that the government had "greatly overreached" its regulatory authority — authority that many campaign finance reform advocates criticized as too tepid and plagued by gridlock.

"The government cannot create silly burdens for people who want to speak in public," Backer said.

Existing federal reporting and disclosure requirements, the panelists stressed to CPAC attendees, were hindering conservative activists like them.

"The law as it stands today grants expansive rights to the most fringe organizations — fascist organizations, socialist organizations — to be able to speak anonymously, but yet center-right groups, veterans groups and the like must undergo all these burdens," Barr said. "That can't be the right state of affairs."

A 1982 U.S. Supreme Court decision held that political donors to the Socialist Workers Party would face harassment if their names were publicly released, so the party is exempted from the FEC's usual disclosure rules. 

"Do fascists and socialists have a superior claim to First Amendment protections than the NRA or the Sierra Club? I don't think so," Barr told the Center for Public Integrity. "The First Amendment is not an accordion. We don't shrink it and expand it as we see fit. Either it protects or it doesn't."

 

 

Conservative attorneys Allen Dickerson (left), Benjamin Barr and Dan Backer appear at a March 14, 2013, CPAC panel.Michael Beckelhttp://www.publicintegrity.org/authors/michael-beckelhttp://www.publicintegrity.org/2013/03/14/12315/cpac-panel-shrink-federal-election-commission

Rick Perry zings fellow Republicans on national stage

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Texas Gov. Rick Perry on Thursday called the Medicaid expansion piece of federal health reform “fiscal coercion” and blamed “friends and allies in the conservative movement” who have embraced it, saying they have “folded in the face of federal bribery and mounting pressure.”

Speaking at the Conservative Political Action Conference in Washington, D.C., Perry, who ran a failed bid for president last year, also seemed to take a shot at his party. He suggested that claims published in the media that voters had rejected conservative causes would only be true if Republicans had “actually nominated conservative candidates in 2008 and 2012.”

To read the full story, co-reported by the Center for Public Integrity's Dave Levinthal and the Texas Tribune's Emily Ramshaw, click here.

 

 

Texas Gov. Rick Perry speaks at a fundraising dinner.The Center for Public Integrityhttp://www.publicintegrity.org/authors/center-public-integrityhttp://www.publicintegrity.org/2013/03/14/12317/rick-perry-zings-fellow-republicans-national-stage

Witnesses tell Congress that Americans, legal residents’ families suffer due to immigration laws

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American families that have been split up for 10 years or more — or forced into exile — by immigration laws took their fight to Capitol Hill Thursday. Representatives testified before a House Judiciary subcommittee that is a crucial forum for public debate over possible immigration reforms.

“It is often said that our immigration laws are broken, but not why. It’s simple: Our laws contradict our values,” Randall Emery, president of American Families United, told members of the Subcommittee on Immigration and Border Security, which is under the Judiciary Committee. 

American Families United represents American citizens and U.S. legal permanent residents whose families have been separated for a decade or more by punitive immigration mandates.

As the Center for Public Integrity and KQED public radio reported recently, the undocumented spouses of U.S. citizens and legal permanent residents are forced, under a 1996 law, to serve a 10-year exile or more outside the United States before they can finish their applications to become legal residents.

Some undocumented spouses can obtain waivers to cut short these so-called bars, but many thousands are not eligible. Thousands of people are too afraid to even try to sponsor their undocumented spouses out of fear of being separated or forced to move abroad to remain together.

The Center’s story recounts the hardship families with children are facing after applying to legalize undocumented spouses — only to have U.S. officials ultimately order those spouses to stay out of the United States for 10 years, 20 years, even for life.

“What does America gain if a husband and wife are separated, or the children are separated?” asked Rep. Zoe Lofgren, a California Democrat and member of the subcommittee. She said she strongly disagreed with the adoption of these bars in 1996 and warned that they would harm Americans.

American Families United is urging Congress to reform this system of inflexible punishment, arguing it serves no purpose because it does not deter illegal immigration and harms U.S. citizens.

On Feb. 27, Rep. Bob Goodlatte, R-Va., chairman of the Juciary Committee, suggested to reporters that he was open to discussions on changing these bars.

Thursday’s hearing — about divided nuclear families — also focused on the many years that U.S. permanent legal residents must wait before their spouses and children are also given visas to immigrate.

The minimum waiting time for a spouse of a legal immigrant to gain admission legally is currently more than two years. At one point, because of country quotas, the minimum wait time for a Mexican permanent resident’s spouse was eight years.

Emery told the subcommittee that American Families United is also urging Congress to shorten this waiting time for legal immigrants, whose families are strained by these waits.

Emery suggested it was a contradiction to force permanent legal immigrants’ spouses to wait so long to come to the United States while allowing certain temporary workers to bring spouses with them for the duration of their work visa.

“On the one hand, we welcome legal immigrants as permanent residents and urge them to become U.S. citizens, so that ‘they’ become ‘us,’ “ Emery said. “On the other hand, our laws block some of the most basic human values for both legal immigrants and U.S. citizens — marriage and family.”

McConnell tries to paint Democrats as party of the rich

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Senate Minority Leader Mitch McConnell, R-Ky., argued today that Democrats, not Republicans, are the party of the rich.

"Don't tell me Republicans are the party of millionaires and billionaires when Obama's campaign arm is charging a half-million dollars for a meeting over near the White House," McConnell said, referencing the new nonprofit Organizing for Action, whose donors will reportedly get special access to President Barack Obama.

McConnell delivered his comments in a speech today at the annual Conservative Political Action Conference.

Donors who raise at least $500,000 for Organizing for Action — launched by former Obama campaign aides — will qualify to be part of a national advisory board, which comes with "the privilege of attending quarterly meetings with the president, along with other meetings at the White House," the New York Timesreported last month.

White House and OFA officials have dismissed the idea that the nonprofit is selling access. They counter that the group will be a grassroots-focused organization that works to support the president's legislative agenda and will build off of the Obama's campaign success with small-dollar donors and volunteers.

During the 2012 election cycle, about 60 percent of Obama's campaign cash came from donors who gave less than $1,000, according to the Campaign Finance Institute, with 28 percent coming from donors who gave $200 or less.

Meanwhile, the nonpartisan research group calculated that two-thirds of Republican presidential nominee Mitt Romney's campaign cash came from individuals who gave more than $1,000 — and only 12 percent came from individuals who gave $200 or less.

Romney's candidacy was also buoyed by politically active nonprofits and super PACs, which could accept unlimited contributions.

Both Obama and Romney tapped networks of elite fundraisers, as the Center for Public Integrity has previouslyreported. Campaign bundlers often receive special perks and access, from participation in VIP retreats to ambassadorships.

Ahead of the election, Obama campaigned on a pledge to let tax cuts signed into law by President George W. Bush expire for individuals making more than $250,000 a year, while Romney championed tax cuts and the elimination of taxes on capital gains for most taxpayers.

Those policy differences helped make Romney the more favored candidate for many on Wall Street.

The securities and investment industry alone contributed roughly three-and-a-half times as much money to Romney as Obama, according to the Center for Responsive Politics.

The industry, which gave nearly 70 percent of its funds to Republicans during the last election cycle, ranks as the top financial supporter of McConnell.

Nevertheless, at CPAC, McConnell said Republicans were "not beholden to any special interests," and he vowed to fight for the right of grassroots groups and business executives to criticize those in power.

"The Constitution doesn't say you can abridge speech if it's during an election year or if it's coming from a businessman whose politics you don't like," McConnell said. "It says you can't abridge speech period."

In the U.S. Senate, McConnell has successfully blocked the Democrats' proposed DISCLOSE Act, legislation favored by Obama, which would add new reporting and disclosure requirements for groups that run political ads.

 

 

Senate Minority Leader Mitch McConnellMichael Beckelhttp://www.publicintegrity.org/authors/michael-beckelhttp://www.publicintegrity.org/2013/03/15/12319/mcconnell-tries-paint-democrats-party-rich

Energy Department auto loan program sputters

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A Department of Energy loan program, infused with $25 billion to spur a wave of fuel-efficient vehicles, has not closed a loan in two years and is likely to leave two-thirds of the money unspent amid fallout over the Solyndra debacle and other factors.

Those findings, revealed Friday in a U.S. Government Accountability Office report, rekindle questions over how effectively the Energy Department picks winners and losers for its lucrative green energy portfolio.

The audit focuses on DOE loan programs, including one known as ATVM – the Advanced Technology Vehicles Manufacturing program.

That program was pitched as part of a broader government campaign to spur innovative, clean technologies that would both rev up the economy and clean the environment. Under ATVM, the government would help bankroll electric cars and other fuel-saving initiatives; this seed money would, in turn, trigger a domino effect for industry and consumers.

Yet the last loan closed in March 2011, and just $8.4 billion has been spent so far in five projects.

The money, records show, helped stalwarts Ford Motor Co. and Nissan North America transform factories to build fuel-efficient vehicles, and cutting-edge upstarts Tesla Motors and Fisker Automotive develop electric cars and plug-in hybrids. A smaller loan went to a Miami company to develop wheelchair-accessible vehicles to run on compressed natural gas.

Yet not all the projects have found success.

An investigation by The Center for Public Integrity and ABC News, published in October 2011, revealed that DOE made a $1 billion bet on two politically connected California car companies – Tesla and Fisker – despite questions from analysts and others about how well their electric cars would fare in the market.

Both companies said the government investment ultimately would pay off. Yet Fisker’s CEO stepped down this week, as the company seeks new investors to jump-start its production.

The ATVM program was infused with another $7.5 billion to cover credit subsidy costs, yet $4.2 billion remains in that pool of money, the GAO report said.

The Energy Department does not expect to issue any more loans under a program once pitched with promise.

As of January 29, 2013, “DOE was not actively considering any applications for using the remaining $16.6 billion in loan authority or $4.2 billion in credit subsidy appropriations available under the ATVM loan program,” the GAO’s Frank Rusco wrote.

The Energy Department told auditors it had seven ATVM applications on file, totaling $1.48 billion. But those applications were “inactive,” DOE said, “for reasons including insufficient equity or technology that is not ready.”

“DOE is not likely to use the remaining ATVM loan program authority given the current eligibility requirements,” the GAO said.

Some potential applicants said they were hesitant to seek Energy Department funding. One factor: The ghost of DOE’s Solyndra debacle continues to hover over the program.

Solyndra, the first green energy loan guarantee unveiled by the Obama administration, was announced with fanfare in early 2009. Yet the Center and ABC reported in May 2011 that DOE initially green-lighted the $535 million loan without all due diligence in hand, putting taxpayers at risk. Later in 2011, Solyndra shuttered its California headquarters and filed for bankruptcy.

The FBI and the Energy Department’s Inspector General have been conducting a joint investigation of the Solyndra project since 2011. No charges have been filed. “It’s still an ongoing, joint investigation,” an FBI spokeswoman told the Center January 31.

“Most applicants and manufacturers noted that public problems with the Solyndra default and other DOE programs have also tarnished the ATVM loan program, contributing to the challenges,” the GAO wrote. “They believed the negative publicity makes DOE more risk-averse or makes companies wary of being associated with government support.”

Applicants and manufacturers said the loan program is needed to help advance technology. Yet several told auditors the cost of participating “outweigh the benefits.” Some cited a “lengthy and burdensome application and review processes.”

This is not the first time auditors have questioned the ATVM program. An earlier GAO audit, released in 2011, warned that the $25 billion may never fully be spent in a program lacking clear benchmarks to ensure taxpayer dollars were properly spent.

An Energy Department spokesman did not respond to an interview request Friday.

The agency, in a written response to auditors, acknowledged it “is not likely to use the remaining Advanced Technical Vehicles Manufacturing loan program authority under the current eligibility requirements.”

The loan office “would be pleased to share our lessons learned in implementing the program and discuss options for program modifications to improve implementation of the original legislation,” wrote David G. Frantz, the Loan Programs Office’s acting executive director.

Fisker Automotive owner Henrik Fisker, who resigned in March 2013, with the company's electric Karma in an earlier photo.Ronnie Greenehttp://www.publicintegrity.org/authors/ronnie-greenehttp://www.publicintegrity.org/2013/03/15/12323/energy-department-auto-loan-program-sputters

Massachusetts outside money pledge unraveling?

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Hopes that the race to fill Secretary of State John Kerry's vacated U.S. Senate seat would be not be subject to the type of spending unleashed by the U.S. Supreme Court's Citizens United decision continued to fade Friday.

NARAL Pro-Choice America became the latest outside group to spend money in the Massachusetts' special primary — despite the candidates' pledge to curb such organizations from spending money on broadcast, online and direct mail advertisements.

Federal Election Commission records show NARAL spent nearly $8,000 on "copy, art and production"  and "list rental" expenses but the filings don't indicate whether the funds fueled activities included in the pledge. A NARAL representative could not immediately be reached for comment.

(Update, 11:49 p.m.: NARAL spokeswoman Samantha Gordon said in an email that "we strongly support efforts to keep outside ads from flooding the airwaves in Massachusetts, and we are not running any ads in this primary campaign. But we believe it is fundamental to democracy to create pathways for citizens to participate actively in the political decisions that will affect their lives." Gordon continued: "Choice will be huge in this race, and we’re proud to use grassroots efforts to encourage our members and supporters to communicate with their friends and neighbors about the importance of the issue in this race.")

Nevertheless, an aide to the spending's target — Rep. Stephen Lynch, D-Mass. — is not pleased. Lynch is running against Rep. Ed Markey, D-Mass., in a Senate primary prompted by Kerry's resignation.

"It does seem a bit disingenuous," Lynch spokesman Conor Yunits said. "We certainly hope that the Markey campaign and their supporters will abide by the pledge, yes, especially given the scope of the outside influences lining up to support him."

Through Friday, the League of Conservation Voters and climate change advocacy group 350.org Action Fund have together with NARAL made almost $352,000 in independent expenditures aimed at helping Markey or attacking Lynch, according to FEC records though none of the expenditures appear to have funded pledge-prohibited activities.

League of Conservation Voters spokesman Jeff Gohringer tells the Center for Public Integrity that his organization is "going to respect the pledge," and that "there's absolutely a distinction" between overt advertisements and grassroots-level politicking.

As for Markey, spokesman Andrew Zucker says the congressman "is fully committed to the People’s Pledge and to passing a constitutional amendment that would clean up our elections by repealing the court’s misguided Citizens United ruling."

The pledge signed by Markey and Lynch is modeled after one struck by Sen. Elizabeth Warren, D-Mass., and former Sen. Scott Brown, R-Mass., during their general election campaign last year.

If outside groups spend money on ads that violate the pledge, the candidates have agreed to dip into their own campaign coffers and donate an amount equal to half the cost of those ads to charity.

The special election primary is April 30, with the general election scheduled for June 25.

 

 

Dave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2013/03/15/12324/massachusetts-outside-money-pledge-unraveling

Conflicts of interest run rampant in state legislatures

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SANTA FE — On February 20, New Mexico’s House Energy and Natural Resources Committee gathered for one of its regular meetings in a drab room here at the capitol, a circular building known as the Roundhouse. On the agenda: a bill that would hike fees and penalties for energy companies drilling wells in the state.

The votes fell along party lines, with five Republicans lining up against the bill and the committee's Democratic majority voting to send the legislation to the House floor. The Republicans argued the bill would stifle business and cost jobs, and for one lawmaker, the issue hit particularly close to home. Rep. James Strickler spends most of the year running his own small oil and gas production company, JMJ Land & Minerals Co. The bill would directly affect his profits.

Strickler, a 58-year-old from the sparsely populated, gas-rich northwest corner of the state, speaks with a gentle western drawl. In an interview after the committee vote, he said the bill would put New Mexico’s regulations out of line with those in other states. Ultimately the bill was voted down on the House floor, and Strickler was among those voting ‘no.’ Over seven years in office, Strickler has been a staunch advocate for his own industry and has twice introduced legislation to reduce the amount of renewable energy that utilities must purchase. He has never recused himself from a vote on energy issues, he said, even when it directly affects his bottom line.

“I don’t think it’s a conflict of interest,” Strickler said. “I think it’s a blessing that a few of us have some understanding of that industry.”

New Mexico’s legislature meets for just 60 days each odd year and 30 days in even years. Lawmakers earn a $154 per diem payment while in session, but they receive no salary. These men and women are true citizen legislators, and unless they are retired or wealthy, they must find another way to earn a living. While all other states pay legislators at least a small salary, only ten state legislatures approach full-time status. The rest are part-time, and most lawmakers hold regular jobs the rest of the year.

As a result, situations like Strickler’s are the norm; insurance agents vote on insurance bills, doctors vote on health care bills and school administrators vote on education funding bills. Illinois House Speaker Michael Madigan is also a partner at a prominent property tax law firm and has used his office to shape legislation and push state contracts that have sent millions of dollars to clients of the firm. Utah state Rep. Johnny Anderson, who runs for-profit day care centers, has pushed to change the state’s child care laws to benefit businesses like his; he told local reporters that all part-time legislators have conflicts. A 2010 review by the Deseret Morning News found that two out of three Utah legislators had introduced a bill that created a potential conflict with their private employment. In extreme cases, some lawmakers head groups that lobby the legislature, or even work as lobbyists themselves.

“It’s an absolute problem,” said Ben Bycel, a lawyer who used to run the ethics commissions in Los Angeles, and later, Connecticut. Bycel said many states do not pay legislators enough to discourage them from using their office for personal gain. In Connecticut, where Bycel worked from 2006-2007, he said many legislators’ outside employment was clearly a benefit of their public office. “Many of them were involved in situations [in which] they would not have had the job, they would not have kept the position, unless they were legislators. The reason why they were given the position was because someone up there thought they could do a good job for whatever industry it was.”

Advocates of part-time legislatures say they bring real-world experience to government and discourage the type of corrupt politics that can plague career politicians. But the system raises obvious conflicts of interest. States try to juggle these roles by requiring that lawmakers disclose their sources of income—which all but three states do—and by limiting what lawmakers can vote on—which 40 states do to at least some extent, according to the National Conference of State Legislatures. Generally, lawmakers are supposed to recuse themselves from votes on bills that would give them a direct financial benefit, but it is often up to the legislators themselves to make that determination.

Many states, however, lack the combination of clear rules and strong enforcement that might ensure conflicts do not become real problems. While 41 states have some form of ethics oversight body, a review last year found many of those bodies to be weak and ineffective. The review, a state-by-state ranking of ethics and accountability carried out by the State Integrity Investigation, a project of the Center for Public Integrity, Global Integrity and Public Radio International, gave grades of D or F to 28 of the state ethics agencies.

In New Mexico, there is no independent body for legislators to turn to for advice or to enforce the state’s ethics laws. While legislators are instructed not to use their office for private gain, lawmakers and government watchdogs say it is essentially up to individual legislators to decide whether a conflict exists, and whether they ought to recuse themselves from a vote.

Dede Feldman served as a Democrat in the legislature for 16 years before deciding not to run for re-election last year. She was a long-time advocate for creating an independent ethics commission, but she grew tired of legislative gridlock, and particularly frustrated with the lack of progress on ethics. She said lawmakers rarely recuse themselves, and that conflicts of interest have become so ingrained in the legislature that they rarely draw attention. “People have come to accept conflict of interest from legislators as the way we do business here,” she said. 

Inside Stories

The Roundhouse consists of four circular hallways stacked on top of each other like doughnuts, with an open rotunda where the hole would be and offices lining the outside of the ring. The fourth floor hosts the governor’s office, which this winter featured an exhibit of the state’s prominent chile pepper industry that posed New Mexico’s basic existential question: Red or Green? The legislative chambers sit on the lowest level, underneath the floor of the rotunda. Lawmakers’ dress ranges from casual suits and blouses with New Mexico flare like the bolo tie, to the power-broker business suits common in Washington, D.C.

John Ryan sticks to the formal end of the scale. The Republican senator matches well-tailored suits with neatly parted chestnut hair. He’s represented parts of Albuquerque and its suburbs since 2005, and spends the rest of the year working as a federal lobbyist. His clients last year included a town in eastern New Mexico, a public water utility and two electric transmission and generation companies that operate in the state. According to data compiled by the Center for Responsive Politics, they paid Ryan $240,000 last year to represent their interests in Washington.

Ryan is not registered to lobby in New Mexico, but he has voted on bills involving some of the same issues he lobbies for in Washington. Last year, he voted on a tax bond measure that funded dozens of projects across the state. One of items in the measure sent $278,000 to build a wastewater pipeline in Clovis, NM, which paid Ryan $40,000 last year. Ryan’s contract with Clovis cites a similar project on his to-do list. The same bond measure contained $210,000 for the Eastern New Mexico Water Utility Authority, which paid Ryan $80,000 last year, according to federal records. Over the past few years, Ryan voted on several other bills that either helped finance or otherwise affected his clients.

Ryan has recused himself from some votes, including a committee vote in February on a bill that would affect electric transmission projects, and he does not generally sponsor bills that would benefit his clients. But the various relationships have led some veteran statehouse-watchers to say Ryan has gone too far. Leanne Leith, the political and programs director for Conservation Voters New Mexico, said she thinks Ryan should not have voted on the tax bond measures, even though other projects were included in the bills. “Where is that line?” she said. “If you’re passing a bill where three of the four clauses affect your clients, but the fourth doesn’t, do you say you were voting on that fourth piece?”

Ethics experts outside the state have reacted more strongly. “That’s outrageous,” Bycel said, after having Ryan’s situation described to him. “Legislators should not also be lobbyists.”

Ryan declined repeated requests for an interview. His arrangement raised few concerns in New Mexico until recently, when the Santa Fe Reporter profiled a complaint against Ryan with the Secretary of State brought by Joe Carraro, who lost to Ryan in the 2012 general election. Carraro served in the legislature as a Republican for two decades until 2009. Five years ago, he was accused of conflicts himself after he requested appropriations for school field improvements that eventually led to contracts for an artificial turf company that had hired him as a consultant. Carraro denied knowing that the appropriations would eventually lead to work for the company.

The essence of Carraro’s complaint was that Ryan had run afoul of the state’s conflict of interest laws with his votes and that he was lobbying within the state without registering.  In December, the Secretary of State’s office sent Carraro a letter saying that based on his allegations and a response from Ryan, it did not find “sufficient evidence” of a violation of ethics laws. Even after the report, some people in the Capitol do not seem surprised by the details of the case and point to several similar examples.

Sen. Daniel Ivey-Soto, a Democrat, is executive director of the New Mexico County Clerks group, and for years lobbied the legislature on the group’s behalf until he was elected last year. While he no longer lobbies, he still runs the group and has even sponsored a bill, which updates marriage license procedures, that he helped draft as a lobbyist.

“I am the most knowledgeable person in the building on this issue. I’ve been dealing with this for three years,” he said. “What sense does it make to say, oh, let me give this to somebody who doesn’t know a thing about it.”

Sitting in a meticulously organized office, with a map of the 15th Senate district on the wall, Ivey-Soto said his work as executive director is not evaluated on the basis of legislative success. He also said he would recuse himself from any bill that could affect his compensation.

Mark Moores, a hulking, former college football player now serving his first term in the Senate as a Republican, is also the head of the New Mexico Dental Association, which has its own legislative agenda. The group has lobbied against a bill this year that would expand the work of dental therapists, and Moores said he will vote on the measure and sees no conflict.

“I don’t have a financial interest in if that bill passes or not,” Moores said. Because he is not a dentist and has no practice, Moores said the bill poses no direct financial concern for him. “But I have more expertise in that area than anyone else in this legislature because I’ve studied it, I know the issue. And if people ask me questions about it, I’m willing to share.”

Viki Harrison, executive director of Common Cause New Mexico, said Moores should recuse himself from voting on the dental bill. But she pointed out that the vote is only a small part of the problem. “I’m going to tell you what happens in a citizen legislature. Other senators are going to look to him for direction because they just got slammed with a thousand bills in 30 days,” she said. “It’s not like every legislator has their own bill analyst to help them out.”

State by state

The situation is hardly exclusive to New Mexico. Ben Kieckhefer, a Republican state Senator in Nevada, is also the director of corporate communications for a Las Vegas law firm. In 2011, he told the Reno Gazette-Journal that he talks with the lobbyists at his firm so he knows what they are working on. "We need to make sure I have a clear understanding of what they're testifying on so I don't have a conflict of interest I don't know about,” he said.

Last year, the government watchdog group Integrity Florida examined lawmakers’ financial disclosure forms in that state and discovered that at least 11 legislators earned money from firms that lobby the legislature. Only two of the 11 reported potential conflicts of interest on votes, and only five listed their clients. Dan Krassner, the group’s executive director, said there were large inconsistencies in financial disclosure reports and that many were filed late or were not filed at all.

“Certainly, there’s an appearance that legislators and other officials that have clients are in a position to help their clients with little oversight,” Krassner said. He said the state’s conflict of interest rules are weak, and that financial disclosure is insufficient. “Too many officials are using their office for private gain.”

David Freel, who used to run Ohio’s Ethics Commission and now teaches ethics at Ohio State University’s Fisher College of Business, said that working for a lobbying firm, while not banned in many states, lies at the edge of what is appropriate in a part-time legislature. “I think it creates an exceptional caution and risk signal to have a legislator be both a legislator and a lobbyist simultaneously,” he said. “Because then the question is, what is the separation?”

A fine line

The general rule of thumb in New Mexico and most states is that lawmakers ought not to vote on bills that affect them in particular, but that they are free to work on bills that affect an industry of which they’re a part.  Most ethics experts say it’s difficult to write rules that are any more restrictive without having problematic side effects, such as precluding anyone except the independently wealthy from serving.

Alan Rosenthal, an expert in state government and legislative ethics at Rutgers University, said he’s in favor of banning dual office holding—when legislators hold a second public job such as sitting on an administrative board—and also supports preventing lawmakers from working as lobbyists or in other political fields. But he said overly restrictive rules would have unintended consequences. “The alternative there is to start trying to restrict the ability of legislators to participate because of where they earn their income,” he said. “The problem there is that you're limiting the representation that your constituency gets.”

The problem becomes complicated when a lawmaker, as is often the case, works in a field in which he has clients who deal with government contracts and regulation. “If he’s an insurance salesman, if he’s a lawyer, if he’s in any of these kinds of fields,” Bycel said, “you bet he’s going to have clients and customers who want something from him as legislator.”

Illinois’ House Speaker Michael Madigan is an extreme example. In a series of articles over the past few years, the Chicago Tribune reported on several cases in which Madigan, a Democrat known for his tight control of the legislature, pushed bills and contracts that reportedly steered millions of dollars to clients of his firm, Madigan & Getzendanner. In 2009, for example, Madigan helped secure $18 million in state funds for a highway interchange that a coalition of businesses had been promoting for years. Two of those businesses had hired his firm. In 2005, months after his firm was hired by a company that owns nursing homes, Madigan and the House made permanent a program that funded assisted living homes for the poor. The Tribune reported that the move unlocked millions of dollars in investment money for the company, Pathway Senior Living LLC, and allowed it to nearly double its number of facilities and collect tens of millions of dollars in additional federal and state funds.

One Tribune columnist called Madigan a “walking conflict of interest.” An editorial said that he had weakened bills affecting banks, nursing homes and pharmacies that had hired his firm, but noted there was no “smoking gun” indicating that Madigan had violated any ethics rules. “You don't need an ethics expert to deduce that something is very wrong in Illinois.”

Steve Brown, a Madigan spokesman, said none of the companies in question had hired Madigan’s firm in order to secure contracts or funds. He said that Madigan has not violated any laws, and that he complies with a personal code of conduct that says nothing he does in his public work will benefit him or his firm privately. “The most important thing is the end conclusion, that at no point did they demonstrate that Mr. Madigan used his pubic office for private gain,” Brown said.

Illinois’ Gov. Pat Quinn this year proposed explicitly prohibiting legislators from voting on issues where a conflict might exist. It’s unclear what exactly Quinn would qualify as a conflict, however, and a spokesman from his office did not answer specific questions on the proposal.

Maryland has a long history of similar dealings, said James Browning, regional director for state operations at Common Cause. In 2004, the organization reviewed votes and financial disclosures in Maryland and found that 50 legislators had sponsored 127 bills that affected their employers.

More recently, the state Senate censured Sen. Ulysses Currie last year for failing to disclose nearly $250,000 in consulting fees he earned from a grocery store chain, even as he helped the company win concessions with the state. Months earlier, a federal jury had acquitted Currie on charges stemming from the scandal; members of the jury said they felt Currie’s indiscretions fell short of criminal behavior.  In the wake of the Currie scandal, Maryland lawmakers passed a bill requiring themselves to post some conflict of interest disclosure forms online, but they did not require that full financial disclosures be posted.

“The practice of pushing these bills to help your employer or yourself is pretty widespread,” Browning said, “and for the most part allowed under the rules.”

Broader perspectives

In many states, the concept of a full-time, professional legislature is a non-starter. In North Dakota and Texas, for example, lawmakers meet every other year. Many lawmakers in New Mexico say a citizen legislature brings a diverse group to the capitol with “real-world” experience.

“The writers of our constitution did not want a professional legislature,” said Moores, the first-term senator in New Mexico. “They wanted people coming in from the four corners of our state with different backgrounds.”

Robert Stern, who helped write California’s conflict of interest laws in 1974 and went on to work for the state’s ethics commission, said part-time legislatures bring a broader perspective to government and can actually reduce lawmakers’ reliance on campaign contributions. If legislators rely on other jobs for their incomes, he said, they may be more willing to alienate donors because serving in office is just one part of their professional life. Attempts to make legislatures full-time have gathered little support in Florida and Texas, and some people have pushed to shorten sessions in California, Michigan and Wisconsin.

But some experts and lawmakers say part-time legislatures harbor systemic flaws. Sen. Gerald Ortiz y Pino, an Albuquerque Democrat and retired social worker, supports giving New Mexico’s legislators a salary. He said the brief legislative sessions mean lawmakers do not have enough time to wade through a wave of more than a thousand bills introduced each session. The problem is compounded by the fact that they do not have staff to help analyze legislation. The situation creates reliance on lobbyists—and their gifts—to help lawmakers sort out the details of legislation, he said. Ortiz y Pino and others also argue that rather than broadening its scope, a part-time legislature actually limits who can serve, because most people cannot afford to take two months away from full-time jobs.

“Having a citizen legislature sounds good on the surface,” Ortiz y Pino said, but the problems associated with it are “enormous.”

Browning of Common Cause said the problem has grown worse as Congress has given greater discretion to the states over how to spend federal money through block grants. The move has shifted more work from Washington to state capitols, he said, but states have not kept pace by devoting more resources to their legislators. “If you consider how much is at stake, how much money is being carved up by budgets and in these committees and how little is being invested in these people in salaries and in resources,” Browning said, “it’s hard to argue that we’ve set up a system to get the best and the brightest and have them fight for their constituents.”

Conflicts of interest have simply become part of the system in many states, experts say, where legislators earn little pay and have no effective oversight. In New Mexico, disclosures are inconsistent and are not audited. And without an independent ethics commission, oversight and enforcement simply does not work, said Harrison of Common Cause New Mexico. People can submit complaints to the Secretary of State, which rarely pursues ethics investigations, or to a number of legislative committees. Those committees have received about half a dozen ethics complaints since 2005, but have not found probable cause in any of them. “From our perspective, there’s really very, very little ethics oversight, and there are very few rules,” Harrison said.

The same could be said for many other states, where ethics agencies remain weak and under-funded, if they exist at all. Experts agree that independent oversight and strong disclosure rules are critical to preventing conflicts, as is paying legislators an adequate salary. But even under the best laws, conflicts are an inherent part of the system —and that issue can’t be squared, certainly not at the Roundhouse. “In some ways it’s an indictment of part-time legislatures,” Browning said. “This will always be a problem.”

While New Mexico legislators, left, are instructed not to use their office for private gain, lawmakers and government watchdogs say it is essentially up to individual  legislators to decide whether a conflict exist. Illinois House Speaker Michael Madigan, top right, is also a partner at a prominent property tax law firm. At the Florida Capitol, bottom right, a watchdog group found at least 11 legislators earned money from firms that lobby the legislature.Nicholas Kusnetzhttp://www.publicintegrity.org/authors/nicholas-kusnetzhttp://www.publicintegrity.org/2013/03/18/12313/conflicts-interest-run-rampant-state-legislatures

OPINION: reform will help level premium costs

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Recently I was one of three witnesses to testify before a House committee hearing on whether the cost of health insurance will be higher or lower for people who cannot obtain it through their employer when important provisions of the Affordable Care Act go into effect in a few months.

I cited studies that indicate the overall cost of coverage — premiums plus out-of-pocket obligations — will be lower. The others on the panel — Douglas Holtz-Eakin, who was director of the Congressional Budget Office during the Bush Administration, and Christopher Carlson of the actuarial firm Oliver Wyman, cited their own studies that indicate costs could be higher for some young adults who have benefited over the years from the prevalent insurance industry practice of charging older people up to 10 times as much as they charge younger folks.

Insurers will not be able to do that much longer. Beginning January 1, they’ll be prohibited from charging someone more than three times as much for insurance as anyone else for the same policy.

Congress would have been better served, in my opinion, if the witness list had included Jim Elder, a retired small business owner from Florida who I interviewed last week as I was preparing for my testimony and this column.

He would have been a better witness than all three of us combined, hands down. That’s because his story would have served as a real-world reminder of just how unaffordable — and even unavailable — health insurance has become for average middle-class Americans who have done nothing wrong other than get sick.

Jim Elder might not be a widower today had premiums for the health insurance coverage he was providing for his family and his employees not become so unaffordable after his wife was diagnosed with breast cancer that he had no option but to drop coverage for everybody.

Elder became a victim of a common but little known practice in the health insurance business called purging. That’s a term insurance executives use behind closed doors (and during conversations with shareholders and Wall Street financial analysts) to describe what they do to small businesses after an employee or dependent gets sick: jack premiums up so high that the employer either has to shift far more of the cost of coverage to workers or stop offering coverage altogether. In many cases, they are not offered a policy at any price.

Purging explains why far fewer small businesses offer health insurance to employees than a decade ago. And it’s one of the reasons I decided to leave my insurance company job. I couldn’t in good conscience continue working for an industry in which coverage for life-saving medical care was priced beyond the ability of millions of Americans to pay for no reason other than to meet profit goals.

Jim Elder’s wife, Leslie, died an untimely death at age 63 last summer, uninsured and facing foreclosure because no insurance company was willing to sell the Elders an affordable policy because of her age and, ultimately, her serious but treatable illness, Hodgkin’s lymphoma.

I learned of the Elders from a CNN report that described the nightmarish roller coaster they were on. Until Leslie got sick, they had what they thought was good medical coverage with stable premiums. Soon after her initial cancer treatments, they had no coverage at all because Elder Auto Repair was purged by Jim’s insurer. And in between: skyrocketing insurance premiums, high deductibles and stacks of unpaid medical bills.  The Elders had to deplete their IRA and savings account to pay for Leslie’s care and were ultimately forced into foreclosure.

The Elders could not find affordable health insurance, and from the industry’s perspective, it’s easy to see why: insuring Leslie would not have been profitable. This is the dilemma we face as Americans, as we try to balance the demands of a health insurance industry driven by money against the needs of friends, family and loved ones who require insurance to survive and be productive citizens.

I know firsthand that insurers are eager to avoid the expense of providing coverage for people who, because of their age and health status, might need costly medical care. In a 2009 policy paper, America’s Health Insurance Plans, the industry’s biggest trade group, acknowledged that almost a third of people in Leslie’s age group were denied coverage every year.

One of the reasons for the congressional hearing was the industry’s massive PR and lobbying campaign to try to get Congress to change Obamacare so that states can decide how much insurers can charge people based on age. That would enable them to maintain the very profitable status quo. By restricting the amount insurers can charge older Americans, however, the Affordable Care Act will foil their attempts to deny coverage to people they want to avoid by charging exorbitant premiums. People who need medical care the most. People like Leslie Elder.

This new restriction is one of the most important consumer protections in the reform law. It would be a tragedy if Congress guts it.

 

Wendell Potterhttp://www.publicintegrity.org/authors/wendell-potterhttp://www.publicintegrity.org/2013/03/18/12320/opinion-reform-will-help-level-premium-costs

Invasion of Iraq, 10 years later

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On the evening of March 19, 2003 – ten years ago – U.S. warplanes bombed a site in Baghdad that military officials believed was the hideout of Iraqi leader Saddam Hussein. Although the failed attempt to kill him was followed two days later by hours of missile and bomb strikes, and then a ground invasion, it was an inauspicious start to a war that would lead to a lengthy U.S. occupation of Iraq and the expenditure of hundreds of billions of dollars from the U.S. treasury. Almost 4,500 American troops were killed in the conflict and more than 32,000 were wounded.

Five years ago, in an effort to hold accountable the officials who led the United States into the Iraq war and orchestrated the war’s expansion, the Center for Public Integrity and the Fund for Independence in Journalism combed through thousands of statements made by those officials about the war. The “Iraq; The War Card” project found hundreds of falsehoods, demonstrating that the policy underpinnings of the conflict were based in large measure on poor understanding, at best, or a manipulative public relations campaign, at worst.

The findings were not controversial, as many official reports – by Congress and others – have reached similar conclusions. But the Center put a number on the falsehoods, and tallied them all in one place. Here is that work, for those who may wish to look back on a tragic record of error-filled official assertions.

 

 

President George W. Bush sits with Vice President Dick Cheney, Secretary of State Colin Powell and Gen. Henry Shelton in the White House for a meeting following the 9/11 terrorist attacks. The Center for Public Integrityhttp://www.publicintegrity.org/authors/center-public-integrityhttp://www.publicintegrity.org/2013/03/19/12331/invasion-iraq-10-years-later

'State Integrity Investigation' has blockbuster first year

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It’s been exactly one year since publication of the State Integrity Investigation, an unprecedented, data-driven analysis of transparency and accountability in all 50 states — and a lot has happened since. The project — a collaboration of the Center for Public Integrity, Global Integrity and Public Radio International, with cooperation from the Investigative News Network— has been quoted, praised, assailed or otherwise cited by hundreds of news outlets, good-government groups and legislators. The project was also a finalist for the prestigious Goldsmith Prize for Investigative Reporting awarded by Harvard’s Kennedy School of Government. Clearly, the idea of measuring accountability and transparency in state government has touched a reformist nerve — and our package is continuing to resonate across the country.

Since the State Integrity Investigation was launched, reform efforts have been initiated in 16 states. Four of those states — Delaware, Iowa, Maine and Rhode Island— have passed laws or issued executive orders improving disclosure and access to public information. Lawmakers in seven other states have proposed a broad slate of measures that would strengthen ethics oversight, tighten campaign finance reporting and more.

The ongoing 2013 legislative sessions have seen a flurry of activity. The Florida Senate and Georgia House have each passed major ethics reform bills that would strengthen ethics enforcement and reign in spending by lobbyists and independent campaign committees. While watchdogs say the bills contain serious flaws, the measures nonetheless could represent the first major reform efforts in those states in decades. Significant legislation has also been introduced in South Carolina, Maine and North Dakota.

Where legislators have been slow to act, in some cases the executive branch has stepped in. Rhode Island Gov. Lincoln Chafee created a new online portal in January 2013 to display audits, contracts and other financial documents in searchable format. Chafee's office has been working with Global Integrity, a partner in the State Integrity Investigation, to bolster open government practices. In Oklahoma, Finance Secretary Preston Doerflinger said his agency had improved online access and added thousands of records to public websites over the previous 12 months.

Since release of the State Integrity Investigation, the Center has published a series of pieces highlighting systemic transparency issues that continue to plague state governments nationwide. You can read some of those, below. Visit the main project site for a wealth of data on transparency and accountability in each of the 50 states.

 

 

Maine state capitol buildingNicholas Kusnetzhttp://www.publicintegrity.org/authors/nicholas-kusnetzhttp://www.publicintegrity.org/2013/03/19/12321/state-integrity-investigation-has-blockbuster-first-year
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