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- 08/08/13--03:00: _California cities s...
- 08/08/13--13:00: _Six federal agencie...
- 08/08/13--20:01: _Praise for our stat...
- 08/09/13--07:15: _Obamacare's hidden ...
- 08/09/13--06:48: _Suit alleges mistre...
- 08/09/13--06:37: _New super PAC to bo...
- 08/09/13--14:55: _Obama says ex-NSA c...
- 08/12/13--03:09: _OPINION: reality ch...
- 08/12/13--03:09: _Parents, advocacy g...
- 08/12/13--13:19: _Pro-Booker PAC prop...
- 08/13/13--08:38: _William Koch emerge...
- 08/14/13--08:01: _Investors, companie...
- 08/15/13--13:27: _Giffords' gun group...
- 08/15/13--13:29: _Obamacare facts sep...
- 08/16/13--03:03: _Booker supports e-f...
- 08/20/13--07:43: _'America Votes' spe...
- 08/19/13--14:12: _OPINION: doing 'as ...
- 08/20/13--13:27: _Jindal's education ...
- 08/21/13--16:07: _Are civilian nuclea...
- 08/21/13--14:06: _A hyper-super PAC b...
- 08/08/13--13:00: Six federal agencies are investigating online payday lenders
- 08/08/13--20:01: Praise for our state corruption risk index
- A 14-year-old girl identified as G.F. was put into solitary in a cell for approximately 100 days over the last year, with no education services and short breaks outside only two times a day. Diagnosed with bipolar disorder and attention deficit, the girl was removed from the juvenile hall county school and put into solitary, with officials failing to conduct a mandatory inquiry into whether her behavior was related to her disability.
- W.B. a 17-year-old boy — already found mentally incompetent by a juvenile court — was put into solitary for more than two months out of a four-month period. He began hearing voices, talking to himself, thought he was being poisoned and broke down into a psychotic episode and was hospitalized for three weeks before being returned to the hall.
- Q.G., 17, has been in full-time special education since third grade and has diagnosed behavior problems. Before entering juvenile hall, he was on a special education plan with specific daily behavior intervention services. After becoming a ward, he was put into general education classes and his behavior plan eliminated and he was marked “absent” from classes when put into solitary 30 times. “While in solitary confinement, Q.G. is denied the opportunity to go to school and receives zero credits for the time he has missed,” the suit says.
- 08/09/13--06:37: New super PAC to boost women candidates
- 08/09/13--14:55: Obama says ex-NSA contractor not a "patriot"
- 08/12/13--03:09: OPINION: reality check on the Affordable Care Act
- 08/12/13--03:09: Parents, advocacy groups push back against independent study at home
- 08/12/13--13:19: Pro-Booker PAC propelled by hedge fund money
- 08/13/13--08:38: William Koch emerges from shadow of famous siblings
- 08/14/13--08:01: Investors, companies fuel super PAC tied to Boehner
- The American Action Network, a related “social welfare” nonprofit, which gave roughly $81,000 in the form of in-kind contributions for shared staff and office space
- The Associated Builders and Contractors trade group, which gave a combined $55,000 through its advocacy arm and political action committee
- Scott Bommer, president and CEO of New York-based hedge fund SAB Capital Management, who gave $50,000
- Thomas McInerney, co-founder and CEO of Connecticut-based private equity firm Bluff Point Associates, who gave $35,000
- Dennis Washington, the Montana-residing billionaire industrialist whose interests range from mining to rail transportation to shipbuilding, gave $25,000
- 08/15/13--13:27: Giffords' gun group to return Midler foundation donation
- 08/15/13--13:29: Obamacare facts separated from spin by Wendell Potter, FactCheck.org
- 08/16/13--03:03: Booker supports e-filing in theory, not in practice
- 08/20/13--07:43: 'America Votes' spent nearly $1 million on Wisconsin recall
- 08/19/13--14:12: OPINION: doing 'as much harm as possible' to Florida's insured
- 08/20/13--13:27: Jindal's education cuts inspire super PAC formation
- 08/21/13--16:07: Are civilian nuclear plants vulnerable to terror attacks?
- 08/21/13--14:06: A hyper-super PAC boosts McAuliffe in Virginia race
In April, the U.S. Centers for Disease Control and Prevention raised to 535,000 its estimate of the number of American children with potentially dangerous levels of lead in their blood.
But for U.S. communities combating the lead hazards, there might never be any money from the group some say is most responsible for creating the problem: The companies that made lead pigment used in the old, flaking paint still coating millions of dwellings.
The industry could be on the verge of defeating the last major legal assault by municipalities and states seeking damages to fund lead removal. Apart from one settlement, the industry has successfully defended roughly 50 lawsuits by states, cities, counties and school districts over the last 24 years.
Now, in a bench trial under way in San Jose, Calif., the industry is seeking a final victory in a case brought by 10 public agencies, including the cities of San Francisco, Oakland and San Diego, as well as Los Angeles and Santa Clara counties. The suit seeks to force the defendants to inspect more than 3 million California homes, and to remove any lead paint hazards that are discovered, at an estimated cost of more than $1 billion.
Lead lawsuits once were expected by some experts to follow the path of tobacco litigation. States that sued to recover smoking-related health care costs wrested a $248 billion settlement in 1998 from cigarette makers.
As in the tobacco cases, public agencies in California and elsewhere hired private law firms, including veterans of the tobacco wars such as Motley Rice. The lead pigment industry, likewise has been represented by legal heavyweights, including top corporate defenders Jones Day and Arnold & Porter.
The industry has been successful despite evidence that company officials knew more than a century ago that lead is hazardous, and industry advertisements promoted lead paint as healthy. In 1923, an ad in National Geographic from lead pigment maker NL Industries proclaimed: “Lead helps to guard your health.” The next year, an ad from a unit of paint maker Sherwin-Williams boasted: “Cousin Susie says her health improved instantly” after her home was covered with lead paint.
"My prediction was that lead would be the next big toxic tort litigation,” said Jed Ferdinand III, a Westport, Conn., lawyer who wrote about the issue in a law review two decades ago. "That really hasn't happened."
Lead has been found in drinking water and in children’s jewelry, and has many industrial uses, but federal authorities say the biggest public health threat comes from lead-laden paint. Lead pigment was mixed into paint for decades not only to give it color, but because it is durable and washable. The federal government outlawed lead paint for household use in 1978, however, due to its health hazards.
The paint is still found on the walls of old houses and apartments, where children sometimes ingest it when it chips off walls and turns into dust. Although poor and minority children are considered most at risk, approximately 35 percent of all U.S. homes have some lead paint, and 22 percent have significant lead paint hazards, according to a 2011 survey by the U.S. Department of Housing and Urban Development.
Public health authorities have made great strides in combating lead poisoning. But recent research has found that even small amounts of the metal can be harmful, which prompted federal authorities this year to raise their estimate of the number of children at risk. Young children with elevated lead levels in their blood are at risk of lower IQ, attention disorders and other problems related to brain damage.
Although some individuals who sued landlords for lead poisoning have won settlements, lawsuits brought by public agencies against lead pigment makers have yielded only one success: In July 2005, DuPont agreed to pay $12.5 million to resolve a case brought by Rhode Island, which accused the industry of creating a public nuisance and presented internal documents showing that the industry had long been aware of lead hazards.
The next year the state won $2.4 billion for lead abatement after a four-month trial against the remaining defendants. In 2008, however, the decision was overturned by the Rhode Island Supreme Court.
But whose paint was it?
Lawsuits against the industry have failed for various reasons. For one thing, individual plaintiffs claiming health damage from lead have been unable to prove that lead paint was the source.
Some suits by public agencies have failed because they couldn’t prove which companies manufactured the lead pigment used in specific buildings and neighborhoods. Courts have rejected efforts to assign liability according to the market shares of the various companies.
As the Missouri Supreme Court ruled in 2007 in a case brought by St. Louis, "Without product identification, the city can do no more than show that the defendants' lead paint may have been present in the properties where the city claims to have incurred abatement costs. That risks exposing these defendants to liability greater than their responsibility and may allow the actual wrongdoer to escape liability entirely."
Other suits by government agencies that charged the industry with violating public nuisance laws were thrown out when judges ruled the laws did not apply because lead paint threatened individuals in their private homes, rather than the community as a whole.
As the Rhode Island Supreme Court said in overturning the state’s victory: “However grave the problem of lead poisoning is in Rhode Island, public nuisance law simply does not provide a remedy for this harm.”
After marathon pre-trial battles, the California case has been allowed to proceed under the state’s public nuisance law.
Defense lawyers have argued in a brief that the companies weren’t aware when they promoted lead paint that it would someday cause harm. "Scientific knowledge concerning lead exposure evolved over the decades," the brief said. What’s more, the defendants say that today there is no widespread lead danger. Current blood lead levels, their court papers say, do not present “a current public health crisis; it instead shows a public health success story."
The defendants also say that California already has a well-funded lead poisoning prevention program that collects annual fees mainly from the gasoline industry, but also from makers of paint and other products.
Presiding Judge James P. Kleinberg of Santa Clara County Superior Court has urged the two sides to settle, though the trial, which began July 15, is continuing.
The California suit is only the third lead pigment case brought by public officials to go to trial since 1989. Back then, New York City officials pioneered the litigation, only to become the first of many municipalities to have their claims dismissed before getting to the trial phase.
As in many other cases filed by public agencies, the defendants in California include Sherwin-Williams, the nation's biggest paint producer, and DuPont, one of the world's largest chemical companies, which in 2012 reported $9.5 billion and $34.8 billion in sales respectively.
Other defendants are the Atlantic Richfield Company, or ARCO, now a subsidiary of BP; ConAgra Grocery Products; and NL Industries, formerly National Lead Co.
The California lawsuit, initiated 13 years ago, has dragged on so long that Kleinberg is the third judge to handle the case. It took five years to resolve the side issue of whether it was proper for private contingency fee lawyers to represent public agencies. (Ultimately, the decision was yes.)
The case was dismissed in 2003 but three years later California’s Sixth District Court of Appeals revived the suit and reinstated the public nuisance claim.
Referring to hazards posed by lead paint, the appellate ruling stated, "Where such a 'ticking time bomb' exists … the public should not have to wait for the destructive results before taking action."
A history of setbacks
Even before public agencies began seeking lead cleanup money from the industry, their struggles were foreshadowed by suits brought by private plaintiffs, including the landmark case known as Santiago v. Sherwin-Williams Company.
Monica Santiago was born on November 9, 1972. From her birth until 1978, Santiago lived in a Boston apartment covered with lead paint. She was diagnosed with lead poisoning at the age of 1, after allegedly ingesting some of the paint on the walls of her family's apartment.
By July 1976, Santiago's medical condition dramatically worsened. She underwent chelation therapy, a medical procedure that involves injecting chemicals that bind with lead, helping patients excrete the metal.
In 1987, Santiago filed the first suit against the lead pigment industry, asking for $2.5 million in compensatory and punitive damages. The suit contended that Sherwin-Williams, NL Industries and others had manufactured and sold the lead pigment used in the paint in her home. That paint, the suit claimed, had not only caused lead poisoning, but later caused her to develop hyperactivity-attention disorder and motor skill difficulties. Yet in 1992 a federal court in Boston rejected the case, and an appeal also failed.
Neil Leifer, a Boston lawyer who represented Santiago, took on the case after discovering documents in the National Archives that pointed to the industry's early knowledge of the poisonous nature of lead.
Those documents, along with related papers discovered later, have been used in cases against the lead pigment industry ever since.
A Sherwin-Williams newsletter from 1900, for example, described lead as a “deadly cumulative poison.”
In 1904, Sherwin-Williams published an article in a company magazine that reported lead was "poisonous in a large degree, both for workmen and for the inhabitants of a house."
And as early as 1912, documents show, NL Industries excluded women and children from working with lead because of its known dangers, yet continued to manufacture it for use in homes.
Donald E. Scott, one of the defense lawyers in the California case, said the early 20th century documents “describe lead-poisoning in workplace settings, like factories, from people consuming very large amounts of lead,” rather than household settings. Doctors, he said, spent many decades afterward trying to establish the toxic threshold for lead.
Letters from the now-defunct Lead Industries Association in the 1950s also signaled that industry officials were aware of public health dangers. "With us, childhood lead poisoning is common enough to constitute perhaps my major ‘headache,’” Manfred Bowditch, health and safety director for the association, wrote in 1955.
Bowditch elaborated on that point in a letter the next year to Felix E. Wormser, assistant secretary for the U.S. Department of the Interior, which was responsible for regulating mining and metal industries.
Bowditch wrote: "Aside from the kids that are poisoned (and we still don't know how many there are), it's a serious problem from the viewpoint of adverse publicity. The basic solution is to get rid of our slums, but even Uncle Sam can't seem to swing that one. Next in importance is to educate the parents, but most of the cases are in Negro and Puerto Rican families, and how does one tackle that job?"
In 1960, at the Lead Industries Association annual meeting, a report by secretary-treasurer Robert L. Ziegfeld outlined concerns about lead poisoning. “The toxicity of lead poses a problem that other nonferrous industries generally do not have to face. Lead poisoning, or the threat of it, hurts our business in several different ways."
“In the first place,” Ziegfeld continued, “it means thousands of items of unfavorable publicity every year. This is particularly true since most cases of lead poisoning today are in children, and anything sad that happens to a child is meat for newspaper editors and is gobbled up by the public. It makes no difference that it is essentially a problem of slums, a public welfare problem. Just the same the publicity hits us where it hurts.”
Scott, the industry lawyer, called the references to slums and minorities, “callous and regrettable.” But Scott said some of the same documents show the industry was working hard to help children in the affected communities.
Plaintiffs in the California lawsuit are continuing to present their case this week. The trial is expected to continue until at least late this month.
FairWarning is a Los Angeles-based nonprofit news organization focused on public health and safety issues.
At least six federal agencies including the Justice and Treasury departments are coordinating a broad probe of online payday lenders that charge enormous interest and fees to low-income borrowers who need quick cash.
The Justice Department and the Consumer Financial Protection Bureau have sent civil subpoenas to dozens of financial companies, including the online lenders, many of which are located on Indian reservations to avoid complying with consumer protection laws. Also subpoenaed were banks and payment processors that do business with them, according to government and industry officials familiar with the probe. The people spoke on condition of anonymity because they were not authorized to discuss it.
The government is using a range of tools — anti-money laundering laws, routine oversight of banks’ books, subpoenas and state laws — that could snuff out an entire category of lenders who contend they are operating lawfully.
Among those involved: Justice’s Civil Division; the CFPB; the Federal Deposit Insurance Corp.; the Office of the Comptroller of the Currency; the Treasury’s Financial Crimes Enforcement Network; and attorneys general and financial regulators from several states.
The probe involves so many industry players that a half-dozen major law firms contacted by the Center for Public Integrity were unable to comment publicly because they are representing banks, lenders, payments companies, marketers and others that are wrapped up in the multi-pronged investigation.
The probe appears to be coordinated by the Financial Fraud Enforcement Task Force, a working group originally created by President Barack Obama to “investigate and prosecute significant financial crimes and other violations relating to the current financial crisis and economic recovery efforts.” The task force is led by the Justice Department and includes more than two dozen federal and state regulators and law enforcement entities.
Help "cut off" lenders
New York's top financial regulator on Tuesday ordered 35 online payday lenders to stop offering loans there that violate state laws capping annual interest rates at 16 percent. The state also sent letters to 117 banks, asking them to help “cut off” payday lenders from the global network used by banks to send money and collect payments.
A trade group representing online lenders suggested that New York’s move was misguided because “state laws are insufficient to govern the global nature of the Internet.”
“Rather than restricting consumer choice, state officials should be focused on finding a federal solution,” said Peter Barden, spokesman for the Online Lenders Alliance, in a statement.
Other states have prosecuted individual online lenders. California sanctioned at least ten online lenders starting last year. Minnesota’s attorney general has settled or won rulings against eight online payday lenders — most recently, an $8 million ruling in May against a company that operated without a state license. Last month, Virginia sued a different lender on similar grounds.
But New York’s was the first public action against such a wide range of players in the online payday lending industry. It follows a strategy outlined this spring in a speech by the head of the federal financial fraud task force: Cutting off lenders’ access to the banking system.
“If we can stop the scammers from accessing consumers’ bank accounts — then we can protect the consumers and starve the scammers,” said Michael Bresnick, the former federal prosecutor who directs the task force, in written remarks before the Exchequer Club of Washington, D.C. No longer focused only on companies with a clear connection to the financial crisis, the group wants to protect consumers from “mass marketing fraud schemes — including deceptive payday loans,” he said.
"Mass market fraudsters"
Referring to online payday lenders repeatedly as “mass market fraudsters,” Bresnick said the working group is focused on banks and payment processors that make it possible for online lenders to operate in states where their loans would be illegal. Bresnick lumped in online "deceptive payday loans" with more clear cut fraudulent industried like fake health care discount cards and phony government grants.
Payday lenders offer short-term loans of a few hundred dollars, mainly to poor, cash-strapped customers. Until about five years ago, they operated mainly out of storefronts that offered a range of money services to people who can’t or won’t use traditional banks. Consumer advocates have long called for stricter limits on the industry, which ensnares many borrowers in a cycle of borrowing anew to repay a previous loan and which can charge interest rates that exceed 1,000 percent.
A number of states, including New York, have tried to eliminate the practice by capping interest rates. Yet the industry has proven resilient. Storefront lenders exploit loopholes by tweaking the terms of their loans, reclassifying themselves as other types of companies and lobbying aggressively for friendly legislation, according to a report this week by ProPublica.
State efforts to regulate the loans have pushed many consumers online, where state laws have so far carried little weight. The Internet allows payday lenders to reach people living in cities or states where their products are illegal. Many companies in this growing market have evaded state and federal consumer protections by operating from Indian reservations. Tribal sovereignty puts them beyond the reach of U.S. regulators, they argue.
Tribal lenders were outraged by New York’s order to stop making loans there, saying it violates their constitutionally protected right to set and enforce their own regulations.
“Years of precedent set by the federal government are being thrown out the window by overzealous regulators looking to further oppress tribal nations and breach our sovereign rights,” said Barry Brandon, executive director of the Native American Financial Services Association, a trade group, in a statement. Brandon said the lending companies are wholly owned by the tribes and provide needed income for community development.
Yet some lenders that claim sanctuary on Native American land operate for the profit of outside businessmen who run them through a labyrinth of shell companies, according to an earlier investigation by the Center for Public Integrity. The center found in 2011 that millionaire Scott Tucker operated and profited from payday businesses that were owned on paper by small Indian tribes — a practice known as “rent-a-tribe.” Tucker’s businesses are not affiliated with the NAFSA, the trade group representing tribal lenders.
The Federal Trade Commission sued a group of companies associated with Tucker in 2012 for misleading and charging undisclosed fees. The government won a major victory last month when a federal magistrate ruled that for-profit companies are not necessarily immune from federal consumer protection laws merely because they are affiliated with Indian tribes. The ruling by a magistrate must still be approved by a district court.
If that happens, the ruling “will have broad implications for all federal enforcers seeking to combat illegal payday lending practices,” said Jessica Rich, director of the FTC’s consumer protection bureau.
The court has not yet determined whether some of the lenders, officially chartered by Indian tribes, are for-profit corporations and therefore subject to FTC oversight.
The companies’ sense of security on Native American land has been rattled by other recent federal actions, including a round of civil subpoenas issued last year by the Consumer Financial Protection Bureau. The Justice Department later became involved in the investigation, according to industry members familiar with the probe who spoke on condition of anonymity to avoid fueling tension with federal authorities.
CFPB spokeswoman Moira Vahey said the agency does not comment on or confirm pending enforcement action. She said the agency is “looking at a wide range of issues involving payday lending and potential consumer harm, including the growing presence of online payday loans.”
“We will continue to oversee the market and if we find small dollar lenders engaged in unfair, deceptive, or abusive practices, the Bureau will hold those institutions accountable,” Vahey said in a written statement.
More than 50 subpoenaes
The Justice Department this spring subpoenaed more than 50 financial companies, mainly banks and the payment processors that connect consumers to online lenders and other companies that Justice thinks may be operating fraudulently. Banks that hold accounts for payment processors “aren’t always blind to the fraud,” said Bresnick, the fraud task force chief, in the March speech. He said they are ignoring red flags like large numbers of transactions by the processors being rejected by other banks.
These banks may be violating laws requiring them to report incidents of possible fraud to the Treasury Department — laws designed originally to prevent money laundering and later updated to combat financing of terrorist organizations. Those laws require them to know what kinds of businesses their depositors are operating or affiliated with — a duty known as "know your customer."
A spokeswoman for the Justice Department declined to comment.
The approach has proven effective. In November, a Delaware bank paid a $15 million penalty to settle charges that it worked with payment companies to make fraudulent withdrawals from consumers’ accounts. More than half of the debits were rejected by consumers and their banks. The overall rate reported by the Federal Reserve is about one-half of one percent. The bank lost its charter and was dissolved.
Regulators also are using bank oversight examinations to drive a wedge between banks and the online payday lenders they serve. They are warning banks during routine examinations to avoid the “reputational risk” of being tied publicly to an unpopular industry, whether by financing loans or processing payments for lenders.
The tactics are similar to those the government used in its successful campaign in 2011 to quash the online poker business, whose revenues had mushroomed to billions of dollars a year. The effort culminated in raids of the three biggest gambling sites and the arrests of their owners. The government shut down about 76 bank accounts in 14 countries and eliminated five domain names.
The companies were charged with bank fraud and money laundering. Before the raid, an agent who represents poker players told CNBC, the poker industry was aware only that authorities were investigating their relationships with payment processors.
It has been gratifying to read newspaper editorials in the last week giving credit to The Center for Public Integrity’s comprehensive state corruption risk index, known as the State Integrity Investigation. The 50-state investigation was released in the spring of 2012 with partners Global Integrity and Public Radio International.
The editorials, in the Washington Post and USA Today, have lavished praise on the Center’s work, while criticizing the mostly non-existent ethics laws in the state of Virginia. As the Post and others have reported, Virginia Gov. Robert F. McDonnell and his family accepted more than $150,000 in gifts, loans and cash from a friend and businessman who was also seeking favors from the state. Once these were exposed, the gifts were returned, but it seems they did not violate existing Virginia laws.
As The Washington Post wrote in its editorial on Aug. 1, “Virginia is for Loopholes: The McDonnell scandal should propel an ambitious reform agenda in Richmond.” The governor and Virginia state lawmakers were explicitly warned in the Center’s report last year that “Virginia’s Swiss-cheese ethics laws are laughably inadequate,” according to the Post.
The Center for Public Integrity gave Virginia an “F” in our report card on the states measuring the risk of corruption, ranking it 47th out of the 50 states. You can look up your own state’s overall grade and the details behind it based on 330 integrity indicators by clicking here. Some 26 states received a “D” or an “F” and no state got an “A.”
Meanwhile, an editorial in USA Today on Wednesday made much the same point. “Gifts to Va. Governor expose lax state laws: Our View” said that many states’ rules are shot through with loopholes and subjective standards. The editorial went on to say that like Virginia, a dozen other states place no dollar limit on the gifts a governor may receive. It also noted that 33 states fail to require reporting of gifts to spouses, and 34 don’t require reporting for gifts to children.
The State Integrity Investigation was one of the most extensive data-driven reporting projects in the last decade focused on American state governments. The project’s in-depth, unbiased analysis of the strengths and weaknesses of state governments’ anti-corruption and good governance mechanisms prompted concrete legislative and institutional reform proposals in at least 16 states, so far. Governors, legislators, regulators, and advocacy groups have all used the project’s data and reporting to press for sorely needed public sector ethics reforms in an era of tight budgets and politicized discourse. Virginia is just the latest state where the State Integrity Investigation has come into play.
Media coverage of this project has been extraordinary, featuring dozens of editorials and more than 1,100 unique stories across the country covering the project’s findings. This is a remarkable amount of coverage for what can otherwise be perceived as arcane, technocratic subject matter. In February, this project was nominated as a finalist for the prestigious Goldsmith Award for investigative reporting given by the Shorenstein Center at Harvard’s Kennedy School of Government.
I couldn’t be prouder of this work, and our partners, editors and staff, along with the 50 reporters and 50 peer reviewers we hired in each state, all of whom helped compile and distribute this information. Executive Editor Gordon Witkin led this massive effort, directing the orchestration of the team and the thousands of hours it took to complete it. We hope to revisit this project in 2014 and have a chance to re-grade each state in order to capture the progress being made, as well as to document which states are still ethically challenged.
Until next week,
Early in the summer of 2009, when lawmakers were starting work on what would become the largest health care overhaul in decades, the industry associations that represent insurance agents and brokers caught wind of an obscure provision.
The plan called for state and federal governments to hire so-called “navigators” — members of social service organizations, advocacy groups, even chambers of commerce — to help people use the new online marketplaces created by the law to choose among insurance plans and enroll in coverage.
The navigator program garnered little attention in the midst of the larger legislative battle. But agents and brokers, worried that navigators would cut into their business, immediately took aim, labeling the initiative “reckless” and “ill-advised.”
When President Obama finally signed the law in March 2010, the Affordable Care Act did include a navigator program — but that hasn’t stopped insurance agents and brokers from fighting against it. Over the past three years, the groups have waged an intense but little-noticed lobbying effort to regulate navigators in the states, leading to the passage of 16 state laws over the past year and a half. Most of the laws contain language that closely resembles recommendations that agents and brokers have been pushing in statehouses nationwide — a push receiving crucial aid from a legislators’ group focused on insurance policy that is supported with industry funds.
Backers of the laws say they provide needed oversight of navigators by establishing state authority and common-sense regulations. But consumer advocates and some health policy experts warn that the laws could shackle the navigator program, meaning fewer people would have access to help.
Roots of a controversy
When states and the federal government launch the new insurance marketplaces, or “exchanges”, on October 1, one of their greatest challenges will be reaching the very people the marketplaces are meant to help. A June poll by the Kaiser Family Foundation found that 55 percent of uninsured Americans had never heard of the exchanges. Even those who have might not understand how to use them to buy insurance.
Enter the navigators. The federal law directs the exchanges in each state to fund these entities, who will act like travel guides for the online marketplaces. People will use the exchanges to select from a range of plans offered by various insurers while trying to determine whether they are eligible for new government subsidies. The navigators will also serve as marketers, spreading the word on the new exchanges.
Navigators will need connections to a range of communities, so any number of groups are eligible to apply for navigator slots, from churches and business groups to ranching and farming organizations. Each state must have at least one community-based group serve as a navigator, however, to help connect with hard-to-reach communities such as immigrants.
It’s not a new concept. When the Obama Administration and its congressional allies began work on the health reform law in 2009, they drew on similar navigator-like provisions that have been integral to previous health care initiatives like the Children’s Health Insurance Program, said Tricia Brooks, a senior fellow at the Center for Children and Families at Georgetown University.
The idea is that health care is complicated, so having someone walk you through the process helps.
But when insurance agents and brokers first learned of the plan, some saw the navigators as government-funded competition. For decades, agents have sold insurance to individuals and small businesses and helped them choose which plans might be right for them. Some work directly for insurers, but many are independent. When a customer buys a particular plan, the insurance company generally pays the broker a commission.
“When you create a class of people who are supposed to do many of the things that our guys already do, it begs the question of circles. Is there overlap? Are they separate?” asked Wes Bissett, senior counsel for government affairs at the Independent Insurance Agents and Brokers of America. “What are the activities the different groups will do?”
State Rep. Richard Smith, chairman of the House Insurance Committee in Georgia, and sponsor of a navigator bill there, said the laws are a matter of states’ rights.
“Insurance is one of those few items that the states regulate,” he said. “We want to make sure they meet our standards, not just the federal government’s standards.”
Insurance has long been the realm of states, and the final law gave control of the navigator program to the exchanges in each state. But in 34 states, including Georgia, the federal government will be running the exchange, at least in part. In those states, the U.S. Department of Health and Human Services will design the training and oversee certification of navigators (the law actually creates various navigator-like groups that go by several names but are often referred to together). The department’s final rules say even these states that are not running their own exchange can implement state regulations for navigators, so long as they don’t prevent implementation of the law.
And so in at least 19 states that are not running their own exchanges, lawmakers have introduced bills to do just that. Legislators — backed by agents and brokers — maintain that these laws simply establish state oversight and ensure that consumers will be protected from unscrupulous or uninformed navigators.
“We regulate lawyers, we regulate doctors, we regulate insurance brokers,” said state Sen. David Simmons, who sponsored the navigator bill in Florida, “because they have the ability to significantly impact the lives of consumers.”
Some lawmakers and regulators have said the federal navigator rules are insufficient to protect against scammers. Most of the state laws clarify that navigators cannot sell insurance or provide other services traditionally handled by agents and brokers, while establishing state-based certification programs and giving state insurance departments authority over navigators.
But consumer groups say most of the laws go too far and, in effect, make it more difficult for community organizations to become navigators. Many of the laws prevent navigators from advising clients about the details of insurance plans, which, depending on how that’s interpreted, may prevent them from doing their jobs.
“We know navigators can’t say, ‘This is the best plan for you,’ but what they should be able to say is, ‘Here are some of the things that should drive your decision,’ ” Brooks said. “ ‘Do you have a particular health condition where you’re taking medication? Maybe we should look at the formulary to see if the medication is covered.’ ”
Nearly all the new state laws require navigators to undergo training and certification that may, in many cases, come on top of training required by the federal government, often at the expense of the navigators.
“The navigator rules just make it more difficult for community groups to be navigators,” said Laura Goodhue, executive director of Florida Chain, a statewide consumer health advocacy group that applied for a navigator grant (the federal government is expected to announce recipients in mid-August). “The purpose of having navigators is to reach diverse communities. Making it harder for groups to do that just means people who are at a disadvantage already are going to have a harder time getting access to the marketplace.”
The Department of Health and Human Services has declined to weigh in on the individual state laws, saying in the final navigator rule that it will work with the states on the implementation of their laws.
“We recognize the importance of balancing consumer protection with the need for a sufficient supply of navigators,” said Joanne Peters, a spokeswoman for the department, in an email. “The federal navigator rule strikes this balance by allowing states to adopt state-specific standards for navigators, while prohibiting these standards from impeding application of the Affordable Care Act.”
A full-court press
At one of the first Senate hearings held on the Affordable Care Act, Janet Trautwein, executive vice president of the National Association of Health Underwriters, questioned the wisdom of a navigator program, telling the health committee that, “the role of the navigators is already played by agents [and] brokers.”
Along with the other major industry associations — the Independent Insurance Agents and Brokers of America, the National Association of Professional Insurance Agents and the National Association of Insurance and Financial Advisors — Trautwein’s group worked to kill or amend the navigator provision as the law wound its way through Congress. More than 1,000 members of these groups came to Capitol Hill in the summer of 2009 to lobby their representatives.
The groups did win language allowing agents and brokers to serve as navigators. But after lawmakers included the program in the final law, the agents and brokers turned their attention to the states. (At least mostly. In August, Rep. Cathy McMorris Rodgers, a Washington Republican, introduced a pair of bills to defund the navigator program unless additional rules are implemented.)
As part of their effort, the agent and broker associations have lobbied the National Association of Insurance Commissioners — the key group of state insurance regulators — to pass resolutions and issue white papers supportive of agents and brokers. The groups have issued recommendations for state regulation and have spread the recommendations by testifying and lobbying at state capitals, from Lincoln to Columbus.
The agent and broker associations have spent at least $683,000 on lobbying this year in the 15 states that passed navigators laws in 2013, as well as $62,010 spent last year in Iowa, where a similar law passed in 2012. (The true figure is likely far higher. Several states require lobbyists to report only spending ranges, and some disclose the amounts lobbyists spent on lawmakers but not their full compensation).
The associations also gave $7.5 million to state campaigns from 2010 through 2012, according to an analysis of data provided by the National Institute on Money in State Politics. The groups spent nearly two-thirds of that total, $4.8 million, in the 16 states that have passed the navigator laws.
And the agents and brokers also got help from an obscure group of state lawmakers called the National Conference of Insurance Legislators.
Spreading the word
Over the course of four days in early July, 63 state legislators converged at the Philadelphia Marriott Downtown, a hulking hotel cum micro-city of restaurants, convention halls and more than 1,300 rooms. The lawmakers were joined on the fifth floor by more than 200 lobbyists and other representatives of insurance companies, law firms and industry associations for the summer meeting of the National Conference of Insurance Legislators. NCOIL, as it’s known, was founded by a group of lawmakers in 1969 as a way to share information on insurance policy and to “re-affirm the traditional primacy of the States in the regulation of insurance.”
The lawmakers divide themselves into committees, which hold hearings, debate policy and pass resolutions and model laws. They attend seminars with titles like “The World of Annuities: Regulation, Consumer Protection and Taxation.” A small civilian staff runs the organization for the legislators, operating under an independent company in Troy, N.Y, called Nolan Associates. The staff — including Susan Nolan, who actually acts as NCOIL’s president — organizes three annual meetings and sends legislative alerts, weekly articles and occasional research reports to legislative members in 26 states.
Between hearings, the lawmakers mingle with industry representatives who pay between $525 and $875 to attend, thereby providing a large portion of the organization’s revenue, which was $672,125 in 2011, the last year for which data are available (lawmakers pay between $375 and $600 per meeting, and 26 “contributing” state legislatures pay $10,000 per year). Some insurance firms host cocktail receptions. An Independence Blue Cross event included an open bar, cocktail shrimp and other snacks, and a grinning host standing by a table full of corporate booklets.
Insurance companies recommend seminar topics through their own related but independent nonprofit, the Industry Education Council to NCOIL, which spent $160,000 in 2011 supporting NCOIL events and research and sponsoring “scholarships for continuing education.” According to tax filings, most of that money was given to yet another related nonprofit, the Insurance Legislators Foundation, which also supports NCOIL activities and provided $50,000 to help pay travel costs for lawmakers to attend the group’s meetings in 2011. More recently, the foundation paid the way for 10 of the 63 lawmakers who attended the July meeting.
Many states would not allow companies to pay directly for a legislator’s travel, said Peggy Kerns, director of the Center for Ethics in Government at the National Conference of State Legislatures. Ten states ban corporate gifts, she said, and about a third of all states impose a monetary limit. But Kerns said that in many states, funneling the money through a foundation would avoid a ban on companies paying for lawmakers’ travel. For instance, NCOIL is explicitly exempted from Indiana’s lobbyist law.
“I’m not going to say that legislators should not attend or should not use the scholarships, but if I were a legislator I would want to make sure that there’s no appearance of impropriety,” Kerns said. “Does it look as if legislators are cozying up to the insurance industry, and if it does, how does that look to their constituents?”
J. Robert Hunter, a former head of the Federal Insurance Administration who runs the insurance program at the Consumer Federation of America, has followed NCOIL for decades and said industry groups push for NCOIL resolutions so they can then use them as lobbying tools in state capitols. “You can count on NCOIL taking positions that are pretty close to what the industry says,” he said.
Susan Nolan, the NCOIL president, disputes that the organization has an industry bias. “Our goal is always to make sure that our legislators hear every perspective on an issue,” she said, “and I believe they do.” Nolan and her staff invite consumer advocates to speak on panels, she said, and offer to pay their travel costs if need be. However, of the 276 attendees at the July meeting, only three represented consumer groups.
George Keiser, a state representative from North Dakota and an NCOIL member, said agents and brokers came to him with concerns about the navigator program early in 2012. He brought the idea to NCOIL soon after and began work on a resolution, which NCOIL’s health committee and executive committee adopted as final this past March. The insurance industry is the top donor to Keiser’s campaigns, according to the National Institute on Money in State Politics, giving $5,050 since 1998, about 28 percent of all his campaign receipts.
Keiser’s resolution calls on states to require their own training and licensing regimes for navigators and to prohibit navigators from recommending specific insurance plans. It also calls for background checks and several other measures that match those ultimately passed in most states. Keiser’s resolution also includes most of the recommendations issued last December by the National Association of Health Underwriters and several passages match the recommendations nearly verbatim.
Keiser said the federal rules are insufficient and that states ought to have oversight of navigators. He acknowledged that agent and broker groups helped write his resolution, but brushed aside concerns of a conflict of interest. “Clearly they have a self-interest,” he said, “but I honestly believe that their primary interest was in protecting the consumer.”
Lynn Quincy, a senior health policy analyst with Consumers Union who was invited to NCOIL’s March meeting to testify before the health committee on behalf of various consumer representatives, said Keiser’s and the agent and broker groups’ magnanimous claims are disingenuous.
“It was trying to get passed under the guise of being good for consumers but it was not supported by a single consumer group,” Quincy said. She read a statement at the hearing laying out her concerns and submitted a letter warning that some measures, if adopted by states, could conflict with federal law. But she said the NCOIL committee seemed to ignore her comments. “My impression was this was a foregone conclusion and this public meeting was just a formality.”
Parade of states
At least sixteen states have passed navigator laws since 2012, with most coming this year, including Ohio, Florida, Missouri, Texas, Indiana and Wisconsin. (Illinois’ Gov. Pat Quinn has yet to sign that state’s law. Louisiana, not included in this list, passed a life insurance bill including a clause directing the state to issue rules to regulate navigators, but did not specify what they should be.) Lawmakers introduced similar bills in Michigan, North Carolina and Pennsylvania that have not passed.
Most of the laws closely match NCOIL’s resolution — and the recommendations forwarded by agent and broker groups. In Georgia, for example, the law calls for navigators to undergo background checks and prohibits them from giving advice “concerning the benefits, terms, and features of a particular health benefit plan,” a clause that consumer groups say goes far beyond imposing reasonable regulation.
State Rep. Smith, the bill’s sponsor, said he was concerned primarily for consumers. “We want to make sure that the person who gives them the information is trained and qualified to do so,” he said. The idea for the bill came from a colleague, Rep. John Meadows, who also works as an insurance agent and is a member of the Northwest Georgia Association of Health Underwriters, which helped write the bill, Smith said.
Even after passage of the Georgia law, insurance agents continued to lobby on the issue, spending more than $1,500 over two days in June on meals and a round of golf for insurance department staff as they worked on the rules implementing the law, according to state filings.
In Missouri, where the bill also originated with agents and brokers and was largely based on NCOIL’s resolution, a rule issued July 24 by the insurance department allayed some concerns. While the law called on the department to require training and certification, the new rule says that the federally-mandated training will be sufficient.
Lawmakers in a few states have shown that it’s possible to regulate navigators while avoiding many of the concerns raised by consumer groups. In Virginia, for example, the law allows the state to receive and investigate complaints against navigators and prohibits navigators from advising which plan is better for a client. But it doesn’t prohibit them from advising on the details of plans, nor does it impose additional state-mandated licensure.
In Nebraska, state Sen. Burke Harr introduced a bill that he said was based on NCOIL’s resolution. But as the legislature began debate, consumer groups including AARP began pushing for changes. After facing more than a dozen amendments from opponents, Harr agreed to amend the bill, and the final language establishes state regulatory authority but imposes few restrictions beyond those in federal rules.
While much will depend on how state insurance departments implement the rules, some of the more restrictive laws could face lawsuits arguing they conflict with federal law. Timothy Jost, a health policy expert at Washington and Lee University School of Law, said that while fraud is a legitimate concern, he thinks the energy put into the laws is misplaced.
“It just seems to me that if people want to commit fraud they don’t have to pretend to be a navigator and they certainly don’t have to become a navigator,” he said. Jost is baffled by the attention given to the issue, which he said agents and brokers have continued to push in health policy circles. “It’s like a zombie,” he said. “You just keep killing it and it keeps coming back again.”
Erin Quinn contributed to this story
Minors with mental health problems and other disabilities are held in “unconscionable conditions” of 23-hour solitary confinement and deliberately cut off from education and other rehabilitation at a San Francisco Bay Area juvenile hall, alleges a lawsuit filed Thursday in federal court in Northern California.
The class-action suit against Contra Costa County probation and county school officials accuses them of locking young wards in small cells for days at a time in response to behavior stemming from the children’s own disabilities — including bipolar disorder — and then illegally depriving them of education as part of a three-tier system of isolation.
The two most severe tiers of isolation imposed on wards are called “risk” and “max,” requiring 23-hour confinement in cells, when “youth with disabilities are outright denied both general and special education entirely,” according to the suit.
The first tier, called “program,” results in up to 22 ½ hours of solitary confinement, during which, the suit says, the county’s policies illegally permit probation (officials) to withhold education as a punishment or for no reason at all.”
Among the suit’s allegations:
The lawsuit was filed by a national pro bono law firm, Public Counsel, and Berkeley, Calif.-based Disability Rights Advocates and the San Paul Hastings private law firm in San Francisco. Lawyers filing the suit say they have corresponded with probation and other officials about conditions. They said county officials declined to meet with them, but contended in correspondence that there were security reasons for confining wards in cells. Officials did not address arguments, lawyers said, that they were legally bound to provide education services and proper assessment of special needs and behavior problems.
Contra Costa County Probation Officer Philip Kader was out of the office until next week, officials at his office said, and they declined to comment. Kader is named in the suit, along with the Contra Costa County Office of Education, which supervises education at the hall.
Peggy Mashburn, chief communications officers at the Contra Costa Office of Education — which is also named as a defendant — said that the office had no comment Thursday because it is still reviewing the lawsuit.
Public Counsel lawyer Laura Faer called the policies inside Contra Coast’s juvenile hall — located in the city of Martinez — “broken and draconian.” She said conditions resemble “maximum-security-like” prisons rather than what state and federal law dictate for conditions inside juvenile and treatment for children with disabilities.
“Contra Costa is failing in its actual legal mission to rehabilitate children,” Faer told reporters. Officials are in “100 percent violation” of laws requiring assessment of students and special-education services.
Wards “are routinely locked for days and weeks at a time in cells that have barely enough room for a bed and only a narrow window the size of a hand,” she said. “In these cells, they are unlawfully denied education and special education and contact with teachers and other students. They are denied textbooks and instructional materials.”
She said 14-year-old plaintiff G.F. has received additional punishment for peering outside her cell while in solitary.
Faer told the Center for Public Integrity that isolation, lasting days, not just hours, can stem from physical fights, but also from defiant comments or refusal to follow staff orders — all behavior that frequently stems directly from a ward’s mental health problems or disability. The law requires officials to assess whether poor behavior stems from a disability, and create a plan that specifically address that.
Mary-Lee Smith, attorney with Disability Rights Advocates, said “it is abhorrent” to confine students with disabilities. The system in Contra Costa, she said, is used “without regard to whether the behavior leading to solitary was related to disability. It does so without even inquiring into whether the child has a disability that may be worsened in solitary confinement.”
The county school at the Martinez juvenile hall enrolls about 1,300 students a year, the lawyers said. The hall’s own records show that at least one-third of the wards have disabilities requiring special education services.
The suit notes that California law declares that juvenile halls exist solely for rehabilitation, and “shall not be deemed to be, not treated as, a penal institution” but rather “a safe and supportive homelike environment.”
Instead, inside the Contra Costa hall, the suit alleges: “Young people with disabilities become trapped in a cruel cycle of discrimination” and “are locked away in solitary confinement where their conditions only deteriorate and they fall further behind in their education.”
Faer said juvenile detention officials are required to create “pro-active, positive rehabilitation plans” for wards, but records obtained and reviewed by lawyers indicate that hall and school officials are failing in that duty.
“These are kids. We have a chance here to help them,” Faer said. “But they are pretty much stealing children’s futures.”
Based on a review of the Martinez hall’s policies, the lawsuit says, wards put into solitary for 23 hours are “outright denied both general and special education entirely.”
The use of solitary confinement in California’s state and county juvenile detention centers has prompted repeated attempts by some legislators to impose regulations barring lengthy isolation beyond relatively short periods and frequent staff observation of youths in cells.
A bill along those lines currently pending in California’s state legislature is sponsored by state Sen. Leland Yee, a San Francisco Democrat. It passed the state Senate, and is now before Assembly members, who have adopted some amendments.
The Center of Public Integrity reported on how a previous unsuccessful attempt by Lee to pass a similar bill was met with stiff opposition from law enforcement officials and prison guards who contribute heavily to legislators’ political campaigns.
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Neither Kentucky nor Georgia has ever elected a woman to serve in the U.S. Senate, but a newly created super PAC based outside of Portland, Ore., hopes to play a role in changing that.
Alison Lundergan Grimes of Kentucky and Michelle Nunn of Georgia have been endorsed by the More Women in Congress Super PAC, which registered with the Federal Election Commission earlier this week.
Grimes is challenging Senate Minority Leader Mitch McConnell, R-Ky., while Nunn is running for the seat being vacated by retiring Republican Sen. Saxby Chambliss. Both women are Democrats.
Shannon Meade, the new super PAC’s president, told the Center for Public Integrity that both women would benefit from the national attention. She added that her group is not “solely focused” on Democrats.
“I’m not loyal to a party,” Meade said.
“Our cause is made clear in the name of our PAC,” she continued, noting that the Democratic Party has “historically been more open” to women politicians.
While touting its long-term plans to raise money and produce advertisements that will be run “straight down the throats of every boy’s club member in Washington,” the super PAC’s website is currently seeking modest $5 donations as a show of “solidarity” with Grimes and Nunn.
A self-described teacher-turned-stay-at-home mom, Meade said that she and her husband, who serves as the PAC’s “creative director,” were inspired by comedian Stephen Colbert — who launched his own super PAC ahead of the 2012 election
Thanks to Colbert, they learned that the U.S. Supreme Court’s Citizens United v. Federal Election Commission ruling presented an opportunity for “regular people” to “join together and have a voice,” Meade said.
"Why should only monsters be able to have super PACs," she added.
There are currently 20 women serving in the Senate — the highest number in the country’s history.
In addition to Kentucky and Georgia, two dozen other states have never elected a female U.S. Senator. Incidentally, the first woman to serve in the Senate was a Georgian — Rebecca Latimer Felton, who was appointed in 1922 and served for just 24 hours.
Several other organizations, affiliated with both Republicans and Democrats, currently seek to recruit female political candidates.
Just last month, a former EMILY’s List official launched a new super PAC to help elect more liberal women governors, as the Center for Public Integrity previously reported.
President Obama on Friday disputed claims that former National Security Agency systems analyst Edward Snowden had blown the whistle on wrongdoing, suggesting that under a White House order he could have raised his concerns about the government’s sweeping cyber spying programs through official channels without fear of reprisal.
“If the concern was that somehow this was the only way to get this information out to the public, I signed an executive order well before Mr. Snowden leaked this information that provided whistleblower protection to the intelligence community for the first time,” Obama said at a press conference.
But the president’s protective order, issued after Congress twice dropped intelligence workers from legislation to strengthen whistleblower protection, specifically excluded intelligence contractors like Snowden.
The 30-year-old was charged with espionage and is now a fugitive living in Russia, receiving a one-year visa after weeks of living in the transit area of a Moscow airport. Russian President Vladimir Putin has refused White House demands to send him back to the U.S.
The Snowden affair was one factor in the U.S. decision to cancel an upcoming summit between Obama and Putin.
At his press conference, the president also announced a series of reforms in oversight of U.S. surveillance efforts, promising greater oversight through the White House’s Privacy and Civil Liberties Oversight Board.
In addition, he said he would seek other safeguards against abuse of the programs, in part by creating a public advocate to challenge the government’s requests for access to communications and records before the Foreign Intelligence Surveillance Court, which operates in secret.
The president insisted that the reforms were in the works before Snowden handed over a trove of electronic copies of top-secret documents to the Guardian newspaper in Britain in May, gathered while he was working for the NSA in Hawaii.
“I don’t think Mr. Snowden was a patriot,” Obama said.
Obama did concede, however, that “there’s no doubt Mr. Snowden’s leaks triggered a much more rapid and passionate response than would have been the case if I had simply appointed this review board.”
The president insisted that the government’s gathering of data on U.S. communications had not led to abuses, and called fears that the U.S. was becoming a surveillance state overblown.
If an “ordinary person” started reading “a bunch of headlines saying, U.S., Big Brother, looking down on you, collecting telephone records, et cetera, well, understandably people would be concerned,” Obama told reporters. “I would be too if I wasn’t inside the government.”
Not confused enough yet about how much health insurance might cost some of us next year when the consumer protections in Obamacare kick in? Just wait. It’s likely you’ll soon be far more confused — and alarmed — than you already are.
Take, as an example, the CNNMoney story from last week, headlined, “Where Obamacare premiums will soar.” The subhead was equally scary: “Get ready to shell out more money for individual health insurance under Obamacare … in some states, that is.”
The first thing you should keep in mind when you read such stories is that very few Americans will be affected by how much insurers will charge for the individual policies they’ll be selling in the online health insurance marketplaces beginning Oct. 1. The CNN story doesn’t mention, as it should have, that in a country of 315 million people, only 15 million — less than five percent of us — currently buy health insurance on our own through the so-called individual market because it’s not available to us through the workplace.
Although the CNN story focused exclusively on the individual market, nowhere in the story was it explained that, according to the U.S. Census Bureau, the vast majority of Americans — about 55 percent of us — are enrolled in health insurance plans sponsored by our employers. Another 32 percent of us are enrolled in Medicare, Medicaid and other public programs. That means that almost 9 out of 10 of us will not be affected at all by rates insurers will charge next year in the individual market.
The Americans who will be affected most by Obamacare are the millions who are uninsured because they either cannot buy coverage at any price today as a result of pre-existing conditions or they cannot afford what insurers are charging.
Although the CNN story didn’t mention that one of the main reasons for Obamacare was to make it possible for the uninsured to at long last buy affordable coverage, it is the uninsured who will be most directly affected by the reform law, and most likely to benefit. That’s because insurers next year will no longer be able to refuse to sell coverage to people who’ve been sick in the past. And because most people shopping for coverage on the online marketplaces will be eligible for federal subsidies to offset the cost of the premiums.
Not until deep in the CNN story are we informed that “Americans with incomes up to $45,960 for an individual and $94,200 for a family of four will be eligible for federal subsidies.” That’s a huge point to bury, especially considering that the median household income in this country is still just around $50,000. It’s just a small percentage of folks buying coverage through the online insurance marketplaces that will have to pay the full premium price on their own.
Below the headline of the CNN story was a startling graphic showing the states of Ohio and Florida with the numbers 41 percent and 35 percent right below them, leading one to believe that all residents of those states would see their health insurance premiums skyrocket.
As I did my own research of those claims, I found that not only did those numbers apply to just the individual market, but they did not take into account the subsidies that will be available. So not only will very few Ohioans and Floridians see their premiums increase by that much, many if not most will pay less than they do today thanks to the sliding-scale subsidies.
I also found that officials in those states were being disingenuous in the way they calculated their “Obamacare” figures. Ohio and Florida and many other states permit insurers to sell policies today that are so inadequate they will be outlawed beginning Jan. 1. The reason those kinds of policies are being outlawed is because, even though they are profitable for insurers that sell them, people who buy them often find out when it’s too late — after a serious illness or accident — that their policies are essentially worthless.
As The Miami Herald noted in a story about the projected rates announced recently by Florida’s Office of Insurance Regulation, the source for the CNN graphic, “The OIR compared ‘apples to oranges’ by failing to factor into its projections the fact that statewide averages for pre-Obamacare premiums included a wide variety of low-value plans — including plans with extremely limited benefits, such as no prescription drug coverage; and high-deductible plans, where the insured first must pay hefty out-of-pocket costs before the insurer begins to cover services.”
Considering all the intentionally misleading information we are being subjected to about Obamacare from politicians and special interests with an obvious agenda, it will be vitally important for reporters to be more responsible in their reporting. Sensational media stories with attention-grabbing headlines but inadequate analysis will only add to Americans’ confusion about a law that in reality will help the vast majority of us.
Following inquiries that led to the Center for Public Integrity’s July publication of “Throwaway kids” — documenting how disciplined California children are forced to study alone at home — education officials inquired how a rural teen was doing, but provided him no assistance other than a few books.
“He still can’t go back to school,” said Nereida Vasquez, the mother of Erick Araujo, who was 13 and in 7th grade when removed from regular school last year on a disciplinary charge in Lost Hills, Kern County, in California’s Central Valley.
Erick’s mother was forced to put him on home study because he was assigned to a county alternative “community school” that is nearly 40 miles away from Lost Hills.
Vasquez’s farmworker job does not allow her time to drive him to and from a school that far away every day. It would also cost $400 a month in gas. But Erick must be offered, under California law, an education — or Vasquez could be legally liable for her son being truant.
Alternative school officials suggested independent study, which means studying at home, alone, four out of five days a week, and seeing a teacher only 4 ½ hours a day once a week, when his mother can drive him. Vasquez believes Erick is getting an insufficient education.
But as long as Erick is officially enrolled at the county community school — while on independent study — that system still receives full attendance-based funding for Erick as if he were attending classes every day. It’s the same story for two-thirds of the more than 4,000 other students put on independent study in Kern’s community system last year.
Other counties in California also employ independent study for tens of thousands of other students enrolled in California’s county community schools. But the state does not require educators to report how many of their students are on these home-study regimens or track individually how they fare.
In addition to Vasquez’s continuing concerns, other families in Kern are starting to complain that their children are being removed for alleged infractions too hastily and then essentially given no choice but to drop school completely.
Speaking on the Spanish-language radio show Radio Bilingue, Martha Cisneros, a mother in the Kern city of Arvin, said her son, 15, was removed from school last spring semester on suspicion of drug use. She said she had her son tested — the test was negative — but the school rejected her evidence.
Her son stopped going to school because the family had no way to drive him to a county community school at least 20 miles away. Cisneros sought help from a community organizing group, the Dolores Huerta Foundation, which helped her send a letter of protest in June to Kern high school administrators.
“I’ve got him in the house,” she said. “I don’t want to take him to work because he’s too young.”
In the letter, which was given to the Center, Cisneros said she signed forms in English and in Spanish she couldn’t understand that gave her consent to transfer her son, and that when she called the community schools she was told to call she was initially told there wasn’t room for him.
Her letter, asking that her son be allowed back into Arvin High School, says the family will face a “perhaps impossible burden” to try to get her son to a county alternative school that’s in Bakersfield, 20 miles distant.
Arvin High expelled 56 students during one recent year, and as the Center report explained, the best that some other parents could do was put their child on home schooling and one-day visits with a teacher.
On Aug. 14th, the California state Assembly Education Committee is scheduled to hold a hearing on a number of bills related to schooling, including a proposal to tighten up the enrollment of students in alternative schools.
Sen. Ricardo Lara, Democrat of Bell Gardens, near Los Angeles, said his bill, SB 744, will address some concerns about transfers. It would, as the Center explained, require that districts cover extra transportation costs for some kids (although not expelled kids) if they exceed a parents’ normal spending to get their children to school. It would also strengthen parents’ rights to revoke some agreements to transfer their children to alternative schools.
Travel complications for kids kicked out of regular school are not just a rural problem.
Lawyer Zoe Rawson of the Labor-Community Strategy Center, which provides court aid to Los Angeles-area schoolchildren, said she represented an 11-year-old special-needs boy last year whose Spanish-speaking mother was urged to transfer him to a community school seven miles from his home. No one in the family could go with him, so he rode a public city bus alone, putting his safety at possible risk.
Rawson filed a complaint with the state and the boy was returned to his home school and given proper testing and a learning plan.
In Kern, Erick has received visits from migrant education specialists, who are tasked with aiding farmworker children whose parents often move about as crops are harvested. They declined to speak with the Center, referring questions to Steve Sanders, chief of staff for the Kern County superintendent of schools.
“We agree that Erick is missing out by not attending school in a classroom environment and we hope that Erick's family is able to provide a way for him to be in school on a regular basis. That is why classroom instruction is always offered as the preferred approach,” Sanders said in an email.
He called independent study — which two-thirds of the county community students are on — a learning method of “last resort.”
Parents choose it, Sanders said, often because of travel problems, but also because of “gang turf issues, lack of family support, behavioral issues where classroom instruction is not an option for the safety of other students.”
Attorney Tim McKinley of the California Rural Legal Assistance legal aid group in Kern has represented Erick and other children in expulsion hearings. McKinley said he was not only concerned about Kern’s high expulsion rates, as the Center has reported, but also the widespread use of independent study.
A California education professionals group, the California Association of Business Professionals, held a workshop in Kern in November 2011 on the legal requirements of short-term and long-term independent study and how to ensure that per-pupil, average-daily-attendance funding (ADA) is not lost.
“A properly implemented independent study program provides a valuable educational alternative to pupils and an ADA increasing strategy for schools,” the workshop said.
McKinley said if independent study were used more sparingly it would bother him less, but given how many students are placed on self-study the workshop announcement struck him as a way “to make buck.”
“It’s beyond troublesome,” he said.
Despite Newark Mayor Cory Booker’s status as the overwhelming favorite to win Tuesday’s Democratic U.S. Senate primary election in New Jersey, a super PAC spent more than $500,000 supporting his candidacy, records show.
More than half of the recently formed Mobilization Project’s initial contributions have come from employees in the securities and investment industry, according to a Center for Public Integrity analysis.
Just six donors accounted for all of the $375,000 raised by the group between its inception on July 15 and July 24, the period covered in the pre-primary campaign finance report it was required to file with the Federal Election Commission.
Booker faces Democratic U.S. Reps. Frank Pallone and Rush Holt and Assembly Speaker Sheila Oliver in a special primary, called to fill the seat of the late Democratic Sen. Frank Lautenberg, who died on June 3. A recent Quinnipiac poll shows Booker with 54 percent of the vote and no challenger drawing more than 17 percent.
The Mobilization Project received $100,000 from Seth Klarman, CEO of the Baupost Group, a Massachusetts-based hedge fund. Ravenel B. Curry III and Ravenel B. Curry IV, both investors with New York-based hedge fund Eagle Capital Management, each also chipped in $50,000.
Other donations included $100,000 from Michael Fux, CEO of Comfort Revolution, which makes mattress pads, and $50,000 from Andrew Tisch, the chairman of Loews Corp., a holding company whose assets include CNA Financial, an offshore drilling subsidiary and a hotel chain.
Additionally, Tisch’s cousin, Laurie Tisch, CEO of the nonprofit Illumination Fund, gave $25,000 to the pro-Booker group.
A Center for Public Integrity review of FEC filings indicates that four of the Mobilization Project’s contributors — Fux, Curry IV, and both Tisches — have also given to directly Booker’s Senate campaign. And all but the older Curry have contributed to Booker’s leadership PAC since 2011 — giving a combined $40,000, according to the Center for Responsive Politics.
Loews maintains a significant presence in Washington. Over the past five years, it has spent about $2 million annually lobbying the federal government on a range of issues, including taxes, finance and energy regulation.
While super PACs ordinarily use their funds for television and radio advertisements, the Mobilization Project has focused all of its resources on a pro-Booker ground game — canvassing operations, literature and telephone calls.
Two other groups have been active in the New Jersey race — Pac Plus and the American Commitment Action Fund.
Pac Plus — which can act as both a super PAC and as a regular PAC, making direct contributions to candidates — backs Booker and has spent a little more than $41,000 on advertisements in the race so far. American Commitment Action Fund has spent $32,000 since late July as part of an ongoing online advertising campaign opposing Booker’s Senate bid.
American Commitment Action is headed by Phil Kerpen, the former vice president for policy at Americans for Prosperity, a conservative nonprofit with ties to billionaire brothers Charles and David Koch.
If Booker prevails, his likely Republican challenger will be former Bogota, N.J., Mayor Steve Lonegan, who Booker is outpolling by 25 percentage points.
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Billionaire businessman William Koch once operated green energy plants on multiple continents and had a reputation for being more politically moderate than his better-known brothers, Charles and David — the principal owners of Koch Industries, Inc..
But William now rejects the “apocalypse of global warming.” He says investing in alternative energy is “foolhardy.” And ahead of the 2012 election, he criticized President Barack Obama for trying to “socialize” the country.
Koch is putting his fortune where his mouth is and is also using his companies’ funds to do so. He has spent millions of dollars to aid politicians he sees as more business-friendly and to fight the Obama administration’s moves to combat climate change, which could mean costly new regulations for Koch’s expansive Oxbow Carbon LLC business network.
Unlike his brothers who have favored politically active nonprofits as their vehicles of choice to back conservative causes, William Koch has poured resources into super PACs, with millions of dollars coming straight from the corporate treasuries of his firms. Meanwhile, donations from his company’s traditional political action committee are at an all-time high — as are Oxbow’s lobbying expenditures.
“Energy companies see a threat to their bottom line and they are taking action,” political analyst Kyle Kondik of the University of Virginia’s Center for Politics told the Center for Public Integrity. “Whatever way they can influence the process, that’s what they’re going to do.”
At the vanguard
Very few large companies took advantage of the more liberal campaign finance system that emerged following the U.S. Supreme Court’s Citizens United v. Federal Election Commission decision in 2010 the way Koch’s Oxbow Carbon LLC did.
The decision allowed corporations to use treasury funds to pay for expenditures that call for the election or defeat of a candidates — or give them to intermediaries, like super PACs.
In 2012, Oxbow was at the vanguard, contributing millions to Republican super PACs — more than nearly any other company. Oxbow, along with Huron Carbon LLC, another of Koch’s companies, contributed $4.35 million to GOP super PACs, according to a Center for Public Integrity analysis of federal records.
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The vast majority of that sum — $3.75 million — went to Restore Our Future, the main super PAC supporting Republican Mitt Romney’s unsuccessful presidential bid. Meanwhile, $500,000 went to a group that backed former Sen. Scott Brown, R-Mass., known as the America 360 Committee.
Another $100,000 went to a Florida-based organization called Freedom PAC, which spent money on behalf of then-Rep. Allen West, R-Fla., and Republican U.S. Senate candidate Connie Mack IV.
Through Oxbow spokesman Brad Goldstein, Koch declined an interview for this story. But earlier this year, Koch told Massachusetts-based CommonWealth magazine that “a lot of our business is influenced regularly by government, too damn much by government. And so we have to play in that game.”
In 2011, Goldstein told The Village Voicethat the Obama administration “has made it extremely difficult for businesses to operate.” Koch himself used even stronger language in a 2012 interview with the Cape Cod Times. “I think Obama's trying to socialize this country,” he said.
Koch also argued to CommonWealth that the renewable energy industry is only profitable when big government gets involved: “The alternative energy business is uneconomical unless you get a government subsidy or a government-enforced contract,” he said.
Oxbow Carbon LLC, which is described in government records as the “holding company for all Oxbow business,” has interests in natural gas, coal, petroleum coke and sulfur, among other natural resources. (Petroleum coke is a byproduct of oil refining, which is used to manufacture steel and aluminum, and Oxbow is one of the leading companies in the industry.)
Its corporate headquarters are in Palm Beach, Fla., but its operations span the globe. Including its subsidiaries and related companies, Oxbow’s annual sales exceed $4 billion, and it employs more than 1,000 workers worldwide.
A related company, Oxbow Mining LLC, owns and operates the Elk Creek coal mine in Colorado. And another Koch company, Oxbow Carbon and Minerals LLC, has sold significant amounts of coal over the years to both the U.S. Department of Defense and Tennessee Valley Authority.
This relationship prompted controversy when Koch’s companies began giving millions of dollars to GOP super PACs, as federal contractors are prohibited from making such donations.
When the Los Angeles Times raised questions about the contribution ban faced by federal contractors, Goldstein, the Oxbow spokesman, maintained that Koch’s companies were on the right side of the law.
"I can say without equivocation that Oxbow Carbon LLC is not a federal contractor," Goldstein wrote in an email to the Times.
Billy the Kid and Katy Perry
Koch, who is the 92nd-richest person in the United States according to Forbes, is Oxbow Carbon LLC’s founder, president and chief executive officer. While he may not have the same prolife in political circles as his brothers — who are tied for fourth among the richest Americans according to Forbes — he’s arguably more colorful.
The 73-year-old chemical engineer earned a doctoral degree from the Massachusetts Institute of Technology. He is an avid collector of art, fine wine and Western memorabilia. He once paid $2.3 million at an auction for the only verified photograph of frontier outlaw Billy the Kid.
In 1992, Koch won the America’s Cup, the highest honor in sailing, and he has been awarded the title of honorary admiral in the state navies of Kansas, Nebraska and Alabama. Last year, for his wife’s 50th birthday party, he hired pop star Katy Perry to perform for a private party at their Palm Beach house.
Additionally, Koch has moved a ghost town he purchased to property he owns outside of Aspen, Colo. For years, he has been pushing for a land exchange with the federal government that would secure even more privacy for the family and guests he plans to entertain there. He recently founded a college preparatory school called the Oxbridge Academy of the Palm Beaches. And he has spent millions of dollars opposing a wind farm project off the shore of Massachusetts’ Cape Cod, where he also has a home.
In 1980, Koch narrowly failed in a bid to win control of the family oil business, which had been established by his father in Kansas in the 1920s. A few years later, he sold his stake and started his own energy corporation. But he later charged that he had been underpaid and brought a series of lawsuits against Koch Industries and his two brothers, beginning in 1984.
Fortune called the struggle “perhaps the nastiest family feud in American business history.” The last court case was settled in 2001, but in a 2012 interview with Forbes, Charles Koch still declined to refer to William by name.
That year, Forbes ranked Koch Industries the second-largest privately held company in the U.S., while William Koch’s Oxbow ranked 96th, as it pumped millions into the nascent GOP super PACs.
Ahead of the 2012 election, Koch, himself, personally donated $400,000 split between three Republican-aligned super PACs, including $250,000 to the pro-Romney Restore Our Future.
But Koch hasn’t always been so enthralled with the GOP. For years, he backed Democrats as often as Republicans.
Not including his recent super PAC donations, Koch has contributed more than $1 million to federal candidates, parties and political action committees since the 1990 election cycle, according to a Center for Public Integrity review of data maintained by the Center for Responsive Politics.
Of that sum, nearly two-thirds went to Democrats, including $400,000 to the Democratic Party of Kansas during the tail end of Bill Clinton’s presidency when “soft money” donations of unlimited size to parties were legal.
Lobby shop headed by former Cheney aide
Oxbow Carbon LLC maintains an office in downtown Washington, D.C., in a building along Pennsylvania Avenue about halfway between the U.S. Capitol and the White House. From there, Karen Knutson — who served as the deputy director of Vice President Dick Cheney’s secretive energy task force during the Bush administration — leads its lobbying operation.
Knutson, who did not respond to messages seeking comment for this story, is also a former chief of staff for Sen. Lisa Murkowski, R-Alaska — the ranking Republican member of the Senate Energy and Natural Resources Committee.
Two other lobbyists who have passed through the revolving door between government and industry appear in Oxbow’s most recent filings: Caroline Martin Szeremeta, who once was a legislative aide to former Sen. Byron Dorgan, D-N.D.; and Kathleen O’Connor, who served in the White House’s office of legislative affairs under President George W. Bush and whose Capitol Hill work experience included a stint as an aide to former Republican Speaker of the House Dennis Hastert.
In addition to its in-house lobbyists, Oxbow retains the lobbying services of Heather Podesta & Partners, including the firm’s namesake, Heather Podesta, one of D.C.’s most recognizable lobbyists.
Last year, Oxbow spent $1.6 million on lobbying — a record for the company. That’s up from $510,000 in 2011, and up from $30,000 in 2009, the year Obama took office. This year, it is on pace to again post some of its highest totals.
During the first half of 2013 alone, Oxbow spent $620,000 lobbying Congress and the Department of Interior on a range of business concerns. Among them: Koch’s desired land swap in the Rocky Mountains of Colorado, as well as proposals related to greenhouse gas regulations, coal leasing on federal lands, fracking and tax reform proposals affecting the energy industry, according to federal records.
PAC also leans right
While Koch’s companies were at the forefront of super PAC activity following the Supreme Court’s Citizens United ruling, they only recently began giving money through traditional political action committees. Traditional PACs, unlike super PACs, are limited in what they can raise, but they may donate directly to candidates’ campaigns.
Oxbow Carbon LLC itself does not sponsor a political action committee, but Koch’s Oxbow Carbon and Minerals LLC does, having established a corporate PAC in 2007. Since then, it has been extremely active.
During the 2012 election cycle, the PAC doled out $112,000 to candidates and committees, according to a Center for Public Integrity review of federal records — that’s more than twice as much as it gave to politicians before the 2010 midterms and about seven times as much as it gave out during its inaugural election cycle in 2008.
Like Koch himself, not only did Oxbow Carbon and Minerals’ PAC donate more lavishly leading up to the 2012 election, it was also more partisan with its giving.
Prior to the 2008 election, roughly half of the PAC’s contributions aided Democrats, including the legal maximum of $4,600 to U.S. Sen. Mark Udall of Colorado. But ahead of the election last November, for every $1 the Oxbow Carbon and Minerals PAC gave to Democrats, it gave about $4.50 to Republicans.
This year, the PAC has already contributed to the re-election campaigns of several GOP leaders, including House Minority Leader Eric Cantor, R-Va.; House Majority Whip Kevin McCarthy, R-Calif.; House Energy and Natural Resources Committee Chairman Fred Upton, R-Mich.; and House Ways and Means Committee Chairman Dave Camp, R-Mich.
All four GOP members of the Colorado delegation in the House also are also among the PAC’s beneficiaries, as is incumbent Sen. Michael Bennet, D-Colo.
Overall, in the first six months of 2013, the PAC doled out $40,500 — with 73 percent of that sum aiding Republicans.
When asked about the PAC contributions, Goldstein, the Oxbow spokesman, said he was “glad” that the PAC’s footprint had been “growing.”
The coming storm
The Obama administration’s willingness to tackle climate change has also been growing.
“I’m here to say we need to act,” Obama said during a June speech at Georgetown University, when he announced a new “national climate action plan.”
“We don’t have time for a meeting of the Flat Earth Society,” Obama continued. “Sticking your head in the sand might make you feel safer, but it’s not going to protect you from the coming storm.”
The president has tasked the Environmental Protection Agency with completing new carbon pollution standards for both new and existing power plants. And because of this role, it’s become a lightning rod for critics who see the Obama administration as waging a “war on energy” and a “war on coal.”
For their part, House Republicans have pushed legislation to restrict the EPA’s ability to enact regulations they view as harming the economy. And Senate Republicans only recently dropped their objections to Obama’s new pick to head the agency, Gina McCarthy, who was nominated in March but didn’t get a confirmation vote until July 18. Just six GOP senators voted to support her.
Oxbow spokesman Goldstein declined to speculate on the company’s future political giving other than to say it will continue backing candidates that support free enterprise.
“We’re all about business,” he said.
Hamburger chain White Castle, the for-profit education provider Apollo Group and a firm connected to a controversial high-stakes gambler and golf course developer were among the largest donors to a super PAC dedicated to keeping Republicans in control of the U.S. House of Representatives.
These three corporate contributions amounted to about 30 percent of the $557,000 raised by the Congressional Leadership Fund in the first six months of the year, according to a Center for Public Integrity review of campaign finance records.
The GOP super PAC’s largest donation so far this year — $125,000 — came from John W. Childs, the founder and chairman of a Boston-based private equity firm that specializes in leveraged buyouts. Childs was one of the top bankrollers of super PACs during the 2012 election cycle, giving $4.2 million to pro-Republican groups.
Its second-largest donation — $100,000 — came from a Nevada-based limited liability company called T STAR III LLC. Nevada business records identify William T. “Billy” Walters and Michael E. Luce as the company’s managers.
Walters is a well-known sports bettor who made $3.5 million betting on the New Orleans Saints in the 2010 Super Bowl. In 2011, the Wall Street Journalreported he made as much as $15 million a year gambling.
He is also the chief executive officer of The Walters Group, a real estate company based in Las Vegas that specializes in high-end golf courses. One of them includes the option of “Par Mates” — “extremely attractive and outgoing young ladies / girl caddies that will keep the golfers company during their round.”
Walters has been indicted by the Nevada attorney general three times on charges of money laundering over the years. Each time, the charges were dismissed before trial. He originally moved to Nevada in 1980 after being convicted of illegal bookmaking in his home state of Kentucky.
Luce is the president of The Walters Group. Company officials did not respond to requests for comment.
Among the Congressional Leadership Fund’s other top donors were for-profit education provider the Apollo Group — the parent company of the University of Phoenix — which contributed $50,000, and hamburger chain White Castle, which gave $25,000.
Apollo Group spokesman Ryan Rauzon told the Center for Public Integrity that the company supports “candidates in both parties” who “understand our important role” in higher education.
White Castle Vice President Jamie Richardson said that “responsible citizenship” motivated his company’s contribution.
“From time to time, we contribute to candidates and causes on both sides of the aisle,” Richardson added. “We support those who care about the same things we do — creating economic opportunity for our team members and working together to improve our neighborhoods."
White Castle has not made any other corporate super PAC donations so far this year, according to federal campaign finance records. The Apollo Group has also donated $11,300 to Jan PAC, the super PAC affiliated with Arizona’s Republican Gov. Jan Brewer.
For his part, Apollo Group founder John Sperling has made just two federal-level political donations so far this year, according to the Center for Responsive Politics: $2,600 to Rep. Ron Barber, D-Ariz., and roughly $30,300 to the Democratic Congressional Campaign Committee, which seeks to increase the party’s ranks in the U.S. House of Representatives.
House Majority PAC, the super PAC that backs Democratic House candidates, got its biggest gift so far this year — $350,000 — from hedge fund manager Donald Sussman, the husband of Rep. Chellie Pingree, D-Maine. It has also received large donations from several labor unions and the law firm of Texas trial lawyers Steve and Amber Mostyn.
Other five-figure donors to the Congressional Leadership Fund so far in 2013 include:
Ahead of the 2012 election, the Congressional Leadership Fund made headlines for accepting a $2.5 million corporate contribution from oil giant Chevron Corp. That year, the super PAC spent $9.4 million on advertisements designed to aid the GOP.
Already this year, the Congressional Leadership Fund has launched ads attacking freshmen Reps. Joe Garcia, D-Fla., and Patrick Maloney, D-N.Y.
Dan Conston, the super PAC's communications director, declined to answer specific questions about its fundraising but said the group would "have the resources to be truly effective again this cycle."
According to the group’s website, it seeks to “counter efforts on the left.” It is headed by former Sen. Norm Coleman, R-Minn., and has close ties to House Speaker John Boehner, R-Ohio.
Boehner himself appeared at a fundraising event for the super PAC earlier this year, according to Politico, and he recently golfed a round in New Jersey with billionaire businessman Donald Trump — who gave the Congressional Leadership Fund $100,000 last year.
Singer, actress and comedian Bette Midler took to Twitter on April 18 to promote Gabby Giffords’ new gun control effort.
“GABBY GIFFORDS SPEAKS, AND SHE IS FURIOUS!!” Midler wrote as she touted a New York Timesopinion column authored by the former Arizona Democratic congresswoman who survived a 2011 shooting and has since launched an advocacy group that aims to curb gun violence.
Just weeks later, Midler upped the ante, donating $10,000 to Americans for Responsible Solutions PAC, the super PAC arm of Giffords’ group. The gift came from Midler’s private family foundation, according to campaign finance records.
Before the second quarter ended in June, another family foundation — the Rupa and Bharat B. Bhatt Foundation — contributed $5,000 to the group and the New England Congregational Church in Saratoga Springs, N.Y., gave $250.
They were modest contributions considering the group raised $6.6 million in the first half of 2013 — more than any other super PAC. But they were also strictly prohibited by the Internal Revenue Service.
Nonprofits organized under Sec. 501(c)(3) of the U.S. tax code are restricted from “directly or indirectly” intervening in political campaigns. And private foundations — such as the Midler and Bhatt foundations — are also prohibited from lobbying to influence legislation.
Since its creation in January, Americans for Responsible Solutions has urged Congress to enact more robust firearms background checks — and used television advertisements, radio spots and robo-calls to mobilize supporters, sometimes through its 501(c)(4) nonprofit arm and sometimes with its super PAC.
Americans for Responsible Solutions backed the bipartisan legislation sponsored by Sens. Joe Manchin, D-W.Va., and Pat Toomey, R-Pa. And after that bill failed to clear a Republican-led filibuster in April, Giffords and her husband, Mark Kelly, pledged to “use every means possible to make sure the constituents of these senators know that their elected representatives ignored them.”
Tax experts told the Center for Public Integrity that foundation donations to Giffords’ super PAC could be “very problematic.”
Nonprofits organized under Sec. 501(c)(3) “cannot spend one penny” on partisan campaign activity, said Cleta Mitchell, an attorney in the Washington, D.C., office of Foley and Lardner LLP.
“You can’t give them money to do things that you can’t do,” she continued.
Political committees, such as super PACs, are “essentially radioactive” for 501(c)(3) nonprofits, added Marcus Owens, a lawyer at D.C.-based Caplin & Drysdale who previously headed the IRS's exempt organization division.
Records show that the Americans for Responsible Solutions PAC refunded the Presbyterian and New England Congregational Church’s $250 donation on June 21. Julie Campbell, the church’s office manager, said that when the money came back, the congregation was told it was voluntarily returned because it came from a “house of worship.”
In response to questions from the Center for Public Integrity, Katie Hill, the communications director of Americans for Responsible Solutions, said the super PAC was in the process of refunding the other two nonprofits’ contributions.
“These are not illegal contributions for us to take, but it’s our understanding that the donations are not appropriate for the donors to make,” Hill wrote in an email. “Thus, we are processing refunds, which will be disclosed on our next report.”
Pam Baker, an accountant at the firm in Nashville, Tenn., that handles the Midler Family Foundation’s books, said her company was “researching it and will have to get back to you.”
(Update Aug. 15, 2013, 4:27 p.m.: Ken Sunshine, Midler's publicist, told USA Todaythat the singer's donation through her foundation was "an accounting mistake" and that Midler has issued a personal check as a substitution.)
Rupa and Bharat B. Bhatt did not respond to requests for comment.
Bharat Bhatt is a businessman who once worked as the president and chief operating officer of GreenPoint Financial Corp. He currently serves on the New York Institute of Technology’s board of directors and is the board chairman of Kodiak Funding, LP, a Virginia-based financial company that specializes in real estate investing.
This is not the first time that a nonprofit has made a donation mistake in the super PAC arena.
Last year, Colorado Christian University donated $5,000 to the super PAC affiliated with Arizona’s Republican Gov. Jan Brewer, which it asked to be refunded when the Center for Public Integrity brought it to the school’s attention.
And the pro-Mitt Romney super PAC Restore our Future accepted $100,000 from the Rod and Leslie Aycox Foundation in July 2011. That money, too, was ultimately returned.
Two excellent reader comments caught my eye this week, in response to Wendell Potter’s latest column separating fact from fiction on the Affordable Care Act, AKA Obamacare.
First there was:
“THANK YOU for this column! I'm so exhausted with the insane rhetoric about just getting healthcare to all our people, and this gives me some information so I can respond to some of that ridiculous hysteria.”
“Misleading information, sloppy coverage are confusing the public about Obamacare. Considering all the intentionally misleading information we are being subjected to about Obamacare from politicians and special interests with an obvious agenda, it will be vitally important for reporters to be more responsible in their reporting.”
Google “Obamacare myths” and you’ll come up with about 8,000 results. Many of the most important provisions of the 2010 law have not taken effect yet, but three years of controversy, legal challenges, deliberate misrepresentations and 40 attempts to repeal it by the U.S. House of Representatives have all taken their toll. Polls show about half of all Americans don’t know enough about the law to see how it will — or will not — affect their families.
In his own version of Obamacare myths, Bill Keller wrote in the New York Times last year that a number of fallacies (it’s a job killer, it’s a federal takeover of health insurance, etc.) “seem to be congealing into accepted wisdom. Much of this is the result of unrelenting Republican propaganda and right-wing punditry, but it has gone largely unchallenged by gun-shy Democrats.”
With new state health insurance marketplaces (known in the law as exchanges) set to enroll people in coverage starting Oct. 1, the distortions, including misleading advertising, seem to be ramping up. Enter Wendell Potter the Center for Public Integrity’s own myth-buster. Wendell is a former health insurance industry insider-turned-whistleblower who writes with clarity and insight about healthcare in ways that others in the media have sometimes come up short.
Yes, the plan is complex, as Potter told me, and advocates have not done an adequate job of explaining it. Of course, it is always easier to condemn and confuse than it is to explain and educate. He believes the law is misunderstood for a combination of reasons. It has been very political from the beginning, with the GOP viewing it as a continuing campaign issue that appeals to its base of supporters. And politicians are only too happy to exploit it for their own political purposes.
Potter believes the media itself has not done its job well enough, especially in steering clear of those with an interest to peddle or an agenda to sell. Obamacare news coverage has too often been driven by Washington politics, as part of an ongoing political campaign, rather than by the substance of the law, which only contributes to the public’s perplexity.
Last May, Potter addressed some of the myths and realities of Obamacare. He noted that: “Two of the most important provisions of the law [Republicans] profess to hate were actually Republican ideas the Democrats embraced in hopes of getting bipartisan support for reform.”
The first such provision is the requirement that all Americans not covered by a public plan like Medicare or Medicaid must buy coverage from a private insurance company. The second provision is that the state health insurance marketplaces or exchanges would be places where private insurers could compete online for customers.
Besides Potter, FactCheck.org, an impartial truth squad, has also been busy comparing facts to political rhetoric. In its latest report (Louie Gohmert’s Health Care Hooey), FactCheck.org found that Texas Republican Rep. Louie Gohmert “is wrong when he says a ‘poor guy out there making $14,000’ is ‘going to pay extra income tax if he cannot afford to pay the several thousand dollars for an Obamacare policy.’”
“In fact, that poor guy will be eligible for Medicaid coverage or heavily subsidized private insurance, depending on where he lives, without fear of being penalized if he cannot afford insurance.
Meanwhile, the Republican National Committee has its own list of 57 “Coordinates for a Train Wreck,” or Obamacare by the Numbers. However, as FactCheck.org noted, the RNC list includes a number of serious mistakes. For example, they claim “that 8.2 million Americans can’t find full-time jobs ‘partly due to ObamaCare.’ But that figure is the total number of part-time workers in the U.S. seeking full-time work.”
“The RNC also claims 6 million retirees ‘will lose prescription drug coverage’ under the health care law. But 6 million aren’t expected to go without drug coverage. Instead, they are expected to lose employer-sponsored drug plans and join other Medicare Part D plans instead.”
FactCheck.org found other “well-worn distortions” in the RNC list, along with items that were true: “the gross cost of insurance coverage provisions in the law do add up to $1.8 trillion for 2014 to 2023, according to the nonpartisan CBO, and the law’s 10 percent excise tax on indoor tanning services would amount to $1.5 billion over 10 years, according to the Joint Committee on Taxation.”
FactCheck.org also faulted President Obama’s recent press conference statement for overpromising on premiums. “President Obama claimed that all of the currently uninsured would be able to get coverage on the exchanges ‘at a significantly cheaper rate than what they can get right now on the individual market’ even without federal tax credits. But even Health and Human Services Secretary Kathleen Sebelius has said that younger Americans would likely pay more on the exchanges, while those who are older would likely pay less.”
One fact that is important to know is that most Americans will not be affected by the changes. As Wendell Potter has explained, in a country of 315 million people, “only 15 million — less than 5 percent of us — currently buy health insurance on our own through the so-called individual market because it’s not available to us through the workplace.”
The vast majority of Americans — about 55 percent — are, according to the U.S. Census Bureau, enrolled in health insurance plans sponsored by our employers. Another 32 percent of us are enrolled in Medicare, Medicaid and other public programs. That means, Potter said, that “almost nine out of 10 of us will not be affected at all by rates insurers will charge next year in the individual market.”
Keeping up with an accurate understanding of the healthcare changes taking place has almost become a full-time job Thank goodness there are careful purveyors of the truth, such as Wendell Potter and FactCheck.org, to help us all with this process.
Until next week,
Cory Booker — the Democratic mayor of Newark, N.J., who cruised to victory Tuesday in a special U.S. Senate primary election — supports a requirement that senators file their campaign finance reports electronically.
“E-filing legislation is an important step towards transparency,” Silvia Alvarez, the Booker campaign’s deputy communications director, told the Center for Public Integrity. “He [Booker] plans to be a leader on this and other transparency measures.”
That may be, but he’s not leading by example.
To date, Booker’s campaign has filed more than 3,000 pages of campaign finance paperwork — a number that will surely grow has he heads into an Oct. 16 general election contest with Republican rival Steve Lonegan.
Unlike candidates for the presidency or U.S. House of Representatives, Senate candidates are not required to electronically file campaign finance reports with the Federal Election Commission.
Instead, they must submit paperwork to the office of the Secretary of the Senate, which, in turn, forwards the reports to the FEC, which then pays an outside firm to perform data entry.
Sixteen senators across party lines, including Tester, voluntarily e-file their reports, as the Center for Public Integrity has previously noted.
But while Booker supports Tester’s plan, his campaign is unlikely to e-file any time soon, said Alvarez.
“Currently, the Booker campaign is complying with existing filing rules,” Alvarez said — which it will continue to do “until everyone is playing by the same set of rules.”
Booker, who has more than 1.4 million followers on Twitter, gained notoriety for regularly responding to — and aiding— constituents using the social media platform. On the campaign trail, Booker has pledged not to be someone who “plays by the same old rules” if elected to the Senate.
"I don't want to just go down there and become a part of the system,” he told NBC News earlier this week. “I want to change it.”
Ahead of Tuesday’s primary election, Booker raised more than $8.6 million, records show. That was more than his three Democratic opponents combined. A super PAC active on Booker’s behalf also spent more than $500,000 on the race.
A recent poll showed Booker with a 25 percentage point lead over Lonegan.
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America Votes, a national liberal nonprofit group with significant union funding, made the 2011 and 2012 Wisconsin recall elections a top priority, providing a major cash infusion to a handful of groups that helped organize the efforts.
Documents show the nonprofit gave a combined $940,000 to four organizations that tried to boot Republican Gov. Scott Walker and several other GOP lawmakers out of office.
America Votes, which aims “to coordinate and promote progressive issues,” raised $11.1 million from July 2011 through June 2012 and spent $9.6 million, according to an IRS filing obtained by the Center for Public Integrity.
Of the total, $725,400 went to the Greater Wisconsin Committee and $150,000 went to We Are Wisconsin, a nonprofit launched shortly after Walker announced his controversial legislation that restricted collective bargaining.
America Votes also gave nearly $45,000 to Citizen Action of Wisconsin and $20,000 to Wisconsin Progress.
America Votes is a “social welfare” nonprofit meaning it doesn’t have to say where it gets its money from, but it does have to say where it’s going.
We Are Wisconsin ultimately spent more than $14 million on both rounds of recall elections, while Greater Wisconsin — which has a political and a nonprofit arm — dished out nearly $11 million.
Those two groups spent more on the recalls than any other independent organization, according the nonpartisan Wisconsin Democracy Campaign.
America Votes spokesman John Neurohr said the group was enlisted as the “coordinating entity” in Wisconsin to ensure the bevy of progressive organizations active in the recalls were not “doubling up on efforts” and wasting valuable resources.
Walker won his election, but the Democrats briefly gained control of the state Senate following the recalls.
In total, America Votes donated more than $1.6 million to 14 separate liberal-leaning social welfare nonprofits and an additional $670,000 to two so-called “527” organizations during its fiscal year, documents show.
Among the other beneficiaries were the three most active Democratic-aligned nonprofits in the 2012 federal elections — the League of Conservation Voters ($141,000), Patriot Majority USA ($45,000) and the Planned Parenthood Action Fund ($25,000).
Additional major contributions include $480,000 to Progress Now Minnesota, $417,500 to the Colorado-based Bull Moose Sportsmen and $105,000 to WIN Minnesota.
Progress Now Minnesota and WIN Minnesota both advocate for liberal policies, while the Bull Moose Sportsmen promote conservation and hunters’ rights.
Notably, 52 percent of the money America Votes brought in during this period came from just 10 donors, a Center for Public Integrity analysis found. Documents show the two largest donations were $1.56 million and $1 million, though the donors are not identified.
The group says it “does not accept contributions earmarked for a specific political purpose” meaning it is not required by the Federal Election Commission to name its donors.
The group next turns its attention to Colorado, according to Neuroh, where Democratic Sens. Angela Giron and John Morse are facing a recall election for supporting a gun control measure.
Neuroh said America Votes is also surveying the fallout over the U.S. Supreme Court’s Voting Rights Act decision, which has led to lawmakers in a number of states seeking to enact stricter voter eligibility requirements.
He stressed that America Votes will continue to focus on a ground game — such as knocking on doors and making phone calls — over television advertisements.
“That’s the best bang for the buck for us,” Neuroh said.
The only independent expenditures — spending in support of a candidate that is required to be reported to the FEC — that America Votes funded in the 2012 federal elections were $47,000 worth of phone calls in support of President Barack Obama and Sen. Bob Casey, D-Pa.
Its super PAC spent $84,000 on canvassing and mailers.
The group backed Obama and Nevada Democrat Steven Horsford, who won a seat in the U.S. House of Representatives in November and opposed Colorado GOP congressional candidate Joe Coors, who failed to unseat incumbent Rep. Ed Perlmutter, D-Colo.
America Votes was originally formed by a group of liberal political operatives, including EMILY’s List founder Ellen Malcolm, former Sierra Club executive director Carl Pope and Harold Ickes, a longtime adviser to Bill and Hillary Clinton.
It first registered with the Internal Revenue Service as a 527 committee during the 2004 election cycle. The 501(c)(4), social welfare nonprofit arm launched in 2009.
Greg Speed, a former Democratic Congressional Committee official, currently serves as the group’s executive director, while former Democratic Legislative Campaign Committee Chairwoman Joan Fitz-Gerald is president.
Aside from its national headquarters in Washington, D.C., America Votes has offices in 11 different states. It has a cozy relationship with organized labor and unions have been a major source of funding for the group, according to a Center for Public Integrity analysis of filings with the Department of Labor.
Ten major labor groups combined to give America Votes more than $1.6 million during the unions' 2012 fiscal years, including $810,000 from the American Federation of State, Municipal, County Employees (AFSCME) and $376,000 from the National Education Association.
For its part, the AFL-CIO gave America Votes about $190,000 during its 2012 fiscal year and the Service Employees International Union (SEIU) contributed $154,000.
Other union financial backers include the United Auto Workers ($75,000); the United Food and Commercial Workers ($50,000); the Illinois-based regional arm of the Laborers International Union of North America ($10,000); the Milwaukee, Wis., chapter of LiUNA ($10,000); the International Association of Fire Fighters ($10,000); and the American Federation of Teachers ($5,000).
Michael Beckel and Chris Zubak-Skees contributed to this report.
First do no harm. That’s a tenet of medical ethics that future doctors worldwide are taught in medical school.
If only the people we elect to represent us were required to take such an oath when they’re sworn into office.
Because they aren’t, folks in Florida are facing having to pay far more for health insurance over the next two years than necessary. And health insurance executives will be laughing all the way to the bank.
Florida state lawmakers, in their ongoing efforts to block the implementation of Obamacare in the Sunshine State, recently passed a law that will allow health insurance companies to gouge Floridians more than any corporate boss dreamed was possible.
And if that weren’t bad enough, insurers will actually be required by law to mislead their Florida customers about why they’re hiking their premiums.
Republicans, who control the governor’s office as well as both houses of the Florida legislature, were confident the U.S. Supreme Court would declare the Affordable Care Act unconstitutional. Not only did they vote to prohibit the state from spending money to implement a law they just knew would be overturned by the high court, they refused to accept money from the federal government that would have enabled the state’s department of insurance to do a better job of regulating health insurers and enforcing new consumer protections in the law.
When the Supreme Court shocked Obamacare opponents last year by upholding the law, Florida lawmakers were in a pickle.
Their response? They passed a bill that prohibits the state’s Office of Insurance Regulation from protecting consumers from unreasonable rate increases for two years.
I learned about what is essentially a “first do as much harm as possible” bill in a letter the nine Democrats in the Florida congressional delegation sent to U.S. Secretary of Health and Human Services Kathleen Sebelius earlier this month pleading with her to step in to protect Floridians by taking an active role in regulating rate increases in the state.
The lawmakers said intervention by HHS was urgently needed because of a law signed in May by Gov. Rick Scott that specifically prohibits Insurance Commissioner Kevin McCarty from doing his job of reviewing rate increases and rejecting those he and his staff determine are unjustifiably high.
Until the passage of SB 1842, McCarty had the power to do that. Florida state lawmakers who voted for the bill, including a few Democrats who seemed to think HHS has more authority than it does, took the position that since the federal government was requiring insurance companies to be more consumer friendly, the federal government should assume the responsibility of enforcing the new consumer protections in Obamacare. The problem is that Congress gave the federal government no such additional powers. As a consequence, HHS really can’t take over what is still a state responsibility. And since Florida turned down the federal money that McCarty would have used to do his job, Floridians appear to be out of luck.
Last month, McCarty’s office said insurance premiums for individuals in Florida would be significantly higher than they are now. In their letter to Sebelius, the state’s congressional Democrats wrote that those increases are “not a coincidence, but rather the product of a cynical and intentional effort by Gov. Scott and the Florida legislature to undermine the Affordable Care Act and make health insurance premiums on the Florida Health Insurance Marketplace more expensive by refusing to allow the insurance commissioner to negotiate lower rates with companies or refuse rates that are too high.”
As PolitiFact noted in a recent analysis of the charges made by the Democrats in their letter (which PolitiFact ruled are true), the states that have authority to approve or disapprove rates were “able to extract significant reductions.” PolitiFact cited a Palm Beach Post story which noted that Maryland’s insurance department had used its regulatory powers “to push rates for next year’s premiums down by as much as a third.”
As Florida CHAIN, a state advocacy group, pointed out when Scott signed SB 1842, the law not only blocks McCarty’s office from protecting consumers, a provision in the law actually requires insurers to send deceptive and misleading notices about rate increases to consumers — and to blame Obamacare for them.
“The only ’public education’ of any sort authorized by the Legislature related to the ACA (Affordable Care Act) is a requirement … that insurers send extremely biased and incomplete notices this fall about the ACA and its effect on policyholders’ rates,” Florida CHAIN said in a statement.
“The sole purpose of the requirement is to create ‘sticker shock’ that can be blamed on the ACA. There will be no mention of the many uncertainties or any other relevant factors, such as past rate increases or how actual rates will be reduced for many by the availability of premium tax credits (to low and middle income earners.)”
So not only will many Floridians be harmed by SB 1842, they will, by law, be misled about who caused the harm.
Maybe it’s time to rethink the oath of office for people we vote to represent us.
Two leaders of the Louisiana Young Democrats have launched a super PAC dedicated to advancing the interests of young professionals, such as education and jobs — and the duo says the new operation will be bipartisan.
“In Louisiana, our voice has not been heard,” said 30-year-old co-founder Jerry Jones, a former Alexandria, La., city council member. “We want to change that.”
Jones — who is also the national committeeman for the Louisiana Young Democrats — launched the True Louisiana Leadership PAC with Timothy Pickett, who serves as the treasurer of both groups. Both men graduated from Southern University, where they were active in student government.
Jones told the Center for Public Integrity that he and Pickett were motivated to take action after seeing repeated budget cuts to higher education by Bobby Jindal, the state’s Republican governor who may be considering a 2016 White House bid.
“We decided to say ‘ouch,'” Jones said. “We needed to be heard.”
Jones offered no fundraising estimates for his super PAC. But he said the committee is “looking forward to playing a role” in a range of upcoming elections, including the state’s contentious U.S. Senate race. The True Louisiana Leadership PAC has yet to make any formal endorsements.
Incumbent Democratic Sen. Mary Landrieu is up for re-election in 2014 and is already facing challengers, including GOP Rep. Bill Cassidy.
A March report from the nonprofit State Higher Education Executive Officers found that Louisiana’s higher education funding cuts in 2012 ranked as the third largest in the country. The budget Jindal signed into law earlier this summer cut an additional $11 million from higher education.
In contrast, Jindal has also supported sizeable higher education infrastructure investments since he took office in 2008, according to The Advocate in Baton Rouge.
At a research facility some two dozen miles from the White House, government scientists operate a nuclear reactor burning uranium that could be used to build a nuclear weapon. A similar research reactor sits just blocks from where the suspected Boston Marathon bombers gunned down a campus policeman. A third reactor is located in the Midwest, less than a mile from a 71,000-seat college football stadium.
Yet more than a decade after the Sept. 11 attacks, these facilities “are particularly vulnerable to sabotage attack” and are not required to meet tougher standards used by the military to protect its weapons-grade uranium from terrorists, say the authors of a new Pentagon-funded study.
The report by two University of Texas at Austin researchers, based mainly on public sources, found that three of the nation’s civilian nuclear research facilities and its 104 commercial reactors remain ill-prepared to guard against large-scale terrorism threats.
The three civilian research reactors — all fueled by uranium that could be used to build a nuclear bomb — are located at the University of Missouri in Columbia, the Massachusetts Institute of Technology in Cambridge, and the National Institute of Standards and Technology in Gaithersburg, Maryland.
All three are supposed to convert to fuel that can’t be used in weapons, but that has not happened yet despite years of effort, and the facilities are expected to use the dangerous material for at least another decade, according to a statement supplementing the study.
The report raised issues that have long concerned nuclear security and nonproliferation experts. But it drew criticism from a number of nuclear industry and academic officials, including Christian Basi, spokesman at the University of Missouri.
Basi wrote in an email that the authors did not have access to confidential security plans and that safeguards at the Missouri plant go “above and beyond” what federal regulations require for such facilities. A spokesman for the National Institute of Standards and Technology also said its facility meets or exceeds federal security requirements.
David Moncton, director of MIT’s Nuclear Reactor Laboratory, said MIT's device is small, keeps no inventory of fresh highly enriched uranium, and MIT is “committed” to converting to non-explosive fuel.
The report's co-author Alan Kuperman, coordinator of UT Austin's Nuclear Proliferation Prevention Project, said in an email responding to critics that the report's “claims are fully documented."
“It is always tempting for government agencies to say, 'Don't worry, everything's OK, but it's classified, so we can't prove it to you, but trust us,'" he said.
Kuperman said in a statement released with the Aug. 15 report that the consequences of the theft or sabotage from civilian nuclear facilities are so great that they need to be protected at the same higher standards used by the military for its nuclear weapons and bomb fuel.
“It would be a tragedy if the United States had to look back after such an attack on a nuclear reactor and say that we could have and should have done more to prevent the catastrophe," he said.
Power plants lack sufficient security, report finds
Kuperman and his co-author, graduate research assistant Lara Kirkham, noted that the U.S. raised safety standards for civilian nuclear facilities after the 2001 attacks on the World Trade Center and the Pentagon, and that the industry has spent $2 billion on increased security in the 12 years since.
But they say that research reactors and their weapons material need to be protected against terror attacks like military nuclear facilities — despite the cost — even if the government has to step in and provide that security itself. The authors did not estimate the cost of such a step.
Despite the experience of 9/11, civilian nuclear power plants are still not required to defend against airplane attacks, the report points out, leaving it to the military and other federal agencies to thwart them.
In 2006, the Nuclear Regulatory Commission, which regulates the use of nuclear material by civilians, rejected a petition from the Union of Concerned Scientists proposing a requirement that such plants be surrounded by a cage of steel beams and cables.
While the precise rules are secret, the report cited sources stating that nuclear plant operators are only required to deploy guns, gates and guards sufficient to deter “five or six well-armed terrorists” — a fraction of the 19 hijackers involved in 9/11.
If a larger-scale attack were launched against a nuclear power plant, operators would have to wait an estimated one-and-a-half to two hours for a SWAT team to respond and fully engage the attackers, according to a Project on Government Oversight estimate, which was cited in the report.
The government also does not require nuclear power plants to protect their facility from rocket-propelled grenades or .50 caliber rifles with armor piercing shells — weapons that the NRC initially proposed that the plants guard against, but that were removed from requirements amid pressure from the nuclear industry to keep costs down, according to reports cited in the study.
David McIntyre, spokesman for the Nuclear Regulatory Commission, said the NRC has adequately “secured and bolstered security requirements” at nuclear facilities since Sept. 11. He said the report offered “no new insight, no new information.”
Charles Faddis, the former head of the CIA’s unit focused on terror groups seeking weapons of mass destruction, and author of “Willful Neglect,” a book about lapses in homeland security, said he could “not endorse” parts of the report, saying details of some of the topics raised should remain confidential. But he agreed that nuclear plants in this country “are not sufficiently secure,” citing what he called poor training and supervision of guard forces in particular.
“That does not mean there is no security,” he said. “That does not mean that anybody could seize one. It does mean that given the potential consequences if one of them is taken, there should be significantly more security. The sites are vulnerable.”
In their report, Kirkham and Kuperman write that terrorists have long considered nuclear power plants as potential targets, citing reported threats or attempts to blow up or penetrate reactors in Argentina, Russia, Lithuania, Western Europe, South Africa, and South Korea.
Edwin Lyman, a senior scientist with the Union of Concerned Scientists, said that civilian research centers are subject to even fewer security requirements than the nuclear power plants, such as having a trained, armed response force with semi-automatic weapons.
If facilities housing the research reactors cannot boost their security, he said, “there is a good case for shutting down research reactors in densely populated areas. It’s something the country has ignored for a long time.”
Since 9/11, he pointed out, seven nuclear research reactors using highly-enriched uranium have converted to a safer fuel. But the larger, higher-powered reactors have yet to make the transition.
The Department of Energy is developing a special kind of fuel for these reactors that can’t be used in weapons, but the effort has taken many years.
DOE spokesman Joshua McConaha said in a statement that DOE has had to revise the conversion program“in response to technical and scientific challenges.” One aim is to create fuel that will produce the kind of radiation sought by researchers currently using those reactors.
Once the fuel is developed and meets all requirements, the National Nuclear Security Administration and those facilities are committed to converting to the safer fuel “as soon as possible,” McConaha said.
McIntyre, with NRC, said civilian research reactors face less stringent security requirements because they don’t “present the same degree of risk or attractiveness to adversaries.”
Correction, Aug. 21, 2013:An earlier version of this story stated that the Republican Governors Association donated $1 million to Ken Cuccinelli's attorney general campaign account. That money instead went to Cuccinelli's gubernatorial campaign account as part of nearly $5.7 million it's donated overall.
Virginia’s permissive campaign finance laws are allowing a super PAC to operate outside its usual boundaries and directly donate to and coordinate with a candidate in the state’s gubernatorial race.
DGA Action has given more than $3.3 million to the campaign of Democratic nominee Terry McAuliffe, federal records show.
Of that, the former chairman of the Democratic National Committee has received $3.2 million in direct contributions from the Democratic Governors Association’s super PAC, along with a series of in-kind donations for research and online services totaling $142,000.
Such activity would be patently illegal at the federal level: super PACs are prohibited from contributing directly to congressional or presidential candidates. Instead, they may raise and spend unlimited amounts of money to independently advocate for or against them.
Virginia, however, does not impose any contribution or source restrictions on state and local candidates or political committees, meaning they may raise as much money as they want from virtually any individual or group — even federally registered super PACs.
“In a state that has no contribution limits, the entire concept [of a super PAC] is irrelevant,” Campaign Legal Center Senior Counsel Paul Ryan said. “In Virginia, every PAC has been a ‘super PAC’ because no PAC has ever had contribution limits.”
When DGA Action first registered with the FEC in 2011, it said — as most super PACs do — it intended to “make independent expenditures” and “raise funds in unlimited amounts,” but that it would not contribute to “federal candidates and committees.”
McAuliffe is the only candidate at any level of government to whom DGA Action has directly given money.
A DGA spokesman declined to comment on the super PAC’s contributions to McAuliffe.
Virginia’s election laws have also given nonprofit and 527 organizations, which at the federal level also must typically abide by stricter limitations, the ability to help fill the campaign coffers of gubernatorial candidates.
The Republican Governors Association has given a massive sum of money — nearly $5.7 million — to Virginia Attorney General and GOP gubernatorial nominee Ken Cuccinelli in the form of direct and in-kind campaign contributions.
The RGA also has a super PAC, but after raising $9.6 million in 2012, the RGA Right Direction PAC has been idle during first half of this year.
Jon Thompson, an RGA spokesman, said the group’s 527 committee is “usually the main vehicle of fundraising for the RGA.”
Meanwhile, Planned Parenthood Action Fund, a 501(c)(4) “social welfare” nonprofit group, has given nearly $107,000 worth of in-kind contributions to McAuliffe’s campaign.
The only other states that do not restrict how much candidates and groups may raise and who may they receive money from are Missouri, Oregon and Utah, according to the National Conference of State Legislatures.
The RGA outraised the DGA $23.6 million to 13.4 million in the first half of 2012, according to recent Internal Revenue Service reports.
But as far as the groups’ super PACs are concerned, DGA Action brought in nearly $5 million on the year and spent more than $4 million from the beginning of the year through the end of July, new FEC filings show. RGA Right Direction did not receive any contributions in the first six months of 2013.
Super PACs spawned from a federal appeals court ruling in the 2010 case SpeechNow v. Federal Election Commission that allowed federal-level groups to raise and spend unlimited funds as long as they used that money solely for independent expenditures.
A Quinnipiac University poll released today shows McAuliffe with a six-point advantage over Cuccinelli among likely voters. The election will take place Nov. 5.
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