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Mudslinging at the FEC over disclosure

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Federal Election Commission Chairman Lee Goodman and two of his fellow Republican colleagues skewered Vice Chairwoman Ann Ravel — a Democrat — on Thursday because she didn’t vote to defend the agency last month against litigation from campaign finance reform-minded organizations.

“Not only does this effort derail longstanding Commission practice, but more troublingly, it contravenes well-established legal precedents and evinces a flippant disregard for judicial review,” wrote Goodman, along with FEC commissioners Caroline Hunter and Matthew Petersen.

"Commissioner Ravel has gone to extraordinary and unprecedented lengths to try to censor presentation of the agency’s rationale for its prosecutorial decision in the Crossroads GPS matter," they continued.

The blistering four-page statement came less than four months after Goodman and Ravel vowed to work together to improve the nation’s campaign finance watchdog and to overcome the bitter ideological divide that has for years plagued the agency.

Whether abstaining from the vote draws “furor or not, I’m here to do what’s best for the public and to fulfill the purposes of the FEC,” Ravel told the Center for Public Integrity. “It’s about disclosure.”

The criticism from her peers also follows a commentary by Ravel — published last week in the New York Times— in which she argued the FEC was “failing to enforce the nation’s campaign finance laws” and called out her three Republican colleagues for regularly voting against investigative actions.

The latest controversy over the FEC litigation stems from a vote in December, when the commission deadlocked on whether to approve effectively allowing the agency to investigate Crossroads Grassroots Policy Strategies, a conservative 501(c)(4) nonprofit co-founded by GOP strategist Karl Rove.

As a “social welfare” nonprofit, Crossroads GPS is not required to publicly disclose its donors. But some have questioned whether it should have registered as a political committee in 2010, after spending millions of dollars on advertisements calling for the election or defeat of candidates.

The change in status would have meant revealing its donors.

The commission's two Democrats and one independent supported investigating Crossroads GPS, as recommended by the agency’s Office of the General Counsel. They said the group appeared to meet the criteria for a traditional political committee.

“Providing public disclosure is a central part of the mission that Congress entrusted to the Commission,” they wrote later about the vote.

In January, a coalition of campaign finance reform groups, including Public Citizen and ProtectOurElections.org, sued the FEC over the Crossroads GPS matter, accusing it of failing to enforce federal election laws that require certain groups to register as political committees and disclose their donors.

Last month, the commission voted to defend itself against the suit. But Ravel and fellow Democratic Commissioner Ellen Weintraub abstained, sparking criticism this week from their peers.

It’s not the first time a commissioner has abstained or voted against allowing the agency to fight litigation, Weintraub told the Center for Public Integrity. FEC spokeswoman Judy Ingram said votes on litigation are made behind closed doors and typically not made public.

Ravel defended her position, saying it “was a principled stance not to defend the statements by the commissioners who did not want to investigate.”

“We thought this was a case that was clearly one where it met the standard for reason to believe to investigate. It’s a very low standard to look into the matter further,” she said, adding that she originally voted against the move on a paper ballot passed around and “out of a concern for collegiality, I changed my vote to abstention.”

Ravel, former chairwoman of the California Fair Political Practices Commission, told the Center for Public Integrity last year that fighting for expanded disclosure at the federal level was an “essential purpose of the FEC.”

For their part, the Republican members of the FEC have tried, unsuccessfully, to secure four votes to release the Office of General Counsel's 76-page draft recommendation on the Crossroads GPS matter, which, for now, has been fully redacted by the agency, as first reported by the National Journal.

Ravel said the general counsel realized the report, discussed at a closed-door executive session meeting, wasn't sufficient, and that the commission allowed him to withdraw and redo it, making the document subject to attorney-client and "deliberative process" privileges.

"The reports from General Counsel's office are only made public after the Commission has made a decision on the underlying matter — which never happened in that case," Ravel said, adding that as a former county counsel in California, she knows that releasing drafts or withdrawn documents can chill open discussions, especially in highly political environments.

Goodman, Hunter and Petersen did not respond to requests for comment made through the FEC's press office. But in a letter to the editor in response to Ravel’s New York Times commentary, they said she “would rather grandstand than follow the law and judicial precedent.”

“We enforce the law as written by Congress and construed by the courts, not as our colleague and her ‘reformer’ allies wish it were,” they wrote.

Rove and others associated with Crossroads GPS have maintained their activities comply with the law and that the group’s primary purpose isn’t campaign activity.

Michael Beckel and Dave Levinthal contributed to this report.

FEC Vice Chairwoman Ann Ravel, left, with fellow Commissioner Ellen Weintraub. Both are Democrats.Julie Patelhttp://www.publicintegrity.org/authors/julie-patelhttp://www.publicintegrity.org/2014/04/11/14577/mudslinging-fec-over-disclosure

Report offers grim predictions for South Texas air quality amid Eagle Ford oil boom

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What might the oil- and gas-rich Eagle Ford Shale region of South Texas look like in 2018?

A newly released but largely unnoticed study commissioned by the state of Texas makes some striking projections:

  • The number of wells drilled in the 20,000-square-mile region could quadruple, from about 8,000 today to 32,000.
  • Oil production could leap from 363 million barrels per year to as much as 761 million.
  • Airborne releases of volatile organic compounds (VOCs) could increase 281 percent during the peak ozone season compared to 2012 emissions. VOCs, commonly found at oil and gas production sites, can cause respiratory and neurological problems. Some, like benzene, can cause cancer.
  • Nitrogen oxides — which react with VOCs in sunlight to create ground-level ozone, the main component of smog — could increase 69 percent during the peak ozone season.

These projections are included in a study prepared by scientists with the Alamo Area Council of Governments (AACOG) in San Antonio and paid for by the Texas Commission on Environmental Quality (TCEQ). The study was designed to determine the extent to which oil and gas development in the Eagle Ford region is contributing to rising ozone levels in the San Antonio metropolitan area, which lies north of much of the drilling. San Antonio’s ozone readings have violated federal air quality standards since August 2012, making the city vulnerable to sanctions under the Clean Air Act.

The study’s findings also have implications beyond San Antonio.

In February, the Center for Public Integrity, InsideClimate News and The Weather Channel produced a series of reports about air quality in the Eagle Ford and found that the Texas regulatory system does more to protect the gas and oil industry than the public. The TCEQ has installed only five permanent air monitors in the region, which is nearly twice the size of Massachusetts, and all of them are on the fringes of the shale play, far from the heavy drilling areas where emissions are highest.

Peter Bella, AACOG's natural resources director, said in a telephone interview that the San Antonio project has two components: a 260-page emission inventory that was posted without fanfare on the AACOG website April 4, and a photochemical model that uses numbers from the inventory and meteorological data to project how the Eagle Ford’s pollutants will influence ozone in San Antonio.

Findings from the photochemical model were given to the TCEQ more than two months ago and the agency is reviewing AACOG's methodology. Bella said he did not know when the results would be released.

The TCEQ did not immediately respond to a request for comment Friday.

The emission inventory catalogs air pollutants from a range of oil and gas operations using three scenarios: low, moderate and aggressive development. (The numbers cited above assume aggressive development.) It was prepared with technical assistance from, and was reviewed by, the TCEQ.

State Rep. Lon Burnam, a Fort Worth Democrat, said the growth predictions are bad news for people who live in the Eagle Ford and surrounding cities, especially San Antonio. Burnam has tried unsuccessfully for years to pass legislation that would protect people from pollution associated with oil and gas production.

“The numbers are mind-boggling,” said Burnam, who recently lost a primary election for a 10th term. “Welcome to an increasingly dirty and unhealthy environment in a state wholly unsympathetic to the health and welfare of its people and wholly beholden to the industry.”

Omar Garcia, president of the South Texas Energy & Economic Roundtable, said Friday morning that he did not have the time to talk about the implications of the report. In previous interviews, Garcia has stressed the economics benefits of the Eagle Ford boom. His organization, which represents major operators in the region, says on its website that in 2012, the boom generated $61 billion in spending and more than 116,000 full-time jobs.

“I would love to engage,” Garcia told a reporter, explaining that he couldn’t spare even a few minutes. “We’ll get you on the next one.”

Drilling for decades to come

Documents obtained by the Center for Public Integrity and InsideClimate News under the Texas Public Information Act show that the AACOG study has generated intense scrutiny. In an email last May, for example, Bella told TCEQ scientists he had "recently been fielding questions on a weekly basis" about it from the media, local officials and academic researchers.

The results of the report, plus a separate inventory of non-Eagle Ford pollution sources, would help the fast-growing San Antonio metropolitan area prepare for future development, Bella wrote.

"We can't afford to work through this critical juncture in San Antonio's air quality history without comprehensive, accurate ozone data…including a comprehensive, accurate ozone precursor" emission inventory for the Eagle Ford, he wrote.

A final draft of the inventory was submitted to the TCEQ for review in December and released publicly a week ago, at the same time the agency was compelled to provide documents related to the report to the Center for Public Integrity and InsideClimate News under the Public Information Act.

The report relies heavily on industry publications and input from Eagle Ford operators with on-the-ground expertise. The document paints a picture of massive production growth over the next four years in a largely rural area already impacted by air pollution and other problems associated with five years of drilling.

Between 2008 and 2012, for example, 835 oil and gas wells were drilled in La Salle County — about one well for every nine residents. In neighboring McMullen County — population 730 — the ratio is one well per five residents.

Parts of the Eagle Ford could see active drilling through 2035, the report says, and wells could be more tightly packed. That could lead to more concentrated air emissions. Most of the growth is expected to occur in four counties — Webb, Dimmit, Karnes and La Salle. These counties were responsible for more than half of the Eagle Ford’s VOC and nitrogen oxide emissions in 2012.

Devine, Texas, lawyer Tomas Ramirez represents two Karnes County families in lawsuits against oil companies that claim emissions are sickening his clients. He called the AACOG projections “staggering.”

“It’s already dangerous if you live in close proximity to these sources of emissions,” Ramirez said. “So what does the future hold when you see such a huge increase? I think that the quality of life will substantially deteriorate for the people.”

Ramirez said he recognizes the vital role oil and gas plays in the Texas economy and that energy is a critical element in the overall stability of the country.

But the industry has to be more responsible, he said. Pollution controls “cost money and the oil companies don’t want to spend it. There is a way it can be done but the oil companies are not going to want to spend the money to do it.”

Extent of future emissions debated

Midstream operations — gas processing plants, compressor stations, storage tanks — will far surpass drilling rigs and well hydraulic engines as sources of ozone-forming pollutants, the AACOG scientists forecast. If the area develops as fast as some predict, midstream facilities could be producing 64 tons of VOCs and 49 tons of nitrogen oxides per ozone season day by 2018. That's more than twice what was emitted in 2012. (In San Antonio, the ozone season runs from April through October).

Email exchanges between AACOG and TCEQ scientists show cordial discussions of the methods used to calculate pollution levels in the Eagle Ford.  The emails also reveal the unique challenge of estimating emissions from a fast-developing industry where technologies are constantly evolving.

In an email on Feb. 24, 2014, for example, the TCEQ's Michael Ege noted that AACOG's numbers for emissions from pump engines were higher than estimates from the U.S. Environmental Protection Agency, while AACOG's emission calculations from oil and condensate tanks were lower than those used by the TCEQ.

The scientists met two days later to discuss the numbers, and AACOG’s Steven Smeltzer sent Ege an email on Feb. 27 to explain the discrepancies. Smeltzer said the EPA's numbers were outdated, and that AACOG had used data from local industry sources and environmental consultants. AACOG also got its storage tank information from local operators.

Such disagreements aside, it’s clear the Eagle Ford is headed for explosive growth. The report notes that David Porter, a member of the Texas Railroad Commission, which regulates drilling, said it will take nearly three decades to “fully develop” the Eagle Ford.

Tom Smith, director of the Texas chapter of Public Citizen, a nonprofit public-interest advocacy organization, said that kind of growth would exhaust the resources of the region’s counties and cities in terms of maintaining roads and providing services.

“The economic devastation to the communities will be extraordinary,” he said. “The demands for infrastructure will increase proportionally to the increase in activity.  The tax base will struggle to pay the debt and clean up the mess made for decades.”

Amber Lyssy, who lives with her husband and three children on an organic farm in Wilson County, said their land is already surrounded by drilling rigs, flares, storage tanks and waste pits.

“Now, to think it’s going to get worse is scary,” she said

This story is part of a project by the Center for Public Integrity, InsideClimate News and The Weather Channel. Jim Morris is a senior reporter with the Center for Public Integrity. Lisa Song and David Hasemyer report for InsideClimate News.

A yellowish haze hangs over DeWitt County, Texas, in the Eagle Ford Shale.Jim Morrishttp://www.publicintegrity.org/authors/jim-morrisLisa Songhttp://www.publicintegrity.org/authors/lisa-songDavid Hasemyerhttp://www.publicintegrity.org/authors/david-hasemyerhttp://www.publicintegrity.org/2014/04/11/14585/report-offers-grim-predictions-south-texas-air-quality-amid-eagle-ford-oil-boom

Air Force seeks less perfection in its nuclear missile corps

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Every day, 90 uniformed men and women in their mid-twenties ride elevators forty to sixty feet below remote fields in Montana, Wyoming, Colorado, North Dakota, and Nebraska in rote preparation for improbable nuclear Armageddon.

They spend some of their 24-hour alerts seated in front of steel Minuteman III missile launch control panels mounted on shock-absorbers, with toggle switches capable of hurling ten to fifty nuclear warheads — each with twenty times the explosive force of the Hiroshima bomb — to the other side of the globe, at speeds of 15,000 mph.

But their day-to-day enemy, for decades, has not so much been another superpower, but the unremitting boredom of an isolated posting that demands extreme vigilance, while also requiring virtually no activity, according to accounts by missileers and a new internal review of their work.

That understandable boredom, when paired with the military’s sky-high expectations for their workplace performance, has pushed some of them to use drugs, others to break the rules — even deliberately, and still more to look for any way out.

The millenials who populate this force can watch television, read, study, or sleep in their cramped, often damp quarters. But their checklist routines are typically unvarying, their moment-to-moment responsibilities are few, and the temperature underground — like the policy requiring their presence — is unnervingly stuck in the mid-60’s.

Referring implicitly to the officers’ ability to wreak almost unimaginable destruction on foreign populations, Col. Robert Vercher, the commander of a missile wing in Minot, North Dakota, told the Air Force's news service in February that “there is no other Air Force unit, other than our sister ICBM wings, where we put this much responsibility on very junior Airmen.”

Their official job criteria require that they have “a positive attitude toward nuclear weapons duty.” Those who don’t feel up to detonating such warheads are generally referred either to chaplains, legal counsels, or “mental health clinicians,” the Air Force says, to try and set them straight. Moreover, until recently, the Air Force’s policy dogma for the force — dating at least from a 2007 episode in which the service for a day lost track of six nuclear warheads fitted atop cruise missiles — is that mistakes cannot be made.

“Perfection is the expectation” for “America’s frontline missile operators,” an article in Airman Online, a website for the service’s officer and enlisted personnel, stated in Jan. 2012. “In what you do every day, there is no room for error, none,” Secretary of Defense Chuck Hagel reiterated during a visit to Wyoming’s F. E. Warren Air Force Base four months ago.

But now — when the national nightmare typically involves a terrorist’s smuggled bomb on the subway rather than another nation’s missile attack over the North Pole — even the Air Force admits that motivating these young officers to fulfill the service’s standard of perfection in their ICBM knowledge and skills is essentially an unachievable goal.

Lt. Gen. James M. Holmes, a former fighter pilot who is now vice commander of the Air Force’s training command, acknowledged as much in a revealing 268-page report he completed in February about the grim life of the missileers. Senior Air Force leaders, he said, had repeatedly ordered a “zero defect” nuclear culture that is “unrealistic and unobtainable.” The consequence of making such demands was not to improve performance but to worsen morale and promote dishonesty, the report concluded.

“Leadership’s focus on perfection led commanders to micromanage their people … imposing an unrelenting testing and inspections with the goal of eliminating all human error,” Lt. Gen. Stephen Wilson, commander of the Air Force’s Global Strike Command, said as he endorsed the Holmes report, which was released in late March. “This approach is unrealistic.”

The Air Force is now planning to ask for less perfection from its 9,600-member missile corps, a result that is practical, or perhaps inevitable given the job’s inherent limitations, even if it is also a disquieting standard for a group with its fingers on such consequential buttons.

Ecstasy and amphetamines

Holmes’ report was sparked by an Air Force probe of drug dealing by two lieutenants in contact with the nuclear missile workforce, which began last August and quickly blossomed into an investigation of widespread cheating on the missileers’ proficiency tests at a Malmstrom Air Force Base, a Montana facility with 150 nuclear-tipped Minuteman III missiles.

The drug dealing probe — which may be the most alarming aspect of the current tumult — remains open and the Air Force has said little about it. But the two officers at its center, both in administrative jobs, allegedly sent messages to 11 others about “specific, illegal drug use…[including] synthetic drugs, ecstasy, and amphetamines,” according to the Holmes report.

Two of those who received these messages at Malmstrom were combat crew members — those with responsibility for actually launching Minuteman missiles, according to a spokeswoman for the Global Strike Command that oversees the missile force. Another recipient was a missile combat crew member at Warren, which has another 150 Minuteman IIIs.

The Defense Department likes absolutes, at least in its policies. It has a stated zero tolerance for drug abuse, and mandates frequent urine testing for its nuclear weapons officers. But drug use of some kind has a long history in the nuclear missile corps, according to Bruce Blair, a former deputy missile combat crew commander who is now a research scholar at Princeton University and advocates eliminating the Minuteman force.

During his four years at Malmstrom in the early 1970's, Blair recalled recently, he sometimes passed the time by eavesdropping on radio chatter by security guards on patrol. He discovered their discussions were often about where to find bags of pot deliberately stashed near missile silos. On his final day on alert in a launch capsule in 1974, Blair added, security officers with dogs swept through the command quarters overhead and snagged the cook, the security chief, and the facility manager.

“Everybody [topside] was high,” Blair said. “They were all relieved of duty.”

A spokesman at Malmstrom said the base had no records of incidents that old. But ridding the missile corps of all drug or alcohol abuse is clearly a steep challenge, given that between 14 and 20 percent of Americans in their twenties have told federal surveyors they recently used illicit drugs.

The Air Force’s rulebook states that drug dealing and the use of hallucinogens or any other drug that might cause “flashbacks” are grounds for permanent removal. But the service can be forgiving of those involved in drug and alcohol incidents that fall short of what it considers “abuse” and “dependency.” These personnel can be reinstated to critical nuclear weapons positions if they undergo rehabilitation and “display positive changes in job reliability and lifestyle.”

Drug or alcohol abuse, and other problematic behavior, is meant to be caught by the Defense Department’s Personnel Reliability Program, which screens and monitors all those with access to nuclear weapons and technical knowledge about them. Eighteen years after the incident described by Blair, nearly 4 percent of the nuclear workforce — or around 2,600 individuals — were typically “decertified” every year, for reasons that included “substance abuse, negligence, conviction of a serious offense, and poor physical or mental condition,” according to a 1992 report by the congressional watchdog agency then known as the General Accounting Office.

“During our review … we found cases where individuals had been certified for nuclear-related positions despite evidence that they had been convicted for driving while intoxicated or they had admitted to pre-service drug use,” the GAO’s report stated. At one base visited, investigators found 6 of 54 personnel had pre-service drug use, mostly involving pot, because the rules at the time allowed precisely six “pre-service experimental” tokes per person.

Fifteen years later, when the nuclear weapons workforce was much smaller, annual decertifications had dropped to 1.83 percent or around 310 personnel from all three services, according to a 2009 Defense Science Board report, including 140 in critical missile launch or maintenance positions. No details about why these workers were removed in 2007 have been made public, nor does the department publish decertification data from other years.

But last year, according to the Global Strike Command public affairs office, fewer than 30 officers were decertified from critical, nuclear weapons-related, bomber and missile launch or maintenance positions in the Air Force. Four of these were for drug-related problems. Another 275 or so members of the command’s security force — roughly four percent — were also decertified that year, including 31 for drug-related problems.

Crushing the rules violators

The Air Force has tried to lend morale-boosting drama to the fifty-year old Minuteman launch jobs, with a colonel flogging the missileers in an email last April to act like they’re on a “go-to-war team” and a visiting general comparing them in a March speech to Babe Ruth or Ty Cobb, always ready to “knock one out of the park.”

It also asks its missile combat crews to spend around 40 days annually in a $9.7 million launch simulator at Vandenberg Air Force base, where they are supposed to become acclimated to reading codes, turning keys, and flipping the switches that would bring death to millions.

But many missileers dislike the assignment, and chafe at being stuck underground for so much of their four-year tours, with little hope of rapid advancement or deployment to a more interesting location. Their chief opportunity, after the first two years, is to shift to the chair next to theirs affixed atop a metal rail in front of the launch control panel, moving from deputy launch commander to commander.

What they most want to do is to sit “fewer alerts,” as recent Air Force focus groups have revealed.

In trying to create a happier workforce, the Air Force has known for years that it faces long odds: “The most difficult issue and the one with the most long-term implications is the widespread perception in both the Navy and Air Force that a nuclear forces career is not the highly promising opportunity of the past era,” an internal Pentagon study concluded in 1998.

By 2008, when the Defense Science Board surveyed more than 8,000 nuclear weapons personnel, the Air Force in particular had lower morale than the other services. Just 37 percent said they wanted to perform “nuclear deterrence related work” until they retired — compared to 62 and 83 percent of those surveyed in the Navy and Army — and fewer in the Air Force said they were willing to recommend their organization as a good place to work.

A confidential study by the RAND Corporation last year confirmed that behavioral and morale problems were more severe among missile force members than others within the Air Force, according to an Associated Press account. The court martial rate among missileers was more than double the overall Air Force rate in 2011 and 2012, as were rates of spousal abuse, although the Air Force says the rates have since declined.

But the pale motivation and weak discipline of some missileers came more forcefully to the public’s attention last May, when a missile group commander at Minot Air Force base wrote a lacerating email to his combat crew members that leaked to the Associated Press. Calling attention to low scores during recent inspections — including some marginal performances in the missile launch simulator, Lt. Col. Jay Folds wrote that “we’re discovering such rot in the crew force” that officers from other missile fields were being summoned “to come pull alerts at Minot while we fix ourselves.”

Folds demanded that his missileers “crush any rules violators,” including those “that do so on purpose.” He told them to turn off their televisions and improve their test performance, and to stop leaving missile silo blast doors open while they slept — a routine that launch capsule veterans say has long been commonplace, despite the obvious security risks.

“No more questioning the rules and orders of the officers appointed over you!” Folds ordered in the email, according to a full copy obtained by CPI, promising “consequences” for those who continued to “bad mouth” their work. “Gone is … the environment where we handed things to you on a silver platter because we thought that’s the way you take care of the crew force.” Seventeen combat crew officers were pulled from alert duty for two months.

In subsequent months, the missile force’s problems — and the public's awareness of them — only grew larger. When investigators probing the alleged drug ring seized the cellphones of suspects at Malmstrom, they discovered that dozens of lieutenants on missile combat crews had been exchanging questions and answers from their proficiency tests for nearly two years.

The tests, administered every month, covered the handling of codes, missile operations, and responding to so-called “emergency war orders” — the authority to unleash nuclear destruction. Ten officers had texted or received a classified test answer without safeguards. They did so, the Holmes report said, because they needed perfect scores to be promoted to other, above-ground Air Force jobs.

Senior Air Force officers responded in March by ordering nine of that base’s group and squadron leaders — all colonels and lieutenant colonels —removed from alert duties, on the grounds that they were not monitoring their crews sufficiently to detect the cheating. The overall commander of Malmstrom’s missile “wing” resigned.

As for Folds, a year after berating his missile crews, he is no longer in his post, having accepted an academic fellowship in Boston. Meanwhile, the Air Force has decided a gentler management approach is better-suited to keeping the millenials happy. “Occasionally, we’re going to … [swing] and miss, and I’m okay with that,” Wilson, the Global Strike Commander, startlingly told Malmstrom’s missileers during a Feb. 26 visit. “I’m good with striking out — that’s what makes us better. It is okay to fail.”

The Air Force also decided to refurbish more launch control centers, revise some of its testing materials, and try to create more attractive career paths. The Personnel Reliability Program has been overhauled to strip away some higher-level reporting requirements and push oversight and decision-making down to the local commands.

In taking a wider view of the test cheating problem, Holmes wrote that he was following the “Reason Model of Human Error.” That’s a slightly garbled name for the theory propounded in 1990 by University of Manchester social psychologist James T. Reason that complex systems — particularly those with highly-perfected mechanical devices at their heart — can fail, sometimes catastrophically, due to mistakes made by the executives who create and manage them.

Reason’s insights from studying air-traffic controllers, hospitals, and nuclear power plants prompted him to be hired by railways and airlines in an effort to anticipate when poor supervisory practices — including excessive corner-cutting, undue budget reductions, and the setting of unrealistic performance expectations — might culminate in unsafe acts. One of his most famous presentations included a series of Swiss cheese slices, representing checks and safeguards, with the holes unexpectedly lined up so that a catastrophe could still occur.

But while the Air Force has embraced this theory in name, its leadership still rejects any suggestion that its missile launch system has any inherent flaws, that cheating or other problems are widespread at the two other missile bases, or that workers’ shortcomings at Malmstrom were well known up the chain of command. “There was a few, handful of people that were at the crux of this problem,” Wilson, head of the Global Strike Command, told reporters on March 27, mentioning four in particular, three of whom he said were involved with drugs.

The missile wing commander who resigned, Col. Robert W. Stanly II, struck a similar theme in a grumpy resignation note that decried the failure of “just one solitary airman” to let any higher-ups know of the rule-breaking, so they could have leapt into action. He said the “extraordinary selfish actions of officers entrusted with the most powerful weapon system ever devised” had kept everything hidden.

'Really unhappy' missileers

A somewhat different account is buried in the bowels of the Holmes report. It says that focus groups and a survey at Malmstrom indicated that many of those who passed through the training at Vandenberg were “conditioned” to expect test coaching at the missile bases. Many crew members believed test sharing was widespread and that the rewards justified the risks. Sixty percent said their squadron leaders knew about it.

“Cheating has been going on for years; however, leadership pretends that the cheating is not happening,” said one of the focus group participants. “You can talk yourself into doing things that you wouldn’t ordinarily do because you see a culture of compromises and a leadership that’s aware of what’s going on and tolerates it,” said another.

After the embarrassing RAND Corporation report on low morale leaked last year, the commander who oversaw the entire 450-missile Minuteman III force, Maj. Gen. Michael J. Carey, told the Associated Press that morale at Minot is “not bad” and that missileers there are “not unhappy.” But the following month, when Carey joined seven other American officials on an official trip to Moscow, he told them that “his group had the worst morale” and the Air Force’s leadership “wasn’t supporting him,” according to an October 2013 report by the service’s inspector general.

“They’ve done a study and saw that his … you know, the missile bases or everyone is really unhappy,” one of the Americans on the trip quoted him as saying. “He is trying to make it better and leadership is not helping out and not listening to him.”

It’s true that Air Force leaders are not listening to Carey today. He was removed from his post after the service’s inspectors concluded he engaged in inappropriate behavior on the trip besides publicly savaging his Air Force superiors. On April 10, the Air Force said he would retire in June at less than his full rank.

Specifically, witnesses said he drank excessively, including from an open vodka bottle handed to him by his hosts; he insistently demanded that the band at a Mexican restaurant in the Russian capital let him sing or play the guitar on stage; and he repeatedly sat or walked with Russians instead of members of his own group, including several attractive women who showed up at two different restaurants and kissed him on the cheek.

According to the report, he also spent most of an evening talking with the cigar shop saleswoman at the Moscow Marriott hotel who he later recalled “was asking questions about physics and optics.” He said he recalled thinking, “Dude, this normally doesn’t happen.”

The lesson appears to be that there’s no immunity, among the missileers at various ranks, from poor judgment and low spirits while pursuing their marginalized profession.

Senior reporter Douglas Birch contributed to this article.

This article was co-published with Slate.com.

First Lt. Daniel Cook and 2nd Lt. Kyle Todd are shown manning a Minuteman III launch control center at F.E. Warren Air Force Base in Wyoming in this Air Force photo taken in August 2012. The name of the launch officer at Warren who allegedly received drug-related emails in 2013 has not been disclosed.R. Jeffrey Smithhttp://www.publicintegrity.org/authors/r-jeffrey-smithhttp://www.publicintegrity.org/2014/04/14/14559/air-force-seeks-less-perfection-its-nuclear-missile-corps

Casinos and offshore companies battle for billions in online gambling push

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Ever since Bugsy Siegel opened the Flamingo Hotel in 1946 and launched the Las Vegas Strip, gambling has held a tenuous position in American life, suggesting glamour, wealth, depravity and corruption all at once. Now that casinos have spread throughout the nation and allegedly shed their mafia ties, a new branch of the industry is fighting for legitimacy here.

Las Vegas-based casinos and overseas operators have begun an all-out battle over Internet gambling, which is mostly banned nationwide but carries with it the promise of billions of dollars in additional revenue for casinos and state governments. Three states began licensing online betting last year, and lawmakers are debating online gambling bills in seven others right now. In Washington, meanwhile, Congress is facing increasing pressure to either bar or regulate the fledgling industry federally.

The moves are coming in response to a concerted push orchestrated by a colorful cast of characters, including one of the most prolific political donors of the Super PAC era, an offshore company that only recently settled federal allegations of money laundering and bank fraud and a pair of benignly named groups backed by millions of dollars in casino cash.

In the process, the war over online gambling has created surprising alliances and divisions that are just now surfacing. Some in the industry warn that the practice poses a threat to the casinos’ hold over gambling since customers would no longer need to actually visit a casino. Furthermore, since online gambling has been legal in other countries for years, American casinos face competition from more established online companies based in exotic locales like Costa Rica and Gibraltar.

One casino mogul, Sheldon Adelson, a prominent backer of conservative political causes, has pledged to spend “whatever it takes” to get Congress to ban Internet gambling outright, while industry giants like Caesars Entertainment and MGM Resorts have taken the opposite tack, banding together in an effort to legalize and control the growing market. Maneuvering quietly in the background are foreign entities, including the Isle-of-Man-based PokerStars, the world’s biggest online poker operator, which so far has been denied a license to operate in New Jersey because of pending federal money-laundering charges against its founder. Along with the Garden State, Nevada and Delaware have legalized online gambling.

All together, this rich mix of interest groups spent $8.2 million lobbying the federal government on Internet gambling last year, according to the trade publisher GamblingCompliance, and millions more in state capitals from Trenton to Sacramento. The casino industry is also among the most generous in giving to political candidates across the country. According to figures from the Center for Responsive Politics and the National Institute on Money in State Politics, from 2009 to 2012 (state data for 2013 aren’t yet available), the gambling industry contributed $287.6 million to state and federal campaigns, some directly to candidates and state ballot initiative efforts and the rest to groups like the Republican Governors Association, which can send the money to states where casinos are barred by law from making political contributions.

Lost in the cacophony are warnings from gambling industry critics who say politicians are rushing headlong into expansion with little understanding of the potential social and fiscal risks. Problem gambling — which the American Psychiatric Association last year classified as an addictive disorder akin to alcoholism — already afflicts millions of Americans. As for the Internet, “Now instead of having to drive to Atlantic City, I can sit at home,” said Les Bernal, national director of the Washington, D.C.-based advocacy group Stop Predatory Gambling. “It’s the most extreme and most addictive form of gambling — because there’s no turning it off.” 

 

Beginnings

For close to 50 years, Nevada had gambling to itself. Even after 1976, when New Jersey legalized casinos in Atlantic City, the gambling industry was essentially relegated to just a few cities. But when Congress passed the Indian Gaming Regulatory Act in 1988, which allowed tribes to run casinos, the move led to a swift series of reactions by states hoping to cash in on the action. In 1989, South Dakota legalized non-tribal casinos, and Iowa, partly as a response to tribal gambling, authorized riverboat casinos. Soon, states up and down the Mississippi River were legalizing gambling, and casinos spread through the country like a colony of industrious ants.

Today, 39 states have some form of casino gambling, and Americans bet away some $90 billion each year, including lotteries, more than on they spend on movies, concerts, theater and sporting events combined, according to the gambling scholar I. Nelson Rose, who teaches at Whittier Law School. Much of that money goes to state governments to fund programs for seniors or property tax rebates, tying the states into an uneasy partnership with the gaming industry.

Just as book sales and movie rentals have moved from brick-and-mortar stores to online operations, many gambling executives see a move to the Internet as inevitable. It began around the turn of this century, when a handful of companies based in loosely regulated jurisdictions in Europe and the Caribbean began offering online gambling games worldwide, including to American players. The industry quickly flourished, but all beyond the grasp of American regulators and tax assessors and, importantly, the big casino companies.

At the time online betting inhabited a legal gray area: neither forbidden nor permitted explicitly by state laws, which generally require any gambling operation be licensed by the state. For years, the federal Department of Justice argued that the 1961 Wire Act, passed to limit bookies’ use of interstate telegraphs, prohibited all forms of betting online. Advocates for Internet gambling, including an aggressive Washington lobbying group for poker players that’s funded by the offshore online companies, countered that the Wire Act applied only to wagers on sports and shouldn’t bar poker or online slots. With the issue unsettled, states were unwilling to challenge the Justice Department’s interpretation, and none tried to license the practice.

It all came to a head in 2006, when Congress passed the Unlawful Internet Gambling Enforcement Act, or UIGEA, which prevents banks from processing the financial transactions of unlicensed Internet betting. Essentially, it gave the Justice Department a tool to go after the offshore companies that were offering games to Americans. Some of these operators saw the law as a warning and pulled out of the U.S., but a handful did not.

In 2011 the Justice Department sued the three biggest operators that remained, including PokerStars, for alleged money laundering. Prosecutors portrayed an elaborate scheme to deceive banks, charging that executives established dozens of fake online businesses with names like www.petfoodstore.biz to hide transactions worth billions of dollars. The companies eventually settled the suit without admitting guilt. As part of the agreement, Ireland-based Full Tilt Poker forfeited its assets to the federal government, which then sold them to PokerStars for $731 million. PokerStars agreed to cease its U.S. operations until a state or the federal government legalized online betting. The third company, Absolute Poker, forfeited its assets.

In a paradoxical twist, though, the 2006 law also paved the way for today’s wave of legalization. The Internet gambling enforcement act had an explicit “carve out” allowing for online bets made entirely within a state as long as state law authorized the activity, and some state lotteries wanted to use that opening to sell tickets online.

New York and Illinois asked the Justice Department whether such a move would be legal, and in late 2011 the department responded by quietly reversing its interpretation of the Wire Act, saying the 1961 law applied only to betting on sporting events. The department did not respond to a request for comment for this story. But suddenly and without fanfare, there was no federal statute barring Internet gambling. States were free to authorize the practice, and some had already begun the process.

An American market: New Jersey

Even before the Justice Department revised its opinion, the offshore companies had begun looking for a legitimate way into the American market, with a particular focus on New Jersey. In early 2009, Joe Brennan Jr., who ran a small, Washington D.C.-based industry group called the Interactive Media Entertainment and Gaming Association, met with state Sen. Raymond Lesniak, a New Jersey lawmaker representing a densely populated patch of the state south of Newark. Lesniak, one of the state’s most powerful politicians, had caught Brennan’s attention when he introduced a bill to legalize sports betting.

The senator, who has thinning red-gray hair, shares a district office with two other legislators in Elizabeth, where he greets visitors in an unadorned conference room. He speaks confidently, as if whatever he’s saying should be self-evident. In a recent interview, Lesniak said he proposed legalizing sports betting after growing tired of annual raids on Super Bowl gambling rings in the Garden State, even as betting on the game is legal in Las Vegas. When Brennan came to visit five years ago, however, he had another idea for the New Jersey lawmaker. Why not legalize gambling over the Internet?

For Lesniak, the proposal offered hope for Atlantic City: a new form of gambling to draw younger clientele and help the state’s struggling casinos, which had been losing money for three straight years because of increasing competition in nearby states. Brennan’s group, which has since ceased operations, never published a list of members. But in a 2007 lawsuit, the group acknowledged that some of its members “provide an Internet gambling opportunity to private individuals located both within and beyond the territorial borders of the United States.” In 2009, when Brennan first met with Lesniak, his organization collected $1 million in membership dues, which Brennan quickly devoted to fighting for a law in New Jersey.

“There was no silver bullet to this,” he said. “It was, very simply, a lot of hard work.” Brennan hired one of New Jersey’s most influential lobbying firms, Princeton Public Affairs Group, which drew up what proved to be an effective strategy. The idea was to have the Atlantic City casinos run the Internet gambling operations, because no bill would pass without their support.

Lesniak was a dogged sponsor, ushering a bill to passage in January 2011. Gov. Chris Christie vetoed the measure, however, saying it would violate the state constitution, which allows gambling only in Atlantic City. Another factor: the casinos, led by Caesars, opposed the bill at the time. The big national gaming companies had gotten behind Internet gambling but wanted a federal law instead, worrying that a patchwork of state statutes would lead to a more arduous and expensive regulatory system. (Lesniak suspects the industry pressed Christie to veto the bill. David Satz, Caesars’ top lobbyist, was a member of Christie’s transition team in 2009 and helped write a report arguing against legalizing Internet gambling at the time.) A spokesman for Christie did not respond to questions about the veto. Neither Caesars nor any of the other casinos contacted for this story offered any comment.

By 2012, though, Caesars and some other casinos had changed course, realizing that Congress was unlikely to approve online gambling, and so they threw their support behind the legislation. Lesniak had reintroduced the bill, tweaking it to address Christie’s concerns, and after two more rounds, Christie signed the law in February 2013.

The online gambling bill received little organized opposition in the state. Only six lawmakers voted against it, compared to 105 in favor. One of the opponents, Assemblyman Ralph R. Caputo, a Democrat, said he was concerned about gambling addiction. One of the few voices against the move from outside the capitol was Carl Zeitz, who served on the state Casino Control Commission from 1980 to 1988.

“It is one thing to have to get on a bus, drive a car, take a train, get on an airplane to Vegas, to go to casinos. It is another thing to sit home in your skivvies in bed or at the kitchen table playing gambling games for real,” he said. “That to me is really unwise public policy.”

The bill allows licensed casinos to apply for online gambling permits and to offer a wide array of games. Players have to be in New Jersey to log in, a detail the casinos verify by tracking a computer’s IP address and using geo-location on cellphones. The state takes 15 percent of the proceeds, along with $400,000 up front and $250,000 each year from any casino running online betting. While the casinos are the only ones eligible for licenses, they have generally partnered with other companies, including overseas operators such as Gibraltar-based Bwin.party Digital Entertainment, to run the websites.

The casinos, which were in favor of an Internet gambling law by 2012, spent $1.2 million on lobbying in 2012 and 2013 in New Jersey, with Caesars spending $703,100 of that both directly and through its donations to the Casino Association of New Jersey. The offshore companies were also active in lobbying. The Interactive Gaming Council, a Vancouver-based industry association for online gambling companies, spent another $253,700, and PokerStars’ parent company, Rational Services, spent $204,353 last year. Both of those entities hired Princeton Public Affairs, the same firm that had represented Brennan’s group.

The various groups also donated generously to Lesniak and other supporters. Brennan, his wife Jennifer and his association gave $22,225 to New Jersey politicians and committees since 2009, including $4,600 to Lesniak and $7,000 to Assemblyman John Burzichelli, the prime sponsor of the legislation in the lower chamber of the legislature.

Another donor was that Washington-based poker group, the Poker Players Alliance, which has been one of the strongest proponents for legalizing online poker. It has unleashed torrents of social media attention on state and federal politicians, pre-writing tweets for its members to send. When the Massachusetts Gaming Commission held a forum on Internet gambling in March, the alliance’s vice president for player relations, Rich Muny, tweeted a link directed at Gov. Deval Patrick: “@MassGovernor I'm glad to see today's Gaming Commission Internet Forum. Please support Internet #poker for Massachusetts!” Within a day, dozens of supporters had sent the tweet.

The alliance was formed in 2005 by a group of poker players, and says it represents 1.2 million players around the country. But according to federal tax filings published by the website citizenaudit.org, nearly all of its money in 2005 came from $1.1 million given by Ruth Parasol and James Russell DeLeon, a married couple who started PartyGaming, one of the world’s largest online poker companies.

The couple, both born in California, were living in Gibraltar at the time, and their company eventually entered into a “non-prosecution” agreement with the Justice Department in 2009, after it had pulled out of the American market in response to the 2006 Internet gambling enforcement act. Under the agreement, PartyGaming paid a $105 million fine and acknowledged that some of its “customer transactions” prior to the 2006 law “were contrary to certain US laws.” In exchange, the Justice Department agreed not to prosecute the company for those transactions.

The company later merged with another to become Bwin.party, which announced in October that Parasol and DeLeon would divest their 14 percent stake as part of the company’s application for a license to operate in New Jersey (in its partnership with the Borgata Hotel Casino and Spa, in Atlantic City, the company holds about 40 percent of New Jersey’s Internet gambling market so far).

John Shepherd, a spokesman for Bwin.party, said the couple decided the time had come to part ways with the company, in part because they were in the midst of divorce proceedings. He said the company had some contact with the Poker Players Alliance prior to 2006, but that Parasol and DeLeon gave their own money to the group and that the company has never contributed money.

While the poker alliance hasn’t received funding from Bwin.party, John Pappas, the group’s executive director, said that most of its money does comes from other offshore online gambling companies, including the Rational Group, which owns PokerStars.

And as Lesniak and Brennan were pushing the law through New Jersey’s legislative process, the alliance was there to help it along. Pappas and other members met with Christie’s staff in January 2013 to urge him to sign the bill. The organization, Pappas, and four prominent poker players gave Lesniak a total of $15,600 after the law passed last year, along with $2,000 to the Union County Democratic Committee, which gave $144,089 to Lesniak. The alliance gave another $2,600 to Burzichelli, the maximum allowed under state law.

Lesniak, Burzichelli and Sen. Jim Whelan, a co-sponsor, received an additional $17,300 collectively from four law and lobbying firms and their employees and family members, including Princeton Public Affairs, that represented the offshore companies in New Jersey, Pennsylvania and Washington, D.C.

Licensed casinos are barred from contributing to politicians in New Jersey. But in 2013, the country’s largest casino companies and their representatives, several of which operate in New Jersey, gave at least $1.5 million to the Republican Governors Association, with $1 million coming from Adelson, the casino mogul. The RGA, in turn, spent $1.7 million last year helping reelect Christie as governor. In November, Christie became chairman of the organization, anointing him the chief fundraiser for the group. Adelson and his wife Miriam also gave $7,600 directly to Christie’s campaign last August, even though Christie had already signed the law legalizing online gambling, which Adelson opposes. Adelson does not have operations in New Jersey.

Jon Thompson, a spokesman for the RGA, said in an email that his organization does not solicit funds for specific races, and there’s no way to tie money from donors to individual contributions the RGA makes. A spokesman for Las Vegas Sands, of which Adelson is chairman and CEO, did not respond to repeated requests for comment.

Despite all the cash being thrown around in the Garden State, the revenue from Internet gambling has so far proved disappointing. The casinos pulled in $27.2 million since they began operating the new websites in late November, through the end of February. At that rate, revenue will fall well short of the $200-$300 million analysts had forecast for the first year of operation; Christie’s initial budget projections suggested even more.

But other states and casino firms still envision a potential Internet gambling bonanza. By the time Christie had signed the law, Nevada and Delaware had passed their own online gambling laws too, with Nevada legalizing only poker. In February, those two states announced an agreement to allow players from each state to place bets with sites based in the other. One of the biggest concerns for less populated states has been that casinos won’t have enough customers to run viable games, and early returns in Delaware have proved disappointing too.

Several other states are looking at Internet gambling this year, including MassachusettsCalifornia, Illinois, Iowa, Minnesota and Mississippi, where a bill was introduced but failed to pass. Lawmakers in Louisiana held hearings on the issue.

The Rational Group, the firm that owns PokerStars, hired lobbyists in at least six states last year, including New York, where the company’s lobbyist met with an adviser to Gov. Andrew Cuomo in November, according to a report by Capital New York. In late March, a lawmaker introduced legislation to legalize online poker in the Empire State. But the bill’s language makes clear that companies that continued to offer U.S. betting even after the 2006 federal law limiting online gambling — with PokerStars the most prominent example — would have a hard time obtaining licenses in New York.

Rational Group declined to comment for this article.

While Nevada and Delaware have teamed up, it’s competition among the states that, more than anything, is driving the push for online gambling. The decline in revenue that so concerned Lesniak, Christie and others began in 2006, two years after Pennsylvania legalized casinos. New Jersey’s casinos have seen revenue fall each year since, and Pennsylvania’s casino revenue passed New Jersey’s in 2012, pulling in $3.2 billion.

Now Pennsylvania is finding itself in a similar situation to New Jersey. Since Ohio and Maryland legalized casinos in 2008 and 2009, Pennsylvania’s gambling growth has stagnated: last year was the first that the Keystone State’s casino revenue did not grow. It’s no surprise the state is now considering legalizing online gambling, with New Jersey as its model, offering a glimpse of how the debate may spread across the country in coming years.

All about revenue: Pennsylvania

Pennsylvania’s ornate state capitol sits high on a hill overlooking Harrisburg and the Susquehanna River. The building dates back to a more prosperous time in the Keystone State’s history, when wealthy industrialists like Andrew Carnegie drove a growing industrial economy. Today, Harrisburg sprawls out below the capitol in a gritty grid of mostly empty streets.

In the plush offices of the capitol, the debate over online gambling is circumscribed almost entirely by the question of whether or not it will generate money for Pennsylvania and its casinos. The state takes 55 percent of revenue from slots and 14 percent from table games, making it essentially a partner in the business. “It’s about revenue,” said state Sen. Kim Ward, who chairs the Community, Economic and Recreational Development Committee, which oversees gambling. “Because every year we’re in a budget squeeze.”

The state is facing a deficit of more than $1 billion this year. Pennsylvania and neighboring states have steadily increased the number of allowable forms of legalized gambling over the past decade, increasing competition within the industry, and casinos have responded with a cry for help.

In December, the Senate funded a study that will look at updating the state’s gambling regulations and taxes and allowing Internet gambling in an effort to boost revenue. The report is due by May 1, in time for this year’s budget debate. Rep. Tina Davis, a Democrat, had already introduced a bill to legalize online gambling last year. But Republicans control both chambers and are likely to write their own bill if they decide to advance the issue after the report comes out.

The state’s tremendous casino stake gives the industry a powerful tool to influence policy, said Barry Kauffman, executive director of the good-government group Common Cause Pennsylvania. All told, various interest groups spent $7.4 million lobbying on gambling and wagering issues last year in Pennsylvania, with Adelson’s Las Vegas Sands spending nearly $234,000, the most of the big casinos. PokerStars spent $42,500 lobbying in Pennsylvania last year, pressing to make sure it’s not cut out of an Internet gambling bill because of its troubled legal history. All told, Pennsylvania’s biggest casinos retained 12 lobbying firms in the state last year, including some of the state’s most powerful, like Greenlee Partners and J.M. Uliana and Associates. Most lawmakers say the casinos have not begun lobbying aggressively on the issue — that would come once a bill is introduced — and that some of the smaller, local casinos have expressed concerns that online gambling could hurt business.

Like in New Jersey, the casinos cannot give directly to candidates or committees in Pennsylvania. But since 2010, casinos operating in the state or their executives and executives’ families have given at least $6 million to the Republican Governors Association. That cash cannot be traced to particular expenditures by the RGA, but the governors’ group has spent generously in Pennsylvania over a period of several years, giving $6 million to Gov. Tom Corbett in 2010 along with $2.3 million to the Pennsylvania Republican Party. Corbett is up for reelection this year in what is expected to be one of the toughest governor’s races in the country. Last year, the RGA gave Corbett another $210,028 and $16,110 to the Pennsylvania Republican Party.

Casinos have also given more than $850,000 since 2010 to the Republican State Leadership Committee, a national group that distributes money to state politicians. In 2012, that group gave $500,000 to the Pennsylvania House Republican Campaign Committee, which in turn distributed money to candidates and to the Pennsylvania Republican Party.

Jill Bader of the Republican State Leadership Committee said in an email that her group has created a “segregated account” for Pennsylvania and that money from casinos is not deposited into the fund.

In response to a question asking whether some casino funds had made their way to Pennsylvania, Thompson, the RGA spokesman, said only that the group invests money “in full compliance of the law.”

The Pennsylvania Gaming Control Board oversees casinos in the state, and spokesman Richard McGarvey said his agency tries to make sure that PACs and other committees are in compliance with the law, but that the agency has no authority over federal political organizations. “We deal with the constraints that we have,” he said.

The casinos’ lobbying firms contributed hundreds of thousands of dollars to Pennsylvania candidates last year, though the lobbyists represent many other clients as well.

Pennsylvania lawmakers say that because of the ban on campaign contributions, they don’t feel influenced by the casinos. And unlike in New Jersey, there is opposition in both parties to allowing online gambling. Republicans in the House have introduced bills to ban online betting. Adelson runs a casino in the state, so he carries considerable weight.

In February, state Rep. Mario Scavello, a Republican, introduced a bill to create criminal penalties for gambling online illegally. The Coalition to Stop Internet Gambling, an advocacy group funded by Adelson, quickly issued supportive statements. The Poker Players Alliance called its members to action with the opposite goal, directing people to flood Scavello’s Facebook page with comments, which the representative later deleted. “If you had read those things, you wouldn’t leave them up there,” he said.

When Rep. Mike Tobash included a note about the Scavello bill in a recent newsletter, the alliance again unleashed its members, who put up a solid block of nearly 40 posts on his Facebook wall, some of them presenting detailed arguments, others with more direct assertions like, “I guess you hate freedom!

Scavello said he’s not convinced by the poker players’ arguments. “I’m really set on seeing something happen,” he said.

Dianne M. Berlin, who helped lead a loose coalition of religious, good-government, minority and other advocacy groups that campaigned against the 2004 gambling expansion, sees a repeat of what occurred a decade ago. She said the industry preys on Pennsylvania’s weakest citizens, from the elderly to the poor, and that lawmakers are hoping for revenue while ignoring the costs of addiction and increased gambling.

“I find it a slap in the face to the people of Pennsylvania when they only look at one side,” she said. “If I open a shoe store and say, oh my god, I can make 60 percent on each pair of shoes, and don’t look at my rent and my lights and the people I’ll have to employ, that’s stupid.”

The coalition has largely dissipated, though. The faith-based Pennsylvania Family Institute and it's sister group, the Family Council, represent the most established anti-gambling organizations in the state, but Thomas J. Shaheen, the group's vice president, said the institute is focused more on blocking the state lottery from adopting a new type of video gambling. Last year, the two groups spent $52,714 lobbying on a handful of issues, including gambling.

A battle royale in the nation’s capital

While many of the big casinos turned their attention to the states over the past couple of years, the Washington lobbying game is ramping up again, driven largely by Adelson’s new push to ban online gambling.

Adelson had already begun pushing for a ban through Las Vegas Sands, which spent $320,000 on lobbying in Washington last year. But in November, the Washington Post reported that he was forming a group called the Coalition to Stop Internet Gambling (the group’s website, stopinternetgambling.com, was registered in June, according to www.whois.com). The group hired former New York Gov. George Pataki, former Sen. Blanche Lincoln of Arkansas (who was also recently hired as a lobbyist by Las Vegas Sands) and former Denver Mayor Wellington Webb as national co-chairmen and recently announced the support of 38, mostly faith-based organizations.

The coalition has begun a national media campaign to convince the public of the ills of online gambling, with Pataki and Webb writing opinion pieces in major newspapers and appearing on television. In February, the group released its first television ad, which warns that “disreputable gaming interests are lobbying hard to spread Internet gambling throughout the country.” The group also secured signatures from 15 state attorneys general on a letter expressing their concern about online gambling and urging Congress to restore the Justice Department’s initial interpretation of the Wire Act; in March, Gov. Rick Perry of Texas and Gov. Nikki Haley of South Carolina sent their own letters — each nearly identical to the other — with the same request to Congress.

Meanwhile, Las Vegas Sands lobbyists were reportedly circulating draft legislation to achieve this goal, a copy of which was published in January by poker blogger Marco Valerio. Several reports tied the draft to Adelson’s representatives.

In late March, the campaign scored a major victory when Sen. Lindsey Graham, R-S.C., and Rep. Jason Chaffetz, R-Utah, introduced a bill with the same title and intent as that draft legislation: to amend the Wire Act to prohibit online gambling. M.J. Henshaw, a spokeswoman for Chaffetz, said the Congressman wants the issue decided by Congress, not a Justice Department lawyer, and that he’s particularly concerned because Utah does not allow any form of gambling. Asked whether the bill originated with Adelson’s lobbyists, Henshaw said, “like any issue that my boss takes on, he seeks the advice of industry folks.”

While Graham has not received much money from casinos, Adelson and his wife and daughter contributed $15,600 to his campaign account last year, and a Sands PAC gave another $5,000, according to the Center for Responsive Politics. The senator’s office did not respond to requests for comment, but Graham told NPR that his Baptist constituents and Adelson “are one with this,” and that “this is really easy politics for me back in South Carolina.” Chaffetz has not received contributions from Adelson or any other gambling interests, according to the Sunlight Foundation.

Neither Las Vegas Sands nor the coalition responded to requests for interviews, but in January, the Sands’ vice president for government relations, Andrew Abboud, told Nevada political reporter Jon Ralston that Adelson was “prepared to mount full campaigns in every state where a bill is introduced,” adding, “we are going to make it ‘the plague.’ ”

Adelson, 80, says he is morally opposed to the practice. He warns of a rash of underage gamblers betting in their living rooms and of the ease with which criminals and terrorists could rig games to launder money. Adelson and his coalition have widely cited an FBI letter, sent last year in response to a request from the late Rep. C.W. Bill Young, which warns that, “online casinos are vulnerable to a wide array of criminal schemes,” including identity theft, money laundering and public corruption. Effective regulation could prevent much of this activity, the letter notes, but “sophisticated methods” might evade detection.

In a recent interview with Politico Magazine, however, Adelson admitted that beyond the morals, he fears for his industry, warning that if online gambling is legalized, software giants like Google or Facebook will take over the market, “and that’s going to be the end of all of it.”

Most of the rest of the casino industry disagrees, and the American Gaming Association, of which Sands is a member, announced in January that it was launching a campaign to fight back. The group added several new staff members and also hired Jim Messina, who led President Obama’s 2012 reelection campaign, to help with “grassroots initiatives,” including online gambling.

The following month, the gaming association and other casino interests formed the Coalition for Consumer and Online Protection, which has hired former Reps. Michael Oxley and Mary Bono and launched a $250,000 ad campaign to block a federal ban. The coalition has framed the question in terms of states’ rights, consumer protection and Internet freedom.

In the Poker Player’s Alliance, the offshore companies have a voice in Washington, too. Pappas has a long history as a political operator — he began his career working for former Rep. John Shadegg before going on to political work with Dittus Communications, a well-connected Washington public relations firm that was later bought by a competitor. Pappas joined the alliance in 2007 and now spends his time criss-crossing the country, testifying on behalf of his group to lawmakers in Washington D.C.Springfield, Ill., and wherever else someone is talking about online gambling. His message: millions of Americans are already gambling over the Internet, and legalizing and regulating the practice would make it easier to protect those gamblers from criminal activity and addiction problems.

Pappas said Adelson appears to be reaching for any argument he can to try to ban online gambling, though most of them, he says, are specious. What’s more, Pappas argues, Adelson has offered visitors to his Venetian Palazzo Las Vegas the opportunity to use computers or smartphones to place bets from anywhere on the property.

The alliance has shifted its focus from direct lobbying to playing more of a pesky role through its own “grassroots” effort, Pappas said, particularly with a heavy social media presence. A December Facebook post by Adelson’s group, showing an image of a child in front of a computer and warning of the “threat to kids,” garnered more than 50 comments after the PPA urged members to fight back. The group’s spending on direct lobbying is far lighter than in previous years, down to $350,000 last year from a high of $2 million in 2007.

The alliance has also given some $363,000 in federal campaign contributions since it began operating in 2005, with the top recipient being former Rep. Barney Frank, who for years pushed to legalize online poker. Frank received $15,024 in direct contributions from the group over the years, and in the 2010 election cycle Pappas bundled contributions worth $51,200 for Frank, according to the Sunlight Foundation.

Bwin.party and its predecessor also spent $2.7 million on lobbying in Washington since 2007, hiring influential firms such as Heather Podesta and Partners. Shepherd, the Bwin.party spokesman, said that money was, “very much to geared to having political radar as opposed to having full-on lobbying.”

Over the past few years, lawmakers have introduced several bills that would create a federal system for regulating Internet gambling, but they garnered little support. In February, Sen. Dean Heller, R-Nev., said he is working on a bill that would legalize Internet poker but ban all other types of online gambling — a move he and Sen. Harry Reid, D. Nev., have pushed in previous years — telling the Las Vegas Review-Journal that “Adelson brings up some reasonable concerns.”

Adelson and his wife have given $18,800 to Heller’s campaigns since 2006, and other Sands employees have given another $27,550. Over the same period, the casino industry as a whole has given Heller nearly $640,000.

The chances of passing such a federal bill, though, will become more difficult as more states legalize their own systems of Internet gambling. To many, there’s a sense of inevitability to online gambling. Rose, of Whittier Law School, said that the wave of gambling expansion that swept the country over the past 25 years has inured politicians to the reservations they once had. “Adding one more form, like Internet poker, is not a big deal now,” he said. “Every state has entrenched political operatives who have no problem with Internet gambling. As long as they’re the ones to run it.”

Ben Wieder contributed to this report.

Nicholas Kusnetzhttp://www.publicintegrity.org/authors/nicholas-kusnetzhttp://www.publicintegrity.org/2014/04/14/14561/casinos-and-offshore-companies-battle-billions-online-gambling-push

For problem gamblers, a powerful online rush 'like any drug addict feels'

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As state lawmakers debate the prospect of legalizing Internet gambling, they’re focusing largely on whether the practice will help boost casino profits and tax revenue. Drawing less attention is the question of what more Internet gambling could mean for millions of gambling addicts like John.

A New Jersey resident, John was working at a financial firm within blocks of the World Trade Center when the planes hit the towers in September 2001, killing thousands of people, including several of his friends. In the weeks after the attack, John would spend hours at a time reading news online, trying to distract himself.

One day, as he was scrolling through headlines, a pop-up window appeared from an online casino called Bodog, offering an escape from anxiety. John had gambled in high school, betting on sports with the help of a friend’s father who was a bookie, but had dropped the habit in college and moved on.

But that day, the enticements from a new, electronic bookie seemed irresistible, and John started placing bets once again. He started small, betting five or ten dollars at a time on sports and blackjack. The stakes grew over the next several years until he was betting $1,000 on each game. Soon, he didn’t have money to fuel his habit, so he borrowed against the house he shares with his wife and three kids in northern New Jersey.

In June 2008, as he was falling deeper into debt, a client called looking for an investment. John told her about a certificate of deposit and asked her to write a check in his name, and rather than deposit it, he used the money to gamble. “I told her the CD was a five year CD, so I didn’t have to worry about this for five years,” he said. “In my twisted mind I thought of it as a loan.”

By the time the company caught him, in February 2010, John had taken nearly $2 million from a handful of clients and $75,000 from his grandparents. He eventually pleaded guilty to two counts of theft and was sentenced to six years in prison, though he was released on parole two years ago (his parole officer requested he keep a low profile, so John asked that his full name not be used).

“I knew it was wrong, but I still couldn’t wait to get that bet in,” he said. “The rush you feel is like any drug addict feels a high.”

The Internet proved to be the perfect forum for his addiction. It offered anonymity, protecting him from any shame he might feel if he were facing a dealer or other gamblers. And it was always there. “My wife used to work nights. She would go to work, the kids would go to bed, and I would gamble from eight at night till four in the morning,” he said. “I fell asleep in the chair a couple of times gambling. It was terrible.”

At the time, no state had legalized online gambling yet, but millions of Americans like John bet through Internet casinos based overseas.

Proponents of legalized gambling point to cases like John’s to say that online gambling is occurring anyway, and that regulating it can help protect addicts. New Jersey’s Internet gambling law, passed last year, requires that casinos operating betting sites contribute $250,000 annually to fund programs for gambling addicts. The law additionally requires these sites include ways for players to set limits for themselves on the amount they can bet or the length of time they can play.

Proponents also point out that billions of dollars in gambling taxes fund popular state programs like property tax relief and other financial assistance programs for seniors.

But some opponents warn that cases like John’s will become increasingly common if more states allow online betting. Last year, the American Psychiatric Association classified problem gambling, as it’s known, as an addictive disorder, and millions of Americans show signs of the disease. What’s more, gambling critics say, a body of research shows that even beyond the problems with addiction, state-sanctioned casino gambling is simply bad public policy.

In the 1990s, for example, Earl Grinols, an economist at the University of Illinois who now teaches at Baylor University, began comparing revenue brought in by casinos with societal costs, such as increased crime and shuttered small businesses, and found that the costs outweighed the benefits 3-to-1. Another troubling figure comes from a handful of studies conducted over the past twenty years in the U.S., Canada and Australia, which estimate that anywhere from a third to more than half of casino revenue comes from gambling addicts.

Relatively little research has focused on whether online betting  presents unique problems for addicts, said Keith Whyte, executive director of the National Council on Problem Gambling, an advocacy group that pushes for responsible gambling policy but does not take a position on whether states should legalize gambling. While some studies suggest that people who gamble online tend to have higher rates of addiction, Whyte said, there’s no way to tell whether that’s caused by some trait unique to betting online, or whether gambling addicts are simply more likely to place wagers on the Internet than other people.

For John, online betting combined two addictive activities — gambling and surfing the Web — each of which offered a convenient escape from his stress. His settlement includes a restitution agreement that has him making monthly payments to his grandmother — his grandfather died last year — and he must reach an agreement with his former employer, which paid back the clients he had stolen from. He works two restaurant jobs, which don’t pay enough for him to settle the claims anytime soon, he said. “I’ll be paying restitution the rest of my life.”

PokerStars is the world's largest online gambling site, but is not currently offered from the U.S.Nicholas Kusnetzhttp://www.publicintegrity.org/authors/nicholas-kusnetzhttp://www.publicintegrity.org/2014/04/14/14562/problem-gamblers-powerful-online-rush-any-drug-addict-feels

American-style health care system pushed in Canada

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VANCOUVER, British Columbia — During the year leading up to the 2008 presidential primaries, my insurance industry colleagues and I were working hard to influence the debate on health care reform.

Our number one objective: make Americans so afraid of “heading down the slippery slope toward socialism” that no candidate would even consider supporting a Canadian-style, single-payer health care system.

Leading the scare campaign behind the scenes was the trade association, America’s Health Insurance Plans. With help from a right-wing Canadian outfit called the Fraser Institute, which has received funding from the Koch brothers and other American donors, AHIP put together a three-ring binder of talking points for insurance company executives  to use in speeches and media interviews.

The contribution from the Fraser Institute, a long-time advocate of privatizing the Canadian system, was a handful of selective statistics and anecdotes designed to create a negative perception of single-payer health care.

At the time, I had done no research of my own about the Canadian system. I hate to admit it, but I had outsourced my thinking to the Fraser Institute. I also hate to admit that I was willing to do that out of self-interest. If the U.S. adopted a single-payer system, I would be out of a job.

With that as background, it’s hard for even me to believe that, nearly seven years later, I’m on a cross-country tour of Canada warning our neighbors to the north about the dangers of “heading down the slippery slope” toward American-style health care.

The reality is that Canadians spend far less per capita on health care then we do in the U.S., yet they have better health outcomes overall. And they have achieved universal coverage.

By contrast, while Obamacare is making it possible for many people to enroll in affordable health care plans for the first time, it will still leave several million of us in the ranks of the uninsured.

What I’m doing on this tour, organized by the Canadian Health Coalition, is disabusing folks of the notion that more private involvement in their health care system will necessarily lead to better quality of care and lower prices. That, essentially, is the promise being held out by the country’s conservative Prime Minister, Stephen Harper.

Harper has frustrated supporters of the current system by refusing to renew a 10-year compact between the federal government in Ottawa and the 13 provincial governments, which are largely responsible for administering their own health care programs.

In that sense, the Canadian system is more like our Medicaid program, which gives the states broad latitude to determine benefits and eligibility, than our traditional Medicare program, which is entirely federally funded and operated.

One of the key provisions of that compact — known as the Health Accord — was a commitment that the federal government would increase its financial support to the provinces by 6 percent per year. The Health Accord also stipulates that the federal dollars be allocated based on both population and need.

In other words, over the past decade, the poorer provinces have been getting a proportionally larger check from Ottawa than the richer provinces.

What Harper is proposing as an alternative is a scheme in which starting in 2017 the growth in the annual federal payment to the provinces would be pegged to the growth in the country’s gross domestic product, usually considerably less than 6 percent, but no less than 3 percent.

Harper further proposes to allocate the federal money only on the basis of population and population growth.  Under this scenario, fast-growing provinces like oil-rich Alberta would fare much better than the relatively small, slow-growing Atlantic provinces of Nova Scotia, Newfoundland and New Brunswick.

Andre Picard, a columnist for The Globe and Mail, Canada’s national newspaper, last week did the math in a way the Harper government hadn’t, and it clearly showed just how starkly the change would affect the fortunes of the provinces.

Alberta would be the big winner, getting more than 27 percent more than it does today. Newfoundland, on the other hand, would get zip.

Patient advocates, who want the Accord not only renewed but expanded to include pharmacy and long-term care benefits, fear that Harper’s proposal would quickly lead to a much more inequitable system because the smaller provinces would likely have no alternative but to cut their health care budgets. Both access to timely care and the quality of care provided would be affected.

And like their counterparts in the U.S. and elsewhere, Canadian conservatives believe as an article of faith that the “free market” and “choice and competition” can lead to cost-saving efficiencies.

I tell audiences that while this sounds good, it actually hasn’t worked out that way south of their border.

I’ve described how the endless quest to satisfy shareholders’ profit expectations created a situation in which insurance companies refused to sell coverage to people who’ve been sick in the past. And I’ve told them about how the cost of a stay in a U.S. hospital has increased far faster than even medical inflation because every hospital in town wants to have the latest bells and whistles to attract paying customers.

Like every country with an aging population, Canada will have to implement some changes to make sure care continues to be accessible and affordable, but the U.S. model is not the example Ottawa and the provinces should follow.

Canadian Prime Minister Stephen Harper listens as President Barack Obama speaks in Toluca, Mexico, February 2014.Wendell Potterhttp://www.publicintegrity.org/authors/wendell-potterhttp://www.publicintegrity.org/2014/04/14/14568/american-style-health-care-system-pushed-canada

Center wins first Pulitzer Prize

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A landmark Center for Public Integrity investigation detailing controversial denials of black lung benefits to coal miners has been honored with a Pulitzer Prize.

The winning series, “Breathless and Burdened: Dying from Black Lung, Buried by Law and Medicine,” was a year-long investigation by Center reporter Chris Hamby illuminating how doctors and lawyers working at the behest of the coal industry helped defeat benefit claims of coal miners who were sick and dying of black lung disease.

One part of the three-part, 25,000-word series was produced in partnership with the ABC News Investigative Unit, whose work included an in-depth Nightline segment. The series won in the category of Investigative Reporting.

The Pulitzers, administered by Columbia University, are widely considered the most prestigious prizes in journalism. The award, announced this afternoon, marks a first for the Center for Public Integrity.

“The Center for Public Integrity could not be prouder of this incredible honor — our first Pulitzer Prize as one of the leading nonprofit, digital, investigative news organizations,” said Bill Buzenberg, executive director. “I want to pay a special tribute to investigative reporter Chris Hamby for his non-stop dedication to the black lung project over the last year. Without his incredible efforts on behalf of sick and dying coal mine workers, we would not have won this singular prize. One result of his work is that miners with black lung will finally be getting the financial benefits they deserve.”

Hamby reviewed thousands of pages of previously hidden legal filings and created original databases. His reporting revealed that industry-hired lawyers withheld key evidence in miners’ cases, and doctors at the John Hopkins Medical Institutions consistently denied the existence of advanced black lung on X-rays – even when other experts saw evidence of the disease. Hamby traveled to Appalachian coal country, interviewing miners sick from black lung, and survivors of those killed by the lung disease.

“This was more than just a project to me," Hamby said. "I spent a lot of time in West Virginia with people who were slowly suffocating to death and they had been essentially screwed by a system that was completely stacked against them and they had no recourse. These are some of the most voiceless people in the country."

Hamby, 28, is a Nashville native and holds a masters degree from the University of Missouri and a bachelors from the University of Richmond. He knew he wanted to be a reporter from the age of 16. His first full-time journalism job was with the Center, where he was an intern in 2010.

So what's next?

"I want to continue to tell stories that give power and say to the voiceless and hold the powerful entities, be they public or private, responsible," he said.

Following the reports, Johns Hopkins suspended its black lung program, U.S. senators began crafting reform legislation, and members of Congress asked for a federal investigation. In addition, the Department of Labor announced procedural changes in the federal benefits system that deals with black lung claims, changes that could help miners navigate the complex benefits system.

Breathless and Burdened was edited by Ronnie Greene and Jim Morris, and included interactive graphics created by Chris Zubak-Skees, with digital production by Sarah Whitmire.

"This is a richly-deserved honor for one of the most meaningful pieces of journalism I have ever seen," said Ronnie Greene, the project's editor.

"Chris built this story entirely from the ground up, beginning with reporting trips to Appalachian coal country, where he heard miners talking about a disease that was killing them, and the system that was defeating them a second time. He followed that trail to some surprising findings about the forces pushing back. It's the best we can do as journalists."

Also nominated as finalists in this category were Megan Twohey of Reuters for her exposure of an underground Internet marketplace where parents could bypass social welfare regulations and get rid of children they had adopted overseas but no longer wanted, the stories triggering governmental action to curb the practice; and Cynthia Hubert and Phillip Reese of The Sacramento Bee for their probe of a Las Vegas mental hospital that used commercial buses to "dump'' more than 1,500 psychiatric patients in 48 states over five years, reporting that brought an end to the practice and the firing of hospital employees.

The Pulitzer Prize is just the latest in a string of honors for Breathless and Burdened, and the Center’s body of 2013 work.

“Breathless and Burdened” also earned the Edgar A. Poe Award for national reporting from the White House Correspondents Association and the Goldsmith Prize for Investigative Reporting from Harvard’s Kennedy School of Government, among other national honors.

Secrecy for Sale” was honored by Investigators Reporters and Editors and also received the business/economics reporting prize from Scripps Howard.

In addition, the Center was presented on Friday with a George Polk Award for its “After the Meltdown” series, which revealed that many of the major players responsible for the 2008 financial crisis have faced few consequences for their actions.

Other Pulitzer Prize winners for Journalism include the Washington Post and The Guardian for their revelations of widespread secret surveillance by the National Security Agency.

Congratulations to all of this year's Pulitzer Prize winners.

From left: 'Breathless and Burdened' reporter Chris Hamby, Executive Director Bill Buzenberg and Project Editor Ronnie Greene celebrate moments after reading the 2014 Pulitzer announcement.The Center for Public Integrityhttp://www.publicintegrity.org/authors/center-public-integrityhttp://www.publicintegrity.org/2014/04/14/14593/center-wins-first-pulitzer-prize

Super PAC leaders score perks from political donations

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The People’s Majority super PAC advertises itself with lofty goals.

“We are the only super PAC dedicated to the research, development and enhancement of motivating conservatives to the polls,” it proclaims on its website. “No dinners, no pictures with VIPs, no shirts or yard signs here. People's Majority uses every penny of your contribution to identify and motivate low-turnout voters on Election Day.”

Well, not every penny. The super PAC, which registered  with the Federal Election Commission with the express purpose of advocating for and against political candidates, spent nearly ten grand on meals alone last year, including eye-popping bills at restaurants including Sorellina in Boston, Manny’s Steakhouse in Minneapolis, Henri in Chicago and Michael’s on the Hill in Vermont.

And even though it is an “independent expenditure-only committee” — the formal name for a super PAC — it didn’t spend a cent on independent expenditures, the activities that help elect or defeat candidates, such as political advertisements and targeted get-out-the-vote efforts.

People’s Majority isn’t alone.

Fewer than one in seven of the roughly 300 super PACs and “hybrid” PACs that spent money in 2013 put funds toward calling for the election or defeat of a federal candidate, according to the Center for Public Integrity’s analysis of recent FEC filings.

Given that 2013 was not a regular election year, it's not surprising that super PACs weren't out buying ads. But critics say the groups could have used 2013 to stockpile cash ahead of midterm elections this November. Instead, they collectively burned through more than half of the $143 million they raised last year. Nearly two-thirds of super PACs and hybrid PACs spent more than they saved.

Many of these committees operated as piggy banks for golf expenses and steakhouse soirees or vehicles for filling the bank accounts of consulting firms and super PAC executives. Others have grown so big and sophisticated that they operate more like political party committees than independent outfits.

Among the Center for Public Integrity’s findings about super PAC spending in 2013:

  • Less than a sixth of the $109 million spent by super PACs and hybrid PACs — which make independent expenditures but also have separate accounts for making candidate contributions — went to independent efforts to support or oppose federal candidates.
  • Almost half of the groups’ itemized reported expenses* — $36 million — went toward overhead costs such as salaries, payments to consultants and marketing. This doesn’t include spending on fundraising, events, research, data, list acquisitions, polling, voter outreach and mailings.
  • Political entrepreneurs cashed in, despite 2013 being a non-election year. At least five super PACs and hybrid PACs made payments to firms employing their leaders. What’s more, the top 10 groups paid by super PACs and hybrid PACs for services together collected more than $22 million.

Leaders of several of the super PACs say their committees’ spending is justified: Fundraising or advocacy work is often done by people whose salaries and consulting fees are considered overhead expenses, and travel is required to help accomplish their goals.

But some of the super PACs’ donors expressed surprise their money wasn’t necessarily paying for efforts to elect the kinds of candidates they support.

“I wouldn’t want to give money to anybody that’s not doing what they claim to,” Texas resident Abel Balboa said after hearing one of the hybrid PACs he donated to, the Tea Party Leadership Fund,  paid nearly $200,000 to firms run by the group’s leaders. “I give on impulse out of my own heart, thinking I’m doing good.”

That’s no surprise to Rick Hasen, a law and political science professor at University of California, Irvine, who publishes the Election Law Blog.

“Super PACs are not just about influencing elections — they are a source of income for political consultants,” Hasen said.

Overhead

Super PACs today play major roles in U.S. politics, but they’re a relatively new phenomenon.

The U.S. Supreme Court’s Citizens United v. FEC decision in 2010 allowed unions and corporations to spend as much as they want to advocate for or against those running for office, so long as they don’t coordinate their spending with candidates or their committees.

Later that year, a lower court ruled in SpeechNow.org v. FEC that independent political organizations could accept unlimited donations from individuals as well as corporations and unions, effectively giving birth to super PACs. Ever since, super PACs have spent hundreds of millions of dollars on elections.

People’s Majority in D.C. spent over a fifth of its more than $121,000 in overall expenses on food, drink and travel costs — more than 10 times what was normal in 2013 for the 301 super PACs and hybrid PACs examined.

Though it didn’t report compensation costs, two-thirds of its expenses went to consultants. The average super PAC spent about a quarter of its cash on both consultants and compensation during 2013.

Paul Hatch, a founder of the super PAC, said most of the consulting fees were for the group’s executive director who spent his time researching better ways to motivate voters to get to the polls and using technology to do that. Hatch said the executive director also had meetings with donors and “spent a lot of time with other people in the industry … vetting ways of using handheld devices, doing online advertising.” It raised more than $65,000, according to FEC records, and was left with less than $8,000 at the end of 2013.

American Bridge 21st Century, which supports Democrats and was one of the highest-spending super PACs last year, once slammed Sen. Marco Rubio, R-Fla., in an opposition research report, citing criticism about his “lavish” spending.

Yet it’s the super PAC’s own spending that may appear lavish. The super PAC — formed by conservative-turned-liberal pundit and writer David Brock — spent nearly $27,000 on food and drinks last year.

The super PAC’s meal costs, reported to the FEC, include hefty bills at such fine dining establishments as Obelisk in Washington, D.C., and Tocqueville in New York City.

A research-centered super PAC, American Bridge shelled out more than $6,800 on tickets to attend events, conferences and workshops around the country and more than $148,000 on travel costs such as airfare and lodging.

It spent $4 million on compensation, or 63 percent of its total expenses — four times more than the percentage for such costs for all groups examined. Its former president, Rodell Mollineau, who left the group recently, earned $196,000 in salary and mileage reimbursement costs.

It also gave $146,000 to Brock, its founder, and another $19,000 to Media Matters for America, Brock’s nonprofit that tracks, analyzes and corrects “conservative misinformation.” Media Matters paid Brock more than $270,000 in 2012, according to its most recent tax return.

American Bridge 21st Century also spent more than $1 million on fundraising but nothing to directly oppose or support candidates.

The super PAC, spokeswoman Gwen Rocco said, “plays a unique, innovative role” holding Republican candidates and leaders accountable.

"By employing research staff and a team of trackers based in states around the country, we record and catalog Republicans' public statements, media appearances, voting records and more,” Rocco wrote in an email, adding that the super PAC employs more than 80 people, including half who are “trackers” that helped document more than 4,400 events during the current election cycle so far.

The super PAC’s expenses don’t bother Margaret Kavounas, a San Francisco retiree who donated $1,000 to the group last year after she said Brock personally asked her.

“You can’t just sit in Washington and know what’s going on,” she said.

At conservative super PAC American Crossroads, President Steven Law, who reportedly prides himself on his group’s low overhead, took home more than $94,000 in compensation and other reimbursements in 2013 from the super PAC. He also earned $538,000 in 2012 as president of the group’s affiliated social-welfare nonprofit, Crossroads Grassroots Policy Strategies, according to its most recent tax return.

American Crossroads, co-founded by Republican operative Karl Rove, is among the highest-spending super PACs. The percentage of its overall expenses for rent and event costs was more than six times that of all groups’ examined: It forked over more than $140,000 to rent offices and more than $130,000 for event costs, mainly catering and renting facilities.

The group also reported one of the single highest dining bills of any super PAC: a $6,346 tab at J&G Steakhouse in Washington, D.C.

"Our event, hospitality and catering expenses are related to fundraising activity,” Jordan Wiggins, a political assistant for the group, wrote in an email, adding that he expects “very low” administrative costs for the current election cycle. American Crossroads’ fundraising costs made up a smaller percentage of its expenses compared to other groups.

Restore our Republic PAC, a super PAC formed in March 2013, solicits donations on its website, saying, “When you make a donation to Restore our Republic, you can be sure your money will support principled conservatives that will not waver when they get to Washington.”

Donors’ money also supported a $5,402 bill at Chops Specialty Meats in Broussard, La., for food at an alligator hunt fundraiser. “It’s an expensive outing to put together,” said former U.S. Rep. Jeff Landry, the group’s leader who is now running for Louisiana attorney general, adding that about 150 people attended. “That bill covered three days of food and drinks [so] it’s really not that high.”

A comparatively small super PAC, 1911 United, didn’t spend money to advocate for or against candidates last year. After all, its stated mission is “to assist in the re-election efforts of … President Barack Obama.”

It did, however, buy more than $3,000 worth of toy airplanes, t-shirts, art supplies and American flags. Its travel- and transportation-related costs represented 40 percent of its more than $20,000 in overall expenses — more than 25 times the percentage spent on such costs by all groups examined.

The money went to 1911 United’s bus tour to Pennsylvania, Ohio, Illinois, Indiana, Mississippi and Louisiana to raise awareness about youth gun violence, said Sinclair Skinner, the group’s treasurer. One event featured plane rides for young people, most of whom had never set foot in an airport, said Skinner, a pilot. The super PAC gave away flags and toy planes at the event.

“We’ve always really focused on leveraging the mind and time of the people, not so much the money of the people,” Skinner said.

Jan PAC is a super PAC formed by Arizona Gov. Jan Brewer, a Republican, to oppose the Obama administration’s signature health care law and illegal immigration. Brewer drew scrutiny a few years ago for frequent travel, and it appears the trips have continued. Her super PAC spent almost $21,000, or more than 14 percent of its expenses, on travel — much higher than the 1.3 percent average for all groups. Brewer and another Jan PAC official didn’t respond to calls and emails.

One of the biggest super PAC spenders, Americans for Responsible Solutions PAC, was formed in 2013 by former congresswoman Gabby Giffords and her husband, Mark Kelly, a retired U.S. Navy captain, two years after her near-fatal shooting. The super PAC, which advocates for stronger gun control laws, gave its affiliated social-welfare nonprofit, also called Americans for Responsible Solutions, more than $186,000 for online advocacy work.

Americans for Responsible Solutions PAC also spent more than $200,000 on travel and transportation related costs — making up a higher percentage of its expenses than that of super PACs and hybrid PACs overall. The expenses include $8,962, $6,903 and $809 for hotels in LondonParis and Honolulu, respectively.

A super PAC spokesman said events were held for American citizens living abroad who care about reducing gun violence and “Giffords does not travel alone and in some cases requires assistance, which incurs additional costs.”

Self-dealing?

Some of the group’s leaders may not have treated themselves to fancy meals on the donors’ dime, but they arguably enriched themselves through payments to firms they have ties with.

For instance, the Tea Party Leadership Fund, which spent more than any other hybrid PAC last year, paid $40,500 for consulting and data licensing to Glengary Inc. — a marketing consulting firm owned by Todd Cefaratti, an organizer for the hybrid PAC.

Cefaratti previously ran a website, JoinTheTeaParty.us, which drew questions from tea party supporters in 2010 for not spending any of its donations for part of that year to directly support tea party candidates.

Dan Backer, the Tea Party Leadership Fund’s treasurer, also has a firm, DB Capitol Strategies, that was paid more than $150,000 by the hybrid PAC last year for legal costs.

Backer is also the registered agent of American Action News and the Coolidge-Reagan Foundation, according to Virginia business registration records. Those two entities, which are listed at the same address in FEC documents as DB Capitol Strategies, each received $20,000 for “media” and “charitable contributions,” respectively, from the Tea Party Leadership Fund.

Backer said both DB Capitol Strategies and Glengary have a lot of other clients.

“With the growing complexities of compliance and increased and often targeted scrutiny of administration officials, candidates for public office and organizations of all varieties … are in need of extensive legal services to provide oversight and compliance, as well as representation,” he wrote in an email about his firm.

Among its services to the hybrid PAC: requesting advisory opinions from the FEC and helping with legal advice and litigation. Backer said the Coolidge-Reagan Foundation works to challenge “unconstitutional restraints on free speech” — an important cause for him.

Glengary, which is one of “many different vendors” hired by the hybrid PAC, provided data management services, Backer said.

At least one Tea Party Leadership Fund donor was surprised to learn his money went toward such expenses.

“Obviously, that doesn’t sit well with anybody,” said Herman Ahrens, a retired Air Force colonel in Arkansas who donated $235 to the Tea Party Leadership Fund last year.

He recalled contributing because he saw an ad he liked about the group, and he generally supports the tea party movement challenging Republicans who are “afraid they’ll make somebody mad.”

Since super PACs could theoretically provide donors with economies of scale and lower administrative costs, many groups’ overhead expenses in 2013 seem high, said David Magleby, a political science professor at Brigham Young University who has researched campaign finance issues.

“If I was a donor, I think I’d say ‘I’d rather find another [group] or charity’ ” to give money to, Magleby said.

More than $76,000 of conservative American Principles Fund’s more than $356,000 in expenses last year went to Frank N. Tsamoutales LLC for management and strategy consulting. The lobbying firm recently promoted Sarah Huckabee Sanders, one of the three leaders listed on American Principles Fund’s website, to vice president.

Huckabee Sanders, the daughter of former Arkansas Gov. Mike Huckabee, is a paid executive director of the super PAC “compensated through the consulting firm she works for,” according to a statement from Frank Cannon, a board member of the group.

Restore America’s Voice PAC doled out more than $146,000 in payments to American Caging, which processes donations, run by its treasurer, Maureen Otis. The super PAC also paid its chairman, Ken Hoagland, a $94,000 salary on top of the $166,170 he was paid in 2012 from its affiliated social-welfare nonprofit, Restore America’s Voice Foundation, according to its most recent tax return.

Hoagland said his compensation from the super PAC has been “reduced to $84,000 as 2013 FEC reports will soon reflect,” adding that his work for the groups includes writing TV ads, appearing on public affairs shows and working with other advocacy groups and members of Congress.

Hoagland added that costs for income tax, retirement, office and travel come out of his compensation, which is on a consulting basis. The donation processing services were cheaper than others’ and included extra services such as data processing, he said.

Advancing Freedom Action Network, whose treasurer is Kevin DeWine, spent $40,000, or most of its roughly $58,000 in expenses, on fundraising to a firm called Main Street Solutions, LLC — whose incorporator and registered agent is DeWine, according to Ohio state business registration recordsDeWine, a former state legislator and former chairman of the Ohio Republican Party, declined to comment.

Put Alaska First, a super PAC that aims to back “candidates that place Alaska’s interests ahead of partisanship,” sent nearly a quarter of its roughly $280,000 in total expenses to Lottsfeldt Strategies, owned by the super PAC’s senior advisor, Jim Lottsfeldt. Almost half of the payments were “pass-through” costs not retained by the firm, Lottsfeldt said.

“Put Alaska First had just started …. Like with a business, start-up costs versus revenues [early on] always look lopsided,” he wrote in an email, noting that fees to his firm this quarter add up to less than one percent of the half-million dollars the group raised.

Political entrepreneurs

More than half of the $59 million the 301 super PACs and hybrid PACS spent on costs not related directly related to promoting or attacking political candidates went to 50 groups.

The biggest beneficiary of non-political expenses was Rochester, N.Y.-based Paychex, which received more than $3 million from liberal super PACs mainly for payroll-related services.

Since most of the money collected was passed on to pay taxes or salaries, Paychex kept less than $20,000 for its payroll-related services, said Laura Saxby Lynch, a spokeswoman for the company.

The second-biggest recipient of non-political expenses was Akron, Ohio-based InfoCision. The telemarketing company drew fire in recent years for labor complaints and for reportedly keeping most of the money it raised for several major charities, including the American Cancer Society.

Infocision officials did not return calls and emails.

A couple of fundraisers, Strategic Fundraising and AB Data, hired by conservative and liberal groups, respectively, were the next largest recipients. They were paid more than $4 million combined. A spokesman for Strategic Fundraising said the group specializes in raising money from small donors.

As to the independent expenditures themselves, more than 140 people and groups benefited from the spending, with media buyers ranking among the top.

Three media buyers, Waterfront Strategies, SKDKnickerbocker, and Smart Media Group, collected a combined $8 million — almost half of the $17 million in independent expenditures examined. Media buyers keep only a fraction of the expenses reported: They typically receive a commission of less than 15 percent of the amount billed.

AB Data and Smart Media Group didn’t respond to calls and emails requesting comment.

“We work with clients to develop a compelling message and then deliver it to the right audience. We are very proud of the advertising work we did [including ads for candidates who] will help millions of families,” said SKDKnickerbocker spokesman Doug Thornell, adding that its commission rate is “significantly” less than 15 percent.

J. Toscano, a partner with GMMB, echoed the sentiment: “The last time an ad agency got 15 percent commission, Don and Betty Draper were still unhappily married.”

Toscano said the precise rates in contracts with clients are confidential and the commission pays for, among other things, negotiating prices with media outlets, placing and creating ads, and providing consulting services: “It’s how we pay employee salaries, health insurance, taxes, rent and keep the lights on.”

It’s also part of a thriving economy that donors support through their political contributions — whether they intended to or not.

Data reporter Ben Wieder contributed to this report.

*The expenses analyzed excluded non-federal costs, transfers, refunds and in-kind expenses. Two super PACs that act as “middle men” transferring donations from individuals to political committees were also omitted.

Julie Patelhttp://www.publicintegrity.org/authors/julie-patelhttp://www.publicintegrity.org/2014/04/15/14537/super-pac-leaders-score-perks-political-donations

How Chinese offshore data became interactive

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It's easy to miss the complexity behind apparently simple things. Take the interactive graphic I helped build for the International Consortium of Investigative Journalists’ China Leaks story. It's not an especially complex display, or so it seems. It shows who in China's elite had connections to offshore companies, and tries to explain why these people matter. But behind this simple display was months of concerted work by journalists in at least ten countries.

It began with research. In July of last year, reporters from around the world began combing through a massive leaked data set, looking for connections to powerful Chinese figures. Two databases of offshore companies were carefully packaged into virtualized computers, then shared with reporters in Hong Kong and Taiwan.

To communicate, ICIJ’s partners used something of a private cloud, including a web-based data search tool and open source collaboration software, including a Vanilla forum and OwnCloud file sharing. Bit by bit, they pieced together profiles of the individuals they wanted to feature — among these, Wen Jiabao's son, Xi Jinping's brother-in-law and Li Peng's daughter.

Security was paramount, since the Chinese government routinely censors critical coverage and monitors the journalists who produce it. Connections were encrypted using Virtual Private Networks and the HTTPS protocol, and important information was kept out of emails, which could be easily tracked. Tor, a global system which obscures the origin of web traffic, was considered, but it is frequently blocked in China.

Getting it together

Once the list was compiled, we faced the problem of illustrating these Chinese elite, many of whom were private figures not accustomed to a media spotlight and who did not appear in photos we could use. We trimmed the background on the photos we had, while ICIJ worked with illustrator Jesús Pérez in Santiago, Chile, to create portraits of the rest.

But getting the illustrations right was its own task. Partners and project managers exchanged rounds of feedback between Washington, Santiago, Madrid and Hong Kong. One concern was that the illustrations might show the Chinese elite in a way that might bias a reader against them. Pérez tweaked the illustrations to show them in a neutral light.

The final list contained a daunting amount of information, which could include a person's name, a short description, a position on a list of the richest Chinese, net worth, a long description of up to 100 words, relations to other power players, and between one to 50 offshore companies that the person was linked to - with the name of the company, the relationship to the person and the date of incorporation.

Just organizing all this information in a structured way was a major undertaking, as was fact-checking it all.

Originally, many types of data were collated into just two Excel sheets. To create connections between people and company records without duplicating records for each, we created new sheets for each type of data and used the names of people and companies to link these together. This was not easy to communicate to a team that was still editing the spreadsheets, and sometimes resulted in a broken interactive. If we were to do this again, that would be a process we’d think through more carefully.

Designing for infinite widths

On the graphic itself, my colleagues at ICIJ insisted that every piece of information be displayed, and indeed, all of it was important. But how could I fit it all into an interactive graphic that could be embedded in a story? And how was I going to re-work that display into the tight confines of an iPad or iPhone screen? 

Initially, each profile featured a photo of that member of the elite in the center, with connections drawn to either side, but this didn't scale neatly or leave a natural spot to place text. After sketching designs on paper, and creating concepts in Adobe Illustrator, I opted instead for a structured design with neatly drawn connections between players along the left side — in the style of a schematic diagram. This meant that the interactive expanded and contracted to fit different screen sizes and page widths without the connections obscuring other information.

By the end of the project, I had written nearly 2,000 lines of JavaScript and CSS to draw the graphic, make it scalable and to provide interactivity.

Each level of information fit into a tier, and to divide the tiers I used shades of blue. I hoped the blue would evoke the overseas nature of the offshore world. This was not without controversy. One person commented that the blue was "too dense," which made the graphic "feel heavy." At a meeting shortly before launch, those involved asked, "Could you make it red?" 

I replied that I wasn't sure, that black text and lines on a red background might be difficult to read. I tried a few shades of red, but remaking the design with a red background that worked seemed impossible in the time before launch.

Of course, most of our partners working with this material opted for web page designs featuring white background with red highlights, because the project was about China.

Found in translation

In order to distribute the interactive to ICIJ’s global media partners, we had to translate it from English into five additional languages. Luckily, the interactive loaded most of the text it displayed from external spreadsheets, which could be opened by programs like to Microsoft Excel. To translate it, we copied those into Google Spreadsheets, which let us collaborate on these easily, then ICIJ's partners rewrote the English versions into Spanish, German, French, Korean and simplified Chinese.

The biggest challenge was keeping six different spreadsheets — one for each language — in sync with every change, and with testing every single update to ensure it worked and displayed well within the graphic's many sizes. Thankfully, ICIJ’s Mar Cabra coordinated much of this. The translations written by ICIJ's partners were published on a preview version of the interactive, which was reviewed by that partner. This usually resulted in the translator making more tweaks. Rinse. Repeat.

In a translation effort of this size, I expected to make several language-specific modifications to the software, but by-and-large, the code worked without many. There was a time when this kind of translation would have been difficult, as coders struggled with a computer infrastructure built by and for English-speakers, but in 2014, with the right tools and design, much of it just works. This was thanks to the set of international characters that now come standard, the relative simplicity of the interactive and the way the software loaded data from external files.

One culture-specific change I didn't anticipate was how text labels along the left side of the app were rotated. In English and European languages, I rotated the whole label 45 degrees. But our Korean partners told us that in their language, this was not the most natural approach. Korean and Chinese languages were traditionally written vertically, from bottom to top. So I changed the code to render labels that way. I didn't know this when I started, but with media partners in ten countries looking over my work, I didn't have to.

By January 21, the interactive graphic and the story were ready for publication. Our work was splashed across partner sites seemingly everywhere, including Le Monde in France, Le Matin in Switzerland, Le Soir in Belgium, the CBC in Canada, Süddeutsche and NDR (public television) in Germany, Trouw in the Netherlands, the Korea Center for Investigative Journalism (KCIJ) in Korea and El País in Spain.

My favorite use was from KCIJ, which filmed a 28-minute mini-documentary exploring the possible social and financial importance of the leak, and using the graphic heavily to introduce video segments and tell the story.

Most importantly, hundreds of thousands of readers from those countries and others, including China, were able to examine the international business interests of China's ruling class in unprecedented detail.

Chris Zubak-Skeeshttp://www.publicintegrity.org/authors/chris-zubak-skeeshttp://www.publicintegrity.org/2014/04/16/14419/how-chinese-offshore-data-became-interactive

The Center for Public Integrity's response to ABC News

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On April 14, 2014, Chris Hamby of the Center for Public Integrity was awarded the Pulitzer Prize for Investigative Reporting for his investigation detailing controversial denials of black lung benefits to coal miners. On April 15, ABC News President Ben Sherwood sent a letter to the Center's Executive Director William Buzenberg calling on the Center to ask the Pulitzer committee to add the names of two ABC journalists to the award. Sherwood's letter has been shared with members of the press and the Center's board. 

This is our response to Mr. Sherwood. We have also written to the Pulitzer Prizes administrator, Professor Sig Gissler.

Dear Ben,

Thank you for your letter of last night regarding the black lung investigation, which was also sent to our full Board of Directors and the news media. I have to assume this is all part of an unfortunate PR campaign by ABC News.

It is curious that you repeatedly reference dictionary definitions of “integrity” in an apparent attempt to play off the Center’s name and imply hypocrisy. In fact, it is the behavior of ABC that should give rise to questions about honesty and moral uprightness.

Though you have framed the issue as the Center seeking to diminish ABC’s contributions, the reality is quite the opposite: ABC is seeking to take credit for a large body of work that it did not produce. These are the facts, as confirmed under the very strict Pulitzer Prize rules by the Pulitzer Administrator Sig Gissler again just yesterday:

Bill: I've reviewed the entry again. It is overwhelmingly Hamby's work and was entered by the center in conformance with our rules on limited partnerships (SEE BELOW). The rules expressly state that the eligible entity must do the preponderance of the work; specific elements produced by the ineligible entity (such as ABC video) cannot be entered; and if there is a prize it will go ONLY to the eligible organization that submitted the work.  

So, based on the entry, the prize to the Hamby alone is warranted.  
Best, SG 

The truth is that ABC did not join the investigation until part-way through, it focused on only one part of a multi-part series, and its reporting was sporadic and almost entirely geared toward the needs of television, not original content for the print series.

We value these sorts of partnerships and were happy to work with ABC. But let’s be honest about the contributions of each party. Chris Hamby lived and breathed this investigation almost exclusively for a year. ABC dropped in periodically over the course of a few months between work on many other stories.

Emails and drafts leading up to the airdate of ABC’s “Nightline” segment show that ABC depended to a remarkable degree on Chris’ access to sources, documents and data and his expertise on complex issues — all of which repeatedly saved ABC from making embarrassing factual errors in broadcast segments and online stories.

The Center is prepared to show in great detail how little ABC’s Brian Ross and Matt Mosk understood about even the most fundamental concepts and key facts and how they repeatedly turned to Chris to advise them or, in some instances, to do their work for them.

Draft scripts leading up to the airdate of the “Nightline” segment show serious factual inaccuracies by ABC and a continued lack of understanding of basic, key concepts. If not for Chris’ intervention, upon finally being shown the scripts, ABC would have found itself facing withering, legitimate criticism.

ABC has never acknowledged its extraordinary reliance on Chris for even the most basic information about this highly technical and complex story. Chris, of course, has never complained to ABC about this, despite repeated statements by ABC on air, online and in press releases that erroneously made it appear as if ABC was the driving force behind this project.

It is incredibly insulting for ABC to not only fail to acknowledge Chris’ indispensable work solely for ABC’s benefit, but to go even further and suggest that the opposite is true — that the Center is downplaying ABC’s work. A mountain of evidence shows this is not true.

I urge you to go to your reporters and engage in serious self-examination. I think your honest appraisal can reach no conclusion aside from this: At every step of the way, ABC turned to Chris for his longstanding connections to key sources in the coal mining community, his expertise in complex legal and medical issues and his vast trove of evidence, painstakingly gathered over a long period of time.

Now that the series has won high praise, however, ABC seems to have changed its tune. Suddenly, both parties contributed equally, in ABC’s telling.

In other words, I agree with your proposal: Let’s show some integrity.

The partnership did not begin on October 31, 2012.

Regardless of when former Center executive editor Ellen Weiss contacted ABC about the possibility of a partnership, ABC did not commit to doing a story — nor did it begin reporting in earnest — until much later. As I mentioned in my previous note, it was not until after an email from Chris to Matt detailing his experience visiting a coal-company doctor that Matt responded in a March 8, 2013, email, “Brian wants to do this.” Even after this, there were long stretches of time in which ABC did not participate in the investigation because it was pursuing other stories.

The idea to investigate the role of doctors was not first proposed by ABC.

ABC’s involvement in the months following the October 2012 contact involved Matt attending occasional background lunches set up by Chris with sources Chris already had spoken with repeatedly. Indeed, the January 13, 2013, email you quote is after just such a meeting. Matt’s email cites the former administrative law judge’s suspicion of doctors who regularly appeared on behalf of coal companies. This may have been novel to Matt at the time, but it certainly was not to Chris. He already had spoken with this former judge and numerous other sources about the role doctors played in the system and the difficulty in addressing their opinions, and he already was investigating specific doctors.

This was not, as you put it, a “new way forward” proposed by ABC, and Chris’ investigation was not limited merely to the involvement of lawyers. By this point, he already had looked into a large number of cases, which had led him to look more closely at specific doctors.

The purported impetus for this — “a number of leads were not panning out” — should really be stated this way: A number of leads were not panning out for television. The key problem for ABC was that the family members of Gary Fox did not want to appear on camera, making the legal story a challenge from a visual perspective. Chris, however, already had interviewed the members of the Fox family and periodically communicated with them.

ABC acts as if they discovered Dr. Paul Wheeler of Johns Hopkins and obtained a key interview that the Center had tried unsuccessfully to arrange — both contentions that are completely false.

Chris identified Dr. Wheeler of Johns Hopkins as a key figure by examining thousands of legal decisions and speaking with countless sources. He first noted the potential newsworthiness of the involvement of Johns Hopkins. And he alone built the database that proved crucial evidence regarding Dr. Wheeler’s readings.

After Chris and Matt discussed Dr. Wheeler, Matt suggested that ABC approach Johns Hopkins. Chris agreed because of the greater level of planning needed for a television interview, rather than act as a middle man as technical arrangements were made.

Chris had not previously approached Johns Hopkins. But for his accommodation of ABC’s particular needs, he would have. ABC seems to assume that this interview never would have happened without its involvement. That is simply not true.

Chris spent at least five hours preparing Brian for the TV interview, providing him with documents, data and medical literature and coaching him on medical technicalities.

Most of the reporting that ABC did was repetitive or was undertaken solely for television purposes — and was not used in the print stories.

You write that Brian and Matt “began to do significant reporting on the medical issue.” Aside from the interview with Dr. Wheeler (discussed above), everything you mention either was simply re-interviewing on camera people who Chris already had interviewed, or gathering pieces that ABC felt it needed for television but that was not used in any of the print stories.

You mention ABC “sending a producer into West Virginia medical exams undercover.” This occurred two months after Chris had attended exams by the same doctor at the same hospital (which is in Virginia, by the way) and told ABC what they could expect if they decided to try to visit. Chris wrote a sidebar based solely on his own experience attending the exams, and nothing from ABC’s visit appeared in any of the print stories.

The other reporting you say Brian and Matt did was “conducting interviews with medical experts around the country.” These experts, however, were either people Chris already had interviewed or people ABC felt it needed for the television segment. Material from ABC’s interviews did not appear in the print stories.

A good example is Dr. John E. Parker, a former government official who now works at the West Virginia University hospital. Chris obtained permission from retired miner Steve Day to receive copies of his X-rays and CT scans; Chris contacted Dr. Parker to see if he would be willing to interpret the films; and the report Dr. Parker provided was addressed only to Chris. ABC interviewed Dr. Parker, but Chris did not use any of the ABC material, instead relying on the report addressed to him and his talks with Dr. Parker.

You again mention that Brian and Matt have bylines on four stories. I will reiterate what I wrote you previously:

The second installment in the series — “Johns Hopkins medical unit rarely finds black lung, helping coal industry defeat miners' claims” — was written entirely by Chris Hamby. He went through editing with Center editors and then shared the story with ABC. Aside from minor wording changes suggested by lawyers for ABC, there were no changes to the story. This is documented in emails and saved drafts of the story. Brian and Matt did significant reporting; however, much of that was to meet the needs of a TV segment and did not end up in the Center’s print story. The amount of reporting from them that made it into the story typically would warrant a credit line at the end. At ABC’s strong request, however, we agreed to place the names of Brian and Matt in the byline field, even though this report was fully reported and written by Chris. To claim for ABC that they wrote this piece now is a pure fabrication.

To put this more simply: The contributions of Brian and Matt do not come close to warranting a byline. We nonetheless inserted their names in the byline fields at ABC’s insistence because we hoped to foster a sense of trust and partnership. It is clear now that ABC’s intent all along was simply to attach their names more prominently to this story for use later in precisely the way you now are: as a weapon to wield in an attempt to claim undue credit.

And again, the remaining three articles with the bylines of Brian and Matt were follow-up stories, not part of the original three-part series.

The factual assertions in the Pulitzer submission are the same as those made in every other award submission; your issue is with the Pulitzer rules.

Contrary to your characterization of the entries, the factual statements about who did what are the same across the many awards entries submitted by the Center. The difference lies in the specific requirements of the contests.

It makes no sense to spend limited space discussing something that has no bearing on the particular contest. Of course, we appreciate the contributions ABC made, but the unique contributions of ABC were almost exclusively for the benefit of the production of television segments. We believe ABC did great work on the television segments, which is why we submitted them in contests that allowed such joint submissions and happily shared numerous other honors with ABC. But, as we’ve said, television simply cannot be entered in the Pulitzers. The rules are very clear and have been confirmed again by the Pulitzer Administrator.

We have been thrilled at the success of this project and happy to share in the accolades with ABC. But we find it very disturbing that ABC is now trying to grab credit for work it did not do.

You question our integrity and pose a question of us: “[D]o you really believe that Hamby and CPI would have been recognized with this honor without the contributions of ABC News?” I would contend that the answer is, “Absolutely, Yes.” And further, I will say with near certainty, that ABC would not have received any of the accolades it has shared with us, without the Center’s deep investigative work. In short, without The Center for Public Integrity, this project would not exist. ABC would not have anything to show.

This project grew out of previous reporting Chris had done on black lung, and he has become a knowledgeable authority on the subject, devoting years of his life to understanding the disease and the benefits system and bringing these powerful stories to light.

I ask you to gather your team; look Matt, Brian and everyone else in the eye and ask them to describe to you exactly what they did that was so crucial beyond producing fine TV segments. Ask them to point you to where in the 25,000 words comprising the original three-part series they made unique contributions.

In the wake of this investigation, Chris has been contacted by at least three government agencies and at least five congressional staffers seeking more information. The reason for this is simple: They all recognize that, although the television segments were well done, the print series is the definitive account that provides the hard and comprehensive evidence, and Chris’ knowledge of these complex but important facts is obvious.

We hope that you will dispassionately examine these facts and, as you have suggested we do, rely on your integrity.

With all good wishes,

Bill

William E. Buzenberg
Executive Director
The Center for Public Integrity

Bill Buzenberghttp://www.publicintegrity.org/authors/bill-buzenberghttp://www.publicintegrity.org/2014/04/16/14596/center-public-integritys-response-abc-news

Senate power players quarrel over fate of e-filing

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Millions of Americans e-filed their income taxes Tuesday, but when senators submitted required reports about their campaign fundraising and expenses, most ignored computers in favor of paper.

According to a Center for Public Integrity review of Federal Election Commission records, just 21 lawmakers voluntarily e-filed copies of their first-quarter reports to meet Tuesday's filing deadline.

That’s about a three-fold increase from three years ago — although it’s far from a majority in the august body that has long cherished its old-school traditions.

The 21 lawmakers who voluntarily e-filed this quarter were Sens. Mark Begich, D-Alaska; Barbara Boxer, D-Calif.; Thad Cochran, R-Miss.; John Cornyn, R-Texas; Joe Donnelly, D-Ind.; Dianne Feinstein, D-Calif.; Al Franken, D-Minn.; Kirsten Gillibrand, D-N.Y.; Martin Heinrich, D-N.M., Angus King, I-Maine; Tim Johnson, D-S.D.; Patrick Leahy, D-Vt.; Claire McCaskill, D-Mo.; Jack Reed, D-R.I.; Bernie Sanders, I-Vt.; Chuck Schumer, D-N.Y.; Jon Tester, D-Mont.; Elizabeth Warren, D-Mass.; John Walsh, D-Mont; Sheldon Whitehouse, D-R.I.; and Ron Wyden, D-Ore.

Neither senators nor Senate candidates are required to e-file their campaign finance reports — unlike the thousands of political action committees, presidential candidates or their colleagues in the U.S. House of Representatives.

Currently, senators must submit their campaign finance reports on paper to the secretary of the Senate, where they are scanned and then forwarded to the FEC.

In a process that lasts weeks, the agency subsequently prints the documents and delivers them to a private contractor, which performs the data entry work necessary to make the information searchable and sortable in electronic databases.

A bipartisan bill sponsored by Tester, however, would change that.

The switch would save taxpayers about $500,000 a year, according to the Congressional Budget Office.

Known as the “Senate Campaign Disclosure Parity Act,” Tester’s legislation has 39 cosponsors, including Senate Majority Leader Harry Reid, D-Nev., who signed on earlier this month.

Senate Minority Leader Mitch McConnell, R-Ky., however, has “objected to passing the bill by unanimous consent,” Tester spokeswoman Marnee Banks said.

“Sen. Tester is working to remove the objection and get the bill the vote it deserves,” Banks added.

A spokesman for McConnell did not respond to requests for comment.

Chris Gallegos, a spokesman for Cochran — a longtime supporter of e-filing — told the Center for Public Integrity that “this commonsense legislation could be passed” with “some agreement from the leadership in the Senate.”

In the meantime, observers don’t expect a deluge this year of new voluntary e-filers, Democrat or Republican.

“We see no need to duplicate the work,” said Brooke Sammon, a spokeswoman for Sen. Marco Rubio, R-Fla.

Rubio’s leadership PAC, Sammon added, “files immediately online," as federal law requires.

   

U.S. Senate Republican Leader Mitch McConnellMichael Beckelhttp://www.publicintegrity.org/authors/michael-beckelhttp://www.publicintegrity.org/2014/04/16/14598/senate-power-players-quarrel-over-fate-e-filing

Center wins three awards from Society of Professional Journalists

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The Center for Public Integrity has won three Sigma Delta Chi Awards from the Society of Professional Journalists.

In the online, independent category “Civil rights group's FCC positions reflect industry funding, critics say” won the top prize for investigative reporting. The story was written by Center contributor Jason McLure and edited by John Dunbar, who oversees political and financial coverage.

The story profiled the Minority Media and Telecommunications Council, a nonprofit which has received extensive industry funding as documented by the Center, and has taken positions that seem to reflect those of their benefactors.

“After the Meltdown” won the online, independent category for non-deadline reporting. The series of stories was written by Alison Fitzgerald, Dan Wagner, former intern Lauren Kyger and Dunbar. It was edited by Fitzgerald and Dunbar.

The three-part series won a George Polk Award for business writing, which was handed out last week.

In it, The Center revisited those who were most responsible for the financial meltdown in 2008 and discovered few if any had suffered any legal consequences. It also reported that executives from all 25 of the top subprime lenders identified in a 2009 Center story are back lending again.

In the online, affiliated category, the Center and ABC News shared the prize for investigative reporting for “Out of Breath: The Untold Story of Big Money, Black Lung and Doctors for the Coal Companies.” The winners were Chris Hamby of the Center and Matt Mosk, Lee Ferran and Brian Ross of ABC News.

The news comes two days after the Center won its first Pulitzer Prize for “Breathless and Burdened: Dying from Black Lung, Buried by Law and Medicine,” the Center’s three-part, 25,000 word investigative series.

The project has won numerous awards this year, including the prestigious Goldsmith Prize for investigative reporting.

For this year’s contest, judges selected 85 honorees from nearly 1,800 submissions. Entries included selections from television and radio broadcasts, newspapers, online news outlets and magazines.

The Sigma Delta Chi Awards date back to 1932, when the Society honored six individuals for their contributions to journalism. The current program began in 1939 as the Distinguished Service Awards.

CBS Corp., Clear Channel Communications Inc., News Corp., AT&T and Comcast have donated hundreds of thousands to the Minority Media and Telecommunications Council.The Center for Public Integrityhttp://www.publicintegrity.org/authors/center-public-integrityhttp://www.publicintegrity.org/2014/04/16/14600/center-wins-three-awards-society-professional-journalists

Counting how Primary Source is Webby worthy

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What could be better than being named one of the world's top five political blogs for 2013?

Being named No. 1.

The Center for Public Integrity's Primary Source blog is currently in the running for this honor after the International Academy of Digital Arts and Sciences selected it as finalist for a Webby Award.

In short, we're thrilled: 2013 was Primary Source's inaugural year — a year that saw more than 150,000 unique visitors to the blog and more than 250 items published.

It'd be quite the honor to top off our first year with a Webby.

There are two components to the Webby Awards. The first are prizes awarded by contest judges. The second are prizes determined by popular vote— and that's where you come in.

Voting ends Thursday, April 24, and we'd be elated to receive your support among a field of worthy candidates. Winners will be announced April 29.

Please click here to vote for Primary Source in the "People's Voice" contest.

In the meantime, here are a few figures Primary Source revealed that we hope will help you count the ways our blog is worthy of your vote:

$310 million: Value of assets held by four foundations run by billionaire industrialists Charles and David Koch

$122 million: Amount spent in 2012 by the Koch brothers’ main politically active nonprofit, Americans for Prosperity

$36 million: Amount spent in 2012 by the League of Conservation Voters

$8.4 million: Amount of undisclosed "dark money" a pro-Barack Obama nonprofit accepted during 2012, despite Obama's stated commitment to transparency

$2.5 million: Amount donated by Microsoft to a “small business” technology trade group, which account for a substantial portion of the group's budget

$570,000: Compensation collected by former GOP Sen. Norm Coleman for work at a pair of politically active nonprofits over a three-year period

$12,000: Amount spent on an 11th-hour blitz in a Missouri House race by a super PAC that wasn’t required to disclose its donors until after Election Day

$4,600: Amount of money the Obama campaign pocketed from convicted Ponzi schemer R. Allen Stanford — and refused to give back

$1,000: Amount by which GOP businessman Shaun McCutcheon exceeded the aggregate limit on giving to political parties in 2012

$1,000: Amount of money drug store chain CVS donated to Michigan Gov. Rick Snyder's NERD Fund, which doesn't disclose donors

500: Number of companies that a trio of trade groups urged to not disclose more information about their political activities

60: Percentage of its 2012 receipts that FreedomWorks, a tea-party aligned "grassroots service center," received from donors who each gave at least $1 million

40: Minimum percentage of the first $1.25 million raised by super PAC Ready for Hillary that came from New Yorkers and Californians

23: Number of campaign bundlers nominated in 2013 by Obama to be ambassadors

21: Number of current U.S. senators who voluntarily e-filed copies of their campaign finance reports

9: Number of senators who transferred leadership PAC funds to a politically active nonprofit that provided air cover for one of their colleagues during 2013’s contentious gun control debate

7: Number of House Democrats who appeared in an online video praising a supportive super PAC

6: Minimum number of U.S. Supreme Court justices who are millionaires

4: Number of FEC employees on the job during October’s government shutdown — right as Chinese hackers successfully attacked the agency

1: Number of times the American League of Lobbyists changed its name last year

0: Number of commissioners serving on the federal Election Assistance Commission

    

The Center for Public Integrityhttp://www.publicintegrity.org/authors/center-public-integrityhttp://www.publicintegrity.org/2014/04/17/14599/counting-how-primary-source-webby-worthy

GOP official forms Montana-focused super PAC

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There’s a new and mysterious political animal roaming on the Montana plains, where one of the hottest U.S. Senate races is brewing.

A super PAC called the “Big Sky Freedom Fund,” based in Billings, Mont., isn't indicating who its leaders are or who it's backing.

It only says it intends “to raise funds in unlimited amounts” and to explicitly call for the election or defeat of federal candidates, according a registration form letter filed this week with the Federal Election Commission.

One clue does exist, though: The name of its treasurer, Nancy Watkins— the only person named on its FEC filing — suggests the group will have a pro-Republican orientation.

The Florida-based Watkins ranks among the GOP's most prominent campaign accountants. Her other clients includes the likes of Rep. Michele Bachmann’s leadership PAC, former Ambassador John Bolton’s super PAC and TD Ameritrade founder Joe Ricketts’ Ending Spending Action Fund super PAC.

Watkins— who, along with her husband, also raised at least $100,000 for President George W. Bush’s 2004 re-election campaign, according to Texans for Public Justice — did not immediately respond to a request for comment.

Bowen Greenwood, the executive director of the Montana Republican Party, told the Center for Public Integrity that he was unaware of the new super PAC.

“I’m afraid I don’t have any information on that,” he said.

The race for Montana's U.S. Senate seat — long-held by Democrat Max Baucus, who resigned earlier this year to become the next ambassador to China — is already attracting significant out-of-state interest despite the state's small voting population.

Republicans need to pick up six Senate seats to wrest control of Congress’ upper chamber away from the Democrats this fall — and many hope that Montana will be one of them.

Democrat John Walsh, the state’s former lieutenant governor, is currently serving as the interim senator. He faces a primary challenge on June 3, and the winner of that race is expected to square off against Republican Steve Daines, the state’s current lone congressman.

Already, American Crossroads — the super PAC juggernaut co-founded by GOP strategist Karl Rove — has reported spending about $150,000 on ads attacking Walsh.

And Americans for Prosperity — the nonprofit supported by conservative billionaires Charles and David Koch — has also spent about $400,000 on ads thanking Daines for voting against President Barack Obama’s signature health care reform law, according to the Billings Gazette.

Lauren Passalacqua, a spokeswoman for Walsh's campaign, said she was unfamiliar with the Big Sky Freedom Fund but said Walsh's opponents were "threatened by John and the good work he’s doing."

"We expect a lot of dark money groups to try to buy this election for Congressman Steve Daines," she added.

  

Michael Beckelhttp://www.publicintegrity.org/authors/michael-beckelhttp://www.publicintegrity.org/2014/04/18/14605/gop-official-forms-montana-focused-super-pac

Be the 'squeaky wheel' if health claim denied

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The good news from last week was that 8 million Americans have signed up for health insurance through the Obamacare-created exchanges. The not so good news is that because most of us have to buy coverage from a private insurer, we will always have to be vigilant to make sure our medical claims get paid and that an insurance bureaucrat miles from where we live doesn’t succeed in denying coverage for medically necessary care.

While we’ve heard a lot recently about the growing number of folks who are at long last able to join the ranks of the insured, we haven’t heard much at all about the important provisions of the law that make many of the previously common industry practices unlawful.

Among other things, insurers can no longer refuse to sell us coverage because we’ve been sick in the past or even take the status of our health into consideration when figuring out how much to charge us for a policy. They also can’t charge women more than men or older folks more than three times as much as younger folks. And they must allow young adults to remain on their parents’ health plans until age 26.

The reason health insurers discriminated against women and people of a certain age as well as anyone not in tip-top shape was because their discriminatory underwriting practices enabled them to sell policies with relatively low premiums to people who were least likely to need medical care. And for the big for-profit insurers that now dominate the industry, those practices made it much easier for them to meet Wall Street’s relentless profit expectations.

Don’t think for a minute, though, that the large institutional investors that own health insurers’ stock these days are cutting the companies any slack when it comes to their profit margins.

As I’ve often said, the one thing most health insurers know how to do is make money. They make billions off of us every year. Obamacare won’t change that. In fact, because Congress succumbed to pressure from the industry’s lobbyists and ditched plans to create a “public option” to compete with insurers, billions more in premium revenue and federal subsidies will flow to them for years to come.

But investors and Wall Street financial analysts look far more closely at profit margins and earnings per share than total revenues.

To keep Wall Street happy, insurers undoubtedly have begun shifting resources from their underwriting departments to their so-called medical management teams. I’m confident that people who work in medical management are under more pressure than ever from the executive office to avoid paying claims whenever possible.

That has been my fear since the reform law was passed and the consumer protections went into effect. So it’s especially important now to scrutinize those “Explanation of Benefits” statements our insurers send us after we get medical care.

Insurers know that many if not most of us do little more than glance at them before throwing them away. They’re hard to understand by design. If you can’t decipher them, chances are you’ll give up and just hope that your insurer and health care providers are treating you fairly and that you are not being billed for care that your policy should cover.

Numerous studies over the years have shown, however, that patients have at least an even chance of prevailing if they go to the trouble of appealing a claim denial or a ruling by somebody in medical management that your doctor-ordered care was not medically necessary.

The most recent proof of that came last week in a Capital Public Radio story out of Sacramento. CPR found after analyzing several years of data compiled by California’s insurance department that patients won about half of the appeals they filed with state regulators after getting a claim denial from their insurer. CPR also noted that a 2011 GAO report based on data from several states prior to the implementation of the Affordable Care Act found that patients were successful between 39 and 59 percent of the time when they appealed directly to their insurer.

Many patients who don’t succeed that way, however, go the additional mile of reaching out to their state insurance departments or their state legislators or members of Congress — or even the media. That enhances the chances their insurers will agree to pay the disputed claims.

“When appealing to a third party (such as the state insurance commissioner), patients also were often successful in getting the service in question — winning as many as 54 percent of such decisions in Maryland, for example,” CPR reported.

Bottom line here: With profit margins under pressure because of Obamacare, insurers likely will be denying more of your claims and inserting themselves even more between you and your doctor when it comes to medically necessary care, but you should never take a “no” as the final answer. Appeal — and be a squeaky wheel — whenever you get a denial. Chances are that if you do, you’ll get the care you need, and get your insurer to pay for it.

President Barack Obama speaks about the new health care law in Washington, D.C., December 2013.Wendell Potterhttp://www.publicintegrity.org/authors/wendell-potterhttp://www.publicintegrity.org/2014/04/21/14608/be-squeaky-wheel-if-health-claim-denied

'Stop R.E.I.D. PAC' draws scrutiny of regulators

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A conservative political action committee called "Stop R.E.I.D. PAC" is the latest target of the Federal Election Commission's name police.

Paul Stoetzer, a senior campaign finance analyst at the agency, recently told Stop R.E.I.D. PAC treasurer Dan Backer that he must "change the name of your political committee so that it does not include the candidate's name" — unless the outfit is authorized by Senate Majority Leader Harry Reid, D-Nev., which it's not.

Fat chance, says Backer, a Virginia-based lawyer who's riding a measure of fame as the driving force behind McCutcheon v. Federal Election Commission, the Supreme Court case that ended aggregate limits on campaign contributions to candidates, PACs and party committees earlier this month.

Backer told the Center for Public Integrity that the committee's name is, technically, Stop Reckless Economic Instability Caused by Democrats PAC. Therefore, he said, its acronym "happens to coincidently match the name of a particular candidate who the PAC sees as epitomizing all that is wrong with America."

It's the latest nomenclatural go-around between federal regulators and Backer, who has made a cottage industry out of challenging federal election laws and regulations. He has also drawn the FEC's ire of late for his involvement with groups named "Stop Pelosi PAC" and "Stand With Rand PAC."

As with Stop R.E.I.D. PAC, Backer has argued that these names don't clearly identify a specific candidate and therefore don't violate federal law — Stand With Rand, for example, could just as well reference economic theorist Ayn Rand, he said.

Beyond issuing warnings, the agency, to date, has not taken public action against Stop Pelosi PAC, Stand With Rand PAC or Stop R.E.I.D. PAC.

Asked about the flap, Reid spokesman Adam Jentleson said: "Frankly this is not something we've discussed, and I don't think it's something we'd comment on. Sounds like it's between the group and the FEC."

Backer has until May 22 to formally respond to the FEC's inquiry.

Backer formed Stop R.E.I.D. PAC on March 11. He organized it as a hybrid super PAC — a single committee that operates both as a traditional PAC, which may make limited donations directly to political candidates, and a super PAC, which may raise and spend unlimited amounts of money to independently advocate for or against candidates.

Through March 31, it raised about $3,700 and spent $1,900, according to federal filings.

Backer says that to date, the PAC has raised about $20,000 from 1,000 contributors. Filings covering the year's second quarter aren't due to the FEC until July 15.

    

Senate Majority Leader Harry Reid, D-Nev., meets in 2013 with reporters following a Democratic policy luncheon on Capitol Hill in Washington. Dave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2014/04/21/14607/stop-reid-pac-draws-scrutiny-regulators

The 'McCutcheon' decision explained — more money to pour into political process

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Just when we learned what “Citizens United” and “super PACs” were all about, the U.S. Supreme Court has again roiled the world of campaign finance, voting 5-4 to allow even more money into a political process that is pretty well saturated with it.

So what does it all mean? We at the Center for Public Integrity shall try to provide some answers.

What did the Supreme Court do?

In essence, the court said that the government cannot prevent citizens from giving campaign contributions to as many different candidates and political parties as they want. Previously, they were capped under the “aggregate limit” rule.

What were the limits?

Prior to the case, known as McCutcheon v. Federal Election Commission, individuals were prohibited from giving more than $48,600 combined to all federal candidates. They were also prohibited from giving more than $74,600 combined to all parties and political action committees. Altogether that added up to $123,200. These aggregate limits are now gone.

Does that mean donors can give a candidate as much as they want?

No. Because the Supreme Court upheld the existing “base” contribution limits, McCutcheon does not mean that billionaires are free to give as much money as they want to any particular candidate.

The maximum amount one donor can give each candidate is still $2,600 per election, or $5,200 counting the primary and general election. The maximum contribution to a national party committee is still $32,400, and the maximum PAC contribution is still $5,000.

Why do aggregate contribution limits exist in the first place?

Congress created the aggregate limit rule to prevent donors from circumventing the base limits by contributing to several groups, which would in turn give that money to a single candidate.

But the rules have changed since the Federal Election Campaign Act of 1971, when aggregate limits were introduced. Now, if one donor used a network of affiliated PACs to fund a single federal candidate, he or she would be breaking the law.

So what does McCutcheon mean for candidates?

Candidates can now more easily band together and raise big money from the same individuals through legal entities called “joint fundraising committees.” These committees let contributors write a single large check to an umbrella group, which, in turn, splits the money up among several beneficiaries.

In recent years, joint fundraising committees have proliferated, and McCutcheon has empowered them to become even bigger. Cue the “jumbo" joint fundraising committees.

How much money are we talking about?

The short answer is we don’t know. During the 2012 election, both President Barack Obama and Republican Mitt Romney operated joint fundraising groups that often asked each donor to give $75,800 — one of the aggregate limits at the time. This money was then split between each man’s campaign and various party groups. Now, the sky’s the limit, but it remains to be seen how it’ll play out in practice.

What does McCutcheon mean for the political parties?

McCutcheon means more money for the national party committees. Want to give the legal maximum of $32,400 apiece to the national party committees of your choice? Now you can. In fact, the Republican National Committee, National Republican Senatorial Committee and the National Republican Congressional Committee have already formed a super-sized joint fundraising committee that is legally allowed to receive $97,200 per donor per year.

Will McCutcheon affect state laws too?

McCutcheon’s ripple effect could soon be coming to a state near you, and with it, more money from wealthy donors. At least eight states — and possibly as many as 20— could see laws overturned, depending on how regulators, government officials and judges interpret the McCutcheon ruling.

How is the McCutcheon case different than Citizens United?

The Citizens United decision in 2010 didn’t affect contribution limits to candidates or parties. It affected spending. There’s a difference. Citizens United, along with a lower court ruling, allowed for unlimited donations from corporations, unions and individuals to go to super PACs and nonprofits, which, in turn, could spend the money on ads blasting or praising candidates. That’s not considered a corrupting influence because these groups are banned from coordinating their spending with candidates.

Why are some people so concerned about McCutcheon?

Campaign finance reform advocates are concerned about a sort of systemic corruption that may arise through the formation of jumbo joint fundraising committees. The leader — possibly a ranking party member — might become a sort of power broker, and the person who wrote the check would no doubt be remembered fondly as the Congress goes about its business.

The Supreme Court in Washington, D.C.Michael Beckelhttp://www.publicintegrity.org/authors/michael-beckelhttp://www.publicintegrity.org/2014/04/22/14611/mccutcheon-decision-explained-more-money-pour-political-process

'Jumbo joints': How big will the newest political animals get?

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Expect this much from the U.S. Supreme Court's McCutcheon v. Federal Election Commission ruling: New groups will emerge that allow big-time political donors to fund multiple candidate and party committees with a single check.

It's not yet clear how prevalent these new "jumbo-joint fundraising committees" will become — or if lawmakers or regulators will take any steps to curb their newly granted powers.

But the nation’s largest Republican groups have already formed a new collective fundraising venture to amass money from wealthy donors, as Politico first reported.

Known as the "Republican Victory Fund," the organization can solicit up to $97,200 per donor annually to benefit the National Republican Congressional Committee, the National Republican Senatorial Committee and the Republican National Committee.

Prior to McCutcheon, a donor could give no more than $74,600 combined to party committees over a two-year election cycle.

Democratic Party groups might also create new jumbo-joint fundraising committees to boost their own coffers and their most vulnerable candidates, to say nothing of keeping pace with their GOP counterparts.

For months, campaign finance reform groups have warned of a scenario in which lawmakers ask for $3.5 million donations through jumbo-joint fundraising committees to support every single candidate and national party committee on their side of the partisan divide.

During McCutcheon’s oral argument, Justice Samuel Alito dismissed such examples as a "wild hypotheticals."

Nevertheless, Paul S. Ryan, an attorney at the Campaign Legal Center, is still concerned.

"Members of Congress will be soliciting big contributions from people with business before Congress," said Ryan.

Kirk Jowers, a campaign finance attorney at Caplin & Drysdale, told the Center for Public Integrity that the use of joint fundraising committees will "absolutely proliferate" after McCutcheon.

But, he added, "I don’t think it’s going to be the huge earthquake that some predict."

Prior to McCutcheon, a donor could not give the legal maximum to more than nine candidates before hitting one of the aggregate limits then set by federal law. Now, that restriction is gone, which illustrates why jumbo-joint fundraising committees could become attractive options.

Take the Democratic Senatorial Campaign Committee: This November, Senate Democrats will be defending 21 seats, and political observers currently rank more than a dozen as potentially competitive.

Or assume, for instance, that the Democratic Congressional Campaign Committee wants to aid its most competitive candidates.

Currently, two dozen incumbents have been named by the DCCC to its "Frontline" program, which seeks to assist vulnerable incumbents. And there are another 35 candidates who are part of its "Red to Blue" program, which aims to boost competitive challengers.

If the DCCC created such a hypothetical jumbo-joint fundraising committee — or whatever you’d like to call such a group — it could accept contributions of roughly $340,000, even as each beneficiary receives no more than the "base" limit.

Likewise, the National Republican Congressional Committee could itself establish a similar effort.

There are currently 15 members of Congress who have been named to the NRCC's "Patriots" program, which aids embattled incumbents, and there are more than six-dozen candidates who have emerged as potential contenders for its "Young Guns" program, which aids challengers.

Such a hypothetical jumbo-joint fundraising committee could receive contributions of more than $400,000 per donor per year.

While plausible, Dan Backer — the conservative attorney who helped Alabama businessman Shaun McCutcheon bring the campaign finance lawsuit that now bears his name — predicts that the number of jumbo-joint fundraising committees will be nominal.

"The administrative burdens are not linear and getting up to a level where you can distribute $250,000 is probably going to be more hassle than it's worth," Backer said.

History shows that politicians have been increasingly embracing joint fundraising committees, and the most prolific ones, in terms of financial success, have been tied to presidential candidates.

During the 2012 election, both President Barack Obama and Republican Mitt Romney operated joint fundraising groups that often asked each donor to give $75,800 — the aggregate limit at the time. This money was then split between each man’s campaign and various national and state-focused party groups.

If they chose to, lawmakers could rein in jumbo-joint fundraising committees — although Backer predicts such a move would be unlikely.

"Congress can just do away with joint fundraising committees, or apply an aggregate limit on joint fundraising committee checks," Backer continued. "But they won’t because it wouldn’t be in their best interest."

   

Michael Beckelhttp://www.publicintegrity.org/authors/michael-beckelhttp://www.publicintegrity.org/2014/04/22/14612/jumbo-joints-how-big-will-newest-political-animals-get

Chemical industry among big spenders on lobbying this quarter

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America’s most powerful special interests are collectively regaining their appetite for old-school government lobbying.

About half of the nation’s top 100 lobbying entities reported spending as much or more on lobbying during this year’s first quarter than they did the year before, according to a Center for Public Integrity of analysis of new congressional disclosure reports and Center for Responsive Politics data.

These new numbers reverse — at least temporarily — top lobbying forces’ shrinking investments in the kinds of conventional government influence efforts that they must by law report publicly. Some have increasingly funneled resources into influence activities just outside the scope of public disclosure.

Big-name trade associations, advocacy groups and corporations representing a range of industries, including chemicals, medicine, social media, shipping and beverages, led the way in early 2014, federal lobbying filings show. The increase was likely thanks, in part, to modest signs of congressional movement on legislation key to their interests after what’s been a year marked by gridlock.

Dow Chemical, for example, spent more than $5 million on lobbying this past quarter, or about $2 million more than during the year before.

In a statement, the company attributed the hefty spending to “increased collaboration in public policy, specifically in energy, trade and agriculture” as well as payment of annual dues to trade associations that represent its interests.  The company also noted it spent more on lobbying thanks to its “successful 2013 earnings results.”

The American Chemistry Council’s lobbying spending jumped from $1.9 million during the first quarter of 2013 to nearly $3 million during the first quarter of 2014. Such action is was prompted in large part, spokeswoman Anne Kolton said, by the trade group’s push to pass legislation reforming the Toxic Substances Control Act, which regulates the production, use and disposal of industrial chemicals.

The Business Roundtable, which represents chief executive officers of major corporations, spent $4.23 million from January through March — a 53 percent increase from the same period in 2013.

That, spokeswoman Amanda DeBard said, is because of an aggressive effort by Business Roundtable Chairman Randall Stephenson to promote “top policy issues” that include “tax reform, immigration reform, expanded trade and fiscal stability.” She added: “Going forward, we will continue to advocate these issues.”

Other lobbying entities reporting notable lobbying spending increases during 2014’s first quarter from 2013’s first quarter include United Parcel Service ($3.04 million from $1.42 million), Coca-Cola Co. ($2.6 million from $1.36 million), the Grocery Manufacturers Association ($1.12 million from $670,000), the Open Society Policy Center ($2.8 million from $1.7 million).

UPS, which did not return requests for comment, indicated in its disclosures that it heavily lobbied on Russian trade issues, Obamacare benefits and U.S. postal reform, among other matters that could potentially affect its revenues.

(Update, 5:56 p.m. April 22: UPS spokeswoman Kara Gerhardt Ross wrote in an email that her company's lobbying expenditure increase was generated by "accounting changes in the way our lobbying activities are calculated," including dues to and compensation to lobbyists. "UPS expects that lobbying expenditures in 2014 to be relatively the same as in 2013," she added.)

Those reporting more modest increases include the American Medical Association, Koch Industries, National Association of Broadcasters, defense contractor United Technologies, FedEx Corp., health firm Amgen, Shell Oil, Prudential Financial, JPMorgan Chase & Co., Duke Energy, American Fuel and Petrochemical Manufacturers, 3M Co. and the Securities Industry and Financial Markets Association.

Overall, the U.S. Chamber of Commerce retained its regular perch as the biggest-spending lobbying entity in the United States, posting a $25.2 million figure for the year’s first quarter. That comes with a caveat: The Chamber, unlike many corporations, trade associations and special interest groups, opts to disclose state- and grassroots-level lobbying, as well as some political organizing costs, alongside its federally focused efforts.

In one case, at least — that of Facebook — a company’s lobbying expenditure spike doesn’t necessary mean it’s bombarding Washington, D.C., with more pressure than usual.

The social networking giant spent $2.78 million from January through March — easily its most expensive single quarter since the social media company began lobbying in 2009. In a statement, Facebook explained that the “vesting of restricted stock units” among its in-house federal lobbyists primarily accounted for its lobbying expenditure increase.

All the same, Facebook reported lobbying Congress, the White House and numerous federal agencies on a variety of topics, from digital privacy issues and online advertising to immigration reform and research and development tax credits.

Twitter, in contrast, continued its modest foray into formalized federal lobbying by spending $50,000 in the year’s first quarter on issues including patent litigation reform, digital privacy, government surveillance and data security.

Some prominent lobbying entities did curtail their spending in early 2014 compared to early 2013.

Those cutting the most, percentage-wise, include a number of energy interests and defense contractors, such as Northrop Grumman, General Electric, ExxonMobil, Chevron Corp., Edison Electric Institute, BP and American Electrical Power.

Ford Motor Co., drug maker Merck and Co., the AFL-CIO, machinery-maker Caterpillar Inc. and the American Farm Bureau also reported dips.

Although not among the biggest lobbying spenders on Capitol Hill, firearm-related groups — both advocates for and opponents of gun rights —continued to press lawmakers early this year with left-leaning lawmakers still pushing about gun control legislation despite little success last year.

Chief among pro-gun groups was the upstart National Association for Gun Rights. Although down from its quarterly peak of $1.9 million, it spent more than $1 million during the first quarter of 2014 and again outspent the better-known National Rifle Association.

“There’s a reason [gun control] legislation] hasn’t been going anywhere — we’ve been investing a lot of money to make sure of it,” said Dudley Brown, the executive vice president for the group. “We’re not going to stop. We’re not cutting deals, not compromising.”

Mayors Against Illegal Guns, comparatively, spent $310,000 during the first quarter of 2014, a slight increase from its spending during the first quarter of 2013.

The American Chemistry Council is located in Washington, D.C. just blocks away from Capitol Hill.Dave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2014/04/22/14621/chemical-industry-among-big-spenders-lobbying-quarter

Texas freezes agency's funding after air pollution data released

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A few casual words and the early release of some scientific data have cost the San Antonio region much-needed state funds to battle its growing air pollution problem. The misstep, which appears to have been unintentional, highlights the sensitivity of studying oil and gas pollution in business-friendly Texas.

The dispute began after the Alamo Area Council of Governments (AACOG) — a coalition that oversees 13 counties in the San Antonio region — launched a two-part study to determine how oil and gas drilling was affecting the city's air quality.

San Antonio’s air quality has been deteriorating since 2008, the same year drilling began in the nearby Eagle Ford Shale, site of one of the nation’s biggest energy booms. The air pollution is now so bad that metropolitan San Antonio could soon be declared in nonattainment with federal standards for ozone, the main component of smog. If that happens, it could be subject to sanctions from the U.S. Environmental Protection Agency, including increased EPA oversight for new development projects.

Local officials hope to avoid that fate by curbing pollution through voluntary measures, but first they need to understand where the emissions are coming from. Because San Antonio is one of the fastest-growing cities in the nation, much of the ozone-forming chemicals are likely emitted by cars and trucks. But AACOG knew little about the contributions from oil and gas drilling.  

AACOG released the first part of the study, an emission inventory of the Eagle Ford, on April 4. It projected a dramatic increase in air emissions by 2018 during peak ozone season, including a possible 281-percent increase in releases of volatile organic compounds, which react with nitrogen oxides to form ozone. More details are expected in the second part, a photochemical model that explains how the emissions affect San Antonio’s ozone levels.

About a week after the emission inventory was released, the Austin American-Statesman reported that the Texas Commission on Environmental Quality (TCEQ), which funded the study, had slashed AACOG’s air-quality planning budget by 25 percent because an AACOG employee had made some of the draft results public. AACOG's contract with the TCEQ prohibited AACOG from releasing any results without TCEQ approval.  

TCEQ spokesman Terry Clawson said the contract was breached when AACOG posted a "summary presentation" on its website. He declined to identify the person responsible for the posting, and said AACOG management was notified of the consequences soon after TCEQ decided to cut the agency's budget.

InsideClimate News and the Center for Public Integrity have been reporting on air quality problems in the Eagle Ford for the past year. The initial group of stories stemming from the investigation, published in February, showed that state regulators and politicians are more focused on protecting the industry than protecting the public.

"This is among the more petulant, childish and vindictive things I've seen TCEQ do," said Al Armendariz, a former EPA regional administrator who now works for the Beyond Coal campaign at the Texas chapter of the Sierra Club. "It's cheap, it's schoolyard bullying … to go after a local government whose sole mission is to protect public health."

In an interview last week on Texas Public Radio, AACOG chairman Kevin Wolff acknowledged that an AACOG employee had made a "fairly minor mistake," but said he didn't think the TCEQ's reaction was very logical. Wolf told the radio show his agency would try to pool some city and county resources to replace the lost funds.

Peter Bella, AACOG's natural resources director who has worked at the agency for 15 years, has concluded that he is the person the TCEQ is referring to. Bella said he summarized preliminary results from the study last July at a meeting attended by companies that operate in the Eagle Ford, who provided much of the data used in the emission inventory. 

After the meeting, Bella posted the summary presentation on AACOG’s website. He said the agency routinely posts documents presented at its meetings, and he never thought it would be considered a breach of contract. Bella said the presentation was well received by the industry representatives.

A scientist by training, Bella has an undergraduate degree in physics and a master's in math. Emails between his team at AACOG and TCEQ's technical staff, obtained through a Texas Public Records Act request, show polite, scientific discussions about the emission inventory over the past 18 months. There's nothing to indicate animosity.

The draft results actually predicted fewer emissions than the report released this month. The draft projected that by 2018, Eagle Ford development would produce 198 tons per day of volatile organic compounds during San Antonio’s peak ozone season. The final report predicted almost three times as much, 544 tons per day.

Six days after the July meeting, Bella presented the same data to AACOG’s technical staff. The TCEQ was invited to attend the meeting, but no one from the agency showed up. Bella said he was never told — by either the TCEQ or AACOG upper management — that he had done anything wrong.

"I thought the state environmental agency would be happy I was making progress and bringing data forward," he said. "Part of the difficulty is that I have yet to receive a true indication of the true nature of the breach."

In September, when the TCEQ handed out state grants for air quality planning for fiscal years 2014-2015, Bella noticed that other local governments had received sizeable budget increases, while AACOG's funding was frozen at around $570,000. The discovery prompted a series of letters between AACOG's upper management and the TCEQ, but Bella said the reason for the cut was never clarified.

Bella said the pieces didn’t fall into place for him until last week, when the media picked up on the story.

Although Bella is the main point of contact for AACOG's TCEQ air grants, he now finds himself relying on the media for clues about his apparent role in the funding freeze.

"It would be very fruitful if I knew what the issues were, with real specificity," he said. "If we said something wrong, tell me … Let's talk about this."

Cyrus Reed, conservation director of the Texas Sierra Club, sees the TCEQ's decision as a message to all the cities that receive state grants. "'Don't do anything unless you have the blessing from TCEQ' — that's really what it's saying."

Shortly after the July AACOG meetings, Bella spoke on a panel at the San Antonio Clean Energy Summit. When an audience member asked about AACOG's ozone study, Bella said the preliminary results indicated Eagle Ford activity could increase ozone by up to 7 parts per billion in San Antonio's Bexar County. The federal ozone standard is 75 parts per billion, and since 2012, San Antonio's monitors have recorded levels above that, some as high as 87 parts per billion.

Bella's comments at the conference were reported the following day in the San Antonio Express-News.

In an email to InsideClimate News, the TCEQ's Clawson cited Bella's comments at the Energy Summit as another breach of the contract. But Bella said the information he shared at the conference came from the photochemical model, which is not being funded by the TCEQ.

Elena Craft, a scientist who spoke on the panel with Bella, said "there was no sense that there was an ill intent” on Bella’s part. Craft is a toxicologist at the Environmental Defense Fund, a green group that often works with industry partners to reduce emissions from natural gas and other industries.

AACOG is "an agency that's really there to help manage air quality in the region," she said. "I don't know what benefit there is to keeping information out of the hands of the public."

The extra state money San Antonio lost would have funded other air quality programs, including public education and cost-benefit analyses for voluntary reduction measures, Bella said.

Such programs have a successful track record in San Antonio. In 2007, for example, AACOG honored Capitol Cement for installing technology that reduced emissions of ozone-forming nitrogen oxides by four tons a day during peak ozone season. The voluntary measure was made possible by an AACOG analysis that showed the technology would have a real impact on air quality.

In January, Bella sent the results of the second study, the Eagle Ford photochemical model, to the TCEQ for review. Bella said he did it not because it was required, but because "TCEQ has a staff of excellent modelers … and their review on ozone modeling updates is always sought out."

On April 14, Bella said TCEQ staff notified him verbally that they didn’t intend to review the report.

However, Clawson, the TCEQ spokesman, told InsideClimate News and the Center for Public Integrity that the agency will review the model. Clawson didn't provide a timeline.

Bella said he's eager to move past the dispute and focus on San Antonio's needs. " I am always prepared to discuss conflicts, problems, and just plain differences of opinion," he said in an email. "What is not valuable is the delay in funding … This is a very critical time. We need the state's partnership. We need their support."

This story is part of a project by the Center for Public Integrity, InsideClimate News and The Weather Channel. Lisa Song is a reporter for InsideClimate News.

San Antonio’s air quality has been deteriorating since 2008, the same year drilling began in the nearby Eagle Ford Shale. Lisa Songhttp://www.publicintegrity.org/authors/lisa-songhttp://www.publicintegrity.org/2014/04/23/14622/texas-freezes-agencys-funding-after-air-pollution-data-released
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