Failures at “all levels of government” contributed to last year’s fertilizer plant explosion in West, Texas, which killed 14 people and injured 226, the U.S. Chemical Safety Board reported Tuesday.

Issuing the board’s preliminary findings on the April 17, 2013, accident at West Fertilizer, Chairman Rafael Moure-Eraso said the explosion “never should have occurred. It resulted from the failure of a company to take the necessary steps to avert a preventable fire and explosion and from the inability of federal, state and local regulatory agencies to identify a serious hazard and correct it.”

Investigators determined that a large amount of ammonium nitrate was ignited by a fire and leveled the facility. They found, among other things, that there is no state fire code and that “counties under a certain population are prohibited from having them.” They identified 1,351 facilities around the country that store ammonium nitrate.

In a story last year, the Center for Public Integrity reported that investigations at the board had languished because of what some critics characterized as mismanagement. The Center found that the number of accident reports, case studies and safety bulletins had fallen sharply since 2006.

Dozens of contractors for the four largest Defense Department intelligence agencies have been investigated for submitting false payment claims worth millions of dollars over the past decade, according to a new Pentagon report.

The report by Deputy Inspector General for Intelligence Anthony Thomas said that when his auditors examined 128 unclassified cases of contractor misconduct, he found 89 — or more than two-thirds — involved fraudulent billing for work the contractors had evidently not done.

In the 86 cases relating to one or more individual contractors, the largest reported loss was $265,698 and the smallest $433 — with an average of $41,790, the report said. The report said the total lost to fraud in all the cases chosen for the report, including 12 contracting companies, was $4.34 million.

The report did not disclose the names of the contractors or the companies involved, but it said that none had been “debarred” — or blocked from getting new contracts — and in many cases the employees implicated in the false charges lost their jobs but kept their security clearances. That allowed them to get rehired by other agencies with their clearances intact.

The agencies involved were the National Security Agency (NSA), the Defense Intelligence Agency (DIA), the National Reconnaissance Office (NRO) and the National Geospatial-Intelligence Agency.

Bridget Serchak, a spokeswoman for the Pentagon’s Inspector General’s office, declined to answer any questions about the report or to provide access to the auditors that worked on it. As a result, it isn’t clear whether how many other cases of overbilling have been caught, and whether the total number has been rising or falling.

Serchak said that because the April 14 report  “was an evaluation and not an ‘audit’ or ‘investigation,’” some details were beyond its scope.

An October 2011 report to Congress by the Pentagon’s Undersecretary of Defense for Acquisition said contractors had been charged with criminal fraud 54 times in the previous ten years — and companies had paid settlements or were ordered to pay civil judgments more than 300 times. But these data encompassed all contractors, not just those that do intelligence-related work.

The website of the Project on Government Oversight, a spending watchdog group, says on its website that in the past decade ten major Defense Department contractors were accused of committing $407 million in contract fraud. In one case cited by POGO, Northrup Grumman in 2009 paid $325 million to settle a whistleblower lawsuit alleging that they billed the National Reconnaissance Office for defective microelectronic parts, according to the Department of Justice.

It’s not clear if the NRO case was one of those included in the Inspector General report.

Eighty five of the 128 cases cited in the recent report were referred to local prosecutors or the Department of Justice, but no information was provided on the outcome of these cases.  The report said “most” of the $4.34 million in improper payments were recovered, without elaborating.

Three contractors who were accused of misconduct — two at the NSA, the nation’s electronic eavesdropping agency, and one at the DIA, which spies on foreign militaries — were initially terminated, but later got new jobs at the same agency.

Eight contractors accused of misconduct by a Defense intelligence agency were later given jobs at the CIA, where they access to classified facilities or information. The eight had previously worked at the NSA; the DIA and the NRO, which operates America’s spy satellites. The CIA said it learned of the actions by other agencies against four of them only after the inspector general's office inquired about them. The Agency said it had since cut off all eight contractors’ access to classified information or had started an internal review of their employment records, the report said.

The inspector general's office said the Pentagon’s intelligence agencies, which report to the Under Secretary of Defense for Intelligence Michael Vickers, did not properly report misconduct allegations or adhere to agreed disciplinary procedures — including a mandate for hearings before an agency’s “Clearance Adjudication Facility” that rules on classified access.

In dealing with accusations of misconduct, the DIA, which has its own police force, used what the report termed a “creative variation” for avoiding “formal adjudications.” They would typically seize contractors’ access badges and escort them from the premises, the report said, without conducting a follow-up hearing on their security clearances.

The report recommended that agencies seek to suspend or debar contractors from future government contracts in all serious misconduct cases, even if the employees leave and no longer see classified information.

“If the misconduct is sufficient to warrant denial or revocation of security clearance/access, then that action should be formally accomplished,” the auditors wrote. In cases of serious misconduct, the auditors wrote, “a point is reached when the ability of the contract employee to responsibly hold a security clearance … must be questioned.”

The report recommended that Under Secretary Vickers ensure that all intelligence contractors accused of wrongdoing are subject to procedures where they can be suspended, debarred or have their security clearance revoked.  In a written response, Vickers’ office agreed without commenting on why they hadn’t been taken earlier.

Officials at the four intelligence agencies weren’t asked by the inspector general's office to comment on the recommendation, but the Defense Intelligence Agency did anyway, saying that pursuing suspension or debarment cases against government contractors no longer on the job would be “inconsistent with being good stewards" of taxpayer funds.It said reporting investigations to one of the intelligence community’s databases on personnel security clearances should be sufficient to flag contractors accused of misconduct.

But the report said agencies often failed to update information on these databases — including the Defense Central Index of Investigations; the Joint Personnel Adjudication System; and a third intelligence community database known as SCATTERED CASTLES. The central index is one of the computerized databases that must be scanned during an intelligence agency background check, and the failure to list disciplinary actions against contractors on it “significantly hinders” the process, the report said.

Investigations of contractor misconduct were properly indexed in only 34 percent of the 128 cases studied, according to the report. It also complained that the Pentagon had no overall policy on how the index should be updated, resulting in “a degree of confusion” among agencies about what to list in its entries.

The report recommended that the NSA, DIA, NRO and NGA improve their record keep practices.In a letter included with the report, the NSA objected, saying that the report’s basis for finding that it “lacked effective record keeping is unclear.” The NRO, meanwhile, said it was following what it understood were the proper procedures. The NGA and DIA, meanwhile, agreed to take the recommended steps.

The Federal Election Commission has issued 21 U.S. Senate candidates — both Democratic and Republican — threatening letters that question why they didn't file their latest round of campaign reports.

"Failure to timely file this report may result in civil money penalties, an audit or other legal enforcement action," read the letters, dated April 22.

Just one problem: The FEC got it wrong.

It's a snafu even political opponents can agree on.

"We filed. It's got to be an error on the FEC's part," Jeff DiSantis, campaign manager for Democratic U.S. Senate candidate Michelle Nunn of Georgia, told the Center for Public Integrity.

"We definitely filed the report — no question," said Chris Crawford, spokesman for Rep. Jack Kingston, R-Ga., who's running for the same seat and finds himself amid a crowded Republican primary field.

Same story for Sen. Lindsey Graham, R-S.C.

"We mailed our report on time, and there is no issue on our end," Graham campaign spokesman Tate Zeigler said.

Other prominent U.S. senators and Senate candidates who received failure-to-file letters from the FEC include Sen. Tim Scott, R-S.C.; Sen. Mark Warner, D-Va.; Sen. Mark Pryor, D-Ark.; Rep. Paul Broun, R-Ga.; Rep. Phil Gingrey, R-Ga.; Republican Karen Handel of Georgia and Republican Thom Tillis of North Carolina.

Several volunteered tracking codes and confirmation receipts as proof they complied.

The situation also highlights the byzantine manner in which Senate candidates — and only Senate candidates — file their campaign finance reports in the first place.

First, they print out paper copies their reports.

Next, they mail or hand deliver these paper copies to the Office of the Secretary of the Senate for processing.

Then, the Secretary of the Senate transfers the paper copies from Capitol Hill over to the FEC, which, in turn, ships them to a contractor for digital conversion.

When this conversion is complete, the FEC posts the data on its website, which can occur days or weeksafter a filing deadline. (Filings by presidential and House candidates, as well as political action committees, appear online instantaneously.)

The Senate's tortured data dance costs taxpayers about $500,000 annually, and the FEC's six commissioners — a typically fractious group — unanimously recommended to Congress in December that Senate candidates begin filing campaign disclosures digitally.

The FEC explained in a statement that it suspected 37 Senate committees had not filed their first-quarter campaign reports by the April 15 deadline. The FEC, which enforces campaign finance laws, learned from the Secretary of the Senate late Tuesday that 21 of those committees had indeed met the deadline — just as it was readying to send delinquent committees warning notices.

The FEC says those 21 notices were posted to its website but pulled from its email queue. At least some received them, however, as several committees that apparently shouldn't have received letters confirm they did.

Transparency advocates note that that Congress' upper chamber could easily avoid this kind of filing problem.

"If the Senate would enter the 21st century and file their campaign contribution reports electronically like House and presidential candidates do, we wouldn't have this problem," said Lisa Rosenberg, a lobbyist for the nonpartisan Sunlight Foundation, which advocates for greater government transparency.

Forty senators — mostly Democrats, but also six Republicans and two independents — have signed on to the latest incarnation of the Senate Campaign Disclosure Parity Act, which would require e-filing. But the Senate has yet to schedule it for a vote.

And while 21 senators voluntarily e-filed their campaign finance reports this month, the FEC doesn't consider those filings official.

They must submit paper copies to be considered in compliance with federal law.

MORGANTOWN, W.Va. — After almost two decades of reports, hearings, failed proposals and political wrangling, federal regulators on Wednesday announced sweeping changes to protect coal miners from black lung disease.

“This is a historical day for coal miners in this country,” said Joe Main, the head of the Mine Safety and Health Administration, as he looked out at a packed atrium — with at least four dozen miners and family members sitting front and center — at a government research facility here. “We’re issuing a new rule that’s going to change your lives.”

During the announcement, which featured testimonials by individual miners, Main and Labor Secretary Tom Perez outlined the details of the long-awaited rule. It reduces the amount of disease-causing dust allowed in mines, requires new technology that would make possible continuous monitoring of dust levels and closes a host of loopholes that have allowed companies to put workers at risk.

The moment of the occasion was clear Wednesday. Current and former federal health officials filled many of the seats at the research agency’s offices here. Moments before the event began, a long line of miners — some hooked to oxygen tanks to help them breathe — and their family members filed in and took their seats at the front of the room.

The rule comes as government researchers are documenting a resurgence in the fatal, incurable disease that was supposed to have been eradicated years ago. Though disease rates declined in the decades following a landmark 1969 law, government researchers recently have documented a disturbing trend: Since the late 1990s, rates of black lung have been on the rise, and a more aggressive form of the disease has surfaced, increasingly affecting younger miners.

The dust limit set by the final rule is the first reduction since the level set by the 1969 law.

Yet the limit does not go as far as the agency’s initial proposal, cutting the benchmark by one quarter instead of one half. “This rule demonstrates that we heard the concerns from the industry,” Perez said after the announcement, addressing questions about the middle ground the agency chose.

Nonetheless, the industry criticized the rule. The National Mining Association issued a statement calling the rule “disappointing” and said experts had determined the new standards “cannot be met by existing technologies.”

Murray Energy Corp., which is one of the nation’s largest coal companies and is led by the outspoken and politically active coal magnate Robert Murray, said Wednesday it planned to sue the Obama administration over the “disastrous and politically motivated rule … which fails to protect coal miners and destroys jobs.”

The push for reform that led to Wednesday’s announcement has a long and tortured history. The National Institute for Occupational Safety and Health, the government research agency known as NIOSH, reviewed a number of studies and concluded in a 1995 document that the dust limit set by the 1969 law should be cut in half. In the final years of the Clinton administration, however, reform attempts stalled.

The most recent push began in December 2009 when MSHA announced a campaign to end black lung. The agency released a proposal in October 2010, then held hearings and took public comments for much of 2011. Last August, MSHA sent the proposal to the White House’s Office of Management and Budget for review and approval. It has been stuck there until this week.

At every step, the coal industry and its allies have sought to delay or kill the rule. In comments to the agency, trade groups and major companies have argued that the rule is not supported by scientific evidence and that it would have grave economic effects.

House Republicans have requested two studies on the rule, with the first being tied to an appropriations bill that would block implementation until the study was complete. Both studies found that the rule was scientifically well-grounded.

When the rule went to the White House’s budget office, industry representatives twice met with officials. Members of the United Mine Workers of America also met once with the White House officials.

On Wednesday, Main and Perez stressed the portions of the rule meant to close loopholes in the current regulatory system, many of which were described in a report by the Center and NPR in 2012. In 2013, another Center series, Breathless and Burdened, described how coal industry lawyers and doctors helped beat back miners’ claims for benefits; one part of the series was produced in partnership with ABC News.

Under existing rules, miners wear pumps that collect samples of the amount of dust in the air, but coal companies get to average five samples, meaning some miners could be exposed to dangerously high dust levels as long as they are balanced by lower exposures to other miners. Samples are taken over an eight-hour period, even though many miners now work 10- or 12-hour shifts.

When an inspector is conducting sampling, companies are allowed to operate at half of normal production levels, generating less dust than likely would be present at full production. When MSHA does issue a citation, companies often have been allowed to avoid fixing the underlying problems for weeks or even months, potentially leaving miners exposed to high dust levels.

The new rule allows MSHA to issue a citation if any individual miner’s sample is too high, mandates sampling over a full shift, requires companies to operate at 80 percent of normal production levels during sampling and gives the agency authority to order quick fixes of violations and step up enforcement efforts at mines that appear to be cutting corners.

The changes to address sampling problems take effect this August. By February 2016, companies will have to use continuous personal dust monitors, which will provide miners with real-time information about the amount of dust they are breathing.

Miners have long described what they viewed as rampant cheating of dust samples. Documents and interviews with current and former miners have revealed practices such as supervisors placing pumps in clean air or tampering with pumps after sampling. The use of the continuous monitors should make such practices much more difficult, Main said Wednesday.

The final stage of the rule — the reduced dust limit — will take effect August 1, 2016.

The rule also expands the government’s X-ray surveillance program to include surface miners, who now will be eligible for the free tests. Emerging research from NIOSH shows that workers above ground also are suffering from black lung at significant rates. Further, all miners now will be eligible for free lung function tests.

The statement from Murray Energy Corp. called the continuous monitors “unproven, unreliable [and] subject to tampering.” Main contended that their use was supported by testing conducted by NIOSH. Overall, the requirements of the rule are not feasible technologically or economically, both Murray Energy Corp. and the National Mining Association said.

“I’ve heard people say we should wait and study this more,” Perez said. “We have, quite literally, studied the issue to death. … We have the tools to prevent this devastating disease. Now it’s time to muster the will to do it.”

U.S. Sen. Jay Rockefeller, who has been a longtime advocate for miners and recently announced he would not seek re-election, received a standing ovation and spoke of the new rule as a crucial step in the continuing fight to secure better working conditions for miners.

“I think we are making history here, but you have to watch us,” he said. “It’s one thing to make an announcement. It’s another thing to make it work. … The coal companies will fight this with everything they have.”

Carol Miller, who lost her husband Ronald to black lung, spoke, as did former miner Gary Hairston, who fought back tears as he described being unable to play with his grandson because of breathing problems caused by black lung.

But perhaps most stark was the one sentence uttered by former miner Dewey Keiper, who struggled to breathe and gasped as he spoke to the audience: “I worked in the mines for 28 years, never had any serious injuries, and now I can’t work no more.” He dropped his head, unable to continue.

“That’s why I took this job,” the normally reserved Main said, choking up. “Many of us in this room today began on this journey years ago, and we didn’t give up. … This rule finally makes good on the promise Congress made 40 years ago.”

The lawmakers were at an impasse.

More than two hours into a meeting of the House Financial Services Committee last month, the members were bickering over two versions of a bill designed to ease a new regulation that affected banks, part of the sweeping 2010 overhaul of financial laws known as the Dodd-Frank Act.

The dispute? Whether to give the banks everything they asked for, or whether to give them even more.

Rep. Scott Garrett, R-N.J., asked to postpone a final vote so he could contact “stakeholders,” code for the bankers who wanted the change. Then Rep. Jeb Hensarling, R-Texas, the committee’s ambitious chairman, attempted to retake the discussion with what passes for a joke in the oxygen-starved air of the wood-paneled hearing room in the Rayburn House Office Building on Capitol Hill.

“Occasionally we have been accused of trying to undermine aspects of Dodd-Frank,” Hensarling said with a chuckle. “I hope we’re guilty of it.”

Hensarling was being modest. With a 29-person committee staff, dozens of congressional colleagues and legions of lobbyists lined up to beat back any attempt to impose new discipline on the industry, the 56-year-old from Dallas is well on his way to achieving that goal.

Bankers’ best friends

Every business sector has its friends in Washington. Financial companies — from the biggest megabanks to small payday lenders — have some of the best.

Less than six years after a massive financial crisis drove the U.S. banking system to the edge of collapse, leading to a $700 billion government bailout and a recession that destroyed as much as $34 trillion in wealth, bankers and lawmakers are working in concert to undermine Dodd-Frank, an 849-page law designed to prevent another failure.

There are more than 2,000 lobbyists for financial firms and trade groups and many are spreading money around Washington, enlisting like-minded members of Congress to write letters, propose legislation, hold hearings and threaten agency budgets as they pressure regulators to ease up on banks.

Regulators say they try to treat input from lawmakers like that from anyone else.

However, “there are all these other factors, like the budget, like the fact that they can call you up to testify, and they can make your life pretty miserable,” said the former head of one regulatory agency who asked not to be identified, as did many of those contacted for this story.

The campaign is working. While Hensarling’s committee can’t move legislation on its own — the Senate Banking Committee supports Dodd-Frank — the House panel can work its will in other ways. And it has. Almost four years after Dodd-Frank became law, community banks face lower capital standards than originally proposed and are therefore more likely to fail; fewer derivatives traders have to register with regulators and they face lower hurdles in booking trades than they otherwise would have, partly undermining the law’s aim to make this corner of the financial system more transparent; and big banks may soon have a green light to keep investing in potentially risky securities that regulators tried to limit.

In the current election cycle, employees and political action committees of financial companies have donated nearly $149 million to congressional candidates, more than any other industry, according to data compiled by the Center for Responsive Politics. That’s more than two-and-a-half times the $57 million donated by the health care sector, the second-most-generous industry.

“It’s an exceedingly rich industry with a lot at stake,” said Brad Miller, a member of the House financial committee from 2003 until he left office in 2013 and currently a lawyer with the firm Grais & Ellsworth. With lawmakers under constant pressure to raise money, Miller said, deep-pocketed lobbyists “don’t have to worry about having access to members, because all you have to do is wait for the phone to ring — and you don’t have to wait very long.”

The Banking Caucus

The Center for Public Integrity reviewed political finance records; members’ voting records; public statements; and correspondence between Congress and financial regulators to identify the House’s unofficial banking caucus — the financial industry’s go-to lawmakers on the Financial Services Committee.

In addition to Hensarling and Garrett, the banking caucus includes Reps. Shelley Moore Capito, R-W.Va.; Sean Duffy, R-Wis.; Jim Himes, D-Conn.; Blaine Luetkemeyer, R-Mo.; Gregory Meeks, D-N.Y.; Ed Royce, R-Calif.; David Scott, D-Ga.; Steve Stivers, R-Ohio; and Ann Wagner, R-Mo.

The center of this alliance is Hensarling, a sharp-tongued Texan who learned his skills as a staffer for an iconic Lone Star State politician, former Sen. Phil Gramm. Hensarling has thick gray-brown hair and eyes that slant down at the corners, giving the impression that he’s on the verge of breaking into a boyish smile. Because of his ties to the House leadership, Hensarling leapfrogged senior members to become committee chair last year when Rep. Spencer Bachus, R-Ala., stepped down because of term limits set by House Republicans.

Operating with a strict, top-down style, Hensarling’s staff, with the help of lobbyists, orchestrates hearings, decides which proposals by regulators merit a letter from Congress and who should sign that letter, according to former committee staffers who have worked with him.

One subcommittee, for example, has spent months crafting a broad “indictment” of the Dodd-Frank Act. The chair of another drafted a letter to regulators and sent it directly to the American Bankers Association so the industry group could pressure other lawmakers to sign on.

Several members of the banking caucus have close ties to the financial industry predating their arrival in Congress, making them especially reliable in corraling cosponsors for a bill or signatures for a letter to regulators. Stivers, for instance, was the top lobbyist until 2002 for Bank One, where Jamie Dimon became CEO in 2000. (JPMorgan Chase & Co. bought BankOne in 2004 and made Dimon president; he became CEO of the world’s biggest bank a year later.)

Luetkemeyer’s family owns a community bank. He has a decades-old relationship with Camden Fine, the top lobbyist for small banks, and is sponsoring a package of rule changes sought by Fine’s organization. “Luetkemeyer is positioned and ready to fight for our industry,” a magazine published by the Independent Community Bankers of America proclaimed in 2011.

Capito, who chairs the subcommittee that oversees consumer lending and finance companies, is married to a banker who has worked for Wells Fargo and Citigroup. Himes spent 12 years at Goldman Sachs Group Inc. before joining a nonprofit housing group in 2002. He represents the tony New York suburb of Greenwich, Conn., which is home to some of the world’s largest hedge funds.

Others align with single industries. Royce, for example, has developed a near-symbiotic relationship with the credit union industry in the 21 years since he took office. He has raised more than twice as much from credit unions as any other lawmaker, and has sponsored at least 11 bills seeking to relax rules that frustrate the industry. Several sought to loosen limits on commercial lending by credit unions, a fight he pledged to continue in a Feb. 25 speech before 4,400 credit union employees and advocates at the Credit Union National Association’s annual conference in Washington. He filed the latest version of the bill on March. 13.

And several former staffers with ties to Hensarling or the committee are now working on the other side. Just as Hensarling rose to become committee chair, his chief of staff of eight years, Dee Buchanan, decamped to Ogilvy Government Relations where he lobbies for the American Bankers Association, insurers and a private equity firm. Former committee chief of staff Larry Lavender now lobbies at the firm Jones Walker for JPMorgan Chase & Co. and payday lending giant Cash America International.

Fundraising platform

The financial services committee is a crucial fundraising tool for both parties because companies with interests in its work generally have money to spend. In the mid-1990s, leaders began packing the panel to help their members bring in campaign cash, and membership swelled from 50 members in 1995 to 71 in 2009. Membership has since been trimmed to 61, but it’s still second in size only to Armed Services, which has 62.

Panel members raise more money for their election campaigns, on average, than those on any other House panel. In the two years ended in 2012, members raised an average of $2.6 million, according to data from the Center for Responsive Politics, edging out the powerful Ways and Means Committee.

“Members are encouraged by both Democrats and Republicans to spend every waking moment being on the phone asking for money, and the people you ask for money if you're on the Financial Services Committee are lobbyists for financial interests,” said Miller, the former member.

Hensarling’s fundraising nearly doubled in 2012, after he became the highest-ranking Republican on the committee. He hosted a fundraising ski trip in February at the St. Regis Deer Valley resort that boasts uniformed “ski valets,” a “private ski beach” and a “split-level infinity pool.” His political action committee, The Jobs, Economy and Budget (JEB) Fund, took in $87,100 that month including $5,000 each from the Consumer Bankers Association, the Capital One Financial PAC, and the National Pawnbrokers Association PAC.

Financial interests recently hosted Scott at Johnny’s Half Shell and Himes at Sonoma, both swank Capitol Hill dining spots, according to copies of the invitations posted by the Sunlight Foundation. Meeks enjoys fundraising trips to Las Vegas and throws an annual Super Bowl party for big-ticket donors, according to the New York Post.

The Sunlight database includes invitations to fundraisers held on behalf of Garrett, Luetkemeyer, Meeks and Scott at the townhouse of Tim Rupli, a well-known lobbyist whose clients have included payday lenders and prepaid debit card companies.

Himes’ spokeswoman, Elizabeth Kerr, said her boss is not advocating for the investment industry. “The congressman doesn’t advocate for or against an industry. He advocates for the right law or regulation,” she said.

The financial sector spent $484.7 million in 2013 lobbying Congress, according to CRP. That includes about $3.6 million spent by groups representing consumer interests. Financial industry lobbyists outnumber those for consumer groups by at least 20 to 1, according to a report by The Nation magazine.

“I used to have 100 meetings with people from the financial sector to every three or four from consumer groups,” said Bart Chilton, who until last month was a commissioner at the Commodity Futures Trading Commission, which regulates derivatives.

When Congress and trade groups work together, the united front can overwhelm regulators, who depend on Congress for budget approval and can face embarrassing public excoriation if they defy lawmakers, according to a senior staffer for a financial regulator who has spent years working with Congress.

How it works

It was late on a Thursday afternoon in December when Cam Fine opened an email and saw the message: “We may have a problem with Volcker.”

Fine is the powerful top lobbyist for community banks and his regulation experts were warning him about an unexpected threat from the Volcker rule, a provision of Dodd-Frank designed to prevent banks from investing, and risking, money for their own profit. The rule was aimed squarely at banking giants engaged in so-called proprietary trading, the practice of buying and selling of securities for their own profit, unrelated to client business.

To Fine’s surprise, the Volcker rule laid out by regulators was about to roil his little-bank world. “We were, like, gobsmacked!” he said. The proposed rule would require community banks to get rid of investments known as trust-preferred collateralized debt obligations. The issue was a technical one, but it would slash the profits of hundreds of community banks and threaten the very survival of a handful.

Fine, a tall, trim man with perfect teeth and a slight drawl, went to work. He called his bankers, he called the regulators, he called his counterparts at other banking trade groups, he said.

The community banking lobby, by many accounts, is the most powerful in the industry. What the banks lack in size, the make up for in numbers — more than 6,000, at least one in each congressional district. Fine keeps a map on his office wall showing each of his members in every congressional district, a reminder that he can activate locally influential bankers to further his group’s message with any congressional office.

Fine and his member bankers started calling up their friends on Capitol Hill, including Capito and Hensarling, who have raised more money from commercial banks than any other House members, including Speaker John Boehner.

After talking to the bankers and lobbyists, Capito and Hensarling fired off a letter telling a slew of regulators that the rule was supposed to “limit certain activities at large, complex financial institutions,” yet this provision would harm “Main Street financial institutions … critical to our economic recovery.”

They followed up three weeks later with a proposed legislative change dubbed the “Fairness for Community Job Creators Act.”

The five regulatory agencies involved in the rule fell in line. The Federal Reserve, Federal Deposit Insurance Corp., CFTC, SEC and the Office of the Comptroller of the Currency all agreed to allow community banks to keep their CDOs. They made the announcement before January 15, when most banks would have to report their quarterly profits.

Going for more

Community banks got their fix, as often happens, but lobbyists for the American Bankers Association, which represents the broader banking industry, are still seeking to blunt Volcker’s potential effect on big banks.

Lawmakers know their constituents think they’re on the side of the angels when they help community banks. Letting them keep their CDOs was a political win-win.

Now the bigger banks wanted a similar carve-out for another kind of investment: so-called collateralized loan obligations, bundles of junk-rated corporate loans that were the subject of competing legislation at last month’s committee meeting.

Under Volcker, CLOs — which performed well during the financial crisis — fell into the same category as the mortgage backed securities and collateralized debt obligations that roiled the industry after the housing market collapsed. Banks would have to sell off the full range of investments.

As a result, the CLO market nearly froze. Issuance of new CLOs, according to research firm S&P Capital IQ, fell to $2.55 billion in January from $7.05 billion in December, when the Volcker rule was published.

To get what they want, bank lobbyists and lawmakers are resorting, critics charge, to an old rhetorical trick: “They are trying to hide behind community banks, grossly exaggerating if not lying about the facts and claiming the need for a big loophole,” said Dennis Kelleher, CEO of Better Markets, a group that advocates stronger market oversight.

Yet the biggest holder of CLOs is JPMorgan, the biggest bank of all, which owns 41 percent of the $70 billion of CLOs held by banks, according to data compiled by Better Markets from the companies’ financial filings.

Only 21 of the 6,000 community banks in the U.S. own CLOs, according to the Loan Syndication and Trading Association, a trade group.  The SEC is investigating whether banks are using CLOs to unlawfully shift assets off their balance sheets, according to The Wall Street Journal.

Rep. Scott of Georgia, at a February Financial Services hearing, urged regulators from five agencies to re-think the treatment of CLOs, saying the securities “provide large amounts of credit to small businesses.”

“They are not toxic. They didn't cause the problem,” Scott continued, adding that small and regional community banks would be hurt.

A senior official with one of the regulators, who asked not to be named because he was not authorized to speak on the topic, said that Scott’s remarks were taken almost word-for-word from a list of suggested questions written by the Securities Industry and Financial Markets Association and passed around to members of the committee.

SIFMA — which represents huge investment firms such as Morgan Stanley and Fidelity and spent more than $5.2 million last year on lobbying — declined to comment. Scott’s chief of staff, Michael Andel, didn’t confirm or deny the allegation. “I can’t find anything to match up to this,” he said.

None of the other elected officials in this story responded to requests for interviews or comments.

Scott’s behavior isn’t uncommon, said Miller, who also is a fellow with the Center for American Progress, a left-leaning policy think tank. Elected officials “are very willing to repeat verbatim what lobbyists suggest they say.”

The Financial Services Committee eventually approved a bill tweaking Volcker to allow banks to keep investing in most CLOs. While that bill is unlikely to become law, Federal Reserve Gov. Daniel Tarullo on Feb. 5 assured the committee that the CLO issue “is already at the top of the list” of items regulators were planning to address.

Issuance surged back. In March, $10.8 billion in CLOs hit the market.

In April, the Fed said it would give banks an additional two years to comply with the new rules.

“All too often, those in government respond to the squeaky wheel, and they try to address things that maybe ought not to be addressed,” said Chilton, the former regulator.

‘You can get a letter done’

Lawmakers often write letters to agencies to amplify banks’ messages and exert pressure on regulators. A freedom of information request yielded 1,820 pages of correspondence between lawmakers and the Consumer Financial Protection Bureau, a new agency created by the Dodd-Frank law and despised by financial institutions, from October 2010 through December 2013. Similar requests yielded hundreds of letters to the Federal Reserve and the Federal Deposit Insurance Corp. The Commodity Futures Trading Commission and The Securities and Exchange Commission post their letters online. The Treasury Department did not fulfill a FOIA request in time for publication.

“You can’t get legislation done but you can get a letter done,” said a longtime financial lobbyist who spoke on condition of anonymity because he was afraid of retaliation by Hensarling’s staff. “Any time you can deliver the message, it’s just one more tile in the mosaic.”

New Jersey’s Garrett wrote or signed on to dozens of letters to regulators objecting to proposed Dodd-Frank rules, advocating for changes and most commonly demanding that the agencies perform exhaustive cost-benefit analyses of every new provision. In August 2011, he wrote Fed Chairman Ben Bernanke and five other agencies urging them to eliminate a proposed rule that would delay or cut the profits large banks can earn when they securitize bundles of mortgage loans.

The letters served to amplify the messages regulators were receiving from JPMorgan, Bank of America,  the American Bankers Association and dozens of others asking them to eliminate the so-called premium capture cash reserve accounts, or PCCRAs.

The accounts were part of a proposed mortgage finance regulation to ensure that lenders hold on their books 5 percent of all the risky loans they write. Regulators believed the accounts could prevent banks from manipulating loan terms to make it look like they were holding a 5-percent stake when in fact the stake was lower, said Guy Cecala, the CEO of Inside Mortgage Finance, a newsletter that tracks the industry.

The rule would have affected only a small segment of the mortgage market, loans that don’t meet the safest underwriting requirements.

“It happens to be a segment of the market that everyone wants to bring back,” Cecala said. “Nobody as a regulator wants to take the chance that they’ll kill it.”

Garrett warned that PCCRAs would reduce the availability of loans to homeowners, referring to the letters from bankers and lobbyists.

“It is not surprising that the securitization community has already commented that this ill-conceived provision will greatly reduce or even eliminate the securitization market,’’ he said in the letter.

A few months later, a coalition of bankers, mortgage lenders and securitizers referred back to, and echoed, Garrett’s correspondence in their own comments to the Fed asking for the proposal to be killed, or delayed while the agencies perform a cost-benefit analysis. Then they questioned whether the bank regulators had the legal authority to mandate the cash reserve accounts, quoting directly from Garrett’s letter.

Several weeks later, in March 2012, Garrett wrote another letter, reiterating their demands and citing reports by Bank of America and Moody’s Analytics that were also cited in at least three bank and trade group comment letters.

The Fed and other regulators in August re-proposed the rule, this time without the premium capture accounts.

Sometimes letters are part of a last-ditch effort to postpone rules, after industry has exhausted every opportunity to water them down.

When banks and mortgage firms wanted regulators to delay mortgage lending rules required under Dodd-Frank, they relied on Capito, who drafted a letter to the consumer bureau, but sent it first to the American Bankers Association and Consumer Bankers Association. The ABA, in turn, distributed it to its members in state banking groups and urged them to make sure their representatives signed on. When the letter went out on Nov. 5, two weeks after ABA circulated it, 118 House members had signed. At least one state trade group publicly took credit for getting its representatives on board.

About a month later, Luetkemeyer and Wagner sent the CFPB a letter whose opening sentences were nearly identical to the language in Capito’s letter.

“We wanted as many members of Congress involved as possible … and certainly when someone with the stature of the chairwoman expresses interest, we want to help as much as we can,” said James Ballentine, ABA’s top lobbyist. Ballentine noted that ABA sent a banker from Capito’s home state of West Virginia to testify on the issue.

In this way, lawmakers help monied interests harness their networks and resources to create the perception of a popular uprising. The trade groups make it clear to regulators exactly what the industry wants, but the uproar appears to bubble up from below rather than being orchestrated from the top. In effect, Capito helped the ABA create an echo chamber, obscuring the fact that all those voices were coming from the same lobbyists.

In this case, the CFPB refused to delay the rule, noting that Congress had established its effective date in the Dodd-Frank Act. The bureau already had spent a year addressing industry’s complaints in a series of official interpretations and amendments and produced videos explaining the rules, Director Richard Cordray wrote in a two-page response to Capito.

But Chilton, the former regulator, notes that lawmakers’ requests consume agencies’ attention even when regulators decline to comply.

“For me as a public servant, it’s an obligation to meet with people and listen to their case,” he said.

Payday for payday supporters

Even the most controversial corners of finance have their champions in the banking caucus. Take payday lenders, widely maligned companies that offer small, short-term loans with steep fees that regulators believe can trap borrowers in a cycle of indebtedness. The Consumer Financial Protection Bureau was created in part to oversee such lenders.

Facing such federal scrutiny for the first time, payday lenders ramped up their political giving. Donations shot up to $3.3 million in the 2012 election cycle, 11-fold what it had been a decade earlier. Most of the payday industry's top recipients are in the banking caucus identified by the Center, including Meeks, Stivers, Hensarling, Luetkemeyer and Wagner. Kansas-based QC Holdings, the biggest political donor in the payday industry this election cycle, has given $33,500 to members of the House committee, including contributions to Wagner, Hensarling, Capito, Garrett and Stivers.

The industry sought shelter from stricter oversight by promoting a bill that would place many payday lenders under the protective umbrella of a federal charter. States with tougher consumer laws would be unable to touch them. Members of the banking caucus have taken up the cause, introducing three versions of the bill even as its original sponsor, former Rep. Joe Baca, D-Calif., left Congress and became CEO of a payday lenders’ trade group.

After Luetkemeyer introduced a revised version of the bill in 2012, he praised Baca as “a dedicated leader on this subject.” When Luetkemeyer introduced the third version in April 2013, this time focused on online lenders, Meeks was the first cosponsor to sign on. Stivers joined a month later.

Wagner has pushed legislation through the House that would prevent the Labor Department from advancing a rule holding money managers more accountable to clients for the decisions they make about retirement investments. After a sustained outcry from industry, the department agreed in September 2011 to rework the rule and propose it again. It has yet to act, a delay that costs retirement investors billions of dollars a year because of brokers’ conflicts of interest, according to research by professors at Indiana University and the University of Texas.

Wagner’s been richly rewarded; her strongest financial support has come from two industries that would face major costs because of the change: securities and investment firms, and insurance companies. In the process, Wagner has distinguished herself as a fundraiser, raising more than $100,000 for her leadership PAC in her first year in office. Among the major donors: Goldman Sachs, Oppenheimer Funds and three insurance trade groups.

The consumer bureau is particularly reviled by banks and other financial firms that deal with the public because it was created with a broad mandate to regulate consumer products that largely escaped oversight before the crisis. That makes it a frequent target for lawmakers.

Duffy of Wisconsin has sponsored at least eight bills to weaken the CFPB since Dodd-Frank established the new consumer agency in 2010. In February, the entire House approved a Duffy bill pushed by bankers that would have made the agency subservient to a council of financial regulators including the Federal Reserve, which historically supported industry’s aims.

On the House floor, Duffy defended the legislation with a familiar brand of populist, anti-Wall Street rhetoric: He said it would help community banks compete.

“Big banks on Wall Street who created the crisis are given a voice to have rules from the CFPB overturned, but you have left the small banks and credit unions in my district voiceless to say: this rule is going to hurt us,” said Duffy, who is vice chairman of Capito’s consumer credit subcommittee.

Goldman Sachs has donated more to Duffy's 2014 reelection effort than any other single financial company or group.

None of those bills has become law, but dealing with the animosity has sapped a huge amount of the CFPB’s resources. The Financial Services Committee has called CFPB officials to testify 14 times in the past three years, more than any other financial regulator. Overall, agency officials have been called to testify before Congress 46 times in the past three years.

Each appearance requires hours of preparation and meetings with key officials who otherwise would be writing and enforcing rules, according to a bureau official familiar with the process. Just one more way the financial industry is able to affect the regulatory process — part of its smoothly effective, multi-front war.

Last week, Center for Public Integrity reporter Chris Hamby was honored with a Pulitzer Prize in Investigative Reporting. This was a thrilling moment for the Center, but also a testament to the power of complex, sophisticated reporting and the impact that it can produce. 

Like most journalists, I’ve always dreamed of being associated with winning a Pulitzer, and I can hardly believe this dream has finally come true. Ever since I was a student in journalism school in the 1960s, and later when I started working on newspapers in the 1970s, I had always wanted to have some part in a successful Pulitzer entry.

My journalism career took me into public radio for 27 years, both at NPR and Minnesota Public Radio-American Public Media. There are no Pulitzers for broadcasting, so I assumed this particular dream would never be fulfilled. Then, a couple years after I moved to The Center for Public Integrity in 2007, the Pulitzer Board started allowing entries in digital text, along with print. Every year since, the Center has entered its best investigative work as a digital news organization.

The Pulitzer’s Investigative Reporting category honors projects built from discoveries of original, groundbreaking material. Chris Hamby’s year-long shoe-leather reporting and deep analysis for our black lung project clearly fit this criterion.

His winning, 25,000-word series, “Breathless and Burdened: Dying from Black Lung, Buried by Law and Medicine,” examines how doctors and lawyers, working at the behest of the coal industry, helped defeat the benefits claims of miners sick and dying of black lung, even as disease rates are on the rise. Chris gathered more than 1,500 medical records and created a database to accompany his devastating narrative.

That database of doctors’ rulings in black lung cases revealed, for the first time, how doctors at Johns Hopkins Medicine systematically denied seeing black lung even when other professionals and evidence showed it existed. You can read what Chris wrote for the background to this story here.

Obviously, it takes a team of dedicated professionals to produce this level of work. “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. They all are due congratulations.

The project also won the Edgar A. Poe Award from the White House Correspondents’ Association and the Goldsmith Prize for Investigative Reporting from Harvard’s Kennedy School of Government, in collaboration with Brian Ross, Matthew Mosk and Rhonda Schwartz of ABC News.

“Breathless and Burdened” is just the latest in a series of award-winning projects to arise from the Center's workers' rights reporting team. Founded in January 2010 and led by senior reporter and managing editor Morris, the unit has produced ground-breaking investigative work on subjects such as the international marketing of deadly asbestos; worker and public safety hazards at the nation's aging oil refineries; and regulatory lapses that put temporary workers, coal miners, contract laborers and others at risk. The Center is among the very few U.S. news outlets committed to in-depth, investigative reporting on worker health and safety and economic justice issues.

Chris Hamby came to the Center four years ago as a paid intern. I was happy to hire him after his internship and he has been a stellar reporter on stories about the environment and workers’ rights. Unfortunately, the Center had to say goodbye to Hamby last week. As I had known for many weeks, he decided before the Pulitzers were announced to join a new investigative unit being formed at BuzzFeed. The Center will miss Chris deeply, and I wish him well.

I am the first to admit that overall there are probably too many awards and prizes in journalism, but the Pulitzers are a different matter. Writing under the headline, “What’s the Point of the Pulitzers?”New York Times Public Editor Margaret Sullivan, a former Pulitzer Board member, wrote that this award is still relevant and is worth more than journalistic self-congratulations because of what it inspires.  

“The Pulitzers encourage journalists and news organizations to strive to do their best,” she wrote, “The prizes provide a benchmark, a focal point and an inspiration for outstanding work. They also give important and lasting recognition to work that took courage or put journalists in harm’s way.”

I agree with her completely. And I am incredibly proud of the Center’s recognition based on Chris Hamby’s meaningful investigation. More important, however, is the fact that this work will enable thousands of coal miners with black lung to finally receive the benefits they deserve.

Until next week,

Bill 

As state courts across the nation prepare to referee numerous public pension reform disputes, a gaggle of interested parties — from major corporations to the Koch brothers — will next week sponsor an expenses-paid conference on public pension reform for judges who may decide the cases’ fates.

Conference funders, which include ExxonMobil, Google and Wal-Mart, could benefit from efforts to slash benefits for public employees. Alternative approaches to shore up state budgets would likely require higher corporate taxes, fewer corporate subsidies and reduced government services, all of which would be bad for business.

The three-day gathering in a Charleston, S.C., hotel is hosted by George Mason University’s Law & Economics Center.

The “Judicial Symposium on the Economics and Law of Public Pension Reform,” according to a George Mason event description, is intended to “comprehensively outline the underlying structure of pension systems, address the differences between public and private pensions and detail the unfunded liabilities and potential bankruptcy issues arising from this crisis.”

In all, about three dozen corporations — Ford Motor Co., General Electric Co., ConocoPhillips, drug maker Pfizer and the Dow Chemical Company also among them — are sponsoring the conference. Other funders include trade associations such as the American Petroleum Institute and the U.S. Chamber of Commerce, and conservative foundations such as the John William Pope Foundation and the Charles G. Koch Charitable Foundation.

Dozens of individuals are also helping bankroll the gathering; some state and federal judges themselves are listed sponsors, including Utah Judge Samuel D. McVey and Harris L. Hartz of the 10th U.S. Circuit Court of Appeals.

It’s unclear which judges — and how many of them — will be attending the conference, although George Mason’s judicial seminars are traditionally open to both state and federal judges. George Mason does not publicly list conference attendees, and federal judges who attend privately funded educational seminars aren’t required to publicly disclose which conference they attended until 30 days after it ends.

Henry Butler, executive director of the Law & Economics Center, did not respond to multiple requests for comment.

As the Center for Public Integrity reported last year, George Mason University’s Law & Economics Center regularly organizes business-friendly judicial seminars.

The Washington Postrecently reported that conference funders provide more than just financial support — they also help coordinate who attends the influential seminars.

Conference agenda

What is clear from the conference’s agenda is that attending judges will spend most of their time inside Charleston, S.C.’s Francis Marion Hotel listening to lectures and panel discussions led mainly by advocates of public pension reform. Bill Lurye, general counsel of the American Federation of State, County and Municipal Employees, stands out as one of the only panelists offering a union perspective on the pension debate.

Two of the conference’s featured lecturers — Todd Zywicki, a George Mason University law professor, and Eileen Norcross, a senior research fellow at George Mason University’s conservative Mercatus Center — co-wrote a 2010 op-ed headlined “How public worker pensions are too rich for New York’s — and America’s — blood.” The column decried unions’ efforts to thwart pension reform efforts.

“No one begrudges a secure retirement for police officers, firefighters and other public servants,” the authors wrote. “But unless states act now by closing insolvent plans to new hires and reducing the rate of benefit accrual for current employees, they won’t be able to shore up enough to guarantee at least some of what’s been promised.”

Norcross will lead an hour-long afternoon session on Monday titled “Pension Reform Options.” In 2011, Norcross testified before the U.S. House Committee on Oversight and Government Reform, where she recommended that states “[f]reeze or reduce the Cost of Living Adjustment, increase the retirement age, increase contributions from workers, and, importantly close the defined benefit plan to new hires.”

Zywicki did not respond to requests for comment. Mercatus Center spokesman Kyle Precourt told the Center for Public Integrity in an email that Norcross is “entrenched in research now and not available for media.”

For a session on “Legal Questions Raised by Pension Reform,” judges will listen to Amy Monahan, a University of Minnesota law professor. Monahan, who did not respond to requests for comment, has published research disputing court rulings that state statutes establishing a pension contract between states and employees cannot legally be broken.

She wrote in a 2012 paper that “changes to future pension accruals should be legally permissible absent clear and unambiguous evidence that the legislature intended to create a contract.”

Peter Kiernan, a New York attorney who co-wrote a recent report on public pensions, says arguments like these are exactly what judges will have to grapple with as pension reforms face legal challenges. In some states and cities, reforms have already reached the courts.

Illinois, for example, passed legislation in late 2013 that cut retirement benefits for public employees. Unions have since filed several lawsuits, claiming that the pension changes violate the Illinois Constitution, which explicitly states that contractual pension benefits “shall not be diminished or impaired.”

Now the fate of Illinois’ pension reform efforts rests in the hands of the courts. How they rule could have nationwide implications.

“If the Illinois Supreme Court says that what the Illinois legislature did is constitutional and legal, then the logjam has been broken,” Kiernan said, stressing that judges will be “enormously important” in resolving the pension reform dispute. “And you’re going to see all of those states attempt reforms with respect to current employees.”

Corporate push for public pension reform

To be sure: Public pensions across the nation are in rotten shape. Depending on who is making the calculations — and how those calculations are being made — state and local pensions nationwide are underfunded by anywhere from nearly $1 trillion to as much as $4 trillion.

Some states and cities are worse off than others. Illinois and New Jersey, two of the worst, are drowning in pension debt. Detroit and other cities, meanwhile, have even filed for bankruptcy in part because their pension shortfalls are so severe.

“Reform is necessary because it is creating an unsustainable burden on taxpayers,” said Todd Maisch, executive vice president of the Illinois Chamber of Commerce.

 In Illinois, “I don’t think you fix the mess without pension reform,” he said.

Government officials find themselves left with difficult choices: Raise taxes and cut services to help increase their annual contributions to beleaguered pension funds, change the terms of public employee pensions to help lower the burden on state and local budgets, or do a little of both.

Reform advocates contend that public employees are enjoying lavish retirement benefits that are handcuffing states and bankrupting cities. They argue that states and municipalities should cut pensions for current and future employees. In some cases, that means shifting workers from employee-friendly defined-benefit plans to plans that more closely resemble private-sector 401(k) plans.

Public workers and their unions, too, have cried foul, arguing that their retirement benefits are far from extravagant and that attempts to change the terms of their pensions violate agreements they previously reached with state and local governments.

David Sirota, a liberal writer and commentator, wrote a 2013 report called “The Plot against Pensions,” which argued that “conservative activists are manufacturing the perception of a public pension crisis in order to slash modest retiree benefits and preserve expensive corporate subsidies and tax breaks.”

While public pensions face a $46 billion annual shortfall, the report found, it is “dwarfed by the $80 billion a year states and cities spend on corporate subsidies.”

“We are having a debate over pension shortfalls, calling them an emergency, when in fact they are in aggregate far smaller than what is spent each year on subsidies to business,” Sirota told the Center for Public Integrity. “And business likes that imbalance.”

Critics of pension reform worry that corporations and conservative lawmakers are winning a public relations battle intended to demonize public pensions while ignoring the broader scope of budget shortfalls.

Hank Kim, executive director of the National Conference on Public Employee Retirement Systems, said he’s tired of pension reform advocates claiming that state and local municipalities can only overcome their fiscal problems on the backs of public workers.

“If it’s really about ‘shared sacrifice,’ which is the terminology folks have been using since the Great Recession, it occurs to us that the groups that aren’t sharing the sacrifice are the wealthy and the corporations because they’re still getting the tax breaks,” he said. “You can’t be crying poverty when you are still giving away the shop to corporations.”

But a combination of higher taxes and poorer services could prompt businesses to move, said Patrick McGuinn, a political science professor at Drew University and author of a February report about the politics of pension reform.

“When you’re cutting things like education or health care or investment in transportation or technology, those are things that, to varying degrees, are going to affect corporations,” he said.

With so much at stake for businesses, some worry what kind of influence a corporate-funded conference might have on judges whose rulings could resolve the pension debate.

Sirota, for one, said the conference hosted by George Mason’s Law & Economics Center is “an effort to lobby judges.”

“It’s crossing a line that’s not supposed to be crossed,” he said. “What’s next? Is a company going to be able to hire a lobbyist to go lobby a judge in chambers?”

Probably not.

But what’s next for judges certainly includes another conference on public pension reform hosted by George Mason’s Law & Economics Center. It’s scheduled for September in San Francisco.

When Linda Wolicki-Gables and her husband appealed a lawsuit all the way to the second-highest court in the nation against Johnson & Johnson over a malfunctioning medication pump that had been implanted in her body, the couple had no idea that one of the judges who decided their case had a financial stake in the giant multinational company.

Eleventh U.S. Circuit Court of Appeals Judge James Hill owned as much as $100,000 in Johnson & Johnson stock when he and two other judges ruled against the Gables’ appeal in the precedent-setting case.

For the Gables, a different decision in the 2011 appeal could have helped them win a verdict for as much as $20 million, a sum that would have vastly improved the quality of her care, according to their attorney, T. Patton Youngblood Jr. Today, the Florida woman is a partial paraplegic, he said, largely confined to her home with only her husband to care for her.

The Center also found that Hill ruled on three other appeals involving companies in which he owned stock, violating clear rules governing the federal courts. In all four instances, the court rulings favored his financial interest. In a statement released by the court, Hill said he was not aware of those stock holdings at the time due to the complexity of his family’s trusts.

“You like to think that people will be above board but we all know that’s not the case. You can’t presume that,” said Youngblood, the Gables’ attorney. “I don’t think it’s fair that he was able to preside over this thing. I just don’t think that’s right. That’s why they ask you for disclosures so that you don’t end up presiding over cases where you have a financial or other conflict.”

The Center for Public Integrity uncovered Hill's conflicts by examining the three most recent years of financial disclosure reports filed by 255 of the 258 judges who sit on the nation’s 13 appellate circuits. In all, the Center identified 24 cases where judges owned stock in a company with a case before them. In two other instances, judges had financial ties with law firms working on cases over which they presided, bringing the total to 26 conflicts.

After the Center notified the judges of its findings, 16 judges had letters sent to the parties in all of those cases uncovered by the Center during the months-long investigation. The letters are the first step in possibly reopening the cases.

The violations occurred even though clear rules regarding conflicts of interest exist. Federal judges may not sit on cases in which they have a financial interest, according to a federal law. A similar rule is also in place in the code of conduct established by the court system. Judges have been warned before about participating in such cases. Following a Washington Post investigation in 2006, the courts even added a computerized screening process to help judges avoid conflicts.

Yet the problems continue.

The Center’s findings point to a larger issue of accountability — or lack thereof — in the federal court system. Judges face no formal punishment for breaking these rules.

Appellate judges can affect a company’s stock price — or even an entire industry sector — with their rulings. They are also far more likely to own stock than the average American, making it all the more important for them to avoid the perception that their holdings could influence their rulings.

Some judges don’t own individual stocks at all to avoid the risk of conflicting with their cases. Many judges are extremely careful in reviewing their holdings. Yet the Center’s findings show that some judges do not keep track of their own investments, even with the help of computerized databases. Sometimes they have failed to do so repeatedly, like Hill.

“Come on guys, this is your obligation,” said Youngblood. “You tell us all the time about ignorance being no excuse.”

William G. Ross, a Samford University law professor in Alabama who specializes in judicial ethics, said such failures undermine public confidence in the judiciary.

“Considering the importance of judicial integrity and avoidance of conflicts of interest, I don’t think it is asking too much of a judge to expect him or her to know what his or her holdings are,” he said. “Even judges with significant portfolios should be familiar with their own holdings.”

Wealthy, powerful and unknown

The Center found that 59 percent of all federal appellate judges reported owning stock, despite the risk that the companies in which they have a financial stake could come before them. By comparison, the proportion of American families who directly own stock is much lower, just 15 percent as of 2010.

That imbalance has grown over the past half-century, according to Ross, the Samford University professor. Like most highly paid professionals in America, federal judges have much larger and more diverse portfolios than they would have had 30 or 40 years ago, he said.

All told, 150 of the judges on the appellate court invested between $76 million and $226 million in more than 1,000 corporations in 2012, according to the Center’s analysis. Disclosure rules require holdings to be reported in a range.

Among the most commonly held stocks owned by appellate judges were General Electric Co. (at least $2.5 million), tech giants Intel Corp. (at least $495,000), Microsoft Corp. (at least $630,000) and IBM Corp. ($1.5 million), plus energy heavyweight ExxonMobil Corp. (at least $3.8 million) — a list that generally dovetails with most commonly held stocks among all investors.

The Center examined the finances of 161 active and 94 senior judges, who also try cases in semi-retirement. The judges must disclose their holdings annually, plus those of their spouses and any dependent children.

Forty-one percent of the judges the Center reviewed have eschewed individual stocks altogether, in some cases to deliberately avoid what one judge called the “mousetrap” of corporate stock ownership, opting instead for generally safer, if potentially less lucrative, investments such as mutual funds, bonds or real estate. Such investments are also less likely to interfere with a judge’s day job.

Unsurprisingly, judges who did not report owning individual stocks were less wealthy, on average, than their stock-owning counterparts.

The median value of a non-stockholding judge’s investments was between $498,000 and $1.3 million compared with stock-holding judges, who reported between $1.4 million and $4.2 million.

Total reported assets, including stock and other investments, for all the judges were between $585 million and $1.8 billion, according to the Center’s calculations.

The easiest fix to the conflict of interest problem would be to ban judges from owning stock, but that would be “an overreaction,” said Stephen Gillers, a New York University law professor who specializes in legal ethics.

“It would be a high price to demand of people who go on to the bench that they limit their investments to government securities and mutual funds,” he said.

For their work in the courts, federal appellate judges earn $211,200 a year, even in retirement, a salary far greater than the average American family, which pulls in roughly $52,000 a year. Still, that’s relatively low compared to what a top-notch lawyer can make in the private sector.

Appellate judges’ wealth is matched by their power. Appointed for life, federal judges are an elite population removed from the general public by demographics, academic achievement and professional status. They are mostly male, mostly white and mostly 65 or older. Roughly one in five federal appellate judges graduated from Ivy League law schools, according to the Center’s analysis of Federal Judicial Center data.

That says nothing of their influence on the bench. Appeals court judges can uphold or strike down a president’s signature health care law, determine how universities admit students and even change the way the Internet works. In the coming months, they will likely play a major role in determining whether same-sex marriage becomes legal nationwide.

“They are the final arbiters in all but the tiny handful of cases that the Supreme Court takes,” said Arthur Hellman, a University of Pittsburgh law professor and an expert on the federal court system.

They’re also on deck to fill vacancies on the U.S. Supreme Court.

But despite their considerable influence, appeals court judges are largely anonymous to the American people — even to many lawyers. News stories sometimes neglect to name the judges who participate in panels that strike down or uphold multimillion-dollar verdicts.

“They are largely unknown,” said Hellman, noting that most Americans couldn’t identify which circuit their state is in. “And even a pretty savvy lawyer would be hard-pressed to identify more than two or three of the judges.”

Still, even their less-influential decisions that never make headlines can mean the world to the parties involved.

‘Clean hands’?

To save his home, Mountaga Bah needed to win a legal battle with a banking giant.

Faced with the threat of foreclosure, Bah and his wife sued Wells Fargo Bank beginning in 2008, claiming that the bank engaged in predatory lending when it added a second mortgage to the Bowie, Md., house where they live with their three daughters.

Wells Fargo, his original complaint alleged, “took advantage” of Bah — a native of the West African nation of Guinea, who was not fluent in English — by failing to ensure that he would be able to afford the monthly mortgage payments. The complaint alleged the bank’s lax underwriting meant it lacked “clean hands.”

In 2010, a three-judge federal appellate panel confirmed a district court order in favor of Wells Fargo, dismissing Bah’s claims.

At the time, 4th U.S. Circuit Court of Appeals Judge Barbara Keenan owned stock in the bank.

 “I couldn’t believe it,” Bah told the Center after he learned about the judge’s conflict of interest in March. “That’s not right.”

Bah and his family have been able to stay in the house up until now in part because he filed for bankruptcy in 2009. But he struggles to keep up with mortgage payments to Wells Fargo and now questions the outcome in the case that had been his chance to keep his family home.

“Why she did this?” he said.

Keenan did not comment directly on the Bah foreclosure case, but the clerk of the appeals court, Patricia S. Connor, wrote in a letter that the judge was unaware of the conflict due to a “mistake in the judge’s office at the time the case was assigned.”

Connor noted that the value of Keenan’s holdings in Wells Fargo was $1,900.

Judges who own even one share of stock in a company that appears before them in court are required to disqualify themselves, according to the law.

Stock ownership accounted for 24 of the 26 conflicts that sparked letters from the courts to the parties in the cases where a conflict arose.

Some of the judges in those cases owned as few shares as Keenan while others may have owned as much as $100,000, or possibly more because some did not report value ranges for their stocks as required.

The remaining two conflicts the Center uncovered involved financial ties to law firms that tried cases before them, including the case of 9th U.S. Circuit Court of Appeals Judge Jay Bybee.

After becoming a judge, Bybee received more than $78,000 worth of legal services from 2009 through 2012 from Davis Polk & Wardwell LLP to defend him for actions in his prior job where he signed the so-called “torture memos” for the Bush administration’s Justice Department. The memos justified the controversial interrogation method of “waterboarding.”

Despite the help, he did not step aside in a 2010 case of a Guatemalan woman who sought asylum under the Convention Against Torture even though she was represented by a lawyer from the firm. The three-judge panel, including Bybee, affirmed the Justice Department’s denial of asylum, thus ruling against the firm that helped him. He acknowledged his failure to recuse himself in a letter sent to the parties in the case after the Center brought it to the court’s attention.

In addition to the 26 conflicts acknowledged by the judges, the Center found about 20 more cases that raised questions, but did not require automatic disqualification of judges.

Federal judges are required to monitor their financial portfolios so that they know when to recuse themselves from particular cases. But interviews with judges suggest that they aren’t always familiar with the stocks they own and the financial transactions they make.

“I don’t pay much attention to those stocks because it’s handled by a stockbroker,” said 11th U.S. Circuit Court of Appeals Judge Peter Fay, one of the 16 judges the Center found who wrongly participated in a case. “I don’t know what he’s doing. … I sit down at the end of the year and say, ‘help me fill out this form.’”

For some judges, their list of investments may fill up just a few lines on their annual financial disclosure form. Other judges, however, have much more complicated portfolios.

One appeals court judge, Helene White of the 6th U.S. Circuit Court of Appeals, filed a financial disclosure in 2012 that included 40 pages of financial holdings and transactions.

The Center found five examples in which White’s holdings overlapped with her caseload. The judge ruled in favor of her financial interests in two of them. Through letters to the involved parties, she admitted to failing to recuse herself in all five of the cases.

One letter said that White did not realize she owned up to $50,000 in Priceline.com stock when she sat on a three-judge panel in 2012 that affirmed a judgment in favor of the company and other travel businesses. The suit had accused the travel companies of violating local tax laws by not charging occupancy taxes on customers who book hotel rooms online. The ruling set a precedent that could affect cases from other cities nationwide.

“I’m not sympathetic to their forgetting to check,” said Tom Fitton, president of the conservative-leaning Judicial Watch, an organization that promotes transparency in government. “It’s not that hard to do.”

However small the investment — and however unintentional the errors may have been — conflicted judgments loom large for litigants like the Bahs, whose family home hangs in the balance. And they reflect poorly on a court system that’s expected to uphold the law.

“Clearly it raises questions about impartiality and threatens to damage public perception of judges as fair and impartial,” said Nan Aron, the president of Alliance for Justice, a liberal advocacy group that focuses on the judicial system.

Charles Geyh, an Indiana University law professor who specializes in judicial ethics, agreed that the conflicts present a “perception problem” for the federal courts. But he questions whether a reasonable person would think a judge’s decision on the bench would be swayed because they owned stock in a party — especially if the investment is small.

“It looks bad,” Geyh said. But unless a judge is a repeat offender, “I’m hesitant to refer to it as a significant problem.”

Federal court officials downplayed the Center’s findings.

David Sellers, a spokesman for the Administrative Office of the U.S. Courts, said in an email that while federal judges take their ethical responsibilities seriously, the more than two dozen conflicts identified by the Center are mistakes that can be attributed to human error.

“It appears that a very small number of judges inadvertently were involved in cases in which they had a financial conflict,” he wrote.

And the judges do not rule on cases by themselves. They typically sit with at least two other judges on each case.

Sellers noted that the two dozen conflicted cases represented just 0.02 percent of the 109,000 total cases decided in the U.S. Courts of Appeals over the last three years. Some experts agreed that it’s important to analyze the Center’s findings in a larger context.

However, the Center’s search was not exhaustive. Center reporters manually searched key words from judges’ three most recent annual disclosure reports against a legal database of case rulings from 2010 to 2012. In one instance, the search led reporters to a 2014 case, as well. The analysis may undercount the actual number of times when judges’ financial ties overlapped with their work on the courts.

In addition, other conflicts could be hidden from view because more than 110 of the 255 judges had some information redacted from their financial disclosure reports in 2012, including information about gifts they received, income they earned and investments they held.

A safety net with holes in it

Guillermo Ramirez died at age 58 last year after a long fight with cancer that his family believes he contracted from a DuPont chemical he applied to his Florida strawberry fields. DuPont recalled the fungicide, Benlate, and paid him for his lost crops but said the chemical wouldn’t harm people.

Ramirez sued the company after he was diagnosed with the cancer that started in his kidneys and eventually spread throughout his body.

He did not know that Judge Joel Dubina, one of the three judges assigned to the case when it got to the 11th U.S. Circuit Court of Appeals, owned up to $15,000 worth of stock in DuPont. The panel unanimously affirmed a jury verdict in favor of DuPont in 2011.

Now his family, including his 33-year-old daughter Veronica R. Juan, is reeling from the Center’s discovery.

“To them it might not have been a big deal, but for us?” Juan said. ”There are days we feel we just can’t function correctly because he was such a great person to all of us.”

It is puzzling to her how the judge didn’t disclose the information before taking the case. The conflict, even if it was an accidental oversight as Dubina said it was, seems all the more frustrating to Juan given the large amount of information her parents had to gather for the case, all while her father was seriously ill — so weak he could barely walk.

“He did everything possible to get all the information that was needed and for him to be just let down?” she said. “Who is to say what could have happened if that person wasn’t there?”

Conflicts of interest such as Dubina’s aren’t supposed to fall through the cracks — not in a federal court system equipped with computer databases designed to backstop judges who might fail to identify conflicts on their own.

In September 2006, the Judicial Conference of the United States, a group of judges who oversee and set policy for the U.S. Courts, adopted a mandatory policy requiring all federal courts — except the U.S. Supreme Court — to conduct automated screenings to help flag potential conflicts of interest.

The automated system, which courts began implementing in 2007, followed a number of stories in The Washington Post that identified instances in which federal judges ruled on cases despite having a financial interest in one of the parties.

The Judicial Conference policy now requires each court to enter judges’ financial conflicts into a database that stores case information, including parties and attorneys. Judges, according to the policy, must provide the court with a list of their financial conflicts. The list must be regularly updated to ensure that nothing is missed as judges make investment transactions during the year.

Each court is required to screen for conflicts “on a regular schedule, including screening new matters as they are filed,” the policy states. And when the database flags a conflict, the court must notify the judge.

The decision on whether to recuse is ultimately up to the judge. Ethics guidelines for federal judges are very clear in some areas such as stock ownership. Beyond the bright-line, one-share rule on stock ownership, a judge must step aside from any proceeding “in which his impartiality might reasonably be questioned.”

Typically, court officials try to prevent judges from getting such cases in the first place by using the database to bypass judges for assignments when their financial interests match up with cases. Doing so makes it unnecessary for judges to decide themselves whether to step aside.

If a conflict is missed by the database, an additional screening step requires judges in all courts to check for potential conflicts after they are randomly assigned to a case.

But the system for flagging conflicts through both automated and manual screening is “not foolproof,” as the 4th Circuit’s conflict-screening plan states. After all, the automated database is only as good as the information the judges feed into it.

“This is a complex and sometimes fluid area,” said Sellers of the Administrative Office of the U.S Courts. “While software managed by the clerks’ office is very helpful, it is dependent on judges providing up-to-date and accurate information about their financial holdings, on staff entering that information correctly and timely, and on automated systems accurately identifying and processing the entries.”

Take, for example, a stock conflict involving Judge Frank Hull of the 11th U.S. Circuit Court of Appeals. Hull sat on a panel in October 2010 that affirmed a lower court ruling in favor of Jacobs Engineering, despite the fact that the judge had purchased up to $15,000 worth of stock in the company several months before the decision.

The conflict slipped by several layers undetected, according to the court, in part because the judge had abbreviated the company name differently than it appeared on the court’s docket. The judge said in a statement that it had slipped through three layers of checks and she was not aware of any potential financial conflict or disqualification when she sat on the case.

Other judges said they ruled on cases not realizing they or their spouses had inherited stocks following a death. Some blamed their investment advisers.

“We’ve got a good system. I thought it worked 100 percent of the time,” 9th Circuit Judge Joseph "Jerome" Farris told the Center after learning that he ruled on a case in which he had a financial interest. “Now you are pointing out it’s only 99.9 percent.”

Still, Bert Brandenburg, executive director of the Washington, D.C.-based Justice at Stake nonprofit that focuses on issues in federal and state courts, said that the system cannot continue to regularly have two dozen cases where judges acknowledge a conflict after the fact.

“There has to be a strong system in place to identify those conflicts in advance so the judges can step aside,” he said. “If that was a failure here, then there needs to be a strong look taken at the system.”

Errors do occur, and the judges and court staffers are humans who make mistakes. But ultimately, it’s up to the judges to guard against such errors.

And even when the cases slip through the cracks, judges can always come forward after the fact to report the mistake. They also have another chance to spot problems when they have to file their annual financial disclosure report.

Eleventh Circuit Judge Beverly Martin was one judge who corrected her mistake.

She ruled on a 2010 case in favor of an insurance company represented by her then-husband’s law firm, Sutherland Asbill & Brennan LLP. As a partner in the firm, he could stand to gain financially from the decision, grounds for disqualification from a case.

“I just screwed up. I didn’t do it on purpose,” she said. “My husband had walked out on me the month before. I don’t remember much. I was not living with him. I was devastated. I wasn’t sleeping. I wasn’t eating. I didn’t have my presence of my mind. I shouldn’t have participated in the case.”

She said that although she was not financially supported by him then, she recused herself a month after issuing the decision. The opinion she had worked on was scrapped and the case was taken up again without her.

A new panel of judges came to the same conclusion, affirming the lower court’s decision in favor of the insurance company represented by her now ex-husband’s firm.

Ruling in the gray zone

Beyond the clear conflicts, where a U.S. statute and the code of conduct for judges lay out definitive rules, is a sea of gray. It is generally up to the judges to decide if the outcome of the case could affect their finances, a system lacking transparency and any outside oversight.

The Center found about 20 cases in which judges had financial ties to the parties before them but there was no clear-cut violation of the rules. Those include five instances in which a married couple on the 5th Circuit, Judges Thomas Reavley and Carolyn King, ruled on cases in which parties in the cases were energy companies that paid the couple royalties for extracting minerals from their property.

“I don’t think that’s a problem for him or for me,” said King. “I don’t think there are any recusal issues here.”

Judges are not required to step aside in cases in which they own bonds in one of the parties or receive royalties from a litigant. The investments don’t represent an ownership stake in the company. Gains for the judge would be unlikely if the company’s value soars, though their investments could suffer if the company suffered financially.

However, according to the judicial code of conduct, judges may need to step aside in those cases “if the outcome of the proceeding could substantially affect the value” of the judges’ financial holdings. In other words, it depends on the extent to which the court’s decision could cause the investment to increase or decrease in value.

Judicial ethics experts said bonds and royalties pose little risk for conflicts. Unlike stocks, they would require recusal only if a “reasonable person” — not one of the litigants involved in the case — would question a judge’s impartiality. To meet that threshold, experts said, the bond investments or royalty income would have to be substantial.

Tenth Circuit Judge Bobby Baldock reported earning up to $50,000 in royalties from ConocoPhillips in 2011 and ruled on a case involving the company that was sued by its union for allegedly violating a collective bargaining agreement. The decision favored both the company and union in some aspects. The judge said the royalty payment did not require him to recuse himself, according to 10th Circuit Clerk of Court Betsy Shumaker. She said he reviewed the ethical guidelines after the Center asked about the case and is “very comfortable” with his conduct.

In some cases, it’s also acceptable for judges to rule on cases in which they had a clear financial stake as long as they sell the holding — even after filing a ruling, as the Center found in one example.

Ninth Circuit Judge Kim Wardlaw ruled on two such cases in 2011 and 2012 but sold the stocks, according to Clerk of Court Molly Dwyer. In one of the cases, though, she sold the stock a day after the decision was filed. The ruling went against the company.

“In both cases Judge Wardlaw promptly divested herself of the interest before these cases became final, thereby avoiding the inefficiencies caused by selecting a third judge so late in the process where that judge could not affect the outcome,” Dwyer said. She noted that all the judges on both cases had already voted the same way.

With both of those cases, Wardlaw gained money from the stock sales, according to her disclosure reports.

No information in the public records of the case show that she disclosed the holdings or their subsequent sale to those involved in the case. “Under the particular circumstances of those cases, she did all she was required to do,” Dwyer said.

Few repercussions

Breaking the conflict-of-interest rules can be a blow to a judge’s reputation. “For most people, that’s the worst thing you can tell them,” said King, the 5th Circuit judge.

But that doesn’t mean judges face any serious consequences. In fact, judges who fail to recuse themselves from cases in which they have a financial interest don’t face any formal punishment.

Anyone can file a complaint under the Judicial Conduct and Disability Act if they believe a judge engaged in misconduct. Of the 1,352 complaints closed in 2012 against judges on all types of federal courts nationwide, though, only one led to any corrective action, court statistics show.

When courts learn about a judge’s missed disqualification after a judgment has been handed down, the courts must notify the parties involved in the case. The parties then have an opportunity to object. The court, without the disqualified judge, decides the legal consequences, if any.

Sometimes a case can be reheard with a new panel of judges.

The 26 cases the Center found moved into that legal limbo when the courts sent out letters. It’s not clear what could happen, as the conflicted judges were not the sole deciding vote in the cases. Still, the people behind the cases, such as the Gables, the Bahs and the Ramirez family, are left waiting and wondering.

Youngblood, the attorney who represented the Gables against Johnson & Johnson, said he’d like their case to be reheard, even if he’s not optimistic it would be reversed.

“I didn’t like the ruling. I mean who likes a ruling that goes against them?” he said. “But I didn’t think the ruling was a fair one even though they tried to make it work according to their legal quotations and citations. I didn’t think it made sense.”

Bah asked for an extension on the deadline to reopen the case. He’s trying to hold on to his home for as long as he can, although the foreclosure still looms.

Francisca Ortega Ramirez and her three children have asked to reopen the case of her husband.

Her daughter, Veronica Juan, who translated from Spanish for her, said no amount of money could replace Guillermo Ramirez, but a financial settlement could have given him some peace of mind before he died. She said her father was worried about how his wife would fare without him.

Even if the case were reopened, it’s a long shot that the family would win. But Juan said her father would have wanted a fair chance at winning — without a conflicted judge — even if it meant the decision didn’t go his way.

 “What is fair is fair,” she said. “He was always a fair man.”

Henry Kerali contributed to this report.

A U.S. Courts of Appeals judge earned more than $73,000 outside the courtroom in 2012 and took multiple trips on someone else’s dime in the two prior years.

But the mandatory financial disclosure reports of 9th Circuit Judge Carlos Bea do not make clear how he earned the money or who footed the bill for five of his trips. That’s because the information was blacked out, hiding everything from a board membership to information about some of his investments.

Bea, who declined to discuss his redactions via the clerk of court, is not the only federal appellate judge who had text obscured from his report. Of 255 judges on the second-highest courts in the nation, the financial disclosure reports of 111 of them had portions that were blacked out, according to a Center for Public Integrity analysis.

If visible, the blacked-out information would include details about gifts they received, income they earned and investments they held. Additionally, some judges have failed to disclose the names of the companies that pay them royalties for pulling oil and gas from their property, the employment of their spouses or even the value of their investments.

Such gaps and deliberate redactions make it difficult for the public to determine whether the judges’ financial and community ties may improperly overlap with their work on the courts. Using the disclosure reports, the Center found 26 examples in which federal appellate judges violated the law by ruling on cases in which they had a financial interest.

Those ties were visible. It’s not clear what information could be hidden behind the redacted text or missing information.

Judges are responsible for filling out the forms annually, so missing or incomplete information is their responsibility. Yet they and court officials say redactions are necessary to protect judges whose high-profile and often controversial rulings can leave them vulnerable to security threats.

“The judiciary is acutely aware of the importance of balancing the public’s right to know with that of the safety of a judge and his or her family,” said David Sellers, a spokesman for the Administrative Office of the U.S. Courts.

But some redactions border on the absurd. For example, one judge’s disclosure removes the words “farm located at” from a property listing — a redaction that was neither requested by the judge nor seemingly necessary to protect him from threats.

William G. Ross, a Samford University law professor in Alabama who specializes in judicial ethics, said it’s not easy for the courts to determine when it’s appropriate to black out certain information. But while each redaction request should be evaluated independently, he said, litigants have a profound interest in knowing what’s in judges’ financial disclosures.

The missing information

A GAO report from 2004 found nearly 600 redactions on federal judges’ reports from 1999 to 2002. During the three-year period, the agency reported, roughly 90 percent of the 661 redaction requests made by federal judges were granted by the judiciary. The redactions revealed in the report raised concerns among judicial ethics experts that the judiciary was being too lax in accepting redaction requests.

A decade later, the Center’s review of similar forms found that some appellate judges’ financial disclosures included just one or two redactions, while others had dozens. First Circuit Judge Michael Boudin, for example, had a total of 189 redactions in his 19-page report. In most cases, it appeared to be just a letter or two that was obscured from his investments.

Of the judges whose reports did contain redactions, more than nine appeared on average per report, according to the Center’s analysis.

The name of a university that paid into 2nd Circuit Judge Jose Cabranes’ pension plan starting in 1984 was removed. The source that reimbursed 3rd Circuit Judge Anthony Scirica for a 10-day teaching gig in Italy is blacked out. Redactions hide the source of income for 7th Circuit Judge Ann Williams’ husband, a banking executive who was also a registered lobbyist at the time.

Neither the judges, nor the court system, are required to explain the reasons for the redactions.

The post-Watergate Ethics in Government Act of 1978 required federal judges, along with legislative and executive branch officials, to publicly report their financial assets and those of  their spouses and dependent children each year. But in 1998, Congress allowed certain sensitive information to be redacted from judges’ reports.

Such information can be removed either by request of the judge or by court staff if it is considered to be excess personal information not required by statute. Such information may include the names of family members, account numbers or street addresses.

Some information is removed because of a specific threat, Sellers said, while other information is blacked out because of the risk it could pose.

Judges’ redaction requests must be approved by a committee of the U.S. Judicial Conference. Committee officials consult with the U.S. Marshals Service on a case-by-case basis to ensure that the judges have demonstrated a clear connection between a security risk and the information they seek to redact, Sellers said.

Judges do not routinely request redactions, yet such requests are almost always granted. Of the nearly 4,400 judicial financial disclosure reports released to the public in 2011, Sellers said, 154 judges’ reports were partially redacted for security reasons upon judges’ requests. Only four requests due to security issues were denied.

Sellers said security redactions are most commonly granted when information reveals the physical location of judges or their family members. Other requests, he said, are approved when redactions are based on “specific threats,” including those relating to identity theft.

Security threats

Judges do have legitimate security concerns. In 1989, 11th Circuit Judge Robert Vance was killed by a mail bomb delivered to his Alabama home.

The U.S. Marshals Service provides security for all federal judges, including response to threats 24 hours a day, seven days a week. Federal judges can also choose to have security systems installed in their homes at the government’s expense, according to the U.S. Marshals.

But another way of protecting judges is to hide their personal information.

In her 2012 financial disclosure, 7th Circuit Judge Ilana Rovner redacted the names of three different organizations — two nonprofits and a university — where she serves on boards. She also blacked out the source of a $1,800 gift she described as a “Partial Honorary Membership.” She told the Center the gift was a membership to a private social club.

A few years ago, Rovner said she found a man waiting for her at the social club who previously had a case before her. “In strong terms,” she said, “he wanted to know why I ruled against him.”

After the incident, Rovner said the U.S. Marshals suggested that she redact certain information from her financial disclosure, including the club membership. She also has the names of her board memberships blacked out, she said, because people could find out the locations and times of board meetings, then confront her.

“The public has every right to know every stock I own,” Rovner said. “But they don’t have the right to know where I go after hours.”

Rovner said she understands that threats come with the territory of being a federal judge. “I’m probably being overly cautious,” the judge added.

But, she said, she doesn’t think most people realize how often she and other judges receive “very odd messages” from people unhappy with their rulings.

Arthur Hellman, a University of Pittsburgh law professor who studies the federal courts, said the security threats federal judges face are not imagined.

“There are threats, and they are taken seriously,” he said. “Judges are sentencing dangerous criminals. And there are lots of crazy people in our society.”

Since December, the Judicial Conference has withheld 1st Circuit Judge Norman Stahl’s 2012 disclosure from the Center for such security concerns, according to Kristina Usry of the U.S. Courts financial disclosure office. The conference is considering redacting Stahl’s entire form as a result of violent threats against the judge from a stalker, she said.

Unrequested redactions

But sometimes even judges can’t explain why their financial disclosures include redactions. Eighth Circuit Judge Diana Murphy’s 2010 financial disclosure included redactions that obscured some of her investment descriptions, as well as the amount and value of every investment.

“I don’t know why that would be,” Murphy told the Center. “I did not ask for the redactions.”

Murphy said she previously had some death threats over the years but seemed surprised that the values of her investments would be blacked out.

In fact, most of the redactions on judges’ reports were not requested by the judges, Sellers said. Most of them are made by court officials when judges report information that is not required by statute, such as spouse names, social security numbers and home addresses.

However, he said, such redactions do not involve issues related to conflicts or possible recusal by a judge.

It is difficult for the public to verify that, though, when the information isn’t visible.

But even beyond the potential for conflicts, some redactions don’t seem to have any obvious reason for being made.

A law clerk for 9th Circuit Judge Edward Leavy was puzzled when the Center asked about the redaction in the judge’s 2012 financial disclosure that blacked out part of the description of real estate located in Marion County, Ore. Reports from prior years had the words "Farm located at" in that space.

“It’s a family property where his son raises hops, so I don’t know why that would have been redacted,” said Kathleen Dodds, a longtime law clerk for the judge who helps Leavy fill out the annual financial reports.

She added that the judge wanted it to be known that he did not request the information to be removed. Dodds said court officials probably made the redaction because they considered the information “over-reporting.”

But the entry didn’t have an address, Dodds said, and much of the county is farmland. “So there’s no clear-cut reason why that was redacted,” she said.

This week, we published the investigation Juris Imprudence, which reveals dozens of examples where federal appellate judges ruled on cases in which they had a financial stake.

About the series

Center researchers spent months examining the finances of federal appellate court judges, the second highest courts in the land, and found 26 examples where judges ruled on cases where they had a conflict of interest.

We have posted those disclosures online and in a searchable database.

The series is reported by Center reporters Reity O'Brien, Kytja Weir and Chris Young, and edited by John Dunbar. 

Get involved

While we looked at hundreds of cases, we did not look at every case where a judge may have had a conflict. If you have been involved in a case that went before the U.S. Circuit Court of Appeals and would like to see what the judges involved in the case own, we’ve made it easy for you to find out.

If you believe you have a story to tell about your own experience with the court, or feel a judge ruled on a case when he or she shouldn’t, please send Weir an email.

Find out about the next stories in this series by either subscribing to our email newsletter or following us on Facebook or Twitter.

What we've found so far

• The Center found 26 examples since 2010 where federal appellate judges ruled on cases in which they had a financial tie to one of the parties before them.
   
• Sixteen judges in all 26 of those cases sent letters to the litigants to alert them of the mistakes. The letters are the first step in possibly reopening the cases.
   
• Fifty-nine percent of the 255 federal appellate judges the Center reviewed reported owning stock.
   
• Total reported assets, including stock and other investments, for the judges was valued between $580 million and $1.8 billion, as calculated by the Center.
   
• More than 110 of judges had some information on their financial disclosure reports blacked out in 2012, including information about gifts, income and investments.

When I returned home after a two-week speaking tour of Canada and began catching up on news about Obamacare, I was angry and upset, and not just at politicians and special interests that benefit from deception-based PR tactics. I was — and still am — mostly angry and upset with myself. And I know I always will be.

Over the course of a two-decade career as a health insurance executive, I spent hours and hours implementing my industry’s ongoing propaganda campaign to mislead people about the Canadian health care system. We spread horror stories about “rationed care” and long waiting times for medically necessary care. Our anecdotes were not at all representative of most Canadians’ experiences, but we spent millions of dollars to persuade Americans that they were.

At every stop between Halifax and Vancouver this month, I explained how the United States had achieved the dubious distinction of having both the most expensive health care system on the planet and also one of the most inequitable. While Canadian lawmakers in the 1960s were implementing a partnership between the federal and provincial governments to create the country’s publicly funded universal health insurance system — known as Medicare — our lawmakers in Washington were establishing America’s own single-payer Medicare program, but only for folks 65 and older and some younger disabled people. Congress also created the federal and state-administered Medicaid program for the nation’s poor.

Ever since, most of the rest of us have had to deal with private insurance companies and pay whatever they felt like charging us for coverage. Canadians are also paying more for coverage these days because of medical inflation and an aging population, but not nearly as much more as we in the U.S. are paying. Just about everybody in every audience I stood before gasped when I told them that health insurance premiums in the U.S. increased 131 percent between 1999 and 2009 — the main reason why 50 million of us were uninsured at the end of the last decade — and that by 2013 the average employer-based family policy cost $16,351.

At one stop in Toronto, I was asked if there was anything about the U.S. system that Canadians should consider adopting. I was stumped. I noted that while we had some of the world’s best doctors and hospitals, they were in many cases off-limits to millions of Americans, many of whom were uninsured because of preexisting conditions that made them “uninsurable” in the eyes of private insurance companies.

Later, on reflection, I realized I should have mentioned some aspects of our Medicare system and our other single-payer program — the Veterans Health Administration — both of which consistently out-perform private insurers in customer satisfaction surveys.

The two aspects of our Medicare system worth emulating are: (1) the fact that it’s a federal arrangement, meaning that benefits and services do not vary from state to state, and (2) the prescription drug benefit (Medicare Part D) that Congress added a few years ago. The Canadian Medicare program is akin to our Medicaid program in that the provinces have broad latitude in administering benefits and services. As a consequence, Albertans’ experience with Medicare can be quite different from that of Newfoundlanders. And the Canadian Medicare program still does not cover medications. Canadians have to buy private insurance for their prescriptions. Consumer advocates there continue to push for the adoption of a nationwide drug benefit.

As for the Veterans Health Administration, which owns and operates its own hospitals, it not only gets higher customer-service scores than private hospitals, it is frequently cited for better health outcomes. For example, the RAND Corporation found in a 2004 study published in the Annals of Internal Medicine that the VHA outperformed all other sectors of the U.S. health care system in 294 measures of quality.

In other words, Canadians should consider making their system even more public than it is, rather than more private.

I usually began my remarks in Canada with an apology — for all the misinformation I helped spread in the U.S. about their system, which, by the way, continues to have overwhelming support. I didn’t encounter a single Canadian who didn’t talk about their Medicare program with pride.

Back in the states, among the distressing pieces I read was a New York Times story last Monday based on interviews with Americans who said they had decided to remain uninsured either because they couldn’t afford to pay the premiums or had just decided to gamble with their health and personal finances.

Those are decisions completely unknown and unnecessary in Canada, where the per capita spending on health care is far lower than it is here and where people live longer. 

The Center for Public Integrity has announced two new hires focused on enhancing exposure and outreach for the organization’s landmark journalism. 

Television producer William Gray has joined the Center for Public Integrity as its Media Relations Specialist.

In his new role, Gray will work to dramatically increase the visibility and impact of CPI’s investigative reporting and the journalists producing that work.

A native of Chattanooga, Tenn., Gray comes to the Center from the public affairs network C-SPAN. Starting his broadcast television career as a C-SPAN intern, he began by working on its morning program, Washington Journal. He contributed to the networks’ 2012 Road to the White House coverage before becoming an operations producer, handling breaking news and both live and overnight coverage for each of the three C-SPAN networks.

While at C-SPAN, Gray was a 2012-2013 Paul Miller Fellow with the National Press Foundation and an assistant editor for the online literary magazine TalkingWriting. He is a graduate of Centre College and earned a Master’s Degree after studying journalism at Harvard University’s Extension School.

Gray is also the creator and curator of the award-winning archive Floor Charts that tracks and tags the props, charts and posters used by politicians and government officials. TIME named the archive one of the “30 Tumblrs to follow in 2013.”

Gray can be reached at wgray@publicintegrity.org or (202) 481-1232.

Video journalist Eleanor Bell is also joining the Center as its Multimedia Editor. 

Originally from New Zealand, Eleanor worked for many years at the ABC, Australia’s national public broadcaster where, in 2011, her investigative multimedia report into urban social disadvantage was awarded Australia’s highest journalism honor, the Walkley Award. Another investigation exposed unlawful and predatory behavior by mobile phone carriers in minority communities and was used as evidence by Australia’s consumer watchdog to prosecute the company. 

Her multiplatform report into the emerging practice of gene patents sparked an Australian Senate inquiry and was nominated for a UN Environmental Reporting award.

Bell has received a coveted UN Media Peace Award for her digital journalism and was named the 2011 Australian Council of Deans of Education Young Journalist of the Year.

She joins the Center's growing digital team.

Founded in 1989 by journalist Charles Lewis, the Center for Public Integrity is one of the country's oldest and largest nonpartisan, nonprofit investigative news organizations.  Our mission: to enhance democracy by revealing abuses of power, corruption and betrayal of trust by powerful public and private institutions, using the tools of investigative journalism. Among the Center’s recent awards are the Goldsmith Prize for Investigative Reporting and the Pulitzer Prize for Investigative Reporting.

A Center for Public Integrity probe detailing how California schools were failing troubled teenagers has been awarded the prestigious 2014 Paul Tobenkin Memorial Award.

The prize, given by Columbia Journalism School, recognizes “outstanding achievements in reporting on racial or religious hatred, intolerance or discrimination.” The winning series, “Throwaway Kids,” was written by Center reporter Susan Ferriss. Her stories described how disciplined teens were assigned to “alternative” schools miles away that they had no way of getting to — leaving them no recourse other than essentially educating themselves through loosely defined “independent study” programs.

Jurors noted that the stories written by Ferriss “galvanized immigrant parents to confront the school system. California legislators are now discussing a legal fix for the problem.”

The award was established in 1959 at Columbia Journalism School to honor New York Herald Tribune reporter Paul Tobenkin. Ferriss will speak May 20 on Journalism Day at the school and receive a citation and a $1,500 honorarium.

The Tobenkin prize marks the second citation for “Throwaway Kids.” The series also was awarded a third prize in the National Awards for Education Reporting, given by the Education Writers Association. Judges in that contest described Ferriss’ work as “ambitious” and “compelling.”  

Ferriss joined the Center in 2011 after covering immigration for the Sacramento Bee and working as a Mexico-City based Latin America correspondent for Cox Newspapers. 

A federal task force aimed at combating campus sexual violence will today unveil recommendations for helping colleges and universities respond to the problem — the focus of a landmark investigation by the Center for Public Integrity.

At an afternoon ceremony attended by students, victims’ advocates, and school administrators, members of the White House Task Force to Protect Students from Sexual Assault will present what they call “first steps” for ending the “epidemic” of sexual violence on college campuses. The interagency group, which includes Education secretary Arne Duncan and attorney general Eric Holder, among other senior administration officials, has been working on recommendations since President Barak Obama created the panel on January 22 of this year.  Over the past three months, the group has held 27 “listening sessions” for students and their advocates, as well as parents, sexual-violence researchers, campus counselors, and administrative officials from more than 50 colleges and universities nationwide.

The initial recommendations aim to tackle what senior administration officials describe as four of the “most pressing” issues to emerge from the sessions: identifying the scope of the problem on college campuses; preventing sexual assaults; helping schools respond more effectively to student allegations; and beefing up the federal government’s own enforcement efforts.

“Colleges and universities need to face the facts about sexual assault,” says Vice President Joe Biden, whose office heads the task force, in a statement. “We need to give victims the support they need ...  and we need to bring the perpetrators to justice.”

Of today’s recommendations, perhaps the most significant is a tool kit for school administrators to use in conducting surveys on the scope of sexual assault on their campuses. The surveys will initially be voluntary, but administration officials say they hope to make such surveys mandatory for all colleges and universities by 2016. Other key recommendations:

• The Obama administration is launching a new website to make public federal enforcement data involving campus sexual assault. The site will also give students information to help them file complaints with the Education and Justice departments, among other resources.
• Justice officials will develop new training programs for campus police officers and school administrators who investigate and adjudicate sexual assault cases; their Education counterparts will prepare similar materials to train campus health center staffers on how to improve services for student victims.
• Education officials will release a new, 50-page guidance clarifying ongoing questions about the confidentiality rights of student victims, including a model policy for school administrations to follow.
• The Justice Department’s Office on Violence Against Women will pilot and evaluate prevention strategies and programs for combating campus sexual violence.

The task force will release a report outlining these and other recommendations today, but administration officials stress that its work has only just begun. The group will continue to refine its recommendations, they say, reviewing possible regulatory reforms and seeking new resources to beef up federal enforcement.

“Both the president and vice president believe all students have the right to live free from sexual assault,” one senior administration official told reporters in a press call. “They’re committed to rooting out this problem on our college campuses.”

Charged with developing “a coordinated Federal response to campus rape and sexual assault,” the task force has targeted many of the problems highlighted by the Center’s investigation. Published in a six-part series starting in 2009, “Sexual Assault on Campus: A Frustrating Search for Justice”— done in collaboration with National Public Radio — showed that campus judicial proceedings regarding allegations of sexual assault were often confusing, shrouded in secrecy, and marked by lengthy delays. Those who reported sexual assaults encountered a litany of institutional barriers that either assured their silence or left them feeling victimized again. Even students found “responsible” for alleged sexual assaults often faced little punishment, while their victims’ lives frequently turned upside down.

Documents obtained by the Center for Public Integrity shine new light on a secretive, high-octane political confab last month at a luxury resort, where industry titans and GOP megadonors mingled with mostly Republican power players at an exclusive, “off-the-record” retreat.

GOP 2012 presidential nominee Mitt Romney, House Speaker John Boehner, House Majority Leader Eric Cantor, House Budget Committee Chairman Paul Ryan, Sen. Marco Rubio of Florida, New Jersey Gov. Chris Christie and Wisconsin Gov. Scott Walker ranked among the event’s headliners, according to an event program.

The American Enterprise Institute, which hosted the gathering, spent more than $50,000 on travel, lodging and meals for 18 members of Congress who attended the event, some of whom traveled with family members whose expenses were also covered, according to travel documentsfiledwith Congress and reviewed by the Center for Public Integrity. In all, about 350 “speakers,” “attendees,” “spouses” and “guests” attended, the documents indicate.

Congressional ethics rules do not prohibit private organizations from footing the bills for lawmakers’ trips. Only lobbyists and agents of foreign governments are generally barred from sponsoring trips.

A handful of elected officials in attendance — such as Boehner, Ryan and Sen. Tim Scott, R-S.C. — used personal money or funds from their campaigns or leadership PACs to attend the conference, according to their spokespeople.

Judy Mayka Stecker, a spokeswoman for the American Enterprise Institute, declined to answer questions about the forum.

“To maintain intellectual freedom and free discourse, the event is private and off-the-record,” she said. “Therefore we do not comment further on the content or attendees.”

But in letters to lawmakers, American Enterprise Institute President Arthur Brooks described the gathering as “feisty, focused and highly informative,” with the goal of bringing together “some of the world’s most distinguished business leaders, policymakers and scholars for off-the-record, agenda-setting discussion covering challenges in politics, economics, foreign policy and other critical areas.”

The multi-day “World Forum” summit — which the American Enterprise Institute has conducted annually since 1982— took place during early March at The Cloister in Sea Island, Ga., a venue known for its “legendary elegance” and “five miles of private beach.”

Among the elite attendees listed in the program: brewing magnate Peter Coors; coal executive Joseph Craft; former Amway president Dick DeVos, who has bankrolled numerous Republican causes in Michigan; former Republican National Committee Chairman Ken Mehlman; TD Ameritrade founder Joe Ricketts, a major GOP donor whose son, Pete Ricketts, is running for governor in Nebraska; and Spencer Zwick, Romney’s former finance director.

At the retreat, guests could attend an array of policy briefings and panel discussions over the course of the weekend, documents indicate.

For instance, Florida Gov. Rick Scott, Michigan Gov. Rick Snyder and former Indiana Gov. Mitch Daniels discussed “how to fix the states.”

Lobbying firm executive and former Mississippi Gov. Haley Barbour, Rep. Cathy McMorris Rodgers of Washington and GOP strategist Karl Rove tackled how “millennials, minorities and women” will vote during upcoming elections.

And those interested in the future of American foreign policy heard from former Vice President Dick Cheney, former CIA Director David Petraeus, former U.N. ambassador John Bolton, former World Bank president and Deputy Secretary of Defense Paul Wolfowitz; former Democrat-turned-independent Sen. Joe Lieberman of Connecticut; and Sen. Bob Corker of Tennessee, the ranking member of the Senate Foreign Relations Committee, among others.

A handful of current and former Obama administration officials also participated in the gathering. They included Austan Goolsbee, former chairman of the Council of Economic Advisers; Gene Sperling, director of the National Economic Council; and National Security Agency Director Keith Alexander.

Apple CEO Tim Cook; Scott Carpenter, the deputy director of Google Ideas; Doug Elmendorf, director of the Congressional Budget Office; and Turki Al-Faisal, the former Saudi Arabian ambassador to the United States, were also featured at the forum, according to event documents.

So, too, were journalists and commentators — such as Michael Barone of the Washington Examiner and Fox News; David Brooks of the New York Times; former CNN anchor Campbell Brown; Paul Gigot of the Wall Street Journal; Bill Kristol, the founder of the Weekly Standard; and Ramesh Ponnuru of the National Review. They often served as moderators for the event’s panels.

Brian Phillips, a spokesman for Sen. Mike Lee, R-Utah, called the event “an opportunity to talk to conservative policy makers” about the senator’s push to implement a “conservative reform agenda."

Kevin Seifert, a spokesman for Ryan, said the House Budget Committee chairman attended the event because it “provided a good opportunity” to “to hear from leading scholars, thinkers and lawmakers about the public policy issues facing our nation.”

Melinda Schnell, a spokeswoman for Wisconsin Sen. Ron Johnson, said the senator attended because he believes it is “important” to have “these kinds of frank conversations and meaningful discussions among leaders from the business, political and financial world.”

Only two Democratic members of Congress were in attendance, according to the program: Rep. John Delaney, D-Md., and Sen. Sheldon Whitehouse, D-R.I.

Seth Larson, a spokesman for Whitehouse, said the Rhode Island Democrat participated in the event “to discuss the promise of health care delivery system reform,” as well as the “costs of carbon dioxide pollution from fossil fuels.”

In a statement released ahead of the event, Whitehouse said that he looked forward to “a forthright discussion” despite his expectation that his views on these issues would “differ greatly” with those of the think tank’s leaders.

After a conservative think tank paid for travel, lodging and food expenses for Sen. Pat Toomey, R-Pa., during its multi-day, “off-the-record” summit at a luxury resort in Georgia, he was supposed to file paperwork with the Senate Office of Public Records detailing the costs.

Now, after questions from the Center for Public Integrity, Toomey’s office has submitted a tardy filing about the trip, which the American Enterprise Institute sponsored.

“We did have an oversight in our post-trip reporting in this case, which we have rectified,” Toomey spokeswoman E.R. Anderson said.

The Senate Ethics Committee notes on its website that all lawmakers are required to file post-trip disclosure forms “no later than 30 days following their return date.” The conference took place in early March.

Senate ethics rules do not prohibit private organizations from footing the bills for lawmakers’ trips. Only lobbyists and agents of foreign governments are generally barred from sponsoring trips. Senators are required to get permission from the Senate Ethics Committee at least 30 days in advance in order to take privately sponsored trips.

The exclusive gathering — which catered to a mostly pro-GOP crowd — allowed business leaders, wealthy political donors and elected officials to mingle in a private setting. 

Republican politicians such as former presidential nominee Mitt Romney, House Speaker John Boehner, Sen. Marco Rubio of Florida and New Jersey Gov. Chris Christie ranked among the event’s headliners.

At the summit, Toomey spoke on a panel entitled “The Fed’s Long Unwinding Road,” according to an event program reviewed by the Center for Public Integrity. The panel addressed questions such as “What is the best way for the Fed to exit quantitative easing?” and “What’s next for monetary policy?”

Toomey was joined on the panel by the likes of former Federal Reserve Governor Kevin Warsh, economist Mark Zandi and Sen. Rob Portman, R-Ohio, among others.

Including Toomey, the American Enterprise Institute spent more than $50,000 on travel, lodging and meals for 18 members of Congress to attend the event, as the Center for Public Integrity previously reported.

Some politicians that attended, such as Boehner, used personal money or funds from their campaigns or leadership PACs to attend.

When Justice Champ Lyons retired from the Alabama Supreme Court, the election was still almost two years away, so it was up to then-Gov. Bob Riley to name a replacement. He didn’t look far.

Riley chose Jim Main, his close friend for 40 years, 25 of which Main served as Riley’s personal attorney. Riley’s wife, Patsy, was in Main’s wedding. Main served in Riley’s administration, first as senior counsel to the Republican governor and later as finance director.

Jim and Gale Main also supported Riley’s political ambition, having contributed $7,500 to Riley’s first gubernatorial campaign and $2,000 during the second campaign, state records show.

Judicial elections are frequently criticized for allowing high-rolling campaign donors to influence the judges deciding major cases — but the judicial appointment process is no panacea either.

According to a Center for Public Integrity investigation, appointments to the states’ top courts are often based on who you know at least as much as on what you know. After examining the appointment process in dozens of states, the Center found:

• Even in states where there are elections, like Minnesota and Texas, judges time their retirements so that the governor, rather than voters, can pick a replacement.
• Contributions by aspiring judges are common. In addition to Alabama, in New York, one appointee and his wife gave $60,000 to the campaign of Gov. George Pataki.
• Appointing cronies is common, as former friends and political advisers are often chosen over potentially superior candidates with no such connections.

Critics say friendships and a history of political support should not be factors when a governor is choosing the most qualified candidate for a state’s highest court — the job should go to the most qualified candidate, period.

How it works

Ironically, when states first began electing judges in the mid-1800s, they did so out of “the concern that gubernatorial appointments gave rise to cronyism,” explained Charles Geyh, a law professor at Indiana University.

Over the past few decades, states have begun returning to appointment systems. Some states, seeking a compromise between elections and appointments, do both:  Judges are appointed, then run unopposed in retention elections to keep their seats.

In 26 states, judges reach the states’ highest appellate courts through appointment by the governor. In an effort to avoid cronyism, in most of these states a nominating commission — whose members are appointed by the governor, state legislative leaders, state bar associations or high court judges — generates a list of names from which the governor can choose.

Each state’s process varies slightly. In some states, the governor’s nomination must also be confirmed by state legislators, similar to the federal process where judges are confirmed by the U.S. Senate. In California, the governor makes an appointment that is later confirmed by a three-member commission. In Massachusetts, the governor can reject the list of nominees and ask for more.

In two states, Virginia and South Carolina, the legislature appoints judges to the state supreme courts.

In the other 22 states, supreme court justices are initially elected to the bench. But when a justice steps down mid-term in 20 of these states, the governor gets to appoint a replacement.

In several of these states, judges have a tendency to step down before the end of their term.

All in the timing

In Texas, for example, supreme court justices are elected every six years. But of the nine justices currently on the court, Republican Gov. Rick Perry has appointed six whose predecessors stepped down before election time.

In Minnesota, another election state, six of the court’s current seven justices were initially appointed, again thanks to judges retiring before their terms expire.

The practice allows the governor to appoint someone with similar ideological leanings, avoiding the risk that voters might choose a candidate who is hostile to the governor’s legislative agenda.

A sitting judge almost always prevails.

“One of the things the studies show is that incumbency is the biggest advantage of all. It’s bigger than money,” said Geyh. Once appointed, incumbents are “almost undefeatable later on.”

Alabama Justice Main stood for election in 2012 unopposed.

Main said money had nothing to do with his appointment. He was chosen, he said, because both Lyons and Riley were familiar with his work.

“Both of them had a good opportunity to evaluate my strengths and weaknesses as a lawyer, and they both knew that I planned to run for Justice Lyons’ seat when he retired anyway,” Main said. “It wasn’t a secret that I wanted to be on the Supreme Court.”

Cash for gavels?

Dozens of current state supreme court justices have been political contributors to the governors who appointed them, according to records.

Among state supreme court judges who contributed the most was New York Court of Appeals Judge Robert Smith. Between April 1999 and October 2002, Smith and his wife Dian gave $60,000 to former Gov. Pataki’s campaign, state records show. They also gave $51,000 to the state Republican Party.

In November 2003, Pataki chose Smith from a list of seven people recommended by the state’s nominating commission to fill a vacancy on the state’s highest court.

Smith was a trial lawyer from Manhattan. He had argued before the U.S. Supreme Court, but he had no experience as a judge, unlike three of the other names on the nominating commission’s list, so Pataki’s choice surprised observers at the time.

Smith declined to comment, and Pataki did not respond to requests for comment. But at the time of the appointment, Pataki insisted that he wasn’t aware of Smith’s political leanings before nominating him. At Smith’s confirmation hearing in 2004, he told a Senate committee that he “never got anything except courtesy in exchange for contributions.”

Two years later, then-Iowa Gov. Tom Vilsack, a Democrat, appointed attorney Brent Appel to the Iowa Supreme Court. Appel had never been a judge, but he gave roughly $30,000 to Vilsack’s campaign between May 2000 and May 2003.

David Wiggins, appointed by Vilsack to the court in 2003, gave nearly $19,000 to Vilsack’s campaigns, together with his wife, Marsha.

Wiggins and Appel declined to comment for this story.

Vilsack, now secretary of the U.S. Department of Agriculture, was limited to picking from among the three names Iowa’s nominating commission offered to him, said spokesman Matthew Paul.

“When choosing among three candidates given to him, Governor Vilsack always chose whom he believed to have the most extensive legal knowledge and an absolute commitment to fairness,” Paul said in a written statement.

Even in states where a nominating commission gives the governor a list of names and the state senate has to confirm the governor’s choice, governors still manage to get allies on the bench.

In Hawaii, for example, former Republican Gov. Linda Lingle appointed Mark Recktenwald to the Hawaii Supreme Court in 2009. Recktenwald had made nine contributions to her campaign, totaling $7,500, between 2002 and 2006, according to data from the National Institute on Money in State Politics.

Recktenwald "had an established record of public service that was well known to Governor Lingle," Hawaii court spokeswoman Tammy Mori said in an emailed statement. Before his appointment, Recktenwald's experience in state government included three years in Lingle's cabinet as the director of the state Department of Commerce and Consumer Affairs.

Political soulmates get gavel

Governors also frequently seek out political allies when making judicial appointments.

In 2010, the Minnesota Supreme Court ruled 4-3 that then-Gov. Tim Pawlenty, a Republican, had overstepped his executive authority when he tried to cut state agency budgets without legislative approval.

University of Minnesota law professor David Stras filed a friend-of-the-court brief in the case supporting Pawlenty’s side. Eight days after Pawlenty lost, he named Stras to fill a vacancy in the Minnesota Supreme Court. Simultaneously, Pawlenty promoted to chief justice then-Associate Justice Lorie Gildea, who had also supported Pawlenty’s legal argument.

State Democrats criticized the appointments as rewards to his political supporters.

“Stras gets it wrong from a legal point of view, but nonetheless gets promoted by getting appointed to the Minnesota Supreme Court,” said David Schultz, an adjunct professor at Hamline University and the University of Minnesota Law School. “Just the timing and having done that brief do suggest that it was rewarding someone just for advocating the correct party line for the governor.”

A representative for Pawlenty did not respond to requests for comment, and a representative of Stras and Gildea declined to comment.

New Jersey Gov. Chris Christie has been accused of playing politics by NOT appointing justices.

New Jersey Supreme Court justices are appointed by the governor and confirmed by the state senate. At the end of a seven-year term, the justices must be reappointed. It has been traditional for governors to reappoint sitting justices unless there is evidence of unethical behavior.

But in 2010, Christie did not reappoint Justice John Wallace Jr., who was originally appointed by Democratic Gov. Jim McGreevey. Since then, each of Christie’s nominees to the court has been part of a battle between the Republican governor and the Democrat-controlled state Senate.

A Christie spokesman referred to the governor's past statements that the New Jersey Supreme Court had "overstepped its role."

"Even before I officially became governor, I made clear it was my intention to reshape the court," Christie said at a press conference in August. "That is the right and the prerogative of any governor, Republican or Democrat. It is how our judicial system is set up."

Now the court’s liberal chief justice, Stuart Rabner, is believed to be at risk. Rabner’s term ends in June.

New Jersey State Bar Association President Ralph Lamparello warned that Christie’s maneuvers put the independence of the state supreme court at risk, especially if judges at all levels of the state judiciary start changing their votes out of concern for their job security.

“You don’t remake the court by getting rid of good judges and justices,” Lamparello said.

He compared the New Jersey court to the U.S. Supreme Court.

“Obviously for a Republican to appoint [Justice Antonin] Scalia or [Justice Clarence] Thomas, they obviously side with the political beliefs of the then-president, but can you imagine saying, ‘I’m a Democratic president now, and Scalia, you’re off the Court’?” he asked. “That’s not the way to run a republic.”

Friends of the guv

Many governors have made a habit of appointing to the bench not just their political allies, but people who were formerly on their payroll.

In 2008, for example, Pawlenty appointed Christopher Dietzen, who served as Pawlenty’s lawyer during his 2002 campaign for governor and defended him against a campaign finance violation charge that year.

A representative for Dietzen declined to comment.

Perry appointed his chief of staff, Jeffrey Boyd, to the Texas Supreme Court in 2012. Boyd is on the ballot for the first time this year. Boyd said the fact that Perry was familiar with his work was a major factor in Perry’s decision to appoint him to the court.

He first met Perry when he was working in the state attorney general’s office, before Perry was governor.

“When Gov. Perry became governor there were a few occasions when I interacted with him, and his senior staff,” he said.

When Perry’s campaign was sued by 2006 Democratic gubernatorial nominee Chris Bell, Boyd said he was brought on to offer some advice. Five years later, he became Perry’s general counsel, eight months after that, his chief of staff, and a little over a year after that, a supreme court justice.

A representative for Perry did not respond to requests for comment.

“The whole system is built around the likelihood that governors and other appointing authorities will choose people they know, people who have supported them,” said Stephen Gillers, an expert in judicial ethics at the New York University School of Law. “It’s not purely meritocratic. It never has been and never will be.”

The advocacy group Common Cause advocates for appointments, rather than elections, but policy counsel Stephen Spaulding recognizes that neither system is perfect.

“Judicial elections are rife with opportunities for special interests,” he said. “At the same time, there’s a concern that there can be chummy, smoke-filled, back-room deals that are cut to appoint justices that are equally friendly to outside special interests.”

A key government agency that oversees financial derivatives could remain without a permanent leader until the man nominated to run it shows he plans to crack down on investment scams involving precious metals.

Sen. Bill Nelson, D-Fla., said Wednesday that he will block the nomination Timothy Massad to chair the Commodity Futures Trading Commission until they can have “a conversation” about the scams in which firms pressure investors, especially the elderly, to put their money in precious metals like gold and silver.

“We’re not going to let this go,” Nelson said during a hearing of the Senate Special Committee on Aging, which he chairs.

Committee staff found in a year-long investigation that “thieves, con-men and swindlers ... looking for an easy buck” are pushing precious metals investments without disclosing the true risks, according to a report issued in connection with the hearing. Metals firms use high-pressure telemarketing tactics, mislead people about the investments’ safety and push investors to take more risk by investing borrowed money, the report says.

Federal law allows people to buy metals with pre-tax retirement funds, even in transactions where borrowed funds also are used, the committee noted.

That makes the elderly, with retirement accounts flush with cash, “particularly attractive targets for a wide array of fraudsters,” former commodities broker Karl Spicer testified. Spicer pled guilty in New York last year to criminal larceny and fraud charges for his role in a metals scam; he is scheduled to be sentenced in June.

One witness at the hearing, Joe Melomo, described being conned into investing his entire retirement savings in gold and silver. American Precious Metals reached Melomo shortly after he lost money on a restaurant venture and convinced him to invest $170,000, the former IBM physicist said. The company tried to charge him $165,000 in administrative fees and $37,000 in interest, he said.

American Precious Metals and its principals later agreed to pay $24 million to settle civil charges by the FTC.

More than 10,000 Americans have been victimized to the tune of $300 million, according to a “conservative” estimate by committee staff.

Metals investments are regulated by the CFTC and the Federal Trade Commission. The CFTC gained authority to oversee many consumer transactions under the 2010 financial overhaul law known as the Dodd-Frank Act. The law also increased the agency’s power to oversee the market for derivatives, a type of financial contract that figured heavily in the 2008 financial meltdown.

The Senate committee found gaps in the two agencies’ enforcement powers. The FTC enforces telemarketing sales rules, while the CFTC has authority over sales to consumers where the physical commodity is not delivered within a month.

With no single agency responsible for monitoring the whole business, senators said during the hearing, fraudsters are able to collapse businesses and set up new ones overnight with few consequences.

Federal regulators “have a tendency to dither and take months and not take very many cases,” said Sen. Claire McCaskill, D-Mo.

Massad, President Barack Obama’s choice to head the CFTC, has been in charge of winding down the massive bank bailout programs enacted during the financial crisis. He previously was a partner with the corporate law firm Cravath, Swaine & Moore LLP, where he worked on securities transactions.

Advocates of stricter financial oversight have questioned whether Massad, if confirmed, would be aggressive enough in cracking down on risky practices by financial companies.

Sen. Elizabeth Warren said after Massad was nominated that she would need to have more conversations with Massad. His predecessor, Goldman Sachs alum Gary Gensler, “set a very high standard,” Warren said in a statement at the time.

And Nelson has raised concerns about Massad before. The senator said previously said that he wants more specifics about how Massad would handle issues including oil trading by speculators that can distort fuel prices.

A CFTC spokesman referred questions to Treasury. Treasury spokesman Adam Hodge did not respond to a request for comment.

A year-long Energy Department reexamination of how to get rid of 34 tons of surplus weapons plutonium affordably, as part of a disarmament deal with Russia, has concluded what many experts long suspected: The cheapest option is to bury it, according to the study’s newly-released text.

The study led by John MacWilliams, a Boston lawyer and equity investor appointed to advise Secretary of Energy Ernest Moniz, was inspired by a large increase in the estimated cost of building a new plant in South Carolina meant to turn the plutonium into nuclear fuel.

The plant’s estimated cost in 2007, when construction began, was $4.8 billion. But the 201-page report, released April 29 on the Energy department’s website, forecast that completing and running the plant would cost another $25 billion. When added to the money already spent on the project, called sunk costs, this sum would bring the overall pricetag to $31 billion.

An alternative approach — involving “downblending” or mixing the plutonium with a chemical called an “inhibitor” to make it harder to use in a nuclear weapon and then burying it in deep salt caverns in New Mexico — would cost just $8.78 billion in new spending, according to MacWilliams’ report. Including sunk costs — such as the pricetag of the existing cavern storage facility — would bring the bottom-line cost to over $16 billion, the report said.

Energy officials weren’t immediately available for comment. But downblending was the cheapest of the options studied, the report said, as well as the easiest to accomplish using existing technology.

The report does not describe the chemical inhibitor involved. But the Energy Department has developed a classified substance called “stardust,” a spokesman told the Center, that binds so tightly with plutonium it can’t be extracted without a chemical separation plant.

Energy engineers have already used “stardust” to dilute some plutonium at Savannah River and disposed of the mixture at the Waste Isolation Pilot Plant in New Mexico, the Center reported in 2013.

Downblending faces legal, regulatory and political hurdles, the MacWilliams report noted, and would require modifying the United States’ current plutonium disposal agreement with Russia. But assuming those hurdles could be overcome, the report said the burial of downblended plutonium at the Waste Isolation Pilot plant could begin in just five years.

Although the Energy agency has been working on the Savannah River fuel plant for more than a decade, the new study noted that Energy officials still haven’t found any electric utilities willing to buy the fuel — a mixture of oxides of plutonium and uranium called MOX — the plant is supposed to produce.

The White House put the project, located at the Energy Department’s former weapons plutonium production facility at Savannah River, on “cold standby” last year, slowing construction pending MacWilliams’ review.

South Carolina has filed a lawsuit seeking to force the federal government to complete the MOX fuel plant, where about 1,600 workers are currently employed. South Carolina’s Congressional delegation has long championed the project, led by Sen. Lindsey Graham, R-S.C.

The United States and Russia first signed a deal to each dispose of 34 tons of their weapons plutonium back in 2000, in a pact brokered by Moniz, then working for the Energy department. But the Russians chafed at the United States’ insistence that they not be allowed to use  their plutonium to fuel “breeder” reactors that can produce more plutonium than they burn.

The Obama administration in 2010 signed a revised agreement granting Russia the right to use breeders for the program, and locking the United States into turning its own plutonium into fuel rather than directly disposing of it through burial or similar means.

The MacWilliams study looked at three alternatives to the MOX project besides downblending.

One was burning the plutonium directly as fuel in a new purpose-built reactor, probably at Savannah River. Another was “immobilizing” the plutonium by mixing it with highly-radioactive liquid wastes and molten glass in thick metal containers, then storing them. The third was dropping canisters of plutonium into three-mile deep boreholes, where they would nestle among the Earth’s crystalline basement rock.

Building a new plutonium-burning reactor, not surprisingly, was the most expensive option. The study said it could cost more than $50 billion to dispose of the surplus plutonium in this way. With sunk costs the bottom line for this option was $58 billion, the report said.

Mixing the plutonium with high-level waste and glass before disposal, the study found, would cost $28.7 billion — about the same amount of money that it would take to complete the MOX plant. This alternative was favored by many nonproliferation experts during the Clinton administration, and was extensively studied. The bottom line total would be $36 billion, with spending-to-date included.

Some advocates of this approach had hoped it would prove much cheaper.

The report said not enough research has been done on the deep borehole idea to estimate the costs.

Executive Director William E. Buzenberg has named Gordon Witkin to the top editor’s position at the Center for Public Integrity.

Witkin, 58, has served as acting executive editor for the nonprofit investigative news organization while overseeing coverage of health care, juvenile justice issues and the State Integrity project. Witkin joined the Center in September 2008 following a long career at U.S. News & World Report.

“I am extremely pleased to confirm the solid editorial structure we have been operating under for more than a year," Buzenberg said Friday. "It was a year in which The Center for Public Integrity won eight of the top 16 awards in journalism, including the Pulitzer Prize, the Goldsmith Prize and the George Polk Award, among others."

John Dunbar, 50, a Center veteran who is on his third stint with the organization, was named deputy executive editor. He will continue to oversee money in politics and financial coverage.

At U.S. News, Witkin served as a regional correspondent in Detroit and as bureau chief in Denver, before coming to Washington in 1987. He covered criminal justice for 11 years, before joining the management ranks as chief of correspondents in 1998.

Starting in January 2003, Witkin served four-and-a-half years as the news magazine’s national affairs editor. Witkin then spent a year as social policy editor at Congressional Quarterly, supervising coverage of health care, legal affairs, education, immigration, housing and labor.

Witkin’s work has been honored by Investigative Reporters and Editors, the American Bar Association, the National Press Club, Sigma Delta Chi, Scripps Howard, Columbia Journalism School and the University of Maryland College of Journalism.

Dunbar was formerly with the Investigative Reporting Workshop at American University and was a reporter in the Washington, D.C., bureau of the Associated Press. Last year’s “After the Meltdown” series won the George Polk Award for business writing.

In another personnel announcement, Jim Morris was named managing editor for coverage of the environment and workplace safety issues. A journalist since 1978, Morris has won more than 60 awards for his work. He has worked for a number of newspapers in Texas and California as well as publications such as U.S. News & World Report and Congressional Quarterly in Washington.

All of the appointments were effective immediately.