The Texas Observer

Ray Sullivan is a lobbyist who represents energy, transportation and development companies. He will represent these clients for another six days. On July 1, he will whip through the proverbial revolving door and re-enter government as Gov. Rick Perry’s new chief of staff.

When he joins the governor’s office, Sullivan plans to shutter his lobby business and terminate all his remaining lobby contracts, said Allison Castle in the governor’s press office. That elevates him to a slightly higher ethical level than the last high-profile lobbyist-turned Perry chief of staff, Mike “the knife” Toomey, who kept his lobby shop in business during his tour in the gov’s office. Toomey ostensibly handed his business off to a partner, but he returned to the lobby game — and a similar set of clients — a few years later.

The coverage so far of the Sullivan hiring has focused on the political angle: Perry bringing in an experienced political hand — Sullivan served as a Perry aide until joining the lobby in 2002, and he once served Bush during the Florida recount in 2000 — to run the governor’s office during a sure-to-be-fierce campaign year.

But we’re more interested in his business connections. Sullivan was a prominent advocate of energy deregulation and red-light cameras this session.

You can find the full list of Sullivan’s lobby clients here (you’ll have to scroll down a ways).

He had a lobby contract with the energy company Exelon Power Texas (a contract worth as much as $50,000 this year). Sullivan also was a spokesperson for an energy industry group called Texas Competitive Power Advocates. He was quoted in several news stories this session arguing the pro-industry position that electricity deregulation is working in Texas despite increasing electric rates in the deregulated parts of the state. Sullivan’s group has fought efforts by consumer advocates to re-regulate the market.

Sullivan also lobbied for Redflex Traffic Systems, one of the nation’s biggest purveyors of red light cameras. The company has contracts with 40 counties and municipalities in Texas, according to its Web site. The Legislature nearly did away with red light cameras this session — an effort Sullivan fought every step. On the other hand, the TxDOT sunset bill at one point contained a provision that would have allowed highway-side cameras to record license plate numbers of passing cars. Redflex — Sullivan’s soon-to-be former client — might be interested in that contract, if the provision ever becomes law.

Another Sullivan client was the construction services firm HNTB Corp., which consulted for TxDOT on the Trans-Texas Corridor — Perry’s now-widely-unpopular massive toll road project. If and when another TxDOT sunset bill makes its way through the Legislature, HNTB will likely fight any further restrictions on toll-road building.

Just a few business interests to keep in mind as Sullivan begins his new gig.

The revolving door between government and the private sector is a time-worn tradition in Texas. But here’s a case that on its bare facts is particularly egregious.

In January, six months after stepping down as the executive director of the Texas Commission on Environmental Quality, Glenn Shankle signed on as a lobbyist for Waste Control Specialists, the company recently licensed by TCEQ to build a massive radioactive waste dump in West Texas. His lobby contract is worth between $100,000 and $150,000, according to the Texas Ethics Commission.

When Shankle left TCEQ in June 2008, the agency was readying, per Shankle’s orders, two licenses authorizing Waste Control to bury millions of cubic feet of radioactive waste. The four-year license review process had been one of the most time-consuming and contentious in agency history.

Shankle’s own technical staff, geologists and engineers had concluded definitively that the dump could not legally be permitted. An Aug. 14, 2007, memo drafted by two geologists and two engineers bluntly stated that the landfill’s proximity to two aquifers made it “highly likely” that radioactive waste would leak into the groundwater. The site, they wrote, “cannot be improved through special license conditions.” They recommended denying the license. With little explanation, Shankle overruled them. His only sop to the staff were license conditions requiring additional studies before construction.

Amazingly, Shankle said in a brief telephone interview yesterday—one of the few times he has ever spoken to the press—that he had never heard of any of this.

“I was not aware of that,” Shankle said of his own technical staff’s recommendations. If true, that’s stunning. According to the Houston Chronicle:

When WCS President Rodney Baltzer learned of the [August 14] memo, he immediately sought out meetings with the agency’s executive director, Glenn Shankle, who decided in December [2007] to begin drafting the license.

In fact, records from TCEQ, previously discussed in the Observer, show that during the time period after the staff’s recommendation, Shankle was frequently meeting with Waste Control officials, attorneys and lobbyists. Waste Control is owned by Harold Simmons, the Dallas billionaire and major Republican donor who helped bankroll Swift Boat ads attacking John Kerry in 2004 and television ads in 2008 linking Barack Obama to Bill Ayers.

Baltzer left nine messages for Shankle and four for [Deputy Executive Director Dan] Eden between July 2007 and January 2008, according to phone logs that reflect only missed calls. Eden met with Waste Control officials at least five times during that period. Former Republican Congressman Kent Hance, a Waste Control investor and chancellor of the Texas Tech University System, paid a visit to Shankle’s office in early November.

Cliff Johnson, a principal in Textilis Strategies, an Austin-based firm that lobbies for Waste Control, visited with Shankle in September. Shankle also met with Giblin, Baltzer, and Mike Woodward, a Waste Control lobbyist and attorney with Hance’s law firm, during that period.

The outcome of this full-court press was the Shankle-ordered drafting of the coveted disposal licenses, permits that are worth untold millions to the company. In fact, without these licenses Waste Control is a losing venture. Last year, Waste Control lost $21.5 million, according to SEC filings for Valhi, Waste Control’s parent company. In other words, Shankle had done a very big favor for Waste Control.

The move so upset his staff that three of them quit in protest. One of them, Glenn Lewis, who coordinated one of the license review teams, reacted with disgust and anger when told yesterday that Shankle was lobbying for Waste Control.

“Even the Mafia was more circumspect than this,” Lewis said. “To find out now that Mr. Shankle—who was in constant communication with WCS throughout this ordeal—now is on retainer for [WCS] is shocking in that it is so brazen and such an insult to everybody who worked on that application. It just shows that any objective appraisal by the TCEQ was from its inception a fantasy and that big money and a lot of political power won once again. … They should have just issued the license the day after it was received and saved everybody a lot of trouble.”

When it was suggested to Shankle that there was at least the appearance of a quid pro quo, he responded: “The freedom of the press can go so far. You’re making some very serious allegations.” Then he hung up.

Poor Bob Perry. What’s millions in political contributions worth these days if you can’t protect your own agency from the slings and arrows of the Sunset Commission?

Today the commission’s staff recommended what thousands of Texans have been begging the Legislature to do for five years: scrap the Texas Residential Construction Commission.

Back in 2003, when the TRCC was created, it was hailed as the consumers’ friend. If your brand new home was riddled with cracks and leaks, you, the Texas consumer, would have the TRCC on your side to act as mediator with the home-builder.

It sounded good on paper, but like many regulatory agencies in Texas, the TRCC is dominated by the very industry it’s supposed to regulate.

The Sunset Commission staff sums up the TRCC in its report: “Current regulation of the residential construction industry is fundamentally flawed and does more harm than good.”

No need to read the entire 75 pages. You’ll get the gist of just how rotten the agency is from the two-page summary at the beginning of the report.

In 2005, the Observer wrote about the homebuilding industry’s lavish donations to the Republican Party — more than $8.9 million to candidates and political action committees. Bob Perry, head of Perry Homes, the top contributor of them all, gave more than $6.9 million from 2001 to 2005. In 2007, the Observer reported that the TRCC couldn’t enforce its own permitting decisions — builders who had lost their permits were still openly working.

The TRCC, stacked with home-builders and builder-friendly appointees, forces homeowners to wait for months for relief that most often never comes. Homeowners must file a complaint with the agency. They also have to complete the agency’s “dispute resolution process” before they can get on with their lives and file a lawsuit or go to arbitration.

When the TRCC does rule in favor of a consumer, it has no power to compel a home-builder to repair the damages

I wouldn’t say goodbye to the TRCC just yet. The Legislature will have the final say on the Sunset recommendations next year. And Bob Perry is still the state’s top political donor.

Imagine you need a lawyer, but can’t afford the high fees. You crack the phone book and find a group calling itself “National Legal Aid Services.” offering low-cost representation. Sounds good, right? Maybe not.

National Legal Aid Services is apparently a group out of Colorado that’s posing as a nonprofit, but allegedly scams poor folks out of their money.

This according to a recent lawsuit filed by Rio Grande Legal Aid (the real legal aid folks in Texas) in state court against several allegedly fake “legal aid” outfits. Thirteen plaintiffs allege they were scammed out of their money by 12 defendants, including an entity called National Legal Aid Services. The group deceptively incorporated the “legal aid” into its name and marketed itself as such, according to the complaint.

One of the plaintiffs is Juanita Sarabia. According to the filings, in June 2007, the San Antonio woman wanted to gain legal access to her grandchildren. Her daughter was missing, and Sarabia wanted to visit her grandchildren, who lived with their father. Unable to afford an attorney, Sarabia tried to contact legal aid, which provides legal representation to the poor. She called directory assistance and was given a phone number for “legal aid.” She called, and asked if she had reached legal aid in San Antonio and was told she had.

The person on the other end of the line told Sarabia they could help get her a lawyer for the fee of $450. (Legitimate legal aid agencies don’t charge for their services.) Sarabia said she didn’t have the money, but the person on the phone insisted and warned her that other lawyers cost thousands of dollars. Sarabia agreed. It took her two months to scrounge up the money. She wired them the money in late September. In return she received a set of documents that, she was told, needed to be notarized and taken to the courthouse. Sarabia asked for an attorney’s help, but was told “we only do paperwork.”

She took the documents to a notary, who told Sarabia she had been scammed. The documents were slapped-together boiler plate that was of little use in Texas. She hasn’t been able to contact the so-called Legal Aid group since and never got her money back.

Sarabia’s experience isn’t contained to Texas. Similar scams have popped up recently in Ohio, California and Maine. But Rio Grand Legal Aid also has joined with Colorado Legal Services to file a federal lawsuit in Colorado federal court against a similar set of defendants, alleging false advertising, trademark infringement, and racketeering. National Legal Aid Services’ Web site has been taken down.

Brian Flood, the top watchdog at the scandal-plagued Health and Human Services Commission (HHSC) announced his resignation late this afternoon. As HHSC inspector general — a post created in 2003 — Flood oversaw investigations of fraud and abuse across Texas’ multi-billion dollar health care safety net.

Earlier this year, Flood feuded rather openly with Gov. Rick Perry and HHSC chief Albert Hawkins after Flood released a highly critical report on HHSC’s two major privatization efforts. Those disastrous contracts , including the Accenture mess, cost the state hundreds of millions and deprived many families of benefits. Investigations by Flood’s office made Hawkins’ leadership of the agency look rather clumsy.

The reason for Flood’s departure late today is unclear. There was speculation at the Capitol during the legislative session that Flood was getting forced out because, according to some sources, he had embarrassed Hawkins, the governor’s ally. It’s worth noting that Perry doesn’t praise Flood personally in the HHSC announcement. The governor has appointed an interim IG.

Texas Watch has been doing all the heavy lifting on this, but director Alex Winslow has dug up yet another interesting document on the fundraising efforts of the state’s senior Supreme Court Justice, Nathan Hecht. Last week Travis County D.A. Ronnie Earle announced his office was looking into one of three complaints filed by Judicial Watch against Justice Hecht for possible omissions on his campaign finance reports.

All of the trouble stems from Hecht’s efforts to get reimbursed for legal expenses he incurred while employing “Oprah’s lawyer” to appeal a reprimand from the state’s judicial ethics commission. The admonition was overturned on appeal, and Hecht eventually paid the bills by hitting up “attorneys, lobbyists, and litigants with business before the Court soliciting funds to cover his personal legal expenses.” Now Texas Watch has obtained a copy of the letter Hecht sent out, reproduced below. It’s a tiny bit of insight into how state officials conduct business:

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More importantly, as Texas Watch notes, the letter’s significance is that Justice Hecht says that “The firm [Jackson Walker] has also agreed to designate a large part of the fees as an in-kind contribution to my campaign.” Hecht’s campaign finance reports show no in-kind contributions from Jackson Walker, which could be a violation of the Election Code.

It’s worth noting Hecht’s explanation in the letter, as well. His letter makes it clear that he thinks he never should have been reprimanded in the first place and that he saw his case as a larger stand: “So I appealed — to clear my record, to ensure that other Texas judges would not be subjected to such abusive treatment by the Commission, and to uphold the rule of law. … Because of the public importance of my case, it could not be lost to misstep. Trial costs were high.”

For what it’s worth, Law.com has a good rundown of both sides from when Hecht was first admonished. For our views on Hecht’s conduct read the Observer editorial “Hecht of a Job.”

Several months ago Justice Nathan Hecht, the longest-serving member of the Texas Supreme Court, racked up some $450,000 in legal bills fighting a ruling by the State Commission on Judicial Conduct, which he paid through the kindness of campaign donors. Details are of that tawdry tale are here.

Now, as Texas Watch documented in a complaint filed today in Travis County, the problem is that Hecht didn’t actually pay that entire legal bill. Turns out he received a discount from his lawyers at the firm Jackson Walker worth about $100,000. While judges are allowed to collect contributions for legal defense funds, they are limited to $5,000 for individuals and $30,000 for PACs, including law firms. If considered the same as a campaign contribution, Hecht’s big discount could constitute one of several violations. Texas watch explains where the complaints were filed and why:

• Public Integrity Unit: The Texas Penal Code prohibits judges from accepting a gift from a party who the judge knows is likely to appear before him. As Jackson Walker is a prominent law firm with numerous clients with interests that are likely to come before the Texas Supreme Court, the discount the firm gave Justice Hecht was possibly an illegal gift. A violation of this statute is a Class A misdemeanor punishable by up to one year in jail and a fine of $4,000.

• State Commission on Judicial Conduct: The discount on his legal expenses is a gift that reflects adversely on his impartiality and is a possible exploitation of his position in apparent violation of the Canons of Judicial Ethics.

• Texas Ethics Commission: The $100,000 discount that Hecht received on his legal bills is an in-kind contribution in excess of the statutory $30,000 contribution limit that law firms are permitted to donate to judges and judicial candidates. A violation of this statute is punishable by a fine of three times the amount of the illegal contribution.

Alex Winslow, the watchdog’s executive director, is asking for a full investigation into the discount.

Hecht, for his part, has denied that any of the contributions to his defense fund would influence proceedings before his court.

Hecht’s lawyer, Chip Babcock, a high-profile First Amendment lawyer in Dallas, told Fort Worth Star-Telegram in April that any rules violations were unintentional. “I’ve said all along that I want to do the right thing, and if the right thing is that I’ve got to be paid more money, then so be it,” he told the paper. “I wouldn’t have done it that way if I thought it was going to cause a problem, especially not to Justice Hecht.”