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Q&A: Watchdog Regulations covers the absurdities of the regulatory state

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Wednesday, February 3rd, 2016

Watchdog Regulations SM Final-01As part of our mission to keep government accountable and expose waste and abuse, Watchdog.org launched a Regulations beat, tapping longtime Watchdog reporter Eric Boehm (pictured below) to keep tabs on how the regulatory state is weakening our economy and undermining personal freedom.

You can find Boehm’s latest stories at Watchdog.org, and make sure to follow Watchdog Regulations on Twitter for the latest government regulations news.

He recently took a break from covering the absurd doings and autocratic facets of the regulatory state to answer a few questions about the regulatory issues facing America today:

Franklin Center: Is there any particular void or overlooked angle in the media’s coverage of regulations that Watchdog.org helps fill? Why is the Regulations beat important?

Eric Boehm: Aside from a few publications that cover federal regulations from a very technical perspective (stuff like The Hill and Roll Call, etc), there’s not a lot of media coverage of regulatory issues, and almost none of it at the state level. That’s understandable, on one hand, because the media likes to cover politics as if it was a sporting event – every story has to be a Democrat vs. Republican thing – and regulatory stories don’t often fit that mold. But on the other hand, that’s a real shame because the regulatory state affects regular people in far more ways than the results of the Iowa caucuses ever will. When the media does cover regulatory issues, too often it parrots the government’s point of view – that is, that regulations are necessary to “protect” some group from harm in the marketplace. The people harmed by excessive regulations are generally unseen and their stories aren’t told.

FC: One of the most interesting and worrisome stories you’ve written lately was about regulatory “dark matter” – an issue that doesn’t seem to get much press. What is this “dark matter”, exactly, and what should Americans know about it?

Boehm profile picEB: That’s a term coined by Clyde Wayne Crews, a researcher for the Competitive Enterprise Institute.  God bless that man, because his job basically entails trying to track every new federal regulation and rule. There are a few thousand of those created every year by various federal agencies. Those agencies are told to create new regulations by Congress or by executive order. But then there’s a whole collection of informal regulations that never go through the proper rule-making process but are adopted by the bureaucratic agencies anyway. Crews says there have been 500,000 of those issued since 1994, and they take lots of different forms. A good way to think about it is like this: Congress passed the Affordable Care Act, and the ACA empowered lots of federal agencies to create lots of new regulations (the FDA’s new rule about calorie counts on menus, for example). But then the White House decided to issue a one-year delay on the law’s mandate that all businesses provide health insurance for their employees. They made that decision and announced it in a blog post, never approved by any agency (in this case it should have gone through the Department of Labor) and yet it was treated as if that declaration was equal to any other aspect of the law or regulations created as part of the law. That’s what he means by “dark matter.”

FC: What is your sense of government regulations in America in general – should we be optimistic or pessimistic about it?

EB: I’m generally pessimistic about almost everything connected to government. We’re over-regulated because there is a sense that government is supposed to protect us from all forms of harm. That’s not what government does.  Government does a good job of serving a judicial role and meeting out justice after harms have occurred, but when it starts trying to stop things before they happen, that’s usually not good – that’s Phillip K. Dick territory.

FC: Do you know of any states or cities that have been successful in repealing and rolling back onerous regulations?

EB: My current home state of Minnesota did a legislative “un-session” a few years ago, which I don’t think anyone else has copied. It was a several-week period where lawmakers met like usual, but the only bills that could be introduced or considered were bills that removed or deleted elements of the state code. I thought that was a good idea, since governments love to make new rules but rarely go back through the books to delete outdated laws or cut regulations that don’t work. Virginia right now is working on repealing, or at least rewriting, some onerous healthcare regulations that drive up the cost of care and limit access. Those are positive signs.

FC: What are some hot regulatory issues/legislation to watch this year?

EB: The ongoing fight over how the “sharing economy” will be regulated is probably (still) the biggest thing. This is one area where the federal government hasn’t meddled too much. So states and local governments are performing their duties as laboratories of democracy and everyone is kind of taking their own approach. That means there will be mistakes – like Chicago’s proposed ordinance that would throw Airbnb users in jail for six months if they violate even a single part of the city’s new rules – but hopefully governments will be able to learn from those bad examples.

FC: Anything else you’d like to say about the Regulations beat that readers should know?

EB: Earlier you asked if I was optimistic or pessimistic about all this.  Maybe the better word would be “skeptical.” My liberal friends like to argue with me by pointing out that regulations and government force helped curb things like 80-hour work weeks and industrial-level pollution. Yes, government can sometimes be a force for good, but I think we’re long past the point of diminishing returns when it comes to government involvement in private decisions. A regulation that says you can’t dump untreated industrial waste into rivers? Sure, that’s a solid idea that benefits the general health and well-being of everyone. But now we’ve reached the point where governments are banning plastic bags and where the city government in Seattle is deputizing trash collectors to issue fines for people who throw food in the trash instead of composting it.

The politics behind California’s water crisis

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Thursday, January 14th, 2016

California flag

California is now entering the fourth year of a grueling drought. The state hasn’t seen substantial rainfall in years, and officials are cracking down on excess water use to make up for the lack of water resources. When Governor Jerry Brown called for Californians to reduce their water use by 25 percent, the people did their part with aplomb, cutting back water use by 31 percent last July by doing everything from watering their lawns less to taking shorter showers. But despite these personal conservation efforts, tensions over the state’s water supply are still running high, straining the state’s laid-back, “whatever” attitude. Does a state of nearly 39 million people simply not have enough water?

As Steven Greenhut explained in a special series of reports for Watchdog this fall, there’s good news and bad news for California’s water crisis. The good news is that the state actually has plenty of water – as well as the ability to increase its supply of fresh water. The bad news is that government policies and politicking are getting in the way – and have proven awfully hard to get around.

The political problem

“California’s drought is largely a man-made crisis,” writes Greenhut. “It is caused by a series of policies – some from the past, many that are ongoing – which has prioritized environmental demands above the basic provision of water resources to the public.” Due to these policies, half of California’s water resources flow through the Sacramento-San Joaquin Delta, the West Coast’s largest estuary, and end up in the San Francisco Bay. A pumping station at the south end of the Delta sends water from this estuary to farmers in the San Joaquin Valley and the Southern California metropolises. During wet years the system works fine, but during dry years, water supplies are halted. The pump is also hampered by the Delta Smelt, a tiny bait fish that, when it is found in the pump’s fish screens, triggers the shutdown of the entire pumping station.

Several plans have been proposed to work around this problem – all of them exceptionally expensive. Governor Brown’s (pictured below) latest proposal would build a pair of tunnels under the Delta to protect the Delta Smelt. The grand total of the project would cost $25 billion, which many people consider an awfully high price tag for protecting a few fish.

“In other words,” Greenhut summarizes, “this is a costly solution to a political problem.” He quotes a Wall Street Journal article that explains how government regulators have flushed 1.4 trillion gallons of water into the ocean to protect the Delta Smelt since 2008. That would have been enough water for 6.4 million Californians for six years.

Jerry Brown CaliforniaThe problem, Greenhut argues, is that “the balance of power has shifted from those who believe people come first to those who seem to view the population as a scourge.” Critics of California’s water usage frequently cite a figure that shows farmers use 80 percent of the state’s water resources, but that statistic does not include environmental uses of water, which account for fully half of the state’s water flows.

Some of these environmental policies are so extreme they have triggered flares of civil disobedience. In April, for example, the Oakdale Irrigation District near Modesto held a public meeting to discuss government requirements to release “pulse flows” from a district-controlled reservoir in the Sierra Nevada foothills. The flows were designed to protect a dozen fish – yes, you read that right, 12 individual fish – so they could swim out of the reservoir and ultimately to the Pacific Ocean, a journey that biologists said they were unlikely to survive in the first place.

Residents were furious (“What if we tell them to go to hell?” one remarked). Their protest was only averted by a last-minute deal, but it illustrated how serious – and absurd – the water problem has become. Locals wanted flexibility to accommodate unique difficulties like drought, but state and local officials said their hands were tied by the Federal Endangered Species Act.

These environmentalist priorities that suck up so much of the state’s water aren’t always coherent, Greenhut continues. Regulators often try to protect fish that are the product of hatcheries and aren’t native to the area, and environmentalists’ calls to demolish California’s system of dams so that rivers can return to their natural state would sometimes cause rivers to run dry – not a good situation for any fish that happen to be living in them.

Taken as a whole, this incoherent series of policies put in place by environmentalists reveals the true crux of the issue: They don’t really care about an endangered bait fish. California’s war over water is about population control.

Too many people?

California’s water plan from the 1950s to early 1970s under the administrations of Governor Brown’s father, Governor Pat Brown, and Governor Ronald Reagan emphasized “agricultural, urban, and industrial growth.” As the state’s highway system expanded and its population grew, these governors worked to build the necessary dams, canals and pumps to support expansion. The result was one of the most impressive systems of dams and aqueducts the world has ever known, but that began to change soon after Reagan left the governor’s mansion in 1975.

In his first two terms as governor from 1975 to 1983, Jerry Brown halted a number of infrastructure projects, assuming that it would slow the state’s population growth, but it didn’t. People kept coming, leading to more competition for increasingly strained water and food resources. Decades later, under Brown’s second stint as governor, California has started seeing the long-term costs of the environmental philosophy he began to implement in the 1970s. That worldview assumed it could control and contain population growth by slowing infrastructure creation. Admittedly, in recent years California hasn’t kept up its breakneck pace of population growth from the twentieth century, but it continues to outpace the national rate and is projected to hit 50 million residents by 2050.

“Left or right, the state’s leadership was once devoted to building and maintaining a water infrastructure that would meet the needs of a growing population,” Greenhut writes. “That consensus is long gone. And that explains why Californians cannot simply follow the straightforward advice of those who want to help them deal with the ongoing drought.”

Population control, after all, is the ultimate aim of the environmental movement, even if it comes at great cost.

Innovative solutions abound

California’s water problems are not without hope, and there are signs that water policy in the state is swinging back toward the rational. A prime example of this is San Diego County, the state’s second most populous county, which has so much water that the county doesn’t know what do with it. Thanks to several innovative projects, the San Diego County Water Authority plans to reduce its water purchases from the Metropolitan Water District of Southern California by two-thirds over the next 15 years.

One such project is a new $1 billion desalination facility, which converts salty ocean water into 50 million gallons of fresh drinking water every day. Government red tape and lawsuits nearly sunk the construction of the facility, which took 18 years from planning to opening. Because it required more equity capital than financial backers anticipated, the project may not end up being a good investment, but the high price tag, like Governor Brown’s proposed pumps in the Delta, is in large part the result of politics. Four separate state agencies had to approve the desalination facility on their own separate tracks, delaying construction by a decade and increasing costs by about 10 percent, or $100 million. Yet despite the regulatory headwinds, it did ultimately become operational.

Other innovative water policies are being implemented at the city level. The San Diego City Council, for instance, is pursuing water recycling technologies like the Pure Water San Diego program, which can turn sewage into drinkable water. The program promises to do so at competitive prices and to provide a third of San Diego’s water by 2035.

“California could easily meet its future water needs – even as the population continues to grow – by embracing technologies that already are working,” Greenhut concludes. “The big question is whether state officials can learn new lessons.”

Watchdog’s stories to watch in 2016

By
Tuesday, January 5th, 2016

FranklinSlider Capitols

What kind of stories exposing government waste, abuse, and injustice can we expect to see in 2016? Here’s the Watchdog roundup of the important issues that we’ll be paying attention to in our states and on our beats this year.

Colorado

Reporter Art Kane will be monitoring the costs of Medicaid expansion on the Colorado state budget, as next year will be the first year that the federal government stops covering the entire cost of providing health coverage to people who earn up to 133 percent of the federal poverty level. Colorado’s Medicaid caseload nearly doubled in the past two years after the state expanded coverage to make more people eligible for Medicaid, surprising state budget officials. As federal spending decreases and the Medicaid rolls grow, it will put more pressure on the state treasury.

And, by extension, Colorado taxpayers.

Texas

A grab bag of issues faces the Lone Star State as Watchdog looks to build on its expanded coverage of municipal expansion, education, and government services in Texas.

In San Antonio, suburban anger, urban angst and higher taxes for everyone could be coming under America’s most aggressive municipal expansion. Moves are afoot to at least make the city’s ambitious new projects more democratic.

All across the state, school districts are shutting down in the face of financial and enrollment difficulties. Will school choice finally break through as a record number of Texas districts fail academically and financially?

And lastly, with a December ruling that establishes federal oversight of Texas’ Department of Family and Protective Services, U.S. District Judge Janis Jack set off a debate that’s likely to be one of the central political issues of the next few years. Will the legislature convene for a special session to reform the state’s foster care system?

Vermont

In 2015, school choice in Vermont seemed to have miraculously survived a power grab aimed at consolidating the state’s 277 school districts. Or so it seemed, until the Vermont Board of Education ruled in September that school choice districts must give up school choice if they merge with districts that operate public schools.

Under Vermont’s new Act 46 district consolidation law, small districts must combine to form larger educational systems of 900 or more students. The objective, say education leaders, is to achieve bureaucratic savings and attain greater uniformity in educational programs and services. In 2016, as school board members across Vermont frantically search for suitable district partners, more than 90 towns face the prospect of losing school choice.

Ohio

In Ohio, it’ll be interesting to see how hard the legislature fights Gov. John Kasich on energy policy. Kasich wants tougher “green energy” mandates and a huge tax hike on energy companies fracking for oil and gas.

Wisconsin

There are a lot of stories to watch in Purple Wisconsin in 2016, says Wisconsin Watchdog reporter Matt Kittle, but perhaps the one with the most long-term impact involves the Wisconsin Supreme Court race. The high court now has a decidedly (5-2) conservative majority. As they did five years ago, the left will throw everything it has at this race to weaken the strong right wing of the court.

shutterstock_128822344 editedMississippi

Mississippi Watchdog broke a big story about civil asset forfeiture abuse last year. Reporter Steve Wilson found that the city of Richland has a new $4.1 million police station, a top-level training center and a fleet of black-and-white Dodge Charger police cars, all thanks to property and cash police seized during traffic stops. Will state lawmakers act to reform the practice?

Labor

As far as labor policy goes, there are a several big right-to-work fights to watch as reformers try to capture momentum from states that have recently passed right-to-work laws.

The big one to watch is Friedrichs v. California Teachers Association. If the plaintiffs win, the impact on public-sector unions will be huge, not just in California, but also nationwide. Union bosses in states without right-to-work could lose the ability to take forced “fair share” fees from nonmembers. A ruling is expected late in the Supreme Court term; oral arguments are in January.

In West Virginia, unions are already rolling out their case against right-to-work, despite widespread support. Can they stop a confident Republican majority from making West Virginia the 26th right-to-work state?

In Kentucky, will newly-elected Gov. Matt Bevin’s big win bring House Democrats around to supporting right-to-work before the 2016 elections? If not, the outcome of House races next November could put right-to-work on the docket in the state for early 2017.

In Missouri, which saw a fierce – but ultimately unsuccessful – fight for right-to-work earlier this year, a Republican victory in the 2016 governor’s race would likely mean it becomes a right-to-work state in 2017. Republicans may try to push the issue again in 2016, but they will still be hard-pressed to overcome Democrat Gov. Jay Nixon’s veto.

Education

It will be important to keep an eye on how the 2016 presidential candidates handle the issue of school choice. With teachers unions pushing for the status quo, and families (especially in under-served communities) fighting for a better future for their children, candidates will have to pick a side. There will be a lot of talk about education. Will the White House contenders keep the focus on choice?

On a local level, reporter Evan Grossman recommends paying attention to charter school expansion in Philadelphia. The school district is broke and failing and there is a public thirst for more charters, evidenced by long waiting lists. The district is mulling 14 applications for new charters and will vote on them in February.

The school choice debate is a sharp one in Philly and all sides have come out swinging as the district also considers turning three failing elementary schools with deplorable conditions into charter schools. On one side are a group of hundreds of parents tired of waiting and desperate for better opportunities for their kids. On the other is a group of parents and typical school choice opponents like the local teachers union that are reluctant to turn the schools over to outside charter operators. The decision to convert those three schools will be made in January, setting the stage for another crucial year for schools choice issues in 2016.

The best of Watchdog journalism from 2015

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Wednesday, December 16th, 2015

Impact journalism at Watchdog was alive and well in 2015, keeping elected officials accountable, exposing government programs in need of reform, and defending the free speech of whistleblowers standing up against corruption.

Here are our top five must-read stories from the past year:

Free Speech Wins

1. Turning the tide in Wisconsin’s Secret War

Wisconsin Watchdog reporter Matt Kittle’s 305-story series investigating a partisan John Doe probe was vindicated by the highest court in the state last summer as the Wisconsin Supreme Court ruled the probe was unconstitutional, a gross abuse of legal authority by a politically motivated district attorney that stifled free speech.

Kittle’s groundbreaking investigative reporting chronicled the egregious civil rights abuses inflicted by Milwaukee County’s Democrat district attorney and his shadowy John Doe investigation against Governor Walker, his political supporters, and dozens of conservative groups. Among the many abuses, targets of the partisan probe were slapped with gag orders under threat of jail time and intimidated by law enforcement with paramilitary style raids. But at long last Wisconsin’s Secret War is coming to an end.

Texas

2. A Texas-sized scandal

The story of the University of Texas admissions scandal began nearly two years ago in a dire place. Wallace Hall, a Gov. Rick Perry appointee to the University of Texas Board of Regents, was about to be impeached for ethics violations after blowing the whistle on admissions favoritism at the university. The story’s narrative changed in Hall’s favor, however, when Watchdog Texas bureau chief Jon Cassidy got involved. Cassidy built a database that tracked over a decade’s worth of academic data from students admitted to UT and traced the individual students who later performed poorly on the Texas Bar exam. Then he found the smoking gun: documents that linked each under-qualified student to a powerful lawmaker or state official.

The story of UT’s admissions scandal will continue to develop as more details surface about the extent of the corruption. But at this point the lesson is clear: statements by those in power shouldn’t be taken at face value, and the bright light of accountability can and will persevere if journalists and whistleblowers are brave enough to hold their ground.

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3. Booze, babes, and EBT abuse

In Colorado, reporter Art Kane’s investigation into the issue that found EBT withdrawals from ATMs at casinos, liquor stores, and strip bars were happening even though both federal and state laws prohibit it. Worse, Colorado Watchdog also discovered that welfare recipients had managed to withdraw money at pot shop ATMs and out of state in places like Las Vegas, Hawaii, and the Virgin Islands. All in all these abuses totaled hundreds of thousands of dollars, and the stories prompted a federal review of whether the Colorado Department of Human Services (CDHS) is doing enough to stop them. The state legislature soon acted to curb the abuse, introducing bills that would help keep CDHS more accountable by requiring it to regularly report illegal withdrawals to lawmakers. Shortly after, Governor John Hickenlooper signed House Bill 1255 into law, blocking ATM welfare withdrawals at strip bars, liquor stores, pot dispensaries and casinos.

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4. Lambos, yachts, and tobacco get a boost from the Small Business Administration

There’s a lot of talk in fiscal policy about “sin taxes” – taxes government levies to discourage particular behaviors. We might call many of the loans dealt by the Small Business Administration “sin loans,” because as Watchdog reporter Art Kane found in a series of stories, the federal agency has distributed hundreds of millions of dollars in loans to liquor stores and bars, supercar dealerships, country clubs, and boat dealerships – all of which government has tried to penalize with special taxes. These loans are usually backed by fees on lenders, but since 2009, taxpayers have subsidized about $835 million worth of loans, many of which have defaulted. Kane’s investigation was sparked by conversations with OpenTheBooks.com, a project of American Transparency, which advocates for transparency in public spending. His findings were featured in Forbes and a number of other national news outlets.

animas-river-spill-photo-from-the-USEPA

5. The EPA’s disaster in Colorado

“Exxon had its Valdez, BP had its Deepwater Horizon and now the U.S. Environmental Protection Agency has its Animas River disaster with which to contend.”

That’s how Watchdog energy reporter Rob Nikolewski summed up the aftermath of the disastrous EPA-caused spill in Colorado’s abandoned Gold King Mine, which released 3 million gallons of toxic waste into the Animas River. Watchdog reporters and Arena contributors would go on the chronicle . As reporter Tori Richards found in a series of bombshell investigations, for example, the EPA’s record of overreach in the area actually goes back years. EPA Administrator Gina McCarthy said the agency “takes full responsibility” for the accident, but EPA headquarters gave no reply when Watchdog reached out asking for a response to charges that the agency uses a double standard for private companies and for itself. In the end, it appears the agency simply tried to wait for the problem to go away.

 

Franklin Center gathers for 2015 Staff Retreat

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Thursday, December 10th, 2015

This week Franklin Center and Watchdog staff gathered for our all-staff retreat. It was a great time to connect with coworkers and allies, celebrate our victories in 2015, and prepare to start the next year with strength and clarity as an organization.

Over the course of two days in Old Town Alexandria, reporters and staff heard from an inspiring slate of speakers about how we can move forward to promote liberty and transparency and better keep government accountable in 2016. Here are some of the highlights:

Reporters gather to hear opening remarks

FC staff reporters

Ohio Treasurer Josh Mandel shares about how his website, OhioCheckbook.com, has brought new levels of transparency to state spending and made government agencies think twice about how they use taxpayer dollars.

FC staff Josh Mandel

Wisconsin Watchdog reporter Matt Kittle and Wisconsin political strategist Eric O’Keefe share the inside story of the state’s controversial (and ultimately unconstitutional) partisan John Doe probe that targeted and intimidated conservatives, leaving them with no recourse but the free press.

FC staff WI John Doe

Daily Signal editor Rob Bluey, Celeste LeCompte of ProPublica, and Scott Reeder of Illinois News Network share tips for establishing media partnerships to grow Watchdog readership.

FC staff DS PP IL

Watchdog’s Matt Kittle joins co-authors Guy Benson of Townhall.com and Mary Katherine Ham of HotAir to provide dinner entertainment with a rollicking discussion of their new book, End of Discussion: How the Left’s Outrage Industry Shuts Down Debate, Manipulates Voters, and Makes America Less Free (and Fun).

The title explains it all.

FC staff Guy book

Beverly Hallberg of District Media Group shares tips for looking (and sounding) good on radio and TV.

FC staff polished tv radio

John Schilling of American Federation for Children, Hubbel Relat of American Energy Alliance, and Evan Swarztrauber of Tech Freedom introduce their organizations and highlight some of the most pressing school choice, technology, and energy issues facing America.

FC staff Tech SC Energy

I’ll see you in court – the costly abuse of eminent domain

By
Wednesday, November 18th, 2015

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It’s bad enough for a local government to use eminent domain to seize personal property, but it’s even worse when that land grab happens immediately through an expedited process known as “quick-take” eminent domain. In public projects involving the “making or repairing” of a road, local government can take possession of a disputed property immediately after it files for eminent domain. The case does not have to go through the normal court process.

This was the situation facing two Ohio homeowners. In October, they suddenly found their front yards in jeopardy as the city of Perrysburg, Ohio tried to grab their property via “quick-take” for a road expansion.

The grab did involve making a road, but there were two problems with its legality, according to the homeowners’ attorney, Maurice Thompson. First, and most significant, said Thompson, Perrysburg did not have authority to seize their property because it lay in Middleton Township, outside the city’s jurisdiction. Second, the city intended to take the land to build a sidewalk, which is not covered by quick-take law.

What was the city’s reason for attempting the “quick take” in the first place? Councilman Todd Grayson, the one councilmember who voted against the eminent domain grab, simply said it’s cheaper than expanding the road on the other side, across from the property owners. The only thing on the other side of the road is a drainage ditch, and no one has any objections to moving it other than that it would increase the estimated cost of the project by $1 million.

Grayson doesn’t believe the extra price tag is a good enough reason for taking and tearing up the front yards of several citizens. “When your justification is ‘it’s cheaper,’ that’s not a legal reason for taking people’s property,” he said. He also suggests that the city attorney downplayed potential legal costs that would arise from homeowner opposition and that those costs were not factored into the financial comparison.

Sure enough, the homeowners pushed back against the city’s land grab, and two weeks later, Watchdog reported, an Ohio court ruled Perrysburg cannot use “quick-take” eminent domain to seize their properties.

“This Court finds that if the legislature intended for ‘quick-take’ procedures to extend to other areas, those other areas would have accordingly been referenced somewhere… They are not,” said Wood Country Probate Judge David Woessner. As a result, the city must wait for the traditional eminent domain process to run its course.

The story ended in “a victory for private property rights across Ohio,” according to Thompson. But abuses of eminent domain are not limited to “quick-take” methods, and many are not successfully challenged. As Watchdog Opinion writers have pointed out a number of times, local government sometimes uses eminent domain on behalf of corporate interests – in the name of “economic development.”

shutterstock_334669748Eminent domain “was originally set up to be used only if somehow taking property was really for a ‘public use,’ like a road expansion,” writes Watchdog Opinion contributor Samuel Friedman, but cases like 2005’s Kelo v. City of New London “created an entirely new problem where governments used the clause to seize property for private use if somehow the argument that doing this was in the ‘best interest of the community’ would stand.”

In Kelo v. City of New London, the city of New London, Connecticut wanted to provide Pfizer, a large pharmaceutical company, with land around a research facility the company planned to build. The company would have attracted jobs and helped boost the region’s flagging economy. In order to do this, however, they would need the property of two families who were not interested in moving, so the city invoked eminent domain. The case went to the Supreme Court, which decided 5-4 in the city’s favor, and the neighborhood was seized and destroyed. Yet in a tragic turn of events, the private developer could not obtain financing for the project. The land now sits empty and abandoned.

Similar incidents involving the use of eminent domain on behalf of private developers threaten to crop up elsewhere. In Illinois, for example, Watchdog Opinion writer Hilary Gowins says Northeastern Illinois University wants to bulldoze six properties so a private developer can build dorms and retail stores instead. University president Sharon Hahs is considering pursuing eminent domain to wipe out the properties of these six businesses, even though they have invested in the neighborhood for years.

In Delaware several years ago, a major developer named Harvey Hanna and Associates wanted to build a shopping center next to the property of a retired truck mechanic named Jack Slawter. Slawter depended on renting that property for much of his income. Even after Harvey Hanna made him an offer, he didn’t want to sell his land. Harvey Hanna needed the land to build an entrance to the proposed mall, so it summoned the state Department of Transportation (DelDOT) to use eminent domain to take Slawter’s property. He responded by retaining a lawyer who argued DelDOT was abusing its eminent domain powers. After both sides dug their heels in, Slawter appealed to the statehouse for help. Lawmakers passed some property-rights reforms to reel in abuse of eminent domain, but ultimately did little to help Slawter’s situation. DelDOT was exempted from the new rules. Eventually the state agency and Harvey Hanna would settle with Slawter. He couldn’t win.

Friedman argues that the state of Delaware has spent much more handling the case than if they had never gotten involved with Harvey Hanna in the first place. At the end of the day, it seems, the only real winners in these incidents are lawyers. This is the case in Minnesota’s Carver County, where Minnesota Watchdog reporter Tom Steward covered a dispute in the Twin City suburbs over a two mile stretch of land obtained from 14 different land owners by eminent domain. Legal fees in the county have soared in the three years since condemnation and destruction. The private attorney litigating settlements for the county stands to collect more than $800,000 – almost four times more than original anticipated. County taxpayers also face tens of thousands of dollars in additional costs as landowners settle.

All these costs shouldn’t come as a surprise to Carver County. With their estimates for the price of land running on the low end of the spectrum, and landowners’ appraisals reaching several times that ($845,000 versus $4.1 million, in one instance), disputes are bound to flare up as landowners vent frustration with the county’s lowball appraisals.

In any case, the lesson from all of these stories is clear. Legal fees will always haunt eminent domain grabs, especially when the government doesn’t move forward in good faith.

Meet Watchdog editor John Bicknell: journalist, author, history buff

By
Tuesday, November 3rd, 2015

10.16.15 004Watchdog’s new executive editor, John Bicknell, has been a journalist for more than 30 years. He came to Washington, D.C. in 1999 as an editor at Congressional Quarterly, where he led the production team for CQ Today and was a team editor for the publication. When CQ merged with Roll Call, he continued as national security editor, co-editor of the 2012 edition of “Politics in America” and eventually became editor of the opinion pages.

Bicknell’s hiring marks the latest step in the Franklin Center’s plan to expand beyond its 16 state bureaus, while growing staff in key states. As executive editor of Watchdog, he will work closely with our extensive network of investigative journalists and develop relationships with other media outlets.

Bicknell recently took a break from working with reporters to answer a few questions about his path to journalism and the state of today’s media:

Franklin Center: How did you first become interested in journalism, and what has kept you working in the industry for 30 years? 

John Bicknell: I grew up in a family very interested in politics and the news. And I always knew I wanted to be some kind of writer. So, while I didn’t major in journalism in college, it was always in the back of my mind that I might go into journalism. I’ve survived for 30-plus years by always looking to do something new, something different every few years.

FC: In addition to journalism, you’ve written a book about the presidential campaign of 1844 and have another one in the works. Clearly you’re a history buff, so how does that inform your approach to journalism and today’s rapid-fire news cycle?

JB: Studying history helps provide a long-term view of issues. When somebody says “this is the dirtiest campaign ever run,” or “this is the most important election of our time,” knowing something about history can provide perspective, as well as a way to debunk such claims. My new book, for example, is about John C. Fremont’s 1856 presidential campaign, the first Republican campaign and the first in American history to involve women and blacks in a substantial way. It was contested in perhaps the most violent peacetime atmosphere of any U.S. election, and though Fremont lost, he set the template that Abraham Lincoln followed four years later in winning.

FC: What is one issue or story you wish more Americans were paying attention to?

JB: It’s hard to narrow it down to one, and I have a different answer every other day. I think people are generally paying attention to issues of national security, probably immigration, maybe even the debt. So today let’s say it’s the decline of the notion about what it means to be an American, the idea of citizenship with responsibility. That might have something to do with studying history closely and seeing how much progress we’ve made in 200 years. Too often, I think, people ignore progress because they benefit from the culture of complaint.

FC: What is the biggest obstacle or challenge facing journalists today? 

JB: The biggest challenge facing journalists today is a self-inflicted problem: too many activists with bylines posing as neutral observers, and they’ve been found out. Once you’ve destroyed your own credibility, it’s very difficult to get it back, and we see that in many, if not most, legacy newsrooms.

FC: What opportunities are you most excited about as you join Watchdog’s network of investigative journalists?

JB: As I said, our opportunity is to fill the wide, wide space left empty by legacy journalists who believe their job is to defend the status quo at the expense of reporting facts and explaining why things happened the way they happened.

The feds’ cash-for-visas foreign investor program: What could go wrong?

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Wednesday, October 28th, 2015

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Earlier this month, U.S. Senator Chuck Grassley (R-IA) took to the Senate Floor to call for reforms to a government program that most Americans probably haven’t even heard of: the EB-5 Regional Center Investment Program. Simply put, the program allows foreign investors to invest large sums of money in American projects in return for a green card, but as Grassley pointed out, the government hasn’t always followed the spirit of the rules for such investments.

The program is divided into two different investment thresholds. The lower level, requiring a minimum investment of $500,000 is supposed to help Targeted Employment Areas – poorer and rural regions – get a nice economic jolt, but gerrymandering of these regions has instead led to the EB-5 program funding lavish building projects in wealthy urban areas. The New York Times and The Wall Street Journal, Grassley said, have covered cases where wealthy areas like Midtown Manhattan had projects funded by EB-5.

“The EB-5 program is supposed to favor distressed economic areas,” said a Washington Post editorial, “but the definition of a needy zone has been stretched to include nearly the whole country, including hot downtown real estate markets.”

Embedded in the heart of Grassley’s speech was Watchdog’s coverage of the program. Specifically, Grassley cited reporter Kenric Ward’s investigation into the program’s abuse in Dallas, where a luxury apartment project in uptown Dallas, one of the most affluent parts of the city, cashed in on funding from 100 overseas investors who each provided $500,000. Acquiring visas through investments of that size is supposed to be reserved for ventures in federally designated Targeted Employment Areas: usually rural or impoverished areas in need of jobs. The fact that EB-5 was used in this way to help develop an area with 0.8 percent unemployment indicates the areas designate by federal regulators as in need of improvement have been badly gerrymandered.

The EB-5 Immigration Investment program was originally established by the Immigration Act of 1990. It took more than a decade for it to gain traction, spiked in use during the Great Recession and now has achieved its full capacity of 10,000 immigrant investors (which includes family members of investors, so the total number of spots for individual investors is more like 3,000). Initially it required a minimum investment of either $500,000 or $1 million, depending on the affluence of the area being invested in, and was required to create at least 10 solid jobs for every investor. In return, investors would receive green cards for themselves and qualifying family members. To stimulate interest, however, the jobs requirement was changed to include “indirect” jobs created, a figured calculated by complex equations.

shutterstock_331350053Grassley’s speech only covers one area of the problems associated with EB-5. The complicated calculations and debatable economic assumptions used to determine the number of indirect jobs created by investments make it difficult to evaluate the true economic impact of the program. The agency also has yet to adequately address questions and concerns over national security. About 85-90 percent of EB-5 investors come from China.

As is often the case, concerns about the effectiveness and integrity of the EB-5 program run all the way to the top. Last spring an Inspector General’s audit accused Alejandro Mayorkas, former director of U.S. Citizenships and Immigration Services, which administers the program, of improper conduct in his handling of EB-5. After the audit, Mayorkas testified before a House Committee on Homeland Security hearing about the program. His answers were curt and evasive, and they did little to bring any much-needed transparency to the program. He described himself as a “hands-on manager,” for example, yet admitted he had significant gaps in operational knowledge. He was unable (or refused) to say how many jobs had been created or whether the thousands of visas issued led to any breaches in national security. When House Homeland Security Committee Chairman Michael McCaul asked whether Chinese nationals who acquired visas through EB-5 were properly vetted on national security grounds, Mayorkas simply answered “I would hope so.”

That’s hardly a ringing statement of confidence.

With critics of EB-5 resigned to its inevitable renewable, many are pinning their hopes on Grassley’s proposed reforms in the American Job Creation and Investment Promotion Reform Act, which would focus on ensuring smaller investments go to high-unemployment zones and rural regions, raise the investment thresholds by several hundred thousand dollars, and require foreign investors to actually prove the creation of direct jobs before receiving permanent residence.

In addition to the abuse of gerrymandered targeted employment districts, however, EB-5 has seen its fair share of woes elsewhere across the country. In South Dakota last year, a meatpacking plant funded by Chinese investors through EB-5 went bankrupt, leaving investors without their promised visas (their investments likely won’t be recovered either). And U.S. Sen. Harry Reid once infamously pressured the feds to expedite more than 200 visa applications through a Las Vegas casino project funded by EB-5.

Neither of these cases, unfortunately, are all that surprising in light of a recent Government Accountability Office report on the program, which found that USCIS does not properly track the economic effects of the program. The agency, the report showed, rarely conducts site visits to verify claims of economic activity, never interviews investors before issuing them green cards, and has left itself open to fraud and abuse through its reliance on “paper-based documentation.”

Mayorkas has been gone from USCIS for almost two years now, but it remains to be seen if the agency can take steps to improve the effectiveness and security of the program – or if Congress will act to prevent future abuse.

Red ink rising: Texas’ massive local government debt

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Wednesday, October 21st, 2015

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A Texas-sized price tag

A few miles beyond the outskirts of Houston lies Alvin, a humble town of 25,000 that could soon be home to five of the most expensive public schools in the history of Texas.

Why such expensive school for such a small town (at least by Texas standards)? The answer lies with Alvin Independent School District, which is trying to sell voters on a $285 million school construction package that would put county taxpayers on the hook for about $1 billion over the life of the bonds.

How can the school district justify such a huge chunk of spending in a district that only has $6.5 billion in total taxable property? The state’s Permanent School Fund Guarantee Program plays a big part in enabling local spending because it promises to repay bondholders in the event of a local default. The district also projects substantial growth in the coming years, but as Texas Watchdog reporter Jon Cassidy reports, its population will have to explode to keep up with the interest payments and keep local property taxes, which fund Alvin ISD, from skyrocketing.

“Alvin’s growth puts it in either tenth or eleventh on the list for homes sold, homes started, and vacant developed lots (among the fastest growing school districts around Houston),” wrote Cassidy. “And yet the district projects it will be the third-biggest grower over the long term based on an analysis of how many homes might one day fit in its empty fields.”

Indeed, for Alvin, every projection is big. No matter how you slice the numbers, the schools Alvin ISD proposes to build with its massive bond will cost twice as much (about $25 million) as a typical elementary school in Texas. Each would rank only behind a $36 million elementary school in Orange as the most expensive schools in the state, and the Orange school has double the student capacity.

Despite its unprecedented costs, local board members don’t seem concerned about the price tag. At an Aug. 18 school board meeting when officials approved the bond package, none of them raised questions about how much the schools cost. The only concerns about cost came up in questions about whether taxpayers in a rural district were ready to swallow a $41.5 million bill for a new 10,000 seat football stadium.

“It’s not an extra, it’s not a boondoggle,” said board member Vivian Scheibel. “It’s something that every part of our community is going to benefit from.”

Unfortunately for Scheibel, the numbers suggest otherwise.

Drowning in red ink

Though Alvin is one of the most flamboyant users of municipal bonds, the problem is widespread. Dallas is pitching a $1.6 billion school bond, Comal County is pitching a $76 million jail bond, and Ysleta Independent School District wants taxpayers to fund new campuses, athletics, technology and security to the tune of a $430.5 million bond – a figure twice the size of its current debt load. These are just a few examples of the $8.8 billion local governments are asking Texas taxpayers to shoulder this fall.

Texas schools, cities, counties and special taxing districts currently carry $322 billion in outstanding debt, ranking Texas second among the ten largest states in local government debt at $8,627 owed per person. The trend becomes especially worrisome, notes Watchdog reporter Kenric Ward, in off-year elections, when low voter turnout (typically just 10 percent of registered voters) and a lack of information give an edge to special interest groups and companies eager for a cut of these lucrative, multimillion government contracts. Public entities themselves, of course, can’t campaign for bond referendums, but the architects, contractors and various vendors that stand to gain from them can. So for the few people who do vote, most have little access to objective information about what they’re actually voting on.

“With bond initiatives, voters are generally uninformed. All they know about them are from the newspaper of the pro-bond committees,” said Peggy Venable, policy and legislative director of Americans for Prosperity Texas. In the case of San Antonio’s North East Independent School District, which has proposed a $499.9 million bond referendum, even the press has widely supported more government spending. The San Antonio Express-News has supported the bond wholeheartedly (according to Watchdog’s count, it’s been 23 years since the newspaper opposed any school bond referendum).

“So many taxpayers are asleep that the government entities don’t have to do their homework on pricing. It’s all about empire building for the people who have the ability to tax,” said Douglas Kirk, a newspaper editor in Comal County, where he estimates the cost of a new jail bond will end up totaling twice as much as the $76 million figure being pitched to taxpayers – and that’s before annual operating expenses are added.

This is not to say that all bonds are inherently bad ideas for local government. State Sen. Kelly Hancock notes that like a home mortgage, financing can be appropriate if the terms are managed, but voters rarely have all the information about interest expenses. And for that matter, the legislators themselves don’t even always have a sense of the true costs.

Some lawmakers in Texas have seen the troubling pattern and attempted reform. State Rep. Matt Shaheen, R-Plano, for example, introduced HB 1750, which would ban the use of capital appreciation bonds that come with balloon payments. But his bill failed.

Another bill designed to shine a light on local government accounting, HB 1378, did pass. It will require government agencies to do two key things: provide a per-capita breakdown on all bond costs, and disclose the total principal and interest required to pay all of their outstanding debts on time and in full. The law, however, does not go into effect until next year. So for the remainder of 2015 the largesse continues as usual.

Is all that public data actually helping us keep government accountable?

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Wednesday, October 14th, 2015

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Earlier this year, the Pew Research Center released a report that attempts to gauge public sentiment concerning open government data. It suggests there are two major factors paving the way for new ways in which people engage with government today.

“The first is data,” say authors. “There is more of it than ever before and there are more effective tools for sharing it. This creates new service-delivery possibilities for government through use of data that government agencies themselves collect and generate.

“The second is public desire to make government more responsive, transparent and effective in serving citizens — an impulse driven by tight budgets and declining citizens’ trust in government.”

Not surprisingly, Democrats have a more upbeat view of open data than Republicans, but that appears to be a reflection of their more optimistic view of government in general. Overall, Americans are divided or ambivalent about the prospect of more open government data, but they lean toward optimism. Fifty six percent said government data allows journalists to cover government activities more thoroughly, and 53 percent said it makes government officials more accountable to the public.

Americans are split right down the middle, however, on the question of whether more open data improves the quality of government services and whether it allows average citizens to have more of an impact on government affairs. And 53 percent of respondents don’t believe that open data results in better decisions by government officials.

For the Franklin Center’s Watchdog journalists and citizen contributors, those first two figures are evidence that success in our mission to bring greater accountability to government is possible. The last two figures, however, indicate that we still have a long way to go. As the report says, “most Americans have yet to delve too deeply into government data and its possibilities to closely monitor government performance.” This is what needs to change.

It’s easy for one’s eyes to glaze over in the face of government data, but a government transparency movement has been at work in recent years trying to help us make sense of all the information available to the public. In a Q&A with Watchdog, open data guru Waldo Jaquith, who works with government and private sector groups to make government data available for public consumption, points to a number of tools and organizations that help make government data more accessible and transparent, including the Sunlight Foundation and FederalRegister.gov, which helps citizens track proposed changes to legislation that could affect them.

As an example of how far the transparency movement has come, Jaquith points to OpenFDA, which takes the raw medical data driving decisions by the U.S. Food and Drug Administration, and makes it accessible to everyone.

“You the public are paying for this medical data,” he says. “You’re already paying us to do this research. Instead of leaving it on a private server somewhere, we’re going to put it up for anybody to access. It’s yours. We should give you access to it.”

Access to government data has allowed Watchdog to break a number of significant stories exposing questionable uses of taxpayer funds. Reporter Arthur Kane’s investigation into questionable loans dealt out by the Small Business Administration was featured in Forbes earlier this year. Kane has partnered with the Washington Times for an front-page exclusive look into how the Export-Import bank was shipping U.S. jobs overseas and allowing companies to keep profits offshore to avoid taxes.

Access to digital public records has also allowed Watchdog reporters to uncover patterns of welfare abuse and sparked reform legislation in several of their respective statehouses.

Strangely, the Pew study seems to leave little room for those who are both innately distrustful of government and those who believe open data initiatives can improve government services and performance. Holding both of those positions simultaneously, after all, is the key to reform. It requires skepticism and sharp eye to find areas of improvement, but also trust that through bringing the truth to light, the government can indeed serve its people better. We believe such change is possible.